CollPlant Biotechnologies Ltd. Q3 FY2023 earnings call

• During the war in Israel since October 7, CollPlant's management maintained company operations and employee safety, with a crisis team monitoring operations. Production and development programs were minimally affected. - Key development programs:
  • Dermal filler product candidate partnered with AbbVie, in clinical phase, received $10 million milestone payment in Q3 2023, and a U.S. patent granted for photocurable dermal filler.
  • Regenerative breast implants: Establishing infrastructure for large animal study starting in December 2023, first large animal study showed tissue regeneration with no adverse events, and breast implants are plant-derived rhCollagen -based, not posing risks like breast implant-associated anaplastic large cell lymphoma.
  • Gut-on-a-Chip program: Developing 3D bioprinted gut tissue model for drug discovery and personalized medicine, recently successfully grew epithelial cells on 3D bioprinted scaffolds.
  • ESG initiatives: Approved sustainability roadmap, initiated projects to reduce carbon footprint, participated in UN Global Compact, and planned to publish inaugural ESG report in 2024.

GAAP revenues for the third quarter ended September 30, 2023 were $43,000, mainly from sales of bioink and rhCollagen, a decrease of $66,000 compared to Q3 2022. GAAP revenues for the nine months ended September 30, 2023 were $10.7 million, mainly from revenues with AbbVie, including a $10 million milestone payment, and an increase in sales of rhCollagen products. GAAP cost of revenues for Q3 2023 was $264,000, and for the nine months was $1.2 million. GAAP operating expenses for Q3 2023 were $4.4 million, and for the nine months was $11.9 million. Non-GAAP operating expenses for Q3 2023 were $3.9 million, and for the nine months were $10.6 million.

• Continue to advance development of regenerative dermal and soft tissue filler program with AbbVie.
• Initiate large animal study with commercial-sized breast implant to generate safety and efficacy data.
• Advance Gut-on-a-Chip development program to deliver functional gut tissue model.
• Continue to form collaborations with industry leaders related to use of rhCollagen.

• Uncertainties related to the war in Israel.
• Weakness in the global capital markets.
• Risks associated with achieving milestones and regulatory approvals for product development.

Q: What's the next milestone to receive the next payment from AbbVie for the dermal filler?

A: We are unable to share information about the timeline for the next milestone as we can only disclose details in accordance with our partners' agreement. The milestones include development, clinical trial, regulatory, and commercial sales.

Q: What's the development strategy for the breast implant after the upcoming large animal study?

A: The upcoming large animal study is to evaluate commercial-sized implants, with endpoints of 3 months and 12 months. The data will help converge into the final implant design. Discussions with the FDA like Type C meeting are planned for 2025, and it's premature to determine the time to commercialization which will take a few years.

Q: Rationale behind terminating the agreement with Tel Aviv University and Sheba Medical Center for the Gut-on-a-Chip and how keen are you to get a partner?

A: After one year of collaboration, CollPlant decided to take on Gut-on-a-Chip product development in-house. The next stage is to develop a model to mimic healthy gut tissue. When we have a healthy tissue model, we will be in a position to start seeking for a collaborator for drug discovery and personalized medicine applications.

Q: Does the two-year cash runway include expected payments from AbbVie milestone payments?

A: The two-year runway is only counting on the $29 million cash we have, not including potential additional milestone achievements or other agreements.

Q: What's the next step for the Gut-on-a-Chip after the termination of the agreement?

A: The next stage is to develop a model to mimic a healthy gut tissue. We are progressing in the healthy tissue model, having managed to grow a pectin layer and form a blood vessel. When we have a validated healthy tissue model, we will seek for a partner.