NEXGEL, Inc. (“NEXGEL” or the “Company”) (NASDAQ: “NXGL”), a
leading provider of ultra-gentle, high-water-content hydrogel
products for healthcare and consumer applications, today announced
its financial results for the third quarter ended September 30,
2023.
Adam Levy, NEXGEL’s Chief Executive Officer,
commented, “We are pleased to deliver yet another record revenue
quarter of $1.2 million, an increase of 115% year-over-year, driven
by growth year-over-year in both contract manufacturing and branded
consumer products. Importantly, gross margins during the third
quarter improved sequentially to 28.2% as compared to 15.0% in the
prior second quarter. Our net loss also continued to trend lower
quarter-over-quarter, in line with our goal to become profitable in
2024.”
Mr. Levy continued, “We have a lot to be excited
about as we near the close of 2023 and head into the new year.
Given our growth into retail with Enigma Health as well as
partnerships with AbbVie and others, we have strategically invested
in inventory and equipment to increase capacity and automation to
meet the significant increase in demand we expect for our
proprietary hydrogels. We expect our revenue growth year-over-year,
margin expansion and net loss decrease trend to continue in the
short term as we optimize our operations and growth opportunities
come to fruition.”
Operational Highlights in 2023
- NEXGEL’s subsidiary, CG Converting
and Packaging, executed a new supply agreement with AbbVie (NYSE:
ABBV), a global biopharmaceutical company to be a supplier of gel
pads with AbbVie’s Rapid Acoustic Pulse device being investigated
for improvement in the appearance of cellulite.
- Announced a new strategic
relationship with Enigma Health, a new joint venture company, for
retail distribution and marketing services in North America.
Third Quarter 2023 Financial Highlights
For the third quarter of 2023, revenue totaled
$1.2 million, an increase of $653 thousand or 115%, as compared to
$568 thousand for the same period the year prior. The quarterly
increase in overall revenues was primarily due to sales growth in
contract manufacturing and branded products year-over-year,
including revenue contribution from the joint venture formed with
C.G. Laboratories.
Gross profit for the third quarter of 2023 was
$344 thousand, compared to a gross profit of $148 thousand for the
same prior year period. Gross profit margin for the third quarter
of 2023 was 28.2% as compared to 26.1% for the same period the year
prior. Gross profit margin increased sequentially to 28.2% during
the third quarter of 2023 as compared to 15.0% during the second
quarter of 2022.
Total operating expenses, including R&D and
SG&A expenses, decreased to $956 thousand for the three months
ended September 30, 2023, compared to $1,185 thousand for the prior
year period. The year-over-year decrease was attributable to a
decrease in total SG&A and the completion of development
efforts of two proof of concept studies for drug delivery
candidates utilizing our hydrogel technology.
Net loss for the quarter ended September 30,
2023, improved to $550 thousand or $0.10 per basic and diluted
share, compared to net loss of $1.2 million or $0.22 per basic and
diluted share for the same period in 2022. Net loss also improved
sequentially to $550 thousand during the third quarter of 2023 as
compared to $642 thousand during the second quarter of 2023.
As of September 30, 2023, NEXGEL had
approximately $3.3 million of cash. The delta between our improved
net loss during the quarter and net cash decrease period over
period relates to an increase in account receivables, and property,
plant and equipment investments.
As of November 13, 2023, NEXGEL had 5,717,629
shares of common stock outstanding.
NEXGEL Third Quarter 2023 Financial Results Conference
Call
Management will host a conference call and
webcast today at 4:30 p.m. Eastern Time to discuss its operational
and financial results for the third quarter 2023.
Date: November 13, 2023Time:
4:30 P.M. ETLive Call: +1-877-407-9208 (U.S. Toll
Free) or +1-201-493-6784 (International)Webcast:
https://viavid.webcasts.com/starthere.jsp?ei=1640412&tp_key=d1c55ca731
For interested individuals unable to join the
conference call, a replay will be available through November 27,
2023, at +1-844-512-2921 (U.S. Toll Free) or +1-412-317-6671
(International). Participants must use the following code to access
the replay of the call: 13742264. An archived version of the
webcast will also be available on NEXGEL’s Investor Relations
site: https://ir.nexgel.com/.
About NEXGEL, INC.NEXGEL is a
leading provider of ultra-gentle, high-water-content hydrogels for
healthcare and consumer applications. Based in Langhorne, Pa., the
Company has developed and manufactured electron-beam, cross-linked
hydrogels for over two decades. Alongside its strategic partners,
NEXGEL has formulated more than 200 different combinations to bring
natural ingredients to gentle skin patches that can be worn for
long periods of time with little to no irritation.
Forward-Looking Statement
This press release contains “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) (which Sections were
adopted as part of the Private Securities Litigation Reform Act of
1995). Statements preceded by, followed by or that otherwise
include the words “believe,” “anticipate,” “estimate,” “expect,”
“intend,” “plan,” “project,” “prospects,” “outlook,” and similar
words or expressions, or future or conditional verbs, such as
“will,” “should,” “would,” “may,” and “could,” are generally
forward-looking in nature and not historical facts. These
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the Company's
actual results, performance, or achievements to be materially
different from any anticipated results, performance, or
achievements for many reasons. The Company disclaims any intention
to, and undertakes no obligation to, revise any forward-looking
statements, whether as a result of new information, a future event,
or otherwise. For additional risks and uncertainties that could
impact the Company's forward-looking statements, please see the
Company's Annual Report on Form 10-K for the year ended December
31, 2022, including but not limited to the discussion under “Risk
Factors” therein, which the Company filed with the SEC and which
may be viewed at http://www.sec.gov/.
Investor Contacts:Valter Pinto, Managing
DirectorKCSA Strategic
Communications212.896.1254valter@kcsa.com
NEXGEL, INCCONDENSED
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30,
2023 AND DECEMBER 31, 2022 (Unaudited)(in
thousands, except share and per share data)
|
|
September 30,2023 |
|
|
December 31,2022 |
|
ASSETS: |
|
|
|
|
|
|
|
|
Current
Assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
3,266 |
|
|
$ |
1,101 |
|
Marketable securities |
|
|
- |
|
|
|
5,508 |
|
Accounts receivable, net |
|
|
1,158 |
|
|
|
222 |
|
Inventory |
|
|
1,090 |
|
|
|
502 |
|
Prepaid expenses and other current assets |
|
|
367 |
|
|
|
172 |
|
Total current assets |
|
|
5,881 |
|
|
|
7,505 |
|
Goodwill |
|
|
311 |
|
|
|
311 |
|
Intangibles, net |
|
|
12 |
|
|
|
20 |
|
Property and equipment, net |
|
|
1,737 |
|
|
|
721 |
|
Operating lease - right of use asset |
|
|
1,911 |
|
|
|
1,737 |
|
Other assets |
|
|
95 |
|
|
|
63 |
|
Total assets |
|
$ |
9,947 |
|
|
$ |
10,357 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,073 |
|
|
$ |
265 |
|
Accrued expenses and other current liabilities |
|
|
152 |
|
|
|
130 |
|
Deferred revenue |
|
|
34 |
|
|
|
- |
|
Current portion of note payable |
|
|
5 |
|
|
|
15 |
|
Warrant liability |
|
|
146 |
|
|
|
242 |
|
Operating lease liability, current portion |
|
|
233 |
|
|
|
207 |
|
Total current liabilities |
|
|
1,643 |
|
|
|
859 |
|
Operating lease liability, net of current portion |
|
|
1,774 |
|
|
|
1,593 |
|
Notes payable, net of current portion |
|
|
274 |
|
|
|
268 |
|
Total liabilities |
|
|
3,691 |
|
|
|
2,720 |
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies (Note 15) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Preferred stock,
par value $0.001 per share, 5,000,000 shares authorized, no shares
issued and outstanding |
|
|
- |
|
|
|
- |
|
Common stock, par
value $0.001 per share, 25,000,000 shares authorized; 5,717,629 and
5,577,916 shares issued and outstanding as of September 30, 2023
and December 31, 2022, respectively |
|
|
6 |
|
|
|
6 |
|
Additional paid-in
capital |
|
|
19,309 |
|
|
|
19,189 |
|
Accumulated
deficit |
|
|
(13,617 |
) |
|
|
(11,558 |
) |
Total NexGel
stockholders’ equity |
|
|
5,698 |
|
|
|
7,637 |
|
Non-controlling
interest in joint venture |
|
|
558 |
|
|
|
- |
|
Total stockholders’
equity |
|
|
6,256 |
|
|
|
7,637 |
|
Total liabilities
and stockholders’ equity |
|
$ |
9,947 |
|
|
$ |
10,357 |
|
NEXGEL, INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Unaudited)(in thousands, except share and per
share data)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Revenues, net |
|
$ |
1,221 |
|
|
$ |
568 |
|
|
$ |
3,007 |
|
|
$ |
1,524 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues |
|
|
877 |
|
|
|
420 |
|
|
|
2,546 |
|
|
|
1,304 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
344 |
|
|
|
148 |
|
|
|
461 |
|
|
|
220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development |
|
|
6 |
|
|
|
193 |
|
|
|
90 |
|
|
|
328 |
|
Selling, general
and administrative |
|
|
950 |
|
|
|
992 |
|
|
|
2,629 |
|
|
|
2,459 |
|
Total operating
expenses |
|
|
956 |
|
|
|
1,185 |
|
|
|
2,719 |
|
|
|
2,787 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(612 |
) |
|
|
(1,037 |
) |
|
|
(2,258 |
) |
|
|
(2,567 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(3 |
) |
|
|
(242 |
) |
|
|
(13 |
) |
|
|
(1,334 |
) |
Interest
income |
|
|
1 |
|
|
|
- |
|
|
|
3 |
|
|
|
- |
|
Loss on debt
extinguishment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(150 |
) |
Warrant
modification expense |
|
|
- |
|
|
|
(57 |
) |
|
|
- |
|
|
|
(57 |
) |
Other income |
|
|
- |
|
|
|
- |
|
|
|
3 |
|
|
|
2 |
|
Gain on
investments |
|
|
44 |
|
|
|
5 |
|
|
|
168 |
|
|
|
5 |
|
Changes in fair
value of warrant liability |
|
|
18 |
|
|
|
104 |
|
|
|
96 |
|
|
|
3 |
|
Total other income
(expense), net |
|
|
60 |
|
|
|
(190 |
) |
|
|
257 |
|
|
|
(1,531 |
) |
Loss before income
taxes |
|
|
(552 |
) |
|
|
(1,227 |
) |
|
|
(2,001 |
) |
|
|
(4,098 |
) |
Income tax
expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net loss |
|
$ |
(552 |
) |
|
$ |
(1,227 |
) |
|
$ |
(2,001 |
) |
|
$ |
(4,098 |
) |
Less: (Income) loss
attributable to non-controlling interest in joint venture |
|
|
2 |
|
|
|
- |
|
|
|
(58 |
) |
|
|
- |
|
Net loss
attributable to NexGel stockholders |
|
|
(550 |
) |
|
|
(1,227 |
) |
|
|
(2,059 |
) |
|
|
(4,098 |
) |
Net loss per common
share - basic |
|
$ |
(0.10 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.74 |
) |
Net loss per common
share - diluted |
|
$ |
(0.10 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.74 |
) |
Weighted average
shares used in computing net loss per common share - basic |
|
|
5,714,316 |
|
|
|
5,572,234 |
|
|
|
5,654,981 |
|
|
|
5,572,234 |
|
Weighted average
shares used in computing net loss per common share – diluted |
|
|
5,714,316 |
|
|
|
5,572,234 |
|
|
|
5,654,981 |
|
|
|
5,572,234 |
|
NEXGEL, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Unaudited)(in thousands)
|
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
Operating
Activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,059 |
) |
|
$ |
(4,098 |
) |
Adjustments to
reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Income attributable to non-controlling interest in joint
venture |
|
|
58 |
|
|
|
- |
|
Depreciation and amortization |
|
|
103 |
|
|
|
84 |
|
Changes in ROU asset and operating lease liability |
|
|
33 |
|
|
|
29 |
|
Share-based compensation and restricted stock vesting |
|
|
120 |
|
|
|
231 |
|
Gain on investment in marketable securities |
|
|
168 |
|
|
|
(5 |
) |
Changes in fair value of warrant liability and warrant
modification |
|
|
(96 |
) |
|
|
(3 |
) |
Amortization of deferred financing costs |
|
|
- |
|
|
|
1,325 |
|
Warrant modification expense |
|
|
- |
|
|
|
57 |
|
Loss on extinguishment of debt |
|
|
- |
|
|
|
150 |
|
|
|
|
|
|
|
|
|
|
Changes in
operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(936 |
) |
|
|
(56 |
) |
Inventory |
|
|
(588 |
) |
|
|
(108 |
) |
Prepaid expenses and other assets |
|
|
(227 |
) |
|
|
(162 |
) |
Accounts payable |
|
|
808 |
|
|
|
104 |
|
Accrued expenses and other current liabilities |
|
|
(67 |
) |
|
|
109 |
|
Deferred revenue |
|
|
34 |
|
|
|
- |
|
Net Cash
Used in Operating Activities |
|
|
(2,649 |
) |
|
|
(2,343 |
) |
|
|
|
|
|
|
|
|
|
Investing
Activities |
|
|
|
|
|
|
|
|
Proceeds from sales of marketable securities |
|
|
5,340 |
|
|
|
1,000 |
|
Investment in marketable securities |
|
|
- |
|
|
|
(6,980 |
) |
Capital expenditures |
|
|
(611 |
) |
|
|
(88 |
) |
Net Cash
Provided by (Used in) Investing Activities |
|
|
4,729 |
|
|
|
(6,068 |
) |
|
|
|
|
|
|
|
|
|
Financing
Activities |
|
|
|
|
|
|
|
|
Proceeds from margin line of credit |
|
|
89 |
|
|
|
- |
|
Principle payments of notes payable |
|
|
(4 |
) |
|
|
(3,512 |
) |
Net Cash
Provided by (Used in) Financing Activities |
|
|
85 |
|
|
|
(3,512 |
) |
Net
Increase (Decrease) in Cash |
|
|
2,165 |
|
|
|
(11,923 |
) |
Cash – Beginning of
period |
|
|
1,101 |
|
|
|
13,350 |
|
Cash – End of period |
|
$ |
3,266 |
|
|
$ |
1,427 |
|
Supplemental Disclosure of Cash Flows
Information |
|
|
|
|
|
|
|
|
Cash paid during
the year for: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
7 |
|
|
$ |
- |
|
Taxes |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Supplemental
Non-cash Investing and Financing activities |
|
|
|
|
|
|
|
|
Property and equipment contributed as capital investment to JV |
|
$ |
500 |
|
|
$ |
- |
|
ROU asset and operating lease liabilities recognized upon
consolidation of JV |
|
$ |
334 |
|
|
$ |
- |
|
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