Gamida Cell (NASDAQ:GMDA), a biotechnology company specializing in cell therapies, has released its financial results for the fourth quarter and full year of 2023. The company announced the commencement of a restructuring process backed by Highbridge Capital Management and reported its first year of revenue generation with the commercialization of OMISIRGE, its FDA-approved stem cell therapy. Despite challenges in finding strategic partnerships, Gamida Cell has entered into a restructuring support agreement to stabilize its financial foundation, reducing debt by $75 million and securing a $50 million debt facility.
Key Takeaways
- Gamida Cell has achieved FDA approval for OMISIRGE, its stem cell therapy.
- The company commenced a restructuring process supported by Highbridge Capital Management.
- Gamida Cell reported its first revenue-generating year with net revenue of $1.8 million for 2023.
- The restructuring will convert $75 million of debt into equity and provide a $50 million debt facility.
- No Q&A session was held during the earnings call.
Company Outlook
- Gamida Cell aims to continue commercializing OMISIRGE and increasing patient access.
- The company anticipates a leaner organizational structure post-restructuring.
- There is a focus on deepening relationships with transplant centers.
Bearish Highlights
- The company did not find a strategic partnership to address its needs by the end of 2023.
- Efforts to re-engage with potential partners did not yield actionable alternatives.
Bullish Highlights
- OMISIRGE is the only stem cell therapy approved based on a global randomized Phase 3 clinical trial.
- The restructuring agreement with Highbridge Capital provides a more stable financial foundation.
Misses
- Gamida Cell reported a net loss of $63 million for 2023, though this was an improvement from 2022's net loss of $79.4 million.
Q&A Highlights
- There was no question-and-answer session during the call.
In conclusion, while Gamida Cell faces challenges in securing strategic partnerships, the company has made significant strides in commercializing its flagship product, OMISIRGE. The restructuring process marks a critical step toward financial stability and continued growth. However, the company's financial position remains precarious, with current funds not expected to support operations beyond the second quarter of 2024.
Full transcript - Gamida Cell (GMDA) Q4 2023:
Operator: Ladies and gentlemen, thank you for standing by. Welcome to Gamida Cell’s Conference Call for a Business Update in Fourth Quarter and Full Year 2023 Financial Results. My name is Darrel and I'll be your operator for today's call. Please be advised that this call is being recorded at Gamida Cell request. Now I would like to introduce you to our conference host, Mike Kuczkowski of Gamida Cell Corporate Communications. Mike, please go ahead.
Mike Kuczkowski: Thank you, Darrel, and good morning, everyone. Welcome to today's call during which we will provide an update on the company and review our financial results for the fourth quarter and full year 2023. Earlier this morning, we issued two press releases, one announcing the commencement of a restructuring process supported by Highbridge Capital Management and the other summarizing our financial results and providing a business update. Both press releases are available at our website, www.gamidacell.com. Please note, we will not be hosting a question-and-answer session on today's call. Here with me on our call today are Abbey Jenkins, Gamida Cell’s President and Chief Executive Officer; and Terry Coelho, our Chief Financial Officer. Before we begin, I want to remind everyone that during this call we may make forward looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any statement describing Gamida Cell’s goals, expectations, financial or other projections, intentions or beliefs is a forward-looking statement and should be considered an at-risk statement. Such statements including those with respect to the curative therapeutic and commercial potential of OMISIRGE, Omidubicel-onlv Gamida Cell therapy candidate GD-201, the continued commercialization of and patient access to OMISIRGE, the financial runway of Gamida Cell. Gamida Cell's ability to complete a transaction supported by Highbridge pursuant to the restructuring support agreement, Gamida Cell's ability to secure the Israeli court's approval of the transaction. Gamida Cell's expectations regarding the delisting from NASDAQ and the timing of the completion of the restructuring proceedings and the state of Gamida Cell's workforce are subject to a number of risks, uncertainties and assumptions. These risks, uncertainties and assumptions include those relating to clinical, scientific, regulatory and technical developments and those inherent in the process of developing and commercializing product candidates that are safe and effective for use as human therapeutics, and as to the pursuit of the transactions contemplated under the RSA, the risk that no transaction may result. In light of these risks and uncertainties and other risks and uncertainties that are described in the Risk Factors section and other sections of Gamida Cell's annual report on Form 10-K to be filed with the Securities and Exchange Commission on March 27, 2024, and other filings that Gamida Cell makes with the SEC from time to time, which are available at www.sec.gov. The events and circumstances discussed in such forward-looking statements may not occur and Gamida Cell’s actual results could differ materially and adversely from those anticipated or implied thereby, although Gamida Cell’s forward-looking statements reflect the good faith judgment of its management, these statements are based only on facts and factors currently known by Gamida Cell. As a result, you are cautioned not to rely on these forward-looking statements. Now I will turn the call over to Gamida Cell’s President and CEO, Abbey Jenkins.
Abbey Jenkins: Thank you, Mike, and everyone joining us today. In this past year, Gamida Cell has achieved important milestones, most notably, our longstanding goal of bringing OMISIRGE through the FDA approval process as the only stem cell therapy approved on the basis of a global randomized Phase 3 clinical trial. As you'll hear on today's call, patients continue to receive OMISIRGE. As we onboard more transplant centers, we are gratified that OMISIRGE is available as a potentially lifesaving option for patients with hematologic malignancies in need of a stem cell transplant. For these patients, OMISIRGE may represent their last or best hope for a cure and we are proud to be able to continue to serve our patients. We have also had to overcome many challenges in this process, including achieving long-term financial stability for the company. Today, I'm providing a corporate update and outlining the progress we have made to stabilize Gamida Cell’s financial foundation. As you know, in Q2 2023, we initiated a strategic restructuring and engaged in an extensive process to pursue strategic alternatives to support the commercialization of OMISIRGE. Our initial strategic alternatives review process included outreach to numerous potential strategic partners, including large and mid-sized pharmaceutical companies and we engaged in substantial discussions with many of those parties. Despite this effort, we did not identify a partnership that would adequately address our strategic needs by the end of the year. In January, we redoubled our efforts and announced that we were focused on reaching a transaction that would provide the long-term financial runway necessary for Gamida Cell to commercialize OMISIRGE, specifically pursuing a merger, acquisition or asset sale. Through that process, we engaged with a number of parties, some as re-engagement and others new. However, these efforts did not yield any actionable alternatives. Earlier today, we announced that we have entered into a restructuring support agreement with Highbridge Capital Management, our principal lender. Under the terms of the agreement and upon completion of our restructuring process, Highbridge will convert $75 million of its existing unsecured convertible senior note into equity, which will represent 100% of the outstanding equity in the newly reorganized company. This transaction will reduce Gamida Cell’s outstanding debt by $75 million and annual interest expense by $4.4 million. The company will receive a secured debt facility of $50 million, of which approximately $5 million will be the remaining principle amount due on Gamida Cell existing secured convertible senior note. Now turning to results. 2023 represented our first year as a revenue generating company. As Abby mentioned, we've reported revenue from the delivery of six units of OMISIRGE in 2023, including four units in the fourth quarter meeting our goal for the year. As we shift from a clinical stage company to a commercial stage company, certain reclassifications of spend were incorporated into our financial reporting beginning in the third quarter of 2023. I will point out the key changes as we walk through the financial results. In the fourth quarter ended December 31, 2023, we are reporting net revenue of $1.1 million resulting from the delivery of the four units of OMISIRGE. Full year 2023 net revenue was $1.8 million resulting from the delivery of six units of OMISIRGE. Full year 2023 cost of sales including costs of direct manufacturing and quality in addition to royalty expenses and batch failure costs were applicable was $1.5 million for full year 2023, resulting in 18.5% gross margin for the year. Over time, we expect the cost of sales and therefore the gross margin to improve measurably as production volumes scale to capacity. Beginning July 1, 2023, reporting of operating expenses has been modified to reflect the company's transition to commercial stage with all operating expenses being reported as either research and development expenses, excess capacity or selling general administrative or SG&A expenses. For 2022 and the first two quarters of 2023 previously reported commercial and general and administrative costs were combined into SG&A expenses. Additionally, certain expenses previously reported in research and development are now being reported in SG&A beginning in the third quarter of 2023 with no reclassification of prior periods. Research and development expenses were $24.3 million for the 12 months ended December 31, 2023 compared to $42.7 million in 2022. The decrease of $18.4 million was due primarily to the aforementioned reporting transition, along with reduced Omidubicel clinical spend relating to the winding down of the Phase 3 clinical trial and reduced NK platform clinical and research and development spend. Excess capacity costs were $4.1 million in 2023, reflecting costs associated with labor, manufacturing overheads and manufacturing depreciation above our standard cost of goods, which are based on staffed capacity levels. SG&A expenses were $44.6 million in 2023, an increase of $12.3 million compared to 2022. The aforementioned financial reporting transition, which resulted in the inclusion of medical affairs expenses and certain indirect supply chain and quality assurance expenses in SG&A reporting contributed approximately $6.9 million to the increase in 2023 as compared to 2022. Selling and marketing expenses increased by $4.3 million compared to the prior year due to commercial launch activities. General and administrative expenses increased by approximately $1.1 million in 2023 as compared to 2022. Financial income or expenses net were $10 million of income in 2023 compared to $4.4 million of expense in 2022. The $14.4 million change in financial income was primarily due to $17.5 million of non-cash income related to the valuation of warrants liability, partially offset by $1.9 million of higher interest expenses, $600,000 of non-cash loss related to the valuation of the company's secured convertible senior notes issued in December, 2022 and $0.5 million of lower interest income. Our net loss was $63 million in 2023 compared to a net loss of $79.4 million in 2022 with the lower net loss being driven primarily by the increase in financial income of $14.4 million together with approximately $2 million of lower operating expenses. In the fourth quarter of 2023, our net loss was $8.8 million compared to a net loss of $22.8 million in the fourth quarter of 2022, primarily driven by the increase in financial income of $10 million together with approximately $4 million of lower operating expenses. As of December 31, 2023, Gamida Cell had totaled cash and cash equivalents of $46.6 million compared to $64.7 million as of December 31, 2022. The decrease of $18.1 million is due primarily to $61.8 million in net cash proceeds from financing activities, which was comprised of $21.1 million in net proceeds from the issuance of ordinary shares and warrants from the company's underwritten public offering in April, 2023 and $43.1 million in net proceeds from the issuance of ordinary shares via at the market or ATM facility, offset by $2.2 million in principle payments of the company's 2022 convertible senior note and $79.1 million of net cash used in operating activities. As of March 15, 2024, our preliminary estimated unrestricted cash and cash equivalence balance was $28.5 million. Although it is difficult to predict future liquidity requirements, we believe that our current total existing funds will not be sufficient to support our ongoing operating activities, including the restructuring process through the end of the second quarter of 2024. Finally, with regard to our deposition, as of December 31, 2023, the company had reduced its principal balance on the 2022 secured convertible note by $18.4 million from $25 million as of December 31, 2022, $6.6 million at the end of the fourth quarter of 2023. The company also holds a 2021 convertible senior note with an aggregate principle amount of $75 million. With that, I will turn the call back over to Abby for some concluding remarks. Abby?
Abbey Jenkins: Thank you, Terry. Today, we discuss several important business updates, most notably, the decision to enter into a restructuring support agreement with Highbridge Capital. The transaction allows Gamida Cell to continue as a going concern and to focus on commercializing OMISIRGE, as we develop and deepen our relationships with transplant center partners to increase access to OMISIRGE. Going forward, we will be a leaner, more focused organization and with a more stable financial foundation. Gamida Cell will be positioned to continue delivering this potentially lifesaving cell therapy for patients with hematologic malignancies, including those from diverse backgrounds. I want to once again thank our employees and express our gratitude to our transplant center partners and vendors for their support through this time of uncertainty, as we continue to advance the commercialization of OMISIRGE. We continue to believe in the future of Gamida Cell and are grateful that OMISIRGE is available for the patients that need it the most. Thank you, everyone for joining us on the call today. Operator, back to you.
Operator:
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