SALT LAKE CITY, Feb. 14, 2020 (GLOBE NEWSWIRE) -- Predictive Technology Group (OTC PINK: PRED) (Predictive or The Company), a leader in helping identify barriers that impact womens health and build healthier families through its innovations to deliver personalized medicine, today announced financial results for the fiscal second quarter ended December 31, 2019 and provided a corporate update.
During the fiscal second quarter and subsequent period, we made significant progress toward our goal of becoming a leading developer of diagnostics and therapeutics targeting the womens health and fertility markets, said Bradley C. Robinson, Chief Executive Officer of Predictive Technologies Group. The clear highlight since our last quarterly report is the announcement last month that we entered into a broad molecular diagnostic oncology development collaboration with Atrin Pharmaceuticals to develop diagnostic tools to facilitate improved selection of cancer patients who would most benefit from treatment with Atrins DNA Damage and Response inhibitors and other small molecule ATR inhibitors. This first-of-its-kind collaboration opens significant new markets for our state-of-the-art sequencing capabilities, genomics expertise and companion diagnostics and, we believe, establishes a framework for additional collaborations in the future.
At the same time, market uptake for our recently introduced diagnostic tests, including FertilityDX and ARTguide, is exceeding our expectations, reflecting the significant unmet needs that exist for accurate tests that can help patients and their doctors identify risk factors and barriers to pregnancy and develop tailored fertility treatments.
We did anticipate some softness in our Predictive Biotech business during the quarter, driven by heightened FDA regulation of human cell and tissue products, and the regenerative medicine industry as a whole, which we believe caused a contraction across the market and a year-over-year decline in our Predictive Biotech revenue. Total company revenue for the quarter was $7.3 million, down about $3.4 million from $10.7 million that was reported fiscal second quarter of 2018. Notwithstanding this temporary headwind, however, we see significant value in the Biotech business, and we are the clear industry leader with an excellent safety and quality record of over 100,000 allografts implanted with no adverse events.
Mr. Robinson concluded, As we enter the back half of our fiscal year, we continue to execute on our growth plan, and we believe that our emergence as a womens health leader, together with our anticipated up-listing to the Nasdaq exchange, will unlock significant long-term value for our shareholders.
Fiscal Second Quarter and Recent Highlights
- Announced positive interim beta test results on over 1,000 patients tested with ARTguide at Houston Fertility Institute. Initial test results exceed all expectations and parameters established during research and development and prospective data continue to accumulate regarding pregnancy rates and other treatment outcomes.
- In January, announcement of a molecular diagnostic oncology development collaboration with Atrin Pharmaceuticals to develop diagnostic tools to facilitate improved selection of cancer patients who would most benefit from treatment with Atrins DNA Damage and Response inhibitors and other small molecule ATR inhibitors
- In October, announced the successful U.S. launch of FertilityDX, a comprehensive genetic testing service that identifies barriers to healthy pregnancy and birth, allowing doctors to tailor fertility treatments
- Continued to work to satisfy Nasdaq listing requirements with the goal of up-listing PRED shares to the Nasdaq exchange
Fiscal Second Quarter 2020 Results
Revenues from operations (net) for the three months ended December 31, 2019 totaled $7.3 million, compared with $10.7 million for the three months ended December 31, 2018. The decrease of $3.4 million was primarily due to the decline in sales volume of allograft products as compared to the year-ago period. The decrease in sales volume is due to increased FDA enforcement efforts affecting the regenerative medicine industry as a whole, which has negatively impacted the size of the market for regenerative medicine services and caused a contraction of sales of allograft products.
Cost of goods sold (COGS) for the three months ended December 31, 2019 was $5.8 million (or 79.6% of revenue) compared with $3.1 million (or 28.6% of revenue) for the three months ended December 31, 2018. The increase in COGS is primarily due to $1.9 million in scrap expense and idle capacity costs resulting from efforts to curtail production in response to the trend in allograft sales. In addition, there was a $0.8 million increase in scrap expense due to a decrease in average quality control pass rates for WIP product compared to the three months ended December 31, 2018.
Sales and marketing expenses for the three months ended December 31, 2019 were $3.0 million, compared with $3.4 million for the three months ended December 31, 2018. The decrease in sales and marketing expense was due to lower paid commissions, as a majority of the companys sales and marketing expenses are incurred in the HCT/P segment.
Research and development (R&D) expenses for the three months ended December 31, 2019 were $2.4 million, compared with $1.8 million for the three months ended December 31, 2018, the increase was primarily related to the development of new allograft products and continued development of molecular diagnostic tests.
General and Administrative (G&A) expenses for the three months ended December 31, 2019 were $7.0 million compared with $2.9 million for the three months ended December 31, 2018. Approximately $3.3 million of the increase is due to increased share-based compensation expenses. Personnel costs also increased by $0.6 million.
Amortization and depreciation expenses for the three months ended December 31, 2019 were $2.8 million, compared with $2.0 million for the three months ended December 31, 2018. The increase was driven by growth in the companys intangible asset portfolio arising from business combinations and asset acquisitions.
Other loss for the three months ended December 31, 2019 increased to $16.5 million from $0.6 million for the three months ended December 31, 2018. The increase was primarily driven by the recognition of an impairment charge of $15.9 million on our equity method investment in Juneau Biosciences, LLC as part of a broader impairment review triggered by the recent decline in the Company's stock price.
The net loss attributable to controlling interest for the three months ended December 31, 2019 was $26.0 million, or $0.09 per share, versus a net loss attributable to controlling interest for the three months ended December 31, 2018 of $2.3 million, or $0.01 per share.
About Predictive Technology Group, Inc.
Predictive Technology Group aims to revolutionize and personalize precision patient care. The Companys entities harness predictive gene-based analytics to develop genetic and molecular diagnostic tests, as well as companion therapeutics, in order to support a patient from diagnosis through treatment. The Companies tests and products empower clinicians to provide their patients with the highest level of care. Predictives subsidiaries include Predictive Laboratories, Predictive Biotech and Predictive Therapeutics. For more information, visit www.predtechgroup.com.
To the extent any statements made in this release contain information that is not historical, these statements are essentially forward-looking and are subject to risks and uncertainties, including the difficulty of predicting FDA approvals, acceptance and demand for human cell and tissue products and other pharmaceutical products, the impact of competitive products and pricing, new product development and launch, reliance on key strategic alliances, availability of raw materials, availability of additional intellectual property rights, availability of future financing sources, the regulatory environment, and other risks the Company may identify from time to time in the future.
For more information, visit www.predtechgroup.com or contact Investor Relations:
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