Renalytix Reports Financial Results for Q3 FY2024
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LONDON and NEW YORK, May 15, 2024 - Renalytix plc (NASDAQ: RNLX) (LSE: RENX), an artificial intelligence-enabled in vitro diagnostics company, focused on optimizing clinical management of kidney disease to drive improved patient outcomes and advance value-based care, today reported financial results for the fiscal third quarter ended March 31, 2024.
The Company made continued progress towards commercial adoption with inclusion of KidneyIntelX in clinical guidelines, issuance of a Medicare coverage draft, performance of new direct to physician sales force, April launch of U.S. Food and Drug Administration ("FDA") De Novo authorized kidneyintelX.dkd, and release of new real-world outcomes evidence. Optimization of shareholder value continues with year over year significant expense reductions, completion of equity financing, and the initiation of a strategic sale process.
Highlights include:
| • | KidneyIntelX included as only biomarker test for prognostic risk assessment in landmark update of international clinical practice guidelines ( https://kdigo.org/guidelines/ ) |
| • | Medicare Local Coverage Determination draft issued for FDA-authorized kidneyintelX.dkd by Medicare contractor National Government Services (NGS) with final issuance expected in the near term |
| • | Formal launch of the FDA-authorized kidneyintelX.dkd in April 2024 |
| • | Customer experience improvements implemented including simplified physician order requisition, increased patient access to national blood draw network, revamped marketing and education materials |
| • | New primary care sales force completed its first quarter of operations with a 33% quarter over quarter increase in independent primary care physician test order volume during the three months ended March 31, 2024 |
| • | Appointed Howard Doran to president concurrent with organizational changes to focus to accelerating sales and marketing of FDA-authorized kidneyintelX.dkd test |
| • | Formal strategic sale process initiated with multiple potential acquirers now in discussions |
| • | Completed common stock equity financings raising aggregate gross proceeds of $13.5 million (including post-period activity) |
| • | Continued operating expense reduction with 50% year-over-year reduction in head count and approximately 40% total lower operating costs |
| • | With FDA and clinical guidelines achieved, process initiated for potential ex-U.S. partners to improve non-dilutive company cash position and expand incremental sales opportunities |
| • | U.S. government added the FDA-authorized kidneyintelX.dkd to 10-year Government-wide Acquisition Contract (GWAC) at a price of $950 per reportable result. The contract covers tests provided by any government healthcare facility |
| • | Total volume of 806 tests during the quarter, of which 82% were billable |
Third Quarter 2024 Financial Results
During the three months ended March 31, 2024, the Company recognized $0.5 million of revenue, compared to $0.7 million for the three months ended March 31, 2023. Cost of revenue for the three months ended March 31, 2024 and 2023, was $0.6 million.
Operating expenses for the three months ended March 31, 2024 were $6.5 million, compared to $11.0 million during the prior year period. Operating cash burn in the fiscal third quarter was $4.9 million, nearly 40% lower than the fiscal second quarter and a 50% reduction from the year ago period.
Within operating expenses, research and development expenses were $2.2 million for the three months ended March 31, 2024, decreasing by $1.7 million from $3.9 million for the three months ended March 31, 2023. The decrease was attributable to a $1.3 million decrease related to external R&D projects and studies with Mount Sinai, Wake Forest and Joslin, a decrease of $0.3 million in compensation and related benefits, and a $0.1 million decrease in other operating expenses.
General and administrative expenses were $3.9 million for the three months ended March 31, 2024, decreasing by $3.2 million from $7.1 million for the three months ended March 31, 2023. The decrease was driven by even further cost cutting measures, which resulted in a $2.6 million decrease in compensation and related benefits, a $0.3 million decrease in other operating expenses, and a $0.3 million decrease in insurance costs.
Net loss was $7.7 million for the three months ended March 31, 2024, compared with $12.1 million for the prior year period.
Cash and cash equivalents totaled $4.7 million as of March 31, 2024.
The Company will host a corresponding conference call and live webcast today to discuss the financial results and key topics including business strategy, partnerships and regulatory and reimbursement processes, at 8:30 a.m. EDT / 1:30 p.m. BST.
Conference Call Details:
Webcast Registration link: https://edge.media-server.com/mmc/p/k57ufszy
RENALYTIX PLC
Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
| For the Three Months Ended March 31, | For the Nine Months Ended March 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands, except share data) | 2024 | 2023 | 2024 | 2023 | ||||||||
| Revenue | $ | 535 | $ | 724 | $ | 1,703 | $ | 2,885 | ||||
| Cost of revenue | 601 | 603 | 1,583 | 2,010 | ||||||||
| Gross profit (loss) | (66 | ) | 121 | 120 | 875 | |||||||
| Operating expenses: | ||||||||||||
| Research and development | 2,216 | 3,943 | 8,228 | 11,026 | ||||||||
| General and administrative | 3,854 | 7,095 | 15,252 | 22,155 | ||||||||
| Impairment loss on property, equipment and other long-lived assets | 417 | - | 723 | - | ||||||||
| Performance of contract liability to affiliate | - | - | - | (19 | ) | |||||||
| Total operating expenses | 6,487 | 11,038 | 24,203 | 33,162 | ||||||||
| Loss from operations | (6,553 | ) | (10,917 | ) | (24,083 | ) | (32,287 | ) | ||||
| Equity in net losses of affiliate | - | - | - | (9 | ) | |||||||
| Foreign currency gain (loss), net | 15 | (461 | ) | 215 | 238 | |||||||
| Fair value adjustment to VericiDx investment | 40 | 129 | (205 | ) | (1,070 | ) | ||||||
| Fair value adjustment to convertible notes | (1,196 | ) | (1,168 | ) | (2,517 | ) | (1,898 | ) | ||||
| Other (expense) income, net | (49 | ) | 310 | 212 | 521 | |||||||
| Net loss before income taxes | (7,743 | ) | (12,107 | ) | (26,378 | ) | (34,505 | ) | ||||
| Income tax (expense) benefit | - | 1 | (4 | ) | 2 | |||||||
| Net loss | $ | (7,743 | ) | $ | (12,106 | ) | $ | (26,382 | ) | $ | (34,503 | ) |
| Net loss per ordinary share-basic | $ | (0.08 | ) | $ | (0.14 | ) | $ | (0.27 | ) | $ | (0.44 | ) |
| Net loss per ordinary share-diluted | $ | (0.08 | ) | $ | (0.14 | ) | $ | (0.27 | ) | $ | (0.44 | ) |
| Weighted average ordinary shares-basic | 97,654,961 | 85,560,783 | 98,184,650 | 78,366,984 | ||||||||
| Weighted average ordinary shares-diluted | 97,654,961 | 85,560,783 | 98,184,650 | 78,366,984 | ||||||||
| Other comprehensive income (loss): | ||||||||||||
| Changes in the fair value of the convertible notes | $ | 155 | $ | 593 | $ | 230 | $ | 70 | ||||
| Foreign exchange translation adjustment | 21 | 505 | (338 | ) | 6 | |||||||
| Comprehensive loss | $ | (7,567 | ) | $ | (11,008 | ) | $ | (26,490 | ) | $ | (34,427 | ) |
| RENALYTIX PLC | ||||||||||||
| CONSOLIDATED BALANCE SHEETS (Unaudited) | ||||||||||||
| (in thousands, except share and per share data) | March 31, 2024 | June 30, 2023 | ||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 4,704 | $ | 24,682 | ||||||||
| Accounts receivable | 554 | 776 | ||||||||||
| Prepaid expenses and other current assets | 1,082 | 1,424 | ||||||||||
| Total current assets | 6,340 | 26,882 | ||||||||||
| Property and equipment, net | 230 | 1,027 | ||||||||||
| Right of Use Asset | - | 159 | ||||||||||
| Investment in VericiDx | 1,060 | 1,460 | ||||||||||
| Other Assets | 1,139 | 1,101 | ||||||||||
| Total assets | $ | 8,769 | $ | 30,629 | ||||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 2,101 | $ | 1,485 | ||||||||
| Accounts payable - related party | 3,027 | 1,451 | ||||||||||
| Accrued expenses and other current liabilities | 4,273 | 6,644 | ||||||||||
| Accrued expenses - related party | 1,060 | 1,963 | ||||||||||
| Current lease liability | 78 | 130 | ||||||||||
| Convertible notes-current | 4,449 | 4,463 | ||||||||||
| Total current liabilities | 14,988 | 16,136 | ||||||||||
| Convertible notes-noncurrent | 4,892 | 7,485 | ||||||||||
| Noncurrent lease liability | - | 41 | ||||||||||
| Total liabilities | 19,880 | 23,662 | ||||||||||
| Commitments and contingencies (Note 10) | ||||||||||||
| Shareholders' equity: | ||||||||||||
| Ordinary shares, £0.0025 par value per share: 128,042,743 shares authorized; 119,916,187 and 93,781,478 shares issued and outstanding at March 31, 2024 and June 30, 2023, respectively | 368 | 286 | ||||||||||
| Additional paid-in capital | 194,786 | 186,456 | ||||||||||
| Accumulated other comprehensive loss | (1,558 | ) | (1,450 | ) | ||||||||
| Accumulated deficit | (204,707 | ) | (178,325 | ) | ||||||||
| Total shareholders' (deficit) equity | (11,111 | ) | 6,967 | |||||||||
| Total liabilities and shareholders' (deficit) equity | $ | 8,769 | $ | 30,629 | ||||||||
| RENALYTIX PLC | ||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||||||
| For the Nine Months Ended March 31, | ||||||||||||
| (in thousands) | 2024 | 2023 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net loss | $ | (26,382 | ) | $ | (34,503 | ) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities:
| For the Three Months Ended March 31, | For the Nine Months Ended March 31, | |||
|---|---|---|---|---|
| (in thousands, except share data) | 2024 | 2023 | 2024 | 2023 |
| Depreciation and amortization | 304 | 388 | ||
| Impairment loss on property, equipment and other long-lived assets | 723 | - | ||
| Stock-based compensation | 1,291 | 2,358 | ||
| Equity in losses of affiliate | - | 9 | ||
| Reduction of Kantaro liability | - | (55 | ) | |
| Fair value adjustment to VericiDx investment | 205 | 1,070 | ||
| Unrealized foreign exchange loss | - | 327 | ||
| Realized loss on sale of ordinary shares in VericiDx | 94 | - | ||
| Realized foreign exchange gain | (144 | ) | - | |
| Fair value adjustment to convertible debt, net interest paid | 2,255 | 1,898 | ||
| Non cash lease expense | 67 | 78 | ||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | 222 | 154 | ||
| Prepaid expenses and other current assets | 310 | (77 | ) | |
| Accounts payable | 617 | 358 | ||
| Accounts payable - related party | 1,576 | 370 | ||
| Accrued expenses and other current liabilities | (2,519 | ) | 2,704 | |
| Accrued expenses - related party | (904 | ) | (485 | ) |
| Deferred revenue | - | (46 | ) | |
| Net cash used in operating activities | (22,285 | ) | (25,452 | ) |
| Cash flows from investing activities: | ||||
| Purchase of equipment | (3 | ) | - | |
| Payment for long term deferred expense | - | (59 | ) | |
| Net cash used in investing activities | (3 | ) | (59 | ) |
| Cash flows from financing activities: | ||||
| Payment of convertible notes principal | (1,660 | ) | (3,262 | ) |
| Proceeds from issuance of ordinary shares in Private Placement | 5,072 | 20,296 | ||
| Payment of offering costs | (1,044 | ) | (666 | ) |
| Proceeds from purchase of ordinary shares under employee share purchase plan | 93 | 116 | ||
| Net cash provided by financing activities | 2,461 | 16,484 | ||
| Effect of exchange rate changes on cash | (151 | ) | 721 | |
| Net decrease in cash and cash equivalents | (19,978 | ) | (8,306 | ) |
| Cash and cash equivalents, beginning of period | 24,682 | 41,333 | ||
| Cash and cash equivalents, end of period | $ | 4,704 | $ | 33,027 |
| Supplemental noncash investing and financing activities: | ||||
| Cash paid for interest on convertible debt | $ | 249 | $ | - |
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