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Analyzing the Financial Performance of PolarityTE

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Top line

In the second quarter, PolarityTE (COOL) earned $3,000 in revenue from the sales of the company’s core product, SkinTE. The company’s cost of sales was $1,000 in this period. 

In comparison, the company didn’t generate any revenue in the second quarter of 2017. In 2018, 2019, and 2020, analysts expect PolarityTE to generate revenue of $1.1 million, $24.2 million, and $179 million, respectively.

Operating expenses

In the second quarter, PolarityTE incurred R&D (research and development) expenses of $5.6 million. It didn’t incur any R&D expenses in the second quarter of 2017. Its R&D expenses in the second quarter included stock-based compensation of $1.5 million, salaries of ~$1.7 million, and medical studies of ~$0.3 million. Its general and administrative expenses increased marginally from $5.7 million in the second quarter of 2017 to $5.9 million in the second quarter of 2018. This increase was primarily the result of higher stock-based compensation.

PolarityTE’s total operating expenses were $11.6 million in the second quarter compared to $110.4 million in the second quarter of 2017. Its significantly higher total operating expenses in the second quarter of 2017 were attributable to the $104.7 million it spent on the acquisition of intellectual property during the period.

Bottom line

PolarityTE’s interest income increased from $3,000 in the second quarter of 2017 to $18,000 in the second quarter of 2018. In the second quarter, PolarityTE recorded a loss of $520,000 on the extinguishment of warrant liability and a gain of $440,000 from a change in the fair value of its derivatives.

PolarityTE’s net income was -$19.2 million in the second quarter compared to its net income of -$110.4 million in the second quarter of 2017. This translated into a net income per share of -$1.47 in the first quarter compared to -$23.50 in the previous year’s period.

In the next article, we’ll take a look at PolarityTE’s product pipeline.

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