• Total Revenue: $798,000, a decline of $2.1 million from $2.9 million in the prior year.
• Clinical Laboratory Service Revenue: Decreased by $1.85 million due to the conclusion of the COVID surveillance testing contract.
• Gross Profit: $245,000 or 31%, down from $1.3 million or 44% in the prior year.
• Total Operating Expenses: Decreased by $500,000 to $3.6 million from $4.1 million in the prior year.
• Operating Loss: $3.3 million compared to $2.9 million in the prior year.
• Adjusted EBITDA: Negative $3.2 million, a decrease of $1.1 million from negative $2.1 million in the prior year.
• Cash and Cash Equivalents: $10.4 million as of June 30, up from $7.2 million on September 30, 2023.
• Average Monthly Cash Burn: $1.3 million for the third quarter, up from $500,000 in the prior year.
• Accounts Receivable: $531,000 as of June 30, with the majority collected after the quarter ended.

• Warning! GuruFocus has detected 6 Warning Signs with APDN.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Applied DNA Sciences Inc (NASDAQ:APDN) has strengthened its balance sheet with a public offering, increasing cash and cash equivalents to $10.4 million as of June 30, 2024.
• The company has received full New York State Department of Health approval for a laboratory-developed test and launched TR8 PGx, a pharmacogenomic testing service.
• A multiyear agreement with Indus Group, a key global cotton apparel manufacturer, potentially expands the addressable market for Applied DNA's cotton tagging services.
• The company is on track to complete its GMP facility for enzymatic DNA IVT template production by September 30, 2024, which is expected to drive future revenue growth.
• Applied DNA Sciences Inc (NASDAQ:APDN) is being onboarded as a validated GMP vendor by two customers, with plans to supply IVT templates for mRNA clinical trial materials in early 2025.

Negative Points

• Total revenues for the third quarter of fiscal 2024 declined by $2.1 million year-over-year, primarily due to the conclusion of a COVID surveillance testing contract.
• Gross profit decreased significantly to $245,000 from $1.3 million in the prior year, largely due to reduced COVID-19 testing volumes.
• The company reported an operating loss of $3.3 million for the third quarter, an increase from $2.9 million in the prior fiscal period.
• Applied DNA Sciences Inc (NASDAQ:APDN) has a substantial doubt of a going concern, dependent on generating revenues or raising capital.
• The company is not in compliance with Nasdaq's minimum bid price requirements, with a deadline to regain compliance by January 8, 2025.

Q & A Highlights

Q: How many customers for GMP manufacturing products do you expect to have by the end of 2024, and are there any customers beyond the two approved and third pending in conversations? What is the expected test volume for TR8 pharmacogenomic testing services in the coming quarters? A: We are launching our GMP facility at the end of fiscal 2024, so we don't expect to have signed contracts at launch. However, we have been through the evaluation process with two large customers, with GMP manufacturing rounds expected in early calendar year 2025. For pharmacogenomics, we are targeting New York State initially and expect to build volume through concierge physician practices, with plans to expand to larger enterprise customers by the end of the first quarter of '25.

Q: What is the overall picture of how quickly the uptake of GMP customers is expected beyond 2024? A: We have verbal commitments for about half of our GMP capacity in early calendar year 2025. We have a robust sales funnel for the rest of that capacity. It's not about the number of customers but the size and therapeutic modality of their mRNA orders.

Q: Are there any other states you are targeting for pharmacogenomic testing, and do they require a similar approval process? A: We are completing registration to sell in 47 additional states. No additional validation is required due to the rigorous New York State validation process we completed, which took over a year.

Q: Can you provide more details on the pharmacogenomic testing service and its market potential? A: We are the first commercial entity in New York State offering a broad-based panel exploring 130 alleles. We are starting with concierge physician practices to implement precision prescribing, with plans to expand to larger enterprise customers, including hospital networks and self-insured companies. Our capacity can support over $25 million in annual revenue, and it is scalable.

Q: What are the key developments in the commercialization of Linea IVT templates and the Linea IVT platform? A: We are on schedule for GMP startup by September 30, 2024, and have completed scale-up of our Linea RNA polymerase enzyme. We have completed validation studies with two customers and are being onboarded as a validated GMP vendor. We expect to support them with IVT templates for mRNA clinical trial materials in early 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.