KOOL stock rocketed 33% higher after the company filed a form 8-K on September 6, 2019, for a distribution agreement for its X-Series product.
Cesca Therapeutics and ThermoGenesis filed a Form 8-K on September 6, 2019, with the SEC announcing the signing of an exclusive, global distribution agreement in which the company will supply its X-Series cell processing products to a leading, major life sciences distributor who will market them globally. The X-Series products are major components of the company’s CAR-TXpress platform, a semi-automated, closed cellular processing platform used for high efficiency cell purification and cell washing. The X-Series products, when used in combination with the company’s proprietary buoyancy activated cell sorting technology, can be applied for both research and commercial manufacturing of a large variety of cell-based therapeutics, including chimeric antigen receptor-T cells. Under the renewable, five-year agreement, the global distributor will be responsible for marketing the X-Series products to customers, worldwide, including existing X-Series customers, with the exception of China for the first two years. The company will receive a $2M upfront distribution fee, and future market support for granting the exclusive rights.
On August 13, 2019, Cesca Therapeutics announced improved financial and operating results for the second quarter ended June 30, 2019 and provided a corporate update.
The Company set up a key objective at the beginning of 2019, to achieve positive cash flow from operations before the end of this calendar year. Plans to execute and achieve this goal included a series of new product launches which expanded the revenue base, accompanied by aggressive measures to reduce costs. Over the second quarter, we made significant progress in achieving its goal, as the Company reported revenue of $4.3 million, an increase of 115% as compared to the same period in the prior year. The increase in revenue along with cost cutting measures previously implemented, resulted in the Company being adjusted EBITDA positive for the three months ended June 30, 2019.
Second Quarter Achievements:
- Completed a strategic agreement with Cordlife Group Limited, owner of the largest network of cord blood banks in Asia, to provide ThermoGenesis’ next-generation AXP® II system, for rapid processing of cord blood units, to Cordlife’s India processing facility.
- Announced registration and availability of ThermoGenesis’ AXP® II in Thailand and Canada, extending the Company’s footprint in Southeast Asia and North America.
- Completed registration of ThermoGenesis’ Point-of-Care PXP® system in Thailand and Canada.
- Increased adoption of ThermoGenesis’ CAR-TXpress™ platform technology to a total of 20+ institutional customers.
- Introduced ThermoGenesis’ enhanced X-MINI® CD3 Selection Kit, broadening the range of research applications and potential users for the product – allowing customers to select CD3+ cells from either human peripheral blood mononuclear cells or whole blood.
- Net revenues up 115%; gross profit increased significantly.
- Regained Nasdaq listing compliance.
“The ThermoGenesis team is committed to improving and broadening the scope of its fully integrated cellular processing solutions for the cell-based therapy market and the breadth of our achievements for the second quarter directly reflect the results of these ongoing efforts,” said Chris Xu, PhD, Chief Executive Officer of Cesca. “In particular; Health Canada approval to market the AXP® II, following on the heels of the agency’s approval of the PXP® system earlier this year, is a testament of the strength and importance of our technology and allows us to penetrate this important geographic region. Outside of North America, we continue to increase our visibility, evidenced by our strategic agreement with Cordlife in India and our expansion into Thailand. An uptick in the number of institutional customers utilizing our CAR-TXpress platform technology, a key focus area of our potential future growth, is also highly encouraging. We will continue to seek partnerships to distribute our key products globally and will stay focused with our strategy to achieve operational cash flow positive before the end of the year.”
Jeff Cauble, Cesca’s Vice President of Finance and Principal Accounting Officer, added, “We continue to reap the benefits of an upward trend in product sales, coupled with a streamlined organization and the reduction of overhead costs due to last year’s reorganization. Revenues during the second quarter of 2019 increased by 115% as compared to the same period last year and the Company’s gross profit jumped significantly, to 45%. As a result, adjusted EBITDA, the metric the Company uses to best approximate operational cash flow, was positive for the second quarter of 2019.”
Net revenues for the three months ended June 30, 2019 were $4.3 million compared to $2.0 million for the second quarter in 2018, an increase of $2.3 million or 115% year over year. The increase was driven primarily by AXP and CAR-TXpress sales. The AXP revenue increase was driven by approximately 550 cases sold to a distributor in China as compared to no cases sold to that distributor in the quarter ended June 30, 2018. Additionally, approximately 450 more cases were sold to domestic end users in the current quarter. CAR-TXpress sales increased due to relaunching the product line in the second half of 2018.
On August 14, 2019, H.C. Wainwright analyst Swayampakula Ramakanth raised his price target for Cesca Therapeutics to $6.50 from $1 and reiterates a Buy rating on the shares following the company’s Q2 results. Strong product sales are driving growth and getting Cesca closer to profitability, Ramakanth tells investors in a research note. Further, the analyst continues to believe that CARTXpress has “great potential” in accelerating the preparation of T cell products and could become a “major value driver” in the future.
The daily chart looks like a gap and trap setup. Let’s look at the 30-minute chart for more details.
It looks like a gap and trap setup. Do not chase KOOL stock higher. Wait for it to come in and then consolidate before taking a swing long entry.
We are not adding KOOL stock to the long-term buy and hold GST portfolio at this time because of the gap and trap pattern.
Disclosure: We do not hold any position in KOOL stock.