BOTHELL, Wash.—Helix BioMedix Inc., a developer of bioactive peptides, announced financial results for the company's third quarter 2010 (3Q10) ended Sept. 30, 2010.
3Q10 Highlights include:
- Revenue of approximately $94,000 for 3Q10, compared to approximately $98,000 for the same period a year ago
- Record revenue of approximately $494,000 for the first nine months of 2010, an increase of 53 percent compared to approximately $324,000 in the first nine months of 2009
- Net loss was approximately $1.1 million for 3Q10, compared to a net loss of approximately $933,000 for the 3Q09
- License fee revenue increased 66 percent compared to 3Q09
- On July 1, 2010 the company acquired a 30-percent membership interest in NuGlow Cosmaceuticals LLC (NuGlow) and signed a three-year supply agreement with NuGlow
- Received the first order from NuGlow for delivery in the 4Q10 at levels significantly above contractual minimums
3Q10 Results
Revenue for 3Q10 was approximately $94,000, compared to approximately $98,000 for 3Q09 and approximately $330,000 for 2Q10. For the first nine months of 2010, revenue was approximately $494,000, compared to approximately $324,000 for the first nine months of 2009. The 53-percent increase in revenue through the first nine months of 2010 reflects a significant increase in licensing revenue and growth in international consumer product sales through the company's new distribution partner in Asia.
Gross margin for 3Q10 was 69 percent, compared to 46 percent in the third quarter a year ago and 62 percent in 2Q10. The year-over-year improvement in gross margin reflects a greater percentage of total revenue from license fees, which generate higher margin compared to peptide and consumer product sales revenue.
"The third quarter began with a unique opportunity to acquire an interest in NuGlow, whose orders under a new three-year supply agreement further contribute to our anticipated record revenues for 2010," stated R. Stephen Beatty, president and CEO of Helix BioMedix. "As expected, this quarter's revenue was lower than the second quarter due, in part, to the bi-annual royalty payment schedule of a key customer, which is received in the second and fourth quarters of each year. However, during the third quarter, our higher margin license revenue continued to grow, increasing almost three-fold year-to-date. This reflects the growing adoption of our peptides in a broad range of consumer products marketed by some of the leading global brands. In addition to our success in licensing, peptide product sales also continued to increase year-to-date as a result of the solid customer base we established in 2009. In particular, product sales benefitted from the successful introduction of Helix-branded Cerakine™ products in the growing Asian markets. Also during the quarter, we received our first order under the NuGlow supply agreement, which should be reflected in our fourth quarter results. The order is well above the contractual minimums and includes seven different products. We believe this serves as a strong indication of the future opportunities under this agreement."
Net loss for 3Q10 was approximately $1.1 million, or $0.04 per share, compared to a net loss of approximately $933,000, or $0.04 per share, for 3Q09 and approximately $942,000, or $0.04 per share, for 2Q10. The year-over-year increase in net loss in the third quarter of 2010 was primarily due to the increases in operating expenses and interest expense related to the company's outstanding convertible notes payable.
As of Sept. 30, 2010, cash and cash equivalents was approximately $2.0 million as compared to approximately $3.0 million as of June 30, 2010.
Beatty concluded: "We are excited by the further advancement of Helix BioMedix as our licensed partners continue to aggressively market our technologies and our efforts to increase peptide and consumer product sales are progressing. Our international product sales are beginning to make a meaningful contribution to revenues, and we continue to evaluate additional partner opportunities in other global markets. We also continue to make progress on our clinical trials, of which we completed initial studies on several molecules targeting large market opportunities. We remain on track for a strong fourth quarter, record revenue for 2010 and additional growth in 2011 based on the anticipated continued success in all of our product lines and continued increases in license revenue generated by our peptide portfolio."