SOURCE: PURE Bioscience, Inc.

PURE Bioscience, Inc.

June 11, 2015 16:02 ET

PURE Bioscience Reports 2015 Fiscal Third Quarter and Nine-Month Financial Results

Prepares to Resubmit Food Contact Notification With FDA for SDC Antimicrobial Use in Raw Poultry Processing

SAN DIEGO, CA--(Marketwired - Jun 11, 2015) - PURE Bioscience, Inc. (OTCQB: PURE), creator of the patented silver dihydrogen citrate (SDC) antimicrobial, today reported financial results for the fiscal three and nine-month periods ended April 30, 2015.

Update - Fiscal Q3 2015 to Present
Continued advancement of multi-prong path to build food-safety-solutions revenue with (a) PURE® Hard Surface disinfectant and (b) product development of SDC as a direct food contact processing aid:

Food Processors/Manufacturers
Active evaluation/testing/pilot supply in 35+ companies (up from 20+ last quarter). Ongoing discussions with established distributors to expand reach.

  • Building diversified revenue in this channel with over a dozen national customers (poultry, meats, produce, bakery, pet food, tortillas).
  • Distributors actively expanding adoption in their established customer base of more than 600 food processing plants.
  • Expanding adoption by successfully leveraging PURE's proven superior efficacy at addressing increasingly persistent Listeria contamination in food processing plants, as documented in the Q2 White Paper.

Restaurants
Continuing to build market reach into quick service restaurants (QSRs) and casual dining restaurant chains.

  • Extending fiscal Q2 launch of phased U.S. national sales rollout with SUBWAY® Restaurants*:
    • Market-by-market sales effort with development agents/multi-unit operators.
      • 15 total new distribution points gained in the SUBWAY® network, providing initial market reach into 4,900 stores, or 17% of SUBWAY's® U.S. system.
      • Gained commitments from major California and Mid-Atlantic markets to bring PURE into their distribution network -- representing potential for an additional market reach of 2,200 stores (8% of system).
    • QSR revenues, while still modest, have doubled in fiscal Q3 when compared with fiscal Q2 revenues.
    • Expanding in-store applications: Recently gained approval for use of PURE Hard Surface in ice machines.
  • Since achieving >93% reductions of bacteria in earlier on-site testing, now conducting late phase testing with two casual dining restaurant chains, each managing more than 1,600 restaurants.
  • Continued on-going evaluation with additional casual dining and QSR chains.

* SUBWAY® is a registered trademark of Doctor's Associates, Inc.

Direct Food Contact Processing Aid
Poultry (FDA) -- As previously announced, following constructive discussions with the FDA regarding PURE's new test data, later this month PURE intends to resubmit its Food Contact Notification (FCN) for the use of SDC as a raw poultry processing aid. 

  • PURE believes that we have adequately addressed the FDA's prior issues through additional testing indicating silver residue levels of treated poultry with SDC to be virtually non-detectable and well below existing guidelines. 
  • This builds upon prior SDC test results indicating the ability to reduce Salmonella below detectable levels.
  • The FDA's FCN review period is 120 days from submission. 

Poultry (USDA) -- Upon the FDA's granting of the FCN, PURE intends to immediately submit the FCN to the Food Safety and Inspection Service (FSIS) of the USDA for a new technology review. 

  • As part of the FSIS review process, PURE may be required to conduct in-plant process validation and optimization trials with the authorization of the USDA. 
    • PURE intends to provide additional updates as the regulatory review and the potential approval processes advance.

Produce (FDA) -- Based on discussions with the FDA, PURE intends to also resubmit its produce FCN. PURE is currently conducting additional produce testing for silver residue levels for the application of SDC as a processing aid for produce.

  • If the new test results continue to adequately address the prior FDA issues, PURE intends to resubmit its FCN for produce during the summer.
    • The FCN review period is 120 days from submission, after which, if there are no concerns from the FDA, the FCN automatically becomes effective. 

Meats (FDA/USDA) -- PURE continues its product development efforts for the application of SDC as processing aid/intervention for beef and pork. Pending positive test results, PURE expects to file the FCN for beef and pork thereafter.

Cruise Lines
PURE and Intercon Chemical Company (the exclusively licensed manufacturer of SDC-based products) continue to collaborate on Intercon's direct sales initiative for the commercial adoption of PURE Hard Surface disinfectant in the cruise line industry. This market segment is an important technology validation of PURE's SDC antimicrobial to prevent and combat Norovirus and other pathogens.

  • Intercon has shipped PURE Hard Surface disinfectant into a major international cruise line for on-ship pilot commercial testing for its U.S.-based fleet.
  • Intercon intends to commence on-ship testing of PURE Hard Surface disinfectant with two additional cruise lines during calendar 2015.
  • PURE derives modest royalty income from product sales made by Intercon of PURE Hard Surface disinfectant.

Summary of Results of Operations
Revenues for the fiscal Q3 2015 were $109,000 compared with prior year fiscal Q3 revenues of $261,000. The revenue mix attributable to food safety solutions increased over prior fiscal quarters to approximately 50% of total revenues in fiscal Q3 2015, a sequential increase from less than 10% of total revenues from fiscal Q2 2015. Total operating costs and expenses, excluding cost of goods sold, share-based compensation, other share-based expenses, and restructuring costs, for the fiscal Q3 of 2015 and 2014, were $1.4 million and $1.6 million, respectively. The fiscal Q3 2015 net loss was ($2.1) million compared with ($2.1) million for fiscal Q3 2014. Our adjusted net loss, adjusted for significant items, for fiscal Q3 2015 and fiscal Q3 2014 was ($1.3) million and ($1.3) million, respectively.

Revenues for the nine months ended April 30, 2015 were $499,000, an increase of 20% as compared with revenues of $417,000 for the nine months ended April 30, 2014. Total operating costs and expenses, excluding cost of goods sold, share-based compensation, other share-based expenses, and restructuring costs, were $4.3 million and $4.3 million, respectively. The net loss for the nine months ended April 30, 2015 was $(5.8) million, or $(0.15) per share, compared with a net loss of $(8.4) million, or $(0.34) per share, in the nine months ended April 30, 2014. The adjusted net loss for the nine months ended April 30, 2015 was $(4.0) million compared with prior year adjusted net loss of $(3.8) million. Cash and cash equivalents, reported as of April 30, 2015, was $2.5 million, a decrease of $1.4 million over reported second quarter of $3.9 million.

Calendar 2015 Strategy and Goals 
Commercialization of PURE Hard Surface is active in three market segments -- food service (testing and sales), food manufacturing/processing (testing and sales), and cruise lines (testing). 

Goals for this calendar year are to continue to:

  • Secure customer adoption in food safety with 2+ national restaurant chains and 10+ national food processors;
  • Leverage outsourcing of operations and supply chain;
  • Subject to updated feedback from the FDA, secure FDA and USDA authorization for use of SDC as a direct food contact/processing aid for poultry, produce, beef and pork; and
  • Continue to out-license PURE distribution and SDC applications to non-core markets.

Hank R. Lambert, Chief Executive Officer, said that, "We continue to build upon the fact that our SDC-based products consistently prove to be the best solution for reducing the risks of food contamination and food borne illness outbreaks. While slower than we had hoped, food safety revenues are gaining momentum, and we are building awareness for PURE as a brand protection solution in the food industry.

"We are making meaningful strides toward achievement of our goals -- gaining commercial traction in food safety, aggressively pursuing FDA/USDA authorizations for direct food contact, and continuing to license SDC distribution and/or technology for non-core applications," continued Lambert.

"As a result of our new test data and our ongoing and most recent discussions with the FDA, we are preparing to resubmit our Food Contact Notification with the FDA for SDC antimicrobial use in raw poultry processing. The results of recent testing indicate a significant reduction of silver residues on poultry treated with SDC to nearly non-detectable levels. We would not resubmit the application unless we believe these data adequately address the FDA's prior issues and meets or exceeds the FDA guidelines. We look forward to the completion of the regulatory review and approval process in order to bring SDC to market as an effective intervention component of an integrated food safety system for poultry processing," Lambert concluded.

2015 Fiscal Q3 Financial Results Conference Call
The Company will host an investor conference call on Thursday, June 11, 2015 at 1:30pm PDT (4:30pm EDT).

The Participant Dial-In Number for the conference call is 1-631-982-4565. Participants should dial in to the call at least five minutes before 1:30pm PDT (4:30pm EDT) on June 11, 2015. The call can also be accessed "live" online at http://public.viavid.com/index.php?id=114860.

A replay of the webcast will be available on the Company's website (http://www.purebio.com/investors/events-presentations/). Also, a replay of the conference call will be available by dialing 1-877-870-5176 (international participants dial 1-858-384-5517) starting June 11, 2015, at 7:30pm EDT through June 25, 2015 at 11:59 pm EDT. Please use PIN Number 906110.

About PURE Bioscience, Inc.
PURE Bioscience, Inc. is focused on developing and commercializing our proprietary antimicrobial products primarily in the food safety arena -- providing solutions to the health and environmental challenges of pathogen and hygienic control. Our technology platform is based on patented stabilized ionic silver, and our initial products contain silver dihydrogen citrate, or SDC. SDC is a broad-spectrum, non-toxic antimicrobial agent, which offers 24-hour residual protection and formulates well with other compounds. As a platform technology, SDC is distinguished from existing products in the marketplace because of its superior efficacy, reduced toxicity and the inability of bacteria to form a resistance to it. PURE is headquartered in El Cajon, California (San Diego metropolitan area). Additional information on PURE is available at http://www.purebio.com/

Forward-looking Statements
Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the Company's cash position and liquidity requirements; the Company's failure to implement or otherwise achieve the benefits of its proposed business initiatives and plans; acceptance of the Company's current and future products and services in the marketplace, including acceptance of the Company's PURE Hard Surface disinfectant by SUBWAY® franchisees; and the ability to convert successful evaluations into customer orders; the ability of the Company to develop effective new products and receive required regulatory approvals for such products, including the required data and regulatory approvals required to use its SDC-based technology as a direct food contact processing aid in raw poultry processing; competitive factors; dependence upon third-party vendors, including to manufacture its products; and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission, including Forms 10-Q and 10-K. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release. 

                       
PURE Bioscience, Inc.  
Condensed Consolidated Statements of Operations  
(Unaudited)  
                       
  Three months ended     Nine months ended  
  April 30,     April 30,  
  2015     2014     2015     2014  
Net product sales $ 109,000     $ 261,000     $ 499,000     $ 417,000  
Operating costs and expenses                              
  Cost of goods sold   65,000       89,000       221,000       145,000  
  Selling, general and administrative   1,207,000       1,338,000       3,731,000       3,506,000  
  Research and development   171,000       248,000       562,000       750,000  
  Share-based compensation   766,000       770,000       1,751,000       2,191,000  
  Other share-based expenses   -       -       -       308,000  
  Restructuring costs   -       -       -       2,754,000  
Total operating costs and expenses   2,209,000       2,445,000       6,265,000       9,654,000  
Loss from operations   (2,100,000 )     (2,184,000 )     (5,766,000 )     (9,237,000 )
Other income (expense)                              
  Change in derivative liability   1,000       3,000       5,000       (56,000 )
  Interest expense, net   (2,000 )     (2,000 )     (7,000 )     (7,000 )
  Gain on extinguishment of debt   -       -       -       727,000  
  Other income (expense), net   10,000       134,000       7,000       198,000  
Total other income (expense)   9,000       135,000       5,000       862,000  
Net loss $ (2,091,000 )   $ (2,049,000 )   $ (5,761,000 )   $ (8,375,000 )
Basic and diluted net loss per share $ (0.05 )   $ (0.07 )   $ (0.15 )   $ (0.34 )
Shares used in computing basic and diluted net loss per share   40,836,625       27,864,746       39,221,585       24,479,959  
                               
                               
                               
           
PURE Bioscience, Inc.  
Condensed Consolidated Balance Sheets  
           
  April 30,     July 31,  
  2015     2014  
  (Unaudited)        
Assets              
Current assets              
  Cash and cash equivalents $ 2,530,000     $ 86,000  
  Accounts receivable   86,000       47,000  
  Inventories, net   207,000       249,000  
  Prepaid expenses   33,000       96,000  
  Total current assets   2,856,000       478,000  
Property, plant and equipment, net   97,000       36,000  
Patents, net   1,227,000       1,345,000  
Total assets $ 4,180,000     $ 1,859,000  
Liabilities and stockholders' equity              
Current liabilities              
  Accounts payable $ 533,000     $ 1,096,000  
  Restructuring liability   66,000       323,000  
  Accrued liabilities   160,000       401,000  
  Derivative liability   4,000       9,000  
  Total current liabilities   763,000       1,829,000  
Deferred rent   10,000       13,000  
Total liabilities   773,000       1,842,000  
Commitments and contingencies (See Note 6)              
Stockholders' equity              
  Preferred stock, $0.01 par value:              
  5,000,000 shares authorized, no shares issued   -       -  
  Common stock, $0.01 par value:              
  100,000,000 shares authorized,              
  41,114,715 shares issued and outstanding at April 30, 2015, and              
  29,394,940 shares issued and outstanding at July 31, 2014   412,000       295,000  
  Additional paid-in capital   89,977,000       80,943,000  
  Accumulated deficit   (86,982,000 )     (81,221,000 )
Total stockholders' equity   3,407,000       17,000  
Total liabilities and stockholders' equity $ 4,180,000     $ 1,859,000  
               
               
               
PURE Bioscience, Inc.  
Reconciliation of Non-GAAP Financial Measures  
(Unaudited)  
                       
  Three months ended     Nine months ended  
  April 30,     April 30,  
  2015     2014     2015     2014  
                               
Net loss, as reported $ (2,091,000 )   $ (2,049,000 )   $ (5,761,000 )   $ (8,375,000 )
                               
Add back significant items:                              
  Share-based compensation   766,000       770,000       1,751,000       2,191,000  
  Other share-based expenses   -       -       -       308,000  
  Restructuring costs   -       -       -       2,754,000  
  Gain on extinguishment of debt   -       -       -       (727,000 )
Net loss, as adjusted for significant items $ (1,325,000 )   $ (1,279,000 )   $ (4,010,000 )   $ (3,849,000 )
                               

Contact Information

  • Contacts:
    Peter C. Wulff
    CFO & COO
    PURE Bioscience, Inc.
    619-596-8600 ext.111
    Email Contact

    Terri MacInnis
    VP of IR
    Bibicoff + MacInnis, Inc.
    818-379-8500
    Email Contact

    Tom Hemingway
    Redwood Investment Group
    714-978-4425
    Email Contact