iSpecimen Reports Third Quarter 2021 Financial Results

November 04, 2021 | Press Releases

-Record Nine-Month Revenue of $8.6 Million Surpassing Full-Year Revenue for 2020-

LEXINGTON, Mass., Nov. 4, 2021iSpecimen Inc. (Nasdaq: ISPC) (“iSpecimen” or the “Company”), an online marketplace for human biospecimens, today reported its financial results for the three and nine-month periods ended September 30, 2021.

“In the third quarter of 2021, we continued to achieve strong growth in our core biospecimen business, while simultaneously expanding our market penetration through increased sales and marketing initiatives,” said Christopher Ianelli, MD, PhD, CEO and President of iSpecimen. “These efforts contributed to nine-month 2021 revenue results that have already surpassed our full-year revenue for 2020. At the same time, we increased our number of supplier organizations under agreement to nearly 200 while growing our registered users on the iSpecimen Marketplace.”

Dr. Ianelli added, “iSpecimen continues to execute its strategic initiatives to broaden our service offerings and expand our number of supplier organizations under agreement to grow our procurement reach and data assets. At the same time, we are assessing potential investments that can further enhance our technology and expand our capabilities. We believe these efforts will allow us to increase our value proposition for users and suppliers, increase our sales momentum and drive long-term revenue growth and shareholder value.”

Q3 2021 Financial & Operational Highlights

  • Revenue increased 21% to $2.7 million for the third quarter of 2021, compared to $2.3 million for the same period in 2020.
  • Revenue increased 57% to $8.6 million for the first nine months of 2021, compared to $5.5 million for the same period in 2020.
  • Unique supplier organizations under agreement were 197 as of September 30, 2021, up from 190 organizations at the end of the second quarter of 2021.
  • Unique customer organizations with purchases totaled 398 as of September 30, 2021, an increase from 378 as of June 30, 2021.
  • iSpecimen Marketplace had approximately 4,900 registered research and supplier users as of September 30, 2021, up 30% year-over-year.
  • As of September 30, 2021, iSpecimen received $12.8 million in purchase orders year-to-date, up 30% year-over-year.

Recent Corporate Updates

  • Launched an Enhanced Custom Biofluids Collection Service to offer U.S. researchers and life sciences organizations a new rapid delivery option. The new offering significantly improves specimen availability for organizations involved in cancer research and development including basic research, the development of new treatments, such as molecular and genomic-targeted therapies and immunotherapies, and the development of new diagnostic tests, including liquid biopsies.
  • Expanded network with a new wave of suppliers to offer increasingly comprehensive selections of annotated cancer tissue, biofluids, and cells through iSpecimen Marketplace. In addition, launched a partnership with a new European healthcare organization offering 17 forms of biofluids, solid tissue, and stem and immune cells from cancer patients, as well as healthy controls. The specimens represent more than 30 categories of cancer.
  • Enhanced global biospecimen supplier network to offer increasingly comprehensive selections of whole blood, plasma and other biofluids to help accelerate the development of liquid biopsies. In connection with the development of liquid biopsies, iSpecimen is working closely with another U.S.-based organization with numerous blood donation centers across the country and access to tens of thousands of donors registered to provide blood for research.
  • Joined the Russell Microcap® Index in late September, as part of the 2021 Russell indexes reconstitution. Membership in the Russell Microcap® Index, which remains in place for one year, means automatic inclusion in the appropriate growth and value style indexes.
  • Appointed Erik Uribe as Director of Global Implementations. Uribe joined from Discovery Life Sciences, where he led all global system implementation projects. Uribe will be responsible for advancing the development of the iSpecimen Marketplace™ and tightening its integration with customer and supplier workflows and systems to ensure a continuously streamlined experience

Financial Results for the Third Quarter of 2021

Revenue for the third quarter of 2021 increased 21% to $2.7 million, compared to approximately $2.3 million for the same period in 2020. This increase was primarily driven by the success of its maturing sales team, continued demand for specimens from patients with known COVID-19 test results, and an increasing demand for specimens in non-COVID-19 research areas. For the third quarter of 2021, COVID-19 related revenue accounted for approximately 34% of total revenue, compared to 63% for the third quarter of 2020. COVID-19 related revenue is expected to continue to decline, while being replaced by increased demand for specimens in non-COVID-19 research areas.

Cost of revenue was $0.9 million for the third quarter of 2021, consistent with the prior year. This was attributable to a 14% increase in the average cost per specimen impacted by the specimen mix, offset by a decrease of 12% in the number of specimens accessioned for the current period compared to the same period in 2020.

General and administrative expenses were $1.7 million for the third quarter of 2021, compared to $0.8 million for the third quarter of 2020. The year-over-year increase was primarily attributable to an increase in costs related to iSpecimen becoming a public company in the second quarter of this year, including increases in legal and accounting expenses, an increase in other general and administrative expenses related to amortization of internally developed software, associated software licenses, human resource related expenses, insurance costs and facility expenses, an increase in director and officer insurance, and an increase in payroll-related costs.

Net loss was approximately $1.1 million for the third quarter of 2021, compared to net loss of over $1.2 million for the same period in 2020.

Cash was approximately $9.8 million as of September 30, 2021.

Conference Call and Webcast Information

The Company will host a conference call and audio webcast today, Thursday, November 4th at 8:30 a.m. Eastern Time featuring remarks by Christopher Ianelli, MD, PhD, CEO and President, Tracy Curley, CFO, and Jill Mullan, COO.

Event:

iSpecimen Third Quarter 2021 Results Conference Call

Date:

Thursday, November 4, 2021

Time:

8:30 a.m. Eastern Time

Live Call:

+1-855-327-6838 (Toll Free) or + 1-604-235-2082 (International)

Webcast:

https://themediaframe.com/mediaframe/webcast.html?webcastid=ReKRVin0

For interested individuals unable to join the conference call, a replay will be available through November 18, 2021, at +1-844-512-2921 (U.S. Toll Free) or +1-412-317-6671 (International). Participants must use the following code to access the replay of the call: 10016869. An archived version of the webcast will also be available on iSpecimen’s Investor Relations site: https://ispecimen.irpass.com/.

About iSpecimen
iSpecimen offers an online marketplace for human biospecimens, connecting life scientists in commercial and non-profit organizations with healthcare providers that have access to patients and specimens needed for medical discovery. Proprietary, cloud-based technology enables scientists to intuitively search for specimens and patients across a federated partner network of hospitals, labs, biobanks, blood centers, and other healthcare organizations. For more information about iSpecimen, please visit www.ispecimen.com.

Forward Looking Statements
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are characterized by future or conditional verbs such as “may,” “will,” “expect,” “intend,” “anticipate,” believe,” “estimate” and “continue” or similar words. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information.

Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to the risks factors contained in the Company’s filings with the Securities and Exchange Commission, which are available for review at www.sec.gov. Forward-looking statements speak only as of the date they are made. New risks and uncertainties arise over time, and it is not possible for the Company to predict those events or how they may affect the Company. If a change to the events and circumstances reflected in the Company’s forward-looking statements occurs, the Company’s business, financial condition and operating results may vary materially from those expressed in the Company’s forward-looking statements.

Readers are cautioned not to put undue reliance on forward-looking statements, and the Company assumes no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

For further information, please contact:

Investor Contact
KCSA Strategic Communications
Allison Soss / Scott Eckstein
iSpecimen@kcsa.com

Media Contact
Kaitlynn Cooney
For iSpecimen
kcooney@brodeur.com
617.587.2811

iSpecimen Inc.

CONDENSED BALANCE SHEETS

September 30, 2021

December 31, 2020

ASSETS

Current assets:

Cash

$ 9,790,732

$ 695,909

Accounts receivable – unbilled

1,750,744

652,761

Accounts receivable, net of allowance for doubtful accounts of $141,952
and $108,096 at September 30, 2021 and December 31, 2020, respectively

2,718,682

1,526,392

Inventory

Prepaid expenses and other current assets

459,321

417,929

Tax credit receivable, current portion

179,376

179,376

Total current assets

14,898,855

3,472,367

Property and equipment, net

$ 44,749

75,589

Internally developed software, net

$ 2,650,867

2,634,139

Tax credit receivable, net of current portion

Security deposits

$ 27,601

27,601

Total assets

$ 17,622,072

$ 6,209,696

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

Accounts payable

$ 351,424

$ 1,792,432

Accrued expenses

1,025,136

810,910

Accrued interest

7,510

3,696,944

Convertible notes payable, related parties, net of unamortized debt discount and debt issuance costs

5,490,811

Derivative liability for embedded conversion features on convertible notes payable

2,373,000

Bridge notes payable, net of debt issuance costs

4,589,228

Bridge notes payable, related parties

1,905,000

Derivative liability for embedded conversion feature on bridge notes payable and bridge notes, related parties

Note payable, non-current portion

Note payable, current portion

604,109

Deferred revenue

718,723

873,254

Total current liabilities

2,102,793

22,135,688

Note payable, net of current portion

178,899

Term loan

3,428,380

Total liabilities

5,531,173

22,314,587

Commitments and contingencies

Series B convertible preferred stock, $0.0001 par value, 3,200,000 shares authorized,
0 and 572,465 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

7,999,997

Series A-1 convertible preferred stock, $0.0001 par value, 556,550 shares authorized,
0 and 100,365 issued and outstanding at September 30, 2021 and December 31, 2020, respectively

561,041

Series A convertible preferred stock, $0.0001 par value, 3,427,871 shares authorized,
0 and 618,182 issued and outstanding at September 30, 2021 and December 31, 2020, respectively

2,612,038

Total convertible preferred stock

11,173,076

Stockholders’ equity (deficit)

Common stock, $0.0001 par value, 200,000,000 shares authorized, 6,996,758 issued,
and 6,965,758 outstanding at September 30, 2021, and 16,000,000 shares authorized,
967,213 issued and 936,213 outstanding at December 31, 2020

697

94

Additional paid-in capital

48,059,389

1,779,698

Treasury stock, 31,000 shares at September 30, 2021 and December 31, 2020, at cost

(172)

(172)

Accumulated deficit

(35,969,015)

(29,057,587)

Total stockholders’ equity (deficit)

12,090,899

(27,277,967)

Total liabilities, convertible preferred stock and stockholders’ equity (deficit)

$ 17,622,072

$ 6,209,696

iSpecimen Inc.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

Three months ended September 30,

Nine months ended September 30,

2021

2020

2021

2020

Revenue

$ 2,718,534

$ 2,250,147

$ 8,586,217

$ 5,466,375

Operating expenses:

Cost of revenue

913,833

903,862

4,026,680

2,032,111

Technology

543,581

413,381

1,315,331

1,131,695

Sales and marketing

513,107

506,641

1,690,085

1,305,897

Supply development

171,595

133,007

383,864

395,200

Fulfillment

399,145

241,785

955,516

642,140

General and administrative

1,636,346

774,550

4,144,989

1,431,262

Total operating expenses

4,177,607

2,973,226

12,516,465

6,938,305

Loss from operations

(1,459,073)

(723,079)

(3,930,248)

(1,471,930)

Other expense, net

Interest expense

(75,922)

(469,477)

(2,062,548)

(1,517,697)

Change in fair value of derivative liability on convertible notes

(54,000)

(271,000)

(76,000)

Change in fair value of derivative liability on bridge notes and bridge notes, related parties

1,582,700

Gain (loss) on extinguishment of bridge notes and bridge notes, related parties

(2,740,425)

Loss on extinguishment of convertible notes and convertible notes, related parties

(260,185)

Gain on extinguishment of note payable

788,156

Other expense, net

(21,687)

(21,756)

6,691

Interest income

3,659

87

3,878

396

Other expense, net

(93,950)

(523,390)

(2,981,180)

(1,586,610)

Income (loss) before benefit from income taxes

(1,553,023)

(1,246,469)

(6,911,428)

(3,058,540)

Benefit from income taxes

Net income (loss)

$(1,553,023)

$(1,246,469)

$(6,911,428)

$(3,058,540)

Net income (loss) per share

Basic and diluted

$ (0.22)

$ (1.33)

$ (2.17)

$ (3.27)

Weighted average common shares outstanding

Basic and diluted

6,960,330

936,213

3,190,060

936,213

iSpecimen Inc.

CONDENSED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(Unaudited)

Series B Convertible Preferred Stock

Series A-1 Convertible Preferred Stock

Series A Convertible Preferred Stock

Common Stock

Treasury Stock

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Additional Paid-In Capital

Accumulated Deficit

Total Stockholders’ Equity (Deficit)

Balance at December 31, 2020

572,465

$7,999,997

100,365

$561,041

618,182

$2,612,038

936,213

$ 94

31,000

$ (172)

$ 1,779,698

$ (29,057,587)

$ (27,277,967)

Share-based compensation expense

22,036

22,036

Net loss

(3,963,491)

(3,963,491)

Balance at March 31, 2021 (unaudited)

572,465

$7,999,997

100,365

$561,041

618,182

$2,612,038

936,213

$ 94

31,000

$ (172)

$ 1,801,734

$ (33,021,078)

$ (31,219,422)

Conversion of redeemable convertible preferred stock into common stock
upon initial public offering

(572,465)

(7,999,997)

(100,365)

(561,041)

(618,182)

(2,612,038)

1,291,012

129

11,172,947

11,173,076

Conversion of principal and accrued interest of convertible notes and bridge notes into
common stock upon initial public offering

2,049,043

205

16,392,139

16,392,344

Issuance of common stock in connection with public offering

2,250,000

225

17,999,775

18,000,000

Offering costs in connection with public offering

-2,339,816

(2,339,816)

Issuance of common stock through exercise of stock options

39,461

4

39,629

39,633

Share-based compensation expense

28,374

28,374

Net loss

(1,394,914)

(1,394,914)

Balance at June 30, 2021 (unaudited)

$ –

$ –

$ –

6,565,729

$ 657

31,000

$ (172)

$ 45,094,782

$ (34,415,992)

$ 10,679,275

Issuance of common stock in connection with public offering over-allotment option exercise

337,500

34

2,497,467

2,497,501

Issuance of commoon stock in exchange for services

2,000

12,500

12,500

Issuance of common stock through exercise of stock options

4,761

4,761

4,761

Issuance of common stock through exercise of warrants

17,889

2

990

992

Vesting of restricted stock units

37,879

4

(4)

Share-based compensation expense

399,821

399,821

Issuance of warrants in connection with debt

49,072

49,072

Net loss

(1,553,023)

(1,553,023)

Balance at September 30, 2021 (unaudited)

$ –

$ –

$ –

6,965,758

$ 697

31,000

$ (172)

$ 48,059,389

$ (35,969,015)

$ 12,090,899

Series B Convertible Preferred Stock

Series A-1 Convertible Preferred Stock

Series A Convertible Preferred Stock

Common Stock

Treasury Stock

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Additional Paid-In Capital

Accumulated Deficit

Total Stockholders’ Deficit

Balance at December 31, 2019

572,465

$7,999,997

100,365

$561,041

618,182

$2,612,038

936,213

$ 94

31,000

$ (172)

$ 1,686,832

$ (24,405,503)

(22,718,749)

Share-based compensation expense

22,045

22,045

Net loss

(1,637,979)

(1,637,979)

Balance at March 31, 2020 (unaudited)

572,465

$7,999,997

100,365

$561,041

618,182

$2,612,038

936,213

$ 94

31,000

$ (172)

$ 1,708,877

$ (26,043,482)

$ (24,334,683)

Share-based compensation expense

29,287

29,287

Net loss

(174,092)

(174,092)

Balance at June 30, 2020 (unaudited)

572,465

$7,999,997

100,365

$561,041

618,182

$2,612,038

936,213

$ 94

31,000

$ (172)

$ 1,738,164

$ (26,217,574)

$ (24,479,488)

Share-based compensation expense

29,266

29,266

Net loss

(1,246,469)

(1,246,469)

Balance at September 30, 2020 (unaudited)

572,465

7,999,997

100,365

561,041

618,182

2,612,038

936,213

94

31,000

(172)

1,767,430

(27,464,043)

(25,696,691)

iSpecimen Inc.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine months ended September 30,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$ (6,911,428)

$(3,058,540)

Adjustments to reconcile net loss to net cash used in operating activities:

Share-based compensation

450,231

80,598

Common shares issued in exchange for services

12,500

Amortization of internally developed software

714,444

599,425

Depreciation of property and equipment

33,390

33,563

Bad debt expense

33,856

Amortization of debt issuance costs on note payable

3,277

Amortization of discount and debt issuance costs on convertible notes

1,088

141,628

Amortization of discount on bridge notes

869,600

Change in fair value of derivative liabilities

(1,311,700)

76,000

Loss on extinguishment on bridge notes

2,740,425

Loss on extinguishment of convertible notes

260,185

Gain on extinguishment on note payable

(788,156)

Change in operating assets and liabilities:

Accounts receivable

(1,226,146)

(924,827)

Accounts receivable – unbilled

(1,097,983)

130,813

Inventory

Prepaid expenses and other current assets

(41,392)

(6,970)

Tax credit receivable

104,624

Accounts payable

(1,441,008)

474,263

Accrued expenses

214,226

129,644

Accrued interest

(1,709,575)

1,374,139

Deferred revenue

(154,531)

581,912

Net cash used in operating activities

(9,348,697)

(263,728)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

(2,550)

(1,006)

Capitalization of internally developed software

(731,172)

(864,921)

Net cash used in investing activities

(733,722)

(865,927)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of bridge notes payable

500,000

1,250,000

Proceeds from issuance of note payable

3,500,000

783,008

Proceeds from exercise of stock options

44,390

Proceeds from exercise of warrants

992

Proceeds from issuance of over-allotment shares of common stock ,
net of transaction costs of $202,499

2,497,501

Proceeds from issuance of common stock in connection with public offering

18,000,000

Payment of debt issuance costs in connection with note payable

(25,825)

Payment of offering costs in connection with the issuance of common
stock in connection with public offering

(2,339,816)

Payment of principal to bridge note holders

(3,000,000)

Net cash provided by financing activities

19,177,242

2,033,008

Net increase in cash

9,094,823

903,353

Cash at beginning of period

695,909

53,893

Cash at end of period

$ 9,790,732

$ 957,246

Supplemental disclosure of cash flow information:

Cash paid for interest

$ 2,824,032

$ –

Income taxes paid

$ –

$ –

Supplemental disclosure of non-cash investing and financing activities:

Conversion of redeemable convertible preferred stock into common stock

$11,173,076

$ –

Conversion of convertible notes and accrued interest into common stock

$ 6,748,729

$ –

Conversion of bridge notes and accrued interest into common stock

$ 4,717,646

$ –

Issuance of common stock warrants as offering costs in connection
with public offering of common stock

$ 374,400

$ –

Issuance of common stock warrants in connection with Term Loan

$ 49,072

$ –

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SOURCE iSpecimen Inc.