Company Update (NASDAQ:GBSN): Great Basin Scientific Inc Reports First Quarter 2016 Results


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Great Basin Scientific, Inc. (NASDAQ:GBSN), a molecular diagnostic testing company, today reported financial results for the first quarter ended March 31, 2016.

First Quarter 2016 Financial Results and Business Highlights

  • Revenue for the first quarter was $731,422, versus $458,730 for the same period in 2015, representing a 59.4% year-over-year increase;
  • 222 revenue-generating U.S. customers as of March 31, 2016, representing 119.8% growth year over year;
  • Shiga Toxin Direct Test received 510(k) clearance by the U.S. Food & Drug Administration (FDA);
  • Staph ID/R Blood Culture Panel received 510(k) clearance by the FDA;
  • Appointed Suzette Chance, Ph.D., Senior Director of Clinical Trials to lead clinical trial strategy, beginning with the five clinical trials slated for this year.

“We are pleased to report our financial results and business progress for the first quarter,” said Ryan Ashton, Co-founder and Chief Executive Officer. “Great Basin continues to execute on our strategic initiatives for 2016, and are on track to meet our previously-stated guidance of ending the year with 300 to 325 customers, launching our two recently FDA-cleared tests and starting five clinical trials this calendar year, two of which will begin in the first half of the year. The investments we made in the first quarter facilitated the Company’s ability to make those goals a reality.”

Great Basin Scientific’s First Quarter 2016 Results

Total revenues for the first quarter of 2016 were $731,422, compared to $458,730 for the same period in 2015, representing an increase of 59.4%. Continued growth in Great Basin’s customer base as well as adoption of its Group B Strep assay drove the year-over-year increase.

Great Basin ended the first quarter of 2016 with 222 U.S. customers, compared to 101 customers for the first quarter ending March 31, 2015, representing an increase of 119.8%.

Operating expenses were $6.0 million in the first quarter of 2016, as compared to $3.4 million in the first quarter of 2015. Research and development expenses increased by $0.8 million over the first quarter of 2015 to $2.3 million in the first quarter of 2016, primarily due to increased clinical and regulatory activities related to our Staph ID/R Blood Culture Panel and Shiga Toxin Direct Test and ongoing pipeline development. Selling and marketing expenses increased by $0.7 million over the first quarter of 2015 to $1.5 million in the first quarter of 2016, reflecting increases in headcount, sales commissions and other costs. General and administrative costs increased by $1.1 million over the first quarter of 2015 to $2.2 million in the first quarter of 2016, due to increased legal, accounting and consulting fees related to financing and restructuring transactions, an increase in headcount and other corporate expenses.

Loss from operations was $7.1 million for the first quarter, compared to $3.9 million for the same period of 2015.

Net loss was $33.7 million for the quarter ended March 31, 2016, compared to a net loss of $71.2 million for the same period in 2015.

Basic and diluted net loss per share was $15.26 for the quarter ended March 31, 2016, compared to basic and diluted net loss per share of $29,374.17 for the same period in 2015.

Warrant Exercises & Preferred Conversion

During the first quarter of 2016, the Company received cashless warrant exercises for 5,229,973 Series C Warrants. The Company settled 5,091,815 of the cashless warrant exercises through the issuance of 1,520,888 shares of common stock and settled 138,158 of the cashless warrant exercises with cash in the amount of $314,879.

In addition, 121,540 underwriter unit purchase options were exercised for cash proceeds of $1,335,950. Pursuant to the exercise of these options, 121,540 shares of Series E Convertible Preferred Stock were issued and immediately converted into 232 shares of common stock and 972,230 Series C Warrants were issued and immediately cashless exercised into 346,667 shares of common stock.

Also, during the first quarter of 2016, 13,967 shares of Series E Convertible Preferred Stock were converted into 27 shares of common stock.

Non-GAAP Financial Measure

This press release includes an Adjusted Net Loss “non-GAAP financial measure” as defined by the U.S. Securities and Exchange Commission (SEC). The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation of, or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles (GAAP). For reconciliation of this non-GAAP financial measure to the nearest comparable GAAP measure, see “Reconciliation of Non-GAAP Financial Measure” included in this press release.

Reconciliation of Non-GAAP Financial Measure

Adjusted Net Loss

The Company excludes the amortization of the convertible note debt discount as well as the change in fair value of the derivative liability in calculating adjusted net loss because they are non-cash in nature and because the Company believes that the non-GAAP financial measures excluding these items provide meaningful supplemental information regarding operational performance. The Company further believes this measure is useful to investors in that it allows for greater transparency to certain line items in its financial statements and facilitates comparisons to peer operating results.

   
GREAT BASIN SCIENTIFIC, INC.
ADJUSTED NET LOSS
(Unaudited)
     
    Three Months Ended
    March 31,
The calculation of adjusted net loss is as follows:   2016   2015
Net loss   $ (33,652,506)   $ (71,173,625)
Adjustment for amortization of debt discount included in interest     6,107,467    
Adjustment for change in fair value of derivative liability     20,219,263     66,994,149
Adjusted net loss   $ (7,325,776)   $ (4,179,476)
             

Amortization of Debt Discount included in Interest

The amortization of the debt discount that is included in interest for the three months ended March 31, 2016 resulted in non-cash other expense in the amount of $6.1 million. This is a non-cash charge as the result of the excess of the fair value of the conversion feature of the convertible notes payable and the associated Series D Warrants over the face value of the notes that was required to be recorded as a debt discount and amortized over the life of the notes.

Change in Fair Value of Derivative Liability

The change in fair value of our instruments recorded as derivative liabilities for the three months ended March 31, 2016 resulted in a non-cash expense of $20.2 million as a result of a net increase in the fair value of our derivative instruments during the period. The issuance of Series E Warrants and the increase in the fair value of the conversion feature of the convertible notes was partially offset by a decrease in the fair value of our Series D Warrants and other derivative securities.

The change in fair value of our instruments recorded as derivative liabilities for the three months ended March 31, 2015 resulted in non-cash expense in the amount of $67.0 million. This is the result of the issuance of our Series C Warrants and the increase in fair value of our other derivative instruments due to the increase of our common stock price during the period. (Original Source)

Shares of Great Basin Scientific closed yesterday at $2.43. GBSN has a 1-year high of $10164 and a 1-year low of $2.38. The stock’s 50-day moving average is $4.00 and its 200-day moving average is $58.95.

Great Basin Scientific, Inc. is a molecular diagnostic testing company, which focused on the development and commercialization of its patented, molecular diagnostic platform designed to test for infectious disease, especially hospital-acquired infections. Great Basin Scientific was founded by David C. Ward, Anthony R. Torres and David Spafford on June 27, 2003 and is headquartered in Salt Lake City, UT.