UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 2.02 | Results of Operations and Financial Condition. |
On August 11, 2021, TELA Bio, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2021. A copy of this press release is furnished as Exhibit 99.1 hereto.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such filing.
| Item 7.01 | Regulation FD Disclosure. |
On August 11, 2021, the Company updated information reflected in a corporate slide deck, which representatives of the Company will use in various meetings with investors from time to time. A copy of the presentation is attached hereto as Exhibit 99.2, and incorporated herein by reference.
The information furnished pursuant to Item 7.01, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
The following exhibit is being furnished herewith:
| Exhibit No. | Document | |
| 99.1 | Press Release of TELA Bio, Inc., dated August 11, 2021. | |
| 99.2 | Corporate Slide Deck, dated August 11, 2021. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TELA BIO, INC. | ||
| By: | /s/ Antony Koblish | |
| Name: | Antony Koblish | |
| Title: | President, Chief Executive Officer and Director | |
Date: August 11, 2021
Exhibit 99.1
TELA Bio Reports Record Second Quarter 2021 Revenues Driven by Increased Demand
MALVERN, Pa., August 11, 2021 (GLOBE NEWSWIRE) -- TELA Bio, Inc. ("TELA") (Nasdaq: TELA), a commercial-stage medical technology company focused on designing, developing, and marketing innovative tissue reinforcement materials to address unmet needs in soft tissue reconstruction, today reported second quarter 2021 financial results.
Second Quarter 2021 Financial Results and Business Highlights
| - | Reported revenue of $7.6 million for the second quarter of 2021, increasing 116% year-over-year and 29% sequentially; |
| - | Increased demand for all OviTex® Reinforced Tissue Matrix hernia products in the second quarter with robotic-assisted and minimally invasive hernia procedures representing approximately 50% of all OviTex hernia procedures in the quarter; |
| - | Achieved strong quarter-over-quarter and sequential growth in both OviTex LPR and OviTex PRS revenue; and |
| - | Initiated BRAVO II prospective clinical study evaluating OviTex Reinforced Tissue Matrix for the robotic repair of ventral hernias. |
"Throughout the quarter, broad demand for all of our reinforced tissue matrix products continued to grow and we delivered record second quarter revenue," said Antony Koblish, co-founder, President and Chief Executive Officer of TELA Bio. "The time and effort our team invested during the pandemic, in reaching out to current and prospective customers through our TELA LIVE virtual program, is bearing fruit. While the uncertainties of another wave of COVID-19 could affect our future revenue growth, I believe we are ideally positioned to continue to experience strong growth in market share and revenue throughout the remainder of 2021 and beyond."
Second Quarter 2021 Financial Results
Revenue was $7.6 million for the second quarter of 2021, an increase of 116% compared to the prior year period and up 29% compared to the first quarter of 2021. The increase in revenue was primarily driven by an increase in unit sales of our products due to the expansion of our commercial organization, an increase in customer accounts, and increased penetration with existing customer accounts.
Gross profit was $5.1 million for the second quarter of 2021, or 67% of revenue, compared to $2.1 million, or 59% of revenue, in the same period in 2020. The increase was primarily due to the decrease in the charge recognized for excess and obsolete inventory adjustments as a percentage of revenue.
Operating expenses were $12.4 million in the second quarter of 2021 and included a one-time non-cash stock-based compensation expense of $0.7 million related to amendments to certain equity award agreements following the death of our co-founder and former Chief Medical Officer. Operating expenses were $7.3 million in the same period in 2020. The increase was due to the expansion of our commercialization activities, higher personnel costs, including non-cash stock-based compensation expenses, and increased research and development expenses. The prior year period also included cost containment measures in response to the COVID-19 pandemic, which were not implemented in 2021.
Loss from operations was $7.3 million in the second quarter of 2021, compared to a loss from operations of $5.2 million in the same period in 2020.
Net loss was $8.3 million in the second quarter of 2021, compared to a net loss of $6.1 million in the same period in 2020.
Cash and Cash Equivalents at June 30, 2021 were $60.3 million.
Financial Outlook
For the full year 2021, TELA Bio is increasing its total revenue guidance to be in the range of $28.0 million to $30.0 million, representing growth of 54% to 65% over the prior year period. As with previous guidance, continued uncertainty relating to the dynamic environment with the COVID-19 pandemic could materially impact this projection.
Conference Call and Webcast Details
The Company will host a live conference call and webcast to discuss these results and provide a corporate update on Wednesday, August 11, 2021, at 4:30 PM ET.
To participate in the call, please dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and provide conference ID 9285257. The live webcast will be available on the Events & Presentations page of the Investors section of TELA's website.
About TELA Bio, Inc.
TELA Bio, Inc. (NASDAQ: TELA) is a commercial-stage medical technology company focused on designing, developing, and marketing innovative tissue reinforcement materials to address unmet needs in soft tissue reconstruction. The Company is committed to providing patients with advanced, economically effective biologic material repair solutions to minimize long-term exposure to permanent synthetic materials and improve clinical outcomes. TELA Bio's OviTex® and OviTex PRS Reinforced Tissue Matrix products are purposefully designed to address the shortcomings of existing reinforcement materials in hernia repair, abdominal wall reconstruction, and plastic and reconstructive surgery. For more information, visit www.telabio.com.
Caution Regarding Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Words such as "may," "might," "will," "should," "believe," "expect," "anticipate," "estimate," "continue," "predict," "forecast," "project," "plan," "intend" or similar expressions, or statements regarding intent, belief, or current expectations are forward-looking statements and reflect the current beliefs of TELA's management. Such forward-looking statements include statements relating to our expected revenue and revenue growth for the full year 2021 and our expected increase in market share throughout the remainder of 2021. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors that could cause actual results and events to differ materially and adversely from those indicated by such forward-looking statements including, among others: the impact to our business of the ongoing COVID-19 pandemic and the development of new variants of COVID-19, such as the delta variant, including but not limited to any impact on our ability to market our products, demand for our products due to deferral of procedures using our products or disruption in our supply chain, our ability to achieve or sustain profitability, our ability to gain market acceptance for our products and to accurately forecast and meet customer demand, our ability to compete successfully, our ability to enhance our product offerings, development and manufacturing problems, capacity constraints or delays in production of our products, maintenance of coverage and adequate reimbursement for procedures using our products, product defects or failures. These and other risks and uncertainties are described more fully in the "Risk Factors" section and elsewhere in our filings with the Securities and Exchange Commission and available at www.sec.gov, including in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Any forward-looking statements that we make in this announcement speak only as of the date of this press release, and TELA assumes no obligation to updates forward-looking statements whether as a result of new information, future events or otherwise after the date of this press release, except as required under applicable law.
Investor Contact
Greg Chodaczek
347-620-7010
ir@telabio.com
TELA Bio, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
(Unaudited)
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 60,292 | $ | 74,394 | ||||
| Accounts receivable, net | 3,545 | 2,683 | ||||||
| Inventory | 4,503 | 3,907 | ||||||
| Prepaid expenses and other assets | 2,395 | 2,241 | ||||||
| Total current assets | 70,735 | 83,225 | ||||||
| Property and equipment, net | 609 | 626 | ||||||
| Intangible assets, net | 2,455 | 2,607 | ||||||
| Total assets | $ | 73,799 | $ | 86,458 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,277 | $ | 652 | ||||
| Accrued expenses and other current liabilities | 6,017 | 5,953 | ||||||
| Total current liabilities | 7,294 | 6,605 | ||||||
| Long-term debt with related party | 31,145 | 30,827 | ||||||
| Other long-term liabilities | 395 | — | ||||||
| Total liabilities | 38,834 | 37,432 | ||||||
| Stockholders' equity: | ||||||||
| Preferred stock; $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding | — | — | ||||||
| Common stock; $0.001 par value: 200,000,000 shares authorized; 14,471,874 and 14,437,289 shares issued and 14,471,774 and 14,437,107 shares outstanding at June 30, 2021 and December 31, 2020, respectively | 14 | 14 | ||||||
| Additional paid-in capital | 248,076 | 245,736 | ||||||
| Accumulated other comprehensive loss | (81 | ) | (71 | ) | ||||
| Accumulated deficit | (213,044 | ) | (196,653 | ) | ||||
| Total stockholders' equity | 34,965 | 49,026 | ||||||
| Total liabilities and stockholders' equity | $ | 73,799 | $ | 86,458 | ||||
TELA Bio, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share amounts)
(Unaudited)
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | $ | 7,558 | $ | 3,507 | $ | 13,435 | $ | 7,233 | ||||||||
| Cost of revenue (excluding amortization of intangible assets) | 2,395 | 1,346 | 4,731 | 2,796 | ||||||||||||
| Amortization of intangible assets | 76 | 76 | 152 | 152 | ||||||||||||
| Gross profit | 5,087 | 2,085 | 8,552 | 4,285 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing | 7,502 | 4,123 | 13,801 | 9,392 | ||||||||||||
| General and administrative | 2,966 | 2,149 | 5,722 | 4,667 | ||||||||||||
| Research and development | 1,930 | 979 | 3,609 | 1,891 | ||||||||||||
| Total operating expenses | 12,398 | 7,251 | 23,132 | 15,950 | ||||||||||||
| Loss from operations | (7,311 | ) | (5,166 | ) | (14,580 | ) | (11,665 | ) | ||||||||
| Other (expense) income: | ||||||||||||||||
| Interest expense | (864 | ) | (884 | ) | (1,753 | ) | (1,763 | ) | ||||||||
| Other (expense) income | (80 | ) | (31 | ) | (58 | ) | 127 | |||||||||
| Total other expense | (944 | ) | (915 | ) | (1,811 | ) | (1,636 | ) | ||||||||
| Net loss | $ | (8,255 | ) | $ | (6,081 | ) | $ | (16,391 | ) | $ | (13,301 | ) | ||||
| Net loss per common share, basic and diluted | $ | (0.57 | ) | $ | (0.53 | ) | $ | (1.13 | ) | $ | (1.16 | ) | ||||
| Weighted average common shares outstanding, basic and diluted | 14,458,911 | 11,443,122 | 14,448,715 | 11,424,952 | ||||||||||||
| Comprehensive loss: | ||||||||||||||||
| Net loss | $ | (8,255 | ) | $ | (6,081 | ) | $ | (16,391 | ) | $ | (13,301 | ) | ||||
| Foreign currency translation adjustment | 1 | 4 | (10 | ) | 31 | |||||||||||
| Comprehensive loss | $ | (8,254 | ) | $ | (6,077 | ) | $ | (16,401 | ) | $ | (13,270 | ) | ||||
Exhibit 99.2
Advancing Soft Tissue Reconstruction Investor Presentation August 2021
2 Forward Looking Statements This presentation contains forward - looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 . All statements other than statements of historical facts contained in this document, including but not limited to statements regarding possible or assumed future res ults of operations, business strategies, development plans, regulatory activities, market opportunity competitive position, potential growth opportunities, and the ef fec ts of competition, are forward - looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause TELA B io, Inc.’s (the “Company”) actual results, performance or achievements to be materially different from any future results, performance or achievements expresse d o r implied by the forward - looking statements. In some cases, you can identify forward - looking statements by terms such as “may,” “will,” “should,” “expect,” “plan ,” “aim,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these term s o r other similar expressions. The forward - looking statements in this presentation are only predictions. The Company has based these forward - looking statements largely on its curr ent expectations and projections about future events and financial trends that it believes may affect the Company’s business, financial condition and results of operations. These forward - looking statements speak only as of the date of this presentation and are subject to a number of risks, uncertainties and assumptions , s ome of which cannot be predicted or quantified and some of which are beyond the Company’s control, including, among others: the impact to the Company's business of the ongoing COVID - 19 pandemic and the development of new variants of COVID - 19, such as the delta variant, including but not limited to any impact on the Compa ny's ability to market its products, demand for the Company's products due to deferral of procedures using the Company's products or disruption in the Company's s upp ly chain, the Company's ability to achieve or sustain profitability, the Company's ability to gain market acceptance for the Company's products and to accuratel y f orecast and meet customer demand, the Company's ability to compete successfully, the Company's ability to enhance the Company's product offerings, development and man ufacturing problems, capacity constraints or delays in production of the Company's products, maintenance of coverage and adequate reimbursement for procedu res using the Company's products, product defects or failures. These and other risks and uncertainties are described more fully in the "Risk Factors" section a nd elsewhere in the Company's filings with the Securities and Exchange Commission and available at www.sec.gov. You should not rely on these forward - looking statements as predictions of future events. The events and circumstances reflected in the Company’s forward - looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward - looking statements. Moreover, the Company operates in a dynamic industry and economy. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties that the Company may face. Exc ept as required by applicable law, we do not plan to publicly update or revise any forward - looking statements contained herein, whether as a result of any new informatio n, future events, changed circumstances or otherwise.
Redefining soft tissue reconstruction with a differentiated category of tissue reinforcement materials ~$2B U.S Market Opportunity 1 in hernia repair , abdominal wall reconstruction and plastic and reconstructive surgery 3 Innovative Products Compelling Clinical Evidence Products Offer Attractive Value Proposition for Hospitals 1 Management estimate. $2B total equals $1.5B hernia & abdominal wall reconstruction and $0.5B plastic reconstructive surgery.
4 Creating Advanced Biologic Materials Novel Biologic Tissue (derived from sheep) Polymer Fibers (permanent or resorbable) Innovative Textile Engineering Purposefully designed to address shortcomings & unmet clinical needs Issued patents protect underlying biologic tissue and product design Hernia & Ab Wall Reconstruction Plastic Reconstruction
5 OviTex: ~$1.5 Billion Annual U.S. Hernia Market Opportunity Simple Ventral Hernia Repair Complex, Moderate Ventral / Abdominal Wall Reconstruction Simple Ventral Hernia Repair Inguinal Hernia Repair Hiatal Hernia Repair ~58,000 ~326,000 ~711,000 ~40,000 $350M $500M $650M $40M Source: Millennium Research Group Reports, IMS Health Data 1 Management estimate. Market size based volume weighted average selling price for OviTex Annual Procedures $1.5B 1
6 Ventral Hernia Patients Range in Complexity • CDC Wound Class I (clean) • Healthier patients - no co - morbidities • Primary hernia repair • CDC Wound Class II (clean - contaminated) • Patient co - morbidities (i.e., obesity, diabetes, COPD) • May have prior hernia repair failure • CDC Wound Class III (contaminated) & IV (infected) • Large defects • Infected synthetic mesh removals • Multiple prior hernia repair failures COMPLEX MODERATE SIMPLE Ventral Hernia Complexity Objective: provide patients the best repair the first time to prevent the simple patient from becoming the complex
7 Current Ventral Hernia Treatment Options: No Perfect Product Persistent inflammatory response Encapsulation of implant Chronic post operative pain Scar tissue / lack of remodeling Mesh infections Significant costs of re - operation Organ erosion or perforation 6,000 related U.S. lawsuits PERMANENT SYNTHETIC MESH Strattice Œ RESORBABLE SYNTHETIC MESH Strattice Œ BIOLOGIC MESH Parietex 䉼 PROCEED ® GORE ® BIO - A ® SurgiMend ® XenMatrix 䉼 Natural Repair Products Simple Ventral Hernia Inguinal Hernia Complex, Moderate Ventral Repair / Abdominal Wall Reconstruction Hiatal Hernia Repair ProGrip 䉼 + Ventralight 䉼 P HASIX 䉼 Mesh Strattice 䉼 Gentrix ® ▫ Persistent inflammatory response ▫ Encapsulation of implant ▫ Chronic post operative pain ▫ Scar tissue / lack of remodeling ▫ Mesh infections / Significant costs of re - operation ▫ Organ erosion or perforation LIMITATIONS ▫ Inflammatory response until absorbed ▫ Encapsulation of implant or contraction until absorbed ▫ Scar tissue / lack of remodeling ▫ Mesh infection until resorbed ▫ Organ erosion or perforation ▫ Lack of mid - term and long - term reinforcement ▫ Lack of strength or durability ▫ Prone to laxity and stretching ▫ Challenges to surgeon handling ▫ Difficult to use in laparoscopic or robotic surgery ▫ High costs
8 Lawsuits against permanent synthetic meshes estimated to be assembled across the U.S. 2 of surgeons agree that use of permanent synthetic mesh puts patients at long - term risk of complications 1 Growing Need for Alternative to Permanent Synthetic Mesh 1 Hernia and Abdominal Surgeries Survey (Oct 2020). 2 www.drugwatch.com (October 2020) 59% Hernia patients have voiced concern over use of permanent synthetic mesh in the past 12 months, according to surgeons 1 1 in 5 ~15K
9 OviTex Reinforced Tissue Matrix: a More Natural Hernia Repair 䉼 An innovative reinforced tissue matrix designed to reduce stretch compared to biologic matrices and long - term complications experienced with resorbable and permanent synthetic meshes Unique permeable design facilitates rapid fluid transfer and movement of cells through the device Layers of biologic material enable functional tissue remodeling Interwoven polymer for added strength and improved handling Lockstitch embroidery pattern creates a ripstop effect and prevents unraveling when cut
10 OviTex LPR for Laparoscopic & Robotic Hernia Repair Tailored OviTex product designed for improved handling in MIS techniques and trocar accessibility Our Solution: OviTex LPR Increase in Robotic - Assisted Hernia Repair ▫ Surgeons have adopted robotic - assisted techniques, primarily for inguinal & simple ventral Hernia repair, due to perceived patient and technique benefits ▫ Legacy biologic products are difficult to use minimally invasively (MIS) due to their thickness and handling properties
11 Compelling Clinical Evidence Ventral Hernia Inguinal Hernia Hiatal Hernia Presentations / Publications 18 Presentations / Publications 5 Presentations / Publications 4 Low incidence of chronic post - operative pain Low hernia recurrence Low SSO / SSI Ease of use Low rate of surgical site occurrences & infections (SSO/SSI) Low hernia recurrence Ease of use Compatibility with MIS approaches Low hernia recurrence OviTex supported by data from ~500 hernia patients across multiple hernia types Moderate - to - complex ventral hernia patients Multi - center, prospective study with 92 patients enrolled Patient follow - up at 3, 12 & 24 - months Additional data readout expected upon study completion by the end of 2021 BRAVO Study
12 OviTex PRS: ~$500 Million Annual U.S. Plastic & Reconstructive Surgery Market Opportunity $500M 1 Market dominated by human acellular dermal matrices (HADMs) ▫ Prone to high degree of stretch ▫ Expensive, putting pressure on hospital systems ▫ Often experience supply shortages, particularly when large pieces of material are required Surgeons use products to reinforce soft tissue during various reconstructive surgeries, including: ▫ Breast reconstruction ▫ Head and neck surgery ▫ Chest wall reconstruction ▫ Pelvic reconstruction ▫ Extremities reconstruction 1 Management estimate. Market size based on sales of current biologics
13 OviTex PRS: Purposely Designed for Plastic and Reconstructive Surgery Layers of biologic material enable functional tissue remodeling Corner - lock diamond embroidery pattern allows the product to stretch while maintaining its shape Fenestrations and slits facilitate fluid management, allow for rapid cellular infiltration, and create a directional bias to the stretch Expanded commercial launch in June 2020 following limited launch initiated in 2019 An innovative reinforced tissue matrix designed to improve outcomes by facilitating fluid management and controlling degree and direction of stretch
14 Commercial Organization 45 sales territories as of June 30, 2021 ▫ OR - based Account Managers call on General, Plastic Recon, Colorectal & Trauma surgeons ▫ Carry full OviTex & OviTex PRS portfolios 6 sales regions ▫ Plan to scale existing regions until each region has ~8 territories ▫ Supported by Clinical Development and Strategic Customer Relations teams
15 Growth Strategy ▫ Promote broader awareness of OviTex & OviTex PRS products ▫ Employ virtual sales & marketing programs, including TELA LIVE ▫ Drive market awareness of risks of permanent synthetic mesh use ▫ Publish BRAVO clinical data INCREASE ADOPTION ▫ Scale direct sales force ▫ Drive account manager productivity ▫ Increase utilization within health systems under GPO contracts ▫ Secure additional contracts with high - potential IDNs and GPOs COMMERCIAL EXECUTION ▫ Launch new product features and designs for OviTex and OviTex PRS ▫ Initiate robotic hernia post - market study ▫ Support investigator - led clinical studies for OviTex PRS MARKET EXPANSION
16 $3.7 $3.5 $5.9 $7.6 Q1 Q2 Q2 2021 Performance ▫ Revenue growth of 116% year over year, up 29% from Q1:21 ▫ Cash and Cash equivalents (as of June 30, 2021): $60.3M ▫ Robotic and MIS hernia procedures represent over 50% of all OviTex hernia procedures Delivering Revenue Growth ($ millions) Annual Revenue Revenue CAGR: 62% $4.3 $8.3 $15.4 $18.2 2017 2018 2019 2020 Quarter Revenue YTD Revenue Growth: 86% ($ millions) Q1:20 Q1:21 Q2:20 Q2:21
17 Investment Highlights Advanced reinforced tissue matrix portfolio supported by compelling clinical evidence Focused on ~$2.0 billion annual U.S. total addressable markets Driving commercial adoption with targeted direct - sales approach Recent product launches in growing markets: robotic hernia surgery + plastic and reconstructive surgery Broad intellectual property portfolio Established DRG - based reimbursement pathway for hernia repair Industry leading executive team with proven track record