Good day, ladies and gentlemen, and welcome to the Orgenesis business update call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, David Waldman from Investor Relations. Sir, the floor is yours.
Thank you, and good morning, everyone, and welcome to Orgenesis second quarter 2022 business update conference call. On the call with us this morning are Vered Caplan, Chief Executive Officer, and Neil Reithinger, Chief Financial Officer. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020. This conference call contains forward-looking statements which are made pursuant to the Safe Harbor provisions of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended. These forward-looking statements involve substantial uncertainties and risks and are based upon current expectations, estimates, and projections and reflect our beliefs and assumptions based upon information available to us at the date of this conference call.
We caution listeners that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions that are difficult to predict. Our actual results or achievements could differ materially from those expressed or implied by the forward-looking statements as a result of a number of factors, including but not limited to the risk factors and uncertainties discussed under the heading Risk Factors in Item 1A of our annual report on Form 10-K for the fiscal year ended December 31, 2021, and our other filings with the Securities and Exchange Commission. We undertake no obligation to revise or update any forward-looking statement for any reason. Now I turn the call over to Orgenesis CEO, Ms. Vered Caplan. Please go ahead, Vered.
Thank you, David, and thanks to everyone for joining us on our call today. I'm always glad to have a chance to speak directly to shareholders. As many of you know, we really try to be responsive and available to any of you who wish to speak with us. I also appreciate the support we have received from some of you lately. The last several months have been ones of much turmoil, political issues, economic instability, and many are still suffering from the latest pandemic, while no new biological threats appear around the corner. These issues have not had a direct influence on our activity, but they have affected investors and shareholders throughout the biotech industry. Many companies have not survived the event. Funds that have been frozen, shareholders that have had to liquidate their assets quickly, and the general mood of the biotech investment world.
We are extremely fortunate that we have the support of some of our shareholders and investors, and that our suppliers and customers have gone out of their way to make sure we maintain our stability. We appreciate this very much and think this is part of the strengthening network, the point of care network that we have woven together in the last few years. We are also not a typical biotech company, far from it. As Uber is not a typical taxi company, as Amazon is not a typical bookstore chain, if you remember when Amazon sold books, and Airbnb is not a hotel chain. We are a new breed of biotech.
Just as the developments in software, hardware, and communication technologies enable the capability to share resources, products, and services to many more people around the globe more efficiently and enabled new sources of employment and deployment of goods, so are we building a new accessibility to cell and gene innovations and therapies. Our point of care network enables clinicians and patients to access to life-saving therapies and paves the pathway for new innovative treatments to reach clinical use in a decentralized manner. A therapy licensed from one hospital may be made available to any hospital in the network. Our network allows clinical and scientific data to be shared. Instead of each hospital trying to face the challenges of supplying these therapies to patients and overcoming the pitfalls that others have faced, we provide a well-collaborated approach.
Our point of care services, now regrouped under Orgenesis, have the know-how and infrastructure to provide such therapies across the network. With quick and efficient capability to expand such services to new hospitals and clinical sites. Biotech companies who wish to access this network and develop and supply their products utilizing our point of care network benefit from such services, enabling them to have a robust supply chain, not limiting access to their products by complex supply issues that derive from a centralized processing facility. The biotech industry in general speaks of cell and gene therapy manufacturing, but no biotech company, as far as I know, has ever manufactured a cell. Cells are expanded, engineered, processed, or reprogrammed.
Cells may be used to manufacture proteins or other materials, and by doing so may be utilized in a manufacturing process such as is done in traditional biotech industry. No cell and gene therapy is based on someone actually manufacturing and making a cell. The source material is always taken from biological tissues. This is a subtle difference, but a crucial one. Cell therapies are based on the know-how and research of scientists around the world that have studied cell behavior and have established scientific methods that enable reprogramming the function of various cells, as well as the capability of selecting and growing these cells.
These technologies are the pinnacle of human achievement, allowing us, in some cases, to cut free from the restrictions that evolution has imposed on ourselves, and in other cases, providing us the insight to utilize the intelligence that resides in our cells based on such evolutions. Cell and gene therapies are about utilizing scientific knowledge, sophisticated biological algorithms, and tools to reprogram cells for our own benefit and health. Their success depends on the processing systems, the hardware, the biological techniques, and the software that enables user-friendly, low cost, and high-quality replication of these algorithms. Our approach to this industry is based on these fundamentals. We work closely with many cellular processing system developers to optimize these devices, and in some cases have even developed our own, which are integrated into our OMPULs.
We work closely with the suppliers and developers of different technologies which enable processing and reprogramming of cells. We utilize these technologies to optimize the quality and the safety of various therapies. We have set up our network in Europe, Asia, the Middle East, and the U.S. We now have our OMPUL deployed in Europe and the Middle East, and have set up point-of-care centers in strategic hubs in the U.S. We have managed to generate revenues that cover our activity in Europe and Asia, and we'll now use the additional funds we have received from Metalmark, which we announced this morning, to deploy additional OMPULs to provide services for our customers in Europe and in the U.S. Our focus this year has been and will continue to be, to establish our point-of-care development and processing services with a strong focus on expanding capacity in the U.S.
One excellent example is our partnership with Johns Hopkins, where we have established a point-of-care center supported by a generous Maryland grant that will be utilized for the construction of the cell and gene therapy processing facility. Our process development services are already active on-site. We have managed to provide our customers with all the services we committed to in a timely manner and believe that they continue to see the value of our decentralized approach. We are also expanding our marketing efforts as we believe we have now the resources to expand our capacity. Turning in more detail to our funding announcement this morning, I'm pleased to report we secured a $10 million loan from Metalmark Capital, a premier investment firm with deep expertise in the healthcare sector.
For those of you unfamiliar with Metalmark, they target investments in middle-market companies seeking to build long-term value through active and collaborative partnerships. Metalmark has managed in excess of $8 billion of both recurrent and predecessor funds. They are committed partners, and we look forward to working closely with them to help us accelerate the rollout of our point of care platform and these critical services. Equally important is the fact that we secured this investment at the subsidiary level. For those of you who have known us over the years, we have two major priorities. Number one is delivering life-saving cell and gene therapies to patients around the world at costs that will allow widespread adoption and no less important, protecting and preserving our shareholder value by avoiding the usual toxic funding that often destroys the capital structure and in turn value for small cap biotech companies.
I strongly believe that the underlying value of what we are building is not reflected in the public market. Bringing in a partner as Metalmark, who has deep expertise in the healthcare sector and understands the valuation biotech services companies are getting in the private sector, I hope will help establish that value. Additionally, they understand, I believe, the growth potential of our business, and we could not be more excited to have them as a partner while preserving our capital structure and minimizing equity dilution. The reason our point-of-care business is resonating well in the industry is we are able to lower the cost, streamline logistics, expand capacity, enhance distribution through processing of therapies close to the hospital setting, which we hope will support payer uptake and make these therapies more broadly available to patients.
We believe this is a crucial step that is necessary for cell therapies to become widely available. Utilizing our OMPUL-based approach, we believe we are uniquely positioned to address the challenges of current centralized production. OMPUL shortens the implementation time of building out new capacity 18-24 months to three months. In terms of expenses, our goal over time is to reduce the cost of these therapies to tens of thousands versus hundreds of thousands. Importantly, we believe we have built a highly scalable business model and expect to benefit from growth, higher margins, recurring revenue streams, and based on future royalties and long-term contracts from industrializing and supplying these cell and gene therapies. At the same time, we've already started generating revenue in our therapy outsourcing. Though not at the same level as the services.
Still, we believe this will provide a longer-term source of future income and additional value for shareholders. Our point-of-care therapeutic pipeline now spans over 16 distinct clinical programs across immuno-oncology, antiviral, metabolic, and autoimmune diseases, as well as tissue regeneration. Our strategy involves leveraging government grants and other sources of non-dilutive funding from regional partners in order to advance life-saving. By designing these therapies from the ground up using our operational -based model, we believe these therapies can be advanced through clinical trials at a fraction of the cost of traditional clinical trials by leveraging our network of academic institutes and healthcare systems around the world. We are also taking advantage of non-dilutive funding, such as our recent award in May 2022 totaling EUR 4 million from the European Innovation Council Pathfinder Grant to advance technologies for the production of personalized induced pluripotent stem cells.
The grant is aimed at the development of technologies to speed production and personalize iPSCs, while significantly reducing manufacturing costs. In turn, these products can be utilized for a wide array of indications, including autologous adoptive cancer immunotherapies, hematopoietic stem cell transplantation, and regenerative medicine. We believe our therapeutic pipeline holds tremendous unlocked potential as we and our partners advance each of these assets through clinical and pre-clinical milestones. When you compare our therapeutic pipeline against other biopharmaceutical companies of our market cap, as well as many of those much larger than us, most of them have only a small handful of related programs. In contrast, we have access to many therapies across various indications at all stages of development through our growing partnerships. To wrap up, we are executing on everything we said we are going to do.
Now with Metalmark's support, we look forward to accelerating the rollout of our point-of-care services and deployment of our tools. Our partners and customers are ready to support the validation, development, and clinical trials of advanced therapies utilizing the point-of-care platform within their respective markets. We continue generating revenue while transitioning from the first to second stages of our business model. Our agreements with our customers are long-term contracts, and as we advance through respective pipelines, we expect to benefit from growth and high margin recurring revenue streams. Overall, we are more enthusiastic than ever about the outlook of the business and believe that we are well-positioned to expand our market position, not only as a leader but as a disruptor in the cell and gene therapy market.
We have built a highly scalable business and we believe will drive value for shareholders for years to come. On that note, I'll now turn the call over to Neil Reithinger, our Chief Financial Officer.
Thank you, Vered. Our revenues for the three months ended June 30, 2022 were $0.2 million, compared to $10.5 million for the three months ended June 30, 2021. The decrease in our revenue is attributable to the fact that most of the performance obligations under our POC development contracts were completed in 2021, which primarily related to services performed to support the company's customers and to set up in their respective territories. Cost of revenues, development services, and research and development for the three months ended June 30, 2022 were $8.9 million, as compared to $9.7 million for the three months ended June 30, 2021, representing a decrease of 8%.
The changes contributing to the decrease during the quarter were attributable to an increase of $531 thousand in salaries and related expenses, mainly attributed to an increase in salaries and related expenses following the scale-up for increased production, a decrease of $2.2 million in subcontracting, professional and consulting service fees, where we invested heavily in subcontracting and professional and such service fees in previous years, and we reduced such expenditures this year, and an increase of $991 thousand in other research and development expenses. Selling, general and administrative expenses for the three months ended June 30 were $2.8 million, as compared to $2.9 million for the comparable period.
The decrease in selling and general administrative expenses for the three months ended June 30 compared to the three months ended June 30, 2021 is primarily attributed to a decline in stock-based compensation, professional fees, and other general and administrative expenses. This was partially offset by an increase in salaries and related expenses in accounting and legal fees. In terms of liquidity and current assets, we ended the period with approximately $25.5 million, including cash and accounts receivable of approximately $21 million. This does not include the funds from Metalmark for $10 million that was received subsequent to the balance sheet date in this quarter. We remain focused on carefully managing expenses through cost-effective international partnering, strategic funding, and non-dilutive grant funding.
We have been fortunate to receive government support from several countries and believe we will continue to benefit from such support to further grow our POCare platform. We also look forward to benefiting from our recent loan and collaboration with Metalmark. Operator, we'll now open the call to questions.
Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions.
Your first question for today is coming from Bruce Jackson. Please announce your affiliation, then pose your question.
Hi, Bruce Jackson, The Benchmark Company. I'd like to start with a comment you made on the fourth quarter call, where you said that you had commitments from customers for future revenue in excess of $30 million for 2022 and $55 million for 2023. I wanted to know if there were any updates to your thoughts on the contract pipeline for the remainder of the year.
I think we're still on track for our commitments. We have had some additional contracts, not major, but I think we have maybe a change of about $5 million, but I don't remember the exact number. Certainly, the contracts we have, we are going well on them, they are still progressing well.
Okay, great. The other question I had was about the formation of the orgenesis subsidiary. Is that with the assets, are those physical assets, for example, the OMPULs? And does it include any intangible assets like patents or know-how, anything there? Just broadly, what's the composition of the assets in the orgenesis subsidiary?
We have subsidiaries that are focused on services, and we have the OMPULs there, and any know-how that is related to providing services such as process development and processing of the cells. This does not include any know-how IP related or anything related to the therapies themselves. We have subsidiaries that are focused on different lines of therapeutic lines and which support the out-licensing and any revenue generated from these out-licensing contracts.
Okay, great. Thank you for taking my questions.
Always a pleasure.
Your next question for today is coming from Kevin Teo. Please announce your affiliation then pose your question.
Hey, Vered. Kevin from Slingshot Capital. Yeah. I'll just share a few observations before asking my question, and I think it will really guide the shareholders in thinking about where this business is headed. I'm looking at our cash level right now is dropping. We are left with about $3 million of cash. And of course, we do have quite a big chunk in accounts receivable, but I'll just discount the accounts receivable for now because time is needed to collect those. This quarter, we incurred about $5 million of losses. Without the extra financing from Metalmark Partners, we might not even last for two quarters. I would just wonder, how are you balancing our own growth, you know, or investing in. I also noticed we spent about $4 million investing in DeepMed IO and other companies.
I'm just wondering, how are you balancing our immediate need for profitability? Because we cannot be diluting and raising money all the time.
Yes, I agree with you. This was actually in support of some of the grant activity. It's actually something that we hope will be refunded by grants. Sometimes grant money takes time, and you have to spend and then receive back. We really try to focus only on the activity expenses on grant-related tables.
Got it. I'd also like to ask as well, because I think a lot of things have changed in this year. Interest rates have definitely gone up. There's a weak macroeconomics. There's a lot of talk about a possible recession. I just want to ask about the customer's commitment for financial year 2023. Do we still expect roughly about $50 million of revenue or you are starting to see some downward adjustments in those figures?
At least, you know, for existing customers and additional, potential customers, I think they, you know, typically when, biotech companies go for development of a product or especially if they're going for a clinical trial, they make sure they have the revenue kind of, expenses kind of available because of the commitment to the hospital. I think most of our customers have the funding, at least the ones I've asked. I also think in general, a lot of our customers are heavily funded by government grants and additional resources, so not only dependent on additional, financing of themselves. I do think our revenues seem pretty secure. We are expanding our customer base just to make sure of that.
That's why it was very important for us to make sure we have the capacity, to expand our services. If we take on new customers and we have the existing customer, and all is well for everyone, we have to make sure we provide those services.
Got it. If I could just squeeze in one last question. In the press release, I noticed we talk about multiple contracts with biotech companies from United States, E.U., Asia, Middle East as well. Maybe for the benefit of other shareholders as well, are you able to elaborate more about the profile, the background of your clients? Are they large clients, small clients? Are they reputable? Are these clients the names that we see in newspapers and publications, science publications?
Well, I think the science is certainly, people. I mean, as I said, a lot of these have gone through a lot of, kind of, screening from government grants, right? I think the science is certainly based. A lot of them have clinical activity, so they are established. This is kind of not the first product to market, which I think is important. We do have smaller ones that maybe are more, kind of, startup mode, but I think many of our customers are kind of established in their own, kind of, activity.
Got it. Just to end off, right? I want to share my observations about the stock market right now, and I hope it is of value to you because I see that as my duty to you and the company as a shareholder. It almost seems like we have entered a different environment right now. Investors are no longer looking for growth, but they are focusing a lot on profitability and just seeing the economy, it's understandable why they are looking at profits instead. I really do hope that we can be profitable soon. Otherwise, I think it's gonna have a adverse effect on our share price and capital raising down the road is gonna be even harder. To end off, I just wanna thank you for the hard work that you're doing as well.
We really do appreciate it.
Thank you. I think we all appreciate your comments. We'll do our best to get to that point.
Once again, if there are any questions or comments, please press star one on your phone at this time. There appear to be no further questions in queue. I would like to turn the floor back over to Ms. Caplan for any closing comments.
Thank you. I'd like to thank everyone for participating on our second quarter update conference call. We are excited about the outlook for the business and appreciate the support of our shareholders. We look forward to providing further updates as we advance our pipeline and our services and deploy our tools worldwide. Thank you.
Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.