SINTX Technologies, Inc. (NASDAQ: SINT) is a leading innovator in the field of advanced ceramics, developing and commercializing cutting-edge materials, components, and technologies for a diverse range of applications. With a rich history spanning over two decades, SINTX has established itself as a trailblazer in the industry, continuously pushing the boundaries of what’s possible in the realms of biomedical, technical, and antipathogenic applications.
Company Background
SINTX Technologies, Inc. was formed in December 1996, initially focusing on the research, development, and commercialization of medical devices made with silicon nitride for use in spinal fusion and hip and knee replacement applications. The company pioneered the use of silicon nitride in medical applications, primarily concentrating on spine fusion therapies. As SINTX evolved, it expanded its capabilities and expertise in ceramic materials beyond medical devices, venturing into various other applications.
A significant milestone in SINTX’s growth came in June 2022 when the company acquired Technology Assessment and Transfer, Inc. (TAT), a nearly 40-year-old business specializing in transitioning advanced materials and process technologies from laboratory environments to commercial products and services. TAT’s expertise in supplying ceramics for biomedical applications, including components for surgical instruments and conceptual and prototype dental implants, further strengthened SINTX’s position in the industry.
Challenges and Opportunities
Throughout its history, SINTX has faced and overcome various challenges. In July 2021, the company made a strategic move to acquire equipment and obtain proprietary know-how rights for developing, manufacturing, and commercializing protective armor from boron carbide and a composite material of silicon carbide and boron carbide. This initiative aimed to cater to military, law enforcement, and civilian markets. However, the armor plant has not been fully operational since the acquisition, presenting ongoing challenges for the company.
The year 2020 brought both opportunities and obstacles for SINTX. The company made a groundbreaking discovery that its silicon nitride material could inactivate SARS-CoV-2, the virus responsible for COVID-19. This revelation opened up new market opportunities in antimicrobial applications, showcasing the versatility and potential of SINTX’s advanced ceramics. However, like many businesses, SINTX has had to navigate the economic and operational impacts of the COVID-19 pandemic.
Certifications and Capabilities
To facilitate entry into different markets and industries, SINTX has obtained various certifications throughout its history. These include FDA registration, cGMP and ANVISA RDC 665 compliance, as well as ISO and AS9100D certifications. Additionally, SINTX has obtained ITAR registration to further facilitate its entry into the aerospace and protective armor markets. These accreditations underscore the company’s commitment to quality and regulatory standards across diverse sectors.
SINTX’s core capabilities lie in the manufacturing, research, and development of advanced ceramic materials, including silicon nitride, silicon carbide, zirconia, and alumina. The company’s state-of-the-art facilities in Salt Lake City, Utah, and Millersville, Maryland, are equipped with the latest technology, enabling them to produce subtractive and additive forms of these advanced ceramics to meet the diverse needs of their customers.
Product Applications
One of the standout attributes of SINTX’s silicon nitride is its exceptional biocompatibility, bioactivity, and antipathogenic properties, making it a highly sought-after material in the medical device industry. The company’s silicon nitride-based spinal fusion devices have been successfully implanted in patients since 2008 in the US, Europe, Brazil, and Taiwan, showcasing the material’s safety and efficacy. SINTX believes that silicon nitride’s resistance to bacterial adhesion and strong bone integration make it a promising material for other fusion device applications such as arthroplasty implants, foot wedges, and dental implants.
Beyond the biomedical realm, SINTX’s advanced ceramics have found applications in the technical and antipathogenic sectors. The company’s silicon nitride and ceramic-polymer composites possess superior mechanical, thermal, and electrical properties, positioning them as the go-to materials for demanding industrial applications, such as aerospace and protective armor. SINTX believes its silicon nitride has the best combination of mechanical, thermal, and electrical properties of any technical ceramic material, making it ideal for applications where high load-bearing capacity, thermal stability, and wear resistance are required.
The discovery in 2020 that SINTX’s silicon nitride can inactivate SARS-CoV-2, the virus responsible for COVID-19, has opened up new markets and applications for the company’s materials, further solidifying its position as a leader in the antipathogenic space. SINTX has found that incorporating its silicon nitride composition into products such as face masks, filters, and wound care devices can create surfaces that inactivate pathogens, thereby limiting the spread of infection and disease.
Recent Developments
In recent years, SINTX has made strategic moves to optimize its operations and financial position. In 2024, the company initiated a series of cost-reduction initiatives, including a significant workforce reduction, that are expected to result in over a 50% reduction in cash used in operating expenses and an annual savings of approximately $5.8 million.
Additionally, SINTX has been actively exploring strategic partnerships and opportunities to expand its presence in the medical device sector. The company has engaged Ascendiant Capital Markets, LLC to assist in identifying and evaluating potential acquisition targets and other strategic business opportunities that align with its renewed focus on the high-growth medical device market.
Financials and Liquidity
While SINTX has faced its share of challenges, including the underperformance of its armor division, the company’s unwavering commitment to innovation and its ability to adapt to market demands have been instrumental in navigating these obstacles. The company’s strong balance sheet, with a reported cash position of $4.81 million as of September 30, 2024, provides a solid foundation for future growth and investment.
For the fiscal year 2023, SINTX reported revenue of $1.23 million, with a net loss of $8.26 million. The company’s operating cash flow (OCF) for 2023 was -$14.12 million, while its free cash flow (FCF) was -$14.65 million.
In the most recent quarter (Q3 2024), SINTX reported revenue of $799,000, representing a year-over-year increase of 18%. This growth was primarily attributed to new orders for silicon nitride aerospace components and government grants and contracts in the Salt Lake City operation, as well as commercial and government contract revenue in the Maryland operation. The company’s net loss for the quarter was $6,239,000, with an operating cash flow of -$2,570,000 and free cash flow of -$2,581,000.
For the nine months ended September 30, 2024, SINTX reported total revenue of $2.35 million, up 36% from the same period in 2023. Product revenue increased 64% to $1.05 million, while grant and contract revenue grew 19% to $1.29 million. Gross profit increased 22% to $1.69 million. However, the company incurred a net loss of $9.33 million, up from a net loss of $5.94 million in the prior year period, primarily due to increased operating expenses, including $4.46 million in armor exit costs and a $407,000 reduction in force.
SINTX primarily sells its products in the United States. The company’s liquidity position as of September 30, 2024, shows a debt-to-equity ratio of 0.024, cash and cash equivalents of $4.81 million, a current ratio of 3.04, and a quick ratio of 2.82. No available credit line was disclosed.
It’s worth noting that SINTX will require substantial future capital to continue operating its business, conduct research and development, and establish effective marketing and sales capabilities. The company’s continuation as a going concern is dependent upon its ability to increase sales, decrease expenses, and raise additional funding.
Conclusion
As SINTX continues to refine its strategic direction, the company’s expertise in advanced ceramics, coupled with its growing footprint in the medical device industry, positions it as a formidable player in the ever-evolving landscape of material science and innovation. With a renewed focus on high-impact, sustainable solutions, SINTX is poised to unlock new avenues for growth and deliver long-term value to its shareholders. The company’s ongoing strategic review and potential shift towards prioritizing the development and commercialization of innovative medical devices aim to leverage SINTX’s expertise in advanced ceramics and biomaterials to serve the high-growth healthcare sector, potentially opening up new opportunities for growth and profitability in the coming years.
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