Filing summary
Entity note: The request identifies Gridai Technologies Corp., but the supplied Form 10-Q is for First Wave BioPharma, Inc. (Nasdaq: FWBI). This summary covers the filing actually provided, for the quarter ended June 30, 2023, filed August 14, 2023.
Business context and reporting period
First Wave is a development-stage biotechnology company focused on non-systemic gastrointestinal therapies. Its principal programs include adrulipase for exocrine pancreatic insufficiency and niclosamide for gastrointestinal and inflammatory conditions. The unaudited filing reports the three and six months ended June 30, 2023, compared with the corresponding 2022 periods.
Financial results and liquidity
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | No revenue | No revenue | No revenue | No revenue |
| Research and development | $1.35 million | $2.91 million | $2.71 million | $7.88 million |
| General and administrative | $2.83 million | $2.50 million | $5.53 million | $6.90 million |
| Net loss | $4.19 million | $5.41 million | $8.26 million | $15.03 million |
| Net loss per share, basic and diluted | $1.89 | $53.47 | $3.10 | $171.55 |
| Operating cash used | Not stated quarterly | Not stated quarterly | $5.61 million | $12.50 million |
Margins are not meaningful because the company reported no revenue. At June 30, cash and cash equivalents were $1.24 million; restricted cash was about $0.02 million. Current assets were $2.35 million and current liabilities $3.26 million, a working capital deficiency of approximately $0.91 million. Total liabilities were $3.45 million, including a $0.15 million current note payable and $0.25 million in operating lease liabilities. Accumulated deficit was $176.79 million and stockholders’ equity was $0.88 million.
Six-month financing cash inflows were $5.48 million, mainly from the March 2023 offering and warrant exercises. Cash and restricted cash decreased by $0.13 million during the period. The company reported approximately $0.65 million of stock-based compensation for the six months.
Material changes versus the prior comparable period
- Six-month net loss narrowed by $6.78 million, or 45%, and operating cash use declined by $6.89 million versus 2022.
- Six-month R&D expense fell 66%, mainly due to lower clinical-trial, adrulipase manufacturing and personnel costs. Management expected further R&D reductions as the SPAN trial closed out.
- Six-month G&A declined 20%; however, Q2 G&A increased 13%, which management attributed principally to higher public-company, investor-relations and corporate-communications costs.
- Common shares outstanding rose from 995,003 at December 31, 2022 to 4,208,995 at June 30, 2023. The company reported 5.52 million warrants outstanding at quarter-end, indicating substantial potential dilution.
Outlook, risks and unusual items
- Going concern: Management said cash was expected to fund planned operations only through September 2023. The company said additional capital was necessary and disclosed substantial doubt about its ability to continue as a going concern. It reported approximately $2.1 million of gross proceeds from a July 2023 offering through August 14; the filing does not establish that this resolved the funding risk.
- Clinical outlook: July 2023 preliminary Phase 2b SPAN results for adrulipase indicated the formulation appeared safe and well tolerated and improved over prior formulations, but the primary efficacy endpoint was likely not achieved. Further endpoint results were expected in Q3 2023.
- Pipeline reprioritization: The company discontinued pursuing the COVID-19 GI indication after mixed trial results, reduced resources for its ulcerative proctitis/proctosigmoiditis program following inconclusive data and cited financial constraints. Its ICI-associated colitis program was on hold for financial reasons.
- Financing and dilution: The June inducement transaction generated about $2.4 million gross proceeds through warrant exercises and issued new warrants to purchase up to 3.45 million shares. The July offering generated about $2.1 million gross proceeds, before approximately $0.35 million of fees and expenses, and included substantial additional warrants and pre-funded warrants.
- Contingency: A former director’s Delaware lawsuit seeks advancement of approximately $250,000 in legal fees and expenses. The case had gone to trial in May 2023 and awaited a decision; additional fees could be sought.
- Management stated disclosure controls were effective and reported no material changes in internal control over financial reporting. No material changes to the prior annual report’s risk factors were disclosed.
Important facts for investors to verify
- Confirm the issuer: the supplied filing is First Wave BioPharma, not Gridai Technologies Corp.
- Review subsequent cash, financing, and runway disclosures, including the net proceeds and terms of the July 2023 offering.
- Check final SPAN trial results against the preliminary assessment that the primary endpoint was likely not achieved.
- Assess outstanding warrants, pre-funded warrants, equity-plan awards and resulting dilution relative to the share count.
- Follow the going-concern funding needs and the outcome and potential cost of the former director’s lawsuit.