iBio, Inc. Form 10-Q Summary
Reporting period: Quarterly period ended March 31, 2022, with comparisons to March 31, 2021. The request identifies “2021 Q3,” but the filing is for fiscal 2022 third quarter. Financial statements are unaudited and presented under U.S. GAAP.
Business Context
iBio develops biopharmaceuticals using its plant-based FastPharming Manufacturing System and provides bioprocessing, contract development and manufacturing, research, and protein products. Its biopharmaceutical pipeline includes candidates for fibrosis, oncology, COVID-19, and classical swine fever. The Company operates through Biopharmaceuticals and Bioprocessing segments.
Key Financial Metrics
| Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Nine Months Ended March 31, 2022 | Nine Months Ended March 31, 2021 |
|---|---|---|---|---|
| Revenue | $1.943 million | $0.765 million | $2.322 million | $1.880 million |
| Gross profit | $1.895 million | $0.272 million | $2.121 million | $0.605 million |
| Gross margin | 97.5% | 35.6% | 91.3% | 32.2% |
| Research and development expense | $5.551 million | $2.162 million | $11.393 million | $6.892 million |
| General and administrative expense | $8.526 million | $5.313 million | $23.522 million | $15.385 million |
| Operating loss | $(12.182) million | $(7.203) million | $(32.794) million | $(21.672) million |
| Net loss attributable to iBio stockholders | $(12.390) million | $(7.725) million | $(33.337) million | $(23.518) million |
| Loss per share | $(0.06) | $(0.04) | $(0.15) | $(0.12) |
- Cash flow: Operating activities used $25.977 million during the nine months ended March 31, 2022, compared with $22.838 million in the prior-year period. Investing activities used $5.604 million, and financing activities used $6.115 million.
- Liquidity: At March 31, 2022, cash and cash equivalents were $33.767 million, investments in debt securities were $14.813 million, and restricted cash was $5.941 million. Management stated that cash, cash equivalents, and debt securities excluding restricted cash totaled approximately $48.6 million and should fund activities through at least September 30, 2023, based on its projections.
- Debt: The Company had a $22.120 million term note payable, net of deferred financing costs, bearing interest at 3.25% and maturing November 1, 2023. The loan is secured by iBio CDMO assets and the manufacturing facility, and the Company guarantees the obligations.
- Balance sheet: Total assets were $115.370 million and total liabilities were $35.990 million at March 31, 2022. Accumulated deficit was $206.876 million. Common shares outstanding were 218.166 million at March 31, 2022 and 218.166 million as of May 9, 2022.
Material Changes Versus the Prior Comparable Period
- Revenue increased 154% in the quarter and 24% for the nine-month period, primarily because the Company recognized $1.8 million of royalty revenue related to the Fraunhofer technology license. This revenue represented 93% of quarterly revenue and 78% of nine-month revenue.
- Gross margin increased substantially because the Fraunhofer royalty revenue had no associated cost of goods sold. The improvement does not necessarily indicate recurring operating margin performance.
- R&D and G&A expenses increased materially as the Company expanded personnel, invested in the San Diego facility, increased production capabilities, and advanced IBIO-101 and IBIO-202.
- On November 1, 2021, the Company acquired its Bryan, Texas manufacturing facility, terminated the prior finance lease, acquired the remaining minority interest in iBio CDMO, and made iBio CDMO wholly owned. The transaction included $28.0 million of cash, a warrant for 1.290 million common shares, and a $22.375 million secured term loan.
- The Company invested $7.5 million in RubrYc Therapeutics agreements, including $2.5 million paid during the quarter for additional preferred shares. The transaction was allocated among preferred stock, intangible assets, and prepaid expenses.
- The SBA PPP loan and accrued interest, totaling approximately $0.607 million, were forgiven during the nine-month period.
Guidance, Outlook, Risks, and Unusual Items
- Management expects revenue to remain variable because it depends on a small number of customers and revenue is often recognized only when a task or project is completed.
- Management stated that IND-enabling challenge studies for IBIO-202 were proceeding as planned and that, assuming favorable results, an IND filing was planned before the end of calendar 2022.
- IBIO-101 entered the IND-enabling stage, with an IND expected before the end of the second quarter of calendar 2023.
- The University of Pittsburgh amended the IBIO-100 license, extending key development deadlines, including an IND filing deadline of December 31, 2023. The Company plans to pace development to extend its cash runway.
- The term loan requires maintenance of at least $10 million of unrestricted cash and contains restrictions on additional debt, liens, investments, restricted payments, and asset sales. Principal is due in November 2023, creating a significant refinancing or repayment requirement.
- Management’s liquidity outlook assumes, among other factors, collection of Fraunhofer-related receivables and a potential sale-leaseback of the Bryan facility. There is no assurance that a sale-leaseback or other financing will be completed.
- The Company has incurred recurring losses and negative operating cash flow and states that it expects losses to continue. It may require additional capital to execute its long-term plans, potentially causing substantial dilution.
- Revenue concentration is significant: one customer accounted for approximately 93% of quarterly revenue and 78% of nine-month revenue.
- COVID-19 may disrupt operations, capacity, supply chains, and liquidity. The Company reported no existing Russian suppliers or contractors but noted uncertainty related to the war in Ukraine and broader economic effects.
- After quarter-end, the Company issued 1,000 shares of convertible preferred stock with special voting rights relating to a proposed 1-for-25 reverse stock split. A special stockholder meeting was scheduled for June 30, 2022 to consider the reverse split, authorized-share reduction, and related matters.
Important Facts for Investors to Verify
- Whether the Fraunhofer settlement and license receivables, including the remaining $5.1 million settlement receivable, were collected as projected.
- Whether revenue growth and high gross margins can be sustained without additional one-time or licensing revenue.
- The Company’s ability to maintain the $10 million unrestricted-cash covenant and repay or refinance the $22.375 million term loan by November 2023.
- Whether the anticipated Bryan facility sale-leaseback is completed and on what terms.
- Progress toward the IBIO-202 and IBIO-101 IND filings and the USDA regulatory response for IBIO-400.
- Future financing needs, potential equity dilution, and the outcome of the proposed reverse stock split and authorized-share reduction.
- Customer concentration, contract timing, CDMO utilization, and recurring revenue trends.