Revelation Biosciences, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Revelation is a clinical-stage biopharmaceutical company developing GEM-AKI, GEM-CKD and GEM-SSI. It has not generated revenue and does not expect product revenue for several years, if ever.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 / prior date |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $0.72 million | $0.53 million |
| General and administrative expense | $1.18 million | $1.09 million |
| Operating loss | $1.90 million | $1.62 million |
| Net loss (earnings) | $2.68 million loss | $6.16 million earnings |
| Net cash used in operations | $2.84 million | $1.58 million |
| Cash and cash equivalents | $14.55 million | $11.99 million at Dec. 31, 2023 |
| Total assets | $14.70 million | $12.21 million at Dec. 31, 2023 |
| Total liabilities | $5.23 million | $5.56 million at Dec. 31, 2023 |
| Stockholders’ equity | $9.47 million | $6.65 million at Dec. 31, 2023 |
Margins are not meaningful because the company reported no revenue. No debt balance is reported. Q1 financing cash flow was $5.42 million, primarily net proceeds from the February 2024 public offering; investing cash flow was a $19,000 outflow for lab equipment.
Material changes and unusual items
- Net results swung from Q1 2023 earnings to a Q1 2024 loss. The prior-year period included a $7.74 million gain from remeasurement of warrant liabilities; the current period recorded a $68,000 gain. This fair-value movement is not a measure of operating performance.
- Operating expenses increased $282,000 year over year. R&D rose $192,000, mainly from GEM-AKI and GEM-SSI clinical-study and personnel costs, partly offset by lower manufacturing expense. G&A rose $90,000, as higher personnel costs were partly offset by lower legal and professional fees.
- The February 2024 offering raised $5.4 million net. It included common shares and pre-funded warrants, which were exercised during February; shares outstanding increased to 1,632,935 at March 31 from 264,537 at year-end. The offering also issued 2.73 million warrants exercisable at $4.53 per share. The offering and warrant exercises are material dilution considerations.
- The company effected a 1-for-30 reverse stock split on January 25, 2024. Share and per-share figures in the filing generally reflect the split.
Outlook, liquidity, and risks
Management expects significant operating losses and negative operating cash flows to continue, with R&D expense expected to increase as development proceeds. The company states that its $14.6 million cash balance is not expected to fund operations for one year after issuance of the financial statements. The filing therefore identifies substantial doubt about the company’s ability to continue as a going concern. Additional capital will be needed, and financing may be unavailable or dilutive; without it, the company may delay, reduce or eliminate development programs.
- Legal contingency: LifeSci Capital seeks approximately $5.3 million plus interest in a pending dispute. A magistrate recommended summary judgment for LifeSci; the company objected. The filing records deferred underwriting commissions as a liability but says any additional liability cannot be determined.
- A-IR matter: A-IR had claimed £1.6 million plus interest and costs. The parties settled on April 26, 2024, after quarter-end, and the proceedings were withdrawn with prejudice. The settlement amount is not disclosed in the supplied filing text.
- The San Diego laboratory lease was extended through November 30, 2024; remaining minimum payments were $42,800 at March 31.
- Management reported effective disclosure controls and no material changes in internal control over financial reporting during the quarter. The filing states there were no material changes to the risk factors in the 2023 Form 10-K.
Important facts for investors to verify
- Funding runway, expected cash use, and the timing and terms of any planned capital raise, given the explicit going-concern warning.
- Development progress, costs and financing needs for GEM-AKI, GEM-CKD and GEM-SSI; the filing provides no revenue or firm commercialization timetable.
- Potential dilution from the February offering and outstanding warrants, including the reset of the older Class C warrant exercise price from $160.80 to $4.53.
- Outcome and potential financial exposure in the LifeSci dispute, and the financial impact of the A-IR settlement.
- The warrant note contains an apparent numerical inconsistency: it reports the remaining Class C warrants’ fair value as “$15,260.0 million,” while the balance sheet reports a warrant liability of $15,260. Investors should verify the intended figure in the original filing.