Streamex Corp. quarterly report, Q3 FY2020

Business context and reporting period

The supplied filing is BioSig Technologies, Inc.’s unaudited Form 10-Q for the quarter ended September 30, 2020—not a filing for Streamex Corp. BioSig develops the PURE EP cardiac signal-processing system and, through majority-owned ViralClear, had been developing the antiviral candidate merimepodib. BioSig reported no revenue and had no paying PURE EP customers.

Financial results and liquidity

With no revenue or cost of goods sold, gross margin and operating margin are not meaningful. Cash used in operating activities was $20.50 million for the nine months, versus $11.58 million in 2019; investing cash outflow was $0.06 million. Financing provided $41.20 million, and cash rose to $32.75 million from $12.11 million at year-end 2019.

At September 30, 2020, working capital was $28.93 million. Total liabilities were $4.98 million, including $4.49 million of accounts payable and accrued expenses and $0.42 million of lease liabilities. The filing reports no convertible debentures outstanding. Cash included $32.25 million in deposits above FDIC insurance limits.

Material changes versus the prior comparable period

• Operating expenses and losses increased substantially: nine-month R&D rose 214% and G&A rose 127% year over year. Management attributed the increases to ViralClear development and clinical work, acquired R&D, increased staffing and performance pay, and higher stock-based compensation.
• Noncash equity-based compensation was $20.57 million for the first nine months of 2020, compared with $7.70 million in 2019.
• Common shares outstanding increased to 30.12 million at September 30, 2020 from 23.32 million at December 31, 2019. The company raised capital through common-stock offerings, its at-the-market program, ViralClear stock sales, and option and warrant exercises.
• ViralClear’s ownership by BioSig declined from 87.8% at year-end 2019 to 69.4% at September 30, 2020 after subsidiary share sales and issuances.

Outlook, commentary, risks and unusual items

• Management said existing cash, subsequent option and warrant proceeds, and potential proceeds from the remaining at-the-market capacity were expected to fund operations for at least 12 months from issuance of the statements. The company nevertheless expects continuing losses and negative operating cash flows, and may need additional financing; no assurance of financing or commercialization was given.
• The company had a $45 million at-the-market facility, with $43.9 million remaining at September 30, 2020. Further equity financing could dilute existing shareholders; inability to raise capital could require reduced activity or cessation of operations.
• On October 26, 2020, after the reporting date, BioSig halted enrollment in ViralClear’s Phase 2 merimepodib/remdesivir COVID-19 trial. An unblinded safety review found an imbalance in survival rates among the seriously ill Grade 3 patients, making it unlikely the trial would meet its primary safety endpoints. The company said it did not intend to continue developing merimepodib and expected trial wind-down and regulatory-reporting costs in Q4 2020; it would consider a sale or license.
• PURE EP had FDA 510(k) clearance and was undergoing clinical evaluation, but had no paying customers. As of October 12, 2020, 63 patients had enrolled in its clinical study. Management targeted ISO 13485 audit preparation and CE-mark progress in 2021, while noting that COVID-19 could delay commercialization and clinical activity.
• Commitments included approximately $13.8 million of future purchases or services, some modifiable or cancellable. ViralClear’s acquired licensing arrangement included potential $10 million and $5 million marketing-authorization milestones in the first and second countries, respectively, plus 6% royalties. These amounts are contingent, not current debt.
• Related-party matters included ViralClear’s acquisition of assets from Trek Therapeutics, an entity controlled by a BioSig director, and services from a firm associated with a director. The filing also describes Series C preferred-stock redemption triggers and a shareholder rights plan that could impede an unsolicited change of control.
• Management reported effective disclosure controls and procedures and no material changes in internal control over financial reporting during the quarter. The filing reported no outstanding litigation.

Most important facts for investors to verify

• Confirm the issuer identity: the supplied document is BioSig Technologies, Inc. (ticker BSGM), not Streamex Corp.
• Track cash burn, payable balances and financing needs against management’s stated funding horizon; the company had no revenue and used $20.50 million in operating cash in nine months.
• Review subsequent disclosures on the halted ViralClear trial, its wind-down costs, and whether merimepodib is sold, licensed or abandoned.
• Monitor PURE EP clinical evaluation, commercialization, customer conversion, and regulatory/CE-mark milestones; stated plans are not assurances of results.
• Assess dilution from equity issuance, stock-based compensation, options and warrants, and the remaining at-the-market capacity.
• Review the terms and potential exposure of the contingent purchase, licensing, royalty and preferred-stock obligations, including related-party arrangements.