BioTime, Inc. — Q1 2016 Form 10-Q summary
Filing identity: The supplied filing is for BioTime, Inc., not Lineage Cell Therapeutics, Inc. It reports the three months ended March 31, 2016, with comparative results for Q1 2015. BioTime describes itself as a clinical-stage biotechnology company; its consolidated results include subsidiaries such as Asterias and OncoCyte.
Financial performance
| Metric | Q1 2016 | Q1 2015 |
|---|---|---|
| Revenue | $2.073 million | $1.264 million |
| Gross profit / margin | $1.848 million / 89.1% | $1.000 million / 79.1% |
| Research and development expense | $13.734 million | $9.323 million |
| General and administrative expense | $11.872 million | $5.179 million |
| Operating loss | $23.758 million | $13.502 million |
| Net loss | $23.997 million | $12.590 million |
| Net loss attributable to BioTime | $17.112 million | $10.167 million |
| Basic and diluted loss per share | $0.19 | $0.13 |
| Net cash used in operating activities | $14.313 million | $9.069 million |
Revenue growth was led by grant income, which rose to $1.487 million from $0.699 million and consisted entirely of CIRM payments to Asterias. Subscription and advertising revenue increased to $0.420 million; royalties declined to $0.123 million, and research product and service sales fell to $0.043 million. Revenue remained small relative to operating costs.
Cash and cash equivalents were $27.132 million at March 31, down from $42.229 million at year-end. BioTime reported working capital of $19.2 million and shareholders’ equity of $59.6 million. Cash, available-for-sale securities and landlord receivable totaled $28.9 million. Total liabilities were $20.522 million, including a $5.408 million lease liability, $0.394 million of related-party convertible debt, and $0.315 million of promissory notes and current portion. Management said available resources were expected to fund operations through 2016.
Material changes and notable items
- Revenue increased 64%, but operating expenses rose substantially: R&D increased 47% and G&A 129% year over year. R&D increases included clinical and regulatory work, consulting, compensation and laboratory costs.
- G&A included a $3.1 million noncash charge for Asterias warrants distributed to Asterias shareholders other than BioTime. Stock-based compensation was $3.4 million, compared with $1.9 million a year earlier.
- Cash used in operations increased to $14.3 million. Investing activities used $1.7 million, including equipment and construction spending and restricted cash for a lease security arrangement; financing activities provided $0.8 million.
- BioTime’s investment in Ascendance was accounted for under the equity method; BioTime recorded $0.235 million of its share of losses in Q1.
Outlook, risks and contingencies
- Management’s runway expectation was through 2016, but Asterias and Cell Cure clinical programs rely in part on grant funding. Loss or interruption of grants could delay or curtail trials. Asterias’s $14.3 million CIRM grant is milestone-dependent; approximately $7.8 million had been disbursed through March 31, 2016.
- On May 10, 2016, after quarter-end, Asterias priced an offering expected to generate approximately $16.3 million after underwriting discounts and before other offering costs. Proceeds are for Asterias and cannot fund BioTime’s or other subsidiaries’ working capital. If completed, BioTime expected its Asterias ownership to fall below 50%, potentially requiring deconsolidation and a material, then unestimable, noncash gain or loss.
- OncoCyte might need additional capital in 2016 if it proceeds with a CLIA-certified laboratory and commercialization of its first cancer diagnostic test. The filing cautions that additional financing may not be available on favorable terms or at all.
- BioTime reported four therapeutic candidates in human trials, including Renevia, AST-VAC1, OpRegen and AST-OPC1. Development and regulatory success are uncertain, and the company reported persistent losses and a $246 million accumulated deficit.
- The company reported no pending litigation and no material off-balance-sheet arrangements. It said disclosure controls were effective and there were no material changes in internal control over financial reporting.
Important facts for investors to verify
- Confirm the issuer: this source is BioTime’s filing, not a Lineage Cell Therapeutics filing.
- Check whether Asterias’s offering closed as expected, the final proceeds, and whether BioTime’s ownership change led to deconsolidation and a reported gain or loss.
- Monitor cash burn, available unrestricted liquidity, subsidiary-level cash access, and whether management’s stated funding runway remains achievable.
- Verify continued CIRM and other grant funding, milestone progress, and any resulting changes to clinical-trial plans.
- Track the timing, costs and funding needs for BioTime’s Alameda facility and OncoCyte’s potential laboratory and diagnostic launch.