SEC Filing Summary: BioTime, Inc. 10-Q, Quarter Ended June 30, 2012
Entity discrepancy: The supplied filing is for BioTime, Inc., not Lineage Cell Therapeutics, Inc. The summary below reflects the filing’s stated registrant.
Business context and reporting period
BioTime is a biotechnology company focused on regenerative medicine, stem-cell research products, and related therapeutic and diagnostic development through subsidiaries. The filing reports the three and six months ended June 30, 2012, compared with the corresponding 2011 periods; balance-sheet figures are compared with December 31, 2011.
Financial performance and liquidity
| Metric | Q2 2012 | Q2 2011 | Six months 2012 | Six months 2011 |
|---|---|---|---|---|
| Total revenue | $1.034 million | $0.780 million | $1.688 million | $1.606 million |
| Revenue after cost of sales | $0.950 million | $0.756 million | $1.582 million | $1.581 million |
| Research and development expense | $4.615 million | $3.334 million | $8.773 million | $6.285 million |
| General and administrative expense | $2.414 million | $2.403 million | $4.802 million | $4.303 million |
| Net loss attributable to BioTime | $5.457 million | $4.278 million | $10.429 million | $7.642 million |
| Basic and diluted loss per share | $0.11 | $0.09 | $0.21 | $0.16 |
Revenue increased about 32% in Q2 and 5% for the first half, while attributable net loss widened about 28% and 36%, respectively. The increase in R&D spending was a principal driver of higher operating losses. Hextend royalties declined year over year amid lower U.S. sales, market price pressure, and hospitals shifting toward albumin.
Cash and cash equivalents were $12.660 million at June 30, down from $22.212 million at December 31, 2011. Net cash used in operating activities was $9.675 million for the first half, compared with $6.153 million in 2011. Investing activities provided $0.143 million, while financing activities provided $0.015 million. Current assets were $14.606 million and current liabilities $2.962 million. The balance sheet reports no borrowings; liabilities primarily comprise payables, accrued costs, deferred license revenue, and other items. Total liabilities were approximately $4.087 million.
Material changes and unusual items
- Q2 royalties were $126,455, down 29% year over year; first-half royalties were $273,857, down 30%. Management attributed the decline mainly to reduced U.S. Hextend sales and falling hetastarch-product prices.
- First-half other expense included a $204,934 reversal of revenue previously recognized by ESI, pending completion of customer audits and acceptance of shipped cell lines.
- In May, LifeMap acquired XenneX for stated consideration of $4.187 million, primarily in BioTime and LifeMap shares. The preliminary purchase allocation included $4.157 million of intangible assets.
- After quarter-end, LifeMap exchanged shares for 420,000 BioTime shares contributed by Alfred D. Kingsley and Greenway Partners. BioTime said its LifeMap ownership would decline from 86.3% to approximately 73.6%–77.4%, assuming no further LifeMap share issuance; LifeMap may sell the BioTime shares to fund operations.
Outlook, risks, and contingencies
Management said revenue from product sales, database subscriptions and advertising, Hextend royalties, and grants was not sufficient to cover operating expenses, and that additional equity or debt financing might be needed. Financing availability and terms were uncertain; insufficient funding could force delays or reductions in planned work. Management believed subsidiaries had sufficient capital for their current 2012 R&D plans, subject to reassessment.
Management described Renevia as targeting European clinical trials by late 2012 and a potential European launch in 2013, and PanC-Dx as targeting a European launch by 2014. These are stated plans, not assurances. The filing emphasizes that most therapeutic programs remain early-stage and face clinical, regulatory, commercialization, financing, competition, intellectual-property, and stem-cell research policy risks. BioTime reported no material litigation. It reported effective disclosure controls and no material change in internal control over financial reporting.
Important facts for investors to verify
- Confirm the intended issuer: this filing identifies BioTime, Inc., not Lineage Cell Therapeutics, Inc.
- Track cash burn, financing needs, and any subsequent capital raises or changes to research plans.
- Verify Hextend sales and royalty trends, particularly the impact of price reductions and market substitution.
- Check clinical, regulatory, and commercial progress against the stated Renevia and PanC-Dx timelines.
- Review the final XenneX purchase accounting and the effects of the LifeMap share exchange on ownership, dilution, and available cash.