Business Context and Reporting Period
Company: NanoViricides, Inc. (NNVC)
Reporting Period: Quarter ended September 30, 2009
Status: Development Stage Company
Business Overview: NanoViricides is a nano-biopharmaceutical company focused on discovering and developing therapeutics for life-threatening viral infections (including HIV, Influenza, Hepatitis, and Ebola). The company holds an exclusive perpetual license from TheraCour Pharma, Inc. for its core technology. As of the reporting date, the company has no commercial products, no revenues, and has incurred significant operating losses since inception.
Key Financial Metrics
| Metric | Q3 2009 (Three Months) | Q3 2008 (Three Months) | Inception to Sept 30, 2009 |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Net Loss | $(731,189) | $(744,757) | $(12,726,724) |
| Operating Expenses | $732,059 | $756,834 | $12,088,591 |
| Cash and Cash Equivalents (Ending) | $4,202,675 | $2,985,247 | $4,202,675 |
| Net Cash Used in Operating Activities | $(618,952) | $(640,493) | $(10,007,957) |
| Net Cash Provided by Financing Activities | $3,187,150 | $3,227,554 | $15,167,896 |
| Total Assets | $5,571,819 | N/A | N/A |
| Total Liabilities | $557,116 | N/A | N/A |
| Stockholders' Equity | $5,014,703 | N/A | N/A |
Note: The company reported no long-term debt as of September 30, 2009. Current liabilities totaled $557,116, primarily consisting of accounts payable and accrued expenses.
Material Changes vs. Prior Period
- Liquidity Improvement: Cash and cash equivalents increased significantly from $1,689,442 at June 30, 2009, to $4,202,675 at September 30, 2009. This increase was driven by net cash provided by financing activities of $3,187,150 during the quarter.
- Financing Activity: The company raised approximately $3.2 million in the quarter through the issuance of common stock and the exercise of warrants. Specifically, $1,337,500 was raised from a private placement of units (stock and warrants) and $1,879,900 from warrant exercises.
- Operating Expenses: Total operating expenses decreased slightly to $732,059 in Q3 2009 compared to $756,834 in Q3 2008. Research and development expenses were $463,922, while general and administrative expenses were $268,137.
- Share Count: Shares outstanding increased from 125,299,457 at June 30, 2009, to 131,774,554 at September 30, 2009.
Guidance, Outlook, and Risks
Capital Requirements and Outlook: Management states that current cash reserves ($4.2 million) are sufficient to fund budgeted plans through December 31, 2010. However, the company estimates it will require an additional $3 million to $5 million over the next 24 months to finance planned capital costs, staffing, and scientific studies necessary for filing an Investigational New Drug (IND) application with the FDA. If additional financing is not secured, the company may be forced to curtail operations or delay its business plan.
Key Risks and Contingencies:
- Going Concern: The company has incurred significant losses since inception ($12.7 million deficit) and has no revenue. Substantial doubt exists regarding its ability to continue as a going concern without additional financing.
- Licensing Dependency: The company relies on an exclusive license from TheraCour Pharma, Inc. (a related party). While the license is perpetual, certain terms regarding additional virus types and license fees are subject to future written agreements. Failure to finalize these could impact operations.
- Development Risk: All drug candidates are in pre-clinical stages. There is no assurance that the nanoviricides will prove effective in human trials or receive regulatory approval.
- Grant Funding: A grant application for hemorrhagic fever virus research is pending with the Department of Defense but is currently on a "reserve list" with no guarantee of funding.
Investor Verification Checklist
- Cash Runway: Verify the accuracy of the $4.2 million cash balance and the projected burn rate to confirm the ability to operate through December 2010.
- Financing Pipeline: Assess the status of discussions with potential investors for the required $3-5 million in future capital.
- Related Party Transactions: Review the terms of the license agreement with TheraCour Pharma, Inc., specifically regarding the $25,000 monthly lab supply fee and the 15% royalty structure, to understand future cash outflows.
- Grant Status: Monitor the status of the Department of Defense grant application for Ebola/Marburg/Dengue research.
- Regulatory Milestones: Track progress on pre-clinical studies required for the IND filing, particularly for the FluCide (Influenza) and HIVCide programs.