Business Context and Reporting Period
NanoViricides, Inc. (NNVC) is a development-stage nano-biopharmaceutical company incorporated in Nevada. The company focuses on the discovery, development, and commercialization of anti-viral therapeutics using proprietary "nanoviricide" technology licensed from TheraCour Pharma, Inc. The reporting period covers the fiscal year ended June 30, 2009. The company has no commercial products, no customers, and has generated no revenue to date. It relies on private placements of equity and debt to fund operations.
Key Financial Metrics
| Metric | Year Ended June 30, 2009 | Year Ended June 30, 2008 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(2,787,798) | $(2,738,337) |
| Accumulated Deficit | $(11,995,535) | $(9,207,737) |
| Cash and Cash Equivalents | $1,689,442 | $816,386 |
| Total Assets | $3,001,261 | $1,468,250 |
| Total Liabilities | $515,719 | $1,024,511 |
| Long-Term Debt | $0 | $0 |
| Research & Development Expenses | $1,791,934 | $1,764,052 |
| General & Administrative Expenses | $1,085,920 | $1,228,179 |
Note: The company reported a net loss per share of $(0.02) for both periods. No margins are applicable as there is no revenue.
Material Changes vs. Prior Period
- Liquidity Improvement: Cash and cash equivalents increased by approximately $873,000 (107% increase) from $816,386 to $1,689,442, driven by proceeds from the issuance of common stock and warrant exercises.
- Expense Reduction: General and administrative expenses decreased by $142,259 (11.6%) due to reductions in consulting and professional fees.
- R&D Increase: Research and development expenses increased slightly by $27,882 (1.6%) to $1,791,934, attributable to the development of additional drug candidates.
- Liability Reduction: Total current liabilities decreased by approximately $508,000, primarily due to the reduction of accrued payroll to officers and related tax expenses.
- Asset Growth: Property and equipment, net, increased significantly from $133,738 to $688,618, reflecting capital expenditures for laboratory equipment and leasehold improvements.
Guidance, Outlook, and Risks
Outlook and Guidance: The company estimates it has sufficient cash to support current operations through December 31, 2010 (approximately six quarters). Management projects a need for an additional $10 million to $15 million over the next 18-24 months to fund "Tox Package" studies, hire scientific staff, and file the first Investigational New Drug (IND) application with the FDA. Without this financing, the business plan will be significantly delayed or curtailed.
Management Commentary: Management has consolidated three influenza programs (FluCide, FluCide-HP, AviFluCide) into a single pan-influenza program to reduce costs. The company has received interest from major pharmaceutical companies regarding its eye drop and HIV candidates but has no binding agreements in place. The company continues to rely on collaborations with government agencies (CDC, WRAIR, USAMRIID) and academic institutions to minimize capital outlays.
Risks and Contingencies:
- Going Concern: The independent auditor has issued a report containing an explanatory paragraph regarding substantial doubt about the company's ability to continue as a going concern due to recurring losses and lack of revenue.
- Technology Dependency: The company is entirely dependent on a perpetual license from TheraCour Pharma, Inc. (a related party) for its core nanomaterial technology. Termination of this license would halt operations.
- Regulatory Uncertainty: All drug candidates are in pre-clinical stages. There is no assurance that pre-clinical results will translate to human efficacy or that the FDA will grant approval.
- Capital Requirements: The company has no long-term debt but requires significant equity financing to proceed. Failure to raise capital will force operational reductions.
Key Facts for Investor Verification
- Revenue Status: Verify that the company has generated zero revenue since inception and has no commercial products.
- Cash Runway: Confirm the estimated cash runway of approximately 18 months (through Dec 2010) and the specific requirement for $10M-$15M additional funding to file an IND.
- Related Party Transactions: Review the exclusive license agreement with TheraCour Pharma, Inc., noting that TheraCour charges development fees (costs + 30%) and is owned 70% by the company's President/Chairman.
- Subsequent Financing: Note that in September 2009 (post-fiscal year end), the company raised an additional $3.2 million through stock sales and warrant exercises.
- Drug Pipeline Stage: Verify that all candidates (FluCide, HIVCide, Eye Drops, HerpeCide, RabiCide) remain in the pre-clinical stage with no human trials initiated.