NanoViricides, Inc. — Form 10-Q Summary
Reporting period: Fiscal quarter and six months ended December 31, 2020; filed February 16, 2021. Financial statements are unaudited. NanoViricides is a pre-revenue antiviral drug developer.
Financial performance and position
| Metric | Three months ended Dec. 31, 2020 | Six months ended Dec. 31, 2020 | Comparable 2019 period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Research and development expense | $1.49 million | $3.07 million | $1.01 million; $2.49 million |
| General and administrative expense | $0.80 million | $1.50 million | $0.62 million; $1.13 million |
| Net loss | $2.33 million | $4.64 million | $1.93 million; $3.49 million |
| Basic and diluted loss per share | $0.22 | $0.44 | $0.50; $0.91 |
For the six months, operating expenses rose 26% to $4.56 million. R&D increased about 23%, primarily on outside laboratory fees, supplies, materials, and repairs; G&A increased about 33%, primarily on professional and general operating expenses. The larger share count materially affects year-over-year per-share comparisons.
Cash and cash equivalents were $18.39 million at December 31, up from $13.71 million at June 30. Six-month operating cash use was $4.55 million; property and equipment purchases were $43,565. The company raised net proceeds of $10.44 million in a July 2020 stock offering. Stockholders’ equity was $27.75 million and accumulated deficit was $110.20 million. Current liabilities were $339,308. The $1.1 million related-party mortgage note was repaid on December 31; management reported no current or long-term debt at period-end.
Changes, outlook, and material risks
- The company focused resources on COVID-19 drug development, deferring its shingles program and reducing work on other pipeline programs. Management expects the shingles candidate to follow the COVID-19 program.
- Management reported that COVID-19 candidate NV-CoV-2 completed core safety pharmacology studies, with draft reports received; a pre-IND submission and FDA feedback were next steps. A February 2021 company announcement, after the quarter, described the candidate as well tolerated in reported studies. No IND clearance, human trial results, or product approval had been achieved in this filing.
- The company also described development of NV-CoV-2-R, which combines its candidate with remdesivir. The filing presents expected benefits as hypotheses, not established clinical efficacy. The company said it had no collaboration with remdesivir sponsor Gilead.
- Management believes available resources can fund planned operations for at least 12 months from issuance of the statements and may cover initial human trials for at least one candidate. It expects spending to rise as clinical trials begin and says additional capital will be required for longer-term development. An unused at-the-market agreement permits up to $50 million of stock sales, subject to company direction and market conditions.
- Key risks include no revenue or commercialized products, continuing losses, uncertain development costs and timelines, FDA requirements, reliance on external collaborators, and the possibility of needing additional financing. COVID-19 disruptions had complicated prospective shingles-trial enrollment; broader market disruption could impair fundraising.
- The company depends on exclusive technology licenses from TheraCour, an entity controlled by CEO and Chairman Anil Diwan. Related-party R&D charges were $1.26 million for the six months. The COVID-19 license remained subject to a limited-license MOU while a full agreement was being developed. The VZV license includes a 15% net-sales royalty and milestone payments.
- Disclosure controls were deemed ineffective at December 31 because a previously reported material weakness remained unremediated. Management described a financial-reporting controls committee and remediation efforts. The filing reported no pending or threatened legal proceedings to the company’s knowledge.
Most important facts for investors to verify
- Subsequent FDA pre-IND interactions, IND filing and authorization, and whether clinical trials actually begin; distinguish preclinical safety findings from evidence of human safety or efficacy.
- Cash burn, trial costs, and how long the reported cash balance supports operations as development spending changes; any use of the $50 million ATM facility and resulting dilution.
- Terms and completion of the full coronavirus license, related-party charges and balances, and any resulting milestones or royalties.
- Progress in remediating the material weakness in internal controls.
- Reconcile the filing’s disclosures on related-party payables: it reports $619,904 payable to TheraCour offset by a $491,000 advance, while also describing a $200,000 deferred amount.