BioRestorative Therapies, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023; financial statements are unaudited and consolidated with the Company’s wholly owned subsidiary. The company develops cell- and tissue-based therapies and has limited royalty revenue. Its principal programs are BRTX-100 for disc/spine conditions and the preclinical ThermoStem metabolic program.
Financial results and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $30,700 | $29,000 | $126,500 | $116,100 |
| Research and development | $874,824 | $989,170 | $3,353,960 | $2,839,731 |
| General and administrative | $2,260,319 | $3,649,530 | $8,772,632 | $11,568,490 |
| Operating loss | $(3,104,443) | $(4,609,700) | $(12,000,092) | $(14,292,121) |
| Net loss | $(2,925,492) | $(4,655,825) | $(11,590,266) | $(14,147,216) |
| Net loss per share, basic and diluted | $(0.64) | $(1.28) | $(2.85) | $(3.93) |
- At September 30, 2023, cash and cash equivalents were $2.44 million and marketable securities were $9.80 million, totaling $12.24 million. Working capital was $11.67 million; total assets were $13.80 million and total liabilities were $975,033.
- The balance sheet reports lease liabilities of $198,724 in total. It does not report other conventional debt at September 30, 2023.
- For the first nine months, operating cash use was $4.66 million; investing activities provided $3.15 million, primarily reflecting net marketable-security sales; financing provided $2.27 million from stock offerings. Cash increased by $760,292 to $2.44 million.
- Stock-based compensation was $6.32 million for the nine months and was included in G&A. The filing does not present gross profit or gross margin; reported revenue was primarily sublicense royalties.
Changes versus comparable periods
- Q3 revenue rose $1,700 year over year; nine-month revenue increased $10,400. Royalties under the sublicense agreement comprised all reported revenue.
- Q3 operating expenses fell $1.50 million, principally because G&A stock-based compensation declined by $1.58 million. R&D was down $114,346, reflecting lower contract research and other fees, partly offset by higher salaries.
- Nine-month operating expenses declined $2.28 million. G&A fell $2.80 million, mainly from a $3.24 million reduction in stock compensation, while R&D increased $514,229, including higher salaries and lab costs, partly offset by lower PRC service expenses.
- Nine-month net loss narrowed by $2.56 million. The comparison also reflects 2022 PPP loan forgiveness income of $250,000; 2023 included higher interest income from investments and $83,333 of net NIH STTR grant income.
- Operating cash use increased by $359,373 year over year. Common shares outstanding rose from 3,677,775 at December 31, 2022 to 4,667,641 at September 30, 2023, including shares issued in financing transactions and preferred-stock conversion.
Outlook, developments, and risks
- Management expects continued losses and negative operating cash flows while it advances development programs. It believes cash and investments at September 30, 2023 can fund operations for the 12 months following the filing date, but says additional equity or debt financing will eventually be needed to complete development activities or reach profitability. Failure to obtain financing could require curtailing development or operations.
- The company reported that its BRTX-100 Phase 2 trial was continuing and that, in June 2023, the Data Safety Monitoring Board unanimously recommended continuation without changes. In September 2023, it announced a supply agreement to manufacture tissue-based biologics for cosmetic and aesthetic applications.
- In July 2023, a registered direct offering of 685,033 shares at $3.03 per share generated approximately $1.83 million in net proceeds. The ATM program generated approximately $412,000 net during the first nine months; a further 39,276 shares raised about $86,000 gross in October 2023.
- Management identified financing availability, clinical and commercial development, intellectual-property protection, staffing, customer attraction, and regulatory complexity among key risks. The filing does not provide quantitative financial guidance.
- Disclosure controls and internal control over financial reporting were deemed ineffective at September 30, 2023 because of material weaknesses involving formal procedures, risk assessment, and documented testing and review controls. Management described remediation efforts, including added financial leadership, external consulting, and control documentation.
Important facts for investors to verify
- Whether cash burn, clinical-trial spending, and the stated 12-month liquidity runway remain consistent with subsequent filings and financing needs.
- ATM capacity, subsequent share issuances, and potential dilution from outstanding options, warrants, restricted stock units, and 1,398,158 Series B convertible preferred shares.
- Progress, enrollment, safety, and milestones for the BRTX-100 Phase 2 trial, as well as the status and economics of the cosmetic biologics supply agreement.
- Whether the material weaknesses in internal controls have been remediated and tested as operating effectively.
- The terms and timing of any additional financing, and the extent to which nonrecurring items such as tax credits, grant income, investment gains, and stock compensation affect reported results.