SEC Filing Summary: Lion Biotechnologies, Inc. (now Iovance Biotherapeutics, Inc.)
Reporting period: Form 10-Q for the quarter and six months ended June 30, 2015. The filing identifies the registrant as Lion Biotechnologies, Inc. It is a clinical-stage biopharmaceutical company developing tumor-infiltrating lymphocyte (TIL) cancer therapies and had no commercial products or revenue.
Financial performance and position
| Metric | Three months ended June 30, 2015 | Six months ended June 30, 2015 | Comparable 2014 period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Operating expenses | $6.44 million | $11.74 million | $2.11 million; $4.37 million |
| Net loss | $6.37 million | $11.67 million | $2.11 million; $4.37 million |
| Basic and diluted loss per share | $0.14 | $0.28 | $0.09; $0.19 |
| Net cash used in operating activities | Not stated for the quarter | $7.96 million | $3.59 million for six months |
Margins are not meaningful because the company reported no revenue. Second-quarter operating expenses included $2.38 million of operating expenses and $4.06 million of research and development (R&D). Six-month R&D was $6.84 million. The six-month cash-flow statement reports $100.68 million used in investing activities, largely reflecting purchases of short-term investments, and $76.28 million provided by financing activities.
At June 30, cash and cash equivalents were $12.56 million, money market funds $7.48 million, and short-term investments $92.30 million, totaling $112.34 million. Working capital was $110.85 million; total assets were $114.74 million and stockholders’ equity $112.87 million. Current liabilities were $1.87 million. The company reported no long-term debt and no bank credit lines.
Changes versus the prior comparable period
- Second-quarter net loss rose from $2.11 million to $6.37 million; six-month net loss increased from $4.37 million to $11.67 million.
- R&D expense increased 720% in the quarter and 462% for the six months, primarily due to expanded research, the Tampa facility, increased staffing, higher NCI CRADA costs, and licensing fees.
- Operating expenses increased 48% in the quarter and 55% for the six months, reflecting greater corporate, listing, compliance, insurance, investor-relations, and compensation costs.
- Cash and investments increased substantially from year-end, mainly following a March public offering, while cash and cash equivalents alone declined as funds were allocated to short-term investments and operations.
Outlook, risks, and notable items
- Management did not expect product-sale or licensing revenue during 2015 and anticipated continued losses and rising R&D and operating expenses.
- Management stated available funds were expected to support planned operations for at least 24 months from June 30, 2015. It also cautioned that completing development and obtaining regulatory approvals could cost more than available funds, so further financing may be needed.
- The company expected to initiate a Phase 2 multicenter study of approximately 20 patients with refractory metastatic melanoma. The filing describes this as a plan, not an achieved milestone.
- The March 2015 public offering of 9.2 million shares generated $68.3 million net proceeds. Warrant exercises generated $7.98 million during the first half. A May secondary offering of 4.75 million shares was by existing stockholders; the company received no proceeds.
- The NCI CRADA was expanded to include bladder, lung, triple-negative breast, and HPV-associated cancers, with annual payments increased from $1 million to $2 million. The filing reports $1.04 million of CRADA expense for the first half; the MD&A separately describes $1.0 million in CRADA payments during that period.
- The company received an SEC subpoena in 2014 related to an investigation into certain stock promotions, completed its document production by November 2014, and reported no further SEC requests to date. The subpoena did not state whether the company was under investigation.
- Management concluded disclosure controls and procedures were not effective as of June 30, 2015. No material change in internal control over financial reporting during the quarter was reported.
- Cash and investment risks include bank balances above insured limits and investment concentration: approximately 53% of short-term investments were notes of five companies, 27% of other domestic issuers, and 20% of a foreign issuer. Average maturity was 124 days.
- Subsequent to quarter-end, warrant exercises generated $129,263 for 51,705 shares. The filing reported no material changes to previously disclosed risk factors.
Key facts investors should verify
- Whether the stated 24-month liquidity runway remains supported by current cash, investment balances, and actual clinical-development spending.
- Progress, timing, costs, and regulatory status of the planned Phase 2 melanoma trial and other TIL programs.
- Future dilution from outstanding warrants, options, restricted shares, and any additional financing; the filing listed 7.89 million warrants and 2.24 million options outstanding at June 30, 2015.
- Resolution and any further developments concerning the SEC subpoena, and remediation of the ineffective disclosure controls.
- The precise CRADA cash-payment and expense figures, given the different amounts presented in the notes and MD&A.