NanoViricides, Inc. — Form 10-Q Summary
Reporting period: Three months ended September 30, 2022, the company’s fiscal first quarter following its June 30 year-end. The filing was signed November 14, 2022. NanoViricides is a pre-revenue antiviral drug developer.
Financial performance and position
| Metric | Q1 FY2023 | Q1 FY2022 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $1.113 million | $2.097 million |
| General and administrative expense | $510,000 | $515,000 |
| Net loss | $1.571 million | $2.613 million |
| Net loss per share, basic and diluted | $0.14 | $0.23 |
| Cash used in operating activities | $1.033 million | $724,000 |
There are no revenue-based margins to assess. The lower year-over-year loss primarily reflects the absence of the prior-year $935,000 Series A preferred-stock license milestone expense to TheraCour, along with lower outside-lab expenses and professional fees. Interest income rose to $52,562 from $188, reflecting higher interest rates.
At September 30, 2022, cash and equivalents were $12.918 million, total assets $22.082 million, current liabilities $518,358, and stockholders’ equity $21.564 million. The company had a $23,837 short-term loan payable and reported no long-term debt. Related-party accounts payable was $433,119, net of a $465,000 advance. Cash declined $1.148 million during the quarter; investing outflow was $44,506 and financing outflow was $70,951.
Material changes and business developments
- R&D expense fell 47% year over year, largely because the prior-year quarter included the COVID-19 license milestone paid in preferred shares. The company says the quarter’s work focused on its COVID-19 program.
- The company reported that NV-CoV-2 preclinical and IND-enabling work was completed and that it was preparing an IND application, developing trial documents, and engaging a CRO. It also described NV-CoV-2-R and several oral and sterile formulations. These are company-reported development claims; the candidates had not entered human trials as of the filing.
- Limited development programs for monkeypox and enterovirus D68 were initiated. Management said it intended to evaluate existing candidates and seek additional funding if promising candidates were identified. Shingles and other antiviral programs remain in the pipeline, with shingles clinical development planned after the COVID-19 program.
- Common shares outstanding were 11,610,037 at quarter-end. Equity compensation and services included preferred shares, common shares, and warrants issued during the quarter.
Outlook, risks, and unusual items
- Management said existing resources were expected to fund planned operations for at least 12 months from the filing, and that funds were sufficient for initial NV-CoV-2 clinical trials. It also expects spending to rise as programs enter clinical testing and says additional capital will be needed for longer-term development absent partnering or licensing support.
- The company has no products, customers, or revenue and expects losses to continue. It stated that clinical timelines depend on regulatory applications and approvals, CRO engagement, and other external factors; it provided no firm trial-start date.
- Potential financing includes an ATM facility authorizing up to $50 million of common-stock sales. The company reported approximately $6.4 million of cumulative sales under the facility; future sales are discretionary and could dilute shareholders.
- TheraCour, controlled by CEO and Chairman Anil Diwan, supplies licensed technology and development services. The company reported $612,711 of related-party R&D costs for the quarter and $433,119 in net related-party payables. Certain licenses also require milestone payments and, upon commercialization, 15% royalties on defined net sales.
- The company disclosed that its disclosure controls were not effective at September 30, 2022 because of an unremediated material weakness involving period-end review and inadequate personnel and resources. A senior-management and Audit Committee financial-reporting controls committee was established as part of remediation.
- No pending or threatened legal proceedings were reported to the company’s knowledge. No income-tax provision was recorded because of operating losses.
Important facts for investors to verify
- Whether and when an IND is submitted and accepted, a CRO is engaged, and human trials actually begin; the filing gives no definite timetable.
- Quarterly cash use and the effect of clinical-trial costs on the stated 12-month funding expectation.
- Funding plans for later-stage trials, including potential ATM sales, partnering, grants, and resulting dilution.
- Related-party charges, balances, and future TheraCour milestone and royalty obligations.
- Progress and effectiveness of the internal-control remediation, and any subsequent change in control status.