Benitec Biopharma Inc. — Form 10-Q summary
Reporting period: Quarter and nine months ended March 31, 2021 (the third quarter of fiscal 2021; fiscal year-end June 30). The supplied filing text does not cover 2020 Q3. Financial-statement amounts below are in U.S. dollars and thousands unless noted.
Business context
Benitec is a development-stage biotechnology company developing genetic medicines using its DNA-directed RNA interference (ddRNAi) platform. Its lead candidate, BB-301, is in IND-enabling development for oculopharyngeal muscular dystrophy (OPMD); BB-103 for chronic hepatitis B is seeking a strategic partner. The company had no approved products or product sales.
Financial results and position
| Metric | Three months ended Mar. 31, 2021 | Three months ended Mar. 31, 2020 | Nine months ended Mar. 31, 2021 | Nine months ended Mar. 31, 2020 |
|---|---|---|---|---|
| Revenue | $1 | $28 | $57 | $137 |
| Research and development expense | $2,758 | $805 | $4,700 | $2,095 |
| General and administrative expense | $1,029 | $1,287 | $4,976 | $3,669 |
| Total operating expenses | $3,794 | $2,139 | $9,798 | $5,531 |
| Net loss | $(3,909) | $(2,102) | $(9,879) | $(5,339) |
| Net loss per share | $(0.82) | $(1.96) | $(2.93) | $(5.36) |
- Revenue remained immaterial and declined year over year, principally because licensing and royalty revenue was lower. No meaningful operating margin comparison is applicable to this pre-revenue business.
- Nine-month R&D expense more than doubled, which management attributed to BB-301 preclinical work. Nine-month G&A rose, mainly from insurance, consulting, legal and accounting costs.
- At March 31, cash and cash equivalents were $11,988, versus $9,801 at June 30, 2020. Total assets were $13,428; total liabilities were $2,498; stockholders’ equity was $10,930. The company reported no borrowings and no credit facility.
- For the nine months, operating cash use was $7,675 (prior year: $4,390); investing cash use was $362 (prior year: $81); and financing provided $9,854 (prior year: $1,770). Financing primarily reflected the October 2020 equity offering and warrant exercises.
- Trade and other payables increased to $2,005 from $741 at June 30, 2020. Accumulated deficit was $126,116 at March 31.
Material changes, outlook and risks
- The October 2020 offering generated approximately $11.5 million gross and $9.9 million net proceeds. Shares issued and outstanding rose from 1,108,374 at June 30, 2020 to 4,818,050 at March 31, 2021. The filing reports 7,854,416 shares outstanding as of May 6, 2021.
- After quarter-end, an April 30 offering sold 3,036,366 shares at $4.25 per share for approximately $12.9 million gross. The underwriter later exercised part of its option, purchasing another 317,274 shares on May 11 for approximately $1.35 million gross. Management said proceeds would support pipeline development, general corporate purposes and strategic growth. These proceeds are subsequent to the March 31 balance sheet.
- Management expected available funding at the report date to support operations for at least 12 months, while noting continuing losses and dependence on future revenue and/or financing. It expects R&D and U.S. public-company costs to increase; no specific revenue or earnings guidance was provided.
- BB-301’s interim pilot-dosing study results were based on analyses of six of 24 dogs. Management reported improved tissue transduction versus a prior study and planned a French scientific-advice meeting in May 2021; it continued to plan for a first-in-human study in 2022. These are development plans and preliminary nonclinical findings, not clinical efficacy evidence.
- COVID-19 delayed BB-301 IND-enabling work by several months; the tissue-transduction study had since started and initial cohort dosing proceeded without incident. Further disruption to studies, vendors or operations remained a risk.
- The company reported no material litigation and no material change to the risk factors in its prior annual report. It also stated that it would not claim Australian R&D tax incentive grants going forward. Prior-year nine-month royalties and license fees included a reversal of an accrual, producing a negative expense of $233; this affects year-over-year comparison.
Key facts for investors to verify
- Whether post-quarter offering proceeds, share issuance and the latest share count are reflected in current capitalization and runway estimates.
- The company’s cash-burn trajectory, payable growth and funding needs relative to its stated minimum 12-month runway.
- Progress, full-study results and regulatory feedback for BB-301, including whether the planned 2022 clinical-start timeline remains achievable.
- Whether BB-103 secures a partner and whether licensing or collaboration income can become a material funding source.
- The assumptions underlying preliminary BB-301 animal findings and the extent to which COVID-19 or other development risks affect timelines and costs.