PharmaCyte Biotech, Inc. — Form 10-Q Summary
Reporting period: Three months ended July 31, 2021 (fiscal first quarter); filed September 14, 2021. The company is a pre-revenue biotechnology developer focused on Cell-in-a-Box cellular therapies, including CypCaps for pancreatic cancer. Its planned Phase 2b trial for locally advanced pancreatic cancer remained on FDA clinical hold.
Financial and operating results
| Metric | Three months ended July 31, 2021 | Comparable 2020 period |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $1.023 million | $882,000 |
| Net loss | $1.025 million | $884,000 |
| Basic and diluted loss per share | $0.64 | $0.79 |
| Net cash used in operations | $1.241 million | $551,000 |
- Gross profit and operating margins are not meaningful because the company reported no revenue.
- At July 31, cash was $959,270, current assets were $1.508 million, and current liabilities were $925,000, producing working capital of approximately $583,000. Total assets were $6.637 million and stockholders’ equity was $5.712 million.
- Liabilities consisted of accounts payable and accrued expenses; the balance sheet reported no long-term debt. The prior-year PPP loan had been forgiven in April 2021.
Changes versus the prior period
- Operating expenses rose $141,675, primarily because general and administrative costs increased $243,594 and legal and professional costs increased $43,992. Research and development expense fell $126,961 to $143,613.
- Net loss increased by approximately $141,000. Loss per share declined from $0.79 to $0.64 as weighted-average shares increased from 1.119 million to 1.591 million.
- Operating cash use increased $690,219. The company received no financing proceeds during the quarter, versus $1.820 million of net financing cash in the comparable 2020 period.
- On July 12, 2021, the company effected a 1-for-1,500 reverse stock split. Common stock began trading on Nasdaq on August 10.
Outlook, risks and unusual items
- The FDA’s clinical hold requires additional preclinical work and information, including genetic sequencing, manufacturing and product-release data, device compatibility, biocompatibility, and a large-animal study. Management described some work as completed or underway; no date for lifting the hold or starting the trial was provided.
- Management expects continued operating losses and says substantial additional capital is needed. It reported approximately $88 million in cash as of September 13, 2021, after subsequent August offerings and warrant exercises, and stated that available funds were expected to cover requirements for at least one year from the financial-statement issuance date.
- Subsequent to quarter-end, the company reported gross proceeds of approximately $15 million from an August 9 offering and approximately $70 million from August 19 offerings, before fees and expenses. Warrant exercises generated additional proceeds. These financings involved substantial issuance of shares and warrants and potential dilution.
- COVID-19, overseas study delays and supply-chain interruptions may slow responses to the FDA and could impair future trial enrollment, conduct or data integrity.
- Disclosure controls and internal control over financial reporting were deemed ineffective due to material weaknesses in segregation of CFO duties and information-technology controls and documentation. Management was investigating remediation.
- The company disclosed an estimated $250,000 of service agreements related to addressing the clinical hold, including approximately $162,000 attributable to related parties. No material litigation was reported.
Important facts for investors to verify
- Progress and timing of the FDA-required studies, IND amendment and potential clinical-hold resolution.
- Cash balance, net proceeds and warrant exercises following the August financings, including fees, share issuance and dilution.
- Operating cash burn and the assumptions supporting management’s stated funding runway.
- Remediation of the disclosed control weaknesses and any subsequent changes in financial-reporting controls.
- Related-party service costs and the status of COVID-related study and supply-chain delays.