RenovoRx, Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended September 30, 2021. Financial statement amounts are in thousands of dollars unless otherwise noted. RenovoRx is a clinical-stage biopharmaceutical company developing RenovoTAMP, a localized drug-delivery platform. Its lead candidate, RenovoGem, is being evaluated in a Phase 3 pancreatic cancer trial. The company had no product revenue.
Financial performance and liquidity
| Metric | Three months ended Sept. 30, 2021 | Nine months ended Sept. 30, 2021 | Comparable 2020 period |
|---|---|---|---|
| Revenue | None | None | None |
| Research and development expense | $767 | $1,938 | $727 and $1,934 |
| General and administrative expense | $628 | $1,377 | $183 and $631 |
| Total operating expenses | $1,395 | $3,315 | $910 and $2,565 |
| Net loss | $1,511 | $3,969 | $1,096 and $2,920 |
| Net loss per share, basic and diluted | $0.27 | $1.09 | $0.48 and $1.31 |
| Net cash used in operating activities | $3,358 for nine months | $2,558 for nine months |
At September 30, cash and cash equivalents were $17.725 million, compared with $1.795 million at year-end 2020. Current assets were $18.164 million and current liabilities $625,000, yielding working capital of approximately $17.539 million. Total liabilities were $625,000; the convertible notes and PPP loan had been converted or forgiven. Accumulated deficit was $18.929 million. Operating margins are not meaningful because the company had no revenue.
Financing cash flow was $19.303 million for the nine months, including $14.561 million of net IPO proceeds, $2.675 million from warrant exercises, $1.977 million from convertible notes, and $90,000 from option exercises. Investing cash outflow was $15,000.
Material changes versus prior periods
- Third-quarter net loss increased 38% year over year; nine-month net loss increased 36%.
- Third-quarter operating expenses rose 53%. G&A increased 243%, primarily due to IPO preparation, professional and consulting services, personnel, and directors’ and officers’ insurance. R&D rose 6% for the quarter; nine-month R&D was nearly unchanged.
- Nine-month interest expense rose to $835,000 from $355,000, principally reflecting amortization of debt discounts and issuance costs on convertible notes.
- The August 2021 IPO raised $16.7 million gross and $14.6 million net. Preferred shares converted to common stock, and $5.3 million of convertible notes and accrued interest converted into units. The IPO and warrant exercises materially increased cash and equity; 8,908,150 common shares were outstanding at September 30.
Outlook, risks, and unusual items
- Management expected September 30 cash to fund operating, investing, and financing needs for at least 12 months from issuance of the interim statements. The company expects continuing losses and negative operating cash flow, and may need additional capital; availability and terms are uncertain.
- Management expected a planned interim readout from the Phase 3 TIGeR-PaC trial in the second half of 2022. It anticipated completing preclinical work on an alternative HCCA treatment approach in the first half of 2022 and launching the appropriate study in 2023. These are forward-looking expectations, not guarantees.
- COVID-19 had challenged Phase 3 patient recruitment and visits and could further disrupt trials, vendors, supplies, and access to financing. No material supply-chain disruption had occurred to date.
- RenovoRx relies on third parties for clinical trials and manufacturing and obtains RenovoCath from a single source. Clinical, regulatory, safety, manufacturing, reimbursement, competition, intellectual-property, and additional-financing risks could delay or prevent commercialization.
- Disclosure controls were reported ineffective due to a material weakness involving accounting expertise, documented processes, review controls, and segregation of duties. Remediation was underway, with completion targeted during 2022.
- The company reported no material pending or threatened legal proceedings. The PPP loan was forgiven; convertible notes converted at the IPO. The filing reports no contractual obligations or other commitments as of its report date.
- Subsequent events included November 2021 executive employment/consulting and severance arrangements and adoption of a service-provider incentive plan.
Most important facts for investors to verify
- Cash runway assumptions, quarterly cash burn, and whether additional financing will be needed before the Phase 3 readout.
- Phase 3 enrollment, trial execution, interim-readout timing, and the clinical evidence needed for regulatory approval.
- Single-source RenovoCath supply, third-party manufacturing capacity, and the continuing effects of COVID-19 on trial operations.
- Progress in remediating the disclosed material weakness and whether disclosure controls become effective.
- Fully diluted share count and potential dilution from IPO-related and note-conversion warrants, stock options, and equity plans.