Streamex Corp. quarterly report, Q2 FY2020

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Filing identity and reporting period

The supplied filing is BioSig Technologies, Inc.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2020—not a filing for Streamex Corp. The company reported two segments: BioSig, developing and commercializing the PURE EP cardiac signal-processing system, and majority-owned ViralClear, developing antiviral candidate merimepodib. BioSig had FDA 510(k) clearance for PURE EP but reported no revenue.

Financial performance and liquidity

  • Revenue and margins: No revenue or cost of goods sold in Q2 or the first half of 2020 or the comparable 2019 periods; gross margin is therefore not meaningful.
  • Q2 results: Operating expenses were $22.35 million, including $5.72 million R&D and $16.61 million G&A. Consolidated net loss was $22.35 million; net loss attributable to BioSig common shareholders was $19.19 million, or $0.72 per share, versus $7.95 million, or $0.38 per share, in Q2 2019.
  • First-half results: Operating expenses were $35.15 million, including $10.64 million R&D and $24.46 million G&A. Consolidated net loss was $35.11 million; net loss attributable to common shareholders was $30.53 million, or $1.20 per share, versus $13.83 million, or $0.72 per share, in first-half 2019.
  • Cash flow: First-half operating cash use was $14.22 million and investing cash use was $0.03 million. Financing provided $39.07 million, principally from BioSig and ViralClear stock offerings and option and warrant exercises. Cash increased from $12.11 million at year-end 2019 to $36.93 million at June 30, 2020.
  • Liquidity and debt: Working capital was $35.05 million. Total liabilities reported as debt were $3.70 million, consisting of lease liabilities; no convertible debentures were outstanding. Series C preferred stock, shown separately as a mezzanine obligation, had $105,000 stated value.
  • Equity and cash burn: BioSig’s common shares outstanding rose to 29.13 million from 23.32 million at year-end. First-half equity-based compensation was $15.74 million, a significant noncash expense. Accumulated deficit was $135.31 million.

Changes versus prior comparable periods

  • Q2 R&D increased 214.5% and G&A increased 169.6% year over year; first-half R&D increased 221.9% and G&A increased 132.1%.
  • Management attributed higher R&D to ViralClear development and acquired research and development, including the Trek asset purchase and Mayo licensing. Higher G&A reflected increased staffing and performance pay, service-provider costs, and stock-based compensation.
  • First-half net loss attributable to common shareholders more than doubled year over year. Operating cash use also rose, from $7.64 million to $14.22 million.
  • Cash increased substantially following equity financing: BioSig raised net proceeds of about $25.21 million and ViralClear about $10.59 million in the first half, in addition to proceeds from exercises.

Outlook, commentary, risks, and unusual items

  • Management expected continued operating losses and negative operating cash flow while products remain under development. It stated available cash, together with post-quarter option and warrant proceeds, should fund requirements for at least the next 12 months; elsewhere it described runway as approximately one year and a day. Additional financing may be needed sooner if plans or assumptions change.
  • PURE EP had 54 patients enrolled in its clinical study; BioSig had no paying customers and planned to prioritize U.S. commercialization. COVID-19-related disruption could delay commercialization, studies, supply, and regulatory activity. ISO 13485 and CE Mark audit preparation was planned, with certification expected in 2021.
  • ViralClear’s merimepodib program was at an early stage. Its Phase II study with remdesivir was enrolling approximately 40 hospitalized patients; an outpatient trial began enrolling in July 2020. Preclinical findings cited by management are not evidence of clinical efficacy.
  • ViralClear’s Trek asset purchase was a related-party transaction involving an entity controlled by a BioSig director. Consideration included $350,000 cash and ViralClear shares valued at $3.17 million, with further milestone, royalty, and sublicensing obligations. A third-party license milestone of $1 million was recorded as payable following Phase II initiation. The filing also reports approximately $7.4 million of aggregate purchase commitments, some modifiable or cancellable.
  • Other potential obligations include Trek’s $500,000 and 2.5% ViralClear equity milestone upon specified FDA approval, additional clinical and marketing milestones and royalties under licensing arrangements, and possible Series C preferred-stock redemption following specified triggering events. The company cautioned it might not be able to meet a redemption demand.
  • The COVID-19 pandemic, competition, regulatory and clinical uncertainty, and potential difficulty raising capital are material risks. Management warned that failure to commercialize or obtain financing could require reduced activity or cessation of operations.
  • After quarter-end, BioSig adopted a shareholder rights plan triggered generally at 12% ownership, expiring July 13, 2021 unless earlier terminated. The independent auditor changed from Liggett & Webb to Friedman LLP in June; the filing reports no disagreements or reportable events. Management concluded disclosure controls were effective and reported no material quarterly change in internal controls.

Important facts for investors to verify

  1. Confirm the issuer: the filing identifies BioSig Technologies, Inc. (Nasdaq: BSGM), not Streamex Corp.
  2. Track cash burn against management’s stated runway and the absence of product revenue; assess whether additional financing may be required.
  3. Review the amount and accounting of stock-based compensation, including ViralClear awards, and the resulting dilution and non-controlling-interest allocation.
  4. Verify clinical-trial enrollment, results, regulatory progress, and commercialization milestones for both PURE EP and merimepodib; distinguish preclinical claims from clinical evidence.
  5. Review the Trek and Mayo related-party and licensing terms, purchase commitments, royalties, milestones, and preferred-stock redemption provisions.
  6. Assess COVID-19 impacts, competitive developments, post-quarter financing and share issuances, and the consequences of the shareholder rights plan.