BioTime, Inc. — Form 10-Q Summary
Period and entity: Quarter ended June 30, 2013; financial statements also report the six months ended June 30, 2013. The supplied filing is for BioTime, Inc., not Lineage Cell Therapeutics, Inc.; the filing identifies BioTime as a California biotechnology company focused on regenerative medicine, stem-cell research products, and related programs conducted through subsidiaries.
Financial performance and position
| Metric | Q2 2013 | Q2 2012 | Six months 2013 | Six months 2012 |
|---|---|---|---|---|
| Total revenue | $1.216 million | $1.034 million | $1.824 million | $1.688 million |
| Revenue after cost of sales | $1.036 million | $0.950 million | $1.461 million | $1.582 million |
| Operating loss | $8.116 million | $6.079 million | $16.520 million | $11.994 million |
| Net loss attributable to BioTime | $7.550 million | $5.457 million | $15.282 million | $10.429 million |
| Basic and diluted loss per share | $0.14 | $0.11 | $0.29 | $0.21 |
- Q2 revenue increased 18% year over year, primarily from higher license fees; six-month revenue rose 8%. Six-month revenue after cost of sales declined 8% as cost of sales increased to $364,000 from $105,000.
- Six-month research and development expense was $10.976 million, up 25%; general and administrative expense was $7.005 million, up 46%. For Q2, those expenses rose 20% and 50%, respectively.
- License fees for the six months were $712,000, including $638,000 of LifeMap database subscription and advertising revenue. Royalties fell 23% to $211,000, and grant income fell 28% to $777,000.
- Cash and cash equivalents were $14.306 million at June 30, 2013, versus $4.350 million at December 31, 2012. Current assets were $18.132 million and current liabilities $4.435 million. Total liabilities were $5.376 million; the balance sheet lists no interest-bearing debt balance.
- Six-month operating cash use was $14.465 million; investing cash use was $790,000. Financing provided $25.138 million, mainly from equity issuances and treasury-share sales. Cash increased by $9.956 million during the period.
- Management said existing cash was expected to fund operations at least into the first quarter of 2014, while emphasizing that revenues did not cover operating expenses and additional financing would be needed. No formal revenue or earnings guidance was provided.
Changes, outlook, and material risks
- Losses widened year over year as operating costs increased, including higher compensation, facility costs, legal and transaction expenses, and research spending. Cell Cure Neurosciences and HyStem programs were among the sources of higher R&D costs; Asterias-related costs also increased.
- Hextend royalties continued to decline amid falling hetastarch prices and a contracting market. The FDA proposed class-wide safety-label changes, including a boxed warning and restrictions for certain critically ill patients. BioTime submitted a rebuttal; any final labeling decision could affect product sales.
- BioTime expected to contribute cash, shares, warrants, subsidiary interests, and cell-line assets to Asterias in a planned transaction with Geron, expected to close by September 30, 2013 subject to conditions. A private investor’s planned $5 million Asterias investment was also conditional; BioTime agreed to replace any shortfall with cash, shares, or both. The transaction could dilute BioTime shareholders, increase costs, and bring patent litigation exposure through Asterias.
- Management cited financing availability, clinical and regulatory outcomes, commercial adoption, competition, grant funding, intellectual-property matters, and the early-stage nature of stem-cell markets as key uncertainties. The company reported a $117.178 million accumulated deficit and losses since inception.
- Operating lease commitments totaled $2.253 million, including $533,000 due within one year. The filing reported no material litigation currently involving BioTime, but noted the expected transfer to Asterias of an appeal concerning two patent rulings after the asset transaction closes.
- Management assessed disclosure controls as effective and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Confirm the intended issuer: this source is BioTime’s 2013 Form 10-Q, not a Lineage Cell Therapeutics filing.
- Track cash burn, financing needs, and whether management’s stated cash runway into Q1 2014 proved sufficient.
- Check final FDA action on Hextend labeling and subsequent royalty and sales trends.
- Verify whether the Geron-Asterias asset contribution and related investor financing closed, and assess resulting ownership, dilution, obligations, and costs.
- Monitor whether database and research-product revenue growth can offset declining royalties and grant income, and whether rising expenses lead to improved commercial progress.