BioTime, Inc. — FY 2012 Form 10-K Summary
Entity note: The supplied filing is for BioTime, Inc., not Lineage Cell Therapeutics, Inc. It covers the fiscal year ended December 31, 2012; the filing also provides unaudited fourth-quarter results. Financial amounts below are in U.S. dollars.
Business context and reporting period
BioTime was a development-stage biotechnology company focused principally on regenerative medicine and stem-cell research, with programs spanning cancer diagnostics and therapeutics, orthopedics, vascular and neurological diseases, and research products. It also earned royalties from Hextend, a plasma-volume expander. The consolidated statements include BioTime and majority-owned subsidiaries.
Financial results and liquidity
| Metric | FY 2012 | FY 2011 |
|---|---|---|
| Total revenue | $3.92 million | $4.43 million |
| Revenue, net of cost of sales | $3.48 million | $4.35 million |
| Research and development expense | $18.12 million | $13.70 million |
| General and administrative expense | $10.37 million | $9.34 million |
| Operating loss | $25.00 million | $18.69 million |
| Net loss attributable to BioTime | $21.43 million; $0.44 per share | $16.52 million; $0.35 per share |
| Net cash used in operations | $19.68 million | $13.59 million |
| Cash and cash equivalents at year-end | $4.35 million | $22.21 million |
| Total assets / total liabilities | $29.75 million / $5.45 million | $45.83 million / $4.37 million |
Consolidated net loss before allocation to noncontrolling interests was $25.31 million. The filing reports no conventional debt balance; reported liabilities mainly comprised accounts payable, accrued costs, deferred revenue, rent, and other obligations. Year-end current assets were $7.18 million versus current liabilities of $4.39 million. The company remained substantially loss-making, so operating margins were negative.
For Q4 2012, net revenue was $1.07 million, operating expenses were $8.12 million, operating loss was $7.06 million, net loss attributable to BioTime was $6.04 million, and basic and diluted loss per share was $0.12.
Material changes versus prior period
- Revenue declined 11.7% year over year. License-fee revenue rose to $900,000, including $752,896 from database subscriptions and advertising following the XenneX acquisition; royalties declined 28.4% to $542,000, and grant income declined 19.7% to $2.22 million.
- Research and development expense increased 32.2%, while general and administrative expense increased 11.0%. The operating loss widened by about $6.31 million.
- Cash fell by $17.86 million during the year, primarily reflecting operating cash use. Cash from financing activities was $1.91 million.
- Hextend royalties weakened as hetastarch-product prices fell, the plasma-expander market contracted, and hospitals shifted toward albumin. Research-product sales also fell, partly because the prior year included a one-time ESI sale.
Outlook, risks and unusual items
- Management said available cash and anticipated proceeds from equity sales were expected to fund operations into at least the first quarter of 2014. This depended on financing and revenue assumptions; the filing says additional capital may be needed and programs could be curtailed if financing is unavailable.
- Management targeted EU clinical trials for Renevia in 2013 and an EU PanC-Dx launch in 2014, contingent on development, trial success, and regulatory approval. These were plans, not assured outcomes. Most therapeutic programs remained preclinical or early-stage.
- The proposed Geron asset contribution to subsidiary BioTime Acquisition Corporation was expected to close by September 30, 2013, subject to conditions including shareholder approval and effective registration statements. BioTime committed shares, warrants, $5 million cash, subsidiary interests, and cell-line rights; a private investor financing was also contemplated. Failure to close could trigger a $1.8 million termination fee in specified circumstances. The transaction could add costs, liabilities, and shareholder dilution.
- The CIRM grant ended in August 2012; the final $392,664 installment was collected in February 2013. The filing also describes a $207,425 reversal in 2012 of ESI revenue recognized in 2011 because customer acceptance had not been completed as initially assumed.
- Key risks include continued operating losses and cash burn, dependence on equity financing and grants, clinical and regulatory uncertainty, declining Hextend royalties, competition, reliance on third-party licensees and collaborators, and patent disputes. No material litigation was reported as of the filing, but BAC was to assume a patent appeal related to the proposed Geron transaction.
- The independent auditor gave an unqualified opinion on the financial statements and reported effective internal control over financial reporting as of December 31, 2012.
Important facts for investors to verify
- Confirm the correct issuer: the filing is BioTime, Inc.; verify whether this is the intended company and period.
- Track subsequent cash, share issuance, and operating burn against management’s stated runway, including the status and proceeds of 2013 financings.
- Verify whether the Geron transaction closed, its final consideration and assumed obligations, and the resulting ownership and dilution.
- Assess whether Renevia and PanC-Dx met development, clinical, and regulatory milestones; the stated dates were forward-looking targets.
- Monitor Hextend sales and royalty trends, database subscription revenue, grant replacement, and whether commercial revenues can cover the cost base.