Business context and reporting period
This is BioTime, Inc.’s unaudited Form 10-Q for the three months ended March 31, 2012—not a filing identified in its text as Lineage Cell Therapeutics. BioTime focused on regenerative medicine and stem-cell research products, with additional programs in diagnostics and therapeutics; it also received royalties from Hextend. Amounts below are in U.S. dollars.
Financial results and position
| Metric | Q1 2012 | Q1 2011 / comparison |
|---|---|---|
| Revenue | $631,946 | $824,629; down 23% |
| Operating expenses | $6,547,486 | $4,850,516; up 35% |
| Operating loss | $5,915,540 | $4,025,887 |
| Consolidated net loss | $6,234,337 | $3,944,685 |
| Net loss attributable to BioTime | $4,973,342; $0.10 per share | $3,362,132; $0.07 per share |
| Operating cash flow | $(5,716,934) | $(3,357,439) |
| Cash and cash equivalents | $16,487,906 at March 31 | $22,211,897 at December 31, 2011 |
| Total assets / total liabilities | $38,977,899 / $3,146,847 | $45,829,695 / $4,371,514 at December 31, 2011 |
Revenue consisted mainly of grants ($400,809) and royalties ($147,384); license fees were $36,468 and research-product sales $47,285. Gross margin is not separately presented. The filing reports no debt balance or financing proceeds for the quarter. Current assets were $18.6 million against current liabilities of $2.0 million. Cash declined by $5.7 million during the quarter; investing activities used $117,129.
Material changes and unusual items
- Hextend royalties fell 32% year over year, attributed to lower U.S. sales, declining hetastarch prices, and hospitals shifting purchases toward albumin. Management said Hospira reduced Hextend prices further in 2012 to maintain share.
- Research and development expense increased $1.23 million, to $4.18 million; general and administrative expense rose $467,050, to $2.37 million. Higher staffing and HyStem-related research contributed to the increases.
- Other expense included a $204,934 reversal of previously recorded ESI revenue, pending completion of customer audits and acceptance of shipped cell lines.
- In January 2012, Glycosan-related activities and hydrogel programs were transferred to BioTime. After quarter-end, BioTime and LifeMap agreed to acquire XenneX; the proposed consideration included approximately 1.36 million LifeMap shares and 448,430 BioTime shares, with closing expected around May 18, 2012.
Outlook, risks and contingencies
No quantified revenue or earnings guidance is provided. Management expected to pursue a late-2012 EU clinical-trial start for Renevia, with a European launch targeted for 2013, and a European launch of PanC-Dx targeted by 2014; these are objectives, not assurances. Management believed subsidiaries had sufficient capital for their current 2012 research plans, but stated that BioTime may need additional equity or debt because revenue does not cover operating costs. Financing availability and terms are uncertain, and additional equity could dilute shareholders. The CIRM grant covered a project through August 31, 2012.
Key risks include sustained losses, cash needs, uncertain clinical and regulatory outcomes, early-stage product development, reliance on partners and licensees, intellectual-property and licensing risks, and declining Hextend demand and pricing. Most therapeutic programs remained preclinical; clinical trials and approvals could require substantial time and expense. The filing reported no material litigation and no fixed non-cancelable obligations other than facility leases. Management stated disclosure controls were effective and reported no material changes in internal control over financial reporting.
Important facts for investors to verify
- Confirm issuer identity: the supplied metadata names Lineage Cell Therapeutics, while this filing is for BioTime, Inc.
- Assess whether cash and potential financing can sustain operations given quarterly operating cash use of $5.7 million and the company’s stated funding needs.
- Track Hextend sales, pricing, and royalty receipts, as well as research-product and grant revenue.
- Verify Renevia and PanC-Dx development, trial, and regulatory milestones against the stated target dates.
- Review the XenneX merger’s closing, share issuance, and resulting dilution; the filing described it as a subsequent event, not a completed transaction.