Filing summary
Entity and period: The supplied filing is BioTime, Inc.’s Form 10-Q for the quarter ended September 30, 2011, filed November 8, 2011. It is not identified as a filing by Lineage Cell Therapeutics, Inc.; verify the issuer before relying on this summary. Financial information below is for BioTime and its consolidated subsidiaries.
Financial results and position
| Metric | Q3 2011 | Q3 2010 | Nine months 2011 | Nine months 2010 |
|---|---|---|---|---|
| Revenue | $1.14 million | $0.82 million | $2.72 million | $2.26 million |
| Operating loss | $4.23 million | $2.46 million | $13.23 million | $6.10 million |
| Net loss | $4.24 million | $4.80 million | $13.00 million | $8.46 million |
| Net loss attributable to BioTime | $3.74 million | $4.67 million | $11.15 million | $8.22 million |
| Basic and diluted loss per share | $0.08 | $0.11 | $0.23 | $0.22 |
- Revenue rose year over year, driven in part by higher grant income and sales of research products. Nine-month royalties fell to $569,206 from $727,388; management attributed weaker Hextend royalties largely to lower prices amid competition.
- Operating expenses increased substantially: nine-month R&D was $9.57 million versus $4.40 million, and G&A was $6.38 million versus $3.96 million. The filing cites expanded operations and acquisitions, including ESI, Glycosan, Cell Targeting and Cell Cure, among the reasons.
- Cash and cash equivalents were $26.23 million at September 30, 2011, down $7.09 million from $33.32 million at December 31, 2010. Nine-month operating cash use was $10.00 million; investing cash use was $0.77 million; financing provided $3.86 million.
- Current assets were $28.56 million and current liabilities $2.72 million. Total liabilities were $3.96 million; no material borrowings or debt balance is identified in the presented balance sheet. The filing does not provide a formal cash-runway estimate.
- Total assets were $50.88 million, including $20.08 million of net intangible assets. Accumulated deficit was $75.11 million. BioTime had 50.24 million shares issued and 48.95 million outstanding at September 30; 50.25 million common shares were reported outstanding as of October 31.
Changes, outlook and risks
- BioTime described a shift toward regenerative medicine, stem-cell research products and subsidiary therapeutic programs, while continuing to receive Hextend royalties and license fees. Six ESI human embryonic stem-cell lines had NIH registry approval by the period covered.
- In August, subsidiary OncoCyte raised $3.0 million from an outside investor and sold shares to BioTime for $1.0 million cash plus BioTime shares valued at $6.0 million; those BioTime shares were recorded as treasury stock. BioTime also entered a Cornell University license and three-year sponsored research arrangement focused on vascular endothelial cells.
- A $335,900 NIH grant awarded in July was to support HyStem microcarrier development; BioTime expected to begin drawing on it in Q4 2011. Management said subsidiary capital was expected to support current 2011 research plans, but stated that additional debt or equity financing may be needed as revenues do not cover operating expenses. Further financing was uncertain and equity issuance could dilute shareholders.
- Most therapeutic programs remained preclinical. Management cautioned that development, clinical trials and regulatory approval are costly, time-consuming and uncertain; no assurance was given that products would be safe, effective or commercialized. Other stated risks include competition and Hextend price pressure, dependence on grants and licensing revenue, patent and license risks, ethical or regulatory limits on embryonic stem-cell research, and foreign-exchange and uninsured-deposit exposure.
- No formal earnings or revenue guidance was provided. The filing reports no legal proceedings and says disclosure controls were effective, with no material change in internal control over financial reporting during the quarter.
- Unusual reporting detail: The statements report nine-month net loss attributable to BioTime of $11.15 million, while the MD&A cash-flow discussion cites $11.10 million. The filing text does not reconcile this difference. Management also noted that 2011 results were not necessarily indicative of full-year results.
Most important facts to verify
- Confirm issuer identity: the provided 10-Q names BioTime, Inc., not Lineage Cell Therapeutics, Inc.
- Reconcile the $11.15 million versus $11.10 million nine-month loss figures in the financial statements and MD&A.
- Assess cash consumption, financing needs and any subsequent financing against the $26.23 million period-end cash balance; the filing gives no runway estimate.
- Check subsequent Hextend royalty trends and whether research-product sales and grant funding can grow enough to offset operating expenses.
- Review clinical and regulatory progress, license obligations, potential dilution and the assumptions underlying the carrying value of acquired intangible assets.