NanoViricides, Inc. — Form 10-Q Summary
Reporting period: Fiscal quarter and six months ended December 31, 2018; filed February 14, 2019. The filing is unaudited. NanoViricides is a pre-revenue biopharmaceutical research and development company developing antiviral drug candidates.
Financial performance and position
| Metric | Three months ended Dec. 31, 2018 | Six months ended Dec. 31, 2018 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $1.66 million | $3.02 million |
| General and administrative expense | $0.71 million | $1.38 million |
| Total operating expenses / operating loss | $2.37 million | $4.41 million |
| Net loss | $2.23 million | $4.07 million |
| Basic and diluted loss per share | $0.03 | $0.06 |
| Net cash used in operating activities | Not separately reported | $3.12 million |
- At December 31, 2018, cash and cash equivalents were $3.90 million, current assets $4.07 million, current liabilities $1.16 million, and stockholders’ equity $13.84 million. The company reported no long-term debt.
- Cash declined $3.18 million from June 30, 2018. Property and equipment, net, was $10.56 million. Accumulated deficit was $87.76 million.
- Accounts payable to related party TheraCour Pharma was $800,830, up from $107,468 at June 30, 2018. TheraCour agreed to defer $25,000 per month in development fees for six months starting July 2018 and waived the usual advance-prepayment requirement during the stated period.
- No gross margin is reported because the company had no revenue or commercialized products.
Changes versus prior comparable periods
- Six-month operating expenses fell $216,000 year over year; R&D declined $66,770 and G&A declined $149,161. Quarterly R&D rose $18,195, while quarterly G&A fell $42,778.
- Six-month net loss improved to $4.07 million from $4.80 million; quarterly net loss improved to $2.23 million from $2.80 million. Lower operating costs and the absence of prior-year debenture-related expenses contributed, partly offset by smaller gains from changes in derivative fair value.
- The $5 million Series C debenture had been redeemed for shares in November 2017. Accordingly, 2018 had no related interest or debt-discount expense and no extinguishment loss; the 2017 six-month period included a $1.35 million extinguishment loss.
- Six-month operating cash use increased to $3.12 million from $2.96 million. The 2018 period included a $693,362 increase in related-party payables, which supported cash flow.
Outlook, development, and risks
- Management prioritized the HerpeCide program, particularly a topical shingles candidate, NV-HHV-101, while assigning lower priority to influenza, HIV, dengue, and other programs. The filing states that IND-enabling safety and toxicology work began around the end of December 2018; subsequent disclosures described studies at BASi and anticipated further GLP work. The company intended to pursue an IND after receiving study results, but gave no assured filing date.
- Management reported encouraging preclinical findings, including safety observations and antiviral activity in cell, animal, and human-skin models. These are not clinical efficacy or safety results; the candidates remain preclinical and require further testing.
- The company is negotiating with TheraCour for a VZV license needed for the shingles program. No completed license is reported; there is no assurance an agreement will be reached on favorable terms.
- Management said current resources were insufficient for projected work beyond ordinary preclinical development and that additional funding would be needed for IND-related work and clinical trials. It was exploring debt or equity financing, investment-bank assistance, grants, licensing, and a possible mortgage on its laboratory facility. Financing availability and terms are uncertain, and failure to raise funds could delay development or further deplete resources.
- The filing identifies substantial doubt about the company’s ability to continue as a going concern, citing no revenue, continuing losses, $3.90 million cash, and $3.12 million operating cash use for the six months. Management planned to control spending and focus on the lead program, but those plans do not eliminate the financing uncertainty.
- After quarter-end, CEO Irach Taraporewala resigned effective February 1, 2019 for personal reasons and became a consultant for two years at $3,000 per month. Of his 300,000 options, 100,000 had vested and the remaining 200,000 were forfeited. Anil Diwan became Executive Chairman.
- Disclosure controls were assessed as ineffective at December 31, 2018 because previously reported material weaknesses remained unremediated. Management described enhanced transaction review and Audit Committee oversight as remediation steps. The filing reports no pending or threatened legal proceedings known to the company.
Most important facts for investors to verify
- Cash runway, actual spending against budget, and whether financing is secured on acceptable terms.
- Progress and results of the IND-enabling studies, the timing and requirements for any IND, and whether clinical development can be funded.
- Status and terms of the proposed VZV and other herpesvirus licenses from TheraCour.
- Remediation of the material weaknesses in internal controls and the effect of the CEO transition on financial reporting and drug-development execution.
- Related-party balances and fees, share-based compensation, and potential dilution; common shares outstanding were 69,501,354 at December 31, 2018.