Filing identity and reporting period
The supplied filing is Coronado Biosciences, Inc.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2012, filed August 8, 2012. This does not match the request metadata identifying Fortress Biotech, Inc.; verify the issuer before relying on this summary.
Coronado was a development-stage biopharmaceutical company developing TSO (CNDO-201) for autoimmune diseases and CNDO-109 for acute myeloid leukemia. It had not begun planned principal operations and had generated no revenue.
Financial position and results
| Metric | Q2 2012 / June 30, 2012 | Comparable period / prior year-end |
|---|---|---|
| Revenue | None | None since inception |
| Research and development expense | $4.525 million for Q2; $9.116 million for six months | Q2 2011: $2.142 million; six months 2011: $3.388 million |
| General and administrative expense | $1.940 million for Q2; $3.930 million for six months | Q2 2011: $1.594 million; six months 2011: $2.187 million |
| Net loss | $6.455 million for Q2; $13.011 million for six months | Q2 2011: $3.733 million; six months 2011: $26.276 million |
| Basic and diluted loss per share | Q2: $0.34; six months: $0.69 | Q2 2011: $1.64; six months 2011: $6.04 |
| Cash and cash equivalents | $38.207 million | $23.160 million at December 31, 2011 |
| Total current assets / liabilities | $38.493 million / $3.926 million | $23.375 million / $3.493 million at December 31, 2011 |
| Debt | $750,000 related-party PCP note; $19,000 interest payable | Same note balance at December 31, 2011 |
| Accumulated deficit | $69.585 million | $56.574 million at December 31, 2011 |
For the six months, operating cash use was $11.431 million, investing cash flow was nil, and financing provided $26.478 million. Cash increased $15.047 million. The June public offering of 5.75 million common shares at $5.00 per share generated approximately $26.5 million net proceeds. No operating margins are meaningful because the company had no revenue.
Changes and notable developments
- Q2 R&D expense rose 111% year over year, primarily from TSO development, including a $2.0 million Falk milestone and costs for a planned Phase 2 trial. Six-month R&D expense rose 169%, reflecting increased TSO development and milestone costs.
- Q2 G&A expense increased 22%; six-month expense increased 80%, mainly due to additional personnel and public-company operating costs.
- Six-month net loss was lower than in 2011 largely because 2011 included $20.706 million of acquired in-process R&D expense from the Asphelia asset purchase. Excluding that unusual item, operating losses increased as development activity expanded.
- Common shares outstanding increased from 18.604 million at year-end 2011 to 24.376 million at June 30, 2012, principally reflecting the offering. The filing reports 24,375,749 shares outstanding as of August 7.
- In June, the company reported a notice of allowance for the first U.S. CNDO-109 patent and FDA orphan-drug designation for CNDO-109. A July 2012 five-year office lease, commencing in October, carries average annual rent of approximately $92,000.
Outlook, risks and contingencies
Management estimated that available cash would fund operations into the fourth quarter of 2013 under its then-current plan. It expected substantial future R&D spending and additional losses, and said further financing would be required for development, regulatory work and possible commercialization. Additional funding might be unavailable or dilutive; insufficient funding could force delays, reductions or termination of programs.
The risk-factor discussion cites the independent auditor’s 2011 going-concern explanatory paragraph and substantial doubt about the company’s ability to continue as a going concern. This is a material financing risk alongside management’s stated cash runway estimate.
- TSO supply depended exclusively on OvaMed, a sole supplier producing at one German facility; CNDO-109 also depended on third-party manufacturers.
- Clinical, regulatory, manufacturing, safety, intellectual-property, licensing, competition and commercialization risks could delay or prevent product approval or sales. The candidates were early-stage and had not completed human testing for the intended indications.
- Contractual obligations totaled $21.003 million, excluding contingent milestone payments: $8.395 million due in less than one year and $10.108 million in one to three years. The total included $11.427 million of purchase and other obligations, primarily clinical-trial commitments; $2.2 million of the total was recorded in accrued expenses.
- Falk payments under the TSO collaboration included a remaining approximately €2.5 million, expected in the first half of 2014; TSO also carried potential milestones, royalties and license obligations.
- The company reported no legal proceedings and stated that disclosure controls were effective as of June 30, 2012. Quantitative and qualitative market-risk disclosures were listed as not applicable.
Most important facts to verify
- Confirm the issuer: the filing is for Coronado Biosciences, not Fortress Biotech.
- Review the cash runway assumptions and financing needs, given the auditor’s prior going-concern paragraph and ongoing cash burn.
- Check clinical-trial progress, milestones and remaining commitments for TSO and CNDO-109, including the dependence on sole-source and other external manufacturers.
- Assess dilution and potential share overhang after the June offering, including outstanding options, warrants and other potentially dilutive securities.
- Confirm the scope and timing of the $21.003 million contractual obligations and contingent milestone, royalty and licensing payments.