Business context and reporting period
This is BioTime, Inc.’s unaudited Form 10-Q for the three months ended March 31, 2013—not a filing identified in the text as Lineage Cell Therapeutics. BioTime focused on regenerative medicine and stem-cell research products through subsidiaries, alongside database products and Hextend royalties. The company reported that quarterly results are not necessarily indicative of full-year results.
Financial performance and position
| Metric | Q1 2013 | Q1 2012 / comparison |
|---|---|---|
| Total revenue | $614,473 | $652,214; down 6% |
| Revenue after cost of sales | $431,724 | $631,946; down 32% |
| Research and development expense | $5,395,488 | $4,178,781; up 29% |
| General and administrative expense | $3,416,145 | $2,368,705; up 44% |
| Operating loss | $8,379,909 | $5,915,540 |
| Net loss attributable to BioTime | $7,719,263; $0.15 per share | $4,973,342; $0.10 per share |
| Operating cash flow | $(7,021,682) | $(5,716,934) |
| Cash and cash equivalents | $9,896,335 at March 31 | $4,349,967 at December 31, 2012 |
| Current assets / current liabilities | $12,967,091 / $4,295,370 | At March 31, 2013 |
| Total liabilities | $5,314,799 | At March 31, 2013; no borrowings are listed in the balance sheet |
License fees rose to $349,824 from $36,468, primarily reflecting LifeMap database subscription and advertising revenue. This was offset by lower grant income ($90,326 versus $400,809) and Hextend royalties ($107,599 versus $147,402). Cost of sales increased to $182,749 from $20,268. No conventional operating margin was reported; revenue less cost of sales was $431,724.
Cash increased during the quarter primarily because of financing: net cash provided by financing activities was $13,113,138, including common-share issuances, treasury-share sales, and subsidiary share sales. Cash used in investing activities was $550,551. The company reported no federal or state income-tax obligation for the quarter, citing net operating loss carryforwards and a full valuation allowance.
Material changes versus the prior comparable period
- Net loss attributable to BioTime widened by approximately $2.75 million, while operating expenses rose by about $2.26 million.
- R&D spending increased, including greater spending on HyStem/Renevia, Cell Cure, and LifeMap. G&A increased chiefly with compensation, stock-based compensation, legal, and accounting costs associated in part with Asterias startup and transactions.
- Grant revenue fell after a California Institute for Regenerative Medicine grant ended in August 2012. Hextend royalties declined amid lower sales and pricing pressure in the plasma-expander market.
- Quarterly operating cash use increased by about $1.30 million. Common shares issued and outstanding rose during the quarter, alongside substantial equity financing.
Outlook, commentary, risks and unusual items
- Management said existing cash and equity-offering proceeds were expected to fund operations at least into the first quarter of 2014; this was an estimate, not a guarantee. An additional $3 million from a private investor was received on April 10, 2013. Management also said the investor proceeds were earmarked for BioTime’s planned $5 million cash contribution to Asterias.
- BioTime expected to continue relying on research-product sales, database subscriptions and advertising, Hextend royalties, grants, and potentially further financing. Management warned that revenue did not cover operating expenses and additional equity or debt might be needed; further equity issuance could dilute shareholders.
- The planned Geron asset contribution to Asterias, expected to close by September 30, 2013, remained subject to conditions including shareholder approvals and effective registration statements. BioTime had agreed to contribute cash, shares, warrants, and other assets. Failure to close could, in specified circumstances, trigger a $1.8 million termination fee and affect the share price.
- BioTime expected its Asterias ownership to decline from 96.7% to approximately 71.6% after the contemplated transaction and investor investment. The filing warned the acquired programs would add research, facility, and public-company costs.
- Key risks include sustained losses, uncertain clinical and regulatory outcomes, dependence on external financing and grants, competition and declining Hextend royalties, patent and licensing disputes, and dilution. Asterias would assume an appeal concerning two patent rulings after closing; an unfavorable outcome could limit value or development options.
- Operating lease obligations totaled $2,484,095, including $764,203 due within one year. No material litigation was reported as of the filing, although the Asterias transaction involved the described patent appeal.
Important facts for investors to verify
- Confirm the issuer identity: the supplied filing is for BioTime, Inc., whereas the request names Lineage Cell Therapeutics, Inc.
- Track the Asterias–Geron transaction’s closing conditions, final consideration and ownership dilution, and any related termination-fee exposure.
- Assess cash runway against quarterly operating cash use, planned R&D, lease commitments, and the availability and terms of future financing.
- Monitor Hextend royalty trends, database and research-product revenue growth, and whether grant funding can be replaced.
- Review subsequent share and warrant issuances and reconcile the filing’s stated financing amounts, which differ in some passages.