Business context and reporting period
Benitec Biopharma Inc. filed this unaudited Form 10-Q for the quarter ended December 31, 2021, the second quarter of fiscal 2022. Comparisons below are with the corresponding 2020 periods unless noted. The development-stage biotechnology company is advancing ddRNAi genetic medicines; its lead candidate, BB-301, is being developed for oculopharyngeal muscular dystrophy (OPMD). It has no approved products and has generated no product-sales revenue.
Financial results and liquidity
Amounts are in U.S. dollars; financial statement figures are in thousands unless otherwise stated.
| Metric | Three months ended Dec. 31, 2021 | Six months ended Dec. 31, 2021 | Prior-year comparison |
|---|---|---|---|
| Revenue | $25 | $25 | $1 and $56, respectively |
| Research and development | $3,146 | $5,926 | $1,168 and $1,942 |
| General and administrative | $1,714 | $3,756 | $2,111 and $3,948 |
| Total operating expenses | $4,860 | $9,682 | $3,260 and $6,004 |
| Net loss | $4,821 | $9,867 | $3,252 and $5,970 |
| Basic and diluted loss per share | $0.59 | $1.21 | $0.76 and $2.21 |
| Net cash used in operations | Not separately provided | $7,622 | $5,686 |
- Quarterly operating loss was $4.835 million; six-month operating loss was $9.657 million. Margins are not informative given minimal licensing revenue and no product sales.
- Cash and cash equivalents were $12.329 million at December 31, 2021, down from $19.769 million at June 30, 2021. Management said available funding was expected to cover operations for at least 12 months from the report date.
- Total assets were $14.014 million and total liabilities were $3.178 million. The company reported no borrowings or credit facility. Lease liabilities totaled $911,000, including $213,000 current and $698,000 non-current.
- Six-month cash flow included no financing proceeds, compared with $9.851 million net financing cash provided in the prior-year period. The company had an accumulated deficit of $139.985 million.
Material changes versus the prior comparable period
- R&D expense rose substantially, attributed primarily to the BB-301 regulatory toxicology study in beagles, other nonclinical work, and planned commercial-scale GMP manufacturing.
- Net loss increased to $9.867 million for the six-month period from $5.970 million. Operating cash use increased to $7.622 million from $5.686 million.
- Licensing revenue was $25,000 for the six months, down from $56,000; quarterly licensing revenue increased to $25,000 from $1,000.
- G&A expense declined year over year in both reported periods. The MD&A narrative nevertheless describes increases in insurance, consulting, legal, and accounting costs; the filing does not clearly reconcile this narrative with the reported expense totals.
- Common shares outstanding remained 8,171,690. In December 2021, stockholders approved increasing authorized common shares from 10 million to 40 million and expanding the 2020 equity plan’s share limit to 1.85 million.
Outlook, management commentary, risks and unusual items
- Management planned to initiate BB-301’s first-in-human Phase 1b/2a study during 2022, subject to completion of enabling work and regulatory requirements. FDA Type C and Health Canada pre-CTA meetings occurred in the fourth quarter of 2021; French regulator ANSM had previously reviewed the proposed nonclinical and clinical plans.
- The BB-301 beagle pilot dosing study was completed without incident. Interim analyses covered 16 of 24 animals; final molecular data were expected during 2022. The company reported substantially higher pharyngeal-muscle transduction than in work by the prior licensee, but these were preclinical interim findings, not human efficacy results.
- COVID-19 had delayed aspects of CTA/IND-enabling work and created supply-chain and trial-site risks. The company said the pilot study had been delayed by several months and was completed; it continued to assess effects on development timing and cost.
- The company expects continued operating losses and may need additional financing. Its stated runway is an estimate dependent on development costs, trial timing, financing access, licensing or collaboration revenue, and other assumptions. The financial statements are prepared on a going-concern basis.
- BB-301 has U.S. and EU Orphan Drug Designations. The filing notes material development, safety, efficacy, regulatory, manufacturing, intellectual-property, collaborator, competition, and financing uncertainties. No material legal proceedings were reported; management reported disclosure controls were effective and no material change in internal controls.
Important facts for investors to verify
- Whether BB-301’s GLP toxicology and biodistribution work, manufacturing, and regulatory submissions support the projected 2022 clinical-study timing.
- How much cash remains and whether the reported minimum 12-month runway is still supported by current spending and updated forecasts.
- Whether interim dog-study findings are confirmed by the complete dataset and subsequent clinical evidence; preclinical results do not establish human safety or efficacy.
- Potential future financing needs and dilution, including the expanded authorized-share limit, equity-plan capacity, outstanding options, and warrants.
- The cause of the MD&A’s G&A cost-increase wording despite lower reported year-over-year G&A expense.