Benitec Biopharma Inc. — Form 10-Q Summary
Reporting period: Three and six months ended December 31, 2020 (fiscal second quarter and first half); filed February 9, 2021. Amounts below are in U.S. dollars unless stated otherwise. The company develops genetic medicines using its ddRNAi platform; BB-301, for OPMD, was its most advanced program.
Financial results
| Metric | Three months ended Dec. 31, 2020 | Three months ended Dec. 31, 2019 | Six months ended Dec. 31, 2020 | Six months ended Dec. 31, 2019 |
|---|---|---|---|---|
| Revenue | $1,000 | $77,000 | $56,000 | $110,000 |
| Operating expenses | $3.260 million | $2.188 million | $6.004 million | $3.387 million |
| Operating loss | $3.259 million | $2.111 million | $5.948 million | $3.277 million |
| Net loss | $3.252 million | $2.090 million | $5.970 million | $3.237 million |
| Net loss per share | $0.76 | $2.00 | $2.21 | $3.40 |
| Cash used in operating activities | Not separately reported for the quarter | $5.686 million | $3.621 million |
Revenue was negligible and the company reported no product sales; therefore, a meaningful operating margin is not available. Research and development expense rose to $1.942 million for the half year from $1.022 million, primarily reflecting BB-301 preclinical work. General and administrative expense increased to $3.948 million from $2.645 million, including higher insurance, consulting, legal and accounting costs.
Financial position and liquidity
- Cash and cash equivalents were $14.010 million at December 31, 2020, versus $9.801 million at June 30, 2020. The increase reflected financing proceeds and foreign exchange effects, partly offset by operating and investing outflows.
- Net cash provided by financing activities was $9.851 million for the six months, including approximately $9.9 million net proceeds from the October 2020 offering. The offering generated $11.494 million gross proceeds and incurred $1.643 million of issuance costs.
- Total liabilities were $887,000, including $311,000 of operating lease liabilities. The company reported no borrowings and no credit facility. Total stockholders’ equity was $14.625 million.
- Management said available funding was expected to support operations for at least 12 months from the report date, while noting the company would continue to need revenue or financing and could not assure either. The company reported accumulated losses of $122.2 million.
Material changes, outlook and risks
- The company issued common stock and pre-funded warrants in October 2020; 3,150,514 shares and warrants were recorded in the offering, and 281,581 pre-funded warrants had been exercised by December 31. Shares outstanding were 4,540,469 as of February 4, 2021, versus 1,108,374 at June 30, 2020.
- The prior Axovant license and collaboration for BB-301 ended effective September 3, 2019. The company is pursuing BB-301 independently and seeking licensing or collaboration partners, but disclosed no assurance that agreements will be reached or on what terms.
- COVID-19 delayed BB-301 IND-enabling work, including the tissue-transduction study, by several months. The study had recently started and initial preclinical cohort dosing proceeded without incident; future timing and costs remained uncertain.
- The company expects continued operating losses and potentially higher R&D and public-company costs. It had no approved products and did not expect significant product revenue unless a candidate is approved and commercialized. It also said it would not claim Australian government R&D grants going forward.
- Management identified development, clinical and regulatory timing, financing needs, partners, intellectual property and COVID-19 effects among the risks. No material legal proceedings or material changes to the prior annual report’s risk factors were reported. Management concluded disclosure controls were effective, with no materially affecting control changes during the quarter.
Investor verification priorities
- Confirm the cash runway assumptions and expected operating cash burn against subsequent filings and development spending.
- Track BB-301 preclinical and IND-enabling milestones, including any further COVID-related delays and costs.
- Review share and warrant dilution from the October offering, including exercises and outstanding awards.
- Assess the sustainability of funding and prospects for licensing or collaboration revenue, given minimal customer revenue and no product sales.
- Check subsequent disclosures for changes in risks, financing plans, or the stated expectation of at least 12 months of funding.