BioRestorative Therapies, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; unaudited. The company develops cell-based therapies, with BRTX-100 as its lead investigational candidate for chronic lumbar disc disease and a preclinical ThermoStem program focused on metabolic disorders. Reported revenue is royalty revenue under a sublicense agreement, not product sales.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $16,000 | $18,000 |
| Operating expenses | $5.070 million | $15.073 million |
| Operating loss | $5.054 million | $15.055 million |
| Net loss | $4.816 million | $15.653 million |
| Net loss per share, basic and diluted | $1.37 | $21.44 |
| Net cash used in operating activities | $1.595 million | $0.814 million |
- Revenue decreased about 11%. Losses and operating expenses fell sharply year over year, primarily because Q1 2021 included substantially more noncash stock-based compensation. Q1 2022 stock-based compensation was $3.376 million.
- Research and development expense rose 369% to $775,337 as development activity resumed after the November 2021 public offering. General and administrative expense fell 72% to $4.208 million, mainly reflecting lower stock-based compensation.
- Cash was $19.323 million at March 31, down from $21.027 million at December 31, 2021. Working capital was $19.385 million. The company reported an accumulated deficit of $138.962 million.
- Operating cash use was $1.595 million; investing cash use was $109,573, primarily for equipment; there were no Q1 2022 financing cash flows. The $250,000 PPP loan was forgiven in January, producing a reported gain and eliminating the loan balance.
- Total liabilities were $762,186, including $392,256 of lease liabilities; there was no PPP debt at quarter-end. The filing reports no material off-balance-sheet arrangements. Profit margins are not meaningful given minimal royalty revenue and ongoing development-stage losses.
Material changes, outlook, and risks
- The company says cash on hand should fund operations for the 12 months following the filing date, but will not fund completion of development activities or achieve profitability. It expects continued operating losses and negative operating cash flows, and expects eventually to need additional equity or debt financing. No specific revenue, earnings, or cash-flow guidance is provided.
- A Phase 2 BRTX-100 trial is underway. A clinical-services agreement has a 46-month term and estimated budgeted cost of $5.844 million. The company also reported issuance in March 2022 of a U.S. patent related to BRTX-100.
- The company did not timely satisfy a February 2022 milestone under its disc/spine technology license. Its exclusive rights may therefore currently be non-exclusive; it is negotiating with the licensor to confirm exclusivity, with no assurance of success.
- Management identified material weaknesses in internal control over financial reporting and concluded disclosure controls were not effective as of March 31, 2022. Remediation includes new financial leadership, external consulting, and documenting risk-based procedures; effectiveness has not yet been established.
- Key risks include obtaining future financing, developing and commercializing BRTX-100 and ThermoStem, retaining exclusive technology rights, protecting intellectual property, and navigating clinical and regulatory requirements. Financing may be unavailable or require unfavorable terms, potentially forcing curtailed development or operations.
Important facts for investors to verify
- Progress and cost expectations for the Phase 2 trial, and whether the company can meet its clinical and development milestones.
- Outcome of negotiations with the licensor regarding continued exclusivity for disc/spine technology.
- Cash-burn trends, financing needs, and the assumptions supporting management’s 12-month cash runway estimate.
- Remediation progress and whether internal-control weaknesses are resolved and controls become effective.
- Potential dilution: 4,739,765 warrants and 864,611 options were outstanding at quarter-end; reported diluted loss per share excluded potential shares as antidilutive. Common shares outstanding were 3,631,719 at March 31 and 3,637,219 as of May 9, 2022.