Business Context and Reporting Period
The supplied filing is AzurRx BioPharma, Inc.’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2018—not a filing identified as Gridai Technologies Corp. AzurRx is a clinical-stage biotechnology company developing non-systemic treatments for gastrointestinal disorders. It reported no revenue.
Financial Highlights
| Metric | Q3 2018 / Sep. 30, 2018 | Comparable period / Dec. 31, 2017 |
|---|---|---|
| Revenue | None | None |
| Operating loss | $2.57 million for Q3; $9.41 million for nine months | $2.73 million for Q3 2017; $7.92 million for nine months 2017 |
| Net loss | $2.57 million for Q3; $9.51 million for nine months | $3.13 million for Q3 2017; $8.62 million for nine months 2017 |
| Basic and diluted loss per share | $0.15 for Q3; $0.64 for nine months | $0.28 for Q3 2017; $0.83 for nine months 2017 |
| Cash and cash equivalents | $4.43 million | $0.57 million |
| Working capital | Approximately $4.22 million | Not stated for the comparative date |
| Total liabilities | $3.05 million, including $1.58 million contingent consideration | $3.82 million, including $1.34 million contingent consideration |
| Debt | No note payable or convertible debt outstanding | $0.42 million in note payable and convertible debt |
| Cash flow | Nine-month operating cash use: $7.53 million; investing cash use: $0.05 million; financing cash provided: $11.46 million | 2017 nine-month operating cash use: $4.72 million; investing cash use: $0.03 million; financing cash provided: $5.85 million |
Gross margin and other operating margins are not applicable because the company had no revenue.
Material Changes Versus Prior Period
- Q3 net loss narrowed from $3.13 million to $2.57 million, while nine-month net loss increased from $8.62 million to $9.51 million.
- Nine-month R&D expense rose to $3.77 million from $2.24 million, attributed primarily to clinical-trial milestone payments, new product batches, and starting U.S. R&D operations.
- Nine-month G&A expense decreased slightly to $5.40 million from $5.56 million. Lower equity-compensation and professional-fee costs were partly offset by a $0.43 million warrant-modification charge and higher compensation.
- Cash increased following the May 2018 public offering and warrant exercises. The company issued 4.16 million shares in the offering and reported 16.94 million shares outstanding at September 30, versus 12.04 million at December 31, 2017.
- The company paid off its remaining LPC convertible debenture in July 2018; reported interest expense fell substantially year over year.
Outlook, Risks, and Unusual Items
- Management said cash on hand was expected to fund operations only until June 2019. The company depends on additional financing, and the filing states that these conditions raise substantial doubt about its ability to continue as a going concern.
- Management expected R&D spending to increase as candidates advance through clinical trials; G&A was also expected to increase in anticipation of commercialization.
- Management reported Phase IIa MS1819-SD results in chronic-pancreatitis patients with exocrine pancreatic insufficiency: the highest-dose cohort had a mean 21.8% increase in coefficient of fat absorption versus baseline (p=0.002, per protocol). The study enrolled 11 patients and was not powered for efficacy.
- After quarter-end, the company announced FDA clearance of its MS1819-SD investigational new drug application for cystic-fibrosis-related EPI (October 16) and clinical-network sanction of its Phase II protocol (November 1). It planned to start a U.S. and European Phase II study in Q4 2018, with completion expected in 2019.
- AZX1103 remained in preclinical development, with an IND filing expected in 2019; the company was assessing whether to continue AZX1101. These are forward-looking plans, not assured outcomes.
- Contingent consideration was a Level 3 fair-value liability of $1.58 million. A separate €1 million payment to Mayoly upon FDA approval of MS1819-SD was disclosed but not accrued.
- The filing reports no legal proceedings and no material changes to the risk factors in the 2017 Form 10-K. It also notes foreign-currency exposure and that $3.90 million of U.S. cash was held in one account above FDIC insurance limits.
Important Facts for Investors to Verify
- Confirm the issuer: the filing names AzurRx BioPharma, Inc., despite the request metadata naming Gridai Technologies Corp.
- Assess the financing runway and ability to raise capital before the stated June 2019 cash runway expires; the going-concern uncertainty is explicit.
- Review the full clinical data and subsequent progress of the MS1819-SD Phase II program, including whether timelines and efficacy findings hold up in larger studies.
- Check potential dilution from outstanding warrants and options, in addition to the shares issued in 2018.
- Reconcile small reported cash-flow financing differences: the cash-flow statement reports $11,457,096, while MD&A reports $11,457,098; verify against the filed financial statements.