Business Context and Reporting Period
The filing is NeuroBo Pharmaceuticals, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2021; it does not identify the registrant as Metavia Inc. NeuroBo is a clinical-stage biotechnology company developing ANA001, NB-01, NB-02 and Gemcabene for COVID-19, neurodegenerative, neuropathic and cardiometabolic indications. It has not generated product or collaboration revenue.
Key Financial Metrics
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $1.143 million | $2.152 million |
| General and administrative expense | $2.187 million | $2.597 million |
| Total operating expenses | $3.330 million | $4.749 million |
| Net loss | $3.324 million | $4.730 million |
| Net loss per share, basic and diluted | $0.15 | $0.30 |
| Net cash used in operating activities | $6.141 million | $4.138 million |
| Cash and cash equivalents at period end | $13.035 million | $9.799 million |
Because the company had no revenue, gross profit and revenue-based margins are not meaningful. Operating loss was $3.330 million, equivalent to total operating expenses. Comprehensive loss was $3.331 million.
At March 31, 2021, total assets were $14.160 million, total liabilities were $1.009 million and stockholders’ equity was $13.151 million. The company had $944,000 of current liabilities, including $468,000 of accounts payable and $452,000 of accrued liabilities. Lease liabilities totaled $89,000. The filing does not report conventional interest-bearing debt.
Cash increased by $2.951 million during the quarter. Operating cash burn of $6.141 million was more than offset by $9.092 million of net financing proceeds. Investing cash flow was zero. The company reported an accumulated deficit of $69.868 million.
Material Changes Versus the Prior Comparable Period
- Net loss decreased by $1.406 million, or approximately 30%, primarily because operating expenses declined.
- Research and development expense declined by $1.009 million, mainly because Q1 2020 included approximately $700,000 of NB-01 Phase 3 CRO termination costs and approximately $400,000 related to further Gemcabene development.
- General and administrative expense declined by $410,000, primarily due to lower acquisition-related transaction costs and legal costs, partly offset by higher insurance premiums.
- Operating cash use increased by $2.003 million despite the lower net loss, primarily due to reductions in accounts payable and accrued liabilities.
- On January 21, 2021, the company raised $10.0 million in gross proceeds through the issuance of 2.5 million common shares and warrants to purchase 2.5 million additional shares. Net proceeds were $9.092 million after $908,000 of issuance costs.
- Shares outstanding increased to 22.171 million at March 31, 2021 from 19.671 million at December 31, 2020. Warrants outstanding increased to 2.578 million, including 2.5 million warrants with a $6.03 exercise price.
Guidance, Outlook, Risks and Unusual Items
- Management expects existing cash to fund operations into the fourth quarter of 2021 at the current level of scientific activity. Further cost reductions could potentially extend the operating window into the first quarter of 2022.
- The company expects to initiate Phase 3 development of ANA001 in the third quarter of 2021, subject to clinical and funding considerations.
- Work on NB-02 and its first human clinical trials was postponed, with potential clinical activity targeted for the second half of 2021 if health and macroeconomic conditions improve.
- NB-01 Phase 3 work was stopped and related CRO arrangements were terminated. The company is evaluating orphan-drug and nutraceutical alternatives.
- Gemcabene’s clinical development program remains on partial FDA hold. The company is exploring additional indications, including COVID-19-related uses.
- The financial statements include substantial doubt about the company’s ability to continue as a going concern. NeuroBo expects continuing losses and negative operating cash flows and has no committed additional financing.
- Potential future obligations include $45.0 million for FDA marketing approval of a Niclosamide product, additional sales milestones, a 2.5% royalty to certain ANA merger stakeholders and $19.5 million of milestones under the YourChoice license. No such milestone liabilities were accrued because achievement and funding were not considered probable.
- CVR holders are entitled to 80% of proceeds from licensing or transfer of Gemcabene for cardiovascular indications and 10% of proceeds for indications outside cardiometabolic diseases, including COVID-19.
- COVID-19 could affect clinical trials, suppliers, contract research organizations, service providers, capital markets and liquidity, although the company reported no significant negative operational impact through the filing date aside from prioritizing COVID-19 programs.
- Disclosure controls and procedures were not effective as of March 31, 2021 because of material weaknesses involving clinical trial cost accounting and accounting for mergers and acquisitions. Remediation was in progress but not complete.
- Cash deposits exceeded federally insured limits by approximately $12.4 million at March 31, 2021.
Investor Verification Points
- Confirm the issuer identity: the supplied filing is for NeuroBo Pharmaceuticals, Inc., ticker NRBO, not Metavia Inc.
- Verify the timing and terms of any financing needed before the projected cash runway ends.
- Monitor ANA001 clinical results, the proposed Phase 3 initiation and regulatory interactions.
- Assess whether NB-02 can begin clinical activity in the second half of 2021 and whether NB-01 or Gemcabene development plans change.
- Review remediation of the material weaknesses and any subsequent restatements or control deficiencies.
- Evaluate dilution from the 2.5 million outstanding 2021 warrants and future equity financings.
- Review the financial impact and probability of contingent milestone, royalty and CVR obligations.