PharmaCyte Biotech, Inc. — Form 10-Q
Reporting period: Three and six months ended October 31, 2021; financial statements are unaudited. The company is a pre-revenue biotechnology developer focused on its Cell-in-a-Box cellular-encapsulation platform, including a candidate for locally advanced, inoperable pancreatic cancer (LAPC).
Key financial metrics
| Metric | Three months ended Oct. 31, 2021 | Six months ended Oct. 31, 2021 | Comparable 2020 period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Operating expenses | $1.00 million | $2.03 million | $0.95 million; $1.83 million |
| Net loss | $0.98 million | $2.01 million | $0.95 million; $1.83 million |
| Basic and diluted loss per share | $0.06 | $0.21 | $0.62; $1.38 |
| Net cash used in operations | Not stated for the quarter | $2.63 million | $1.80 million for six months |
| Cash | $86.94 million at Oct. 31, 2021 | $3.72 million at Oct. 31, 2020 | |
| Working capital | Approximately $87 million at Oct. 31, 2021 | Approximately $1.6 million at Oct. 31, 2020 |
At October 31, 2021, total assets were $92.31 million, total liabilities were $186,122, and stockholders’ equity was $92.12 million. The filing reports no material debt outstanding; the $75,200 PPP loan was forgiven in April 2021. No investing cash flows were reported for the six-month periods. Profit margins are not meaningful because the company had no revenue.
Changes versus the prior comparable periods
- Six-month operating expenses rose $197,003 to $2.03 million, while net loss increased approximately $171,000 to $2.01 million. Higher general and administrative and legal/professional costs were partly offset by lower compensation and R&D expenses.
- Cash increased substantially, principally from financing. Net cash provided by financing activities was $87.36 million for the six months, versus $4.62 million in 2020. The company reported approximately $87.4 million in net proceeds from stock and warrant-related financing during the period.
- Common shares outstanding increased from 1.59 million at April 30 to 20.72 million at October 31, following a 1-for-1,500 reverse stock split and substantial equity issuance. The company began trading on Nasdaq in August 2021.
Outlook, developments and risks
- The FDA’s clinical hold on the planned Phase 2b LAPC trial remained in place. The company was completing additional preclinical studies and compiling requested information on product stability, manufacturing, genetic data, release specifications, delivery devices, biocompatibility, and safety. The filing gives no date for submitting a complete response or for possible hold removal.
- The company reported completed stability testing through 18 months and positive results from capsule-material studies indicating no complement activation, hemolysis, or mutagenicity. Other requested studies, including animal and device-compatibility work, were ongoing or planned.
- COVID-19 was said to have had a non-material operational impact as of the report date, mainly through delays in clinical-hold response work. The company warned that further delays, trial-enrollment difficulty, or compromised trial data were possible.
- No formal revenue, earnings, or clinical-development guidance was provided. The company stated it was not devoting further resources to its Cannabis Program until the FDA permits the LAPC trial and the platform is validated in that trial.
- Potential dilution is material: 10.77 million warrants were outstanding at October 31, in addition to stock options and other equity awards. The company also reported approximately $8.36 million of offering costs related to its August financings.
- Management concluded that disclosure controls and procedures were not effective at October 31 because of material weaknesses in internal control over financial reporting. No material litigation was reported. The company disclosed about $86.66 million of cash above the FDIC-insured limit at October 31.
Important facts for investors to verify
- Current FDA clinical-hold status, completion and submission of all requested studies and documentation, and any resulting trial timetable.
- Cash use and remaining liquidity relative to the actual cost and timing of preclinical, manufacturing, and clinical work.
- Potential dilution from outstanding warrants, options, and other securities, including warrant exercises and any subsequent share-count changes.
- Progress in remediating the disclosed internal-control material weaknesses.
- Whether COVID-19, third-party manufacturing or study dependencies, or regulatory requirements further delay development.