Benitec Biopharma Inc. — Form 10-K Summary
Reporting period: Fiscal year ended June 30, 2020, with comparison to fiscal 2019. Although the request metadata says “2019 Q4,” this filing is an annual report for fiscal 2020, not a quarterly filing. Filed September 23, 2020. Financial figures below are in U.S. dollars.
Business context
Benitec is a development-stage biotechnology company developing DNA-directed RNA interference (ddRNAi) and “silence and replace” genetic medicines. Its lead candidate, BB-301, is in preclinical development for oculopharyngeal muscular dystrophy (OPMD); BB-301 has U.S. and EU Orphan Drug Designations. BB-103, being developed for chronic hepatitis B, is not actively advancing while the company seeks a strategic partner. The company has no approved products and has never generated product-sales revenue.
On April 15, 2020, the company completed its re-domiciliation from Australia to Delaware. Its shares trade on Nasdaq as BNTC. The transaction also made Benitec subject to U.S. domestic reporting requirements.
Financial performance and liquidity
| Metric | FY2020 | FY2019 |
|---|---|---|
| Total revenue | $0.102 million | $12.199 million |
| Operating expenses | $8.383 million | $9.616 million |
| Operating income (loss) | $(8.281) million | $2.583 million |
| Net income (loss) | $(8.274) million | $2.609 million |
| Basic and diluted EPS | $(8.10) | $3.05 |
| Operating cash flow | $(7.535) million | $4.790 million |
| Cash and cash equivalents at year-end | $9.801 million | $15.718 million |
- Revenue fell approximately 99% year over year, principally because the Axovant license and collaboration agreement was terminated effective September 3, 2019. FY2020 customer revenue was $97,000; government R&D grant revenue was $5,000.
- FY2020 R&D expense was $3.001 million, down from $4.567 million; G&A expense was $5.567 million, up from $4.614 million. The company recorded a $185,000 credit for royalties and license fees, following reversal of a previously accrued milestone that was determined not to be payable.
- Cash used in investing activities was $94,000. Financing provided $1.770 million net, from $2.250 million in share proceeds less $480,000 of issuance costs. Cash declined by $5.859 million during the year.
- Total assets were $11.587 million, total liabilities $1.349 million, and stockholders’ equity $10.238 million at June 30, 2020. The company reported no borrowings or credit facility. Lease liabilities totaled $405,000, including $192,000 current.
- Accumulated deficit was $116.636 million. Conventional product gross margins are not meaningful because the company has no product sales.
Material changes, outlook and risks
- The prior-year profit was not indicative of recurring product economics: FY2019 revenue included $10.273 million of licensing revenue and $1.095 million of service revenue under the Axovant agreement. Benitec resumed sole responsibility for BB-301 development after Axovant’s termination.
- Management reported $9.8 million of cash at year-end and said cash together with anticipated proceeds from a planned public offering was expected to fund operations for at least 12 months. The filing also estimated runway to approximately the first quarter of 2022 on the basis of existing cash and planned financing. The S-1 for the planned offering was filed August 14, 2020; proceeds were not assured. The financial statements identify substantial funding dependence and warn that unavailable financing could require expenditure cuts and adversely affect the company’s ability to continue as a going concern.
- BB-301 remained preclinical. Benitec initiated a large-animal tissue-transduction study in July 2020; interim data were expected in late 2020 or early 2021. Management described the study as part of planned IND-enabling work. Preclinical mouse results were encouraging, but do not establish human safety or efficacy.
- COVID-19 delayed the start of BB-301 IND-enabling work by several months and reduced laboratory activity during work-from-home measures. Further disruption to studies, vendors, supply chains, financing and future clinical timelines remained uncertain.
- The company depends on outside manufacturers and research partners, has no commercial-scale manufacturing agreement, and expects to need additional capital to begin and complete BB-301 clinical studies. Risks also include regulatory uncertainty for gene therapies, AAV-related immune responses, competition, intellectual-property challenges and potential dilution from future financing.
- Nant Capital held approximately 26.4% of the shares as of September 15, 2020. The filing notes potential conflicts arising from its ownership and the CEO’s prior relationship with Nant Capital. The company reported no material legal proceedings or material off-balance-sheet arrangements.
Most important facts for investors to verify
- Whether the planned public offering closed, how much net cash it raised, and the resulting cash runway and dilution.
- Current BB-301 large-animal study results, IND-enabling milestones, timelines and estimated costs; distinguish animal findings from clinical evidence.
- Whether Benitec secured a development partner and funding for BB-103, and whether its development status changed.
- How cash burn and operating expenses compare with the filing’s runway assumptions, including additional U.S. public-company compliance costs.
- The status of manufacturing arrangements, intellectual-property rights and any licenses needed for commercialization.