Fortress Biotech, Inc. — filing identity note
The supplied filing is Coronado Biosciences, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2013, not a filing under the name Fortress Biotech, Inc. Investors should verify the issuer and filing before relying on this summary.
Business context and reporting period
Coronado described itself as a clinical-stage biopharmaceutical company developing immunotherapy candidates. Its principal programs were TSO (CNDO-201) for autoimmune diseases and CNDO-109 for acute myeloid leukemia. It remained a development-stage enterprise and had not generated revenue. Amounts below are in U.S. dollars; financial statement amounts are in thousands unless noted. The interim statements are unaudited.
Financial results and position
| Metric | Q1 2013 | Q1 2012 / comparison |
|---|---|---|
| Revenue | None | None since inception |
| Research and development expense | $5,974 | $4,581; up 30% |
| General and administrative expense | $2,484 | $2,000; up 24% |
| Operating loss | $(8,458) | $(6,581) |
| Net loss | $(8,858) | $(6,556); loss increased 35% |
| Basic and diluted loss per share | $(0.35) | $(0.35) |
| Cash used in operating activities | $(7,492) | $(5,425) |
| Cash and cash equivalents at quarter-end | $44,052 | $40,199 at Dec. 31, 2012 |
No gross profit or margins were reported because the company had no revenue. At March 31, 2013, current assets were $45.062 million and current liabilities were $6.168 million, implying working capital of approximately $38.894 million. Total liabilities were $18.728 million. Notes payable totaled $14.276 million on the balance sheet, including $3.190 million current and $11.086 million long-term; the Hercules term loan had a $15 million original principal and was reported net of a $724,000 debt discount. Accumulated development-stage deficit was $93.042 million.
Changes, outlook, risks and unusual items
- R&D spending rose mainly with higher costs for the TSO Phase 2 study and manufacturing-site preparation; management expected R&D and G&A spending to increase as development and public-company activities continued.
- Interest expense rose to $476,000 from $19,000, principally reflecting the Hercules loan. Stock-based compensation was $1.523 million, versus $874,000 a year earlier.
- Operating cash use increased by $2.067 million year over year. Financing provided $11.347 million in Q1, principally from common-stock issuance; cash increased by $3.853 million during the quarter.
- The company raised $11.8 million net through its existing ATM during Q1 and had fully used that $30 million facility. On April 29 it established a new ATM facility of up to $45 million. From January 1 through May 7, it reported $29.9 million net proceeds and 3.4 million shares issued under its ATM facilities. Common shares outstanding were 26.168 million at quarter-end and 28.048 million as of May 6.
- Management said quarter-end cash was expected to fund operations for at least the next 12 months under its existing plan, but additional financing would be required for development and potential commercialization. Financing might not be available on acceptable terms; a shortfall could force delays, reductions or elimination of programs.
- Coronado entered a four-year TSO research agreement with Freie Universität Berlin, with up to approximately $843,000 in research fees. Related license terms included up to approximately $4.982 million in potential milestone payments and 1.0%–2.5% royalties. An agreement with Ovamed provided for up to approximately $1.333 million in potential milestone payments and royalties, subject to the agreement terms.
- Key risks included clinical and regulatory uncertainty, reliance on collaborators and third-party manufacturers, and dependence on Ovamed as the sole TSO supplier at a single German facility. The filing reported no legal proceedings, no off-balance-sheet arrangements, and no material changes to contractual obligations outside the ordinary course.
- Subsequent events included a $312,500 executive market-capitalization bonus paid in April, the president’s resignation and expected approximately $445,000 severance liability, and a three-year New York City office lease with approximately $366,000 total rent.
Important facts for investors to verify
- Confirm the issuer identity: the filing is for Coronado Biosciences, not Fortress Biotech.
- Review the clinical progress, trial results and expected costs for TSO and CNDO-109, and the terms and status of the Berlin/Ovamed arrangements.
- Assess cash runway using post-quarter ATM proceeds, ongoing operating cash use, and the stated need for future financing; consider the associated share dilution.
- Review Hercules loan repayment terms and the company’s single-source manufacturing and supply exposure.
- Check subsequent executive compensation, severance and lease commitments, and whether actual spending or financing needs diverged from management’s outlook.