Filing summary
Issuer identification: The supplied filing is First Wave BioPharma, Inc. (Nasdaq: FWBI), not Gridai Technologies Corp. It is a Form 10-Q for the quarter ended September 30, 2022, filed November 14, 2022.
Business context and reporting period
First Wave is a clinical-stage biotechnology company developing gut-restricted therapies for gastrointestinal diseases. Its programs include adrulipase for exocrine pancreatic insufficiency and niclosamide formulations for gastrointestinal and inflammatory conditions. The company reported no revenue to date and has financed operations primarily through securities offerings. Financial statements are unaudited.
Key financial metrics
| Metric | Three months ended September 30, 2022 | Nine months ended September 30, 2022 |
|---|---|---|
| Revenue | None reported | None reported |
| Net income (loss) | $4.39 million | $(10.64) million |
| Operating cash flow | Not separately presented | $(16.75) million |
| Cash and cash equivalents at period end | $1.66 million; restricted cash was $0.02 million | |
| Total assets at period end | $4.65 million | |
| Total liabilities at period end | $6.93 million | |
| Working capital | Negative approximately $4.1 million |
There is no meaningful revenue margin to assess because the company had no revenue. The third-quarter profit was not evidence of commercial profitability: it principally reflected an $8.09 million recovery in acquired-intellectual-property expense following a restructuring of obligations to former First Wave Bio, Inc. stockholders. For the nine-month period, financing activities provided $10.22 million; cash and restricted cash declined by $6.54 million. The $0.64 million note payable outstanding at year-end 2021 had been repaid by September 30, 2022. Lease liabilities totaled about $0.30 million. Current liabilities were $6.69 million.
Changes versus the prior comparable period
- Third-quarter net income of $4.39 million compared with a $30.40 million loss in third-quarter 2021. The swing was chiefly due to the acquired-IP liability reduction; operating expenses excluding that recovery remained substantial.
- Nine-month net loss narrowed to $10.64 million from $47.37 million. The prior-year period included a $21.33 million acquired-IP charge; 2022 included an $8.09 million recovery related to the settlement. General and administrative expense fell 36% to $9.81 million, while research and development expense excluding the acquired-IP item fell 23% to $8.67 million.
- Cash and cash equivalents fell from $8.25 million at December 31, 2021 to $1.66 million at September 30, 2022. Stockholders’ deficit improved from $7.82 million to $2.28 million, but remained negative.
- Common shares outstanding at September 30, 2022 were 2,307,008 versus 495,194 at year-end 2021. The company completed a 1-for-30 reverse split in August 2022 and raised capital through an at-the-market program and other offerings.
Outlook, commentary, risks and unusual items
- Liquidity and going concern: Management said September 30 cash plus approximately $5.2 million net proceeds from an October 11, 2022 offering were expected to fund planned operations into the first quarter of 2023. The filing states substantial doubt about the company’s ability to continue as a going concern within one year of issuance; continued operations depend on additional financing.
- Clinical outlook: Management expected to initiate an adrulipase Phase 2b monotherapy trial in fourth-quarter 2022. The Phase 2 RESERVOIR COVID-19 GI trial did not meet its efficacy endpoint, although the drug was reported safe with no serious adverse events. The ulcerative proctitis/proctosigmoiditis trial concluded in August 2022 and failed to demonstrate efficacy under its design; the company was evaluating whether to pursue a differently designed study. The ICI-associated colitis program was on hold for financial reasons.
- Settlement and contingent obligations: A July 2022 settlement provided for $2.5 million paid by September 30 and a further $2.0 million payment due by November 30, 2022 or upon qualifying equity financing. Payment of the second installment extinguished about $10.1 million of remaining fixed obligations. Former FWB stockholders retain certain potential milestone, licensing, sale and revenue-related rights.
- Nasdaq listing: The company regained compliance with Nasdaq’s minimum bid-price rule after the reverse split. Its continued-listing exception had significant conditions, including additional equity financing, and was due to expire November 22, 2022. The filing cautions that delisting remained possible.
- Other risks and events: The company reduced headcount and closed facilities to conserve cash. It identified clinical and regulatory execution, access to capital, Nasdaq compliance, COVID-19 and geopolitical uncertainty as risks. AzurRx SAS was dissolved effective October 26, 2022. The October offering included substantial pre-funded and common warrants, creating potential dilution.
Most important facts for investors to verify
- Confirm the issuer and ticker: the source filing is First Wave BioPharma (FWBI), not Gridai Technologies Corp.
- Review subsequent cash usage, financing needs and actual runway against management’s first-quarter 2023 estimate, including payment of the remaining $2.0 million settlement installment.
- Check the outcome of the Nasdaq continued-listing exception and whether all required conditions and financing milestones were met.
- Assess clinical trial updates, particularly adrulipase development and any decision on further niclosamide studies after the failed efficacy results.
- Evaluate dilution from the October 2022 offering, outstanding warrants and other potentially issuable shares.