AzurRx BioPharma, Inc. — Form 10-Q Summary
The supplied filing identifies the registrant as AzurRx BioPharma, Inc. (not Gridai Technologies Corp.). It reports unaudited consolidated results for the quarter and six months ended June 30, 2018; balance-sheet figures are compared with December 31, 2017. AzurRx is a development-stage biotechnology company developing non-systemic biologics for gastrointestinal disorders and reported no revenue.
Key financial metrics
| Metric | Three months ended June 30, 2018 | Six months ended June 30, 2018 | Comparable 2017 period |
|---|---|---|---|
| Revenue | None | None | None |
| Research and development expense | $925,776 | $2,603,805 | $743,422; $1,277,559 |
| General and administrative expense | $2,167,247 | $4,083,580 | $1,381,013; $3,555,368 |
| Operating loss | $3,263,023 | $6,847,385 | $2,384,435; $5,192,927 |
| Net loss | $3,309,177 | $6,942,174 | $2,671,782; $5,481,148 |
| Loss per share, basic and diluted | $0.22 | $0.50 | $0.27; $0.56 |
| Operating cash used | Not separately stated | $4,862,321 in cash-flow statement | $3,422,440 |
At June 30, cash was $7.42 million, current assets $8.63 million, current liabilities $2.61 million, and working capital approximately $6.02 million. Total liabilities were $4.11 million, including $281,024 of current convertible debt, $26,836 of note payable, and $1.50 million of contingent consideration. Accumulated deficit was $40.93 million. The filing provides no meaningful operating margin because the company had no revenue.
Six-month investing cash outflow was $41,041; financing cash inflow was $11.77 million, principally from the May stock offering and warrant exercises. Cash increased from $573,471 at year-end 2017. The company reported stockholders’ equity of $7.63 million. Its May 2018 offering raised $10.4 million gross and approximately $9.6 million net; common shares outstanding rose from 12.04 million at year-end to 16.79 million at June 30.
Changes versus prior comparable periods
- Second-quarter net loss increased by $637,395 year over year; first-half net loss increased by $1.46 million. R&D expense rose materially, principally due to MS1819-SD trial milestones and new product-material production, as well as establishing a U.S. R&D function.
- First-half G&A expense rose by $528,212, reflecting warrant-modification expense, added executive compensation and bonuses, and investor-relations costs, partly offset by lower equity-compensation-related costs.
- Interest expense declined to $94,789 for the first half from $288,221, mainly because less LPC debenture remained outstanding.
- First-half operating cash use increased to $4.86 million from $3.42 million. Financing proceeds supported the increase in cash.
- On July 11, 2018, after quarter-end, the company paid off the LPC debenture for approximately $286,529. The May offering and warrant exercises substantially increased shares outstanding and strengthened reported cash, while diluting existing holders.
Outlook, risks, and unusual items
- Funding and going concern: Management estimated that June 30 cash would fund operations until July 2019, but stated that additional external financing is necessary and that the conditions raise substantial doubt about the company’s ability to continue as a going concern. Without adequate funding, it may be unable to meet obligations. The company expects substantial future development costs.
- MS1819-SD: The company completed a Phase IIa dose-escalation study in 11 patients with exocrine pancreatic insufficiency. Initial results reported a dose response and more than 21% improvement in coefficient of fat absorption in the highest-dose evaluable patients; maximum absolute response was reported as up to 57%. No serious adverse events were reported. Formal results were expected in fall 2018, and a Phase IIb study focused on cystic fibrosis patients was planned for the second half of 2018.
- Other pipeline: AZX1103 had positive preclinical findings in a minipig model; an IND filing was expected in 2019. The company was assessing whether to continue AZX1101 development.
- Contingencies: Protea acquisition consideration is a Level 3 fair-value liability of $1.50 million, including a $2 million FDA-approval milestone and sales royalties. Mayoly’s agreement includes a €1 million payment upon U.S. FDA approval of MS1819-SD; no liability was recorded. The filing reports no legal proceedings and no material risk-factor changes from the 2017 Form 10-K.
- Other notable matters: A $428,748 warrant-modification charge affected first-half G&A. The company had significant cash in excess of FDIC insurance limits: approximately $6.42 million in one U.S. account. Foreign-currency translation reduced first-half comprehensive results by $103,893. Management said disclosure controls were effective and reported no material change in internal controls.
Important facts for investors to verify
- Confirm the registrant’s identity: the filing names AzurRx BioPharma, Inc., despite the request metadata naming Gridai Technologies Corp.
- Track actual cash burn, financing availability, and whether the company can extend its stated July 2019 cash runway; the going-concern uncertainty is explicit.
- Check the formal Phase IIa data and subsequent progress, safety, enrollment, and funding for the planned MS1819-SD Phase IIb study.
- Assess dilution from the public offering, warrant exercises, outstanding warrants and options, and future equity financing needs.
- Reconcile operating cash used: the cash-flow statement reports $4,862,321, while MD&A gives $4,862,323; the MD&A also cites financing cash inflow of $11,770,340 versus $11,770,338 in the cash-flow statement.
- Monitor contingent consideration and the unrecorded €1 million Mayoly payment trigger, as well as debt and any subsequent-period developments.