Filing summary
Period and entity: This is AntriaBio, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2016, covering the three- and nine-month periods ended that date. It does not identify Rezolute, Inc. or a 2015 third quarter; the filing states AntriaBio was formerly known as Fits My Style, Inc.
Business context and results
AntriaBio is a preclinical biopharmaceutical company developing sustained-release injectable therapies. Its lead candidate, AB101, is a once-weekly formulation of basal insulin for type 1 and type 2 diabetes. The company reported no revenue.
| Metric | Three months ended Mar. 31, 2016 | Nine months ended Mar. 31, 2016 | Comparable 2015 period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Research and development expense | $2.31 million | $6.80 million | $1.29 million / $2.97 million |
| General and administrative expense | $1.41 million | $4.28 million | $1.01 million / $4.63 million |
| Net loss | $3.71 million | $11.06 million | $3.17 million / $8.32 million |
| Net loss per common share | $0.15 | $0.46 | $0.14 / $0.42 |
| Operating cash used | Not separately presented | $7.34 million | $5.12 million |
Margins are not meaningful because the company had no revenue. Nine-month R&D expense rose substantially as staffing, development activity, and preparations to manufacture clinical material increased. Nine-month G&A expense declined, which management attributed mainly to reduced consulting and investor-relations costs as roles were brought in-house.
Financial position and liquidity
- At March 31, 2016, cash was $1.75 million; current assets were $2.04 million and current liabilities were $2.42 million, a working-capital deficit of approximately $379,000.
- Total assets were $8.79 million and total liabilities were $2.85 million. Stockholders’ equity was $1.12 million; Series A convertible preferred stock, presented separately from equity, was recorded at $4.82 million.
- Nine-month investing cash outflow was $1.14 million, including $1.77 million of fixed-asset purchases, partly offset by release of restricted cash and return of a security deposit. Financing provided $4.94 million, primarily from preferred-stock issuance.
- The company had $60,000 of convertible notes outstanding; all were matured and payable, continuing to accrue interest at 8%. Lease commitments totaled approximately $1.57 million under the facilities lease, plus $48,446 under the equipment lease.
- Series A preferred shares carry a cumulative 6% annual dividend, conversion rights, and liquidation preferences. The company issued 2.74 million shares through March 31 and received approximately $4.8 million net. A further preferred-stock closing after quarter-end raised $1 million gross.
Outlook, risks, and other significant matters
- Management estimated an additional $15–$18 million would be needed to fund operations, AB101’s first clinical trial, and continued R&D through calendar year-end 2016 and the first half of 2017. It was seeking additional capital; availability and terms were uncertain.
- The company said existing cash and expected operating cash flows would not sustain operations for more than one year. The filing states that these conditions raise substantial doubt about its ability to continue as a going concern.
- Management’s near-term priorities were to qualify the new sterile manufacturing suite and produce clinical material. It planned to submit an IND in the second half of calendar 2016 and begin a clinical study shortly thereafter, subject to manufacturing and financing progress. Manufacturing delays could delay the study.
- The filing reports no material pending or threatened legal proceedings and no off-balance-sheet transactions. It identifies no material change to previously disclosed risk factors.
- Management concluded disclosure controls were ineffective due to a material weakness involving lack of segregation of duties and the need for a stronger control environment, attributed to the small staff.
Important facts for investors to verify
- Confirm the requested issuer and period: this source is AntriaBio’s March 31, 2016 10-Q, not a Rezolute 2015 Q3 filing.
- Assess the going-concern risk, cash burn, and whether the company obtained sufficient subsequent financing; the filing’s estimated $15–$18 million funding need was not assured.
- Track sterile manufacturing readiness, IND submission, and clinical-trial timing for AB101.
- Review the terms and dilution implications of the redeemable, dividend-bearing Series A preferred stock, outstanding warrants, and matured convertible notes.
- Monitor remediation of the disclosed material weakness in disclosure controls.