Add
IBIO to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| IBIO > SEC Filings for IBIO > Form 10-Q on 15-May-2012 | All Recent SEC Filings |
15-May-2012
Quarterly Report
The following information should be read together with the financial statements and the notes thereto and other information included elsewhere in this quarterly report on Form 10-Q.
Forward-Looking Statements
This quarterly report on Form 10-Q, including the sections entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations", contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding iBio's expected future financial position, results of operations, cash flows, business strategy, budgets, projected costs, capital expenditures, products, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include the words such as "expects," "reaffirms" "intends," "anticipates," "plans," "believes," "seeks," "estimates," or variations of such words and similar expressions, are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Investors are cautioned that actual events or results may differ from our expectations. Factors that may affect our actual results achieved include, without limitation, our ability to develop existing and new products, future actions by the FDA or other regulatory agencies, results of pending or future clinical trials, the results of ongoing litigation, overall economic conditions, general market conditions, market acceptance, foreign currency exchange rate fluctuations, the effects on pricing from group purchasing organizations and competition, as well as our ability to integrate purchased businesses. Other risks and uncertainties include, but are not limited to, the factors described from time to time in our reports filed with the SEC, including our Form 10-K for the year ended June 30, 2011.
Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this quarterly report on Form 10-Q will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. iBio disclaims any obligation to update the forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date stated, or if no date is stated, as of the date of this document.
Overview
iBio, Inc. ("iBio" and the "Company") is a biotechnology company focused on commercializing its proprietary technology, the iBioLaunch™ platform, for biologics including vaccines and therapeutic proteins. Our strategy is to promote our technology through commercial product collaborations and license arrangements. We expect to share in the increased value our technology provides through upfront license fees, milestone revenues, service revenues, and royalties on end products. We believe our technology offers the opportunity to develop products that might not otherwise be commercially feasible, and to work with both corporate and government clients to reduce their costs during product development and meet their needs for low-cost, high-quality biologics manufacturing systems. Our near-term focus is to establish business arrangements for use of our technology by licensees for the development and production of products for both therapeutic and vaccine uses.
In order to attract appropriate licensees and increase the value of our share of such intended contractual arrangements, we engaged the Center for Molecular Biotechnology of Fraunhofer USA, Inc., or FhCMB, in 2003 to perform research and development activities to develop the platform and to create our first product candidate. We selected a plant-based influenza vaccine for human use as the product candidate to exemplify the value of the platform. Based on research conducted by FhCMB, our proprietary technology is applicable to the production of vaccines for any strain of influenza of H1N1 swine-like influenza. A Phase 1 clinical trial of a vaccine candidate for H1N1 influenza, based on iBio's technology, was initiated in September 2010. We announced positive interim results in June 2011 and successful completion of the clinical trial in March 2012. The vaccine candidate demonstrated strong induction of dose correlated immune responses, with or without adjuvant, as assessed by virus microneutralization antibody assays and hemagglutination inhibition ("HAI") responses. The vaccine was safe and well tolerated at all doses when administered with and without adjuvant.
In connection with the research and development agreement, FhCMB agreed to use its best efforts to obtain grants from governmental and non-governmental entities to fund additional development of our proprietary plant-based technology. Consequently, in addition to the funding we have provided, FhCMB has received funding from the Bill & Melinda Gates Foundation for development of various vaccines based upon our proprietary technology including an experimental vaccine for H5N1 avian influenza. A Phase 1 clinical trial of a vaccine candidate for H5N1 influenza, based on iBio's technology, was initiated in December 2010 and is ongoing. We announced positive interim results in June 2011 and successful completion of the clinical trial in March 2012.
In addition to the platform and product development engagements, in 2006, the Company engaged FhCMB to create a prototype production module for products made through the use of the platform. The purpose of this engagement was to demonstrate the ease and economy with which platform-based products could be manufactured in order to attract potential licensees and increase the value of our share of such business arrangements. The prototype design, which encompasses the entire production process from the seeding through pre-infiltration plant growth, infiltration with agrobacteria, harvesting of plant tissue and purification of target proteins, was completed in May 2008. A pilot plant based upon this prototype was subsequently constructed in the FhCMB facility in Newark, Delaware. This pilot plant, and the equipment in it, are owned by FhCMB and have been validated for cGMP (current good manufacturing practice) production. It is anticipated that it will be used for cGMP production of protein targets for clinical trials of product candidates utilizing our platform technology.
In January 2011, we announced the grant of a commercial, royalty-bearing license to Fiocruz/Bio-Manguinhos of Brazil to develop, manufacture and sell certain vaccines based upon our proprietary technology. Fiocruz/Bio-Manguinhos will invest $6.5 million to bring the first product candidate, a yellow fever vaccine, through a Phase I clinical trial. Yellow fever is a viral infection in the group of diseases known as hemorrhagic fevers. The virus is transmitted by mosquitoes, and is common in South America and sub-Saharan Africa. The disease, which causes fever, nausea and pain, varies in severity, but is frequently lethal when it progresses to bleeding or to liver damage. The World Health Organization has estimated that 200,000 unvaccinated people contract yellow fever each year, and approximately 30,000 die from the disease.
Development of the yellow fever vaccine candidate will be performed through a
commercial collaboration among the Company, Fiocruz/Bio-Manguinhos, and FhCMB.
The license covers the nations of Latin America, the Caribbean and Africa. The
Company retains the right to sell the products developed under the license and
collaboration agreement in any other territory with a royalty back to
Fiocruz/Bio-Manguinhos. Bio-Manguinhos is a unit of the Oswaldo Cruz Foundation
(Fiocruz), a central agency of the Ministry of Health of Brazil.
Fiocruz/Bio-Manguinhos produces and develops immunobiological items to respond
to public health demands. Its product line consists of vaccines, reagents and
biopharmaceuticals. Fiocruz/Bio-Manguinhos is a leading company in the national
export of human vaccines and a major participant in total export sales of the
Brazilian pharmaceutical sector. Fiocruz/Bio-Manguinhos is one of the main
producers of vaccines and diagnostics for infectious diseases in Latin America.
Fiocruz/Bio-Manguinhos is a certified World Health Organization provider to
United Nations agencies, and is a leading world manufacturer of yellow fever
vaccine, which it has exported to over 60 countries.
The Company established non-commercial arrangements among the Company, certain government entities, a non-governmental organization ("NGO") and FhCMB, pursuant to which the Company grants non-commercial rights to use its platform for the development and production by FhCMB of product candidates selected by the government entities and the NGO, in consideration for grants by the government entities and the NGO directly to FhCMB to fund such research and development.
Through (i) the Company/FhCMB contracts and (ii) the non-commercial arrangements described above (which we refer to collectively as the "business structure"), the Company retains ownership of the intellectual property and exclusive worldwide commercial rights in the fields of human health and veterinary influenza applications of the intellectual property. The Company licenses or otherwise grants
This business structure helps the Company to enhance the value of commercial rights and the scope of applications of its platform technology. It also helps the Company demonstrate the validity and apparent value of the platform to parties to whom it will offer licenses or other business opportunities. Outsourcing our research and development work allows us to develop our product candidates, and thereby promote the value of our platform for licensing and product development purposes, without bearing the full risk and expense of establishing and maintaining our own research and development staff and facilities. FhCMB is engaged to perform research and development for the yellow fever vaccine project based on their expertise. The contract with FhCMB is expected to be $6.5 million. Service revenues and research expense under this arrangement commenced in January 2011. The amount of revenues recorded under this agreement and related research and development expenses for the three months ended March 31, 2012 and 2011 were approximately $372,000 and $176,000, respectively. The amount of revenues recorded under this agreement and related research and development expenses for the nine months ended March 31, 2012 and 2011 were approximately $926,000 and $176,000, respectively.
The Company's platform technology is sometimes referred to as "iBioLaunch™ technology" or the "iBioLaunch™ platform," and the category of this technology is sometimes referred to as "plant-based technology" or as a "plant-based platform." The Company has exclusive control over, and the rights to ownership of, the intellectual property related to all human health and veterinary influenza applications of the plant-based technology developed by FhCMB. Current development projects include conducting proof-of-principle preclinical studies and conducting clinical studies of proprietary influenza vaccines. Many biotech drugs have been on the market long enough for patents on them to expire. Emerging opportunities for biosimilars (also known as biogenerics or follow-on biologics) create potential for our platform technology to be used by potential licensees to enter the market utilizing what the Company expects to be an economical production system. The Company is seeking commercial partners for this category of products and is unlikely to develop products in this category without the financial and marketing support of a commercial partner.
Our current product candidates are in the preclinical or early clinical stage of development and will require significant further research, development, clinical testing and regulatory clearances. They are subject to the risks of failure inherent in the development of products based on innovative technologies. These risks include, but are not limited to, the possibilities that any or all of these products will be found to be ineffective or unsafe, or otherwise fail to receive necessary regulatory clearances; that these products, although effective, will be uneconomical to market; that third parties may now or in the future hold proprietary rights that preclude us from marketing them; or that third parties will market superior or equivalent products. Accordingly, we are unable to predict whether our research and development activities will result in any commercially viable products or applications. Further, due to the extended testing and regulatory review process of these product candidates required before marketing clearance can be obtained, we do not expect to be able to commercialize any for at least several years, either directly or through our current prospective partners or licensees. There can be no assurance that our product candidates will prove to be safe or effective or receive regulatory approvals that are required for commercial sale. Historically, in addition to the development of the platform technology described in the preceding paragraphs, the Company has also generated sales of nutritional supplements utilizing plants as sources of high-quality nutritional minerals.
The Company has a patented process for hydroponic growth of edible plants that causes them to accumulate high levels of important nutritional minerals such as chromium, selenium, iron and zinc. The Company utilized the services of various wholly-owned subsidiaries of our former parent company, Integrated BioPharma, Inc. ("Integrated BioPharma" or "Former Parent") to support the production, marketing and sales of these phytomineral products.
Results of Operations
For the three months ended March 31, 2012 versus March 31, 2011
Revenues for the three months ended March 31, 2012 were approximately $372,000 as compared to approximately $176,000 for the three months ended March 31, 2011. Revenues were attributable to providing technology services to a licensee, Fiocruz/Bio-Manguinhos, to assist them in implementing the Company's technology.
Research and development expense
Research and development expense for the three months ended March 31, 2012 was approximately $1,307,000 compared to approximately $1,137,000 over the comparable period in 2011, an increase of approximately $170,000. This increase primarily relates to approximately $196,000 for FhCMB to service the yellow fever vaccine contract with Fiocruz/Bio-Manguinhos using iBio's technology. In addition, the Company incurred approximately $119,000 in outside services to a related party, to perform laboratory feasibility analyses of gene expression and protein purification and also preparation of research samples. These expenses were offest primarily by a research project ("Project 1") that was entered into last year with FhCMB by approximately $53,000 to evaluate gene expression and protein production, focus on a series of product candidates, using the iBioLaunch platform. The focus was to determine feasibility and relative priority, for business development purposes, of several protein therapeutic candidates that are representative of
General and administrative expenses
General and administrative expense for the three months ended March 31, 2012 was $1,246,000 compared to $1,927,000 for the comparable period in 2011, a decrease of approximately $681,000. The decrease is attributed primarily to reductions in share-based compensation expense for options of approximately $427,000 and share-based compensation expense for warrants of approximately $268,000. During the three months ended March 31, 2011, there were certain options granted that had shorter vesting as compared to the current period which caused the options to expense over a shorter period. The decrease in share-based compensation expense for warrants primarily represents an agreement for services that commenced during the previous period that had more of an impact on such period than the current period in conjunction with revaluing at each reporting period due to the price of the Company's stock.
Other income (expense)
The derivative instrument liability non-cash charge for the three months ended March 31, 2012 was approximately $918,000 as compared to a non-cash charge of $144,000 for the comparable period in 2011. This resulted in an increase in a non-cash charge of approximately $774,000 for the three months ended March 31, 2012 as compared to the comparable period in 2011. The Company had issued additional warrants as a result of the anti-dilution provision as described in Note C to the notes to the unaudited condensed financial statements. In addition, the non-cash charge for the three months ended March 31, 2012 also related to the increase in the Company's stock price at March 31, 2012 as compared to December 31, 2011. The non-cash income for the three months ended March 31, 2011 primarily relates to a decrease in the Company's stock price at March 31, 2011 as compared to December 31, 2010. The calculation of this derivative liability is affected by factors which are subject to significant fluctuations and are not under the Company's control. This liability resulted from warrants included in the August 2008 equity financing with an anti-dilution provision. Therefore, the resulting effect upon our net income or loss is subject to significant fluctuations and will continue to be subject to significant fluctuations until the warrants either expire in August 2013 or are exercised prior to that date. The accounting guidance applicable to these warrants requires the Company (assuming all other inputs to the pricing model remain constant) to record a non-cash charge when the Company's stock price is rising and to record non-cash income when the Company's stock price is falling.
Based upon the above, the net loss for the three months ended March 31, 2012 and 2011 was approximately $3,099,000 and $3,031,000 and $0.07 and $0.09 per share, respectively. The weighted average common shares outstanding - basic and diluted for the three months ended March 31, 2012 and 2011 was 45,715,762 and 32,338,587, respectively.
Results of Operations
For the nine months ended March 31, 2012 versus March 31, 2011
Revenues for the nine months ended March 31, 2012 were approximately $926,000 as compared to approximately $176,000 for the nine months ended March 31, 2011. Revenues were attributable to providing technology services to a licensee, Fiocruz/Bio-Manguinhos, to assist them in implementing the Company's technology which commenced during the three months ended March 31, 2011.
Research and development expense
Research and development expense for the nine months ended March 31, 2012 was approximately $3,926,000 compared to approximately $1,915,000 over the comparable period in 2011, an increase of $2,011,000. This increase for the nine months ended March 31, 2012 primarily relates to two new research agreements that were entered into with FhCMB, Project 1 and Project 2 incurred more costs during the nine months than the comparable period in 2011 by approximately $806,000. Project 2 was completed during the three months ended March 31, 2012 and Project 1 commenced during the three months March 31, 2011. In addition, FhCMB was engaged to outsource the Fiocruz/Bio-Manguinhos agreement for their research and development based on their expertise to advance the yellow fever vaccine project using iBio's technology. The increase for the nine months ended was $750,000 as compared to the comparable period in 2011. There are two $1 million obligation payments that are due each year during a five-year period and such obligations commenced in 2009. The May 2011 obligation was expensed upfront for the completion of the Pilot Plant at FhCMB as services were fully rendered through June 30, 2011. The accounting for the TTA agreement has been to expense such amounts as services are rendered. Such expense was approximately $667,000 greater for the nine months ended March 31, 2012 as compared to the comparable period in 2011. In addition, the Company incurred approximately $119,000 in outside services to a related party, to perform laboratory feasibility analyses of gene expression and protein purification and also preparation of research samples. Share-based compensation expense - options decreased for the nine months in 2012 as compared to
General and administrative expenses
General and administrative expense for the nine months ended March 31, 2012 was approximately $4,180,000 compared to approximately $4,386,000 for the comparable period in 2011, a decrease of $206,000. The decrease is primarily attributed to a reduction in share-based compensation expense for warrants of approximately $939,000. Other decreases include the past consulting services by the former CFO for approximately $114,000 and public company listing fees of approximately $106,000. This was offset by an increase in share-based compensation expense for options for approximately $503,000 primarily for an option modification. In November and December 2011, the Board of Directors modified the cancellation provision of previously issued options, permitting an option holder, upon termination without cause, to exercise the vested portion of an option post-termination up to ten years after the grant date. Current period option awards granted also include this provision. The Company estimates the effect of the modification to be approximately $633,000, which will be expensed over the vesting terms, of which approximately $614,000 pertains to general and administrative expenses. For the nine months ended March 31, 2012, the amount charged to general and administrative expense was approximately $495,000. The remaining amount of $119,000 will be expensed in subsequent periods over the vesting terms. Other increases related to increases in professional fees of approximately $114,000, business travel of approximately $64,000 and in payroll and benefits of approximately $370,000. The Company hired two employees and salaries were increased primarily for the CEO and President.
Other income (expense)
The derivative instrument liability non-cash income for the nine months ended March 31, 2012 was approximately $2,873,000 as compared to a non-cash charge of approximately $4,425,000 for the comparable period in 2011. This resulted in an increase of non-cash income of approximately $7,298,000 for the nine months ended March 31, 2012 as compared to the comparable period in 2011. The non-cash income for the nine months ended March 31, 2011 of $2,873,000 is primarily due to the decrease in the Company's stock price at March 31, 2012 as compared to June 30, 2011. However, it was also affected by the issuance of additional warrants as a result of the January 2012 equity offering due to the anti-dilution provision that was part of the August 2008 equity offering. The increase in other income - change in derivative liability of approximately $7,298,000 primarily results from decreases in the stock price at March 31, 2012 and 2011, respectively, as compared to June 30, 2011 and 2010, respectively. The calculation of this derivative liability is affected by factors, which are subject to significant fluctuations and are not under the Company's control. This liability resulted from warrants included in the August 2008 equity financing with a down round provision. Therefore, the resulting effect upon our net income or loss is subject to significant fluctuations and will continue to be subject to significant fluctuations until the warrants either expire in August 2013 or are exercised prior to that date. The accounting guidance applicable to these warrants requires the Company (assuming all other inputs to the pricing model remain constant) to record a non-cash charge when the Company's stock price is rising and to record non-cash income when the Company's stock price is falling.
Based upon the above, the net loss for the nine months ended March 31, 2012 and 2011 was approximately $4,245,000 and $10,560,000 and $0.12 and $0.35 per share, respectively. The weighted average common shares outstanding - basic and diluted for the nine months ended March 31, 2012 and 2011 was 36,761,767 and 30,499,090 respectively.
Liquidity and Capital Resources
The Company has incurred losses and negative cash flows from operations since the spinoff from its Former Parent in August 2008. As of March 31, 2012, the Company had an accumulated deficit of approximately $29,975,000 and cash used from operations for the nine months ended March 31, 2012 and 2011 was approximately $4,969,000 and $4,240,000, respectively. The Company has historically financed its activities through the sale of common stock and warrants. To date, the Company has dedicated most of its financial resources to investing in its iBioLaunch™ platform, advancing intellectual property, product candidate development, and general and administrative activities.
iBio believes it has the financial capability to meet its current obligations. In addition, the Company estimates that the cash on hand as of March 31, 2012 of approximately $6,724,000 will be adequate to fund its operations until the second calendar quarter of 2013. The Company plans to fund its further development and commercialization through licensing and partnering arrangements, . . .
|
|