UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
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(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As of May 8, 2023, the registrant had
Table of Contents
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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EXPLANATORY NOTE
All share and per share information included in this Quarterly Report on Form 10-Q has been retroactively adjusted to reflect a 1-for-25 reverse stock split effected on January 3, 2023.
TRADEMARKS
Biora TherapeuticsTM, BIOJETTM, NAVICAPTM, and GITRACTM are trademarks of Biora Therapeutics, Inc. Any other brand names or trademarks appearing in this Quarterly Report on Form 10-Q are the property of their respective holders.
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Biora Therapeutics, INC.
CONDENSED Consolidated Balance Sheets
(In thousands, except share and per share data)
(Unaudited)
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March 31, 2023 |
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December 31, 2022 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Income tax receivable |
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Prepaid expenses and other current assets |
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Current assets of disposal group held for sale |
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Total current assets |
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Property and equipment, net |
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Right-of-use assets |
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Other assets |
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Goodwill |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders' Deficit |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Warrant liabilities |
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Total current liabilities |
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Convertible notes, net of unamortized discount of $ |
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Other long-term liabilities |
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Total liabilities |
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$ |
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$ |
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Stockholders' deficit: |
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Common stock – $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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Treasury stock – at cost; |
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( |
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( |
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Total stockholders' deficit |
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( |
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( |
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Total liabilities and stockholders' deficit |
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$ |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
1
Biora Therapeutics, INC.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
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Three Months Ended |
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2023 |
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2022 |
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Revenues |
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$ |
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$ |
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Operating expenses: |
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Research and development |
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Selling, general and administrative |
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Total operating expenses |
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Loss from operations |
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( |
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Interest expense, net |
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( |
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Gain on warrant liabilities |
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Other expense, net |
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( |
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( |
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Loss from continuing operations |
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( |
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Gain from discontinued operations |
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Net loss |
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( |
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( |
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Net loss per share from continuing operations, basic and diluted |
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$ |
( |
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$ |
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Net gain per share from discontinued operations, basic and diluted |
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$ |
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$ |
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Net loss per share, basic and diluted |
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$ |
( |
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$ |
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Weighted average shares outstanding, basic and diluted |
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See accompanying notes to unaudited condensed consolidated financial statements.
2
Biora Therapeutics, INC.
Condensed Consolidated Statements of Stockholders’ Deficit
(In thousands, except share data)
(Unaudited)
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Common Stock |
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Additional |
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Accumulated |
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Treasury Stock |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Shares |
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Amount |
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Deficit |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Issuance of common stock, net |
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— |
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— |
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— |
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Issuance of common stock upon vesting of restricted stock units |
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— |
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( |
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— |
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( |
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— |
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( |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Balance at March 31, 2023 |
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$ |
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$ |
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$ |
( |
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( |
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$ |
( |
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$ |
( |
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Common Stock |
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Additional |
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Accumulated |
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Treasury Stock |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Shares |
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Amount |
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Deficit |
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Balance at December 31, 2021 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Issuance of common stock, net |
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— |
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— |
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— |
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— |
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Issuance of common stock upon vesting of restricted stock units |
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— |
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( |
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— |
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( |
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— |
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( |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Balance at March 31, 2022 |
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$ |
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$ |
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$ |
( |
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( |
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$ |
( |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
3
Biora Therapeutics, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
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Three Months Ended |
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2023 |
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2022 |
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Operating Activities: |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Gain from discontinued operations |
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Non-cash revenue reserve |
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Depreciation and amortization |
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Stock-based compensation expense |
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Amortization of debt discount and non-cash interest |
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Loss on disposal of property and equipment |
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Impairment of property and equipment |
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Change in fair value of warrant liabilities |
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( |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
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Accounts payable |
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( |
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( |
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Accrued expenses and other liabilities |
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( |
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Other long-term liabilities |
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( |
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( |
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Net cash used in operating activities - continuing operations |
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( |
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Net cash provided by operating activities - discontinued operations |
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Net cash used in operating activities |
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( |
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Investing Activities: |
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Purchases of property and equipment |
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( |
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Proceeds from sale of property and equipment |
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Net cash used in investing activities |
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( |
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Financing Activities: |
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Proceeds from issuance of common stock |
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Payment of offering costs |
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( |
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Payments for financing of insurance premiums |
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( |
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( |
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Principal payments on capital lease obligations |
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( |
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Net cash provided by financing activities |
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Net decrease in cash and cash equivalents |
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( |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information: |
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Cash paid for income taxes |
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$ |
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$ |
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Supplemental schedule of non-cash investing and financing activities: |
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Lease assets obtained in exchange for operating lease liabilities |
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$ |
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$ |
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Purchases of property and equipment in accounts payable |
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$ |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
4
Biora Therapeutics, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization and Description of Business
Biora Therapeutics, Inc. (the “Company” or “Biora” or "Biora Therapeutics") is a biotechnology company developing oral biotherapeutics that could enable new treatment approaches in the delivery of therapeutics. The Company's therapeutics pipeline includes two therapeutic delivery platforms:
Biora Therapeutics, a Delaware corporation, was formerly known as Progenity, Inc. (“Progenity”), and commenced operations in 2010 with its corporate office located in San Diego, California. The Company's historical operations included a licensed Clinical Laboratory Improvement Amendments and College of American Pathologists certified laboratory located in Michigan specializing in molecular testing markets serving women’s health providers in the obstetric, gynecological, fertility, and maternal fetal medicine specialty areas in the United States. Previously, the Company's core business was focused on the carrier screening and noninvasive prenatal test market, targeting preconception planning and routine pregnancy management for genetic disease risk assessment. Through its former affiliation with Mattison Pathology, LLP, a Texas limited liability partnership doing business as Avero Diagnostics (“Avero”), the Company’s operations also included anatomic and molecular pathology testing products.
In order to refocus efforts and resources on its research and development pipeline, in June 2021, the Company announced a strategic transformation ("Strategic Transformation") that included the closure of the Progenity genetics laboratory and in December 2021, the Company sold Avero, together referred to as the Laboratory Operations. The Company has reported all revenues and expenses associated with its Laboratory Operations as discontinued operations, see Note 3 for additional information. In April 2022, the Company announced that it would rebrand to better reflect the current focus on its therapeutics pipeline, and changed its name to Biora Therapeutics, Inc.
On December 29, 2022, the Company filed a certificate of amendment ("the Certificate of Amendment") to its eighth amended and restated certificate of incorporation to effect, as of January 3, 2023, a 1-for-25 reverse split of the Company's common stock (the "Reverse Stock Split"). On January 3, 2023, the Company effected the Reverse Stock Split. See Note 2 for additional information.
Liquidity
As of March 31, 2023, the Company had cash and cash equivalents of $
The Company’s ability to continue as a going concern is dependent upon its ability to raise additional funding. Management believes that the Company’s liquidity position as of the date of this filing provides sufficient runway to achieve important research and development pipeline milestones. Management intends to raise additional capital through equity offerings and/or debt financings, or from other potential sources of liquidity, which may include new collaborations, licensing or other commercial agreements for one or more of the Company’s research programs or patent portfolios or divestitures of the Company's assets. Adequate funding, if needed, may not be available to the Company on acceptable terms, or at all. The Company’s ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide. If the Company is unable to raise capital when needed or on attractive terms, it would be forced to delay, reduce, or eliminate its research and development programs or other operations. If any of these events occur, the Company’s ability to achieve its operational goals would be adversely affected.
5
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission, (“SEC”), from which management derived the Company’s condensed consolidated balance sheet as of December 31, 2022.
The condensed consolidated financial statements and notes thereto give retrospective effect to the Reverse Stock Split for all periods presented. All common stock, options exercisable for common stock, restricted stock units, warrants and per share amounts contained in the condensed consolidated financial statements have been retrospectively adjusted to reflect the Reverse Stock Split for all periods presented. Concurrent with the Reverse Stock Split, the Company effected a reduction in the number of authorized shares of common stock from
Unaudited Interim Financial Information
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include the valuation of stock options, the valuation of goodwill, accrual for reimbursement claims and settlements, the valuation of warrant liabilities, the valuation of assets held for sale, assessing future tax exposure and the realization of deferred tax assets, and the useful lives and the recoverability of property and equipment. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions.
Recent Accounting Pronouncements Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses, which requires the measurement of expected credit losses for financial instruments carried at amortized cost, such as accounts receivable, held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of this standard is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financing Instruments–Credit Losses, which included an amendment of the effective date. The Company adopted this standard on January 1, 2023, and it did not have a material impact on the condensed consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)-Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for convertible instruments, amends the guidance on derivative scope exceptions for contracts in an entity's own equity, and modifies the guidance on diluted earnings per share calculations as a result of these changes. The standard is
6
3. Strategic Transformation
Assets Held for Sale and Discontinued Operations
In June 2021, the Company announced its Strategic Transformation to reallocate resources to research and development to better position the business for future growth. The plan included the closure of the Company's genetics laboratory in Ann Arbor, Michigan and the divestiture of Avero. This plan represented a strategic business shift having a major effect on the Company's operations and financial results. The Company classified the results of its Laboratory Operations as discontinued operations in its condensed consolidated statements of operations and consolidated statements of cash flows. Additionally, the remaining assets have been reported as assets held for sale in the Company’s condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022.
The following table presents the combined results of discontinued operations of the Laboratory Operations (in thousands) for the three months ended March 31, 2022. There was
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Three Months Ended |
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2022 |
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Revenues |
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$ |
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Operating expenses: |
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Selling, general and administrative |
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Total operating expenses |
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Net gain from discontinued operations |
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$ |
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The following table presents the carrying amounts of the remaining assets held for sale related to the Laboratory Operations as of March 31, 2023 and December 31, 2022 (in thousands):
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March 31, |
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December 31, |
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Current assets of disposal group held for sale |
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Property and equipment, net |
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Total current assets of disposal group held for sale (1) |
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$ |
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$ |
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(1)
Investment in Enumera Molecular, Inc.
In May 2022, the Company completed the divesture of its single-molecule detection platform. Under the terms of the agreements, the Company contributed intellectual property and fixed assets related to the single-molecule detection platform to a newly-formed entity, Enumera Molecular, Inc. ("Enumera"), which intends to develop and commercialize the platform. As of the transaction date, the Company received
Northwest License Agreement
In November 2022, the Company entered into a license agreement with Northwest Pathology, doing business as Avero Diagnostics (“Northwest”), pursuant to which the Company licensed its Preecludia rule-out test for preeclampsia to Northwest for commercial development (the “Northwest License Agreement”). Under the terms of the Northwest License Agreement, Northwest received the rights to assets and intellectual property related to the Preecludia test and the Company will receive commercial milestone payments and royalties on net sales.
7
4. Revenues
The Company's current revenue is related to license and collaboration agreements. Revenues historically were derived from contracts with healthcare insurers, government payors, laboratory partners and patients related to tests provided to patients. The Company evaluated its contracts and identified a single performance obligation, the delivery of a test result. The Company satisfied its performance obligation at a point in time upon the delivery of the test result, at which point the Company billed for its products. The amount of revenue recognized reflected the transaction price and considered the effects of variable consideration. All of the historical test revenue is part of the Company's Laboratory Operations and has been included in discontinued operations in the condensed consolidated statements of operations.
The Company had established an accrual for refunds of payments previously made by healthcare insurers based on historical experience and executed settlement agreements with healthcare insurers. Any refunds were accounted for as reductions in revenues in the statement of operations as an element of variable consideration.
The Company periodically updated its estimate of the variable consideration recognized for previously delivered performance obligations. These updates resulted in an additional $
5. Balance Sheet Components
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
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March 31, |
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|
December 31, |
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Prepaid expenses |
|
$ |
|
|
$ |
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Other current assets |
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|
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Total |
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$ |
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|
$ |
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||
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
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March 31, |
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|
December 31, |
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||
Computers and software |
|
$ |
|
|
$ |
|
||
Building and leasehold improvements |
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|
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|
|
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||
Laboratory equipment |
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|
|
|
|
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||
Furniture, fixtures, and office equipment |
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|
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Construction in progress |
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Total property and equipment |
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|
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|
|
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||
Less accumulated depreciation and amortization |
|
|
( |
) |
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|
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation expense was $
Other Assets
Other assets consisted of the following (in thousands):
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|
March 31, |
|
|
December 31, |
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||
Investment in Enumera |
|
$ |
|
|
$ |
|
||
Other |
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|
|
|
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Total |
|
$ |
|
|
$ |
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||
8
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
|
|
March 31, |
|
|
December 31, |
|
||
Accrual for reimbursement claims and settlements, current (1) |
|
$ |
|
|
$ |
|
||
Commissions and bonuses |
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|
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Vacation and payroll benefits |
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