Benitec Biopharma(BNTC) - 2021 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements for the quarterly period ended September 30, 2020, reflecting the company's financial position, performance, and cash flows during the period Consolidated Balance Sheets The Consolidated Balance Sheet as of September 30, 2020, shows a decrease in total assets to $8,916 thousand from $11,587 thousand at June 30, 2020, primarily driven by a reduction in cash and cash equivalents, with total stockholders' equity declining from $10,238 thousand to $7,736 thousand Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2020 | Jun 30, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $7,450 | $9,801 | | Total current assets | $8,056 | $10,809 | | Total assets | $8,916 | $11,587 | | Liabilities & Equity | | | | Total current liabilities | $1,019 | $1,136 | | Total liabilities | $1,180 | $1,349 | | Total stockholders' equity | $7,736 | $10,238 | Consolidated Statements of Operations and Comprehensive Loss For the three months ended September 30, 2020, the company reported a net loss of $2,718 thousand, a significant increase from the $1,147 thousand net loss in the same period of 2019, driven by a substantial rise in operating expenses, particularly in general and administrative costs, which grew from $750 thousand to $1,837 thousand Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Total revenues | $55 | $33 | | Research and development | $774 | $423 | | General and administrative | $1,837 | $750 | | Total operating expenses | $2,745 | $1,199 | | Loss from operations | ($2,690) | ($1,166) | | Net loss | ($2,718) | ($1,147) | | Net loss per share (Basic and diluted) | ($2.45) | ($1.34) | Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from $10,238 thousand at June 30, 2020, to $7,736 thousand at September 30, 2020, primarily due to the net loss of $2,718 thousand incurred during the quarter, partially offset by a $178 thousand positive foreign currency translation adjustment - Total stockholders' equity decreased from $10,238 thousand at the beginning of the period to $7,736 thousand at the end of the period[25] - The primary drivers for the change in equity were a net loss of $2,718 thousand and a foreign currency translation gain of $178 thousand[25] Consolidated Statements of Cash Flows The company used $2,360 thousand in cash for operating activities during the three months ended September 30, 2020, a significant increase from the $545 thousand used in the prior-year period, with no financing activities compared to $1,770 thousand provided in 2019, resulting in a $2,533 thousand decrease in cash and cash equivalents Cash Flow Summary (in thousands) | Activity | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($2,360) | ($545) | | Net cash (used in) provided by investing activities | ($173) | $1 | | Net cash provided by financing activities | $0 | $1,770 | | Net (decrease) increase in cash | ($2,533) | $1,226 | | Cash and cash equivalents, end of period | $7,450 | $16,631 | Notes to Consolidated Financial Statements The notes provide crucial context to the financial statements, detailing the company's business, re-domiciliation, basis of presentation, significant accounting policies, and key disclosures regarding funding sufficiency and financial details - The company focuses on developing novel genetic medicines using its proprietary DNA-directed RNA interference (ddRNAi) platform[33] - On April 15, 2020, the company completed its re-domiciliation from Australia to the United States (Delaware)[34][36] - Subsequent to the quarter end, on October 6, 2020, the company closed an underwritten public offering with gross proceeds of approximately $11.5 million[120] - Management estimates that existing cash, including proceeds from the October 2020 offering, will be sufficient to fund operations for at least the next twelve months from the filing date[97] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's business overview, operational and financial impacts, results of operations, liquidity, capital resources, and critical accounting policies for the quarter Overview Benitec is a development-stage biotechnology company advancing genetic medicines via its proprietary DNA-directed RNA interference (ddRNAi) platform, with its lead program BB-301 for OPMD utilizing a 'silence and replace' approach, and completed re-domiciliation to the U.S. in April 2020 - The company's core technology is a proprietary platform called DNA-directed RNA interference (ddRNAi), which combines RNAi with gene therapy[125] - The most advanced program is BB-301 for Oculopharyngeal Muscular Dystrophy (OPMD), which uses a 'silence and replace' mechanism and has received Orphan Drug Designation in the U.S. and EU[126] - The company completed a re-domiciliation from Australia to Delaware on April 15, 2020, becoming a U.S. domestic public company[129][130] COVID-19 Impact The COVID-19 pandemic has caused delays to the company's preclinical development timelines, particularly for the BB-301 program, with a key tissue transduction study delayed but now commenced - The company has experienced delays in the timeline for its BB-301 IND-enabling development work due to the COVID-19 pandemic[132] - A key BB-301 tissue transduction study was delayed but has recently been initiated, with initial dosing proceeding without incident[132] Results of Operations For the three months ended September 30, 2020, revenues were minimal at $55 thousand, while operating expenses increased to $2,745 thousand from $1,199 thousand in the prior-year period, mainly due to higher G&A and R&D costs, resulting in a net loss of $2,718 thousand, more than double the $1,147 thousand loss from the same quarter in 2019 Comparison of Operating Results (in thousands) | Metric | Q3 2020 | Q3 2019 | | :--- | :--- | :--- | | Total Revenues | $55 | $33 | | Royalties and license fees | $134 | $26 | | Research and development | $774 | $423 | | General and administrative | $1,837 | $750 | | Total operating expenses | $2,745 | $1,199 | | Net Loss | ($2,718) | ($1,147) | - The increase in R&D expenses was primarily due to the impact of being reimbursed $618 thousand by Axovant Sciences in the prior year period and the termination of the AMD program[152] - The increase in G&A expense was due to increases in corporate and office costs[153] Liquidity and Capital Resources As of September 30, 2020, the company had $7.5 million in cash and cash equivalents, with net cash used in operations of $2.4 million for the quarter, and a subsequent public offering in October 2020 raised approximately $9.9 million in net proceeds, which management believes are sufficient to support operations for at least the next twelve months - The company held $7.5 million in cash and cash equivalents as of September 30, 2020[160] - Net cash used in operating activities for the quarter was $2.36 million[160][162] - On October 6, 2020, the company completed a public offering, raising approximately $11.5 million in gross proceeds and $9.9 million in net proceeds[165] - Management estimates that its cash and cash equivalents are sufficient to fund operations for at least the next twelve months[160][168] Critical Accounting Policies and Significant Accounting Estimates This section details the accounting policies that require significant management judgment and estimation, primarily Revenue Recognition (ASC 606) and Share-Based Compensation (ASC 718) - Critical accounting policies require management to make difficult, subjective, or complex judgments[173] - Key policies include Revenue Recognition (ASC 606) and Share-Based Compensation (ASC 718)[176][183] - For revenue recognition, management applies judgment in identifying performance obligations and determining transaction prices, especially for licensing agreements[177][178] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Benitec Biopharma Inc. is not required to provide the information requested under this item - The company is not required to provide information for this item as it qualifies as a smaller reporting company[188] Item 4. Controls and Procedures Based on an evaluation conducted by management, including the principal executive and financial officers, the company's disclosure controls and procedures were deemed effective as of September 30, 2020, with no material changes to internal controls over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures are effective as of the end of the period covered by the report[189] - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[190] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company reports that it is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[194] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended June 30, 2020 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the period ended June 30, 2020, have occurred[195] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the reporting period - None reported[196] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None reported[197] Item 4. Mine Safety Disclosures This item is not applicable to the company - None reported[198] Item 5. Other Information The company reported no other information for this period - None reported[199] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, which include certifications by the CEO and CFO pursuant to the Sarbanes-Oxley Act and XBRL data files - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and XBRL Instance Documents[200]