BeyondSpring(BYSI) - 2025 Q2 - Quarterly Report

Forward-Looking Statements Forward-Looking Statements This section cautions investors that forward-looking statements involve risks and uncertainties, and actual results may differ - The report identifies numerous forward-looking statements concerning the company's operations, including clinical trial progress, regulatory filings, commercialization potential, financial projections, and intellectual property strategy[12][16] - Investors are directed to "Part II, Item 1A. Risk Factors" for a detailed discussion of risks that could cause actual results to differ from those projected in the forward-looking statements[11][13] PART I. FINANCIAL INFORMATION Financial Statements Unaudited Q2 2025 financial statements report a net loss of $4.6 million, reclassifying SEED Therapeutics as a discontinued operation Condensed Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $31.0 million, while cash from continuing operations increased to $9.5 million Condensed Consolidated Balance Sheet Highlights (in thousands of U.S. Dollars) | Account | Dec 31, 2024 | June 30, 2025 (Unaudited) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $2,922 | $9,544 | | Current assets of discontinued operations | $25,347 | $15,712 | | Total assets | $34,315 | $31,043 | | Liabilities & Equity | | | | Total current liabilities | $11,010 | $11,730 | | Total liabilities | $48,600 | $48,588 | | Total shareholders' deficit | ($14,285) | ($17,545) | Condensed Consolidated Statements of Comprehensive Income (Loss) For H1 2025, net loss from continuing operations was $4.5 million, but a $7.0 million gain from subsidiary sale resulted in a total net income of $2.7 million Six Months Ended June 30, (in thousands of U.S. Dollars) | Metric | 2024 | 2025 | | :--- | :--- | :--- | | Revenue | $0 | $0 | | Research and development | ($1,550) | ($1,876) | | General and administrative | ($3,146) | ($2,683) | | Net loss from continuing operations | ($4,731) | ($4,462) | | Net income (loss) from discontinued operations | ($2,646) | $983 | | Net income (loss) attributable to BeyondSpring Inc. | ($7,262) | $2,671 | | Basic and diluted EPS | ($0.19) | $0.07 | Condensed Consolidated Statements of Cash Flows For H1 2025, net cash used in operating activities was $10.1 million, offset by $17.2 million from investing activities, resulting in a net cash increase of $7.1 million Cash Flow Summary for Six Months Ended June 30, (in thousands of U.S. Dollars) | Cash Flow Activity | 2024 | 2025 | | :--- | :--- | :--- | | Net cash used in operating activities | ($12,254) | ($10,072) | | Net cash provided by investing activities | $0 | $17,154 | | Net cash provided by financing activities | $3,000 | $0 | | Net increase (decrease) in cash | ($9,354) | $7,080 | Notes to Condensed Consolidated Financial Statements Key notes detail the divestiture of SEED Therapeutics as a discontinued operation, collaboration agreements, and the company's deferred tax asset valuation allowance - The company approved a plan to sell 90-100% of its interest in SEED Therapeutics. The first closing occurred in February 2025 for $7.35 million, resulting in a recognized gain of $7.0 million. The company's ownership in SEED decreased to 40.12% but it retained control[62][68][70] - The collaboration with Hengrui for Plinabulin in Greater China involves an upfront fee of $31.0 million (RMB 200 million) and potential milestones. No revenue has been recognized from this agreement as of June 30, 2025, and the upfront fee is recorded as deferred revenue[71][72][74] - The collaboration with Eli Lilly via subsidiary SEED involves an upfront fee of $10 million and potential milestones up to $780 million. Revenue from this agreement is recognized over time and is reported within discontinued operations[76][77][81] - As of June 30, 2025, the company maintained a full valuation allowance against its net deferred tax assets, believing it is more likely than not that they will not be realized[87] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Plinabulin development, SEED Therapeutics divestiture, and H1 2025 financial results, noting decreased G&A and increased R&D expenses - The company's lead asset, Plinabulin, is being developed as an anti-cancer agent, with a focus on non-small cell lung cancer (NSCLC) patients who have progressed on checkpoint inhibitors. The company plans to file a New Drug Application (NDA) with China's NMPA[122][124] - The company entered into agreements to sell a portion of its SEED preferred shares for $35.4 million in three tranches. The first closing in February 2025 yielded $7.35 million. Future closings are expected by December 2025 and December 2026[134] - As of June 30, 2025, continuing operations held $9.5 million in cash and cash equivalents. Management anticipates that current financial resources will be sufficient to meet operational expenses for the next 12 months[130][161] Results of Operations For H1 2025, R&D expenses increased by 21% to $1.9 million, while G&A expenses decreased by 15% to $2.7 million, improving net loss from continuing operations Comparison of Operating Results for the Six Months Ended June 30, (in thousands of U.S. Dollars) | Item | 2024 | 2025 | Change % | | :--- | :--- | :--- | :--- | | Research and development | ($1,550) | ($1,876) | 21% | | General and administrative | ($3,146) | ($2,683) | -15% | | Loss from operations | ($4,696) | ($4,559) | -3% | | Net loss from continuing operations | ($4,731) | ($4,462) | -6% | - The $0.3 million increase in R&D expenses for H1 2025 was primarily due to higher professional service fees for regulatory and CMC activities and increased research on Plinabulin combination therapies[155] - The $0.4 million decrease in G&A expenses for H1 2025 was mainly due to lower salary expenses from reduced administrative headcount and lower investor relations and D&O insurance costs[157] Liquidity and Capital Resources Liquidity improved in H1 2025, with cash from continuing operations reaching $9.5 million due to the SEED equity sale, and current resources are sufficient for the next 12 months - The company financed operations through a combination of equity offerings, loans, sale of subsidiary interests, and collaboration arrangements. In February 2025, it received $7.4 million from the first closing of the SEED sale[160] - Net cash used in operating activities decreased to $10.1 million in H1 2025 from $12.3 million in H1 2024[160][162] - Management is evaluating various financing alternatives for medium to long-term funding, including equity/debt financing, licensing, partnerships, or other strategic transactions[161] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, BeyondSpring Inc. is exempt from providing quantitative and qualitative disclosures about market risk - The company is exempt from providing quantitative and qualitative disclosures about market risk because it qualifies as a smaller reporting company under Exchange Act Rule 12b-2[181] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of June 30, 2025, the Principal Executive and Financial Officer concluded that the company's disclosure controls and procedures were effective[182] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[184] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any legal proceedings that would materially adversely affect its business or financial condition - As of the filing date, the company is not involved in any material legal proceedings[186] Risk Factors There are no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - The company states there are no material changes from the risk factors disclosed in its 2024 Annual Report on Form 10-K[187] Exhibits This section lists the exhibits filed with the Form 10-Q, primarily including officer certifications and Inline XBRL data files - Exhibits filed include CEO/CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[192]