ABVC BioPharma(ABVC) - 2023 Q4 - Annual Results

Executive Summary & Corporate Updates ABVC BioPharma announced 2023 financial results and Q1 2024 updates, regained Nasdaq compliance, and pursued strategic licensing and real estate investments Introduction ABVC BioPharma, Inc. announced its 2023 annual financial and operating results, along with a fiscal year 2024 first-quarter business update, as detailed in its Form 10-K filing - ABVC BioPharma, Inc. (NASDAQ: ABVC) is a biotechnology company focused on botanically based solutions[1] - The company announced its 2023 annual financial and operating results and a fiscal year 2024 first-quarter business update[1] Nasdaq Compliance ABVC BioPharma successfully regained compliance with Nasdaq Marketplace Rules by meeting the minimum $1.00 bid price and $2.5 million minimum stockholders' equity requirements in August and September 2023, respectively - Regained compliance with Nasdaq's minimum $1.00 bid price requirement by August 8, 2023[4] - Regained compliance with Nasdaq's $2.5 million minimum stockholders' equity requirement by September 6, 2023[4] Strategic Business Developments The company engaged in significant strategic initiatives, including a global licensing agreement for CNS drugs and substantial real estate investments aimed at developing healthcare centers and plant factories, with plans to generate new revenue streams from these assets Licensing Agreements ABVC and its subsidiary BioLite entered a multi-year global licensing agreement with AiBtl BioPharma Inc. (AIBL) for CNS drugs (MDD and ADHD), receiving 23 million shares of AIBL stock each, with potential future milestones and royalties - Entered a multi-year, global licensing agreement with AiBtl BioPharma Inc. (AIBL) for CNS drugs (MDD and ADHD)[3] - ABVC and BioLite each received 23 million shares of AIBL stock, valued at $10 per share, giving ABVC a controlling interest in AIBL[3] - Eligible to receive $3.5 million and 5% royalties on net sales (up to $100 million) if certain milestones are met[3] Real Estate Investments & Revenue Generation ABVC made strategic real estate acquisitions in China and elsewhere, intending to develop healthcare centers and plant factories for its botanical pipeline. The company has begun leveraging these assets by licensing healthcare expertise and leasing properties to generate revenue - Acquired 20% ownership of a property in Leshan, Sichuan, China, valued at $37 million, for joint development into a healthcare center[5] - Acquired an additional real estate asset in February 2024 to develop plant factories for its botanical pipeline, with the property valued at approximately $2,962,232[6] - Executed an agreement to license healthcare-related expertise ('Know-How') to Senior Paradise, Inc. (SPI) for $3 million (cash or stock) and 2% royalties on SPI's revenues from projects on leased land, marking the first revenue generation from real estate acquisitions[7] Capital Structure & Stockholders' Equity The company engaged in several financing activities, including issuing convertible notes to Lind Global Fund II, LP and conducting a registered direct offering, which contributed to a significant increase in total stockholders' equity to $8,388,050 by December 31, 2023 - Issued a secured, convertible note to Lind Global Fund II, LP in February 2023 for $3,175,000, with a principal amount of $3,704,167[8] - Completed a registered direct offering in July 2023, selling 300,000 common shares and 200,000 pre-funded warrants for gross proceeds of $1,750,000[9] - Issued additional secured, convertible notes to Lind in November 2023 ($1,000,000 purchase price) and January 2024 ($833,333 purchase price), both with warrants[12][13] Stockholders' Equity | Metric | As of Dec 31, 2023 | | :----- | :----------------- | | Total Stockholders' Equity | $8,388,050 | Key Financial Highlights (2023 vs 2022) In 2023, ABVC BioPharma experienced an 84% decrease in revenues due to project completion but significantly reduced its net loss by 31% through decreased operating expenses, particularly in stock-based compensation and R&D, despite an increase in interest expense Revenue Comparison (2023 vs 2022) | Metric | 2023 | 2022 | Change (%) | | :----- | :----------- | :----------- | :--------- | | Revenues | $152,430 | $969,783 | -84% | Operating Expenses Comparison (2023 vs 2022) | Metric | 2023 | 2022 | Change | | :--------------- | :----------- | :------------- | :----- | | Operating Expenses | $8,066,902 | $15,797,780 | Decreased | | Stock-based Comp | (Decreased by $6,100,337) | | | | R&D Expenses | (Decreased by $1,630,541) | | | Net Loss and Cash & Cash Equivalents (2023 vs 2022) | Metric | 2023 | 2022 | Change (%) | | :----- | :------------- | :------------- | :--------- | | Net Loss | $(10,910,288) | $(16,312,374) | -31% | | Cash & Cash Equivalents | $60,155 | $85,265 | -29.5% | Research & Development (R&D) Updates The company advanced its neurology, ophthalmology, and oncology pipelines with new patents, regulatory approvals, and clinical trial progress Patents & Regulatory Approvals ABVC BioPharma secured multiple patents in the US, Taiwan, and Australia for its Polygala extract in treating MDD and ADHD, and for corneal tissue preservation. The company also received several US FDA and Taiwan FDA Investigational New Drug (IND) approvals for its oncology pipeline - Received US, Taiwanese, and Australian patents for Polygala extract for Major Depressive Disorder (MDD) and Attention Deficit Hyperactive Disorder (ADHD)[17] - Obtained a Taiwanese Patent (TW I792427) for Storage Media for the Preservation of Corneal Tissue[17] - Received US FDA approval for IND ABV-1519 for EGFR Wild-type Non-Small Cell Lung Cancer (NSCLC) in December 2022, followed by Taiwan FDA approval in January 2024[18] - Total of four US FDA approved INDs: ABV-1501 (Triple Negative Breast Cancer), ABV-1519 (NSCLC), ABV-1702 (Myelodysplastic Syndrome), and ABV-1703 (Pancreatic Cancer Therapy)[18] Clinical Pipeline Updates ABVC BioPharma provided updates across its neurology, ophthalmology, and oncology/hematology pipelines, including successful completion of MDD Phase II trials, ongoing ADHD Phase IIb trials, and progress in its vitreous substitute and cancer therapies, alongside new licensing agreements Neurology The MDD Phase II trials for ABV-1504 were successfully completed, with preparations for Phase III underway. ADHD Phase IIb trials are ongoing, with an interim report expected by early Q2 2024, and a Phase I study for MDD in cancer patients is set to begin in Q2 2024. The company also signed a licensing term sheet for MDD and ADHD drugs in China and a global licensing agreement with AIBL - MDD Phase II trials for ABV-1504 completed successfully, with good tolerance and no serious adverse effects, ready for End-of-Phase 2 FDA meeting[19] - ADHD Phase IIb trials commenced at UCSF and five Taiwan sites, with an interim report expected by early Q2 2024[19] - ABV-1601 for MDD in cancer patients has completed Phase I study preparation and is set to initiate in Q2 2024[19] - Signed a legally binding term sheet with Xinnovation Therapeutics Co., Ltd. for exclusive licensing of ABV-1504 (MDD) and ABV-1505 (ADHD) in mainland China, with a possible aggregate income of $20 million[20] - Entered a global licensing agreement with AIBL for MDD and ADHD CNS drugs, valued at $667 million by a third-party evaluation[21] Ophthalmology Vitargus, a biodegradable hydrogel vitreous substitute, completed its feasibility study in Australia and received TGA approval for the next trial phase. ABVC also received approval to establish a pilot GMP facility in Taiwan for Vitargus production, with construction expected to complete in 2025 - Vitargus, a vitreous substitute, completed its feasibility study in Australia and received Australian TGA approval to initiate the next trial phase[22] - Approved by Taiwan Science Park Administration to set up a pilot Good Manufacturing Practice (GMP) facility for Vitargus production, with construction expected to complete in 2025[23] Oncology/Hematology The US FDA approved the Investigational New Drug (IND) application for BLEX 404 (active ingredient in ABV-1519) for advanced inoperable or metastatic EGFR wild-type non-small cell lung cancer, marking the fourth IND approval for BLEX 404 - US FDA approved IND application for BLEX 404 (active ingredient in ABV-1519) for advanced inoperable or metastatic EGFR wild-type non-small cell lung cancer[24] - This is the fourth IND approved by the US FDA for BLEX 404, with previous approvals for triple-negative breast cancer, myelodysplastic syndromes (MDS), and pancreatic cancer[24] Contract Development and Manufacturing Organization (CDMO) Services BioKey, a subsidiary, expanded its dietary supplement production and secured new clinical development service contracts CDMO Overview BioKey, a wholly-owned subsidiary, continues to produce maitake mushroom dietary supplements and has entered the second year of a distribution agreement, with plans to produce an additional $1 million worth of products. BioKey also secured two ANDA approvals and a three-year, $3 million contract for clinical development services for clients - BioKey, a wholly-owned subsidiary, produces maitake mushroom dietary supplements and is set to produce an additional $1 million worth of products for the global market[25] - Received two ANDA approvals from the US FDA for clients[25] - Secured a three-year contract worth up to $3 million for clinical development services with Rgene Corporation[25] Company Profile ABVC BioPharma is a clinical-stage biopharmaceutical company with a diverse pipeline, leveraging in-licensed technology for drug and medical device development Company Profile Overview ABVC BioPharma is a clinical-stage biopharmaceutical company with a pipeline of six drugs and one medical device, leveraging in-licensed technology from renowned research institutions for clinical development, with plans for global Phase III trials for its medical device, Vitargus - ABVC BioPharma is a clinical-stage biopharmaceutical company with an active pipeline of six drugs and one medical device (ABV-1701/Vitargus)[26] - Utilizes in-licensed technology from institutions like Stanford University, UCSF, and Cedars-Sinai Medical Center for proof-of-concept trials through Phase II[26] - Intends to conduct global clinical trials through Phase III for Vitargus[26] Financial Statements The company's 2023 financial performance showed increased assets and stockholders' equity, reduced net loss, but decreased revenues compared to 2022 Consolidated Balance Sheets As of December 31, 2023, total assets increased to $14.49 million from $9.58 million in 2022, driven primarily by a significant increase in property and equipment. Total liabilities remained relatively stable at $6.36 million, while total stockholders' equity more than doubled to $8.39 million Consolidated Balance Sheet Highlights | Metric | Dec 31, 2023 | Dec 31, 2022 | Change | | :-------------------------- | :----------- | :----------- | :----- | | Total Assets | $14,492,599 | $9,579,574 | +51.3% | | Property and equipment, net | $7,969,278 | $573,978 | +1287% | | Total Liabilities | $6,361,627 | $6,343,435 | +0.3% | | Total Stockholders' Equity | $8,388,050 | $3,098,585 | +170.7%| Consolidated Statements of Operations For the year ended December 31, 2023, revenues decreased significantly by 84% to $152,430. However, total operating expenses were nearly halved, leading to a substantial reduction in net loss by 31% to $(10,910,288). Basic and diluted net loss per share improved from $(5.19) in 2022 to $(2.43) in 2023 Consolidated Statements of Operations Highlights | Metric | 2023 | 2022 | Change (%) | | :-------------------------------- | :------------- | :------------- | :--------- | | Revenues | $152,430 | $969,783 | -84.3% | | Gross (loss) profit | $(149,607) | $683,368 | -121.9% | | Total operating expenses | $8,066,902 | $15,797,780 | -48.9% | | Loss from operations | $(8,216,509) | $(15,114,412) | -45.6% | | Total other income (expenses) | $(2,437,773) | $(400,184) | +509.1% | | Net loss | $(10,910,288) | $(16,312,374) | -33.1% | | Net loss per share (Basic & Diluted) | $(2.43) | $(5.19) | -53.1% | Consolidated Statements of Cash Flows Net cash used in operating activities decreased by 42.7% to $(4,235,845) in 2023. Cash flows from financing activities provided $3,918,960, primarily from the issuance of common stock, warrants, and convertible notes, partially offsetting the cash used in operations and investing Consolidated Statements of Cash Flows Highlights | Metric | 2023 | 2022 | Change (%) | | :--------------------------------------- | :------------- | :------------- | :--------- | | Net cash used in operating activities | $(4,235,845) | $(7,398,391) | -42.7% | | Net cash used in investing activities | $(360,186) | $(1,721,684) | -79.1% | | Net cash provided by financing activities | $3,918,960 | $4,013,925 | -2.4% | | Net increase (decrease) in cash and cash equivalents and restricted cash | $(674,948) | $(5,173,487) | -86.9% | | Cash and cash equivalents and restricted cash (Ending) | $716,780 | $1,391,728 | -48.5% | - Significant non-cash financing activity included the purchase of property and equipment by issuing common stock to a third party for $7,400,000[32] - Issuance of common stock for conversion of debt amounted to $3,306,112[32] Legal Disclaimers & Contact Information This section provides standard forward-looking statements disclaimers and contact information for investor inquiries Legal Disclaimers & Contact Information Overview This section includes standard forward-looking statements disclaimers, emphasizing that clinical trials are in early stages and future performance is subject to various risks and uncertainties. It also clarifies that the press release does not constitute an offer to sell securities and provides contact information for investor inquiries - Clinical trials are in early stages, and there is no guarantee that any specific outcome will be achieved[27] - Forward-looking statements are subject to known and unknown risks and uncertainties, many beyond the Company's control, which may cause actual results to differ materially[27] - The press release does not constitute an offer to sell or the solicitation of an offer to buy securities[28] - Contact information for investor inquiries is provided: Leeds Chow, Email: leedschow@ambrivis.com[28]