NASDAQ:BIOR
READ THE FULL BIOR RESEARCH REPORT
Since our previous update in December, Biora Therapeutics, Inc. (NASDAQ:BIOR) has generated compelling data from its BioJet collaborations, initiated its BT-600 Phase I study, completed several cohorts of the study and made beneficial changes to its capital structure. On March 26th, 2024, the company reported full year 2023 results highlighting both the progress that it has made in its clinical program and collaborations. The company has also substantially reduced its debt, dramatically improving the capital structure. Based on the preclinical work that has been completed so far, management is optimistic that they will see a partnership emerge this year.
2023 Financial and Operational Results
Biora reported full year 2023 results in a press release and Form 8-K filing with the SEC on March 26th. A conference call was held to discuss results with investors following the release. For the financial year ending December 31, 2023 and versus the prior year, insignificant revenues were recognized. Net loss for 2023 totaled ($124.3) million or ($8.58) per share. Operational expenses rose 8% to $67.1 million as increases related to vesting of non-cash compensation were recognized in both research and development (R&D) and general and administrative (G&A) expense lines.
➢ Revenues were $4,000 down from $305,000 the prior year;
➢ Research and development expenses totaled $29.8 million, up 24% from $24.0 million due to an increase in salaries and benefits attributable to the accelerated vesting of unvested restricted stock unit (RSU) awards and an increase in consulting and professional fees. Higher expenses related to the launch of the BT-600 program also contributed;
➢ General & Administrative expenses were $37.3 million, down 2% from $38.0 million in part due to a decrease in business insurance, facilities and software costs;
➢ Interest expense was ($9.8) million compared to ($11.0) million;
➢ Other income was ($47.5) million vs. $23.5 million as a result of the inducement loss on the convertible notes, offset by an increase in income related to the sale of preeclampsia assets and intellectual property;
➢ Net loss was ($124.3) million vs. ($48.8) million or ($8.58) and ($6.40) per share, respectively.
As of December 31, 2023, cash totaled $15.2 million. This amount compares to the $30.5 million cash balance held at the end of 2022. A variety of notes are carried on the balance sheet at $45.7 million which is a substantial decline from the $127.8 million at the end of 2022. Biora debt instruments underwent a number of conversions and refinancings that reduced debt and added to the share balance and warrant count. These efforts also improved the company’s capital structure and added cash to the balance sheet. Following the end of the quarter, Biora monetized a non-core asset generating an additional $3 million.
During 2023, Biora reduced its outstanding notes by more than $80 million and most recently came to an agreement with investor Context Capital to exchange $5.6 million in 2025 convertible notes for $3.8 million in 2028 convertible senior secured notes. Context will also purchase $2.8 million in 2028 notes which include common stock warrants. Other cash items contributing to the balance sheet in 2023 include a net $2.5 million from the sale of the Ann Arbor laboratory as well as other arrangements.
Update on Programs
IND Clearance for BT-600
Following an investigational new drug (IND) submission in September for the NaviCap BT-600 program, the FDA responded with questions in late October. The data the agency sought for the clinical trial evaluating the safety of tofacitinib delivery to the small intestine for ulcerative colitis (UC) was readily available and resubmitted to the agency a week later. On November 30, the FDA cleared Biora’s IND application for BT-600, allowing the study to begin. An announcement of the trial’s initiation was made in January. The Phase I will directly deliver tofacitinib to the colon for the treatment of moderate to severe UC. Data from the study is expected to produce data related to the pharmacokinetic and pharmacodynamic effects of BT-600. In late February, Biora announced that the single ascending dose (SAD) cohorts had been completed and that the multiple ascending dose (MAD) cohorts would begin promptly. The MAD portion is designed to enroll 24 participants to receive BT-600 tofacitinib at 5 and 10 mg or placebo. During the full year earnings conference call on March 26th, Dr. Ariella Kelman provided a summary of the SAD study findings.
BT-600 Trial Interim Readout – Single Ascending Dose
The BT-600 trial, carried under the NCT06275464 identifier, was launched in January as a randomized, double-blind, placebo-controlled Phase I study to evaluate the safety, tolerability, pharmacokinetics (PK), and pharmacodynamics (PD) of BT-600 when administered in single and multiple ascending doses to healthy participants. The NaviCap device used a proprietary formulation of tofacitinib to deliver either 5 mg, 10 mg or placebo to healthy patients. Data from the trial will be presented in future publications and scientific events.
The single dose data is consistent with PK and safety generated in previous studies. The product was deemed to be well tolerated and functioned as intended and designed with drug release as predicted. Devices carrying drug demonstrated corresponding systemic absorption and delivery to the colonic tissue. Measurable tofacitinib in the blood was observed at approximately 6 hours and maximum concentration at 8 hours. This is in contrast to the conventionally orally delivered tofacitinib which reaches its maximum concentration within the first hour. Based on measurements taken during the study, delivery to the colon vs. the upper gastrointestinal tract was confirmed. Dose proportional PK was observed between the 5 mg and 10 mg doses. NaviCap’s goal is to achieve higher concentrations of drug in the target tissue and lower levels systemically compared with conventional administration. Further studies later this year are expected to extract biopsies to confirm tissue concentration.
The MAD portion of the study is underway and will be conducted to confirm the results already produced. Patients will receive one daily dose of 5 mg, 10 mg or placebo. The dose will be one-half the amount administered as per the drug label for tofacitinib. Results are expected to be shared with stakeholders before the end of 2Q:24.
In the second half of the year, another study is planned that will evaluate the use of NaviCap tofacitinib in UC patients to further confirm plasma and tissue PK and PD and to further inform subsequent trials.
BioJet Collaboration Update
Biora announced a new collaboration for its BioJet Systemic Oral Delivery platform last December. The new agreement provides funding to test the BioJet platform’s ability to achieve bioavailability through oral delivery of the collaborator’s molecules to the small intestine in animal models. Based on our conversations with management, we believe that several of the company’s other large pharma relationships are nearing the end of their collaborations and possibly close to securing a partnership which may include upfront payments. BioJet allows for large molecule drugs to be delivered orally, bringing a number of benefits including administration convenience and daily dosing which contrast with the more frequently used infusion method.
A January 2nd press release announced that BioJet has achieved an important bioavailability hurdle in a collaboration with AstraZeneca, mentioning the collaborator’s name for the first time. The preclinical study generated greater than 25% bioavailability compared to subcutaneous delivery with a less than 50% coefficient of variation. In this study, the BioJet device was administered to a porcine model in comparison with subcutaneous administration. BioJet devices were delivered endoscopically and released for autonomous activation. These results build upon other preclinical work evaluating a variety of molecules in animal models.
Debt Reduction and Capital Raise
Biora has been burdened with convertible debt that it incurred as part of its 2020 financing. In 2023, the company and its investors made a concerted effort to reduce this burden and increase the proportion of equity in its capital structure which is more appropriate for a non-revenue generating research and development company. At the end of 2022, the convertible debt was held on the balance sheet at approximately $128 million. In a series of transactions, this balance sits at approximately $51 million as of 1Q:24. We discuss the details of the transactions that took place in our previous report which are current up to year end 2023 and align with the recently reported 2023 financial results.
Following the end of the year, Biora made further progress improving its capital structure, monetizing a legacy asset for $3 million and conducting a convertible note exchange for another $2.8 million in new capital. Management notes that as of the March 11th transaction Biora’s debt had been reduced by more than $80 million while also raising $19.8 million in new capital. As we discuss above, Biora agreed with Context Capital to exchange $5.6 million of 2025 convertible notes for $3.8 million of 2028 convertible notes. Along with this transaction, Context also purchased $2.8 million of 2028 notes and common stock purchase warrants. The 2.0 million warrants have an exercise price of $2.75 per share and are exercisable until March 12, 2029.
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