1. The Company
|3 Months Ended|
Mar. 31, 2015
|Organization, Consolidation and Presentation of Financial Statements [Abstract]|
Xenetic Biosciences, Inc. (the Company), incorporated in the state of Nevada and based in Lexington, Massachusetts, is a clinical stage biopharmaceutical company that is focused on the discovery, development and planned commercialization of a new generation of human drug therapies for the treatment of a variety of conditions including anemia, refractory Acute Myeloid Leukemia, Cystic Fibrosis and certain cancers based upon its proprietary and patented drug delivery platform systems and drug development collaborations with major third party pharmaceutical companies around the world.
The Companys drug delivery platform systems include PolyXen® for creating next generation biologic drugs by extending the efficacy, safety and half-life of existing biologic drugs, OncoHist for the development of novel oncology drug therapies focused on orphan indications in humans and ImuXen® for the development of vaccines that can simultaneously deliver multiple active pharmaceutical ingredients. The Company is also developing a broad pipeline of drug candidates for next generation biologics and novel oncology therapeutics in a number of orphan disease indications.
With the Companys relocation to the United States from the United Kingdom, the Company, having historically been a research organization, is now focused on employing United States based drug development expertise leveraging off its 147 issued patents and 90 patent applications to develop a proprietary drug pipeline of next generation products. All the rights over the Companys patents and licenses are controlled in the United Kingdom.
We have historically relied upon equity financing to fund our operations. Since 2005 we have raised approximately $47 million in equity financing, including $10 million from the sale of shares to Baxter in January 2014, while recording revenues of approximately $10 million during that same period. Approximately 90% of that revenue is from a single customer, Baxter, in connection with milestone receipts and fees for services. We expect the majority of our funding through equity or equity linked instruments to continue as a trend for the foreseeable future.
For the quarter ended March 31, 2015, our working capital decreased due to our net loss of $2.4 million and cash used in operating activities of $2.0 million which sum includes approximately $631,000 in program-specific clinical development costs, $445,000 in legal and professional consultants, $379,000 in salaries and wages, including scientific staff, $99,000 in accounting and tax consultants and approximately $446,000 from all other research development and general and administrative costs.
At March 31, 2015 and December 31, 2014 we had a working capital deficit of $1.7 million and working capital of $78,000, respectively. As of March 31, 2015, we had $0.9 million in cash and $2.8 million in total current liabilities. As of December 31, 2014, we had cash and current liabilities of $2.5 million and $2.7 million, respectively. Included in the working capital deficit at March 31, 2015 is a trade payable in the amount of approximately $431,000 that is being disputed by the Company and a loan from related parties in the amount of $395,000 that is subject to alternative payment arrangements. We expect that the loan from related parties will be settled only at such time as an adequate sized capital raise is concluded. The loan is classified as current on our condensed consolidated balance sheet as of March 31, 2015 and there is no certainty that the amount due will not be called prior to an equity raise.
Pursuant to arrangements previously disclosed concerning the appointment of investment bankers retained for the purpose of assisting the Company in seeking finance from various parties, whether by way of the issuance of equity or debt instruments, non-binding indications of interest have been received to provide additional working capital in an amount of up to $3,200,000 net of expenses.
Although there can be no assurance on either the timing or extent of such outcome, the Company expects to receive funding from the sale of such securities (of such type and in such form as may be agreed between the parties) within approximately 10 business days of the filing of this Quarterly Report on Form 10-Q (the 10-Q).
Even following the sale of the securities referred to above, the Company will be required to raise additional working capital of approximately $5,000,000 before the end of October 2015 in order to meet its financial obligations through March 31, 2016 under its base business plan. To this end, management has received non-binding indications of interest to complete a second, and similarly structured debt offering according to the Companys working capital needs, such later offering being likely to be made sometime in Q3 or Q4 2015. Although we have received indications of interest, no investor is obligated to provide additional financing to the Company and there is no certainty that we will receive such financing based on the contemplated terms or otherwise.
While the Company believes that the working capital to be received from the sale of the securities referred to above will allow the Company to continue its base business activities and to meet its financial obligations for approximately five months from now, it remains confident of raising such further working capital as may be necessary to secure its financial position and to continue to fund its operations through to the proposed completion of a registered equity raise and planned up-list to a National Exchange within the next 12 months.
Dependent upon the amount of working capital the Company is able to raise in the upcoming five months we may be able to fund activities beyond our current base business plan. If we successfully generate funding in excess of our basic requirements, our priorities will be: (i) to accelerate existing drug development programs; and (ii) to pursue additional indications based upon our existing patented and proprietary technologies.
The only significant cash receipts that we expect may fall due under our current collaborations would be from Baxter. Due to the uncertainties and risks inherent in the clinical development process, we are unable to predict precisely when those receipts may occur, if ever. We do not expect any significant receipts to become due before 2016, however there can be no assurance that future receipts will ever become due because they are contingent on positive outcomes from Baxters clinical development efforts in connection with the Factor VIII drug candidate.
We are in the early stages of seeking out-license arrangements for our ErepoXen® technology but do not expect any new income to be generated from such outlicensing before Q1 2016 at the earliest. Due to the uncertainties inherent in the clinical research process and unknown future market conditions, there can be no assurance our ErepoXen® technology will lead to any future income.
Baxter currently holds a share warrant entitling them to subscribe for approximately 4.59 million new shares of common stock in the Company at a price of $0.4660 per share. These warrants are due to expire in June 2016. We do not expect Baxter to exercise these warrants at the prevailing average price of the stock of the Company as quoted on the OTCQB, and in any event, not before June 2016.
Although we are optimistic about our ability to raise additional working capital, there can be no assurance that we will be successful in our efforts to raise additional working capital by way of a bridge financing, or on any future equity transaction or, even if the Company is successful, that the Company will be able to do so on commercially reasonable terms. Further, due to the uncertainties inherent in the clinical research process and unknown future market conditions, there can be no assurance that either the Companys ErepoXen® candidate will lead to any future fees or that Baxter itself will be successful in initiating human clinical trials in the estimated timeframe or that the underlying product will meet the clinical milestones necessary to trigger any payment to the Company under the terms of its license agreement with them.
While the interim financial statements have been prepared on a going concern basis, if the Company does not successfully conclude the follow on financing described above, there is no assurance that the Company would be able to continue planned operations and these conditions raise substantial doubt about its ability to continue as a going concern. Under such circumstances, the Company would have to further reduce the planned scale of, or possibly suspend, all of its pre-clinical development initiatives and clinical trials delivered by external consultants.
The entire disclosure for the business description and basis of presentation concepts. Business description describes the nature and type of organization including but not limited to organizational structure as may be applicable to holding companies, parent and subsidiary relationships, business divisions, business units, business segments, affiliates and information about significant ownership of the reporting entity. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS).
No definition available.