BIOAF: Third Quarter Results

By John Vandermosten, CFA

OTC:BIOAF

READ THE FULL BIOAF RESEARCH REPORT

Third Quarter Fiscal Year 2022 Operational & Financial Results

Bioasis Technologies Inc. (OTC:BIOAF) filed third quarter fiscal year 2022 operational and financial reports with SEDAR on January 20, 2022 for the three-month period ending November 30, 2021.

During the third quarter ending November 30, 2021 and to-date, Bioasis:

➢ Presented at Sachs 21^st Annual Biotech in Europe Forum Digital Conference - October 2021

➢ Japanese p97-IDS fusion protein patent application granted - October 2021

➢ Attended BIO-Europe Digital - October 2021

➢ Annual General Meeting (AGM) - December 2021

➢ HCW BIOCONNECT Virtual - January 2022

In the financial realm, Bioasis reported third quarter total operating expenses of CA$0.8 million¹ resulting in net loss of ($1.3) million or ($0.02) per share.

For the three months ending November 30, 2021 and versus the same ending November 30, 2020:

➢ Research revenue totaled $38,000 versus $nil, driven by the material transfer agreement with a global pharmaceutical company absent in the prior year period;

➢ General and administrative expenses totaled $512,000, down 5% from $537,000 due to decreases in salaries and consulting and office, insurance and amortization expenses, partially offset by increases in investor relations, marketing and travel, legal, other professional and regulatory expenses and share-based compensation;

➢ Research and development expenses totaled $302,000, increasing 3% from $292,000 on increases in preclinical expenses, share-based compensation, salaries, consulting fees and benefits, and office, rent and amortization, partially offset by a decrease in patent maintenance, legal and filing fees;

➢ Total other income was ($496,000) vs $1.7 million. Gain on sale of royalty rights was $nil in this period versus $1.6 million, interest expense totaled $243,000 versus $2,000, and change in estimated fair value of derivatives was ($241,000) versus $187,000;

➢ Net loss was ($1.3) million, or ($0.02) per share, compared to $0.9 million or $0.01 per share.

As of November 30, 2021, cash and equivalents on the balance sheet totaled $2.6 million. Cash burn for the nine months was approximately ($2.4) million, while cash flows from financing were a net $2.8 million from convertible debenture proceeds partially offset by debt issuance costs.

Annual General Meeting

On December 16, 2021, Bioasis announced resolution voting results for its Annual General Meeting, held the same day, providing additional detail in the MD&A² portion of its third quarter fiscal year 2022 SEDAR filing. All five incumbent directors were re-elected and Manning Elliott LLP was reappointed as auditor for the upcoming year.

Ladenburg Thalmann Enlisted

During the AGM, Bioasis stated that it will evaluate strategic alternatives for the company with the help of Ladenburg Thalmann. Alternatives include potential accretive merger or acquisition opportunities and future financings. This is one of multiple sources of capital from which the company may be able to draw. The others include the execution of two outstanding Material Transfer Agreements (MTAs), further draws on the Lind agreement or transactions with partners.

Saltarelli Serves as Acting Chief Medical Officer

At the AGM, Bioasis also announced that Board member Dr. Mario Saltarelli assumed the role of acting Chief Medical Officer. Mario Saltarelli, MD, PhD has more than 20 years of leadership experience in the biopharmaceutical sector, where he has focused on the identification, growth, and advancement of therapeutics development pipelines through the application of advanced translational paradigms. Dr. Saltarelli previously served as Chief Medical Officer of Entrada Therapeutics in Boston. Prior to Entrada, he served as Chief Medical Officer of Syntimmune, a mid-stage biopharmaceutical company focused on the development of therapeutics for rare autoimmune diseases, which was acquired by Alexion Pharmaceuticals in November 2018. Dr. Saltarelli earned his bachelor’s from the University of Illinois at Urbana-Champaign, and his MD and PhD from The Johns Hopkins University School of Medicine.

Allowance & Granting of Japanese Patent Application

On August 9^th, Bioasis announced that its patent application relating to an xB³-Iduronate-2-sulfatase (IDS) fusion protein had been allowed in Japan. The patent (2019-189551) was issued Notice of Allowance by the Japanese Patent Office, and the claims of this patent cover xB³-IDS fusion protein and treatment of lysosomal storage disease, namely at risk of developing central nervous system involvement including Hunter Syndrome (MPS II). The patent follows the June 18, 2020 Australian patent application (2015219339) granted by the Australian patent office, also relating to IDS. On October 20, 2021, Bioasis’ application, Serial No. 2019-189551, directed at p97-IDS fusion protein, was granted by the Japanese Patent Office.

Upcoming Milestones

Below we have provided the anticipated timeline for events related to portfolio candidates (calendar quarters):

➢ xB³-007 glucocerebrosidase enzyme replacement therapy (ERT), BBB data – 1H:22

➢ xB³-009 (Progranulin) BBB data – 1H:22

➢ IND preparation for xB³-007 – 2022

➢ IND preparation for xB³-003 – 2022

➢ Additional research agreements with partners related to signed MTA – 2022

Summary

Bioasis filed third quarter fiscal year 2022 reports with SEDAR on January 20, 2022 for the three-month period ending November 30, 2021. During this period, Bioasis presented at Sachs’ 21^st Annual Biotech in Europe Forum, was granted a Japanese patent for p97-IDS fusion protein, attended BIO-Europe Digital, and held its Annual General Meeting, where Board member Dr. Saltarelli was announced as acting Chief Medical Officer and Ladenburg Thalmann was recruited to aid in the evaluation of strategic alternatives. In the financial realm, Bioasis reported third quarter total operating expenses of CA$0.8 million resulting in net loss of ($1.3) million or ($0.02) per share. As of November 30, 2021, cash and equivalents on the balance sheet totaled $2.6 million. Cash burn for the nine months was approximately ($2.4) million, while cash flows from financing were a net $2.8 million.

Bioasis offers a broad portfolio built on its xB³ technology platform that can be developed both internally and with partners for many therapies demonstrating brain activity. While transportation, COVID and material availability related issues have delayed work, we anticipate a minor slowdown to the company’s timeline and one dependent on partner capacity. We anticipate parallel development of several xB³ compounds that will enter the clinic over the next several years. Two MTA’s that were signed earlier in 2021 may yield additional agreements (likely with associated upfront payments) to add to Bioasis’ pipeline. Our valuation work assumes candidates will achieve median drug revenue for each of the programs underway and applies a discount related to the anticipated 8% weighted probability of success. Please refer to our initiation here for detail on the company and a thorough discussion of our thesis.

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1. Subsequent financial results and comparison in Canadian Dollars (CA$)

2. Management’s Discussion and Analysis

3. Source: January 2022 Corporate Slide Deck