Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

BioMimetic Therapeutics (BMTI) Q3/12 Results

Net loss of $4.6 M, or $0.16 per diluted share …

A net loss of $4.6 M or $0.16 per diluted share, compared to a net loss of $7.1 M, or $0.25 per diluted share, for Q3/11.

For Q3/12, BMTI reported total revenues of $0.7 M, consisting of product sales, sub license fee income and royalty income. This compares to total revenues of $0.4 M recorded for Q3/11. R&D expenses totaled $1.9 M compared to $3.6 M for Q3/11 which included outside professional services expenses, as well as salaries, wages, benefits, payroll taxes and stock-based compensation expense for internal R&D personnel, and relate to clinical trials of product candidates in the US, Canada and the EU, as well as continuing expenses associated with pre-clinical studies and regulatory filings. The FY12 expenses for manufacturing costs and outside professional services associated with clinical trials decreased by a combined $0.6 M and were lower as certain clinical trials and pre-clinical studies have been delayed to conserve resources and focus attention on addressing the Augment PMA. Clinical trial expenditures for Augment Injectable have decreased since BMTI voluntarily suspended additional screening and enrollment of patients. Salaries, benefits, payroll taxes and stock-based compensation expense in the R&D function decreased by a combined $0.9 M due to a reduction in staffing. Expenses for general business activities in the R&D function, such as travel, recruiting and relocation and lab supplies, decreased by a combined $0.2 M.

SG&A expenses totaled $3 M compared to $3.6 M in Q3/11. The 2012 expenses for SG&A activities decreased primarily from efforts to carefully manage expenses and conserve resources given the sales, marketing and customer service efforts, particularly in connection with the commercial activities for Augment and Augmatrix. The $0.6 M decrease resulted from a $0.3 M decrease in salaries, benefits, payroll taxes and stock-based compensation expense due to a reduction in staffing, and a $0.4 M decrease in general business activities in the SG&A function, such as outside professional services, rent and utilities, dues and subscriptions, recruiting and relocation, repairs and maintenance, and taxes and licenses. These decreases are partially offset by an increase of $0.1 M in sales commissions and milestone expenses. Shares used in computing the net loss were 28.216 M.

  • As of 9/30/12, BMTI had approximately $44.3 M which included $15.5 million in cash and cash equivalents and $28.8 M in short-term investments.

9 Month Review: BMTI reported a net loss of $17.1 M, or $0.61 per diluted share, compared to a net loss of $23.3 M, or $0.83 per diluted share, for the same period in FY11. BMTI reported total revenues of $1.6 M consisting of product sales, sublicense fee income and royalty income. This compares to total revenues of $1.3 M recorded for the same periods in FY11. R&D expenses totaled $7.5 M, compared to $11.5 M for the same period in FY11. The 2012 expenses for manufacturing costs and outside professional services associated with clinical trials, which decreased $1.1 M were lower as certain clinical trials and pre-clinical studies have been delayed to conserve resources and focus attention on addressing the Augment PMA. Salaries, benefits, payroll taxes and stock-based compensation expense in the R&D function decreased by $2.3 M due to a reduction in staffing. In addition, expenses for general business activities in the research and development function, such as travel, recruiting and relocation and lab supplies, decreased by $0.6 million. Selling, general and administrative expenses for nine months, SG&A expenses totaled $10.2 M, compared to $12.3 M for the same period in FY11. The $2.1 M decrease resulted from a $0.5 M decrease in royalty expense, a $0.7 M decrease in outside professional fees, a $0.7 M decrease in salaries, benefits, payroll taxes and stock-based compensation expense due to a reduction in staffing, and a $0.4 M decrease in general business activities in the SG&A function. These decreases are partially offset by an increase of $0.2 M in sales commissions and milestone expenses during the year.

Q3/12 Highlights and Achievements:

  • BMTI continues to focus on advancing its Augment® Bone Graft Pre-Market Approval (NYSEARCA:PMA) application through the FDA review process. In 9/12, BMTI amended its PMA to include the results of a study conducted on becaplermin (Regranex®) to evaluate cancer mortality. The results of the study, presented at the Second Annual Meeting of The American College of Wound & Tissue Repair, indicated no difference in either cancer incidence or cancer mortality in 12,858 matched patients (Regranex vs. no Regranex) who were recorded in the Veterans Affairs and Medicare patient records and followed for up to 11 years to identify new malignancies and cancer-related deaths. Regranex contains the same synthetic protein that is found in Augment, but is topically administered onto open skin sores daily for weeks to months compared to the one-time implantation of Augment during foot and ankle fusion surgery. Given that the same protein therapeutic is used in both Regranex and Augment, BMTI believes these data strengthen the case for approval of Augment;
  • In 6/12, BMTI submitted to the FDA an amendment to its PMA application for Augment Bone Graft for its use as an alternative to autograft in hind foot and ankle fusion procedures. The amendment provided supplemental information requested by the FDA in a post-panel response letter earlier this year. The FDA is actively reviewing the amendment and has 180 days from the date of the filing to respond, although there can be no assurance that this timeline will not be extended. The Company reiterates guidance for a complete response letter from FDA around year-end and a final approvability decision between April 2013 and January 2014;
  • Augment Bone Graft was recently listed on the Australian Private Health Insurance Prostheses List, enabling a full launch into this market in September;
  • Following the June release of top-line data from the Canadian registration study comparing Augment® Injectable Bone Graft to autograft in foot and ankle fusion surgery, BMTI recently filed a Device License Application (NYSEMKT:DLA) with Health Canada for approval to market the product candidate in Canada and also intends to file for approval of Augment Injectable in other countries in the coming months. Additionally, all 105 patients enrolled in the North American randomized controlled clinical trial have completed 6 months follow-up, the time of the primary endpoint for the study. The patients will continue to be followed to assess safety. If BMTI determines it won't re-initiate enrollment, it expects results of the trial will be unblinded and available in the first half of next year;
  • BMTI has elected to proceed with its Augment® Chronic Tendinopathy 100 patient dose ranging P2 clinical trial. A CROhas been retained to assist in managing the trial. Patient enrollment is expected to begin in the first half of next year.

Guidance: Based on current operating plans, forecasted timing and costs of clinical trials and other product development programs, BMTI anticipates its 2012 year-end balance of cash, cash equivalents and investments to range from $32 to $39 M, and anticipates its net cash used for the year will be between $22-$29 M. Net loss for FY12 is forecasted to be in the range of $23-$30 M.

The Bottom Line: As one can read BMTI is totally focused on gaining U.S. FDA marketing approval of Augment and accordingly amended its PMA to include compelling findings supporting the safety of rhPDGF-BB which further strengthens the benefit risk profile of Augment and offer another supporting factor for approval. While BMTI await the FDA's complete response, decreases in all levels of expenses have been cut a make or break proposition. I particularly like the guidance effort, even though it will strain the $44.3 M in cash. To quote <aptly> one investor/commentator, Stephen Simpson … "It hasn't been easy to stay bullish on BioMimetic Therapeutics (NASDAQ:BMTI), as the stock has stagnated while the company worked to resubmit its PMA for its Augment bone graft product. What's more, news about under-reported side-effects and over-promised for Medtronic's (NYSE:MDT) Infuse BMP-2 protein has not led doctors nor analysts to have especially warm and fuzzy feelings about the orthobiologics space. All of that said, there remains a real medical need for this product, and the efficacy data on Augment is such that I believe there is a legitimate bull case to be made on BMTI". By statute, the FDA has 180 days from the date of the initial filing this summer to review and respond to BMTI's PMA amendment. The additional amendment was submitted in September that included the Regranex study did not change this expected time line. Assuming that the FDA takes the full 180 days post-submission to respond, BMTI could receive a complete response letter from them around year-end, and could anticipate a final approvability decision between 4/13 and 1/14. BMTI closed at $3.81 on 11/5, flat from last Friday ($3.81) and Thursday's ($3.74); risk is risk but, being a betting investor the odds "could or should" be with BMTI - thus a "BUY".

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.