Cleveland BioLabs cut its operating losses almost in half during the fourth quarter as the Buffalo drug development company trimmed its research and development spending and took in almost twice as much revenue through grants and government contracts.
But the company still is in a precarious financial position, almost two months after a key federal agency ended negotiations to provide the funding that Cleveland BioLabs needs to carry out final tests and studies on its anti-radiation sickness drug – a key initiative for the company, because that drug is the furthest along in its development and the closest to becoming a revenue source.
Cleveland BioLabs executives said they are still pushing for a meeting with the U.S. Food and Drug Administration to discuss using a process, known as a Pre-Emergency Use Authorization, that could allow the government to stockpile unlicensed drugs, such as the company’s Entolimod anti-radiation sickness drug, for emergency use, such as a nuclear power plant accident or terrorist attack.
The company hopes to schedule a session with the FDA during July to discuss the data that the FDA would require in an application under the program, said Yakov Kogan, Cleveland BioLabs’ chief executive officer, during a conference call Tuesday. The company then expects it would take several months to prepare that application.
“There is a lot of value in [Cleveland BioLabs] that has not yet been realized,” Kogan said.
In the interim, Cleveland BioLabs trimmed its operating loss to $3 million during the fourth quarter, almost half the $5.6 million in operating losses it absorbed a year earlier. The company reduced its research and development spending by 17 percent to $4.6 million, mainly because it completed a costly study on its Entolimod drug as a radiation sickness treatment on nonhuman primates.
The company’s revenues jumped by 79 percent to $3.9 million from $2.2 million as the company brought in additional developmental funding from the Russian Federation and the U.S. Defense Department.
The company had about $16.8 million in cash in mid-January, including the $10.4 million in cash that was on its books at the end of last year and the $6.4 million it raised early this year through a stock sale to a pair of institutional investors. That cash should be enough to fund the company’s operations into the first quarter of next year, said Neil Lyons, the company’s chief executive officer.
The company is expected to burn through cash at a pace of $1.1 million to $1.2 million a month throughout this year, excluding spending at its Russian subsidiaries that are working on developing cancer drug development, and at a $1.7 million to $1.8 million monthly pace at all of its operations, including the Russian ventures, Lyons said.
Cleveland BioLabs’ shares dropped 4 cents on Tuesday, to close at 68 cents, and the company said it has received a warning letter from the Nasdaq Capital Market that it has fallen short of the listing requirement that it maintain a share price of at least $1.
The company, whose shares plunged below the $1 level after disclosing the failure of the federal funding negotiations in late January, has 180 days to bring its share price above $1 or it could face a de-listing that would force its shares to trade on a less prominent exchange. The company also could seek a further extension of 180 additional days if its share price has not risen sufficiently after the initial 180 day period expires, Lyons said.