What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-09-26 compared with 2023-09-21 · 48 added, 48 removed, 158 unchanged (38% of the section changed)

16 unchanged sentences

Additionally, the achievement of permanent gene silencing and gene replacement may significantly reduce the risk of patient non-compliance during the course of medical management of potentially fatal clinical disorders.

Re-domiciliation

On April 15, 2020, or the Implementation Date, the Re-domiciliation of Benitec Limited, a public company incorporated under the laws of the State of Western Australia, or Benitec Limited, was completed in accordance with the Scheme Implementation Agreement, as amended and restated as of January 30, 2020, between Benitec Limited and us.

As a result of the Re-domiciliation, the jurisdiction of incorporation was changed from Australia to Delaware, and Benitec Limited became our wholly owned subsidiary.

The Re-domiciliation was effected pursuant to a statutory scheme of arrangement under Australian law, or the Scheme, whereby on the Implementation Date, all of the issued and outstanding ordinary shares of Benitec Limited were exchanged for newly issued shares of our common stock, on the basis of one share of our common stock, par value $0.0001 per share, for every 300 ordinary shares of Benitec Limited issued and outstanding.

Holders of Benitec Limited’s American Depository Shares, or ADSs (each of which represented 200 ordinary shares), received two shares of our common stock for every three ADSs held.

COVID-19 has been declared a pandemic by the World Health Organization and has spread to nearly every country, including Australia and the United States.

The impact of this pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to businesses and capital markets around the world.

The extent to which the coronavirus impacts us will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and its variants, and the actions to contain the coronavirus or treat its impact, including the effectiveness and adoption of vaccines for the virus, among others.

Certain of our research and development efforts are conducted globally, including the ongoing development of our silence and replace therapeutic for the treatment of Oculopharyngeal Muscular Dystrophy (OPMD), and will be dependent upon our ability to continue our preclinical and clinical studies and related work despite the COVID-19 pandemic and any similar events.

Available Information

Our telephone number is (510) 780-0819, and our Internet website is www.benitec.com.

The information on, or that can be accessed through, our website is not part of this Annual Report on Form 10-K and is not incorporated by reference herein.

Royalties, milestone payments and other license fees

We are required to pay royalties, milestone payments and other license fees in connection with our licensing of intellectual property from third parties, including as discussed below.

We have collaborated with Biomics Biotechnologies Co., Ltd., or Biomics, pursuant to several collaboration agreements in relation to single-stranded RNA and shRNA sequences for treatment of hepatitis B.

In July 2015, we entered into an earn-out agreement with Biomics which confirmed Benitec’s ownership of certain patents resulting from the collaboration in exchange for an upfront payment and equity issuance to Biomics and a share of certain future licensing revenue received by Benitec.

Foreign Currency Translation and Other Comprehensive Income (Loss)

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Equity transactions are translated at each historical transaction date spot rate.

Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive income (loss).” Gains and losses resulting from foreign currency transactions are included in the statements of operations and comprehensive income (loss) as other comprehensive income (loss).

Other Comprehensive Income (Loss) for all periods presented includes only foreign currency translation gains (losses).

Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive income (loss).” Gains and losses resulting from foreign currency translation are included in the consolidated statements of operations and comprehensive income (loss) as other comprehensive income (loss).

April 2021 Capital Raise

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The Company received gross proceeds of approximately $30.9 million and net proceeds of approximately $27.9 million from the offering.

April 2024 Capital Raise

On April 22, 2024 we closed a private investment in public equity (PIPE) financing of common stock and common stock equivalents (the “April 2024 Capital Raise”).

The Company received gross proceeds of approximately $40.0 million and net proceeds of approximately $37.1 million from the financing.

Results of Operations

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Total revenues

During the year ended June 30, 2023, the Company recognized $75 thousand in customer revenues, as compared to $73 thousand for the comparable year ended June 30, 2022.

The slight increase in revenues from customers is due to the increase in licensing revenue in the current year.

During the year ended June 30, 2024, the Company did not recognize any customer revenues, as compared to $75 thousand for the comparable year ended June 30, 2023.

The decrease in revenues from customers is due to the decrease in licensing revenue in the current year.

Royalties and license fees

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The Company records accrued liabilities for estimated costs of research and development activities conducted by third-party service providers, which include the conduct of pre-clinical studies and clinical trials, and contract manufacturing activities.

The Company records the estimated costs of research and development activities based

upon the estimated amount of services provided but not yet invoiced and includes these costs in trade and other payables on the consolidated balance sheets and within research and development expenses on the consolidated statements of operations and comprehensive loss.

The Company records the estimated costs of research and development activities based upon the estimated amount of services provided but not yet invoiced and includes these costs in trade and other payables on the consolidated balance sheets and within research and development expenses on the consolidated statements of operations and comprehensive loss.

The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers.

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General and administrative expenses also include facility expenses, professional fees for legal, consulting, accounting and audit services and other related costs.

We anticipate that our general and administrative expenses may increase as the Company focuses on the continued development of the pre-clinical OPMD program.

The Company also anticipates an increase in expenses relating to accounting, legal and regulatory-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and other costs associated with being a domestic public company after the Re-domiciliation.

We anticipate that our general and administrative expenses may increase as the Company focuses on the continued development of the clinical OPMD program.

The following table sets forth a summary of our expenses for each of the periods set forth below:

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Total expenses

During the year ended June 30, 2023, we did not incur any royalties and license fees, as compared to $9 thousand for the year ended June 30, 2022.

The change is primarily due to a decrease in license fees.

During the years ended June 30, 2024 and June 30, 2023, we incurred royalties and license fees expenses of $(108) thousand and zero, respectively.

The credit to expense during the year ended June 30, 2024 relates to the reversal of accruals for license fees no longer due.

During the year ended June 30, 2024, we incurred $15.6 million in research and development expenses, as compared to $12.8 million for the comparable year ended June 30, 2023.

The increase in research and development expenses relates primarily to the OPMD project.

General and administrative expense was $6.382 million and $6.646 million for the years ended June 30, 2023 and 2022, respectively.

The year-over-year decrease relates primarily to lower listing and filing fees and stock-based compensation.

The increase in research and development expenses relates to the ongoing clinical development of BB-301 for the treatment of OPMD.

General and administrative expense totaled $7.0 million and $6.4 million for the years ended June 30, 2024 and 2023, respectively.

The year-over-year increase relates primarily to higher stock-based compensation, bonuses paid during the second quarter, and travel expenses ($300 thousand, $25 thousand, and $157 thousand, respectively).

Other Income (Loss)

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Year Ended June 30,

Foreign currency transaction loss

Interest expense, net

Foreign currency transaction gain (loss)

Interest income (expense), net

Other expense, net

Unrealized loss on investment

Total other loss, net

The other loss, net during the year ended June 30, 2023 totaled $481 thousand, which consists of foreign currency transaction loss, interest expense, other expense, net, and unrealized loss on investment.

Total other income (loss), net

The other income, net during the year ended June 30, 2024 totaled $739 thousand, which consists of foreign currency transaction gain, interest income, other expense, net, and unrealized loss on investment.

During the year ended June 30, 2023, other loss, net, totaled $481 thousand.

Foreign currency transaction loss has increased due to a change in foreign exchange rates.

Interest expense was essentially unchanged year-over-year.

The decrease in other expense, net relates to recognition of a tax refund.

The foreign currency transaction gain for the year ended June 30, 2024, as compared to the loss for the year ended June 30, 2023, reflects a change in foreign exchange rates.

Net interest income for the year ended June 30, 2024, in comparison to the loss reported for the year ended June 30, 2023, reflects the increase in the Company’s cash and cash equivalent balances.

The increase in other expense relates to higher Delaware report filing fees ($160 thousand) and franchise taxes ($32 thousand), which are based on the Company’s stockholders’ equity.

Unrealized loss on investment was due to lower fair market values of the Company’s investments.

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The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

For the years ended June 30, 2023, and 2022, the Company incurred net losses of $19.56 million and $18.21 million, and used net cash of $18.01 million and $15.90 million in operations, respectively.

For the years ended June 30, 2024, and 2023, the Company incurred net losses of

$21.8 million and $19.6 million, and used net cash of $19.4 million and $18.0 million in operations, respectively.

The Company expects to continue to incur additional operating losses in the foreseeable future.

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Effects of exchange rate changes on cash, cash equivalents, and restricted cash

Net decrease in cash, cash equivalents, and restricted cash

Net increase (decrease) in cash, cash equivalents, and restricted cash

Operating activities

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Net cash used in operating activities for the year ended June 30, 2023 was $18.0 million.

Net cash used in operating activities was primarily the result of our net loss, change in working capital, depreciation and amortization, and share-based compensation expense.

Net cash used in operating activities was primarily the result of our net loss, partially offset by share-based compensation expense, changes in working capital, and depreciation and amortization.

Investing activities

Net cash used in investing activities for the years ended June 30, 2023 and 2022 was $1 thousand and $13 thousand, respectively, and primarily related to purchases of equipment.

Net cash used in investing activities for the years ended June 30, 2024 and 2023 was $179 thousand and $1 thousand, respectively, and relates to purchases of laboratory equipment.

Financing activities

Net cash provided by financing activities was $16.015 million and zero for the years ended June 30, 2023 and 2022, respectively.

For the year ended June 30, 2023, cash from financing activities related to the issuance of ordinary shares and pre-funded warrants, and common warrants;

including $17.884 million in gross proceeds from the September 2022 Capital Raise, partially offset by $1.869 million of shares and warrant issuance costs.

Net cash provided by financing activities was $68.0 million and $16.0 million for the years ended June 30, 2024 and 2023, respectively.

For the year ended June 30, 2024, cash from financing activities related primarily to the issuance of common shares, pre-funded warrants, and common warrants;

including $30.9 million and $40.0 million in gross proceeds from the August 2023 and April 2024 Capital Raises, respectively;

partially offset by $3.0 million and $2.9 million, respectively, of related issuance costs.

The future of the Company as an operating business will depend on its ability to keep operating costs and budgeted amounts and obtain adequate financing.

While we continue to progress discussions and advance opportunities to engage with pharmaceutical companies and continue to seek licensing partners for ddRNAi in disease areas that are not our focus, there can be no assurance as to whether we will enter into such arrangements or what the terms of any such arrangement could be.

On August 11, 2023, the Company closed an underwritten public offering resulting in $28.6 million in net proceeds to the Company.

On April 22, 2024, the Company closed a private

investment in public equity (PIPE) financing resulting in $37.1 million in net proceeds to the Company.

We estimate that our cash and cash equivalents will be sufficient to fund the Company’s operations for at least the next twelve months after the date that this Annual Report is filed.

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We are subject to the risks inherent in the development of new gene therapy products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.

On August 11, 2023, the Company announced the closing of an underwritten public offering of common stock and common stock equivalents.

On April 22, 2024, the Company announced the closing of a private investment in public equity (PIPE) financing.

The Company received gross proceeds of approximately $40.0 million and net proceeds of approximately $37.1 million from the offering.

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In addition, management is periodically faced with uncertainties, the outcomes of which are not within its control and will not be known for prolonged periods of time.

These uncertainties are discussed in the section above entitled “Risk Factors.” Based on a critical assessment of its accounting policies and the underlying judgments

and uncertainties affecting the application of those policies, management believes that the Company’s consolidated financial statements are fairly stated in accordance with accounting principles generally accepted in the United States of America, and provide a meaningful presentation of the Company’s financial condition and results of operations.

These uncertainties are discussed in the section above entitled “Risk Factors.” Based on a critical assessment of its accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that the Company’s consolidated financial statements are fairly stated in accordance with accounting principles generally accepted in the United States of America, and provide a meaningful presentation of the Company’s financial condition and results of operations.

Management believes that the following are critical accounting policies:

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Accounting Standards recently adopted

New Accounting Standards and Interpretations not yet mandatory or early adopted

ASU 2016-13—In June 2016, the FASB issued ASU No.

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Under the prior model, losses were recognized only as they were incurred.

The Company has determined that it has met the criteria of a smaller reporting company (“SRC”) as of November 15, 2019.

As such, ASU 2019-10:

“ Financial Instruments-Credit Losses, Derivatives and Hedging, and Leases:

Effective Dates ” amended the effective date for the Company to be for reporting periods beginning after December 15, 2022.

The Company will adopt this ASU effective July 1, 2023.

The Company adopted this ASU effective July 1, 2023 and determined that its impact on the accompanying consolidated financial statements is immaterial.

Recently Issued Accounting Standards not yet adopted

In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740)— Improvements to Income Tax Disclosures ”, which enhances the transparency, effectiveness and comparability of income tax disclosures by requiring consistent categories and greater disaggregation of information related to income tax rate reconciliations and the jurisdictions in which income taxes are paid.

This guidance is effective for annual periods beginning after December 15, 2024 with early adoption permitted.

The Company is currently evaluating the impact of the ASU on its income tax disclosures within the consolidated financial statements.

In November 2023, the FASB issued ASU No.

2023-07, “ Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures”, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

This ASU also expands disclosure requirements to enable users of financial statements to better understand the entity’s measurement and assessment of segment performance and resource allocation.

This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of the ASU on its disclosures within the consolidated financial statements.

Quantitative and Qualitative Disclosures about Market Risk.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis