Vaxart Inc (VXRT)

[oc631]

Biota financial management




BOTA claims to have lost $3.9M last quarter. At first blush this doesn't sound unreasonable. The company is enrolling 636 patients in a Phase-2 study of Laninamivir Octanoate. All the expenses for CEO Russ Plumb to close up shop in Maryland and move home to Georgia have already been incurred thus reducing the burn to a more reasonable level. Right?

In actuality this burn rate is quite unreasonable. BOTA is a one drug company with a placeholder (Vapendavir). There's no indication R&D is going on because there's nothing to show for it. Management has never gone into detail over the HSV program and they never will. Laninamivir clinical development is paid for by the government under the $231M BARDA contract. BOTA actually makes money under the BARDA contract while advancing Laninamivir in the clinic. They also receive royalties on Relenza and Inavir (Japan). So what's going on at Biota to justify this quarterly burn rate and bogus charges?

As I see it the company has only two obligations to shareholders. The first is to advance Laninamivir and abide by the rules of the BARDA contract. The second is to be proper stewards of shareholder cash. They are failing this second obligation miserably.

I have some suggestions for BOTA management to boost productivity beyond creative writing and accounting. How about settling the Laninamivir royalty rates with Daiichi so shareholders can value the Lani asset?

BOTA is on record saying they are looking to acquire a clinical asset (since their pipeline is a house of mirrors). Unfortunately shareholder cash is being squandered by a CEO made famous for a one-off event on a dangerously flawed compound. Someone remind him who that money belongs to and what it's for.