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Tuesday, March 18, 2014 11:19:56 PM
To be free of needing outside cash via selling shares, what would they need? Well from last 10-Q period ending Sept. 30, 2013 they had the following cash use entries on the balance sheet (essentially no sales or cash source from biz activities)- which, again excluding even interest costs, will allow the "burn rate/cash need rate" to be approximated pretty easily.
From 10-Q balance sheet:
For the 9 months ended Sept 30, 2013 Marketing, General Admin costs were $1,750.276.
For the 9 months ended Sept 30, 2013 R&D (think trials) was only $494,762
So they consumed $1,750,276 + $494,762 = $2,245,038 CASH in 9 months
That would make the burn rate about $2,245,000/9 = approx. $250K per month. THAT IS WHAT THEY NEED MINIMUM COMING IN A MONTH to be free of outside share sales/dumping, etc and remain solvent, w/o laying off people, cutting current spending,etc. And that's on the low side as is does not include interest expenses on their debt.
So any/all these 3rd world biz undertakings, PR news of "deals", etc would need to generate at least $250K a MONTH coming in direct to BHRT at this burn rate to even get close to breaking even. There has been speculation that this could happen "soon"- personally I see it as a long shot, no way I can see anything recently announced getting them this kind of coin coming in this quickly, my opinion.
To give an idea of interest expense on the debt: Under supplement to cash flow activities page on balance sheet- they list interest paid on debt, for 9 month period ended Sept,30 2013 as $513,986 (just a bit higher than amount paid in same period 2012- so it's consistent).
That amounts to $513,986/9 = $57K PER MONTH.
That would bring the MINIMUM MONTHLY CASH NEEDS TO approx $300K PER MONTH just to break even and remain solvent, out of BK by paying their interest due, etc $300 THOUSAND A MONTH. That's about the magic number at this point per the documents- else you have to cut costs somewhere, get someone to allow you to delay paying interest- or you're insolvent pretty much.
What's also interesting is how little they spend on R&D in ratio to SG&A (salaries on 4 or 5 people, rent, general overhead, etc)- it's pretty out of whack in my opinion. A typical R&D to General Expense ratio of a healthy biz - giving some examples:
Lowe (a researcher) found that Merck ($MRK) spends 27% of its revenue on SG&A and 17.3% on research and development. Pfizer's ($PFE) ratio is even more lopsided, with 33% on SG&A and 14.2% on R&D. Smaller, more biotech-focused companies have better numbers; Biogen Idec, for one, spends 23% of its revenue on SG&A and 24% on R&D. That's partly because--we suspect--specialty drugs don't require the armies of sales reps sent out to support primary-care meds.
By contrast- of the approx budget for that 9 month period, BHRT spent about $1,750,276/2,245,038 = approx 78% ON SG%A (SEVENTY EIGHT PERCENT- to pay themselves, pay rent on a small office, etc. Just seems way out of whack to me- but that my 2 cents)
And about only $494,762/2,245,038 = approx only 22% on R&D
(Again, that doesn't include the additional $50K, a big chunk, they spend on debt service (interest) each month)- but it shows they don't spend much of what they generate/take in, in cash on R%D which is the "trials" and all. I don't see how you can possibly get a phase III, FDA quality trial through to completion on anywhere near that low an R&D budget, let alone fund the people needed for all the functions that will be needed- a massive report/data compilation effort, possibly more trials if the FDA demands more, etc.
Those are the cold, hard numbers from my read of the 10-Q (most recent) and the balance sheets, where the money goes, etc. I just don't see them getting anywhere near being free of selling more shares on a continual basis at this point and I don't see how you'd fund a large, FDA quality, phase III trial with those numbers above- I just don't see getting from point A to B in my opinion. It's not unusual in the slightest, to spend $10's of MILLIONS on a phase III, even exceeding $100 MILLION would not bat an eyebrow in the pharma-biomed world.
That's my take financially at this point. Looking forward to the 10-K. Owe, and the cash balance at the end of those numbers above was only $6K approx. total cash left on the books. 10-K should be interesting to say the least- looking forward to seeing what it says.
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