10-Q: NAYA Biosciences Reports Third Quarter 2024 Results, Revenue Growth Driven by Clinic Acquisitions

NAYA Biosciences' third quarter 2024 results show significant revenue growth primarily driven by the acquisition of the Wisconsin Fertility Institute.

Summary

• NAYA Biosciences reported a net loss of $1.63 million for the third quarter of 2024, compared to a net loss of $1.25 million for the same period in 2023.
• The company's revenue for the third quarter of 2024 was $1.43 million, a 47% increase from $0.97 million in the third quarter of 2023.
• This revenue increase was primarily due to clinic revenue, which reached $1.42 million in Q3 2024, up from $0.95 million in Q3 2023.
• The cost of revenue for the third quarter of 2024 was $0.99 million, compared to $0.58 million in the same period of 2023.
• Selling, general, and administrative expenses were $1.51 million for Q3 2024, compared to $1.26 million for Q3 2023.
• For the nine months ended September 30, 2024, NAYA reported a net loss of $5.47 million, compared to a net loss of $6.04 million for the same period in 2023.
• Revenue for the first nine months of 2024 was $4.85 million, a 196% increase from $1.64 million in the same period of 2023.
• The company's accumulated deficit as of September 30, 2024, was $63.5 million.
• The company has been dependent on raising capital from debt and equity financings to meet its needs for cash used in operating and investing activities.
• The company received $1.6 million from the sale of preferred stock, $0.9 million from the exercise of warrants, $0.7 million in net proceeds from the sale of notes, and $0.2 million in net proceeds from the sale of common stock during the first nine months of 2024.

Sentiment

Score: 5

Explanation: The document presents a mixed picture. While revenue growth is strong, driven by acquisitions, the company continues to operate at a loss and is dependent on external financing. The merger with Legacy NAYA adds complexity and potential but also introduces new risks. The sentiment is neutral to slightly negative due to the ongoing losses and dependence on external funding.

Positives

• The company experienced a significant increase in revenue, driven by clinic operations and the acquisition of WFI.
• The net loss for the first nine months of 2024 decreased compared to the same period in 2023.
• The company has successfully raised capital through various financing activities.
• The company has expanded its operations through the acquisition of the Wisconsin Fertility Institute.

Negatives

• The company continues to operate at a net loss.
• The company has a negative working capital of approximately $6.7 million as of September 30, 2024.
• The company has an accumulated deficit of $63.5 million as of September 30, 2024.
• The company is dependent on raising capital from debt and equity financings to meet its needs for cash used in operating and investing activities.

Risks

• The company's ability to continue as a going concern is dependent on raising additional capital.
• The company has incurred significant operating losses and expects to continue to incur significant expenses and operating losses.
• The company's stock price may be negatively impacted by its failure to maintain compliance with Nasdaq listing requirements.
• The company's future success is dependent on the successful integration of acquired businesses and the development of new products.

Future Outlook

The company plans to grow the Wisconsin Fertility Institute and pursue additional IVF clinic acquisitions. The company also plans to advance its clinical-stage therapeutics in oncology and autoimmune diseases.

Management Comments

• The company's commercial strategy for the fertility business is primarily focused on operating fertility-focused clinics, which include the opening of INVO Centers dedicated primarily to offering the intravaginal culture (IVC) procedure enabled by our INVOcell medical device (INVOcell) and the acquisition of US-based, profitable in vitro fertilization (IVF) clinics.
• The company plans on opening additional INVO Centers in the coming years and such clinics will be wholly owned.
• The company expects to continue to pursue additional acquisitions of established and profitable existing fertility clinics as part of its ongoing strategy to accelerate overall growth.
• The company is currently preparing the initiation of a Phase I dose escalation clinical trial for NY-303, its lead GPC3-targeting NK engager bispecific antibody for the treatment of hepatocellular carcinoma and other solid tumors, pending approval from regulatory authorities and hospital internal review boards.
• Clinical trials for NY-338, our lead CD38-targeting NK engager bispecific antibody for the treatment of multiple myeloma and autoimmune diseases, are expected to initiate in 2025.

Industry Context

The company operates in the growing ART market, which is characterized by increasing infertility rates and a demand for more affordable and accessible treatment options. The company's INVOcell technology and clinic-based strategy are aimed at addressing these market needs. The company is also entering the oncology and autoimmune disease markets with its bispecific antibody pipeline.

Comparison to Industry Standards

• The company's INVOcell technology is positioned as a lower-cost alternative to traditional IVF, with comparable success rates.
• The company's clinic-based strategy is aimed at addressing the capacity constraints in the ART market, which is a common challenge for many fertility clinics.
• The company's bispecific antibody pipeline is targeting large and growing markets in oncology and autoimmune diseases, with the potential to compete with existing therapies.
• The company's financial results are consistent with other early-stage biotechnology companies that are investing in research and development and commercialization activities.

Management Changes

Related Party Transactions

• In the fourth quarter of 2022, the Company issued a series of demand promissory notes in the aggregate principal amount of $550,000 to a related party, JAG, a company in which the Company's Chief Financial Officer is a beneficiary but does not have any control over its investment decisions with respect to the Company, for an aggregate purchase price of $500,000.
• In the fourth quarter of 2022, the Company issued demand promissory notes in the aggregate principal amount of $220,000 for an aggregate purchase price of $200,000, of which (1) $100,000 was received from its Chief Executive Officer and (2) $100,000 was received from an entity controlled by its Chief Financial Officer.
• As of September 30, 2024, the Company owed accounts payable to related parties totaling $268,337, primarily related to unpaid employee expense reimbursements and unpaid board fees, and accrued compensation of $640,038, primarily related to deferred wages and accrued paid time off.

Stakeholder Impact

• Shareholders face the risk of dilution and potential loss of investment if the company cannot achieve profitability and requires further capital raises.
• Employees may be impacted by the company's financial performance and any potential restructuring or cost-cutting measures.
• Customers may benefit from the company's efforts to expand access to fertility treatments and develop new therapies.
• Suppliers and creditors may be impacted by the company's ability to meet its financial obligations.
• The company's merger with Legacy NAYA may impact the roles and responsibilities of key personnel.

Next Steps

• The company plans to grow the Wisconsin Fertility Institute and pursue additional IVF clinic acquisitions.
• The company plans to advance its clinical-stage therapeutics in oncology and autoimmune diseases.
• The company is required to hold a meeting of its stockholders to, among other things, (i) ratify the A&R Merger Agreement and the transactions contemplated thereby, including the Merger, (ii) approve the increase in the amount of authorized shares under the Companys Second Amended and Restated 2019 Stock Incentive Plan, (iii) approve the issuance of the Companys common stock issuable upon conversion of the Series C-1 Preferred and Series C-2 Preferred, and (iv) approve an amendment to the Companys articles of incorporation to (1) increase the number of shares of the Companys authorized common stock to 100,000,000 shares, and (2) effectuate a reverse stock split of the Companys common stock at a ratio ranging from any whole number between 1-for-2 and 1-for-20, as determined by the Companys board of directors in its discretion.

Key Dates

Keywords

NAYA Biosciences, fertility, IVF, INVOcell, clinic revenue, acquisition, financial results, net loss, revenue growth, Wisconsin Fertility Institute, capital raise, oncology, autoimmune diseases, bispecific antibodies