Botanix Pharmaceuticals (ASX:BOT) deepens half-yearly losses as spending soars

• Shares in skincare treatment company Botanix Pharmaceuticals (BOT) slumped today after deepening its half-yearly loss
• The company lost just under $7 million from July to December 2019 — 67 per cent more than the same time the year before
• The half-yearly loss comes from increased spending as the company researches and develops its cannabidiol-based skincare treatments
• While Botanix is burning more cash than its earning, the company told shareholders all clinical trials are tracking along nicely
• Nevertheless, Botanix shares are down just under four per cent today, currently worth 7.7 cents each

Skincare specialist Botanix Pharmaceuticals (BOT) failed to outperform a struggling market today after deepening its half-yearly loss.

The biopharma company is currently developing a pipeline of cannabidiol-based drugs for treating a range of skin conditions. In its most recent financial report released today, Botanix highlighted a half-yearly loss of just under $7 million. For reference, the company reported a loss of $4.18 million for the same period in 2018.

The loss comes from some hefty spending over the half-year as the company continues to research and develop its products. In fact, revenue for the half-year was 62 per cent higher than the same time the year before, with $7.66 million hitting Botanix’s wallet in the last half compared to 2018’s $4.74 million.

Interestingly, however, research and development costs increased just under 10 per cent on the year before at $8.38 million in the last half.

Meanwhile, employee benefits expenses increased by over 750 per cent compared to the previous corresponding period. In 2018, the company spent roughly $322,000 on employee benefits, while in 2019 employee benefits expenses came in at $2.67 million.

Further, Botanix’s revenue from operations fell roughly 18 per cent on the year before, though both numbers are marginal compared to the cash pulled in from the government’s Research and Development incentive scheme. Operating revenue for 2019 was $103,792, while Botanix received $7.56 million from the government scheme.

With Botanix spending roughly $14.67 million over the last half-year, investors may be worried that the rate at which the company is burning cash may call for more funding and dilution to keep operations flowing.

However, Botanix told shareholders today clinical studies for four of its key drugs are tracking along nicely, with 2020 set to see each of these studies advance to their next respective stages.

Further, with roughly $27 million cash on hand at the end of the last half, Botanix can afford the lavish spending for at least another three quarters before it needs to start seeing more cash inflows than it does outflows.

On a day like today when all ASX sectors are splattered red, it’s hard to tell how investors are reacting to Botanix’ half-yearly report. Nevertheless, shares are down 3.75 per cent around midday AEDT, currently worth 7.7 cents each in a $77 million market cap.