BETTER THERAPEUTICS, INC. SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this "Quarterly Report") contains "forward-looking statements" which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "will," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements are based on the current expectations of the Company and its management of and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to:
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our ability to obtain funding for our operations;
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our ability to successfully commercialize and market BT-001 and our other product candidates, if approved, and the timing of any commercialization and marketing efforts;
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the rate and degree of market acceptance of BT-001 and our other product candidates by physicians, patients, third-party payors and others in the medical community;
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the willingness of insurance companies to reimburse the use of prescription digital therapeutics ("PDTs");
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our ability to build our own sales and marketing capabilities to commercialize our product candidates, if approved, and to advance awareness of PDTs for the treatment of disease among patients and providers;
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our expectations regarding the sufficiency of our existing cash and cash equivalents to fund our operating expenses and capital expenditure requirements;
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the pricing, reimbursement and cost-effectiveness of our product candidates, if approved;
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the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
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the implementation of our business model, strategic plans for our business, product candidates and technology;
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the effect of the ongoing COVID-19 pandemic on the foregoing;
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our financial performance; and
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other risks and uncertainties detailed under the section entitled "Risk Factors"
included in our Annual Report on Form 10-K for the fiscal year ended
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The forward-looking statements contained in this Quarterly Report are based on current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading "Risk Factors" included in our 2021 Annual Report. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some of these risks and uncertainties may in the future be amplified by the ongoing COVID-19 pandemic and there may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Overview
Our mission is to address unmet needs for treatment of cardiometabolic diseases
such as diabetes and heart disease. The
In response to addressing the root causes of cardiometabolic diseases, we
developed a proprietary platform for the development of
We believe this demonstrates that the use of BT-001 significantly improved A1c compared to standard of care alone. The unique characteristics of prescription digital therapeutics and cardiometabolic diseases ("CMDx"), may make it possible for us to launch multiple products now in development for the treatment of other CMDx over the next few years.
We are building a fully integrated PDTs company focused on treating the root causes of cardiometabolic diseases. Our therapeutics are intended to fill a known gap in the treatment of cardiometabolic diseases and integrate within the existing healthcare system. We expect primary care providers to prescribe our therapeutics and insurers to reimburse them much like they would a drug, and for the patient to remain in the care of their provider while using them.
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Impact of COVID-19
In
We are continuing to evaluate the impact of the ongoing COVID-19 pandemic,
including the emergence of new variants of COVID-19, on our business and are
taking proactive measures to protect the health and safety of our employees, as
well as to maintain business continuity. Based on guidance issued by federal,
state and local authorities, we transitioned to a fully remote work model for
our employees, effective
The ultimate impact of the ongoing COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, our clinical trial, healthcare systems or the global economy as a whole. However, these effects could harm our operations, and we will continue to monitor the ongoing COVID-19 pandemic closely.
Components of Results of Operations
Revenue
Since our inception in 2015, we have recognized an immaterial amount of revenue
resulting from a pilot program with a private health insurer. We expect that our
primary sources of revenue will be through reimbursement coverage for our
treatments by commercial insurers, Medicare, and Medicaid in the
We also may explore opportunities to partner with pharmaceutical companies marketing traditional drug therapies for cardiometabolic diseases that may benefit from an increase in efficacy and durability when combined with our prescription digital therapeutic.
Operating Expenses
We classify operating expenses into three main categories: (i) research and development (ii) sales and marketing and (iii) general and administrative.
Research and Development
Our research and development expenses consist of external and internal expenses incurred in connection with our research activities and development programs. These expenses include external expenses, including expenses associated with contract research organizations engaged to manage and conduct clinical trials; and other research and development expenses associated with software development and licenses, and other external development spend. Additionally, our research and development expenses include internal personnel expenses, including expenses for salaries, benefits and stock-based compensation, and allocation of certain overhead expenses.
Research and development costs incurred to develop software and our platform for internal use are capitalized and separately presented on the balance sheet as capitalized software development costs. Costs incurred during the preliminary planning and evaluation stage of the project are expensed as incurred. Costs incurred during the application development stage of the project are capitalized. To date, the majority of these expenses have been incurred to advance our lead product candidate, BT-001.
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We expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in research and development activities related to developing our platform and our product candidates, as our product candidates advance into later stages of development, and as we continue to conduct clinical trials. The successful development of our platform and our product candidates is highly uncertain. As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates.
Sales and Marketing
Sales and marketing expenses consist primarily of advertising and public relations costs and consulting services. We expect our sales and marketing expenses to increase for the foreseeable future as we prepare to prepare for commercialization of BT-001. Our sales and marketing efforts are expected to focus on targeting patients and primary care physicians through general awareness and branded promotional activities. We expect to incur significant investments in building a primary care sales force, and our plan and expectation is to have recruited and deployed such sales force during the first year of commercialization of our initial product candidate.
General and Administrative
General and administrative expenses consist primarily of personnel-related costs
and professional services including legal, audit and accounting services.
Personnel-related costs consist of salaries, benefits, and stock-based
compensation. We expect our general and administrative expenses to increase for
the foreseeable future due to anticipated increases in headcount to advance our
product candidates and as a result of operating as a public company, including
expenses related to compliance with the rules and regulations of the
Interest Expense, Net
Interest expense, net primarily consists of interest expense related to convertible notes and long-term debt entered into in 2021.
Results of Operations
Comparisons of the three months ended
The following table summarizes our results of operations for the periods
presented (in thousands):
Three Months Ended March 31,
2022 2021 Change % Change
Operating expenses:
Research and development $ 3,673 $ 1,378 $ 2,295 167 %
Sales and marketing 2,044 43 2,001 N/M
General and administrative 3,628 1,566 2,062 132 %
Total operating expenses 9,345 2,987 6,358 213 %
Loss from operations (9,345 ) (2,987 ) (6,358 ) 213 %
Interest expense, net (317 ) (2 ) (315 ) N/M
Change in fair value of SAFEs - (2,492 ) 2,492 N/M
Loss before benefit from income taxes (9,662 ) (5,481 ) (4,181 ) 76 %
Benefit from income taxes - (151 ) 151 N/M
Net loss $ (9,662 ) $ (5,330 ) $ (4,332 ) 81 %
N/M - The percentage change is not meaningful
Research and Development Expenses
Research and development expenses were
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Sales and Marketing Expenses
Sales and marketing expenses were
General and Administrative Expenses
General and administrative expenses were
Interest Expense, Net
Interest expense, net was
Change in Fair Value of SAFEs
The expense related to the change in fair value of our SAFEs was zero for the
three months ended
Liquidity and Capital Resources
We have primarily funded our operations through the sale of preferred stock,
convertible notes, SAFEs and funding from the merger with
On
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On
As of
We have incurred negative cash flows from operating activities and investing activities and significant losses from operations in the past. We expect to continue to incur operating losses at least for the next 12 months due to the investments that we intend to make in our business and, as a result, we will require additional capital resources to grow our business.
We expect to incur substantial expenses in the foreseeable future for the development and potential commercialization of our product candidates and ongoing internal research and development programs. At this time, we cannot reasonably estimate the nature, timing or aggregate amount of costs for our development, potential commercialization, and internal research and development programs. However, in order to complete our planned product development, and to complete the process of obtaining regulatory authorization or clearance for our product candidates, as well as to build the sales, marketing and distribution infrastructure that we believe will be necessary to commercialize our product candidates, if approved, we will require substantial additional funding in the future. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us, or at all. If we are unable to raise additional capital when desired, our business, results of operations, and financial condition would be adversely affected. Under our current operating plan, we believe we have sufficient capital to fund our operations into the first quarter of 2023. These factors raise substantial doubt regarding the Company's ability to continue as a going concern.
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