0001420720--06-302022Q1false217957594217873094P3Y0.50P10YP90DP30DP10YP90DP30D2021-12-012023-09-01P2YP5Y00P3YP10YP3YP10YP10YP10YP10YP10YP10Y5100000900000P2Y0001420720ibio:IbioCdmoMember2020-07-012020-09-3000014207202021-09-012021-09-300001420720us-gaap:CommonStockMember2021-07-012021-09-300001420720us-gaap:StandstillAgreementsMemberibio:EasternCapitalLimitedAndItsAffiliatesMember2021-07-012021-09-300001420720us-gaap:SeriesBPreferredStockMemberibio:UnderwrittenPublicOfferingMember2018-06-262018-06-260001420720us-gaap:SeriesAPreferredStockMemberibio:UnderwrittenPublicOfferingMember2018-06-262018-06-260001420720us-gaap:PreferredStockMember2020-07-012020-09-300001420720us-gaap:RetainedEarningsMember2021-09-300001420720us-gaap:NoncontrollingInterestMember2021-09-300001420720us-gaap:AdditionalPaidInCapitalMember2021-09-300001420720us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300001420720us-gaap:RetainedEarningsMember2021-06-300001420720us-gaap:NoncontrollingInterestMember2021-06-300001420720us-gaap:AdditionalPaidInCapitalMember2021-06-300001420720us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001420720us-gaap:RetainedEarningsMember2020-09-300001420720us-gaap:NoncontrollingInterestMember2020-09-300001420720us-gaap:AdditionalPaidInCapitalMember2020-09-300001420720us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001420720us-gaap:RetainedEarningsMember2020-06-300001420720us-gaap:NoncontrollingInterestMember2020-06-300001420720us-gaap:AdditionalPaidInCapitalMember2020-06-300001420720us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300001420720us-gaap:CommonStockMember2021-09-300001420720us-gaap:CommonStockMember2021-06-300001420720us-gaap:CommonStockMember2020-09-300001420720us-gaap:PreferredStockMember2020-06-300001420720us-gaap:CommonStockMember2020-06-300001420720ibio:OmnibusIncentivePlanMember2021-09-300001420720ibio:TwoThousandEighteenOmnibusEquityIncentivePlanMember2018-12-180001420720ibio:TwoThousandEighteenOmnibusEquityIncentivePlanMember2018-12-170001420720ibio:TwoThousandEightOmnibusEquityIncentivePlanMember2008-08-122008-08-120001420720ibio:VariousEmployeesMemberus-gaap:EmployeeStockOptionMemberibio:IbioInc.2020OmnibusEquityIncentivePlanMember2021-09-302021-09-300001420720srt:ChiefExecutiveOfficerMemberus-gaap:EmployeeStockOptionMemberibio:IbioInc.2020OmnibusEquityIncentivePlanMember2021-09-232021-09-230001420720ibio:VariousEmployeesMemberus-gaap:EmployeeStockOptionMemberibio:IbioInc.2020OmnibusEquityIncentivePlanMember2021-09-132021-09-130001420720srt:DirectorMemberus-gaap:EmployeeStockOptionMemberibio:IbioInc.2020OmnibusEquityIncentivePlanMember2021-08-232021-08-230001420720ibio:VariousEmployeesMemberus-gaap:RestrictedStockUnitsRSUMemberibio:IbioInc.2020OmnibusEquityIncentivePlanMember2021-08-232021-08-230001420720ibio:VariousEmployeesMemberus-gaap:EmployeeStockOptionMemberibio:IbioInc.2020OmnibusEquityIncentivePlanMember2021-08-232021-08-230001420720ibio:VariousEmployeesMemberus-gaap:EmployeeStockOptionMemberibio:IbioInc.2020OmnibusEquityIncentivePlanMember2021-07-192021-07-190001420720ibio:VariousEmployeesMemberus-gaap:EmployeeStockOptionMemberibio:IbioInc.2020OmnibusEquityIncentivePlanMember2021-07-122021-07-120001420720srt:MinimumMemberibio:TwoThousandEighteenOmnibusEquityIncentivePlanMember2018-12-182018-12-180001420720srt:MaximumMemberibio:TwoThousandEighteenOmnibusEquityIncentivePlanMember2018-12-182018-12-180001420720srt:MinimumMemberibio:TwoThousandEightOmnibusEquityIncentivePlanMember2008-08-122008-08-120001420720srt:MaximumMemberibio:TwoThousandEightOmnibusEquityIncentivePlanMember2008-08-122008-08-120001420720ibio:IBioIncVersusFraunhoferUnitedStatesOfAmericaIncorporatedMemberus-gaap:LicenseAndMaintenanceMemberibio:ScenarioPlanExpectedPaymentOneMemberus-gaap:SettledLitigationMember2022-03-310001420720ibio:IBioIncVersusFraunhoferUnitedStatesOfAmericaIncorporatedMemberus-gaap:SettledLitigationMember2021-09-300001420720us-gaap:SeriesCPreferredStockMemberibio:UnderwrittenPublicOfferingMember2019-10-292019-10-290001420720ibio:CantorFitzgeraldMemberibio:SalesAgreementMember2021-05-072021-05-070001420720ibio:CantorFitzgeraldMemberibio:SalesAgreementMember2021-02-242021-02-240001420720ibio:CantorFitzgeraldMemberus-gaap:OverAllotmentOptionMember2021-01-112021-01-110001420720ibio:IBioIncVersusFraunhoferUnitedStatesOfAmericaIncorporatedMemberus-gaap:LicenseAndMaintenanceMemberus-gaap:SettledLitigationMember2021-07-012021-09-300001420720us-gaap:TransferredOverTimeMember2021-07-012021-09-300001420720us-gaap:TransferredAtPointInTimeMember2021-07-012021-09-300001420720us-gaap:TransferredOverTimeMember2020-07-012020-09-300001420720us-gaap:TransferredAtPointInTimeMember2020-07-012020-09-300001420720ibio:KbiConsultingServiceMember2020-04-012020-04-010001420720ibio:IbioCdmoMemberibio:EasternCapitalLimitedAndItsAffiliatesMember2021-09-300001420720srt:MinimumMember2021-07-012021-09-300001420720srt:MaximumMember2021-07-012021-09-300001420720us-gaap:OfficeEquipmentMember2021-09-300001420720us-gaap:ConstructionInProgressMember2021-09-300001420720ibio:MedicalEquipmentMember2021-09-300001420720ibio:FacilityImprovementsMember2021-09-300001420720us-gaap:OfficeEquipmentMember2021-06-300001420720us-gaap:ConstructionInProgressMember2021-06-300001420720ibio:MedicalEquipmentMember2021-06-300001420720ibio:FacilityImprovementsMember2021-06-300001420720us-gaap:RetainedEarningsMember2021-07-012021-09-300001420720us-gaap:NoncontrollingInterestMember2021-07-012021-09-300001420720us-gaap:RetainedEarningsMember2020-07-012020-09-300001420720us-gaap:NoncontrollingInterestMember2020-07-012020-09-300001420720ibio:KbiConsultingServiceMember2020-07-012020-09-3000014207202021-10-012021-10-310001420720us-gaap:SeriesCPreferredStockMember2021-09-300001420720us-gaap:SeriesBPreferredStockMember2021-09-300001420720us-gaap:SeriesAPreferredStockMember2021-09-300001420720ibio:PreferredTrackingStockMember2021-07-012021-09-300001420720ibio:CantorFitzgeraldMemberibio:UnderwrittenPublicOfferingMember2020-12-102020-12-100001420720us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300001420720us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001420720us-gaap:NotesReceivableMember2021-09-300001420720us-gaap:NotesReceivableMember2021-06-300001420720ibio:IbioCdmoMemberibio:PreferredTrackingStockMemberibio:ExchangeAgreementMember2021-09-300001420720ibio:IbioCdmoMemberibio:AfterPreferredTrackingStockExchangedForUnitsOfLimitedLiabilityCompanyInterestsMemberibio:PreferredTrackingStockMemberibio:ExchangeAgreementMember2017-02-230001420720ibio:IbioCdmoMemberibio:PreferredTrackingStockMemberibio:ExchangeAgreementMember2017-02-230001420720ibio:IbioCdmoMemberibio:EasternAffiliateMemberibio:PreferredTrackingStockMemberibio:ExchangeAgreementMember2021-09-300001420720ibio:IbioCdmoMemberibio:AfterPreferredTrackingStockExchangedForUnitsOfLimitedLiabilityCompanyInterestsMemberibio:EasternAffiliateMemberibio:PreferredTrackingStockMemberibio:ExchangeAgreementMember2017-02-230001420720ibio:IbioCdmoMemberibio:EasternAffiliateMemberibio:PreferredTrackingStockMemberibio:ExchangeAgreementMember2017-02-2300014207202020-04-160001420720ibio:IBioIncVersusFraunhoferUnitedStatesOfAmericaIncorporatedMemberus-gaap:SettledLitigationMember2020-07-012021-06-3000014207202021-09-100001420720ibio:IbioCdmoMember2021-09-300001420720srt:MinimumMember2021-09-300001420720srt:MaximumMember2021-09-300001420720us-gaap:NotesReceivableMember2021-07-012021-09-300001420720ibio:SecondEasternAffiliateMember2021-07-012021-09-300001420720ibio:SecondEasternAffiliateMember2020-07-012020-09-300001420720us-gaap:FinancialStandbyLetterOfCreditMember2021-09-100001420720ibio:IBioIncVersusFraunhoferUnitedStatesOfAmericaIncorporatedMemberus-gaap:SettledLitigationMember2021-05-040001420720srt:MinimumMemberus-gaap:IntellectualPropertyMember2021-07-012021-09-300001420720srt:MaximumMemberus-gaap:IntellectualPropertyMember2021-07-012021-09-300001420720us-gaap:PatentsMember2021-07-012021-09-300001420720us-gaap:PatentsMember2021-09-300001420720us-gaap:IntellectualPropertyMember2021-09-300001420720us-gaap:PatentsMember2021-06-300001420720us-gaap:IntellectualPropertyMember2021-06-300001420720us-gaap:StandstillAgreementsMembersrt:MaximumMembersrt:DirectorMember2021-09-300001420720ibio:PreferredTrackingStockMember2021-09-300001420720ibio:PreferredTrackingStockMember2021-06-300001420720us-gaap:OperatingSegmentsMembersrt:ScenarioPreviouslyReportedMemberibio:SegmentReportingReclassificationsMemberibio:IbioIncMember2020-07-012020-09-300001420720us-gaap:OperatingSegmentsMembersrt:ScenarioPreviouslyReportedMemberibio:SegmentReportingReclassificationsMemberibio:IbioCdmoMember2020-07-012020-09-300001420720us-gaap:OperatingSegmentsMemberibio:SegmentReportingReclassificationsMemberibio:IbioIncMember2020-07-012020-09-300001420720us-gaap:OperatingSegmentsMemberibio:SegmentReportingReclassificationsMemberibio:IbioCdmoMember2020-07-012020-09-300001420720us-gaap:IntersegmentEliminationMembersrt:ScenarioPreviouslyReportedMemberibio:SegmentReportingReclassificationsMember2020-07-012020-09-300001420720us-gaap:IntersegmentEliminationMemberibio:SegmentReportingReclassificationsMember2020-07-012020-09-300001420720srt:ScenarioPreviouslyReportedMemberibio:StatementOfOperationsReclassificationsMember2020-07-012020-09-300001420720srt:ScenarioPreviouslyReportedMemberibio:SegmentReportingReclassificationsMember2020-07-012020-09-300001420720srt:RestatementAdjustmentMemberibio:StatementOfOperationsReclassificationsMember2020-07-012020-09-300001420720ibio:SegmentReportingReclassificationsMember2020-07-012020-09-300001420720us-gaap:SeriesCPreferredStockMember2021-07-012021-09-300001420720us-gaap:SeriesBPreferredStockMember2021-07-012021-09-300001420720us-gaap:SeriesAPreferredStockMember2021-07-012021-09-300001420720ibio:TwoCustomersMemberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMember2021-07-012021-09-300001420720ibio:ThreeCustomersMemberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMember2021-07-012021-09-300001420720ibio:TwoCustomersMemberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMember2020-07-012020-09-300001420720ibio:OneCustomersMemberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMember2020-07-012020-09-3000014207202020-06-300001420720us-gaap:OperatingSegmentsMemberibio:IbioIncMember2021-09-300001420720us-gaap:OperatingSegmentsMemberibio:IbioCdmoMember2021-09-300001420720us-gaap:IntersegmentEliminationMember2021-09-300001420720us-gaap:OperatingSegmentsMemberibio:IbioIncMember2020-09-300001420720us-gaap:OperatingSegmentsMemberibio:IbioCdmoMember2020-09-300001420720us-gaap:IntersegmentEliminationMember2020-09-3000014207202020-09-300001420720us-gaap:RestrictedStockUnitsRSUMember2021-07-012021-09-300001420720us-gaap:EmployeeStockOptionMember2021-07-012021-09-300001420720us-gaap:RestrictedStockUnitsRSUMember2020-07-012020-09-300001420720us-gaap:EmployeeStockOptionMember2020-07-012020-09-300001420720us-gaap:ResearchAndDevelopmentExpenseMember2021-07-012021-09-300001420720us-gaap:GeneralAndAdministrativeExpenseMember2021-07-012021-09-300001420720us-gaap:ResearchAndDevelopmentExpenseMember2020-07-012020-09-300001420720us-gaap:GeneralAndAdministrativeExpenseMember2020-07-012020-09-300001420720us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001420720ibio:SecondEasternAffiliateMember2021-09-300001420720ibio:SecondEasternAffiliateMember2021-06-300001420720ibio:IbioCdmoLlcMember2021-07-012021-09-300001420720ibio:RubrycTheraputicsInc.Memberibio:ImmuneOncologyAntibodiesRtx003Member2021-08-230001420720us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300001420720us-gaap:CommonStockMember2020-07-012020-09-300001420720ibio:ScenarioTwoMemberibio:IbioInc.2020OmnibusEquityIncentivePlanMember2020-12-090001420720ibio:ScenarioOneMemberibio:IbioInc.2020OmnibusEquityIncentivePlanMember2020-12-090001420720ibio:IbioInc.2020OmnibusEquityIncentivePlanMember2020-12-090001420720ibio:IBioIncVersusFraunhoferUnitedStatesOfAmericaIncorporatedMemberus-gaap:LicenseAndMaintenanceMemberibio:ScenarioPlanExpectedPaymentTwoMemberus-gaap:SettledLitigationMember2023-03-310001420720ibio:CantorFitzgeraldMemberus-gaap:OverAllotmentOptionMember2020-12-082020-12-080001420720ibio:CantorFitzgeraldMemberibio:UnderwrittenPublicOfferingMember2020-12-082020-12-080001420720us-gaap:OperatingSegmentsMemberibio:IbioIncMember2020-07-012020-09-300001420720us-gaap:OperatingSegmentsMemberibio:IbioCdmoMember2020-07-012020-09-300001420720us-gaap:IntersegmentEliminationMember2020-07-012020-09-300001420720ibio:IBioIncVersusFraunhoferUnitedStatesOfAmericaIncorporatedMemberus-gaap:SettledLitigationMember2021-05-042021-05-040001420720ibio:StatementOfOperationsReclassificationsMember2020-07-012020-09-300001420720ibio:IbioCdmoMemberibio:PaymentInAdditionToBaseRentScenarioTwoMemberibio:SecondEasternAffiliateMember2021-07-012021-09-300001420720ibio:IbioCdmoMemberibio:PaymentInAdditionToBaseRentScenarioThreeMemberibio:SecondEasternAffiliateMember2021-07-012021-09-300001420720ibio:IbioCdmoMemberibio:PaymentInAdditionToBaseRentScenarioFourMemberibio:SecondEasternAffiliateMember2021-07-012021-09-300001420720ibio:IbioCdmoMemberibio:PaymentInAdditionToBaseRentScenarioFiveMemberibio:SecondEasternAffiliateMember2021-07-012021-09-300001420720ibio:IbioCdmoMembersrt:MinimumMemberibio:PaymentInAdditionToBaseRentScenarioTwoMemberibio:SecondEasternAffiliateMember2021-07-012021-09-300001420720ibio:IbioCdmoMembersrt:MinimumMemberibio:PaymentInAdditionToBaseRentScenarioThreeMemberibio:SecondEasternAffiliateMember2021-07-012021-09-300001420720ibio:IbioCdmoMembersrt:MinimumMemberibio:PaymentInAdditionToBaseRentScenarioFourMemberibio:SecondEasternAffiliateMember2021-07-012021-09-300001420720ibio:IbioCdmoMembersrt:MinimumMemberibio:PaymentInAdditionToBaseRentScenarioFiveMemberibio:SecondEasternAffiliateMember2021-07-012021-09-300001420720ibio:IbioCdmoMembersrt:MaximumMemberibio:PaymentInAdditionToBaseRentScenarioTwoMemberibio:SecondEasternAffiliateMember2021-07-012021-09-300001420720ibio:IbioCdmoMembersrt:MaximumMemberibio:PaymentInAdditionToBaseRentScenarioThreeMemberibio:SecondEasternAffiliateMember2021-07-012021-09-300001420720ibio:IbioCdmoMembersrt:MaximumMemberibio:PaymentInAdditionToBaseRentScenarioFourMemberibio:SecondEasternAffiliateMember2021-07-012021-09-300001420720ibio:IbioCdmoMembersrt:MaximumMemberibio:PaymentInAdditionToBaseRentScenarioFiveMemberibio:SecondEasternAffiliateMember2021-07-012021-09-300001420720ibio:IbioCdmoMemberibio:PaymentInAdditionToBaseRentScenarioOneMemberibio:SecondEasternAffiliateMember2021-07-012021-09-300001420720ibio:IbioCdmoMemberibio:PaymentInAdditionToBaseRentScenarioSevenMemberibio:SecondEasternAffiliateMember2020-01-012021-09-300001420720ibio:IbioCdmoMemberibio:PaymentInAdditionToBaseRentScenarioSixMemberibio:SecondEasternAffiliateMember2018-01-012019-12-310001420720us-gaap:SeriesAPreferredStockMember2018-06-200001420720ibio:IbioCdmoMemberibio:PreferredTrackingStockMemberibio:ExchangeAgreementMember2021-07-012021-09-300001420720ibio:IbioCdmoMemberibio:PreferredTrackingStockMemberibio:ExchangeAgreementMember2017-02-232017-02-230001420720ibio:EasternCapitalLimitedAndItsAffiliatesMember2021-07-012021-09-300001420720ibio:RubrycTheraputicsInc.Memberibio:ImmuneOncologyAntibodiesRtx003Memberibio:Series2PreferredStockMemberibio:StockPurchaseAgreementMember2021-08-232021-08-230001420720us-gaap:NotesReceivableMember2020-10-012020-10-010001420720us-gaap:NotesReceivableMember2020-10-0100014207202021-04-012021-04-0100014207202021-09-102021-09-100001420720ibio:IbioCdmoMember2021-07-012021-09-300001420720us-gaap:OperatingSegmentsMemberibio:IbioIncMember2021-07-012021-09-300001420720us-gaap:OperatingSegmentsMemberibio:IbioCdmoMember2021-07-012021-09-300001420720us-gaap:IntersegmentEliminationMember2021-07-012021-09-300001420720us-gaap:EquipmentMember2021-09-300001420720ibio:FacilityMember2021-09-300001420720us-gaap:EquipmentMember2021-06-300001420720ibio:FacilityMember2021-06-300001420720ibio:CollegeStationInvestorsLlcAndBryanCapitalMemberus-gaap:SubsequentEventMember2021-11-010001420720ibio:IbioCmoPreferredTrackingStockMemberibio:BryanCapitalInvestorsLlcAndAffiliatesOfEasternCapitalLimitedMemberus-gaap:SubsequentEventMember2021-11-012021-11-010001420720ibio:IbioCdmoOwnedByBryanCapitalMemberibio:BryanCapitalInvestorsLlcAndAffiliatesOfEasternCapitalLimitedMemberus-gaap:SubsequentEventMember2021-11-012021-11-010001420720ibio:BryanCapitalInvestorsLlcAndAffiliatesOfEasternCapitalLimitedMemberus-gaap:SubsequentEventMember2021-11-012021-11-010001420720ibio:CollegeStationInvestorsLlcAndBryanCapitalMemberibio:SecuredTermLoanMemberus-gaap:SubsequentEventMember2021-11-010001420720ibio:RubrycTheraputicsInc.Memberibio:ImmuneOncologyAntibodiesRtx003Memberibio:ClinicalDevelopmentAndRegulatoryMilestonePaymentsMemberibio:CollaborationOptionAndLicenseAgreementMember2021-08-232021-08-230001420720ibio:RubrycTheraputicsInc.Memberibio:ImmuneOncologyAntibodiesRtx003Memberibio:ClinicalDevelopmentAndRegulatoryMilestonePaymentsMemberibio:CollaborationAndLicenseAgreementMember2021-08-232021-08-230001420720ibio:RubrycTheraputicsInc.Memberibio:ImmuneOncologyAntibodiesRtx003Memberibio:NoBiosimilarProductHasBeenApprovedMemberibio:CollaborationOptionAndLicenseAgreementMember2021-08-232021-08-230001420720ibio:RubrycTheraputicsInc.Memberibio:ImmuneOncologyAntibodiesRtx003Memberibio:EventOfNonPaymentMemberibio:CollaborationOptionAndLicenseAgreementMember2021-08-232021-08-230001420720ibio:RubrycTheraputicsInc.Memberibio:ImmuneOncologyAntibodiesRtx003Memberibio:EventOfNonPaymentMemberibio:CollaborationAndLicenseAgreementMember2021-08-232021-08-230001420720ibio:RubrycTheraputicsInc.Memberibio:ImmuneOncologyAntibodiesRtx003Memberibio:FinancingRequirementNotMetMemberibio:CollaborationOptionAndLicenseAgreementMember2021-08-232021-08-230001420720ibio:RubrycTheraputicsInc.Memberibio:ImmuneOncologyAntibodiesRtx003Memberibio:CollaborationAndLicenseAgreementMember2021-08-232021-08-230001420720ibio:RubrycTheraputicsInc.Memberibio:ImmuneOncologyAntibodiesRtx003Memberibio:CollaborationOptionAndLicenseAgreementMember2021-08-232021-08-230001420720ibio:IBioIncVersusFraunhoferUnitedStatesOfAmericaIncorporatedMemberibio:ScenarioPlanExpectedPaymentTwoMemberus-gaap:SettledLitigationMember2023-03-010001420720ibio:IBioIncVersusFraunhoferUnitedStatesOfAmericaIncorporatedMemberibio:ScenarioPlanExpectedPaymentOneMemberus-gaap:SettledLitigationMember2022-03-010001420720ibio:IBioIncVersusFraunhoferUnitedStatesOfAmericaIncorporatedMemberus-gaap:ScenarioPlanMemberus-gaap:SettledLitigationMember2021-05-040001420720ibio:IBioIncVersusFraunhoferUnitedStatesOfAmericaIncorporatedMemberibio:ScenarioPlanExpectedLegalFeesMemberus-gaap:SettledLitigationMember2021-05-040001420720ibio:CollegeStationInvestorsLlcAndBryanCapitalMemberus-gaap:SubsequentEventMember2021-11-012021-11-010001420720srt:MinimumMember2021-09-102021-09-100001420720srt:MaximumMember2021-09-102021-09-100001420720ibio:RubrycTheraputicsInc.Memberibio:ImmuneOncologyAntibodiesRtx003Memberibio:Series2PreferredStockMemberibio:StockPurchaseAgreementMember2021-09-300001420720ibio:RubrycTheraputicsInc.Memberibio:ImmuneOncologyAntibodiesRtx003Member2021-08-232021-08-230001420720us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2021-08-232021-08-230001420720us-gaap:FiniteLivedIntangibleAssetsMember2021-08-232021-08-230001420720ibio:Series2PreferredStockMember2021-08-232021-08-2300014207202021-08-232021-08-230001420720us-gaap:StandstillAgreementsMembersrt:DirectorMember2021-07-012021-09-300001420720ibio:CantorFitzgeraldMemberibio:SalesAgreementMember2020-11-2500014207202021-09-3000014207202021-06-3000014207202020-07-012020-09-3000014207202021-11-1200014207202021-07-012021-09-30xbrli:sharesiso4217:USDxbrli:pureibio:itemutr:sqftiso4217:USDxbrli:sharesibio:segment

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission file number 001-35023

iBio, Inc.

(Exact name of registrant as specified in its charter)

Delaware

 

26-2797813

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

8800 HSC Parkway, Bryan, TX

 

77807-1107

(Address of principal executive offices)

 

(Zip Code)

(979) 446-0027

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Ticker symbol(s)

 

Name of each exchange on which registered

Common Stock

 

IBIO

 

NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes    No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated Filer 

 

 

 

Accelerated Filer 

Non-accelerated Filer  

Smaller reporting company  

 

 

 

 

 

 

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes    No 

Shares of Common Stock outstanding as of November 12, 2021: 217,957,594

PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements (Unaudited).

iBio, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands, except share and per share amounts)

September 30, 

June 30, 

2021

2021

(Unaudited)

(See Note 2)

Assets

Current assets:

Cash and cash equivalents

$

62,820

$

77,404

Accounts receivable - trade

 

207

 

426

Settlement receivable - current portion

5,100

5,100

Investments in debt securities

 

19,453

 

19,570

Inventory

587

27

Prepaid expenses and other current assets

 

1,650

 

2,070

Total Current Assets

 

89,817

 

104,597

 

 

Convertible promissory note receivable and accrued interest

1,575

1,556

Settlement receivable - noncurrent portion

5,100

5,100

Finance lease right-of-use assets, net of accumulated amortization

 

25,695

 

26,111

Operating lease right-of-use asset

3,487

Fixed assets, net of accumulated depreciation

 

9,821

 

8,628

Intangible assets, net of accumulated amortization

5,164

952

Investment in equity security - at cost

1,760

Prepaid expenses - noncurrent

1,296

Security deposits

24

24

Total Assets

$

143,739

$

146,968

 

 

Liabilities and Equity

 

 

Current liabilities:

 

 

Accounts payable

$

2,292

$

2,254

Accrued expenses (related party of $840 and $701 as of September 30, 2021 and June 30, 2021, respectively)

 

2,691

 

3,001

Acquisition Payable

2,500

Finance lease obligations - current portion

374

367

Operating lease obligation - current portion

147

Note payable - PPP loan - current portion

600

Contract liabilities

 

94

 

423

Total Current Liabilities

 

8,098

 

6,645

 

 

Finance lease obligations - net of current portion

31,660

31,755

Operating lease obligation - net of current portion

3,456

 

 

Total Liabilities

 

43,214

 

38,400

 

 

Commitments and Contingencies

 

 

 

 

Equity

 

 

iBio, Inc. Stockholders’ Equity:

 

 

Common stock - $0.001 par value; 275,000,000 shares authorized at September 30, 2021 and June 30, 2021; 217,957,594 and 217,873,094 shares issued and outstanding as of September 30, 2021 and June 30, 2021, respectively

 

217

 

217

Additional paid-in capital

 

282,956

 

282,058

Accumulated other comprehensive loss

 

(64)

 

(63)

Accumulated deficit

(182,566)

(173,627)

Total iBio, Inc. Stockholders’ Equity

 

100,543

 

108,585

Noncontrolling interest

 

(18)

 

(17)

Total Equity

 

100,525

 

108,568

Total Liabilities and Equity

$

143,739

$

146,968

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

iBio, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited; in Thousands, except per share amounts)

Three Months Ended

September 30, 

2021

    

2020

Revenues

$

211

$

410

 

 

Cost of goods sold

40

107

Gross profit

171

303

Operating expenses:

 

 

Research and development

 

2,511

 

1,862

General and administrative (related party of $189 and $393)

 

6,634

 

5,365

Total operating expenses

 

9,145

 

7,227

 

 

Operating loss

 

(8,974)

 

(6,924)

 

 

Other income (expense):

 

 

Interest expense (related party of $608 and $614)

(609)

(614)

Interest income

 

36

 

4

Forgiveness of note payable and accrued interest - SBA loan

607

Total other income (expense)

 

34

 

(610)

 

 

Consolidated net loss

 

(8,940)

 

(7,534)

Net loss attributable to noncontrolling interest

 

1

 

1

Net loss attributable to iBio, Inc.

 

(8,939)

 

(7,533)

Preferred stock dividends

 

(66)

 

(66)

Net loss attributable to iBio, Inc. stockholders

$

(9,005)

$

(7,599)

 

 

Comprehensive loss:

 

 

Consolidated net loss

$

(8,940)

$

(7,534)

Other comprehensive loss - unrealized loss on debt securities

(1)

(7)

Other comprehensive loss - foreign currency translation adjustments

 

 

 

 

Comprehensive loss

$

(8,941)

$

(7,541)

 

 

Loss per common share attributable to iBio, Inc. stockholders - basic and diluted

$

(0.04)

$

(0.05)

 

 

Weighted-average common shares outstanding - basic and diluted

 

217,876

 

162,442

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

iBio, Inc. and Subsidiaries

Condensed Consolidated Statements of Equity

(Unaudited; in thousands)

Three Months Ended September 30, 2021 and 2020

Accumulated

Additional

Other

Preferred Stock

Common Stock

Paid-In

Comprehensive

Accumulated

Noncontrolling 

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Loss

 

Deficit

 

Interest

 

Total

Balance as of July 1, 2021

$

217,873

$

217

$

282,058

$

(63)

$

(173,627)

$

(17)

$

108,568

Exercise of stock options

85

77

77

Share-based compensation

  

  

  

  

  

821

  

  

  

  

821

Unrealized loss on debt securities

 

 

 

(1)

 

 

 

(1)

Net loss

 

 

 

 

(8,939)

 

(1)

 

(8,940)

Balance as of September 30, 2021

$

217,958

$

217

$

282,956

$

(64)

$

(182,566)

$

(18)

$

100,525

Accumulated

Additional

Other

Preferred Stock

Common Stock

Paid-In

Comprehensive

Accumulated

Noncontrolling 

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Loss

 

Deficit

 

Interest

 

Total

Balance as of July 1, 2020

6

$

140,071

$

140

$

206,931

$

(33)

$

(150,420)

$

(11)

$

56,607

Capital raises

11,292

11

32,111

32,122

Costs to raise capital

(1,525)

(1,525)

Exercise of stock options

30

28

28

Conversion of preferred stock to common stock

(6)

28,925

29

(29)

Share-based compensation

  

  

  

  

  

  

  

  

351

  

  

  

  

  

  

  

  

351

Unrealized loss on debt securities

(7)

(7)

Net loss

 

 

 

 

(7,533)

 

(1)

 

(7,534)

Balance as of September 30, 2020

  

  

$

  

180,318

  

$

180

  

$

237,867

  

$

(40)

  

$

(157,953)

  

$

(12)

  

$

80,042

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

iBio, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited; in Thousands)

    

Three Months Ended

September 30, 

    

2021

    

2020

Cash flows from operating activities:

Consolidated net loss

$

(8,940)

$

(7,534)

Adjustments to reconcile consolidated net loss to net cash used in operating activities:

 

 

Share-based compensation

 

821

 

351

Amortization of intangible assets

 

88

 

72

Amortization of finance lease right-of-use assets

416

415

Depreciation of fixed assets

 

306

 

97

Accrued interest income on note receivable

(19)

Amortization of premiums on debt securities

102

Forgiveness of note payable and accrued interest - SBA loan

(607)

Settlement of revenue contract

(84)

Changes in operating assets and liabilities:

 

 

Accounts receivable – trade

 

(93)

 

(225)

Inventory

 

(560)

 

(45)

Prepaid expenses and other current assets

 

325

 

(51)

Prepaid expenses - noncurrent

(912)

Accounts payable

 

79

 

(12)

Accrued expenses

 

(269)

 

302

Contract liabilities

 

 

(440)

 

 

Net cash used in operating activities

 

(9,347)

 

(7,070)

 

 

Cash flows from investing activities:

 

 

Purchases of debt securities

(2,386)

(6,017)

Redemption of debt securities

2,400

Purchase of equity security

(1,173)

Additions to intangible assets

 

(2,867)

 

(164)

Purchases of fixed assets

 

(1,123)

 

(419)

 

 

Net cash used in investing activities

 

(5,149)

 

(6,600)

 

 

Cash flows from financing activities:

 

 

Payment of finance lease obligation

(88)

(73)

Proceeds from sales of common stock

 

 

32,122

Proceeds from subscription receivable

5,549

Proceeds from the exercise of stock options

28

Costs to raise capital

 

 

(1,525)

Proceeds from capital contribution

 

 

 

  

 

  

Net cash provided by (used in) financing activities

 

(88)

 

36,101

 

 

Net (decrease) increase in cash and cash equivalents

 

(14,584)

 

22,431

Cash and cash equivalents – beginning

 

77,404

 

55,112

Cash and cash equivalents - end

$

62,820

$

77,543

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

iBio, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited; in Thousands)

    

Three Months Ended

September 30, 

    

2021

    

2020

Schedule of non-cash activities:

 

 

Increase in operating lease ROU asset for new lease - net of lease incentive

$

3,487

$

Increase in operating lease obligation for new lease

$

3,603

$

Unpaid portion of RubrYc transaction

$

2,500

$

Fixed assets included in accounts payable in prior period, paid in current period

$

383

$

268

Unrealized loss on available-for-sale debt securities

$

1

$

Unpaid fixed assets included in accounts payable

$

750

$

123

Settlement of revenue contract

$

580

$

Lease incentive for construction in progress

$

82

$

Proceeds from options exercised included in prepaid expenses and other current assets

$

77

$

Conversion of preferred stock shares into common stock

$

$

29

 

 

Supplemental cash flow information:

 

 

Cash paid during the period for interest

$

610

$

614

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

iBio, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.   Nature of Business

iBio, Inc. (“we”, “us”, “our”, “iBio”, “Ibio, Inc” or the “Company”) is a developer of next-generation biopharmaceuticals and the pioneer of the sustainable FastPharming Manufacturing System ®. The Company is applying its technologies to research and develop novel product candidates to treat or prevent fibrotic diseases, cancers, and infectious diseases. The Company is using its FastPharming Manufacturing System (“FastPharming” or the “FastPharming System”) and Glycaneering Services TM to rapidly and cost effectively build a portfolio of biologic drug candidates as well as to create proteins for others by contract or via the Company’s catalog.

The Company operates in two segments: (i) Biopharmaceuticals: its biologics development and licensing segment which is focused on drug development in two primary areas: Therapeutics (currently Fibrotics and Oncology) and Vaccines (human and animal health vaccines), and (ii) Bioprocessing: focused on two business lines: Services and Research & Bioprocess Products (“RBP”).

Biopharmaceuticals:

Therapeutics

Anti-Fibrotics

Fibrosis is a pathological disorder in which connective tissue replaces normal parenchymal tissue to the extent that it goes unchecked, leading to considerable tissue remodeling and the formation of permanent scar tissue. Fibrosis can occur in many tissues within the body, including the lungs (e.g., idiopathic pulmonary fibrosis (“IPF”) and skin (e.g. systemic scleroderma).

Oncology

iBio’s oncology efforts seek to identify therapeutics to aid in the treatment of cancer. Although there are a large number of cancer treatments available, significant unmet need exists in many types of cancer for improved treatments. Cancer remains the second most frequent cause of death worldwide. New research on cancers, especially on how to boost or support the immune system to treat cancer, is leading to a number of new treatments and new research programs with the potential to further improve cancer therapies.

Vaccines

Human Health: SARS-CoV-2

Coronavirus disease 2019 is an infectious disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) (“COVID”). It was first identified in December 2019 in Wuhan, Hubei, China, and has resulted in an ongoing pandemic. Common symptoms include fever, cough, fatigue, shortness of breath or breathing difficulties, and loss of smell and taste. Some people develop acute respiratory distress syndrome (ARDS), possibly precipitated by cytokine dysregulation, multi-organ failure, septic shock, and blood clots.

Animal Health:  Classical Swine Fever

Classical swine fever (“CSF”) is a contagious, often fatal disease affecting both feral and domesticated pigs. Outbreaks in Europe, Asia, Africa, and South America have not only adversely impacted animal health and food security, but have also had severe socioeconomic impacts on both the pig industry worldwide and small-scale pig farming. Currently available vaccines can be efficient at triggering rapid animal immune response and protecting swine populations when combined with culling of infected pigs, but do not allow the differentiation of infected from vaccinated animals (DIVA), nor are they approved for use in the U.S. The development of DIVA compatible and efficacious vaccination solutions remains a top priority to prevent the economic impacts of a CSF outbreak including supply disruptions, export restrictions and reduced food security.

Bioprocessing:

Services

iBio’s contract development and manufacturing services use iBio’s FastPharming intellectual property and know how to develop or manufacture proteins for others per a contract or to provide bioprocess services.

8


Research & Bioprocess Products

iBio is developing proteins for use in cutting-edge research and cGMP manufacturing where the demand for high-quality products continues to evolve. The Company offers recombinant proteins for third parties on a catalog and custom basis. These catalog products often can lead to opportunities to provide CDMO services or identify in-licensing opportunities for our proprietary biotech pipeline.

FastPharming

The FastPharming System is iBio’s proprietary approach to plant-made pharmaceutical and protein production. It uses hydroponically-grown, transiently-transfected plants, (typically Nicotiana benthamiana, a relative of the tobacco plant), novel expression vectors, a large-scale transient transfection method, and other technologies that can be used to produce complex therapeutic proteins emerging from our own, our clients’ and our potential clients’ pipelines.  We believe the FastPharming System enables biologics production that is faster, more cost-effective and more environmentally friendly than other approaches.

2.   Basis of Presentation

Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared from the books and records of the Company and include all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and Rule 8-03 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required for complete annual financial statements. Interim results are not necessarily indicative of the results that may be expected for the full year. Interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021, filed with the SEC on September 28, 2021, from which the accompanying condensed consolidated balance sheet dated June 30, 2021 was derived.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated as part of the consolidation.

Liquidity

In the past, the history of significant losses, the negative cash flow from operations, the limited cash resources on hand and the dependence by the Company on its ability – about which there was uncertainty – to obtain additional financing to fund its operations after the current cash resources are exhausted raised substantial doubt about the Company's ability to continue as a going concern. Based on the total cash and cash equivalents plus investments in debt securities of approximately $82.3 million as of September 30, 2021 and the financial options following the purchase of the Company’s manufacturing facility, the Company continues to believe that its current cash position is sufficient to fund its operations through the third quarter of Fiscal 2023. If we cannot take advantage of the additional financial flexibility and based on the Company’s working capital at September 30, 2021, management has concluded that there is sufficient liquidity to fund normal operations through at least the second quarter of Fiscal 2023.

3.   Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 3 of the Notes to Financial Statements in the Annual Report.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates include liquidity assertions, the valuation of intellectual property, legal and contractual contingencies and share-based compensation. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ from these estimates.

9

Accounts Receivable

Accounts receivable are reported at their outstanding unpaid principal balances net of allowances for uncollectible accounts. We provide for allowances for uncollectible receivables based on our estimate of uncollectible amounts considering age, collection history, and other factors considered appropriate. Our policy is to write off accounts receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible. At September 30, 2021 and June 30, 2021, the Company determined that an allowance for doubtful accounts was not needed.

Revenue Recognition

The Company accounts for its revenue recognition under Accounting Standards Codification ("ASC") 606, “Revenue from Contracts with Customers. Under this standard, the Company recognizes revenue when a customer obtains control of promised services or goods in an amount that reflects the consideration to which the Company expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts.

The Company’s contract revenue consists primarily of amounts earned under contracts with third-party customers and reimbursed expenses under such contracts. The Company analyzes its agreements to determine whether the elements can be separated and accounted for individually or as a single unit of accounting. Allocation of revenue to individual elements that qualify for separate accounting is based on the separate selling prices determined for each component, and total contract consideration is then allocated pro rata across the components of the arrangement. If separate selling prices are not available, the Company will use its best estimate of such selling prices, consistent with the overall pricing strategy and after consideration of relevant market factors.

In general, the Company applies the following steps when recognizing revenue from contracts with customers: (i) identify the contract, (ii) identify the performance obligations, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations and (v) recognize revenue when a performance obligation is satisfied. The nature of the Company’s contracts with customers generally falls within the three key elements of the Company’s business plan: CDMO Facility Activities; Product Candidate Pipeline, and Facility Design and Build-out / Technology Transfer services.

Recognition of revenue is driven by satisfaction of the performance obligations using one of two methods: revenue is either recognized over time or at a point in time. Contracts containing multiple performance obligations classify those performance obligations into separate units of accounting either as standalone or combined units of accounting. For those performance obligations treated as a standalone unit of accounting, revenue is generally recognized based on the method appropriate for each standalone unit. For those performance obligations treated as a combined unit of accounting, revenue is generally recognized as the performance obligations are satisfied, which generally occurs when control of the goods or services have been transferred to the customer or client or once the client or customer is able to direct the use of those goods and/or services as well as obtaining substantially all of its benefits. As such, revenue for a combined unit of accounting is generally recognized based on the method appropriate for the last delivered item but due to the specific nature of certain project and contract items, management may determine an alternative revenue recognition method as appropriate, such as a contract whereby one deliverable in the arrangement clearly comprises the overwhelming majority of the value of the overall combined unit of accounting. Under this circumstance, management may determine revenue recognition for the combined unit of accounting based on the revenue recognition guidance otherwise applicable to the predominant deliverable.

If a loss on a contract is anticipated, such loss is recognized in its entirety when the loss becomes evident. When the current estimates of the amount of consideration that is expected to be received in exchange for transferring promised goods or services to the customer indicates a loss will be incurred, a provision for the entire loss on the contract is made. At September 30, 2021 and June 30, 2021, the Company had no contract loss provisions.

The Company generates (or may generate in the future) contract revenue under the following types of contracts:

Fixed-Fee

Under a fixed-fee contract, the Company charges a fixed agreed upon amount for a deliverable. Fixed-fee contracts have fixed deliverables upon completion of the project. Typically, the Company recognizes revenue for fixed-fee contracts after projects are completed, delivery is made and title transfers to the customer, and collection is reasonably assured.

10

Revenue can be recognized either 1) over time or 2) at a point in time and is summarized below (in thousands).

Three Months Ended

    

September 30, 

2021

2020

Revenue recognized at a point in time

$

211

$

410

Revenue recognized over time

 

 

Total revenue

$

211

$

410

Time and Materials

Under a time and materials contract, the Company charges customers an hourly rate plus reimbursement for other project specific costs. The Company recognizes revenue for time and material contracts based on the number of hours devoted to the project multiplied by the customer’s billing rate plus other project specific costs incurred.

Contract Assets

A contract asset is an entity’s right to payment for goods and services already transferred to a customer if that right to payment is conditional on something other than the passage of time. Generally, an entity will recognize a contract asset when it has fulfilled a contract obligation but must perform other obligations before being entitled to payment.

Contract assets consist primarily of the cost of project contract work performed by third parties for which the Company expects to recognize any related revenue at a later date, upon satisfaction of the contract obligations. At both September 30, 2021 and June 30, 2021, contract assets were $0.

Contract Liabilities

A contract liability is an entity’s obligation to transfer goods or services to a customer at the earlier of (1) when the customer prepays consideration or (2) the time that the customer’s consideration is due for goods and services the entity will yet provide. Generally, an entity will recognize a contract liability when it receives a prepayment.

Contract liabilities consist primarily of consideration received, usually in the form of payment, on project work to be performed whereby the Company expects to recognize any related revenue at a later date, upon satisfaction of the contract obligations. At September 30, 2021 and June 30, 2021, contract liabilities were $94,000 and $423,000, respectively. The Company recognized revenue of $84,000 during the three months ended September 30, 2021 that was included in the contract liabilities balance as of June 30, 2021. The Company recognized revenue of $311,800 during the three months ended September 30, 2020 that was included in the contract liabilities balance as of June 30, 2020.  

Leases

The Company accounts for leases under the guidance of Accounting Standards Codification ("ASC") 842, "Leases" ("ASC 842"). The standard established a right-of-use (“ROU”) model requiring a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months and classified as either an operating or finance lease. The adoption of ASC 842 had a significant effect on the Company’s balance sheet, resulting in an increase in non-current assets and both current and non-current liabilities.

As the Company elected to adopt ASC 842 at the beginning of the period of adoption (July 1, 2019), the Company recorded the ROU and finance lease obligation as follows:

1. ROU measured at the carrying amount of the leased assets under Topic 840.
2. Finance lease liability measured at the carrying amount of the capital lease obligation under Topic 840 at the beginning of the period of adoption.

The Company elected the package of practical expedients as permitted under the transition guidance, which allowed it: (1) to carry forward the historical lease classification; (2) not to reassess whether expired or existing contracts are or contain leases; and (3) not to reassess the treatment of initial direct costs for existing leases.

In accordance with ASC 842, at the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present and the classification of the lease including whether the contract involves the use of a distinct identified asset, whether the Company obtains the right to substantially all the economic benefit from the use of the

11

asset, and whether the Company has the right to direct the use of the asset. Leases with a term greater than one year are recognized on the balance sheet as ROU assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less under practical expedient in paragraph ASC 842-20-25-2. For contracts with lease and non-lease components, the Company has elected not to allocate the contract consideration and to account for the lease and non-lease components as a single lease component.

The lease liabilities and the corresponding ROU assets are recorded based on the present value of lease payments over the expected remaining lease term. The implicit rate within our existing finance (capital) lease was determinable and, therefore, used at the adoption date of ASC 842 to determine the present value of lease payments under the finance lease. The implicit rate within our operating lease was not determinable and, therefore, the Company used the incremental borrowing rate at the lease commencement date to determine the present value of lease payments. The determination of the Company’s incremental borrowing rate requires judgment. The Company will determine the incremental borrowing rate for each new lease using our estimated borrowing rate.

An option to extend the lease is considered in connection with determining the ROU asset and lease liability when it is reasonably certain we will exercise that option. An option to terminate is considered unless it is reasonably certain we will not exercise the option.

Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.  Cash equivalents at September 30, 2021 and June 30, 2021 consisted of money market accounts.

Investments in Debt Securities

Debt investments are classified as available-for-sale. Changes in fair value are recorded in other comprehensive income (loss). Fair value is calculated based on publicly available market information. Discounts and/or premiums paid when the debt securities are acquired are amortized to interest income over the terms of the debt securities.

Investment in Equity Security

The Company applies the cost method for its investment in equity security. Under the cost method, the investment is recorded at cost, with gains and losses recognized as of the sale date, and income recorded when received.

Inventory

Inventory is stated at the lower of cost or net realizable value on the first-in, first-out basis.  Inventory consists of the following (table in thousands):

September 30, 

June 30,

2021

2021

Raw materials

$

487

$

Work in process

57

27

Finished goods

43

$

587

$

27

Research and Development

The Company accounts for research and development costs in accordance with the Financial Accounting Standards Board (“FASB”) ASC 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved.

Fixed Assets

Fixed assets are stated at cost net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets ranging from three to fifteen years.

12

Intangible Assets

The Company accounts for intangible assets at their historical cost and records amortization utilizing the straight-line method based upon their estimated useful lives. Patents are amortized over a period of ten years and other intellectual property is amortized over a period from 16 to 23 years. The Company reviews the carrying value of its intangible assets for impairment whenever events or changes in business circumstances indicate the carrying amount of such assets may not be fully recoverable. Evaluating for impairment requires judgment, and recoverability is assessed by comparing the projected undiscounted net cash flows of the assets over the remaining useful life to the carrying amount. Impairments, if any, are based on the excess of the carrying amount over the fair value of the assets. There were no impairment charges for the three months ended September 30, 2021 and 2020

Share-based Compensation

The Company recognizes the cost of all share-based payment transactions at fair value. Compensation cost, measured by the fair value of the equity instruments issued, adjusted for estimated forfeitures, is recognized in the financial statements as the respective awards are earned over the performance or service period. The Company uses historical data to estimate forfeiture rates.

The impact that share-based payment awards will have on the Company’s results of operations is a function of the number of shares awarded, the trading price of the Company’s stock at the date of grant or modification, the vesting schedule and forfeitures. Furthermore, the application of the Black-Scholes option pricing model employs weighted-average assumptions for expected volatility of the Company’s stock, expected term until exercise of the options, the risk-free interest rate, and dividends, if any, to determine fair value.

Expected volatility is based on historical volatility of the Company’s common stock; the expected term until exercise represents the weighted-average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and the Company’s historical exercise patterns; and the risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. The Company has not paid any dividends since its inception and does not anticipate paying any dividends for the foreseeable future, so the dividend yield is assumed to be zero. In addition, the Company estimates forfeitures at each reporting period, rather than electing to record the impact of such forfeitures as they occur. See Note 17 - Share-Based Compensation for additional information.

Concentrations of Credit Risk

Cash

The Company maintains principally all cash balances in two financial institutions which, at times, may exceed the insured amounts. The exposure to the Company is solely dependent upon daily balances and the strength of the financial institutions. The Company has not incurred any losses on these accounts. At September 30, 2021 and June 30, 2021, amounts in excess of insured limits were approximately $12,408,000 and $27,013,000, respectively.

Revenue

During the three months ended September 30, 2021, the Company generated 100% of its revenue from three customers with two customers accounting for 81% of revenue. During the three months ended September 30, 2020, the Company generated 100% of revenue from two customers with each one accounting for approximately half of the total.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires an entity to assess impairment of its financial instruments based on its estimate of expected credit losses. Since the issuance of ASU 2016-13, the FASB released several amendments to improve and clarify the implementation guidance. In November 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which amended the effective date of the various topics. As the Company is a smaller reporting company, the provisions of ASU 2016-13 and the related amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022 (quarter ending September 30, 2023 for the Company). Entities are required to apply these changes through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company will evaluate the impact of ASU 2016-13 on the Company’s condensed consolidated financial statements in a future period closer to the date of adoption.

Effective July 1, 2019, the Company adopted ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU No 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance also specifies that Topic 718 applies to

13

all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The adoption of ASU 2018-07 did not have a significant impact on the Company’s condensed consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”) to reduce the cost and complexity in accounting for income taxes. ASU 2019-12 removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of U.S. GAAP. The guidance is effective for fiscal years and for interim periods within those fiscal years, beginning after December 15, 2020 (quarter ending September 30, 2021 for the Company), with early adoption permitted. An entity that elects early adoption must adopt all the amendments in the same period. Most amendments within ASU 2019-12 are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The adoption of ASU 2019-12 did not have a significant impact on the Company’s condensed consolidated financial statements.

Management does not believe that any other recently issued, but not yet effective, accounting standard if currently adopted would have a material effect on the accompanying condensed consolidated financial statements. Most of the newer standards issued represent technical corrections to the accounting literature or application to specific industries which have no effect on the Company’s condensed consolidated financial statements.

4.   Financial Instruments and Fair Value Measurement

The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses in the Company’s condensed consolidated balance sheets approximated their fair values as of September 30, 2021 and June 30, 2021 due to their short-term nature. The carrying value of the convertible promissory note receivable and finance lease obligation approximated fair value as of September 30, 2021 and June 30, 2021 as the interest rates related to the financial instruments approximated market.

The Company accounts for its investments in debt securities at fair value. The following provides a description of the three levels of inputs that may be used to measure fair value under the standard, the types of investments that fall under each category, and the valuation methodologies used to measure these investments at fair value.

Level 1 – Inputs are based upon unadjusted quoted prices for identical instruments in active markets.
Level 2 – Inputs to the valuation include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.  All debt securities were valued using Level 2 inputs.
Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

5. Significant Transactions

RubrYc

On August 23, 2021, we entered into a series of agreements with RubrYc Theraputics, Inc. (“RubrYc”) described in more detail below:

Collaboration and License Agreement

The Company entered into a collaboration and licensing agreement (the “RTX-003 License Agreement”) with RubrYc to further develop RubrYc’s immune-oncology antibodies in its RTX-003 campaign.  Under the terms of the agreement, the Company will be solely responsible for worldwide research and development activities for development of the RTX-003 antibodies for use in pharmaceutical products in all fieldsContingent upon receipt by RubrYc of funding of its Series A-2 preferred stock offering (see below), during the term of the RTX-003 License Agreement, RubrYc granted the Company an exclusive worldwide sublicensable royalty-bearing license under the patents controlled by RubrYc that cover the RTX-003 antibodies. The commercial license exclusively permits the Company to research, develop, make, have made, manufacture, use, distribute, sell, offer for sale, import, and export antibodies in RubrYc’s RTX-003. Under the terms and conditions of the RTX-003 License Agreement, the Company agreed to use commercially reasonable efforts to develop and commercialize RTX-003 antibodies. If the Company fails to achieve certain timing milestones for starting GMP manufacturing and dosing human patients under an IND, it could be required to make a payment to RubrYc on the date the milestone is missed and on each anniversary of such date until the milestone is achieved, provided that the milestone was missed due to its failure to exercise commercially reasonable efforts.

14

 

iBio Development Milestones

·

Successful 1st run GMP manufacture first licensed product

·

1st patient dosed under a licensed product

Under the terms of the RTX-003 License Agreement, RubrYc is eligible to receive from the Company up to an aggregate of $15 million in clinical development and regulatory milestone payments for RTX-003 upon achievement of the following four clinical milestones: 

·

5th patient dosed in a Phase I clinical study;

·

5th patient dosed in a Phase II clinical study;

·

4th patient dosed in a Phase III clinical study (payable in cash or our stock, at our discretion) and

·

First commercial sale (payable in cash or our stock, at our discretion).

 

RubrYc will also be entitled to receive royalties in the mid-single digits on net sales of RTX-003 antibodies, subject to adjustment under certain circumstances. Royalties are payable on a country-by-country basis until the latest to occur of: (i) the last-to-expire of specified patent rights in such country; (ii) expiration of marketing or regulatory exclusivity in such country; or (iii) ten (10) years after the first commercial sale of a product in such country, provided that no biosimilar product has been approved in such country.

If either the Company or RubrYc materially breaches the RTX-003 License Agreement and does not cure such breach within 60 days (or 30 days in the event of non-payment), the non-breaching party may terminate the RTX-003 License Agreement in its entirety. Either party may also terminate the RTX-003 License Agreement, effective immediately upon written notice, if the other party files for bankruptcy, is dissolved or has a receiver appointed for substantially all of its property. RubrYc may terminate the RTX-003 License Agreement if the Company or its sublicensees challenges the validity or enforceability of any of RubrYc’s Licensed Patents subject to certain exceptions. The Company may terminate the RTX-003 License Agreement in its entirety for any or no reason upon ninety (90) days’ written notice to RubrYc. In addition, if RubrYc is unable to complete a financing with proceeds of a certain agreed upon amount by a set time defined in the RTX-003 License Agreement, the Company may terminate the RTX-003 License Agreement upon written notice to RubrYc within thirty (30) days of the end of such period. Effective upon such termination, among other things, RubrYc shall assign to us exclusive ownership of the RTX-003, including all relevant intellectual property rights.

Collaboration, Option and License Agreement

The Company entered into an agreement with RubrYc to collaborate for up to five years to discover and develop novel antibody therapeutics using RubrYc’s artificial intelligence discovery platform. Antibody targets for the collaboration may be agreed upon pursuant to written collaboration plans approved by a joint steering committee comprised of two representatives of each party. In addition, RubrYc has granted the Company an exclusive option to obtain a worldwide sublicensable commercial license with respect to each of the lead product candidates resulting from such collaboration programs (the “Selected Compounds”). The Company has agreed to pay RubrYc for each Selected Compound as it achieves various milestones in addition to royalties if the Selected Compounds are commercialized. Under the terms and conditions of the Collaboration Agreement, in the event the option is exercised by the Company, it has various diligence obligations including that it will use commercially reasonable efforts to (i) develop Selected Compounds for use in pharmaceutical products (the “Collaboration Products”); and (ii) commercialize the Collaboration Products. The Company is also required to meet a series of development milestones for each Collaboration Product. Failure to achieve the milestones will result in a payment to RubrYc on the date the milestone is missed and on each anniversary of such date until the milestone is achieved, provided that the milestone was missed due to its failure to exercise commercially reasonable efforts.

 

iBio Development Milestones

·

Successful 1st run GMP manufacture of the first Collaboration Product

·

Initiate IND enabling studies for such Collaboration Product

·

1st patient dosed under such Collaboration Product

Under the terms of the Collaboration Agreement, RubrYc is eligible to receive from us up to an aggregate of $15 million in clinical development and regulatory milestone payments for each Collaboration Product that achieves the following:

5th patient dosed in a Phase I clinical study;

5th patient dosed in a Phase II clinical study;

4th patient dosed in a Phase III clinical study (payable in cash or our stock, at our discretion) and

First commercial sale (payable in cash or our stock, at our discretion).

 

15

RubrYc will also be entitled to receive tiered royalties ranging from low- to mid-single digits on net sales of Collaboration Products, subject to adjustment under certain circumstances. Royalties are payable on a country-by-country and collaboration product-by-collaboration product basis until the latest to occur of: (i) the last-to-expire of specified patent rights in such country; (ii) expiration of marketing or regulatory exclusivity in such country; or (iii) ten (10) years after the first commercial sale of a product in such country, provided that no biosimilar product has been approved in such country.

If either the Company or RubrYc materially breaches the Collaboration Agreement and does not cure such breach within 60 days (or 30 days in the event of non-payment), the non-breaching party may terminate the Agreement in its entirety. Either party may also terminate the Collaboration Agreement, effective immediately upon written notice, if the other party files for bankruptcy, is dissolved or has a receiver appointed for substantially all of its property. RubrYc may terminate the Collaboration Agreement if the Company, its affiliates or its sublicensees challenges the validity or enforceability of any of RubrYc’s patents covering any of the licensed compounds or products. The Company may terminate the Collaboration Agreement in its entirety, or with respect to a program, collaboration or Selected Compound for any or no reason upon ninety (90) days’ written notice to RubrYc.

In addition, if RubrYc is unable to complete a financing with proceeds of a certain agreed upon amount by a set time defined in the Collaboration Agreement, the Company may terminate the Collaboration Agreement upon written notice to RubrYc within thirty (30) days of the end of such period. Effective upon such termination, among other things, RubrYc shall assign to the Company exclusive ownership of the Collaboration Hit Candidates (as defined in the Collaboration Agreement) that are in the then-current (un-terminated) discovery collaboration plans, including all relevant intellectual property rights.

Stock Purchase Agreement

In connection with the entry into the Collaboration Agreement and RTX-003 License Agreement, the Company also entered into a Stock Purchase Agreement (“Stock Purchase Agreement”) with RubrYc whereby we purchased 1,909,563 shares of RubrYc’s Series A-2 preferred stock “Series A-2 Preferred”) for $5,000,000 and agreed to acquire an additional 954,782 shares of RubrYc’s Series A-2 Preferred for $2,500,000 in the event certain conditions set forth in the Stock Purchase Agreement are satisfied as of December 1, 2021. In connection with the Stock Purchase Agreement, the Company entered into the RubrYc Therapeutics, Inc. Second Amended and Restated Investors’ Rights Agreement (the “Investors’ Rights Agreement”), RubrYc Therapeutics, Inc. Second Amended and Restated Voting Agreement (the “Voting Agreement”) and the RubrYc Therapeutics, Inc. Second Amended and Restated Right of First Refusal and Co-Sale Agreement (the “Right of First Refusal and Co-Sale Agreement”).  

The rights, preferences and privileges of the RubrYc Series A-2 Preferred Stock (“Series A-2 Preferred”) are set forth in the Third Amended and Restated Certificate of Incorporation of RubrYc Therapeutics, Inc. (the “Amended RubrYc COI”), and include a preferential eight percent (8%) dividend, senior rights on liquidation, the right to elect a Series A-2 Preferred director for as long as the Company holds at least 1,500,000 shares of RubrYc stock, the right to vote on an as-converted basis, certain anti-dilution and other protective provisions, the right to convert the Series A-2 Preferred into shares of RubrYc common stock at the Company’s option, and mandatory conversion of the Series A-2 Preferred into shares of RubrYc common stock upon (a) the closing of a firm-commitment underwritten public offering to the public pursuant to an effective registration statement under the Securities Act of 1933, as amended, for shares of RubrYc common stock at a per share price of at least five (5) times the Series A-2 Original Issue Price (as defined in the Amended RubrYc COI) and resulting in at least $30,000,000 of gross proceeds to RubrYc or (b) such other date, time or event, specified by vote or written consent of the majority of the aggregate voting power, on an as-converted basis, of the RubrYc Series A preferred stock (“Series A Preferred” and together with the Series A-2 Preferred, the “Senior Preferred Stock”) and Series A-2 Preferred. The Right of First Refusal and Co-Sale Agreement gives RubrYc the right of first refusal on stock sales by key holders, generally defined as founders, and a second right of first refusal and a co-sale right to specified other investors, including certain holders of Senior Preferred Stock and the Company.

 

The Investors’ Rights Agreement provides the holders of Senior Preferred Stock with, among things: (i) demand registration rights, under specified circumstances; (ii) piggyback registration rights in the event of a company registered offering; (iii) lock-up and market-standoff obligations following a registered underwritten public offering; (iv) preemptive rights on company offered securities; and (v) additional protective covenants that require the approval at least two of the three directors elected by the holders of the Senior Preferred Stock.

 

Pursuant to the Voting Agreement, certain RubrYc stockholders are contractually obligated to, among other things, vote for and maintain the authorized number of directors at five members, one of which the Company has the contractual right to elect subject to the conditions set forth above. Mr. Thomas Isett ("Isett"), our Chief Executive Officer and Chairperson, was appointed to the board of directors of RubrYc for which he receives no additional compensation from RubrYc.

16

The Company accounted for the agreements as an asset purchase and allocated the consideration to the various assets acquired.  Total consideration was calculated to be $7,500,000 as the Company determined that it was more likely than not that the defined conditions described above would be met and that the Company would acquire the second tranche of the Series A-2 Preferred.

The Company allocated the purchase price of $7,500,000 as follows:

Preferred stock

$

1,760,000

Intangible assets

4,300,000

Prepaid expenses

1,440,000

$

7,500,000

At September 30, 2021, the Company recorded a liability of $2,500,000 for the acquisition of the second tranche of Series A-2 Preferred.

6.   Convertible Promissory Note Receivable

On October 1, 2020, the Company entered into a master services agreement with Safi Biosolutions, Inc. (“Safi”). In addition, the Company invested $1.5 million in Safi in the form of a convertible promissory note (the "Note"). The Note bears interest at the rate of 5% per annum and is convertible into shares of Safi’s common stock (as defined). Principal and accrued interest mature on October 1, 2023.  For the three months ended September 30, 2021, interest income amounted to $19,000. As of September 30, 2021 and June 30, 2021, the Note balance and accrued interest totaled $1,575,000 and $1,556,000, respectively.

7.   Investments in Debt and Equity Securities

Debt Securities

Investments in debt securities consist of AA and A rated corporate bonds bearing interest at rates from 0.19% to 4.25% with maturities from December 2021 to September 2023. The components of investments in debt securities are as follows (in thousands):

September 30, 

June 30,

2021

2021

Adjusted cost

$

19,463

$

19,603

Gross unrealized losses

(10)

(33)

Fair value

$

19,453

$

19,570

The fair value of available-for-sale debt securities, by contractual maturity, as of September 30, 2021, was as follows (in thousands):

September 30, 

June 30

2021

2021

2022

$

8,867

$

11,430

2023

9,133

8,140

2024

1,453

$

19,453

$

19,570

Amortization of premiums paid on the debt securities amounted to $102,000 and $0 for the three months ended September 30, 2021.

Equity Security – at cost

As discussed above, the Company acquired Series A-2 Preferred shares of RubrYc valued at $1,760,000.  The Company classified the investment as noncurrent as it is management's intent not to sell the investment in the near term.

17

8.   Finance Lease ROU Assets

As discussed above, the Company adopted ASC 842 effective July 1, 2019 using the modified retrospective approach for all leases entered into before the effective date.

From January 13, 2016 until November 1, 2021, iBio CDMO leased its facility (the “Facility”) in Bryan, Texas as well as certain equipment from an affiliate (the "Second Eastern Affiliate") of Eastern Capital Limited ("Eastern"), a former significant stockholder of the Company, under a sublease (the "Sublease"). The Sublease was terminated on November 1, 2021 when iBio CDMO acquired the Facility and became the tenant under the ground lease for the property upon which the Facility is located.  See Note 13 – Finance Lease Obligation for more details of the terms of the Sublease and Note 25 - Subsequent Events.

The economic substance of the Sublease was that the Company was financing the acquisition of the Facility and equipment. As the Sublease involved real estate and equipment, the Company separated the equipment component and accounted for the Facility and equipment as if each were leased separately.

The following table summarizes by category the gross carrying value and accumulated amortization of finance lease ROU (in thousands):

    

September 30, 

    

June 30, 

2021

2021

ROU - Facility

$

25,907

$

25,907

ROU - Equipment

 

7,728

 

7,728

 

33,635

 

33,635

Accumulated amortization

 

(7,940)

 

(7,524)

Net finance lease ROU

$

25,695

$

26,111

Amortization of finance lease ROU assets was approximately $416,000 and $415,000 for three months ended September 30, 2021 and 2020, respectively.

9.   Operating Lease ROU Assets

On September 10, 2021, the Company entered into a lease for approximately 11,383 square feet of space in San Diego, California.  Based on the terms of the lease payments, the Company recorded an operating lease right-of-use asset of $3,487,000.  See Note 14 - Operating Lease Obligation for additional information.

10.   Fixed Assets

The following table summarizes by category the gross carrying value and accumulated depreciation of fixed assets (in thousands):

    

September 30, 

    

June 30, 

2021

2021

Facility improvements

$

1,517

$

1,517

Machinery and equipment

 

4,255

 

4,255

Office equipment and software

 

2,429

 

714

Construction in progress

3,151

3,367

 

11,352

 

9,853

Accumulated depreciation

 

(1,531)

 

(1,225)

Net fixed assets

$

9,821

$

8,628

Depreciation expense was approximately $306,000 and $97,000 for the three months ended September 30, 2021 and 2020, respectively.

18

11.   Intangible Assets

The Company has two categories of intangible assets – intellectual property and patents. Intellectual property consists of all technology, know-how, data, and protocols for producing targeted proteins in plants and related to any products and product formulations for pharmaceutical uses and for other applications. Intellectual property includes, but is not limited to, certain technology for the development and manufacture of novel vaccines and therapeutics for humans and certain veterinary applications acquired in December 2003 from Fraunhofer USA Inc., acting through its Center for Molecular Biotechnology (“Fraunhofer”), pursuant to a Technology Transfer Agreement, as amended (the “TTA”). The Company designates such technology further developed and acquired from Fraunhofer as iBioLaunch(TM) or LicKM(TM) or FastPharming(R) technology. The value on the Company’s books attributed to patents owned or controlled by the Company is based only on payments for services and fees related to the protection of the Company’s patent portfolio. The intellectual property also includes certain trademarks.

On August 23, 2021, the Company entered into a series of agreements with RubrYc described in more detail above (see Note 5 – Significant Transactions) whereby in exchange for a $7.5 million investment in RubrYc, the Company acquire a worldwide exclusive license to certain antibodies that RubrYc develops under what it calls its RTX-003 campaign, which are promising immuno-oncology antibodies that bind to the CD25 protein without interfering with the IL-2 signaling pathway thereby potentially depleting T regulatory (T reg) cells while enhancing T effector (T eff) cells and encouraging the immune system to attack cancer cells.  In addition, the Company also received preferred shares and an option for future collaboration licenses.

In January 2014, the Company entered into a license agreement with the University of Pittsburgh whereby iBio acquired exclusive worldwide rights to certain issued and pending patents covering specific candidate products for the treatment of fibrosis (the "Licensed Technology") which license agreement was amended in August 2016 and again in December 2020. The license agreement provides for payment by the Company of a license issue fee, annual license maintenance fees, reimbursement of prior patent costs incurred by the university, payment of a milestone payment upon regulatory approval for sale of a first product, and annual royalties on product sales. In addition, the Company has agreed to meet certain diligence milestones related to product development benchmarks. As part of its commitment to the diligence milestones, the Company successfully commenced production of a plant-made peptide comprising the Licensed Technology before March 31, 2014. The next milestone – filing an Investigational New Drug Application with the FDA or foreign equivalent covering the Licensed Technology ("IND") – initially was required to be met by December 1, 2015, and on November 2, 2020, was extended to be required to be met by December 31, 2021. iBio is in the process of discussing an additional extension for the IND milestone.

The Company accounts for intangible assets at their historical cost and records amortization utilizing the straight-line method based upon their estimated useful lives. Patents are amortized over a period of 10 years and other intellectual property is amortized over a period from 16 to 23 years. The Company reviews the carrying value of its intangible assets for impairment whenever events or changes in business circumstances indicate the carrying amount of such assets may not be fully recoverable. Evaluating for impairment requires judgment, and recoverability is assessed by comparing the projected undiscounted net cash flows of the assets over the remaining useful life to the carrying amount. Impairments, if any, are based on the excess of the carrying amount over the fair value of the assets. There were the three months ended September 30, 2021 and 2020.

The following table summarizes by category the gross carrying value and accumulated amortization of intangible assets (in thousands):

    

September 30, 

    

June 30, 

2021

2021

Intellectual property – gross carrying value

$

3,100

$

3,100

Patents and licenses – gross carrying value

 

7,021

 

2,720

 

10,121

 

5,820

Intellectual property – accumulated amortization

 

(2,750)

 

(2,711)

Patents and licenses – accumulated amortization

 

(2,207)

 

(2,157)

 

(4,957)

 

(4,868)

Net intangible assets

$

5,164

$

952

Amortization expense of intangible assets was approximately $88,000 and $72,000 for the three months ended September 30, 2021 and 2020, respectively.

19

12.   Notes Payable – PPP Loan

On April 16, 2020, the Company received $600,000 related to its filing under the Paycheck Protection Program and Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). The Company elected to treat the SBA Loans as debt under ASC 470, “Debt”.

On July 21, 2021, iBio was granted forgiveness in repaying the loan.  In accordance with ASC 405-20-40, “Liabilities - Extinguishments of Liabilities – Derecognition”, the Company derecognized the liability and accrued interest in the first quarter of Fiscal 2022.  At June 30, 2021, the Company owed $600,000.

13.   Finance Lease Obligation

Sublease

As discussed above, until November 1, 2021, iBio CDMO leased facility in Bryan, Texas as well as certain equipment from the Second Eastern Affiliate under the 34-year Sublease. iBio CDMO began operations at the facility on December 22, 2015 pursuant to agreements between iBio CDMO and the Second Eastern Affiliate granting iBio CDMO temporary rights to access the facility. These temporary agreements were superseded by the Sublease Agreement, dated January 13, 2016, between iBio CDMO and the Second Eastern Affiliate.

The Sublease was terminated on November 1, 2021 when iBio CDMO acquired the Facility and became the tenant under the ground lease for the property upon which the Facility is located. iBio will account for the transactions from November 1, 2021 in its second quarter financial statements.

Prior terms of the Sublease which determined the accounting through the first quarter of 2021 include:

The 34-year term of the Sublease was to expire in 2050 but could have been extended by iBio CDMO for a ten-year period, so long as iBio CDMO was not in default under the Sublease. Under the Sublease, iBio CDMO was required to pay base rent at an annual rate of $2,100,000, paid in equal quarterly installments on the first day of each February, May, August and November. The base rent was subject to increase annually in accordance with increases in the Consumer Price Index (“CPI”). The base rent under the Second Eastern Affiliate’s ground lease for the property was subject to adjustment, based on an appraisal of the property, in 2030 and upon any extension of the ground lease. The base rent under the Sublease would have increased by any increase in the base rent under the ground lease as a result of such adjustments. iBio CDMO was responsible for all costs and expenses in connection with the ownership, management, operation, replacement, maintenance and repair of the property under the Sublease. The Company incurred rent expense of $49,000 and $42,000 for the three months ended September 30, 2021 and 2020, respectively.
In addition to the base rent, iBio CDMO was required to pay, for each calendar year during the term, a portion of the total gross sales for products manufactured or processed at the facility, equal to 7% of the first $5,000,000 of gross sales, 6% of gross sales between $5,000,001 and $25,000,000, 5% of gross sales between $25,000,001 and $50,000,000, 4% of gross sales between $50,000,001 and $100,000,000, and 3% of gross sales between $100,000,001 and $500,000,000. However, if for any calendar year period from January 1, 2018 through December 31, 2019, iBio CDMO’s applicable gross sales were less than $5,000,000, or for any calendar year period from and after January 1, 2020, its applicable gross sales were less than $10,000,000, then iBio CDMO was required to pay the amount that would have been payable if it had achieved such minimum gross sales and would pay no less than the applicable percentage for the minimum gross sales for each subsequent calendar year. As the Company accounts for leases under ASC 842, the minimum percentage rent is included in the finance lease obligation.

Accrued expenses at September 30, 2021 and June 30, 2021 due to the Second Eastern Affiliate amounted to $840,000 and $847,000, respectively. General and administrative expenses related to Second Eastern Affiliate, including rent related to the increases in CPI and real estate taxes, were approximately $189,000 and $185,000 for the three months ended September 30, 2021 and 2020, respectively. Interest expense related to the Second Eastern Affiliate was approximately $608,000 and $614,000 for the three months ended September 30, 2021 and 2020, respectively.

Mobile Office Trailer

Commencing April 1, 2021, the Company is leasing a mobile office trailer at a monthly rental of $3,819 through March 1, 2024.  

20

The following tables present the components of lease expense and supplemental balance sheet information related to the finance lease obligation (in thousands).

    

Three Months Ended

Three Months Ended

September 30, 

September 30, 

2021

2020

Finance lease cost:

 

  

  

Amortization of right-of-use assets

$

416

$

415

Interest on lease liabilities

 

609

 

614

CPI lease cost

 

49

 

42

Total lease cost

$

1,074

$

1,071

 

  

 

  

Other information:

 

  

 

  

Cash paid for amounts included in the measurement lease liabilities:

 

  

 

  

Operating cash flows from finance lease - CPI rent

$

49

$

42

Financing cash flows from finance lease obligations

$

88

$

73

September 30, 

June 30,

2021

2021

Finance lease right-of-use assets

$

25,695

$

26,111

Finance lease obligation - current portion

$

374

$

367

Finance lease obligation - non-current portion

$

31,660

$

31,755

Weighted average remaining lease term - finance lease

 

28.33

years

 

28.58

years

Weighted average discount rate - finance lease obligation

 

7.606

%

 

7.606

%

Future minimum payments under the finance lease obligation are due as follows (in thousands):

Fiscal period ending on September 30:

    

Principal

    

Interest

    

Total

2022

$

374

$

2,426

$

2,800

2023

395

2,397

2,792

2024

 

407

 

2,366

 

2,773

2025

 

414

 

2,336

 

2,750

2026

 

447

 

2,303

 

2,750

Thereafter

 

29,997

 

34,628

 

64,625

 

  

 

  

 

  

Total minimum lease payments

 

32,034

$

46,456

$

78,490

Less: current portion

 

(374)

 

  

 

  

Long-term portion of minimum lease obligations

$

31,660

 

  

 

  

14.   Operating Lease Obligation

On September 10, 2021, the Company entered into a lease for approximately 11,383 square feet of space in San Diego, California.  Terms of the lease include the following:

The length of term of the lease is 88 months from the lease commencement date (as defined).
The lease commencement date is estimated to be on or around January 1, 2022.
The monthly rent for the first year of the lease is $51,223 and increases approximately 3% per year.
The lease provides for a base rent abatement for months two through five in the first year of the lease.
The landlord is providing a tenant improvement allowance of $81,860 to be used for improvements as specified in the lease.
The Company is responsible for other expenses such as electric, janitorial, etc.
The Company opened an irrevocable letter of credit in the amount of $188,844 in favor of the landlord. The letter of credit expires on October 8, 2022.

As discussed above, the lease provides for scheduled increases in base rent and scheduled rent abatements.  Rent expense is charged to operations using the straight-line method over the term of the lease which results in rent expense being charged to operations at inception of the lease in excess of required lease payments. This excess (formerly classified as deferred rent) is shown as a reduction of the

21

operating lease right-of-use asset in the accompanying balance sheet.  As the Company has already started making improvements to the facility, the rent expense will be spread commencing from September 10, 2021.

The following tables present the components of lease expense and supplemental balance sheet information related to the operating lease obligation (in thousands).

Three Months Ended