The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited consolidated
financial statements and related notes included in this Quarterly Report on Form
10-Q, and our audited financial statements and notes thereto as of and for the
year ended
Our predecessor,
Immediately prior to the Merger, AmpliPhi completed a 1-for-14 reverse stock
split and changed its name to
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Statements contained in this Quarterly Report on Form 10-Q that are not
statements of historical fact are forward-looking statements within the meaning
of the
Overview
We are a clinical-stage biotechnology company focused on the development of pathogen-specific bacteriophage therapeutics for the treatment of antibiotic-resistant and difficult-to-treat bacterial infections using our proprietary bacteriophage-based technology. Bacteriophages or "phages" have a powerful and highly differentiated mechanism of action that enables binding to and killing specific bacteria, in contrast to traditional broad-spectrum antibiotics. We believe that phages represent a promising means to treat bacterial infections, especially those that have developed resistance to current standard of care therapies, including the so-called multidrug-resistant or "superbug" strains of bacteria. We are a leading developer of phage therapeutics which are uniquely positioned to address the growing worldwide threat of antibiotic-resistant bacterial infections.
We are combining our proprietary approach and expertise in identifying, characterizing and developing both naturally-occurring and engineered (synthetic) bacteriophages with our proprietary phage-specific current good manufacturing practice regulation ("cGMP") manufacturing capabilities to advance a broad pipeline of high-quality bacteriophage product candidates. We believe that synthetic phage, engineered using advances in sequencing and synthetic biology techniques, represent a promising means to advance phage therapy, including improving upon the ability of natural phage to treat bacterial infections, especially those that have developed resistance to current antibiotic therapies, including the multidrug-resistant or "superbug" bacterial pathogens.
We are developing and advancing our lead clinical phage candidate
for Pseudomonas aeruginosa. On
We are also developing a phage product candidate for Staphylococcus aureus for
the treatment of S. aureus bacteremia. On
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proceed from the FDA for its Investigational New Drug application for AP-SA02. We plan to continue to advance the "diSArm" study provided that the impacts of COVID-19 do not impede our ability to enroll subjects in this clinical trial.
In addition to our more advanced pipeline programs, we have phage development
efforts underway to target other indications including non-cystic fibrosis
bronchiectasis ("NCFB"), prosthetic joint infections ("PJI") and hospitalized
pneumonia. On
Our proprietary phage engineering platform serves to enhance the clinical and commercial prospects of phage therapy.
We are committed to conducting randomized controlled clinical trials required for FDA approval in order to move toward the commercialization of alternatives to traditional antibiotics and provide a potential method of treating patients suffering from drug-resistant and difficult-to-treat bacterial infections.
The following chart summarizes the status of our phage product candidate development programs and partners.
[[Image Removed: Chart, bar chart Description automatically generated]]
We have generally incurred net losses since our inception and our operations to
date have been primarily limited to research and development and raising
capital. As of
We currently expect to use our existing cash and cash equivalents for the continued research and development of our product candidates, including through our targeted phage therapies strategy, and for working capital and other general corporate purposes. We expect to continue to incur significant and increasing operating losses at least for the next several years. We do not expect to generate product revenue unless and until we successfully complete development and obtain marketing approval for at least one of our product candidates.
We may also use a portion of our existing cash and cash equivalents for the
potential acquisition of, or investment in, product candidates, technologies,
formulations or companies that complement our business, although we have no
current understandings, commitments or agreements to do so. Our existing cash
and cash equivalents will not be sufficient to enable us to complete all
necessary development of any potential product candidates. Accordingly, we will
be required to obtain further funding through one or more other public or
private equity offerings, debt financings, collaboration, strategic financing,
grants or government contract awards, licensing arrangements or other sources.
Our ability to raise additional capital may be adversely impacted by potential
worsening global economic conditions and the recent disruptions to, and
volatility in, financial markets in
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technologies or potential markets, file for bankruptcy or cease operations altogether. Any of these events could have a material adverse effect on our business, financial condition and results of operations and result in a loss of investment by our stockholders.
Business Update Regarding COVID-19
In
The COVID-19 pandemic has directly and indirectly impacted our business, results of operations and financial condition and is expected to continue to impact our business. For example, the COVID-19 pandemic has resulted in delays in our clinical trials due to the implementation of COVID-19 protocols at investigator sites, which resulted in longer than anticipated site identification and initiation activities. In addition, while we currently do not anticipate any interruptions in our supply chain, it is possible that the COVID-19 pandemic and the continuing response efforts may have a future impact on our third-party suppliers and partners. It is possible that due to the continued development and manufacturing of vaccines for COVID-19, certain basic supply chain materials such as resins, vessels, vials and stoppers may be in high demand by the pharmaceutical companies developing and manufacturing vaccines and our ability to obtain these materials for our development activities could be negatively impacted. Although we have experienced some delays of this nature during 2021, such delays have not had a material adverse impact on our business, results of operations or financial condition.
The full extent of the COVID-19 pandemic impact continues to depend on future developments that remain highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact, the identification and spread of COVID-19 variants such as the Delta and the Omicron variants, the distribution of vaccines, the acceptance of vaccines and the implementation of vaccine mandates, and the economic impact on local, regional, national and international markets. Management continues to actively monitor the developments regarding the pandemic and the impact that the pandemic could have on our financial condition, liquidity, ability to enroll patients in our contemplated clinical trials, manufacturing and research and development operations, suppliers to our operations and suppliers to our outside clinical trial organizations, biotech industry overall, and importantly the health and safety of our workforce. Given the continued volatility of the COVID-19 pandemic and the global responses to curb its spread, we are not able to estimate the effects of the COVID-19 pandemic on our results of operations, financial condition, or liquidity for 2022. Any recovery from negative impacts to our business and related economic impact due to the COVID-19 pandemic may also be slowed or reversed by a number of factors, including the recent widespread resurgence in COVID-19 infections attributable to the Omicron variant, combined with the seasonal flu.
Recent Events
NCFB Investigational New Drug ("IND") Approval
On
On
Pursuant and subject to the terms and conditions of the securities purchase
agreement and related agreements, Innoviva agreed to purchase 9,000,000 newly
issued shares of our common stock, at a price of
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common stock and warrants to purchase 1,807,396 shares of common stock for an
aggregate purchase price of approximately
Executive Transition
On
On
Results of Operations
Comparison of three months ended
Grant Revenue
The Company recognized
Research and Development
Research and development expenses for the three months ended
General and Administrative
General and administrative expenses were
Other Income (Expense)
For the three months ended
Income Taxes
There was no income tax expense or benefit for the three months ended
Operating Activities
Net cash used in operating activities for the three months ended
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million increase in net loss, offset by increases of
Investing Activities
Net cash used in investing activities was
Financing Activities
Net cash provided by financing activities was
Net cash provided by financing activities was
Liquidity, Capital Resources and Financial Condition
We have prepared our consolidated financial statements on a going concern basis, which assumes that we will realize our assets and satisfy our liabilities in the normal course of business. However, we have incurred net losses since our inception and have negative operating cash flows. These circumstances raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty concerning our ability to continue as a going concern. While management believes this plan to raise additional funds will alleviate the conditions that raise substantial doubt, these plans are not entirely within its control and cannot be assessed as being probable of occurring. The Company may not be able to secure additional financing in a timely manner or on favorable terms, if at all.
As of
Future Capital Requirements
We will need to raise additional capital in the future to continue to fund our operations. Our future funding requirements will depend on many factors, including:
the effects of the continuing COVID-19 pandemic on our clinical programs and
business, including delays or difficulties in enrolling patients in our
? clinical trials, shortage in supply chain materials, labor shortages impacting
our ability to hire and retain qualified personnel, and changes in local, state
or federal regulations as part of a response to the COVID-19 pandemic;
? the costs and timing of our research and development activities;
? the progress and cost of our clinical trials and other research and development
activities;
? manufacturing costs associated with our targeted phage therapies strategy and
other research and development activities;
? the terms and timing of any collaborative, licensing, acquisition or other
arrangements that we may establish;
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? manufacturing costs associated with our targeted phage therapies strategy and
other research and development activities;
? the terms and timing of any collaborative, licensing, acquisition or other
arrangements that we may establish;
? whether and when we receive future Australian tax rebates, if any;
? the costs and timing of seeking regulatory approvals;
? the costs of filing, prosecuting and enforcing any patent applications, claims,
patents and other intellectual property rights; and
? the costs of lawsuits involving us or our product candidates.
We may seek to raise capital through a variety of sources, including:
? the public equity market;
? private equity financings;
? collaborative arrangements, government grants or strategic financings;
? licensing arrangements; and
? public or private debt.
Any additional fundraising efforts may divert our management team from their
day-to-day activities, which may adversely affect our ability to develop and
commercialize our product candidates. Our ability to raise additional funds will
depend, in part, on the success of our product development activities, including
our targeted phage therapies strategy and any clinical trials we initiate,
regulatory events, our ability to identify and enter into in-licensing or other
strategic arrangements, and other events or conditions that may affect our value
or prospects, as well as factors related to financial, economic and market
conditions, many of which are beyond our control. We cannot be certain that
sufficient funds will be available to us when required or on acceptable terms,
if at all. If we are unable to secure additional funds on a timely basis or on
acceptable terms, we may be required to defer, reduce or eliminate significant
planned expenditures, restructure, curtail or eliminate some or all of our
development programs or other operations, dispose of technology or assets,
pursue an acquisition of our company by a third party at a price that may result
in a loss on investment for our stockholders, enter into arrangements that may
require us to relinquish rights to certain of our product candidates,
technologies or potential markets, file for bankruptcy or cease operations
altogether. Any of these events could have a material adverse effect on our
business, financial condition and results of operations. Moreover, if we are
unable to obtain additional funds on a timely basis, there will be substantial
doubt about our ability to continue as a going concern and increased risk of
insolvency and loss of investment by our stockholders. To the extent that
additional capital is raised through the sale of equity or convertible debt
securities, the issuance of such securities could result in dilution to our
existing stockholders. Our ability to raise additional capital may be adversely
impacted by potential worsening of global economic conditions and volatility of
financial markets in
Off-Balance Sheet Arrangements
As of
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Critical Accounting Policies and Estimates
Management's discussion and analysis of financial condition and results of
operations are based upon our condensed consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in
Refer to Note 3 to the consolidated financial statements contained elsewhere in
this report. During the three months ended
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