CNS PHARMACEUTICALS, INC. You should read the following discussion and analysis of our financial condition
and results of operations in conjunction with the financial statements and the
related notes appearing elsewhere in this Form 10-Q. This discussion contains
forward-looking statements reflecting our current expectations that involve
risks and uncertainties. See Item 1A. "Risk Factors" of our Form 10-K for the
year ended
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We make forward-looking statements under the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and in other sections
of this Form 10-Q. In some cases, you can identify these statements by
forward-looking words such as "may," "might," "should," "would," "could,"
"expect," "plan," "anticipate," "intend," "believe," "estimate," "predict,"
"potential" or "continue," and the negative of these terms and other comparable
terminology. These forward-looking statements, which are subject to known and
unknown risks, uncertainties and assumptions about us, may include projections
of our future financial performance based on our growth strategies and
anticipated trends in our business. These statements are only predictions based
on our current expectations and projections about future events. There are
important factors that could cause our actual results, level of activity,
performance or achievements to differ materially from the results, level of
activity, performance or achievements expressed or implied by the
forward-looking statements. In particular, you should consider the numerous
risks and uncertainties described under Item 1A. "Risk Factors" of our Form 10-K
for the year ended
While we believe we have identified material risks, these risks and uncertainties are not exhaustive. Other sections of this Form 10-Q may describe additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this Form 10-Q to conform our prior statements to actual results or revised expectations, and we do not intend to do so.
Forward-looking statements include, but are not limited to, statements about:
· the economic and market uncertainty caused by the COVID-19 outbreak;
· our ability to obtain additional funding to develop our product candidates;
· the need to obtain regulatory approval of our product candidates;
· the success of our clinical trials through all phases of clinical development;
· compliance with obligations under intellectual property licenses with
third parties;
· any delays in regulatory review and approval of product candidates in
clinical development;
· our ability to commercialize our product candidates;
· market acceptance of our product candidates;
· competition from existing products or new products that may emerge;
· potential product liability claims;
· our dependency on third-party manufacturers to supply or manufacture our
products;
· our ability to establish or maintain collaborations, licensing or other
arrangements;
· our ability and third parties' abilities to protect intellectual
property rights;
· our ability to adequately support future growth; and
· our ability to attract and retain key personnel to manage our business
effectively.
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We caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this Form 10-Q in the case of forward-looking statements contained in this Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements. Although we believe that the expectations reflected in the forward looking-statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, you should not rely on any of the forward-looking statements. In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Overview
We are a clinical pharmaceutical company organized as a
We believe our lead drug candidate, Berubicin, if approved by the FDA, may be a significant discovery in the treatment of glioblastoma. Glioblastoma are tumors that arise from astrocytes, which are star-shaped cells making up the supportive tissue of the brain. These tumors are usually highly malignant (cancerous) because the cells reproduce quickly, and they are supported by a large network of blood vessels. Berubicin is an anthracycline, which is a class of drugs that are among the most powerful chemotherapy drugs known. Based on limited clinical data, we believe Berubicin is the first anthracycline that appears to have crossed the blood brain barrier and target brain cancer cells. While our current focus is solely on the development of Berubicin, we are also in the process of attempting to secure intellectual property rights in additional compounds that may be developed into drugs to treat cancers.
Berubicin was discovered at MD Anderson by Dr.
The planned Phase 2 trial will evaluate the efficacy of Berubicin in patients with Glioblastoma Multiforme who have failed primary treatment for their disease, and results will be compared to the current standard of care, with 2 to 1 randomization of the 243 patients to Berubicin or Lomustine. Subjects receiving Berubicin will be administered a 2-hour IV infusion of 7.5 mg/m2 berubicin hydrochloride daily for three consecutive days followed by 18 days off (21-day cycle). Lomustine is administered orally. The trial will include an interim analysis that will evaluate the comparative effectiveness of these treatments. The trial's adaptive design is intended to allow this interim analysis of the data to demonstrate meaningful differences in efficacy between treatments and then to allow an adjustment to the size of the patient population in the trial for maximum efficiency in terms of time in development. Even if Berubicin is approved, there is no assurance that patients will choose an infusion treatment, as compared to the current standard of care, which requires oral administration.
We do not have manufacturing facilities and all manufacturing activities are contracted out to third parties. Additionally, we do not have a sales organization.
On
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On
On
With the Reata Agreement and the HPI License, we believe we have obtained all rights and intellectual property necessary to develop Berubicin. As stated earlier, it is our plan to obtain additional intellectual property covering other compounds which, subject to the receipt of additional financing, may be developed into drugs for brain and other cancers.
On
On
Results of Operations for the Three Months Ended
General and Administrative Expense
General and administrative expense was approximately
Research and Development Expense
Research and development expense was approximately
15 Net Loss
The net loss for the three months ended
Liquidity and Capital Resources
On
Our plan of operations is primarily focused on completing a Phase II clinical
trial for Berubicin. We estimate that we will require additional financing of
approximately
We will need to raise additional capital in order to meet our obligations and execute our business plan. If we are unable to raise sufficient funds, we will be required to develop and implement an alternative plan to further extend payables, reduce overhead or scale back our business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.
Summary of Cash Flows
Cash used in operating activities
Net cash used in operating activities was approximately
Cash used in investing activities
Net cash used by investing activities was approximately
Cash provided by financing activities
Net cash provided by financing activities was
Off-balance Sheet Arrangements
As of
16 Purchase Commitments
We do not have any material commitments for capital expenditures, although we are required to pay certain development fees to HPI and WPD as described in the section "Overview" above.
JOBS Act Accounting Election
The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, exempts an "emerging growth company" such as us from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in
Management believes its application of accounting policies, and the estimates inherently required therein, are reasonable. These accounting policies and estimates are periodically reevaluated, and adjustments are made when facts and circumstances dictate a change.
Stock-based Compensation - Employee and non-employee share-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period.
Research and Development Costs - Research and development costs are expensed as incurred.
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