Forward-Looking Statement Notice
Certain statements made in this Quarterly Report on Form 10-Q are
"forward-looking statements" (within the meaning of the Private Securities
Litigation Reform Act of 1995) regarding the plans and objectives of management
for future operations. Such statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, performance or
achievements of Enochian Biosciences, Inc. ("Enochian", and together with its
subsidiaries, the "Company", "we" or "us") to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. The forward-looking statements included herein are
based on current expectations that involve numerous risks and uncertainties. Our
actual future results and trends may differ materially depending on a variety of
factors, including, but not limited to, the risks and uncertainties discussed in
Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K as filed with
the SEC on September 24, 2021. The Company's plans and objectives are based, in
part, on assumptions involving the continued expansion of the business.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although the
Company believes its assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could prove inaccurate and, therefore, there
can be no assurance the forward-looking statements included in this Quarterly
Report will prove to be accurate. In light of the significant uncertainties
inherent in the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by the Company or
any other person that the objectives and plans of the Company will be achieved.
We are a pre-clinical stage biotechnology company committed to using our
genetically modified cell, gene, and immune therapy technologies to potentially
prevent or cure HIV, HBV, influenza and coronavirus infections, as well as to
provide potentially long-term or life-long cancer remission in some of the
Over the past several years, Enochian BioSciences Inc. has expanded the pipeline
from a single potential cure for HIV (autologous transplantation with
gene-modified cells; ENOB-HV-01) to three additional potential cures for HIV, a
potential cure for Hepatitis B Virus (HBV), potential inhaled treatment and
prophylaxis/prevention of all variants of SARS-CoV-1 and -2 (the cause of the
COVID-19 pandemic), and potential cures for many solid tumors, beginning with
Our integrated platforms encompass innovative interventions in gene and immune
therapies that provide hope for cures or life-long remissions for devastating
diseases. Our platforms can potentially streamline and accelerate pre-clinical,
regulatory, clinical, and production pathways. Because of the relative ease of
administration, our potentially groundbreaking interventions could be used
throughout the world.
Our novel approach tricks the virus into sending suicide signals to the infected
cell instead of turning the cell into a virus factory. The technology is
delivered by vectors that would allow it to rapidly treat an infection, or to
lay and wait in ambush until a cell becomes infected, which would prevent
(prophylaxis, similar to taking drugs to protect from becoming infected with
malaria or HIV) future infections.
The delivery mechanism can be adapted for aerosol (e.g., respiratory infections
like the virus that causes COVID-19 and influenza), intravenous or other
delivery mechanisms (e.g. for Hepatitis B Virus and HIV).
Allogeneic Cell Therapy
The human immune system is designed to recognize "self" and destroy "otherness"
or "non-self", such as bacteria, viruses and cancer cells.
Alloreactivity (reacting against another person's cells) is the most powerful
response the immune system generates. Several of our technologies take advantage
of the alloreactivity to hyperstimulate a person's immune response to better
attack a chronic infection (e.g. HIV) or solid tumors. In certain treatments
(e.g. HIV and cancer), cells taken from healthy donors are sometimes genetically
modified to further boost the immune system to seek and kill diseases.
In addition to those platforms, Enochian BioSciences has an innovative approach
to remove cells from a person living with HIV and genetically modify them so
they cannot be infected with HIV. The unique innovation is an additional genetic
alteration to increase the ability of those cells to survive and expand when
they are given back to the same person (autologous transplantation).
To date, our operations have been funded by sales of our securities and the
issuance of debt. We have never generated any sales revenue, and we expect this
to continue until our therapies or products are approved for marketing in the
United States and/or Europe. Even if we are successful in having our therapies
or products approved for sale in the United States and/or Europe, we cannot
guarantee that a market for the therapies or products will develop. We may
In June 2021, Enochian BioSciences acquired the exclusive license to a potential
pan-SARS-Cornavirus-1 and-2 (SARS-CoV) and pan-Influenza inhaled treatment
SARS-CoV-2 has caused the most devastating global pandemic in a century -
COVID-19. Using the Hijack RNA platform technology, in vitro and in vivo results
showing rapid killing of infected cells but not uninfected cells were presented
at the important Conference on Retroviruses and Opportunistic Infections in
March 2021. Since that time, there has been substantial progress with a Pre-IND
(as defined below) submission expected in the near term.
Influenza has caused dozens of major global pandemics; the most notable in 1918
that killed 50 to 100 million people. There was an H1N1 threat as recently as
2009. The Hijack RNA also has shown promising in vitro results that were
presented at the Annual Conference of the American Society of Gene and Cell
Therapy (ASGCT) in May 2020.
Two leading scientists and public health experts were announced as members of
our newly formed Scientific Advisory Board focused on respiratory diseases
August 30, 2021.
Human Immunodeficiency Virus (HIV), and Acquired Immunodeficiency Syndrome
HIV attacks the human immune system, specifically killing off CD4+ cells, or T
cells, which play a central, controlling role in the immune system. Left
untreated, HIV dramatically reduces the number of T cells in the body,
devastates the immune system, leading to AIDS, a condition where the immune
system cannot fight off life-threatening infections and cancers.
Currently there are over 30 antiretroviral drugs, or ART, approved by the U.S.
Food and Drug Administration ("FDA") to treat HIV but these drugs are expensive,
require daily adherence, and can have significant side effects over time. In
addition, on a global basis, as many as 1 million people, including persons in
high-income countries, continue to die each year from HIV/AIDS due to
drug-resistant HIV or lack of access to treatment. To date, there are no
treatments that can eliminate the reservoir of immune cells that are infected
with HIV from the body. Consequently, treatment for HIV is life-long.
There have been several efforts to cure HIV by re-engineering a person's own
T-cells so that these cells no longer express a special protein (C-C chemokine
co-receptor type 5 or CCR5), which HIV uses to gain entry to them. A naturally
occurring mutation that blocks expression of CCR5 on T cells occurs in ~1% of
persons living in or from Northern Europe with no known adverse effects. The
"Berlin patient", and more recently the "London patient" were HIV-positive
persons who developed cancer and were treated with a bone marrow transplant with
cells donated from persons with this naturally occurring mutation of CCR5. The
Berlin and London patients seem to have been effectively cured from HIV
providing proof-of-concept that HIV can be cured. However, because the
transplanted cells come from another person, such transplants carry high risk
and can result in death in a significant proportion of patients. Given the
success with these two patients, several researchers and companies have
attempted to replicate this experience by genetically modifying T cells of
HIV-positive patients to render them unable to be infected by HIV and then
returning them to the patient. Because the transplanted cells are from the same
person, the risks to the patient are much lower. The uptake, or engraftment of
the modified T cells, however, has not been optimal, leading to failure to
achieve a cure. In addition, the transplant pre-treatment that has been used is
bone marrow-destroying chemotherapy, which wipes out the patient's immune system
and can have long-term side effects including the risk of developing cancer.
ENOB-HV-01 is a novel, proprietary approach with the potential to overcome the
failures of recent efforts to develop a cure for HIV. The intervention provides
gene-modified T cells with a competitive advantage over non-modified cells in
the HIV-positive person, with the potential to significantly increase
engraftment; and avoid the need for chemotherapy that substantially depletes the
bone marrow and could potentially be given as an outpatient treatment. The
Company met with the FDA INTERACT team on June 2, 2020. INTERACT is the first
available FDA interaction and is a key step in the process towards a potential
Investigational New Drug Application (IND) to study First-in-Human products
potentially leading to marketing authorization via Biologics License Application
(BLA). The FDA Center for Biologics Evaluation and Research (CBER) has numerous
INTERACT requests and grants meetings that are deemed appropriate for this early
FDA engagement. The Enochian management team considered the meeting to be
successful with strong alignment between Enochian's approach to developing
ENOB-HV-01 and the comments of the FDA reviewers.
Initial scientific findings from a mouse study on the ENOB-HV-01 approach were
presented at the annual ASCGT conference in May 2020. Additional in vitro and in
vivo studies are ongoing and/or planned. We hope to make a Pre-IND submission to
the US FDA in the latter part of 2022.
We are also developing ENOB-HV-11 and ENOB-HV-12 that will utilize a novel
cellular- and immunotherapy approach that could potentially provide both
preventative and therapeutic vaccines for HIV. A non-human primate study is in
process and on schedule. Preliminary results could potentially be available
the latter part of 2022.
Our co-founder and inventor, Dr. Serhat Gumrukcu, who is also the Director of
Seraph Research Institute (SRI), submitted Pre-IND for ENOB-HV-21 an innovative
treatment of Natural Killer (NK) and Gamma Delta T-Cells (GDT) collected from
another person. It is believed that the GDT cells, a small subset of immune
cells that can be infected with HIV, could be a key factor in controlling the
virus. The initial scientific findings were presented during the ASCGT
Conference this past May. Enochian BioSciences has an exclusive license to use
the underlying patent to develop ENOB-HV-21 for the prevention, treatment,
and/or amelioration of and/or therapy exclusively for HIV in humans, and
research and development exclusively relating to HIV in humans.
We are in the development phase of additional product candidates related to our
HIV pipeline. ENOB-HV-31, which is an in vivo gene therapy, and ENOB-HV-32,
which is a peptide drug for packaging and distribution.
Hepatitis B (HBV)
Despite the availability of an effective vaccine and treatment that can control
infection if it is taken daily for life, hepatitis B virus (HBV) is the world's
most common serious liver infection. While vaccines are increasingly required
for children, many adults have not been vaccinated. Life-long treatment can be
difficult for certain people and access can be limited.
In that regard, HBV remains the leading cause of liver cancer and the second
leading cause of cancer deaths in the world. Two billion people have been
infected with HBV, approximately 350 million have chronic HBV infection, and
nearly one million people die every year.
Current efforts to develop novel treatment or cure largely focus on approaches
to deplete the pool of a certain type of HBV DNA. Enochian BioSciences has
collaborated with SRI to develop an innovative approach to co-opt HBV
polymerase, a key expanding factor that the virus needs to reproduce itself, to
induce the death of liver cells infected with the virus.
On July 27, 2020, Enochian BioSciences announced the creation of an HBV
Scientific Advisory Board comprised of distinguished leaders in HBV disease,
treatment and cure. On August 23, 2021, we announced the addition of a third
leading expert with substantial experience in HBV clinical trials.
The initial in vitro and in vivo work was presented at the biannual HEP DART
meeting in December of 2019, where it was selected as one of the best new
therapies/novel strategies. Additional data was presented at the annual ASCGT
conference in May 2020. A proof-of-concept, in vivo cure study is in advanced
stages. A Pre-IND request was accepted.
Based on learning from peer-reviewed publications of Phase I/IIa trials, we have
designed an innovative therapeutic vaccination platform that could potentially
be used to induce life-long remissions from some of the deadliest solid tumors.
Initial preclinical in vitro studies have been encouraging. We initially plan to
target pancreatic cancer, triple-negative breast cancer, glioblastoma, and renal
cell carcinoma. The platform might also allow for non-specific immune
enhancement that could have impact against a broad array of solid tumors. As
with HIV, our approach would potentially allow for outpatient therapy without
ablating or significantly impairing the patient's immune system, as many current
Through a collaboration with a leader in the field of pancreatic cancer, our
first cancer-related therapeutic target, we are developing the pipeline with in
vitro and in vivo proof-of-concept studies to evaluate the potential to induce
long-term remission or cure. Results are expected in late 2021or first half
On August 11, 2021, and with an effective date of July 1, 2021, the Company and
Dr. Dybul entered into an Employment Agreement.
On September 27, 2021, the Company announced the completion of a
Pre-Investigational New Drug (IND) process following receipt of written comments
from the U.S. Food and Drug Administration (FDA) Center for Biologics Evaluation
and Research (CBER) Office of Tissues and Advanced Therapies (OTAT) for
On October 18, 2021, the Company announced the completion of an Investigator
Pre-Investigational New Drug (IND) process following receipt of written comments
from the U.S. Food and Drug Administration (FDA) Center for Biologics Evaluation
and Research (CBER) Office of Tissues and Advanced Therapies (OTAT) for
On February 16, 2018, we completed our acquisition of Enochian Biopharma
pursuant to an acquisition agreement, dated January 12, 2018, by and among the
Registrant, its wholly owned subsidiary DanDrit Acquisition Sub, Inc., Enochian
Biopharma and Weird Science with Enochian Biopharma surviving as a wholly owned
subsidiary of the Registrant. As consideration for the acquisition, the
stockholders of Enochian Biopharma received (i) 18,081,962 shares of Common
Stock and (ii) the right to receive contingent shares pro rata upon the exercise
or conversion of warrants, which were outstanding at closing (see Note 7.)
The COVID-19 pandemic continues to evolve, and to date has led to the
implementation of various mitigation responses, including government-imposed
quarantines, travel restrictions and other public health safety measures, as
well as leading to reported adverse impacts on healthcare resources, facilities
and providers across the United States and in other countries. COVID-19 may
cause delays in our research activities. To date, it has not materially affected
our operations; however it has caused delays in the conduct of experiments due
to limitations of various organizations, in particular those conducting
experiments related to COVID-19. There have also been increases in the cost to
conduct animal studies due to staffing and other limitations.
The full extent to which the COVID-19 pandemic may impact our business and
operations is subject to future developments, which are uncertain and difficult
to predict. Further quarantines, shelter-in-place or similar restrictions and
other actions taken or imposed by foreign, federal, state and local governments
could adversely impact our or our partners' clinical, research and development,
regulatory and manufacturing operations or timelines.
We continue to monitor the impact of the COVID-19 pandemic on our business and
operations and will seek to adjust our activities as appropriate. In addition,
the pandemic could result in significant and prolonged disruption of global
financial markets, reducing our ability to access capital, which could in the
future negatively affect the financial resources available to us.
Results of Operations for the three months ended September 30, 2021 and 2020
The following table sets forth our revenues, expenses and net loss for the three
months ended September 30, 2021 and 2020. The financial information below is
derived from our unaudited condensed consolidated financial statements.
For the Three Months Ended
September 30, Increase/(Decrease)
2021 2020 $ %
General and administrative
expenses $ 4,466,697 $ 1,777,923 $ 2,688,774 151 %
Research and development
expenses 3,006,243 1,050,376 1,955,867 186 %
Depreciation and amortization 31,733 30,458 1,275 4 %
Total Operating Expense 7,504,673 2,858,757 4,645,916 163 %
LOSS FROM OPERATIONS (7,504,673 ) (2,858,757 ) (4,645,916 ) 163 %
Other Income (Expense)
Change in fair value of
contingent consideration (2,824,642 ) 427,400 (3,252,042 ) (761 )%
Interest expense (89,739 ) (92,313 ) 2,574 (3 )%
Gain on currency transactions 9 - 9 100 %
Interest income 7,110 4,306 2,804 65 %
Total Other Income (Expense) (2,907,262 ) 339,393 (3,246,655 ) (957 )%
Loss Before Income Taxes (10,411,935 ) (2,519,364 ) (7,892,571 ) 313 %
Income Tax Benefit (Provision) (34 ) 122,794
(122,828 ) 100 %
NET LOSS $ (10,411,969 ) $ (2,396,570 ) $ (8,015,399 ) 335 %
Results of Operations for the three months ended September 30, 2021 compared to
the three months ended September 30, 2020
We are a pre-revenue, pre-clinical biotechnology company. We have never
generated revenues and have incurred losses since inception. We do not
anticipate earning any revenues until our therapies or products are approved for
marketing and sale.
Our operating expenses for the three months ended September 30, 2021, and
September 30, 2020 were $7,504,673 and $2,858,757, respectively, representing an
increase of $4,645,916, or approximately 163%.
General and administrative expenses for the three months ended September 30,
2021, and September 30, 2020 were $4,466,697 and $1,777,923, respectively,
representing an increase of $2,688,774 or approximately 151%. The variance is
primarily related to an increase in stock based compensation of $2,401,819, and
an increase in compensation expense of $353,422, partially offset by decreases
in legal fees and consulting fees totaling $161,881.
Research and development expenses for the three months ended September 30, 2021,
and September 30, 2020 were $3,006,243 and $1,050,3776, respectively,
representing an increase of $1,955,867, or approximately 186%. The variance is
primarily driven by a $1,500,000 milestone payment related to the pre-IND
submission for ENOB-HB-01, $600,000 related to costs for ENOB-HV-21, an increase
in CRO costs of $48,000, Covid license payments of $75,000, and $76,383 in
additional regulatory consulting fees, partially offset by a decrease of
$400,000 in payments of 3rd party R&D study fees incurred in the prior period
but, not incurred in the current period. All other R&D costs have remained
relatively stable during these periods.
The Company recorded other (expense) of $2,907,262 for the three months ended
September 30, 2021, compared to other income of $339,393 for the three months
ended September 30, 2020, representing an increase in other expense of
$3,246,655 or 957%. The variance is primarily due to the change in fair value of
the contingent consideration liability expense of $3,252,042.
Net loss for the three months ended September 30, 2021, and 2020, was
$10,411,969 and $2,396,570, respectively, representing an increase in loss of
$8,015,399 or approximately 335%. The increase in loss was primarily due to the
increase in expense related to the change in fair value of the contingent
consideration of $3,252,042, an increase in research and development expenses of
$1,955,867 primarily related to the $1,500,000 milestone payment made in
connection with the HBV license agreement and, costs related to ENOB-HV-21, and
an increase in general and administrative expenses of $2,688,774.
Liquidity and Capital Resources
We have historically satisfied our capital and liquidity requirements through
funding from shareholders, the sale of our Common Stock and warrants, and debt
financing. We have never generated any sales revenue to support our operations
and we expect this to continue until our therapies or products are approved for
marketing in the United States and/or Europe. Even if we are successful in
having our therapies or products approved for sale in the United States and/or
Europe, we cannot guarantee that a market for the therapies or products will
develop. We may never be profitable.
At this time, we believe we have sufficient liquidity and access to committed
funds to fund our operations for the next twelve months. We may need additional
funds for (a) the purchase of equipment, (b) increases in personnel, and, (c)
research and development, specifically to advance towards an Investigational New
Drug Application (IND) following Pre-IND readouts from the FDA for ENOB-CV-01,
ENOB-HB-01, ENOB-HV-01, and ENOB-HV-21. We will also require additional funding
to continue our research and development of ENOB-HV-11/12 and ENOB-DC-11 and
ENOB-FL-01 and -11 and ENOB-CV-11, to fund the Coronavirus and Influenza
Indications License Agreement in furtherance of treatment related to all
coronaviruses, and for possible future strategic acquisitions of businesses,
products or technologies complementary to our business. If additional funds are
required, we may raise such funds from time to time through public or private
sales of our equity or debt securities. Such financing may not be available on
acceptable terms, or at all, and our failure to raise capital when needed could
materially adversely affect our growth plans and our financial condition and
results of operations.
As of September 30, 2021, the Company had $15,377,050 in cash and working
capital of $14,244,631 as compared to $20,664,410 in cash and working capital of
$19,013,100 as of June 30, 2021, a decrease of 26 % and 25%, respectively.
Total assets at September 30, 2021, were $184,064,717 compared to $189,605,225
as of June 30, 2021. The decrease in total assets was primarily due to the
decrease in cash of $5,287,360. The change is primarily attributed to $3,006,243
in research and development costs primarily related to the HBV License Agreement
and ENOB-HV-21 studies, and general and administrative expenses of $1,738,722
net of non-cash items.
Total liabilities at September 30, 2021, were $17,089,765 compared to
$14,942,286 as of June 30, 2021. The increase in total liabilities was primarily
related to the increase of 2,824,642 in the contingent consideration liability
as a result of mark-to-market adjustment, and the increase in accounts payable
of $227,307, partially offset by the reduction in accrued expenses of $817,554
due to timing, and a decrease in other short-term liabilities of $90,602.
The following is a summary of the Company's cash flows (used by) or provided by
operating, investing, and financing activities:
Ended Three Months
September 30, Ended September 30,
Net Cash (Used in) Operating Activities $ (5,276,687 ) $ (2,755,665 )
Net Cash (Used in) Investing Activities
Net Cash Provided by Financing Activities -
(Loss) Gain on Currency Translation (5,517 )
Change in Cash and Cash Equivalents $ (5,287,360 ) $ (2,730,700 )
Cash used in operating activities for the three months ended September 30, 2021,
and 2020 was ($5,276,687) and ($2,755,665), respectively. Cash used in operating
activities during the current period included $3,006,243 in research and
development costs primarily related to the HBV License Agreement and studies
related to ENOB-HV-21, and general and administrative expenses of $1,738,722 net
of non-cash items.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on the Company's financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to investors.
Significant Accounting Policies and Critical Accounting Estimates
The methods, estimates, and judgments that we use in applying our accounting
policies have a significant impact on the results that we report in our
financial statements. Some of our accounting policies require us to make
difficult and subjective judgments, often as a result of the need to make
estimates regarding matters that are inherently uncertain.
For a full explanation of our accounting policies, see Note 1 to the unaudited
condensed consolidated financial statements.
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