INDAPTUS THERAPEUTICS, INC. Unless the context indicates otherwise, in this Quarterly Report on Form 10-Q,
the terms "Indaptus," "Company," "we," "us" and "our" refer to
The following discussion and analysis provides information that we believe to be
relevant to an assessment and understanding of our results of operations and
financial condition for the periods described. This discussion should be read
together with our condensed consolidated financial statements and the notes to
the financial statements, which are included in this Quarterly Report on Form
10-Q. This information should also be read in conjunction with the information
contained in our Annual Report on Form 10-K for the year ended
This Quarterly Report on Form 10-Q of
Overview
We are a pre-clinical biotechnology company developing a novel and patented systemically-administered anti-cancer and anti-viral immunotherapy. We have evolved from more than a century of immunotherapy advances. Our approach is based on the hypothesis that efficient activation of both innate and adaptive immune cells and associated anti-tumor and anti-viral immune responses will require a multi-targeted package of immune system activating signals that can be administered safely intravenously. Our patented technology is composed of single strains of attenuated and killed, non-pathogenic, Gram-negative bacteria, with reduced i.v. toxicity, but largely uncompromised ability to prime or activate many of the cellular components of innate and adaptive immunity. This approach has led to broad anti-tumor and anti-viral activity, including safe, durable anti-tumor response synergy with each of five different classes of existing agents, including checkpoint therapy, targeted antibody therapy and low-dose chemotherapy in pre-clinical models. Tumor eradication by our technology has demonstrated activation of both innate and adaptive immunological memory and, importantly, does not require provision of or targeting a tumor antigen in pre-clinical models. We have carried out successful GMP manufacturing of our lead clinical candidate, Decoy20, and completed other IND-enabling studies.
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Unlike many competitor products, our technology does not depend on targeting
with or to a specific antigen, providing broad applicability across multiple
indications. Our product candidates are designed to have a much shorter
half-life and produce less systemic exposure than small molecule, antibody or
human cell-based therapies, potentially reducing the risk of non-specific
auto-immune reactions. Our technology produces single agent activity and/or
combination therapy-based durable responses of lymphoma, hepatocellular,
colorectal and pancreatic tumors and has also produced significant single agent
activity against chronic hepatitis B virus (HBV) and chronic human
immunodeficiency virus (HIV) infections in pre-clinical models. In
Decoy Merger
On
Previously, on
Also, in connection with the Merger, we changed our name from "
Following completion of the Merger, our shares of common stock commenced trading
at market open on
Winding Down of Accordion Pill Business
In connection with the completion of the Merger, on
In connection with the winding down, we laid off all our employees and we
terminated our contracts with counterparties, including the termination of the
process development agreement between
Private Placement
In connection with the Merger, on
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On
In connection with the Purchase Agreement, we entered into a registration rights
agreement, or the Registration Rights Agreement, with the Purchaser requiring us
to file a resale registration statement, or the Resale Registration Statement,
with the
Components of Operating Results
Operating Expenses Research and Development
Research and development expenses account for a significant portion of our operating expenses. Research and development expenses consist primarily of fees paid to contract research organizations, or CROs, and contract manufacturing organizations, or CMOs, as well as compensation expenses for certain employees involved in the planning, managing, and analyzing the work of the CROs and CMOs.
We expect our research and development expenses to increase substantially for the foreseeable future as we continue to ramp up our clinical development activities and incur expenses associated with hiring additional personnel to support our research and development efforts. Our expenditures on future nonclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion. The duration, costs and timing of pre-clinical studies and clinical trials and development of product candidates will depend on a variety of factors, including:
? the timing and receipt of regulatory approvals;
? the scope, rate of progress and expenses of pre-clinical studies and clinical
trials and other research and development activities;
? potential safety monitoring and other studies requested by regulatory
agencies;
? significant and changing government regulation.
General and Administrative
General and administrative expenses include compensation, employee benefits, and stock-based compensation for executive management, finance administration and human resources, facility costs (including rent), professional service fees, and other general overhead costs, including depreciation, to support our operations.
We expect our general and administrative expenses to increase substantially for
the foreseeable future as we continue to increase our headcount to support our
research and development activities and operations generally, the growth of our
business and, if any of our product candidates receive marketing approval,
commercialization activities. We also expect to continue to incur additional
expenses as a result of operating as a public company, including expenses
related to compliance with the rules and regulations of the
Other Income, Net
Other income includes interest earned on deposits and other items of income, expense, gain and loss that are incidental to the core operations of the Company.
5 Results of Operations
Three months ended
The following tables sets forth our results of operations for the three months endedJune 30, 2022 and 2021 and the relative dollar and percentage change between the two quarters. Three months ended Change June 30, (2022 to 2021) 2022 2021 ($) Operating expenses: Research and development$ 1,506,165 $ 391,118 $ 1,115,047 General and administrative 2,363,095 137,527 2,225,568 Total operating expenses 3,869,260 528,645 3,340,615 Loss from operations (3,869,260 ) (528,645 ) (3,340,615 ) Other income, net 33,758 13,166 20,592 Net loss$ (3,835,502 ) $ (515,479 ) $ 3,320,023 Net loss attributable to common stockholders per share, basic and diluted$ (0.46 ) $ (0.27 ) $ (0.19 ) Weighted average number of shares used in calculating net loss per share, basic and diluted 8,258,597 1,944,672
Research and Development Expenses
Our research and development expenses for the three months ended
General and Administrative Expenses
Our general and administrative expenses for the three months ended
Other Income, net
Other income, net, increased in the three months ended
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Six months ended
The following tables sets forth our results of operations for the six months endedJune 30, 2022 and 2021 and the relative dollar and percentage change between the two quarters. Six months ended Change June 30, (2022 to 2021) 2022 2021 ($) Operating expenses: Research and development$ 2,803,263 $ 880,839 $ 1,922,424 General and administrative 4,468,070 261,782 4,206,288 Total operating expenses 7,271,333 1,142,621 6,128,712 Loss from operations (7,271,333 ) (1,142,621 ) (6,128,712 ) Other income, net 70,677 14,721 55,956 Net loss$ (7,200,656 ) $ (1,127,900 ) $ (6,072,756 ) Net loss attributable to common stockholders per share, basic and diluted$ (0.87 ) $ (0.58 ) $ (0.29 ) Weighted average number of shares used in calculating net loss per share, basic and diluted 8,258,597 1,944,672
Research and Development Expenses
Our research and development expenses for the six months ended
General and Administrative Expenses
Our general and administrative expenses for the six months ended
Other Income, net
Other income, net, increased in the six months ended
Liquidity and Resources
Since our inception, we have funded our operations primarily through public and
private offerings of our equity securities. As of
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In
Net cash used in operating activities was approximately
Net cash used in investing activities was approximately
There was no net cash provided by financing activities in the six months ended
Current Outlook
Following the Private Placement that closed in
We are closely monitoring ongoing developments in connection with the COVID-19 pandemic. As of the date of issuance of these condensed consolidated financial statements, the ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change. While it is unknown how long these conditions will last and what the complete financial effect will be to us, capital raise efforts and additional development of our technologies may be negatively affected.
Developing drugs, conducting clinical trials, obtaining commercial manufacturing capabilities and commercializing products is expensive and we will need to raise substantial additional funds to achieve our strategic objectives. We will require significant additional financing in the future to fund our operations, including if and when we progress into additional clinical trials, obtain regulatory approval for one or more of our product candidates, obtain commercial manufacturing capabilities and commercialize one or more of our product candidates. Our future capital requirements will depend on many factors, including, but not limited to:
? the progress and costs of our preparations for clinical trials and other
research and development activities;
? the scope, prioritization and number of clinical trials and other research and
development programs;
? the amount of revenues and contributions we receive under future licensing,
collaboration, development and commercialization arrangements with respect to
our product candidates;
? the impact of the COVID-19 pandemic and the Russian invasion of
? the costs of the development and expansion of our operational infrastructure;
? the costs and timing of obtaining regulatory approval for one or more of our
product candidates;
? the ability of us, or our collaborators, to achieve development milestones,
marketing approval and other events or developments under our potential future
licensing agreements;
? the costs of filing, prosecuting, enforcing and defending patent claims and
other intellectual property rights;
? the costs and timing of securing manufacturing arrangements for clinical or
commercial production;
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? the costs of contracting with third parties to provide sales and marketing
capabilities for us or establishing such capabilities ourselves;
? the costs of acquiring or undertaking development and commercialization
efforts for any future products, product candidates or technology;
? the magnitude of our general and administrative expenses;
? market conditions; and
? any cost that we may incur under future in- and out-licensing arrangements
relating to one or more of our product candidates.
Until we can generate significant recurring revenues, we expect to satisfy our future cash needs through capital raising. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of or eliminate research or development programs and other operations and make necessary change to our operations to reduce the level of our expenditures in line with available resources.
We have no off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Critical Accounting Estimates
This discussion and analysis of our financial condition and results of
operations is based on our condensed consolidated financial statements, which
have been prepared in accordance with
We believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.
Accounting for Research and Development Costs
We record the costs associated with services provided by CROs and CMOs as they
are incurred. Though the scope and timing of work are generally based on signed
agreements, some judgement is involved in determining periodic expenses because
payment flows do not always match the periods over which services and materials
are provided to us. As a result, our management is required to make estimates of
services received and efforts expended pursuant to agreements established with
these third-parties at each period-end date. During the three and six months
ended
9 Stock-Based Compensation
We measure and record the expense related to stock-based payment awards based on the fair value of those awards on the date of grant. We use the Black-Scholes-Merton, or Black-Scholes, option pricing model to establish the fair value. We recognize stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting period, on a straight-line basis. The Black Scholes model requires that our management make certain estimates regarding the expected stock price volatility, expected term, risk-free interest rate, and dividend yield to derive an estimated fair value. The use of different assumptions would increase or decrease the related determination of fair value, increasing or decreasing the compensation expense related to a particular stock-based award.
Recently Issued Accounting Pronouncements
None.
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