This Quarterly Report on Form 10-Q, including this Part I., Item 2.,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," contains forward-looking statements regarding us and our business,
financial condition, results of operations and prospects within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
may be identified by the words "project," "believe," "anticipate," "plan,"
"expect," "estimate," "intend," "should," "would," "could," "will," "may" or
other similar expressions. In addition, any statements that refer to projections
of our future financial performance, our clinical development programs and
schedules, our future capital resources and funding requirements, our
expectations regarding future licenses of our technology, our anticipated growth
and trends in our business and other characterizations of future events or
circumstances are forward-looking statements. We cannot guarantee that we will
achieve the plans, intentions or expectations expressed or implied in our
forward-looking statements. There are a number of important factors that could
cause actual results, levels of activity, performance or events to differ
materially from those expressed or implied in the forward-looking statements we
make, including those described under "Risk Factors" set forth below in Part
II., Item 1A. In addition, any forward-looking statements we make in this
document speak only as of the date of this report, and we do not intend to
update any such forward-looking statements to reflect events or circumstances
that occur after that date.
Business Overview
We are a biopharmaceutical company focused on the development of a novel
therapeutic peptide, Thymosin beta 4, or Tß4, for tissue and organ protection,
repair, and regeneration. We have formulated Tß4 into three distinct product
candidates in clinical development:
· RGN-259, a preservative-free topical eye drop for regeneration of corneal
tissues damaged by injury, disease or other pathology;
RGN-352, an injectable formulation to treat cardiovascular diseases, central
· and peripheral nervous system diseases, organ and tissue damage associated with
acute inflammatory diseases such as COVID-19, and other medical indications
that may be treated by systemic administration; and
· RGN-137, a topical gel for dermal wounds and reduction of scar tissue.
Current Financial Status
On June 30, 2021, we closed a private placement of common stock and warrants
with several institutional and accredited investors, including members of
management and the board, and received gross proceeds of $1,980,000. Pursuant to
the terms of the Purchase Agreement, the Company sold an aggregate of 9,900,000
shares of its common stock to investors at a price of $0.20 per share. Investors
also received Series A Warrants to purchase 7,425,000 shares of common stock at
an exercise price of $0.24 per share with a two-year term and Series B Warrants
to purchase 7,425,000 Warrant Shares at an exercise price of $0.28 per share
with a five-year term. In connection with the private placement we paid a cash
fee to Roth Capital Partners, LLC, our placement agent, and also issued warrants
to purchase up to 1,268,750 shares of common stock on the same terms of the
Series B Warrants and Series A Warrants (the "Roth Warrants"). At present, we
believe that we will have sufficient cash to fund planned operations through the
end of 2022.
Current Clinical Status
In January 2015, we entered into a Joint Venture Agreement with GtreeBNT whereby
we created ReGenTree LLC ("ReGenTree" or "Joint Venture") jointly owned by us
and GtreeBNT, which will commercialize RGN-259 for treatment of dry eye syndrome
and neurotrophic keratitis, an orphan indication in the United States.
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To date, ReGenTree has sponsored a Phase 2/3 clinical trial ("ARISE-1") and two
Phase 3 clinical trials in patients with DES ("ARISE-2" and "ARISE-3"). In 2020,
ReGenTree completed a Phase 3 clinical trial in patients with NK ("SEER-1"). All
Phase 3 trials were conducted in the U.S. In May 2016, we reported the results
of the 317-patient ARISE-1 trial and in October 2017, we reported the results of
the ARISE-2 trial. The ARISE-2 study, which was sponsored by ReGenTree and
managed by Ora, Inc., demonstrated a number of statistically significant
improvements in both signs and symptoms of DES with 0.1% RGN-259 versus placebo,
albeit not in the designated co-primary endpoints, while showing excellent
safety, comfort, and tolerability profiles. The ocular discomfort symptom showed
a statistically significant reduction in the RGN-259-treated group at day 15 as
compared to placebo (p=0.0149) in the change from baseline. For sign, RGN-259
also improved the dry eye patient's ability to withstand an exacerbated
condition in a patient subgroup with both compromised corneal fluorescein
staining and Schirmer's test at baseline. In this population, RGN-259 showed
superiority over placebo in reducing corneal fluorescein staining in the change
from baseline at days 15 and 29 (p=0.0207 and 0.0254, respectively). RGN-259
confirmed its global effects on dry eye syndrome and fast onset in multiple sign
and symptom efficacies with no safety issues in the ARISE-1 and ARISE-2 studies
as well as in the pooled data, although ARISE-2 was not successful in
duplicating the results of ARISE-1 where the study population was limited and
less diversified.
Topline results from ARISE-3 were reported on March 18, 2021. Further
statistical analysis was performed as part of the process to fully understand
patient data and the effects of RGN-259 compared to placebo by evaluating
various subgroups of patients within ARISE-3 with pooled data from all three
ARISE clinical trials. While the trial failed to meet its co-primary sign and
symptom endpoints, the conclusions from these expanded analyses were that the
use of RGN-259 has demonstrated statistically significant and clinically
relevant improvements in both signs and symptoms of dry eye syndrome after one
and two weeks of treatment when measured across all three Phase 3 clinical
trials in over 1,600 patients, while confirming its excellent safety profile.
From a regulatory perspective, the question is whether the combined data from
these three trials is sufficient to file for a biologics license (BLA) for
marketing approval in the U.S. ReGenTree has been working with outside FDA
regulatory consulting firms to define its regulatory strategy, based on these
analyses, which have been discussed with the FDA at a pre-BLA meeting on
February 28, 2022. The ReGenTree team previously submitted a 150-page pre-BLA
dossier to the Agency in anticipation of the meeting, as well as a number of
questions. The FDA has provided to ReGenTree minutes of the meeting. Based on
these minutes and continued discussion with the FDA, ReGenTree has advised us
that it plans to apply for SPA (Special Protocol Assessment) to the FDA around
this October. SPA is a program in which FDA specialists provide a sponsor
(ReGenTree) with collaboration in setting up clinical protocols and statistical
analysis plans. The agreed clinical trial design with the FDA is binding and
this program will give the sponsor and FDA a clear understanding of relevant
trial criteria by participating together at this stage of the clinical trial
protocol development. Upon successful completion of the SPA we believe a large
Phase 3 clinical trial (ARISE-4) will take place early in 2023.
The NK trial (SEER-1), a smaller study in an orphan population, enrolled a total
of 18 patients. On May 14, 2020, the Company reported that the trial was closed
and reported the results of SEER-1. Six out of 10 patients in the RGN-259
treated group and 1 out of 8 patients in the placebo treated group achieved
complete corneal healing in four weeks. In terms of the primary endpoint, "ratio
of corneal wound healed patients after four weeks' administration", the
statistical difference was slightly over 0.05 (p = 0.0656, Fisher's exact test),
due to the limited number of patients in each group. When another statistical
analysis method was used to analyze the same primary endpoint (Chi square test),
there was statistical significance, p = 0.0400. In addition, in a pre-specified
secondary endpoint evaluating corneal epithelial healing at day 43 (two weeks
post-treatment) and the durability of RGN-259 treatment, we also confirmed a
clear statistical difference using the Fisher's exact test, p = 0.0359. Several
other efficacy parameters were either highly significant or strongly trending
toward statistical significance in the RGN-259 group indicating the depth of
patient response to RGN-259.
ReGenTree will seek to confirm the efficacy observed in SEER-1 despite the very
small number of subjects in that trial. ReGenTree has developed a plan to enter
into two Phase 3 studies (SEER-2, SEER-3) simultaneously with 60 patients in
each study to meet the requirement of two independent Phase 3 clinical trials
necessary for FDA marketing approval. To this end, ReGenTree plans to retain a
contract research organization (CRO) and start recruitment of patients around
November 2022.
HLB Therapeutics (the parent company of GtreeBNT) has developed the CMC
(chemistry, manufacturing and controls) dossier required for Phase 3 clinical
trials and commercialization in the U.S. and in Korea. This comprehensive and
critical effort ensures that final drug product manufacturing, packaging,
stability, purity, reproducibility, etc., meets regulatory guidelines and
product specifications. The product of this activity is the current product
formulation being utilized in the U.S. trials being conducted by ReGenTree and
will also be utilized in the planned clinical activity to be conducted by HLB
under the RGN-259 license agreement for Pan Asia.
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In February 2017, our licensee for RGN-137, GtreeBNT (now HLB), through its
subsidiary, Lenus Therapeutics, LLC, received permission from the FDA to sponsor
a Phase 3 clinical trial using RGN-137 to treat patients with epidermolysis
bullosa ("EB"), a genetic disease that causes severe blistering of the skin and
internal organs. In August 2017, the Company amended the agreement for RGN-137
held by GtreeBNT. Under the amendment, the Territory was expanded to include
Europe, Canada, South Korea, Australia and Japan. In December 2018, GtreeBNT
initiated a small Phase 2 open trial in patients with EB to evaluate RGN-137 in
such patients prior to sponsoring a larger Phase 3 trial. Three patients have
been enrolled in the open clinical trial to date. In August 2019, it was
reported that the first patient had positively responded to RGN-137. However, as
of the date of this report, the Company believes that the EB trial has been put
on hold and that Lenus Therapeutics has been dissolved with the rights reverting
back to HLB, but the Company has not been updated by HLB Therapeutics as to any
future development plans for RGN-137.
Development of Product Candidates
Previously, Thymosin beta 4 was regulated as a new chemical entity under the
FDA's Center for Drug Evaluation and Research ("CDER"). On March 23, 2020, a new
requirement under the Biologics Price Competition and Innovation Act of 2009
(BPCI Act) was enacted requiring that polypeptides larger than 40 amino acids in
length, such as Thymosin beta 4 (T?4), be regulated as biologics under the FDA's
Center for Biologics Evaluation and Research ("CBER"). Other such products
formerly regulated as drugs, and now as biologics, include insulin and insulin
analogs, human growth hormone, pancreatic enzymes, and reproductive hormones.
Pursuant to our most recent FDA meeting related to RGN-259, our product
candidate for the treatment of neurotrophic keratitis (NK), we officially
confirmed that since RGN-259 contains T?4 as the active ingredient it will now
be approved under a BLA instead of under an NDA. In this regard, the team at
ReGenTree LLC, our U.S. joint venture, has been developing the chemistry,
manufacturing, and controls ("CMC") required for a BLA with top-tier CGMP
manufacturers based in the U.S. and Europe. ReGenTree believes that its CMC
manufacturing and quality control standards and development directions would be
appropriate to submit a BLA. Thus, we intend to proceed with development
conforming to BLA standards as we move forward.
Unlike the previous five-year exclusive period for new chemical entities
approved under an NDA, Section 7002 of the Patient Protection and Affordable
Care Act (PPACA) provides 12 years of exclusivity for products approved under a
BLA. Biologics can also receive orphan drug and pediatric exclusivities.
Therefore, if RGN-259 receives a license under a BLA, and with the T?4 patents
already secured in the U.S., we believe our exclusive market position would be
strengthened.
RGN-259
RGN-259 is our proprietary preservative-free eye drop formulation of Thymosin
beta 4. In September 2011, we completed a Phase 2a exploratory clinical trial
evaluating the safety and efficacy of RGN-259 in 72 patients with moderate dry
eye syndrome. In November 2011, we reported preliminary safety and efficacy
results from the trial. RGN-259 was deemed safe and well-tolerated, with no
observed drug-related adverse events.
In June 2012, we reported preliminary results from a double-masked,
vehicle-controlled, physician-sponsored Phase 2 clinical trial evaluating
RGN-259 for the treatment of nine patients (18 eyes) with severe dry eye.
RGN-259 was observed to be safe and well-tolerated and met key efficacy
objectives with statistically significant sign and symptom improvements,
compared to vehicle control, at various time intervals, including 28 days
post-treatment.
Consistent with the reduction of ocular discomfort and fluorescein staining at
the 28-day follow-up visit, other improvements seen in the RGN-259-treated
patients included tear film breakup time and increased tear volume production.
Likewise, these improvements were seen at other time points in the study. These
results were published in Cornea in 2015.
In September 2015, ReGenTree began the Phase 2/3 ARISE-1 clinical trial in
patients with DES (and the Phase 3 SEER-1 clinical trial in patients with
neurotrophic keratitis, both in the U.S. In May 2016, we reported the results of
the 317-patient ARISE-1 dry eye trial. In the trial, RGN-259 demonstrated
statistically significant improvements in both signs and symptoms of dry eye
with 0.05% and 0.1% RGN-259 compared to placebo in a dose dependent manner
during a 28-day dosing period. While the primary outcome measures were not met,
several key related pre-specified endpoints and subgroups of patients with more
severe dry eye showed statistically significant treatment effects. These results
confirm the findings from the previous Phase 2 trial providing clear direction
for the clinical regulatory pathway and remaining registration trials for
RGN-259. Shortly following the ARISE-1 trial, the FDA approved ReGenTree's Phase
3 ARISE-2 dry eye protocol and we initiated the ARISE-2 trial that enrolled
approximately 600 patients.
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The ARISE-2 study, which was sponsored by ReGenTree, demonstrated a number of
statistically significant improvements in both signs and symptoms of DES with
0.1% RGN-259 versus placebo, while showing excellent safety, comfort, and
tolerability profiles. The ocular discomfort symptom showed a statistically
significant reduction in the RGN-259-treated group at day 15 as compared to
placebo (p=0.0149) in the change from baseline. For sign, RGN-259 also improved
the dry eye patient's ability to withstand an exacerbated condition in a patient
subgroup with both compromised corneal fluorescein staining and Schirmer's test
at baseline. In this population, RGN-259 showed superiority over placebo in
reducing corneal fluorescein staining in the change from baseline at days 15 and
29 (p=0.0207 and 0.0254, respectively). RGN-259 confirmed its global effects on
DES and fast onset in multiple sign and symptom efficacies with no safety issues
in the ARISE-1 and ARISE-2 studies as well as in the pooled data, although
ARISE-2 was not successful in duplicating the results of ARISE-1 where the study
population was limited and less diversified.
In February 2019, ReGenTree initiated the 700-patient ARISE-3 trial in patients
with dry eye syndrome to confirm the results observed in ARISE-2. The first
patient was enrolled in the second quarter of 2019 and the last patient was
enrolled in October 2020. Topline results from ARISE-3 were reported on March
18, 2021 and further statistical analysis was performed as part of the process
to fully understand patient data and the effects of RGN-259 compared to placebo.
We evaluated various subgroups of patients within ARISE-3 and pooled the data
from all three ARISE clinical trials. The conclusions from these expanded
analyses are that the use of RGN-259 has demonstrated statistically significant
improvements in both signs and symptoms of dry eye syndrome after one and two
weeks of treatment when measured across three Phase 3 clinical trials in over
1,600 patients, while confirming its excellent safety profile.
ReGenTree completed a randomized, double-masked, placebo-controlled, Phase 3
clinical trial of RGN-259 for the treatment of neurotrophic keratitis (SEER-1)
in 2020. Due to slow patient recruitment, the trial was closed after 18 of 46
patients completed treatment. Six out of 10 patients in the RGN-259-treated
group and 1 out of 8 patients in the placebo-treated group achieved complete
corneal healing in 4 weeks. In terms of the primary endpoint, the "ratio of
corneal wound healed patients after four weeks' administration", the statistical
difference was slightly over 0.05 (p = 0.0656, Fisher's exact test), due to the
limited number of patients in each group. When another statistical analysis
method was used to analyze the same primary endpoint (Chi square test), there
was statistical significance, p = 0.0400. In addition, in a pre-specified
secondary endpoint evaluating corneal epithelial healing at day 43 (two weeks
post-treatment) and the durability of RGN-259 treatment, there was a clear
statistical difference using the Fisher's exact test, p = 0.0359. Several other
efficacy parameters were either highly significant or strongly trending toward
statistical significance in the RGN-259 group indicating the depth of patient
response to RGN-259. The product candidate was deemed to be safe and
well-tolerated.
RGN-352
During 2009, we completed a Phase 1a and Phase 1b clinical trial evaluating the
safety, tolerability and pharmacokinetics of the intravenous administration of
RGN-352 in 60 healthy subjects (40 in each group, 20 of whom participated in
both Phases). Based on the results of these Phase 1 trials and extensive
preclinical efficacy data published in peer-reviewed journals, in the second
half of 2010, we began start-up activities for a Phase 2 study to evaluate
RGN-352 (Tß4 Injectable Solution) in patients who had suffered an AMI. We had
planned to begin enrolling patients in this clinical trial in the second quarter
of 2011. However, in March 2011, we were notified by the FDA that the trial was
placed on clinical hold as a result of our contract manufacturer's alleged
failure to comply with the current Good Manufacturing Practice ("cGMP")
regulations. The manufacturer has since closed its manufacturing facility. The
FDA prohibited us from using any of the active drug or placebo formulated by
this manufacturer in human trials; consequently, we must have study drug
(RGN-352 and RGN-352 placebo) manufactured by a new cGMP-compliant manufacturer
in the event we seek to move forward with this or any human clinical trial with
RGN-352. While we had identified a qualified manufacturer for RGN-352, we have
elected to postpone activities on this trial until the requisite funding or a
partner is secured.
In addition to the potential application of RGN-352 for the treatment of
cardiovascular disease, preclinical research published in the scientific
journals Neuroscience and the Journal of Neurosurgery, among others, indicates
that RGN-352 may also prove useful for patients with multiple sclerosis, or MS,
as well as patients suffering a stroke, traumatic brain injury, peripheral
neuropathy, or spinal cord injury. In these preclinical studies, the
administration of Tß4 resulted in regeneration of neuronal tissue by promoting
remyelination of axons and stimulating oligodendrogenesis, resulting in
improvement of neurological functional activity. In 2012, researchers studying
Tß4 under a material transfer agreement (MTA) found that Tß4 had beneficial
effects in animal models of peripheral neuropathy, one of the major
complications of diabetes. This research was published in the Journal of
Neurobiology of Disease in 2012 and appears to corroborate previous findings
using Tß4 for repair of central nervous system disorders.
More recently, newer data have been published demonstrating that Tß4 may be
useful as a therapy for the treatment of acute systemic inflammatory diseases
such as systemic inflammatory response syndrome (SIRS), acute respiratory
disease (ARDS) and COVID-19, which can lead to sepsis, septic shock and death.
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Based on our Phase 1 data and the preclinical research discussed above, we are
evaluating various opportunities for government funding for a Phase 2a clinical
trial to show proof-of-concept to further develop our product candidate in these
fields, including for the treatment of COVID-19 and other systemic inflammatory
diseases.
RGN-137
Clinical Development - Epidermolysis Bullosa. Starting in 2005, we began
conducting a Phase 2 clinical trial designed to assess the safety and
effectiveness of RGN-137 for the treatment of patients with EB. EB is a genetic
disease of approximately 10 gene mutations that results in fragile skin and
other epithelial structures (e.g., cornea and GI tract) that can blister
spontaneously or separate at the slightest trauma or friction, creating a wound
that at times does not heal or heals poorly. In severe cases, recurrent
blistering and tissue loss may be life threatening. EB has been designated as an
"orphan" indication by the FDA's Office of Orphan Drugs. We closed the Phase 2
trial in late 2011 and we submitted the final report to the FDA in 2014.
Subsequently, we licensed RGN-137 to GtreeBNT for development in the U.S. and
EU. In February 2017, GtreeBNT received permission from the U.S. FDA to sponsor
a Phase 3 clinical trial using RGN-137 to treat patients with EB. Recently, the
FDA modified efficacy requirements in EB patients from complete wound closing to
partial wound closing, which has had a positive impact on clinical trial design.
Our licensee initiated a Phase 2 open clinical trial on EB patients in the U.S.
in December 2018, and 3 of 15 patients have been enrolled to date. Due to the
COVID-19 pandemic, it is unclear when enrollment will resume.
Clinical Development - Pressure Ulcers. In late 2005, we began conducting Phase
2 clinical trial designed to assess the safety and effectiveness of RGN-137 for
the treatment of patients with chronic pressure ulcers, commonly known as
bedsores.
In January 2009, we reported final data from this trial. RGN-137 was
well-tolerated at all three dose levels studied, with no dose-limiting adverse
events, which achieved the primary objective of the study. A follow-on
evaluation, reported at the 3rd International Symposium on the Thymosins in
Health and Disease in March 2012, showed that for those pressure ulcer patients'
wounds that healed, RGN-137 mid dose (0.02% T?4 gel product) accelerated wound
closure with a median time to healing of 22 days as compared to 57 days for the
placebo. Although those results are clinically significant, they were not
statistically significant.
Clinical Development - Venous Stasis Ulcers. In mid-2006, we began conducting a
Phase 2 clinical trial designed to assess the safety and effectiveness of
RGN-137 for the treatment of patients with venous stasis ulcers. Venous stasis
ulcers are a common type of chronic wound that develops on the ankle or lower
leg in patients with chronic vascular disease. In these patients, blood flow in
the lower extremities is impaired leading to venous hypertension, edema
(swelling) and mild redness and scaling of the skin that gradually progresses to
ulceration. In 2009, we reported final data from that trial. Those results were
both clinically and statistically significant.
Strategic Partnerships
Currently, we have active partnerships in four major territories: North America,
Europe, China and Pan Asia. Our partners have been moving forward and making
progress in each territory. In each case, the cost of development is being borne
by our partners with no financial obligation for RegeneRx. We still have
significant clinical assets to develop, primarily RGN-352 (injectable
formulation of Tß4 for cardiac and CNS disorders) in the U.S., most of Asia, and
Europe; RGN-259 in the EU. In August 2017, we amended the RGN-137 License
Agreement with GtreeBNT, expanding the territory to include Europe, Canada,
South Korea, Australia and Japan. Regarding RGN-259, our goal is to wait until
satisfactory results are obtained from the current ophthalmic clinical program
in the U.S. before moving into the EU. This should allow us to obtain a higher
value for the asset at that time. However, we intend to continue to develop
RGN-352, our injectable systemic product candidate for cardiac and central
nervous system indications, either by obtaining grants to fund a Phase 2a
clinical trial in the cardiovascular or central nervous system fields or finding
a suitable partner with the resources and capabilities to develop it as we have
with RGN-259. We have also been exploring the potential of RGN-352 for the
treatment of COVID-19.
We anticipate incurring additional operating losses in the future as we continue
to explore the potential clinical benefits of Tß4-based product candidates over
multiple indications. To fund further development and clinical trials, we have
entered into a series of strategic partnerships under licensing and joint
venture agreements where our partners are responsible for advancing development
of our product candidates with multiple clinical trials.
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Lee's Pharmaceuticals.
We are a party to a license agreement with Lee's Pharmaceutical for the license
of T?4in any pharmaceutical form, including our RGN-259, RGN-352 and RGN-137
product candidates, in China, Hong Kong, Macau and Taiwan. In February 2019, the
License Agreement was assigned by Lee's to its affiliate, Zhaoke Ophthalmology
Pharmaceutical Limited. Lee's previously filed an IND with the Chinese FDA to
conduct a Phase 2, randomized, double-masked, dose-response clinical trial with
RGN-259 in China for dry-eye syndrome. Lee's subsequently informed us that it
received notice from China's FDA declining its IND application for a Phase 2b
dry eye clinical trial because the API was manufactured outside of China. The
API was manufactured in the U.S. and provided to Lee's by RegeneRx pursuant to a
license agreement to develop RGN-259 ophthalmic eye drops in the licensed
territory. However, in mid-2016, we were informed by Lee's that the CFDA
modified its manufacturing regulations and will now allow Chinese companies to
utilize API manufactured outside of China for Phase 1 and 2 clinical trials.
Recently, we have been in ongoing discussions with management of Zhaoke to
further refine its development plan for RGN-259. We have not yet been informed
of a projected starting date for Phase 2 trials but believe Lee's intends to
await the outcome of the ARISE-3 DES trial prior to initiating clinical trials
in China. On April 28, 2021, Zhaoke Ophthalmology completed an initial public
offering, raising over US $300 million for development of its ophthalmic
products, including RGN-259 licensed from the Company. There are no economic
changes to the License Agreement.
GtreeBNT.
We are a party to a license agreement with GtreeBNT for the license of RGN-259
related to certain development and commercialization rights for RGN-259, in Asia
(excluding China, Hong Kong, Macau and Taiwan). Separately, we licensed GtreeBNT
the rights to RGN-137 which was recently amended as discussed above. GtreeBNT is
currently our second largest stockholder. GtreeBNT filed an IND with the Korean
Ministry of Food and Drug Safety to conduct a Phase 2/3 study with RGN-259 in
patients with dry eye syndrome and in July 2015, received approval to conduct
the trial. In late 2016, GtreeBNT informed us that it believes marketing
approval in the U.S. will allow expedited marketing in Korea, possibly without
the need for a clinical trial. At this point, GtreeBNT advises us that its
planned strategy is to await marketing approval in the U.S. before any further
development in KOREA.
U.S. Joint Venture (ReGenTree, LLC).
In January 2015, we entered into a Joint Venture Agreement with GtreeBNT whereby
we created ReGenTree, jointly owned by us and GtreeBNT, which will commercialize
RGN-259 for treatment of dry eye and NK, an orphan indication in the United
States. We are entitled to royalties as a percentage of net sales ranging from
single digits to low double digits based on the medical indications approved and
whether the Joint Venture commercializes products directly or through a third
party. RegeneRx possesses one of three board seats of ReGenTree and certain
major decisions and transactions within ReGenTree, such as commercialization
strategy, mergers, and acquisitions, require RegeneRx's board designee's
consent. We currently hold a 38.5% ownership interest in ReGenTree. This
ownership interest may be further reduced to as low as 25% once ReGenTree
obtains FDA approval of a BLA for dry eye syndrome in the U.S. In the event
ReGenTree is acquired, or a change of control occurs following achievement of a
BLA, RegeneRx shall be entitled to a minimum of 40% of all proceeds paid or
payable and will forgo any future royalties.
Our Strategy
We seek to maximize the value of our product candidates by advancing their
clinical development and then identifying suitable partners for further
development, regulatory approval, and marketing. We intend to engage in
strategic partnerships with companies with clinical development and
commercialization strengths in desired pharmaceutical therapeutic fields. We are
actively seeking partners with suitable infrastructure, expertise and a
long-term initiative in our medical fields of interest. Our ability to locate
and engage new strategic partners has been limited by the global COVID pandemic.
Historically, we have entered the licensing and joint ventures discussed above.
We have retained the (RGN-352) asset in the EU and are able to consolidate them
with similar assets in the U.S. and other territories in Asia to create a
worldwide portfolio that we believe will be more attractive to multi-national
pharmaceutical companies.
Financial Operations Overview
We have never generated product revenues, and we do not expect to generate
product revenues until the FDA approves one of our product candidates, if ever,
and we begin marketing and selling it. We anticipate incurring additional
operating losses in the future as we continue to explore the potential clinical
benefits of Tß4-based product candidates over multiple indications. To fund
further development and clinical trials we have entered into a series of
strategic partnerships under licensing and joint venture agreements where our
partners are responsible for advancing development of our product candidates
with multiple clinical trials.
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Most of our expenditures to date have been for research and development, or R&D,
activities and general and administrative, or G&A, activities. R&D costs include
all of the wholly-allocable costs associated with our various clinical programs
passed through to us by our outsourced vendors. Those costs include
manufacturing Tß4 and peptide fragments, formulation of Tß4 into our product
candidates, stability studies for both Tß4, and the various formulations,
preclinical toxicology, safety and pharmacokinetic studies, clinical trial
management, medical oversight, laboratory evaluations, statistical data
analysis, regulatory compliance, quality assurance and other related activities.
R&D includes cash and non-cash compensation, payroll taxes, travel and other
miscellaneous costs of our internal R&D personnel, three persons in total, who
are dedicated on a part-time hourly basis to R&D efforts. R&D also includes a
proration of our common infrastructure costs for office space and
communications. We expense our R&D costs as they are incurred.
R&D expenditures are subject to the risks and uncertainties associated with
clinical trials and the FDA review and approval process. As a result, these
expenses could exceed our expectations, possibly materially. We are uncertain as
to what we will incur in future R&D costs for our clinical studies, as these
amounts are subject to, management's continuing assessment of the economics of
each individual R&D project and the internal competition for project funding.
G&A costs include outside professional fees for legal, business development,
audit and accounting services. G&A also includes cash and non-cash compensation,
travel and other miscellaneous costs of our internal G&A personnel, two in
total, who are wholly dedicated to G&A efforts. G&A also includes a proration of
our common infrastructure costs for office space and communications. Our G&A
expenses also include costs to maintain our intellectual property portfolio.
Historically, we have expanded our patent prosecution activities and in some
cases, we have filed patent applications for non-critical strategic purposes
intended to prevent others from filing similar patent claims. We continue to
closely monitor our patent applications in the United States, Europe and other
countries with the advice of outside legal counsel to determine if they will
continue to provide strategic benefits. In cases where we believe the benefit
has been realized or it becomes unnecessary due to the issuance of other
patents, or for other reasons that will not affect the strength of our
intellectual property portfolio, we have and will continue to abandon these
patent applications in order to reduce our costs of continued prosecution or
maintenance.
Critical Accounting Policies
In Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations," of our Annual Report on Form 10-K for the year ended
December 31, 2021, which was filed with the SEC on March 30, 2022, which we
refer to as the Annual Report, we included a discussion of the most critical
accounting policies used in the preparation of our financial statements. There
has been no material change in the policies and estimates used in the
preparation of our financial statements since the filing of our Annual Report.
Results of Operations
Comparison of the three months ended June 30, 2022 and 2021
Revenues. For the three months ended June 30, 2022 and 2021, we recorded revenue
in the amount of approximately $19,000 related to the amortization of unearned
license fees.
R&D Expenses. We did not record any R&D expenses for the three months ended June
30, 2022. Our R&D expenses were approximately $500 for the same period in 2021.
The reduction of our R&D expenses over the past several years reflects the shift
in our business resulting from our partnering strategy.
G&A Expenses. For the three months ended June 30, 2022, our G&A expenses
increased by approximately $208,000, or 75%, to $484,000 from $276,000 for the
same period in 2021. The changes in the G&A expenses are reflected in several
areas. Increases in stock option expense (increase of $190,000), professional
services (increase of $14,000), investor relations (increase of $7,000) facility
related (increase of $2,000) and insurance (increase of $3,000) were offset by a
decrease in personnel related (decrease of $8,000). We expect that our G&A
expenses will remain steady over the next year.
Net Loss. Our Statements of Operations reflect a net loss of approximately
$546,000 for the quarter ended June 30, 2022, versus a net loss of approximately
$339,000 for the quarter ended June 30, 2021.
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Comparison of the six months ended June 30, 2022 and 2021
Revenues. For the six months ended June 30, 2022 and 2021, we recorded revenue
in the amount of approximately $38,000 related to the amortization of unearned
license fees.
R&D Expenses. We did not record any R&D expenses for the six months ended June
30, 2022. Our R&D expenses were approximately $1,000 for the same period in
2021. The reduction of our R&D expenses over the past several years reflects the
shift in our business resulting from our partnering strategy.
G&A Expenses. For the six months ended June 30, 2022, our G&A expenses increased
by approximately $253,000, or 43%, to $847,000 from $594,000 for the same period
in 2021. The changes in the G&A expenses are reflected in several areas.
Increases in stock option expense (increase of $216,000), personnel related
(increase of $5,000), professional services (increase of $20,000), investor
relations (increase of $2,000) facility related (increase of $3,000) and
insurance (increase of $7,000). We expect that our G&A expenses will remain
steady over the next year.
Net Loss. Our Statements of Operations reflect a net loss of approximately
$970,000 for the six months ended June 30, 2022, versus a net loss of
approximately $718,000 for the six months ended June 30, 2021.
Liquidity and Capital Resources
Overview
We have not commercialized any of our product candidates to date and have
incurred significant losses since inception. Over the past couple of years, we
have primarily financed our operations through the sale of a series of
convertible promissory notes through private placements with accredited
investors and the March and August 2014 private placements of common stock with
GtreeBNT as well as our entry into the joint venture with ReGenTree in early
2015. The report of our independent registered public accounting firm regarding
our financial statements for the year ended December 31, 2021 contained an
explanatory paragraph regarding our ability to continue as a going concern based
upon our history of net losses and dependence on future financing in order to
meet our planned operating activities.
We had cash and cash equivalents of $706,648 at June 30, 2022. Our current cash
includes the proceeds from the June 2021 private placement of $1,980,000 of
common stock and warrants with several institutional and accredited investors,
including members of management and the board. We believe that these funds will
be sufficient to fund planned operations through the end of 2022. We will need
to secure additional funding in order to advance operations substantially beyond
the fourth quarter of 2022. We may also receive funds from grants, new
partnerships or the raising of additional capital if the market climate
warrants. Additionally, we intend to continue to pursue additional partnering
activities, particularly for RGN-352, our injectable systemic product candidate
for cardiac and central nervous system indications.
Cash Flows for the Six Months Ended June 30, 2022 and 2021
Net cash used in operating activities was approximately $525,000 for the six
months ended June 30, 2022, compared to approximately $268,000 used in operating
activities for the six months ended June 30, 2021.
Net cash provided by financing activities was approximately $0 for the six
months ended June 30, 2022, compared to approximately $1,866,000 provided by
financing activities, primarily the proceeds from the June 2021 PIPE, for the
six months ended June 30, 2021.
Future Funding Requirements
The expenditures that will be necessary to execute our business plan are subject
to numerous uncertainties that may adversely affect our liquidity and capital
resources. Currently, RegeneRx has active partnerships in four major
territories: the U.S., Europe, China and Pan Asia. In each case, the cost of
development is being borne by our partners with no financial obligation for
RegeneRx. Patient accrual, treatment, and follow-up for ophthalmic trials are,
in general, relatively fast, as opposed to most other clinical efforts.
We still have significant clinical assets to develop, primarily RGN-352
(injectable formulation of Tß4 for cardiac and CNS disorders) in the U.S., Pan
Asia, and Europe, and RGN-259 in the EU. Our goal is to wait until positive
results are obtained from the current ophthalmic clinical program before moving
into the EU with RGN-259. If successful, we believe this should allow us to
obtain a higher
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value for the asset at that time. However, we intend to continue to develop
RGN-352, either by obtaining grants to fund a Phase 2a clinical trial in the
cardiovascular or central nervous system fields or finding a suitable partner
with the resources and capabilities to develop it as we have with RGN-259. We
are also continuing to file patent applications for methods of utilizing the
asset for certain medical indications. Our capital resources remain limited;
therefore, we will need to secure additional operating capital to continue
operations substantially beyond the end of 2022. A sale of common stock and
warrants, a convertible instrument or additional partnering of licensed rights
are possible sources of operating capital in the future. In addition, the length
of time required for clinical trials varies substantially according to the type,
complexity, novelty and intended use of a product candidate.
Some of the factors that could impact our liquidity and capital needs include,
but are not limited to:
? the progress of our clinical trials;
? the progress of our research activities;
? the number and scope of our research programs;
? the progress of our preclinical development activities;
? the costs involved in preparing, filing, prosecuting, maintaining, enforcing
and defending patent and other intellectual property claims;
the costs related to development and manufacture of preclinical, clinical and
? validation lots for regulatory purposes and commercialization of drug supply
associated with our product candidates;
? our ability to enter into corporate collaborations and the terms and success of
these collaborations;
? the costs and timing of regulatory approvals; and
? the costs of establishing manufacturing, sales and distribution capabilities.
the continuing impact of the COVID-19 pandemic, the war in Ukraine, the
? worsening of relationships between the United States and Russia and China,
rising interest rates and continued inflationary concers on our activities and
those of our development partners.
In addition, the duration and the cost of clinical trials may vary significantly
over the life of a project as a result of differences arising during the
clinical trial protocol, including , among others, the following:
? the number of patients that ultimately participate in the trial;
? the duration of patient follow-up that seems appropriate in view of the
results;
? the number of clinical sites included in the trials; and
? the length of time required to enroll suitable patient subjects.
Also, we test our product candidates in numerous preclinical studies to identify
indications for which they may be efficacious. We may conduct multiple clinical
trials to cover a variety of indications for each product candidate. As we
obtain results from trials, we may elect to discontinue clinical trials for
certain product candidates or for certain indications in order to focus our
resources on more promising product candidates or indications.
Our proprietary product candidates have not yet achieved FDA regulatory
approval, which is required before we can market them as therapeutic products.
In order to proceed to subsequent clinical trial stages and to ultimately
achieve regulatory approval, the FDA must conclude that our clinical data
establish safety and efficacy. Historically, the results from preclinical
studies and early clinical trials have often not been predictive of results
obtained in later clinical trials. A number of new drugs and biologics have
shown promising results in clinical trials, but subsequently failed to establish
sufficient safety and efficacy data to obtain necessary regulatory approvals.
Sources of Liquidity
We have not commercialized any of our product candidates to date and have
primarily financed our operations through the issuance of common stock and
common stock warrants in private and public financings. In October 2020, we sold
the 2020 Notes resulting in gross proceeds to the Company of $500,000. The 2020
Notes were accompanied by 2020 Warrants. In June 2021, we closed a private
placement of common stock and warrants with several institutional and accredited
investors, including members of management and the board, and received gross
proceeds of $1,980,000. Pursuant to the terms of this purchase agreement, the
Company sold an aggregate of 9,900,000 shares of its common stock to investors
at a price of $0.20 per share. Investors also received Series A Warrants to
purchase 7,425,000 shares of common stock at an exercise price of $0.24 per
share with a two-year term and Series B Warrants to purchase 7,425,000 Warrant
Shares at an exercise price of $0.28 per share with a five-year term.
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With the receipt of the proceeds from the closing of the 2021 Private Placement,
we expect to have sufficient cash to fund our planned operations through the end
of 2022. We continuously monitor our cash use as well as the clinical timelines.
We continue to evaluate options including the licensing of additional rights to
commercialize our clinical products as well as raising capital through the
capital markets.
We have various strategic agreements and license agreements with GtreeBNT,
ReGenTree and Lee's. These license agreements provide for the opportunity for us
to receive milestone payments upon specified commercial events and royalty
payments in connection with any commercial sales of the licensed products in the
respective territories. However, there are no assurances that we will be able to
attain any such milestones or generate any such royalty payments under the
agreements.
Other Financing Sources
Other potential sources of outside capital include entering into additional
strategic business relationships, additional issuances of equity securities or
debt financing or other similar financial instruments. If we raise additional
capital through a strategic business relationship, we may have to give up
valuable rights to our intellectual property. If we raise funds by selling
additional shares of our common stock or securities convertible into our common
stock, the ownership interest of our existing stockholders may be significantly
diluted. In addition, if additional funds are raised through the issuance of
preferred stock or debt securities, these securities are likely to have rights,
preferences and privileges senior to our common stock and may involve
significant fees, interest expense, restrictive covenants and the granting of
security interests in our assets.
Our failure to successfully address liquidity requirements could have a
materially negative impact on our business, including the possibility of
surrendering our rights to some technologies or product opportunities, delaying
our clinical trials, or ceasing operations. There can be no assurance that we
will be able to obtain additional capital in sufficient amounts, on acceptable
terms, or at all.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, as such term is defined in
Item 303(a)(4) of Regulation S-K.
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