REGENETP, INC. The discussion and analysis below includes certain forward-looking statements that are subject to risks, uncertainties and other factors, as described in "Risk Factors" in our Annual Report on Form 10-K for the year endedDecember 31, 2021 ("2021 Annual Report"), and in this Quarterly Report on Form 10-Q that could cause our actual growth, results of operations, performance, financial position and business prospects and opportunities for this fiscal year and periods that follow to differ materially from those expressed in or implied by those forward-looking statements. Readers are cautioned that forward-looking statements contained in this Quarterly Report on Form 10-Q should be read in conjunction with risk factors disclosed in our reports and disclosure under the heading "Disclosure Regarding Forward-Looking Statements" below. OverviewPolarityTE is a clinical stage biotechnology company developing regenerative tissue products and biomaterials.PolarityTE's first regenerative tissue product is SkinTE, which is intended for the repair, reconstruction, replacement, and supplementation of skin in patients who have a need for treatment of acute or chronic wounds, burns, surgical reconstruction events, scar revision, or removal of dysfunctional skin grafts.
Since the beginning of 2017,PolarityTE has incurred substantial operating losses and its operations have been financed primarily by public equity financings. The clinical trials for SkinTE and the regulatory process will likely result in an increase inPolarityTE's expenses.PolarityTE will continue to incur substantial operating losses as we pursue an investigational new drug application ("IND") and biologics license application ("BLA"), andPolarityTE expects to seek financing from external sources over the foreseeable future
to fund its operations. Regenerative Tissue Product Our first regenerative tissue product is SkinTE. OnJuly 23, 2021 , we submitted an IND for SkinTE to theU.S. Food and Drug Administration (the "FDA") through our subsidiary,PolarityTE MD, Inc. ("PTE-MD"), as the first step in the regulatory process for obtaining licensure for SkinTE under Section 351 of the Public Health Service Act. The FDA subsequently issued clinical hold correspondence to us identifying certain issues that needed to be addressed before the IND could be approved. We provided responses to the FDA, and onJanuary 14, 2022 , the FDA notified us that the clinical hold had been removed. Our first planned pivotal study under our IND is a multi-center, randomized controlled trial evaluating SkinTE in the treatment of diabetic foot ulcers ("DFUs") classified as Grade 2 in the Wagner classification system entitled "Closure Obtained with Vascularized Epithelial Regeneration for DFUs with SkinTE," or "COVER DFUs Trial." We plan to enroll up to 100 subjects at up to 20 sites in theU.S. in the COVER DFUs Trial, which will compare treatment with SkinTE plus the standard-of-care to the standard-of-care alone. The primary endpoint is the incidence of DFUs closed at 24 weeks. Secondary endpoints include percent area reduction ("PAR") at 4, 8, 12, 16, and 24 weeks, improved quality of life, and new onset of infection of the DFU being evaluated. We have been enrolling subjects in the COVER DFUs Trial since the end ofApril 2022 , and we expect the study will be fully enrolled sometime in the first six months of 2024. Additionally, there is an interim analysis planned for the first 50 patients and we believe that data will be available in the fourth calendar quarter of 2023. InMarch 2022 , we submitted to the FDA a request for a Regenerative Medicine Advanced Therapy ("RMAT") designation for SkinTE under our IND. Established under the 21st Century Cures Act, RMAT designation is a dedicated program designed to expedite the drug development and review processes for promising regenerative medicine products, including human cellular and tissue-based therapies. A regenerative medicine therapy is eligible for RMAT designation if it is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug or therapy has the potential to address unmet medical needs for such disease or condition. RMAT designation provides the benefits of intensive FDA guidance on efficient drug development, including the ability for early interactions with the FDA to discuss potential ways to support accelerated approval and satisfy post-approval requirements, potential priority review of a BLA, and other opportunities to expedite development and review. By letter datedMay 11, 2022 , we were advised by the FDA that it concluded SkinTE meets the criteria for RMAT designation for the treatment of DFUs and venous leg ulcers ("VLUs"). 30
As a result of the RMAT designation we were able to engage in an expedited dialogue with the FDA on the tasks that are likely to be necessary to support a BLA submission for SkinTE as a treatment of DFUs and VLUs, which were identified in the RMAT designation. Based on that dialogue we plan to run a second multi-center, randomized controlled trial under our current IND to support approval of a broad DFU indication for SkinTE in a BLA, and we plan to engage in discussions with the FDA regarding the design and implementation of the second clinical trial. We believe this strategy will be the fastest and least costly approach to achieving our first BLA submission for SkinTE, with DFUs representing the largest market opportunity within the category of chronic cutaneous ulcers. We plan to further engage with the FDA to fully define our development plan for other wound indications. We expect to incur significant operating costs in the next three to four years as we pursue the regulatory process for SkinTE with the FDA, conduct clinical trials and studies, and pursue product research, all while operating our business and incurring continuing fixed costs related to the maintenance of our assets and business. We expect to incur significant losses in the future, and those losses could be more severe as a result of unforeseen expenses, difficulties, complications, delays, and other unknown events. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending upon the timing, progress, and outcomes of our clinical trials and our expenditures for satisfying all the conditions of obtaining FDA licensure for SkinTE.
Liquidity and Capital Resources
Available Capital Resources and Potential Sources of Liquidity
As ofSeptember 30, 2022 , we had$16.1 million in cash and cash equivalents and working capital of approximately$15.7 million . For the nine-month period endedSeptember 30, 2022 , cash used in operating activities was$18.3 million , or an average of$2.0 million per month, compared to$15.3 million of cash used in operating activities, or an average of$1.7 million per month, for the nine-month period endedSeptember 30, 2021 . For the three-month period endedSeptember 30, 2022 , cash used in operating activities was$4.0 million , or an average of$1.3 million per month, compared to$4.6 million of cash used in operating activities, or an average of$1.5 million per month, for the three-month period endedSeptember 30, 2021 . As of the date of this quarterly report we do not expect that our cash and cash equivalents of$16.1 million as ofSeptember 30, 2022 , will be sufficient to fund our current business plan including related operating expenses and capital expenditure requirements beyond the second calendar quarter of 2023. Accordingly, there is substantial doubt about our ability to continue as a going concern, as we do not believe that our cash and cash equivalents will be sufficient to fund our business plan for at least twelve months from the date of issuance of our quarterly financial statements in this report. We plan to address this condition by raising additional capital to finance our operations. AfterApril 2022 we have not engaged in any business activity that generates cash flows from operations, which in the past contributed to defraying our operating costs, and we do not expect we will be engaged in any operating business activity that would generate cash flow in the foreseeable future. Accordingly, we expect we will be dependent on obtaining capital from external sources to fund our operations over the next three to four years. Although we have been successful in raising capital in the past, financing may not be available on terms favorable to us, if at all, so we may not be successful in obtaining additional financing. Therefore, it is not considered probable, as defined in applicable accounting standards, that our plan to raise additional capital will alleviate the substantial doubt regarding our ability to continue as a going concern.
Anticipated Uses of Capital Resources
As noted above, we are focused primarily on the advancement of our IND and subsequent BLA to attain a license to manufacture and distribute SkinTE. To that end, inJune 2021 we engaged a contract research organization ("CRO") to provide services for the COVER DFUs Trial at a cost of approximately$6.5 million consisting of$3.1 million of service fees and$3.4 million of estimated costs. In 2021 we prepaid$0.5 million , which will be applied to payment of the final invoice under the work order. Over the approximately three-year term of the COVER DFUs Trial the service provider will submit to us for payment monthly invoices for units of work stated in the work order that are completed and billable expenses incurred. We began enrolling subjects in our COVER DFUs at the end ofApril 2022 , and we believe we may be able to complete enrollment of 100 subjects sometime in the first six months of 2024. As enrollment increases, we expect our monthly CRO and related costs of conducting the trial will ramp
up. 31 Our expectation is that the second DFU clinical trial under the IND for SkinTE will be similar to the COVER DFUs Trial with respect to size, length of time to complete, and cost. To the extent we decide to pursue additional indications for the application of SkinTE, such as VLUs, we expect we will need to submit separate IND applications for those indications and conduct additional clinical trials to support BLAs for those indications. Clinical trials are the major expense we see in the near and long term, and while we are pursuing clinical trials, we will continue to incur the costs of maintaining our business. In addition to clinical trials, our most significant uses of cash to maintain our business going forward are expected to be compensation, costs of occupying, operating, and maintaining our facilities, and the costs associated with maintaining our status as a publicly traded company listed on Nasdaq. During the 12-month period following the filing of this report our plan is to preserve the facilities, equipment, and staff we need to advance the COVER DFUs Trial and other work necessary for advancing the process for obtaining regulatory approval of SkinTE. With the acceptance of our IND for SkinTE and the beginning of the COVER DFUs Trial, we do not expect to have the same need for research and development staff associated with product development and, as a result, we reduced research and development staff inApril 2022 . During the latter part of 2021 and intoFebruary 2022 , we engaged in discussions with certain third parties regarding potential M&A transactions and strategic initiatives. In the first quarter of 2022 we recognized$1.2 million of one-time costs for professional services associated with such M&A and strategic initiatives, which is in addition to$1.2 million of such costs recognized
in the fourth quarter of 2021.
Our actual capital requirements will depend on many factors, including the cost and timing of advancing our IND and subsequent BLA for the use of SkinTE on DFUs, the cost and timing of additional INDs and BLAs for other indications where SkinTE may be used, the cost and timing of clinical trials, the cost of establishing and maintaining our facilities in compliance with current good tissue practices and current good manufacturing practice requirements, and the cost and timing of advancing our product development initiatives related to SkinTE. Our projection of the period of time for which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We will need to raise additional capital in the future to fund our effort to obtain FDA approval of SkinTE and maintain our operations. Any additional equity financing including financings involving convertible securities, if able to be obtained, may be highly dilutive, on unfavorable terms, or otherwise disadvantageous, to existing stockholders. Debt financing, if available, may involve restrictive covenants or require us to grant a security interest in our assets. If we elect to pursue collaborative arrangements, the terms of such arrangements may require us to relinquish rights to certain of our technologies, products, or marketing territories. Our failure to raise additional capital when needed, and on acceptable terms, would require us to reduce our operating expenses and would limit our ability to continue operations, any of which would have a material adverse effect on our business, financial condition, results of operation, and prospects. Results of Operations
Changes in Polarity's Operations
There have been significant changes in our operations affecting our results of
operations for the nine-month period ended
OnJuly 23, 2021 , we submitted an IND for SkinTE to the FDA through our subsidiary, PTE-MD, as the first step in the regulatory process for obtaining licensure for SkinTE under Section 351 of the Public Health Service Act. The FDA subsequently issued clinical hold correspondence to us identifying certain issues that needed to be addressed before the IND could be approved. We provided responses to the FDA, and onJanuary 14, 2022 , the FDA sent correspondence informing us that the clinical hold had been removed. Acceptance of the IND by the FDA enables us to commence the first of two expected pivotal studies needed to support a BLA for SkinTE. We ceased selling SkinTE at the end ofMay 2021 , when the period of enforcement discretion previously announced by the FDA with respect to its IND and premarket approval requirements for regenerative medicine therapies, such as SkinTE, came to an end, and we do not expect to be able to commercialize SkinTE until our BLA is approved, which we believe will take at least three to four years. Consequently, we recognized products net revenues in the nine months of 2021, and did not have any such revenues in the first nine months of 2022. 32 Our subsidiary,Arches Research, Inc. ("Arches") began offering COVID-19 testing services inMay 2020 under 30-day renewable testing agreements with multiple nursing home and pharmacy facilities in the state ofNew York controlled by a single company, which substantially added to our services net revenues in the first three months of 2021. When theNew York nursing homes and pharmacies adopted on-site employee testing at the end ofMarch 2021 , our COVID-19 testing revenues declined substantially, and inAugust 2021 , we decided to cease COVID-19 testing.Arches focused its research and development resources on supporting our IND and clinical trial efforts for the remainder of 2021 and continued in that role in 2022. However, we do not expect we will have the same need for research and development staff associated with product development and, as a result, we reduced research and development staff inApril 2022 , and began to eliminate or sell certain items of equipment that had been leased or purchased for our research and development activity. At the beginning ofMay 2018 , we acquired a preclinical research and veterinary sciences business, which we operated through our indirect subsidiary,IBEX Preclinical Research, Inc. ("IBEX").Utah CRO Services, Inc. , aNevada corporation ("Utah CRO"), is our direct subsidiary and held all of the outstanding capital stock of IBEX (the "IBEX Shares"). Utah CRO also held all the member interest ofIBEX Property LLC , aNevada limited liability company ("IBEX Property"), that owned two unencumbered parcels of real property inLogan, Utah , consisting of approximately 1.75 combined gross acres of land, together with the buildings, structures, fixtures, and personal property (the "Property"), which was leased by IBEX Property to IBEX for IBEX to conduct its preclinical research and veterinary sciences business. OnApril 28, 2022 ,Utah CRO sold all the IBEX Shares to an unrelated third party in exchange for a promissory note in the principal amount of$0.4 million bearing simple interest at the rate of 10% per annum payable interest only on a quarterly basis and all principal and remaining accrued interest due on the five-year anniversary of the closing of the sale of the IBEX Shares. On the same day IBEX Property closed the sale of the Property to an affiliate of the same party that purchased the IBEX Shares and we realized net cash proceeds of$2.3 million , after deducting closing costs and advisory fees. Prior toApril 2022 , while we were exploring the opportunities for selling IBEX and IBEX Property, IBEX assumed a more passive approach to marketing its services, which resulted in a decline in IBEX services revenues in the first nine months of 2022 compared to the first nine months of 2021. Accordingly, our services net revenues were nominal from the beginning of 2022 through the sale of IBEX and the Property completed at the end ofApril 2022 , and services net revenues generated by IBEX ended permanently after the sale. As a result of the foregoing developments, we made a number of changes to our operations that impacted our results of operations. These included reductions in our work force and reducing the services and infrastructure needed to support a larger work force and commercial sales effort.
Comparison of the nine months ended
For the Nine Increase
Months Ended (Decrease)
September 30, September 30,
(in thousands) 2022 2021 Amount %
(Unaudited)
Net revenues
Products $ - $ 2,924 $ (2,924 ) (100 )%
Services 814 5,438 (4,624 ) (85 )%
Total net revenues 814 8,362 (7,548 ) (90 )%
Cost of sales
Products - 448 (448 ) (100 )%
Services 616 3,275 (2,659 ) (81 )%
Total costs of revenues 616 3,723 (3,107 ) (83 )%
Gross profit 198 4,639 (4,441 ) (96 )%
Operating costs and expenses
Research and development 8,489 10,491 (2,002 ) (19 )%
General and administrative 12,456 14,999 (2,543 ) (17 )%
Sales and marketing - 2,718 (2,718 ) (100 )%
Restructuring and other
charges 38 678 (640 ) (94 )%
Impairment of assets held
for sale 223 - 223 100 %
Total operating costs and
expenses 21,206 28,886 (7,680 ) (27 )%
Operating loss (21,008 ) (24,247 ) 3,239 (13 )%
Other income (expense), net
Gain on extinguishment of
debt - 3,612 (3,612 ) (100 )%
Change in fair value of
common stock warrant
liability 13,719 4,134 9,585 232 %
Inducement loss on sale of
liability classified
warrants - (5,197 ) 5,197 100 %
Interest income (expense),
net (33 ) (106 ) 73 69 %
Other income, net 83 185 (102 ) (55 )%
Net loss $ (7,239 ) $ (21,619 ) $ 14,380 (67 )%
33
Comparison of the three months ended
For the Three Months Increase
Ended (Decrease)
September 30, September 30,
(in thousands) 2022 2021 Amount %
(Unaudited)
Net revenues
Services $ - $ 1,116 $ (1,116 ) (100 )%
Total net revenues - 1,116 (1,116 ) (100 )%
Cost of sales
Services - 634 (634 ) (100 )%
Total costs of revenues - 634 (634 ) (100 )%
Gross profit - 482 (482 ) (100 )%
Operating costs and expenses
Research and development 2,551 3,870 (1,319 ) (34 )%
General and administrative 2,685 3,687 (1,002 ) (27 )%
Sales and marketing - 93 (93 ) (100 )%
Restructuring and other
charges - 242 (242 ) (100 )%
Impairment of assets held
for sale 169 - 169 100 %
Total operating costs and
expenses 5,405 7,892 (2,487 ) (32 )%
Operating loss (5,405 ) (7,410 ) 2,005 27 %
Other income (expense), net
Change in fair value of
common stock warrant
liability 1,984 6,354 (4,370 ) (69 )%
Interest income (expense),
net (4 ) (29 ) 25 86 %
Other income, net 25 64 (39 ) (61 )%
Net loss $ (3,400 ) $ (1,021 ) $ (2,379 ) 233 %
Net Revenues and Gross Profit. We ceased commercial sales of SkinTE in the second calendar quarter of 2021 and sold the IBEX services business at the end ofApril 2022 , so we were not engaged in any revenue generating business activity atSeptember 30, 2022 , and do not expect to generate operating revenues from any business activity for the foreseeable future. The decreases in revenues, cost of revenues, and gross profit for the nine-month and three-month periods endedSeptember 30, 2022 , compared to the same periods in 2021 are consistent with our cessation of revenue-generating business activity. 34 Operating Costs and Expenses. Operating costs and expenses decreased$7.7 million , or 27%, for the nine-month period endedSeptember 30, 2022 , compared to the nine-month period endedSeptember 30, 2021 , and decreased$2.5 million , or 32%, for the three-month period endedSeptember 30, 2022 , compared to the three-month period endedSeptember 30, 2021 . Research and development expenses decreased 19% for the nine-month period endedSeptember 30, 2022 , compared to the nine-month period endedSeptember 30, 2021 , and decreased 34% for the three-month period endedSeptember 30, 2022 , compared to the three-month period endedSeptember 30, 2021 . The decrease is primarily attributable to costs incurred in the nine-month period endedSeptember 30, 2021 , for completing our pre-IND diabetic foot ulcers trial, lab supplies for work on preparing the technical items for our IND, and consulting services for preparing our IND that did not recur in the nine-month period endedSeptember 30, 2022 , which was partially offset by an increase primarily attributable to SkinTE manufacturing and overhead personnel redirecting their efforts following the cessation of SkinTE sales to research and development activities, manufacturing costs for SkinTE produced for use in the COVER DFUs Trial, and increased costs related to quality control supplies and infrastructure implemented for the COVER DFUs Trial. The amount of general and administrative expenses decreased 17% for the nine-month period endedSeptember 30, 2022 , compared to the nine-month period endedSeptember 30, 2021 , and decreased 27%, for the three-month period endedSeptember 30, 2022 , compared to the three-month period endedSeptember 30, 2021 . We effectuated a reduction in force for our commercial operations in the second quarter of 2021. Consequently, there were reductions in cash compensation, stock compensation, consulting fees, and travel expense. Furthermore, with the cessation of SkinTE sales we re-allocated manufacturing supplies and compensation from general and administrative expenses to research and development costs. These reductions were offset by professional fees incurred in connection with our pursuit of a strategic transaction that did not materialize, and investment banking fees paid in connection with an at-the-market offering we terminated in the first quarter of 2022. In the first nine months of 2021, we incurred sales and marketing costs related to our commercial sales effort that did not recur in the first nine months of 2022. In connection with terminating commercial sales of SkinTE, we realized as a restructuring charge a loss on impairment of property and equipment in the amount of$0.4 million and a charge of$0.6 million for employee severance and revaluing of equity awards related to severance, which was offset by a gain of$0.3 million from early termination of an office/ laboratory lease inAugusta, Georgia . In the first nine months of 2022 we realized a charge of$0.2 million from impairment of equipment to be sold and a nominal amount of restructuring charges on employee severance. Operating Loss and Net Loss. Operating loss decreased$3.2 million , or 13%, for the nine-month period endedSeptember 30, 2022 , compared to the nine-month period endedSeptember 30, 2021 , and decreased$2.0 million , or 27%, for the three-month period endedSeptember 30, 2022 , compared to the three-month period endedSeptember 30, 2021 . Net loss decreased$14.4 million , or 67%, for the nine-month period endedSeptember 30, 2022 , compared to the nine-month period endedSeptember 30, 2021 , and increased$2.4 million , or 233%, for the three-month period endedSeptember 30, 2022 , compared to the three-month period endedSeptember 30, 2021 . Warrants issued in connection with financings we completed in 2022, 2021 and 2020 are classified as liabilities and remeasured each period until settled, classified as equity, or expiration. As a result of the periodic remeasurement, we recorded a gain for change in fair value of common stock warrant liability of$13.7 million for the nine-month period endedSeptember 30, 2022 , compared to a gain of$4.1 million for the nine-month period endedSeptember 30, 2021 , and a gain for change in fair value of common stock warrant liability of$2.0 million for the three-month period endedSeptember 30, 2022 , compared to a gain of$6.4 million for the three-month period endedSeptember 30, 2021 . For additional information on the change in fair value of common stock warrant liability please see Note 4 to the condensed consolidated financial statements included in this report. We issued common stock purchase warrants inJanuary 2021 , as an inducement to holders of warrants issued inDecember 2020 to exercise those December warrants. As a result, we recognized an inducement loss of$5.2 million for the nine-month period endedSeptember 30, 2021 . There was no similar inducement loss in the first nine months of 2022. 35 Non-GAAP Financial Measure
The table below provides a reconciliation of adjusted net loss, which is a
non-GAAP measure that shows net loss before fair value adjustments relating to
our common stock warrant liability and warrant inducement loss, to GAAP net
loss. We believe adjusted net loss is useful to investors because it eliminates
the effect of non-operating items that can significantly fluctuate from period
to period due to fair value remeasurements. For purposes of calculating non-GAAP
per share metrics, the same denominator is used as that which was used in
calculating net loss per share under GAAP. Other companies may calculate
adjusted net loss differently than we do. Adjusted net loss has limitations as
an analytical tool and you should not consider adjusted net loss in isolation or
as a substitute for our financial results prepared in accordance with GAAP.
Adjusted Net Loss Attributable to Common Stockholders
(in thousands - unaudited non-GAAP measure)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
GAAP Net Loss $ (3,400 ) $ (1,021 ) $ (7,239 ) $ (21,619 )
Change in fair value of
common stock warrant
liability (1,984 ) (6,354 ) (13,719 ) (4,134 )
Inducement loss on sale of
liability classified
warrants - - - 5,197
Non-GAAP adjusted net loss
attributable to common
stockholders - basic &
diluted $ (5,384 ) $ (7,375 ) $ (20,958 ) $ (20,556 )
GAAP net loss per share
attributable to common
stockholders
Basic* $ (0.47 ) $ (0.31 ) $ (1.08 ) $ (6.81 )
Diluted* $ (0.47 ) $ (0.37 ) $ (1.54 ) $ (6.81 )
Non-GAAP adjusted net loss
per share attributable to
common stockholders
Basic and diluted* $ (0.75 ) $ (2.27 ) $ (3.12 ) $ (6.47 ) * Giving retroactive effect to the 1-for-25 reverse stock split effectuated on
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with GAAP requires both the use of estimates and judgment relative to the application of appropriate accounting policies. We are required to make estimates and assumptions in certain circumstances that affect amounts reported in the Unaudited Condensed Consolidated Financial Statements and related footnotes. We evaluate these estimates and assumptions on an ongoing basis based on historical developments, market conditions, industry trends, and other information that we believe to be reasonable under the circumstances. There can be no assurance that actual results will conform to these estimates and assumptions or that reported results of operations will not be materially and adversely affected by the need to make accounting adjustments to reflect changes in these estimates and assumptions from time to time. Our critical accounting policies are more fully described in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" presented in our 2021 Annual Report. There have been no changes in our critical accounting policies fromDecember 31, 2021 . 36
Disclosure Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements. Risks and uncertainties are inherent in forward-looking statements. Furthermore, such statements may be based on assumptions that fail to materialize or prove incorrect. Consequently, our business development, operations, and results could differ materially from those expressed in forward-looking statements made in this Quarterly Report. We make such forward-looking statements pursuant to the safe harbor provisions in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by words such as "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "seek," "should," "target," "would," or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited
to, statements about:
? our ability to raise capital to fund our operations;
? the timing or success of obtaining regulatory licenses or approvals for
initiating clinical trials or marketing our products;
? the initiation, timing, progress, cost, and results of clinical trials under
our open IND for DFUs;
? the initiation, timing, progress, cost, and results of other INDs for SkinTE in
additional indications and the clinical trials that may be required under those
INDs;
? sufficiency of our working capital to fund our operations in the near and long
term, which raises doubt about our ability to continue as a going concern;
? infrastructure required to support operations in future periods, including the
expected costs thereof;
? estimates associated with revenue recognition, asset impairments, and cash
flows;
? variance in our estimates of future operating costs;
? future vesting and forfeitures of compensatory equity awards;
? the effectiveness of our disclosure controls and our internal control over
financial reporting;
? the impact of new accounting pronouncements;
? size and growth of our target markets; and
? the initiation, timing, progress, and results of our research and development
programs.
Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, without limitation:
? the need for, and ability to obtain, additional financing in the future;
? the ability to comply with regulations applicable to the development,
production, and distribution of SkinTE;
? the timing and requirements associated with obtaining FDA acceptance of our
second clinical trial;
? the ability to obtain subject enrollment in our trials at a pace that allows
the trials to progress on the schedules we have established with our CRO;
? unexpected developments or delays in the progress of our clinical trials;
? the scope of protection we can establish and maintain for intellectual property
rights covering our product candidates and technology;
? the ability to gain adoption by healthcare providers of our products for
patient care;
? developments relating to our competitors and industry;
? new discoveries or the development of new therapies or technologies that render
our products or services obsolete or unviable;
? the ability to find and retain skilled personnel;
? outbreaks of disease, including the COVID-19 pandemic, and related stay-at-home
orders, quarantine policies and restrictions on travel, trade, and business
operations;
? political and economic instability, whether resulting from natural disasters,
wars (such as the conflict between
or other sources;
? changes in economic conditions, including inflation, rising interest rates,
lower consumer confidence, and volatile equity capital markets;
? inaccuracies in estimates of our expenses, future revenues, and capital
requirements;
? future accounting pronouncements; and
? unauthorized access to confidential information and data on our information
technology systems and security and data breaches. 37
Forward-looking statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Any forward-looking statement in this Quarterly Report on Form 10-Q reflects our current view with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to our operations, results of operations, industry, and future growth. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. This Quarterly Report on Form 10-Q may also contain estimates, projections, and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data, and similar sources.
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