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    RGIN   US75887Q1022


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REGENICIN : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

02/22/2021 | 10:34am EDT

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.


During the quarter ended, December 31, 2019, the Company continued to position its product, NovaDerm®, to enter clinical trials to gain FDA product approval. Having secured Orphan Drug Designation as a biologic for NovaDerm®, we complied with the FDA annual reporting requirements. In addition, as part of an asset purchase agreement, we granted Amarantus Bioscience Holdings, Inc., a right of first refusal for the purchase of any engineered skin technology designed for treatment of severe burns in humans that we developed. This right of first refusal expired during this quarter on November 7, 2019.

Recently, the risk of introducing pathogens when using materials from animals to produce drugs, devices, and biologics has increased awareness of the safety issues. NovaDerm® and future Regenicin products use animal sourced materials like collagen to produce the life-saving products. We have worked with our collagen supplier and the FDA to ensure we are meeting the expectations for traceability and purity of the FDA for NovaDerm® production. We have arranged for sufficient Bovine Closed Herd corium to produce sufficient collagen scaffolds to meet our needs for the clinical trials, ensuring compliance with FDA requirements.

Our major objective for 2021 is to secure the required funding to finalize some additional requirements of the IND application and begin the clinical trials. As previously reported, our goal in obtaining the required funding has been to minimize shareholders' dilution as much as possible. Consequently, we are primarily pursuing financing through the issuance of debt instruments, international licensing agreements and governmental grants. We have completed all the administrative requirements to allow us to apply for grants. Regenicin is now registered with System For Award Management ("SAM") which is required to do business with the US Government. We must have our IND submitted before we can request financial assistance from The US FDA Office of Orphan Products Clinical Trials Grant. We intend to take full advantage of working with OOPD to develop our clinical protocol according to suggestions from the FDA during our Pre-IND meeting.

The Orphan Drug Act created the Orphan Product Grants Program, which is administered by OOPD, to stimulate the development of promising products for rare diseases and conditions. Orphan product grants are a proven method of fostering and encouraging the development of new safe and effective medical products for rare diseases and conditions. These grants support new and continuing extramural research projects that test the safety and efficacy of promising new drugs, biologics, devices, and medical foods through human clinical trials in very vulnerable populations often with life-threatening conditions.


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As a registered member of SAM we will be investigating numerous government programs to seek developmental funding needed to complete our IND.

We estimated that the completion of the IND and the clinical trials would take approximately 12-18 months and cost in the range of $6.9 million once initial funding is in place. It is estimated that the cost to finalize the IND will be approximately 1.9 million, and the cost to complete Phase 1/2 of the clinical trial will be approximately 5.0 million. In addition to the completion of the IND, the only other significant gating item to entering the clinical trials is funding for this process.

Two board positions remain open anticipating requests of Board representation from potential investors.

Importantly, we are filing this quarterly report without our auditor's review of our financial information or this report. Our reason for doing this is simply that we cannot afford at this time to pay our auditor for past due services or prior filings or to pay the costs necessary for this current filing. Instead, we have provided herein information as typically presented in our 10Q quarterly report, including financial information, which has not been reviewed or audited by any independent outside source.

We intend, if and when able, to file an amendment to this 10Q and previously filed 10K with such audited and reviewed information. We are unaware at this time when, if ever, we will obtain the necessary funding for this amended filing, but we will continue to provide such information to investors as and when we are able through either this SEC EDGAR filing process and/or through postings on our website as things change.

We are continuing to work with potential investors in order to pursue the necessary funding based on our stated objectives. It has taken longer to raise the funds than originally estimated; however, we remain confident that our goal is achievable. In the interim, the officers and related parties intend to continue to fund our essential operating costs as they have in the past, as disclosed in the accompanying financial statement.

In preparation of the IND application, we will continue, subject to funding, to develop the testing suggested by the FDA during the Pre-IND meeting. Our scaffold supplier continues to introduce the FDA suggested testing on collagen processing which addresses Bovine Closed Herd requirements for the tighter safety and traceability of the collagen scaffolds used to produce NovaDerm®. Our scaffold supplier is close to entering a contract for ASTM-F2212 testing of Type I collagen. We continue discussions and evaluation of possible clinical trial sites for NovaDerm®. Our discussions have confirmed that patient recruitment and enrollment should be faster and less complicated than other clinical trials because of our Orphan Designation. In addition, the surgical protocol will be similar to the grafting procedures currently in use at those limited burn center facilities, NovaDerm® should thus require minimal physician training and documentation to complete the clinical trial.

Subject to funding, the initial trials are planned to begin with a total of ten subjects and an Initial Data Safety Monitoring Board, (DSMB), review of safety on the first three subjects once they have reached 6 months follow-up. We do not intend to interrupt our trial waiting for the DSMB report. Our management's approach is to set up the trials so as to allow for a seamless transition into commercial production upon approval.

Our first cultured skin substitute product candidate, NovaDerm®, is a multi-layered tissue-engineered living skin prepared by utilizing autologous (patient's own) skin cells. It is a graftable cultured epithelium skin substitute containing both epidermal and dermal components with a collagen base. Clinically, we expect our Cultured Skin substitute self-to-self skin graft product will perform the same as split thickness allograft skin. Our Autologous cultured skin substitute should not be rejected by the immune system of the patient, unlike porcine or cadaver cellular grafts. Immune system rejection is a serious concern in Xeno-transplant procedures which have a cellular component. The use of our cultured skin substitute should not require any specialized physician training because it is applied the same as in a standard split thickness allograft procedure.

NovaDerm® does not require the large harvest areas that are required when performing split thickness allograft procedures. NovaDerm® is designed to need only a small area of harvest material to cover the wound. Where split thickness allograft skin can be stretched 2 to 4 times, NovaDerm® can expand the coverage 100 to 400 times, greatly reducing scarring from harvesting. There are limits to how much burned area can be covered with the current split thickness allograft procedure. When a patient has more than 50% of their body with full thickness burns there is not enough harvest area available to cover the area so the same area harvested must be allowed to grow back the replacement skin before it can be harvested the second or third time, allowing to wound area to open with high risk of infection and even mortality.

Clinically speaking, a product designed to treat a life-threatening condition must be available for the patient when needed. Our Culture skin substitute is being developed to be ready to apply to the patient when the patient is ready for grafting, within the first month of the patient being admitted to the hospital. Patients with serious burn injuries may not be in a condition to be grafted on a predefined schedule made more than a month in advance. Therefore, in order to accommodate the patient's needs, we are striving to ensure that our cultured skin substitute will have an adequate shelf life and manufacturing schedule to ensure it is available whether the patient needs it the first month, or any day after, until the patient's wound is completely covered and closed. We intend to provide the patient enough NovaDerm® to meet the patients' needs in a single lot of material with adequate shelf life to be available when the patient is ready. With our extended shelf life and enough material in the first shipment the physician may perform a second grafting 5 or ten days post grafting period 1.


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Our second product is anticipated to be TempaDerm®. TempaDerm® uses cells obtained from human donors to develop banks of cryo-preserved (frozen) cells and cultured skin substitute to provide a continuous supply of non-allogenic skin substitutes to treat much smaller wound areas on patients, such as ulcers. This product is expected to have applications in the treatment of chronic skin wounds such as diabetic ulcers, decubitus ulcers and venous stasis ulcers. This product is also expected to be similar to our burn indication product, except for the indications, and it will not depend totally on autologous cells. In fact, it may be possible to use the excess cultured skin that was originally produced for use on the patient that donated the cells used to grow the skin. Hopefully, TempaDerm® will be able to take this original cultured skin and use it on someone other than the original donor. As currently planned, TempaDerm® has the possibility of using banked cells, or even frozen cultured skin substitutes, to carry inventory to satisfy unknown needs or large volumes to meet the demands created in large scale disasters. Because of our focus to date on NovaDerm®, we have taken only limited steps toward the development of TempaDerm®. We may also decellularize TempaDerm® or NovaDerm® to make collagen wound coverings containing all the natural growth promoters found in skin.

We believe this technology has many different uses beyond the burn indication. The other uses may include chronic wounds, reconstructive surgery, other complex organs and tissues. Some of the individual components of our planned cultured skin substitute technology is expected to be developed for devices, such as tendon wraps made of collagen or collagen temporary coverings of large area wounds to protect the patients from infections while waiting for the permanent skin substitute. The collagen technology used for cultured skin substitutes, as designed, is expected to be used for many different applications in wound healing and stem cell technology and even drug delivery systems.

We could pursue any or all of the indications simultaneously if financing permitted, but for now we will seek approval for burns first as an Orphan Biologic Product to establish significant safety data and then Biological License Approval.

Results of Operations for the Three Months Ended December 31, 2020 and 2019

We generated no revenues from September 6, 2007 (date of inception) to December 31, 2020. We do not expect to generate revenues until we are able to obtain FDA approval of our product and thereafter successfully market and sell the product.

We incurred operating expenses of $150,818 for the three months ended December 31, 2020, compared with operating expenses of $192,350 for the three months ended December 31, 2019. General and Administrative expenses accounted for all of our operating expenses for the three months ended December 31, 2020. The major difference and shift in operating expenses from the three months ended December 31, 2020 was accounted for by lower General and Administrative expenses.

Net other expense was $9,060 for the three months ended December 31, 2020, as compared to net other expense of $5,636 for the three months ended December 31, 2019. Other expenses for the three months ended December 31, 2020 consisted of interest expense of $8,285 and an unrealized loss on securities of $775. Other income and expense for the same period ended 2019 consisted of interest expense of $4,411, and an unrealized loss on securities of $1,225.

After provision for preferred stock dividends of $17,845, we recorded net loss of $177,723 for the three months ended December 31, 2020. By comparison, we recorded net loss of $215,831 for the three months ended December 31, 2019. Our net loss for the quarter ended December 31, 2020 was primarily the result of General and Administrative expenses of $150,818.


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Liquidity and Capital Resources

As of December 31, 2020, we had cash of $1,373 and total current assets of $3,373. As of December 31, 2020, we had current liabilities of $4,450,527. We therefore had working capital deficit of $4,447,154.

Operating activities used $11,193 in cash for the three months ended December 31, 2020. This use of cash was primarily attributable to funding the loss for the period.

There were no investing activities during the reported period.

Cash flows from financing activities for the three months ended December 31, 2020 represent net proceeds from a loan from John Weber, the Company's Chief Financial Officer of $11,200.

We have issued various promissory notes to meet our short term demands, the terms of which are provided in the notes to the consolidated financial statements accompanying this report. While this source of bridge financing has been helpful in the short term to meet our financial obligations, we will need additional financing to fund our operations, continue with the FDA approval process, and implement our business plan. Our long term financial needs are estimated at about $8-10 million.

Based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund operations through increased debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We plan to seek additional financing in a private equity or debt offering to secure funding for operations. Alternatively, we have been discussing the possibility of obtaining financing through a merger and/or other arrangements related to combining with other related companies or going private transactions. There can be no assurance that we will be successful in raising additional funding or in entering into any of these sorts of arrangements. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.

Off Balance Sheet Arrangements

As of December 31, 2020, there were no off-balance sheet arrangements.

Going Concern

Our consolidated financial statements have been prepared assuming that we will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We have incurred operating losses from inception, expect to incur further losses in the development of our business, and have been dependent on funding operations through the issuance of convertible debt and private sale of equity securities. These conditions raise substantial doubt about our ability to continue as a going concern. Management's plans include continuing to finance operations through the private or public placement of debt and/or equity securities and the reduction of expenditures. However, no assurance can be given at this time as to whether we will be able to achieve these objectives. The consolidated financial statements do not include any adjustment relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

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Financials (USD)
Sales 2020 - - -
Net income 2020 -0,56 M - -
Net Debt 2020 0,57 M - -
P/E ratio 2020 -2,92x
Yield 2020 -
Capitalization 2,84 M 2,84 M -
EV / Sales 2019 -
EV / Sales 2020 -
Nbr of Employees 3
Free-Float 72,8%
Duration : Period :
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Managers and Directors
Randall E. McCoy Chairman, President & Chief Executive Officer
John J. Weber Chief Financial & Accounting Officer, Director
J. Roy Nelson Chief Science Officer
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