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
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
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
Table of Contents
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
Table of Contents
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
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
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.
Table of Contents
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
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.
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
© Edgar Online, source Glimpses