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accurate, afford, alter, analyze, annum, assist, BDO, bid, certify, Chairman, commensurate, complex, comply, confidence, contemplated, corporate, corporation, covenant, cure, cured, Delinquency, Delinquent, delisting, director, disaggregated, domestic, duration, earnout, EastGroup, effort, encounter, entrant, escrow, evolving, expedient, experienced, expose, external, fairly, freight, furnish, furniture, gain, guarantee, Guide, hand, handling, higher, improve, inbound, independent, inherent, instrument, insufficient, IP, Jeffrey, jurisdiction, Kopfkino, leasehold, liable, light, loan, matter, Minumum, moderate, modification, nature, noncompliance, notice, Notification, Notwithstanding, original, originally, overallotment, paired, permitted, practical, President, pressure, primary, prioritization, promissory, prospective, publicly, purpose, reconciliation, regained, registered, registration, reliability, remeasured, repayment, respectfully, retrospectively, satisfaction, Shipping, sixty, sized, small, spread, stockholder, suitable, suspend, suspension, thereof, ThinkEquity, title, type, unchanged, underwriter, underwriting, unpaid, unproven, unsatisfied, USA, VWAP, warehouse, wholly
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Financial report summary
?Competition
Bristol-Myers Squibb • Pfizer • AMGEN • Celldex Therapeutics • Celgene • EOM Pharmaceutical • Gilead Sciences • Bausch Health Companies • Astrazeneca • AgenusRisks
- To date, we have not generated significant revenue and we do not anticipate generating significant revenue in the near future.
- We need to raise additional capital to support our long-term business plans and our failure to obtain funding when needed may force us to delay, reduce or eliminate our development programs or commercialization efforts.
- Our current cash is anticipated to be sufficient to fund operations only through late May, 2024. We need to raise additional capital to fund our operations and we cannot be certain that funding will be available to us on acceptable terms on a timely basis, or at all. To meet our financing needs, we are considering multiple alternatives, including, but not limited to, additional equity financings, which we expect will include sales of common stock, debt financings, equipment sale leasebacks, and/or funding from partnerships or collaborations. Our ability to raise capital through the sale of securities may be limited by our inability to utilize a registration statement on Form S-3 to raise capital due to the late filing of this Annual Report and various rules of the NYSE American that place limits on the number and dollar amount of securities that we may sell. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that may impact our ability to conduct our business. If we fail to raise additional funds on acceptable terms, we may be unable to continue to maintain our listing on the NYSE American. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we have to restructure the company including a work force reduction, or initiate steps to cease operations or liquidate our assets.
- We have incurred net losses every year since our inception and expect to continue to incur increased expenses and generate operating losses and experience negative cash flows and it is uncertain whether we will achieve profitability.
- We face risks related to the restatement of our previously issued financial statements for the quarters ended June 30, 2022 and September 30, 2022.
- We identified a material weakness in our internal control over financial reporting and determined that our disclosure controls and procedures were ineffective as of June 30, 2022 and September 30, 2022 as well as of December 31, 2022. As a result, we restated our quarterly financial results for the periods ending June 30, 2022 and September 30, 2022. This material weakness continues to exist as of December 31, 2023. In the future, we may identify additional material weaknesses or otherwise fail to maintain an effective system of internal control over financial reporting or adequate disclosure controls and procedures, which may result in material errors in our financial statements or cause us to fail to meet our period reporting obligations.
- We depend on spending and demand from our customers for our contract manufacturing and development services and any reduction in spending or demand could have a material adverse effect on our business.
- To date, our revenues have come from a limited number of customers, making us dependent on those few customers.
- We generally do not have long-term CDMO customer contracts and our backlog cannot be relied upon as a future indicator of revenues.
- All of our manufacturing services are conducted at our facility situated in San Antonio, Texas, which increases our exposure to significant disruption to our business as a result of unforeseeable developments in a single geographic area.
- The operations of our business and our suppliers’ business could also be subject to business interruptions.
- We rely on third parties to supply most of the necessary raw materials and supplies for the products we manufacture on behalf of our customers and our inability to obtain such raw materials or supplies may adversely impact our business, financial condition, and results of operations.
- Our manufacturing services are highly complex, and if we are unable to provide quality and timely services to our customers, our business could suffer.
- We are dependent upon our customers’ ability to receive and maintain regulatory approval for their product candidates which negatively impact our revenues and profitability.
- Our business is dependent upon the demand for our services by our customers.
- If we use hazardous and biological materials in a manner that causes injury or violates applicable law, we may be liable for damages.
- If our acquired intangible assets become impaired, we may be required to record a significant charge to earnings.
- If Elusys Holdings should fail to fulfill the royalty payment obligations under the Merger Agreement, we will be liable for such payments.
- Certain members of our management team serve as executive officers of the entity that owns Elusys Therapeutics, which may give rise to potential conflicts of interest.
- Failure to comply with existing and future regulatory requirements for our CDMO could adversely affect our business, financial condition, and results of operations.
- Uncertainty regarding health care reform and declining general economic or business conditions may have a negative impact on our business.
- Our operating results may be adversely affected by fluctuations in foreign currency exchange rates and restrictions on the deployment of cash across global operations.
- We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act (“FCPA”) and other worldwide anti-bribery laws.
- We have limited protection for our intellectual property, which could impact our competitive position.
- Our technology, our products or our development efforts may be found to infringe upon third-party intellectual property rights.
- Changes in general economic conditions, geopolitical conditions, domestic and foreign trade policies, monetary policies and other factors beyond our control may adversely impact our business and operating results.
- We may not successfully effect our intended expansion, which would harm our business prospects.
- Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future, and as a result, investors in our common stock could incur substantial losses and our ability to raise funds may be impacted.
- We are a smaller reporting company, and we cannot be certain if the reduced reporting requirements applicable to smaller reporting companies will make our common stock less attractive to investors.
- We have additional securities available for issuance, which, if issued, could adversely affect the rights of the holders of our common stock.
- We have never paid dividends and have no plans to pay dividends in the future.
- Certain provisions of the General Corporation Law of the State of Delaware, our bylaws and stockholder rights plan may have anti-takeover effects that may make an acquisition of our company by another company more difficult.
- Future sales of our common stock by our existing stockholders could cause our stock price to decline.
- Our shares of common stock are from time to time thinly traded, so stockholders may be unable to sell at or near ask prices or at all if they need to sell shares to raise money or otherwise desire to liquidate their shares.
- The shares of common stock offered under any at the market offering that we may engage in, and investors who buy shares at different times will likely pay different prices.
- Reports published by securities or industry analysts, including projections in those reports that exceed our actual results, could adversely affect our common stock price and trading volume.
Management Discussion
- Revenues. For the three months ended March 31, 2024 we recognized $3.5 million of revenue from process development. For the three months ended March 31, 2023 we recognized $0.7 million of process development revenue and $0.1 million of license revenue. The increase in process development revenue is attributable to the expanded biomanufacturing operations and service offerings of the CDMO.
- Cost of revenues. Cost of revenues were $0.9 million and $0.6 million for the three months ended March 31, 2024 and 2023, respectfully and primarily consisted of the direct cost of labor, overhead and material costs at Scorpius. The increase in cost of revenues is due to the expanded service offerings and completed milestone work on multiple CDMO contracts.
- Research and development expense. Research and development expenses were $3.9 million for the three months ended March 31, 2024 compared to $6.3 million for the three months ended March 31, 2023. The components of R&D expense are as follows, in millions: