PDS0102 is an investigational immunotherapy utilizing tumor-associated and immunologically active T cell receptor gamma alternate reading framed protein (TARP) from the NCI. PDS0102 is designed to treat TARP-positiveTARP-associated cancers including, acute myeloid leukemia (AML), prostate and breast cancer. In our preclinical work, in the administration of PDS0102, the Versamuine+TARP antigen combination led to the induction of large numbers of polyfunctional tumor targeted killer T cells. In addition, the TARP tumor antigen alone has already been studied at the NCI in men with prostate cancer and been shown to be safe, immunogenic with slowing tumor growth rates (NCT00972309). We are evaluating the next steps in the clinical development of PDS0102 and are seeking nondilutive fundingfinancings to progress to humanmove the program into clinical trials.
MUC1 is highly expressed in several types of cancer and has been shown to be associated with drug resistance and poor disease prognosis in breast, colorectal, lung and ovarian cancers, for which PDS0103 is being developed. Expression of MUC-1MUC1 is often associated with poor disease prognosis, due in part to drug resistance. In preclinical studies, and similarly to PDS0101, PDS0103 demonstrated the ability to generate powerful MUC1-specific CD8 killer T cells. In the first quarter of 2022, we held a pre-IND meeting with the FDA on PDS0103 and we are prepared to submit our IND package inby the first half of 2023.2024. However, the actual submission date may potentially be impacted by the outcomeallocation of our meetings withresources to initiate the FDA on the timing of a pivotal trial for PDS0101. Our primary goal is commercialization of PDS0101, and allocation of resources to implement an earlier than planned start of a registrational trial may delay PDS0103 initiation.
Our current pipeline of Versamune based therapies is as follows:
IL-12 Oncology Immunocytokine Pipeline
PDS01ADC (formerly known as PDS0301/M9241 and NHS-IL-12 ) is a novel investigational IL12 fused antibody drug conjugate (IgG1), tumor-targeting interleukin 12 (IL-12) immune-cytokine that enhances the proliferation, potency and longevity of T cells in the tumor microenvironment. Together with Versamune based immunotherapies PDS01ADC works synergistically to overcome tumor immune suppression and to promote a targeted T cell attack against cancers. As with Versamune, PDS01ADC is given by a simple subcutaneous injection. Clinical data suggests the addition of PDS01ADC to Versamune based immunotherapies may demonstrate significant disease control in advanced cancer patients by shrinking tumors and/or prolonging life.
With the exclusive global license agreement with Merck KGaA, Darmstadt, Germany for PDS01ADC, we believe we have simplified our registrational pathway for the NCI-led triple combination by owning both PDS0101 and PDS01ADC and combining these agents with an FDA approved ICI. PDS01ADC has been designed to overcome the limitations of cytokine therapy as explained above, and based on extensive preclinical studies performed at the NCI evaluating PDS01ADC as a monotherapy and also in combinations with established standard of care treatments for cancer, we believe that PDS01ADC has significant potential as a cytokine therapy independent of Versamune. Based on the informative preclinical studies, a number of ITT Phase 2 trials are currently in progress at the NCI, some of which are outlined below:
| ● | Phase II Study Evaluating ICI Naïve and Resistant Patients with HPV-positive malignancies treated with PDS01ADC, PDS0101 and bintrafusp alfa. |
| ● | A Phase II Study Evaluating T-Cell Clonality After Stereotactic Body Radiation Therapy Alone and in Combination with the Immunocytokine PDS01ADCin Localized High and Intermediate Risk Prostate Cancer Treated with Androgen Deprivation Therapy |
| ● | A Phase I/II Study of PDS01ADC in Combination with Docetaxel in Adults with Metastatic Castration Sensitive and Castration Resistant Prostate Cancer |
| ● | Phase I/II of PDS01ADC going forward as a Monotherapy in Advanced Kaposi Sarcoma |
| ● | Phase I/II of PDS01ADC in Combination of with a Histone Deacetylase (HDAC) Inhibitor in ICI resistant MUC1-positive colon and bladder cancers among others |
In October 2023, interim safety and immune response data was presented for the first-in-human Phase1/2 clinical trial evaluating PDS01ADC in combination with current SOC chemotherapy, docetaxel, to treat metastatic castration sensitive and castration resistant prostate cancer. The data was featured in an oral presentation at the 11th Annual Meeting of the International Cytokine & Interferon Society. Data presented as follows:
| ● | Decrease in PSA levels was seen in all patients at all three tested doses of PDS0301 and 61% of patients had at least a 60% decrease in PSA levels. |
| ● | All doses of the combination were well-tolerated with one patient experiencing Grade 4 neutropenia. |
| ● | Administration of the combination was associated with decreases in T reg cells and increases in activated natural killer (NK) cells, memory CD8 T cells, proliferating CD4 and CD8 T cells and cytokines INF-γ and Interleukin 10 (IL-10). |
| ● | The changes in immune responses with the combination were independent of the PDS0301 dose. |
We are working closely with the NCI to determine the best pathway forward for the prioritized PDS01ADC studies, as well as evaluating the use of PDS01ADC in combination with other Versamune based clinical candidates.
Our current pipeline of IL12 fused antibody conjugated PDS01ADC based therapies is as follows:
Infectimune Development Strategy
We believe that the key differentiating attributes of the Infectimune platform technology are strong induction of CD8+CD8 and CD4+CD4 T cells as well as antibodies which can be leveraged to improve treatment and preventive options in several infectious disease indications. In January 2022, we announcedpresented preclinical data on our universal flu program sponsored by the National Institute of Allergy and Infectious Disease (NIAID) demonstrating the potential of the Infectimune technology with computationally designed influenza proteins developed by the laboratory of Dr. Ted Ross at the University of Georgia to generate broadly protective anti-influenza immune responses across multiple strains of influenza. This data as well as our COVID-19 data has provided a unique opportunity to highlight Infectimune’s potentially transformative utility in the development of more broadly effective and longer lasting protective vaccines. Current preventive and prophylactic vaccine approaches and technologies predominantly focus on creating strong induction of antibody responses. However, the induction of T cell responses, in addition to antibody responses, provides more durable and broad protection against infectious diseases.
Based on the promising data recently announced with the universal seasonal flu vaccine and the current focus of the NIAID in developing more effective flu vaccines, we have decided to opportunistically focus our near-term infectious disease activities to align with the interests of the NIAID Collaborative Influenza Vaccine Innovation Centers (CIVICs) program. This will involve development of a universal seasonal flu vaccine and the potential development of a universal pandemic influenza vaccine based on similar computationally designed antigens as have shown promise with Infectimune.
In July 2022, we announced the presentation of universal flu vaccine preclinical data for PDS0202 at the 41st American Society of Virology meeting: Abstract number 3733830, Infectimune™Infectimune enhances antibodies elicited by COBRA hemagglutinin influenza vaccine. We are evaluating the next steps in the clinical development and funding for PDS0202.
The results for Infectimune based vaccines were published in two separate articles in the peer reviewed journal Viruses in February 2023: 1. preclinical studies demonstrating complete protection against sickness after lethal challenge with live SARS-CoV-2 or influenza viruses (Gandhapudi SK et al. Viruses 2023, 15, 432) and 2. Dramatically enhanced CD4 T cell responses to recombinant influenza proteins compared to leading commercial vaccine adjuvants (Henson TR et al. Viruses 2023, 15, 538).
22
In September 2023, data on our investigational universal flu vaccine, PDS0202, were presented at the 9th European Scientific Working Group on Influenza (ESWI) conference. These data demonstrated active neutralization across multiple influenza viruses and provided protection against infection and weight loss after challenging with high doses of H1N1 viruses not previously exposed to flu.
Our current pipeline of Versamuneand Infectimune based therapies is as follows:
Liquidity
We have never been profitable and have incurred net losses in each year since inception. Our net losses were $21.7$32.0 million, and $10.6$21.7 million for the nine months ended September 30, 20222023 and 2021,2022, respectively. As of September 30, 2022,2023, we had an accumulated deficit of $82.4$133.6 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with these operations.
As of September 30, 2022,2023, we had $71.6$54.3 million in cash and cash equivalents.
Our future funding requirements will depend on many factors, including the following:
| ● | the timing and costs of our planned clinical trials; |
| ● | the timing and costs of our planned preclinical studies of our Versamune® platform; |
| ● | the outcome, timing and costs of seeking regulatory approvals; |
| ● | the terms and timing of any future collaborations, licensing, consulting or other arrangements that we may enter into; |
| ● | the amount and timing of any payments we may be required to make in connection with the licensing, filing, prosecution, maintenance, defense and enforcement of any patents or patent applications or other intellectual property rights; and |
| ● | the extent to which we license or acquire other products and technologies. |
SELECTED FINANCIAL OPERATIONS OVERVIEW
Revenue
We have not generated any revenues from commercial product sales and do not expect to generate any such revenue in the near future. We may generate revenue in the future from a combination of research and development payments, license fees and other upfront payments or milestone payments.
Research and Development Expenses
Research and development expenses include employee-related expenses, licensing fees to use certain technology in our research and development projects, costs of acquiring, developing and manufacturing clinical trial materials, as well as fees paid to consultants and various entities that perform certain research and testing on our behalf. Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided by vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the consolidated financial statements as prepaid or accrued expenses. Costs incurred in connection with research and development activities are expensed as incurred.
We expect that our research and development expenses will increase significantly over the next several years as we advance our platforms including Versamune based immuno-oncology, orIL12 Fused antibody drug candidates in oncology, and Infectimune based infectious disease candidates into and through clinical trials, pursue regulatory approval of our investigational candidates and prepare for a possible commercial launch, all of which will also require a significant investment in contract and internal manufacturing and inventory related costs.
The process of conducting human clinical trials necessary to obtain regulatory approval is costly and time consuming. We may never succeed in achieving marketing approval. The probability of successful commercialization of our drug candidates may be affected by numerous factors, including clinical data obtained in future trials, competition, manufacturing capability and commercial viability. As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates.
Results of Operations
The following table summarizes the results of our operations for the three months ended September 30, 20222023 and 2021:2022:
| | Three Months Ended September 30, | | | Increase | |
| | 2022 | | | 2021 | | | $ Amount | | | % | |
| | (in thousands) | | | | | | | |
Operating expenses: | | | | | | | | | | | | |
Research and development expenses | | $ | 4,353 | | | $ | 3,688 | | | $ | 665 | | | | 18 | % |
General and administrative expenses | | | 2,926 | | | | 3,274 | | | | (348 | ) | | | (11 | )% |
Total operating expenses | | | 7,279 | | | | 6,962 | | | | 317 | | | | 5 | % |
Loss from operations | | | (7,279 | ) | | | (6,962 | ) | | | (317 | ) | | | 5 | % |
Interest income (expense), net | | | (145 | ) | | | 1 | | | | (146 | ) | | | (14,600 | )% |
Net loss and comprehensive loss | | $ | (7,424 | ) | | $ | (6,961 | ) | | $ | (463 | ) | | | 7 | % |
| | Three Months Ended September 30, | | | Increase (Decrease)
| |
| | 2023 | | | 2022 | | | $ Amount | | | % | |
| | (in thousands) | | | | | | | |
Operating expenses: | | | | | | | | | | | | |
Research and development expenses | | $ | 6,449 | | | $ | 4,353 | | | $ | 2,096 | | | | 48 | % |
General and administrative expenses | | | 4,071 | | | | 2,926 | | | | 1,145 | | | | 39 | % |
Total operating expenses | | | 10,520 | | | | 7,279 | | | | 3,241 | | | | 45 | % |
Loss from operations | | | (10,520 | ) | | | (7,279 | ) | | | (3,241 | ) | | | 45 | % |
Interest income (expense), net | | | (329 | ) | | | (145 | ) | | | (184 | ) | | | 127 | % |
Net loss and comprehensive loss | | $ | (10,849 | ) | | $ | (7,424 | ) | | $ | (3,425 | ) | | | 46 | % |
Research and Development Expenses
Research and development (R&D) expenses increased to $6.4 million for the three months ended September 30, 2023 from $4.4 million for the three months ended September 30, 2022 from $3.72022. The increase of $2.0 million is primarily attributable to an increase of $1.3 million in clinical trials, and $0.7 million in personnel costs, including $0.3 million in non-cash stock-based compensation.
General and Administrative Expenses
General and administrative expenses increased to $4.1 million for the three months ended September 30, 2021. The increase of $0.7 million in 2022 was primarily attributable to an increase of $0.2 million in clinical study and research costs, $0.3 million in personnel costs and $0.4 million in manufacturing services partially offset by a decrease of $0.2 million in professional fees and facilities.
General and Administrative Expenses
General and administrative expenses decreased to2023 from $2.9 million for the three months ended September 30, 2022 from $3.3 million for the three months ended September 30, 2021.2022. The decreaseincrease of $0.4$1.2 million is primarily attributable to a decreasean increase of $0.7 million in personnel costs, including $0.5 million in personnel, a decrease of $0.1non-cash stock-based compensation, and $0.5 million in facilities offset by an increase of $0.2 million in professional fees.investor relations costs.
Comparison of the Nine Months Endedmonths September 30, 20222023 and 20212022
The following table summarizes the results of our operations for the nine months ended September 30, 20222023 and 2021:2022:
| | Nine Months Ended September 30, | | | Increase (Decrease) | | | Nine Months Ended September 30, | | | Increase (Decrease) | |
| | 2022 | | | 2021 | | | $ Amount | | | % | | | 2023 | | | 2022 | | | $ Amount | | | % | |
| | (in thousands) | | | | | | | | | (in thousands) | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development expenses | | $ | 13,276 | | | $ | 7,865 | | | $ | 5,411 | | | 69 | % | | $ | 20,297 | | | $ | 13,276 | | | $ | 7,021 | | | | 53 | % |
General and administrative expenses | | | 9,575 | | | | 7,252 | | | | 2,323 | | | 32 | % | | | 12,341 | | | | 9,575 | | | | 2,766 | | | | 29 | % |
Total operating expenses | | | 22,851 | | | | 15,117 | | | | 7,734 | | | 51 | % | | | 32,638 | | | | 22,851 | | | | 9,787 | | | | 43 | % |
Loss from operations | | (22,851 | ) | | (15,117 | ) | | (7,734 | ) | | 51 | % | | | (32,638 | ) | | | (22,851 | ) | | | (9,787 | ) | | | 43 | % |
Interest income (expense), net | | (65 | ) | | 3 | | | (68 | ) | | (2,267 | )% | | | (812 | ) | | | (65 | ) | | | (747 | ) | | | 1,149 | % |
Benefit from income taxes | | | 1,199 | | | | 4,516 | | | | (3,317 | ) | | (73 | )% | | | 1,406 | | | | 1,199 | | | | 207 | | | | 17 | % |
Net loss and comprehensive loss | | $ | (21,717 | ) | | $ | (10,598 | ) | | $ | (11,119 | ) | | 105 | % | | $ | (32,044 | ) | | $ | (21,717 | ) | | $ | (10,327 | ) | | | 48 | % |
Research and Development Expenses
Research and development (R&D) expenses increased to $20.3 million for the nine months September 30, 2023 from $13.3 million for the nine months ended September 30, 2022 from $7.9 million for the same period in 2021.2022. The increase of $5.4$7.0 million was primarily attributable to an increase in personnel costs of $1.8$2.0 million, of which $0.5including $1.0 million wasin non-cash stockstock-based compensation, clinical studiestrials of $1.5$3.4 million, manufacturing and qualityexpenses of $1.9$1.4 million and researchprofessional fees and consumablesfacilities costs of $0.2 million.
General and Administrative Expenses
General and administrative expenses increased to $12.3 million for the nine months September 30, 2023 from $9.6 million for the nine months ended September 30, 2022 from $7.32022. The increase of $2.7 million for the same period in 2021. The $2.3 million increase was primarily attributable to an increase in personnel costs of $1.2$2.0 million, of which $0.8including $1.4 million wasin non-cash stockstock-based compensation, and professional and legal costs of $1.1 million.$0.7 million in investor relations costs.
Benefit from Income Taxes
Income tax benefit was $1.4 million for the nine months ended September 30, 2023 and $1.2 million for the nine months ended September 30, 2022 and $4.5 million for the nine months Ended September 30, 2021. A decrease2022. The increase of $3.3$0.2 million was due to a smaller portionan increase in the amount of New Jersey NOL carryforwards sold when compared to the accumulated Net Operating Losses (NOL) through 2020 available for sale.comparable period.
Liquidity and Capital Resources
In July 2020, we filed a shelf registration statement, or the 2020 Shelf Registration Statement, with the SEC, for the issuance of common stock, preferred stock, warrants, rights, debt securities and units, which we refer to collectively as the Shelf Securities, up to an aggregate amount of $100 million. The 2020 Shelf Registration Statement was declared effective on July 31, 2020. The 2020 Registration Statement was terminated upon effectiveness of the 2022 Registration Statement (as discussed below).
In August 2020, we sold 6,900,000 shares of our common stock at a public offering price of $2.75 per share pursuant to the 2020 Shelf Registration Statement, which includes 900,000 shares issued upon the exercise by the underwriter of its option to purchase additional shares at the public offering price, minus underwriting discounts and commissions. We received gross proceeds of approximately $19.0 million and net proceeds of approximately $17.1 million, after deducting underwriting discounts and offering expenses.
In May 2021, we received approximately $4.5 million from the net sale of tax benefits to an unrelated, profitable New Jersey corporation pursuant our participation in the New Jersey Technology Business Tax Certificate Transfer Net Operating Loss (NOL) program for State Fiscal Year 2020.
In June 2021, we sold 6,088,235 shares of common stock at a public offering price of $8.50 per share pursuant to the 2020 Shelf Registration Statement, which includes 794,117 shares issued upon the exercise by the underwriter of its option to purchase additional shares at the public offering price, minus underwriting discounts and commissions. We received gross proceeds of approximately $51.7 million and net proceeds of approximately $48.5 million, after deducting underwriting discounts and offering expenses.
In April 2022, we received approximately $1.2 million from the net sale of tax benefits to an unrelated, profitable New Jersey corporation pursuant our participation in the New Jersey Technology Business Tax Certificate Transfer NOL program for State Fiscal Yeartax year 2020.
In August 2022, we filed a shelf registration statement, or the 2022 Shelf Registration Statement, with the SEC for the issuance of common stock, preferred stock, warrants, rights, debt securities, and units, which the Company refers to collectively as the Shelf Securities, up to an aggregate amount of $150 million, $50 million of which covers the offer, issuance and sale by the Companyus of itsour common stock under the Sales Agreement (as discussed below). The 2022 Shelf Registration Statement was declared effective on September 2, 2022.
In August 2022, we entered into an At Market Issuance Sales Agreement, or the Sales Agreement, with B. Riley Securities, Inc. and BTIG, LLC, each an Agent and collectively the Agents, with respect to an at-the-market offering program under which we may offer and sell, from time to time at our sole discretion, shares of our common stock, having an aggregate offering price of up to $50.0$50 million, or the Placement Shares, through or to the Agents, as sales agents or principals. Upon delivery of a placement notice and subject to the terms and conditions of the Sales Agreement, the Agents may sell the Placement Shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act of 1933, as amended, including, without limitation, sales made through The Nasdaq Capital Market or on any other existing trading market for our common stock. The Agents will use commercially reasonable efforts to sell the Placement Shares from time to time, based upon our instructions (including any price, time or size limits or other customary parameters or conditions we may impose). We will pay the Agents a commission equal to three percent (3%) of the gross sales proceeds of any Placement Shares sold through the Agents under the Sales Agreement, and also hashave provided the Agents with customary indemnification and contribution rights. We are not obligated to make any sales of our common stock under the Sales Agreement. The offering of Placement Shares pursuant to the Sales Agreement will terminate upon the earlier of (i) the sale of all Placement Shares subject to the Sales Agreement or (ii) termination of the Sales Agreement in accordance with its terms. DuringFor the quarteryear ended September 30,December 31, 2022, we did not sell anysold 1,238,491 shares of our common stock with a net value of $9.9 million pursuant to the Sales Agreement. During the three and nine months ended September 30, 2023, we sold 139,575 and 736,037 shares of our common stock with a net value of $0.8 million and $5.7 million, respectively, pursuant to the Sales Agreement.
In August 2022, we entered into a venture loan and security agreement, or the Loan and Security Agreement, with Horizon Technology Finance Corporation, as lender and collateral agent for itself and the other lenders. The Loan and Security Agreement provides for the following 6 separate and independent term loans: (a) a term loan in the amount of $7,500,000, or Loan A, (b) a term loan in the amount of $10,000,000, or Loan B, (c) a term loan in the amount of $3,750,000, or Loan C, (d) a term loan in the amount of $3,750,000, or Loan D, (e) a term loan in the amount of $5,000,000, or Loan E, and (f) a term loan in the amount of $5,000,000, or Loan F, (with each of Loan A, Loan B, Loan C, Loan D, Loan E, and Loan F, individually a Loan and, collectively, the Loans). Loan A, Loan B, Loan C, and Loan D were delivered to us on August 24, 2022. Loan E and Loan F arewere uncommitted Loans that may becould have been advanced by the lendersLenders upon their discretionthe parties agreement prior to July 31, 2023 upon the satisfaction by the Company of certain agreed upon conditions precedent.conditions. At this time the option has expired and Loan E and Loan F are no longer available to the Company under the Loan and Security Agreement . We may only use the proceeds of the Loans for working capital or general corporate purposes.
Each Loan matures on the 48-month anniversary following the applicable funding date unless accelerated pursuant to agreed upon events of default. Payments on the principal balance begin on October 1, 2024 and are paid monthly in the succeeding 24 months. The principal balance of each Loan bears a floating interest. The interest rate is calculated initially and, thereafter, each calendar month as the sum of (a) the per annum rate of interest from time to time published in The Wall Street Journal as contemplated by the Loan and Security Agreement, or any successor publication thereto, as the “prime rate” then in effect, plus (b) 5.75%; provided that, in the event such rate of interest is less than 4.00%, such rate shall be deemed to be 4.00% for purposes of calculating the interest rate.
Interest is payable on a monthly basis based on each Loan principal amount outstanding the preceding month. We, at our option upon at least ten (10) business days’ written notice to the lenders, may prepay all (and not less than all) of the outstanding Loan by simultaneously paying to each lender an amount equal to (i) any accrued and unpaid interest on the outstanding principal balance of the Loans; plus (ii) an amount equal to (A) if such Loan is prepaid on or before the Loan Amortization Date (as defined in the Loan and Security Agreement) applicable to such Loan, 3% of the then outstanding principal balance of such Loan, (B) if such Loan is prepaid after the Loan Amortization Date applicable to such Loan, but on or before the date that is 12 months after such Loan Amortization Date, 2% of the then outstanding principal balance of such Loan, or (C) if such Loan is prepaid more than 12 months after the Loan Amortization Date but prior to the stated maturity date applicable to such Loan, 1% of the then outstanding principal balance of such Loan; plus (iii) the outstanding principal balance of such Loan; plus (iv) all other sums, if any, that shall have become due and payable thereunder. No prepayment premium will be applied to any outstanding balance of any Loan paid on the stated maturity date.
In connection with the Loan and Security Agreement, we issued Horizon Technology Finance Corporation and Powerscourt Investments XXV, LP warrants to purchase an aggregate total of 381,625 shares of our common stock at an initial exercise price of $3.6685 per share. Each warrant is classified as equity and is exercisable at any time for a period beginning on the date of grant and ending on the earlier of (A) 10 years from the date of grant, and (B) the closing of (A) (i) the sale, lease, exchange, conveyance or other disposition of all or substantially all of the our property or business, or (ii) its merger into or consolidation with any other corporation (other than a wholly-owned subsidiary of the Company), or any transaction (including a merger or other reorganization) or series of related transactions, in which more than 50% of the voting power of the Company is disposed of, in each case, for cash or for marketable securities meeting certain requirements as described in the applicable warrants. The key assumptions used in Black-Scholes option pricing model were (i) expected term of 10 years, (ii) a risk-free rate of 3.11%, (iii) expected volatility of 93.8%, and (iv) no estimated dividend yield.
In April 2023, we received approximately $1.4 million from the net sale of tax benefits to an unrelated, profitable New Jersey corporation pursuant our participation in the New Jersey Technology Business Tax Certificate Transfer NOL program for tax year 2021.
As of September 30, 2022,2023, we had $71.6$54.3 million in cash and cash equivalents. Our primary uses of cash are to fund operating expenses, primarily research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.
We evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the filing of this Quarterly Report on Form 10-Q. Based on such evaluation and our current plans, which are subject to change, management believes that our existing cash and cash equivalents as of September 30, 2022 will be sufficient to satisfy our operating cash needs for at least one year after the filing of this Quarterly Report on Form 10-Q.
We plan to continue to fund our operations and capital funding needs through equity and/or debt financings. However, we cannot be certain that additional financing will be available when needed or that, if available, financing will be obtained on terms favorable to us or our existing stockholders. We may also enter into government funding programs and consider selectively partnering for clinical development and commercialization. The sale of additional equity would result in additional dilution to our stockholders. Incurring debt financing would result in debt service obligations, and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. If we are unable to raise additional capital in sufficient amounts or on acceptable terms, we may be required to delay, limit, reduce, or terminate our productclinical development or future commercialization efforts or grant rights to develop and market immunotherapies that we would otherwise prefer to develop and market ourselves. Any of these actions could harm our business, results of operations and prospects.
We evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the filing of this Quarterly Report on Form 10-Q. While we intend to finance our cash needs principally through collaborations, strategic alliances, or license agreements with third parties and/or debt or equity financings, there is no assurance that new financing will be available to us on commercially acceptable terms or in the amounts required, if at all. As such, we have concluded that substantial doubt exists about our ability to continue as a going concern for a period of at least 12 months from the date of the issuance of these unaudited condensed consolidated financial statements. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
Cash Flows
The following table shows a summary of our cash flows for each of the periods indicated (in thousands):
| | Nine Months Ended September 30, | | | Nine Months Ended September 30, | |
| | 2022 | | | 2021 | | | 2023 | | | 2022 | |
Net cash used in operating activities | | $ | (18,181 | ) | | $ | (7,985 | ) | | $ | (25,179 | ) | | $ | (18,181 | ) |
Net cash provided by financing activities | | | 24,581 | | | | 48,889 | | | | 5,610 | | | | 24,581 | |
Net increase in cash and cash equivalents | | $ | 6,400 | | | $ | 40,904 | | | $ | (19,569 | ) | | $ | 6,400 | |
Net Cash Used in Operating Activities
Net cash used in operating activities was $18.2$25.2 million and $8.0$18.2 million for the nine months ended September 30, 20222023 and 2021,2022, respectively. The increase in net cash used in operating activities of $10.2$7.0 million was primarily due to an increase in net loss of
$11.1$10.3 million,
anreduced by the increase
in the non-cash stock-based compensation expense of $2.4 million, offset by changes in the timing of working capital requirements, including changes in prepaid expenses
of $1.1 million, and
an increase in finance right to use asset of $0.3 million, offset by an increase in stock compensation of $1.4 million, an increase in amortization of debt discount of $0.1 million,other assets, accrued expenses and
anaccounts payable. The increase in accounts payable,
specifically, is primarily the result of
$0.7 million.a dispute with a certain vendor and we are working towards resolving this dispute.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2023 was due to the receipt of net proceeds of $5.6 million due to the sale of common stock under the Sales Agreement. Net cash provided by financing activities for the nine months ended September 30, 2022 was primarily due to the receipt of net proceeds of $24.6 million due to a note payable.the Venture Loan.
Operating Capital Requirements
To date, we have not generated any product revenue. We do not know when, or if, we will generate any product revenue and we do not expect to generate significant product revenue unless and until we obtain regulatory approval and commercialize one of our current or future product candidates. We anticipate that we will continue to generate losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, our tablet vaccine candidates, and begin to commercialize any approved vaccine candidates. We are subject to all of the risks incident to the development of new products, and may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may harm our business. We expect to incur additional costs associated with operating as a public company and anticipate that we will need substantial additional funding in connection with our continuing operations.
We evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the filing of this Quarterly Report. Our budgeted cash requirements in 20222023 and beyond include expenses related to continuing development and clinical studies. We believe that our existing cash and cash equivalents as of September 30, 2022 are sufficient to continue operations and research and development programs for at least one year after the date of this Quarterly Report. Until we can generate significant cash from our operations, we expect to continue to fund our operations with available financial resources. These financial resources may not be adequate to sustain our operations. While we intend to finance our cash needs principally through collaborations, strategic alliances, or license agreements with third parties and/or debt or equity financings, there is no assurance that new financing will be available to us on commercially acceptable terms or in the amounts required, if at all. As such, we have concluded that substantial doubt exists about our ability to continue as a going concern for a period of at least 12 months from the date of the issuance of these unaudited condensed consolidated financial statements.
We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all of our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:
| ● | the initiation, progress, timing, costs and results of our planned clinical trials; |
| ● | the effects of health epidemics, pandemics, or outbreaks of infectious diseases, including the recent COVID-19 pandemic, on our business operations, financial condition, results of operations and cash flows; |
| ● | the outcome, timing and cost of meeting regulatory requirements established by the U.S. Food and Drug Administration, or FDA, the European Medicines Agency, or EMA, and other comparable foreign regulatory authorities; |
| ● | the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights; |
| ● | the cost of defending potential intellectual property disputes, including patent infringement actions brought by third parties against us now or in the future; |
| ● | the effect of competing technological and market developments; |
| ● | the cost of establishing sales, marketing and distribution capabilities in regions where we choose to commercialize our products on our own; and |
| ● | the initiation, progress, timing and results of our commercialization of our productclinical candidates, if approved, for commercial sale. |
Please see the section titled “Risk Factors” elsewhere in the Quarterly Report and Annual Report for additional risks associated with our operations.
Purchase Commitments
We have no material non-cancelable purchase commitments with service providers as we have generally contracted on a cancelable, purchase order basis.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. Our accounting policies are more fully described in Note 2 to the consolidated financial statements included in this Quarterly Report on Form 10-Q. As described in Note 2, the preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Estimates are assessed each period and updated to reflect current information. Actual results may differ from these estimates under different assumptions or conditions. We believe that the discussion in our management’s discussion and analysis addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments.
There have been no material changes to our critical accounting policies and estimates during the nine months ended September 30, 20222023 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.
Operations and Liquidity
While the potential economic impact brought by and over the duration of the COVID-19 pandemic may be difficult to assess or predict, the COVID-19 pandemic has resulted in significant disruption of global financial markets, which could in the future negatively affect our liquidity. In addition, a recession or market volatility resulting from the COVID-19 pandemic could affect our business. We have taken proactive, aggressive action throughout the COVID-19 pandemic to protect the health and safety of our employees and expect to continue to implement these measures until we determine that the COVID-19 pandemic is adequately contained for purposes of our business. We may take further actions as government authorities require or recommend or as we determine to be in the best interests of our employees. Given the nature and type of our short-term investments, we do not believe that the COVID-19 pandemic will have a material impact on our current investment liquidity.
Outlook and Impact of COVID-19 on our Business
In December 2019, a novel (new) coronavirus known as SARS-CoV-2 was first detected in Wuhan, Hubei Province, People’s Republic of China, causing outbreaks of the coronavirus disease, known as COVID-19, that has now spread globally. On January 30, 2020, the World Health Organization (WHO) declared COVID-19 a public health emergency. The Secretary of Health and Human Services declared a public health emergency on January 31, 2020, under section 319 of the Public Health Service Act (42 U.S.C. 247d), in response to the COVID-19 outbreak. On March 11, 2020, the WHO declared COVID-19 a pandemic and on March 13 the President declared a national emergency in response to the pandemic. The full impact of the COVID-19 pandemic is unknown and rapidly evolving. The COVID-19 pandemic has and could continue to negatively affect our liquidity and operations. To date, two of the three recently initiated PDS0101 clinical trials were delayed, specifically as a result of the adverse impact the COVID-19 pandemic has had on clinical trial operations for cancer indications in the United States. The FDA issued and since updated guidance to assist sponsors in assuring the safety of trial participants, maintaining compliance with Good Clinical Practice (GCP) and minimizing risks to trial integrity. Clinical trial sites have implemented institution-specific measures securing the safety of patients and staff to ensure the integrity of the trials in the face of the ongoing pandemic. All three studies have since been initiated despite the pandemic challenges; however, the evolving COVID-19 pandemic has impacted the pace of enrollment in clinical trials in general and we may be negatively affected with our trials. COVID-19 related travel and other restrictions may also impact the potential for on-site monitoring visiting and audits and inspections by us, third parties, and regulators. There may be shortages of site personnel and equipment necessary for the timely completion of our trials. We are providing support to address these challenges, but these mitigation measures may not overcome the obstacles that the pandemic has wrought which continue to impede progress of clinical trials.
Although there is uncertainty related to the anticipated impact of the COVID-19 pandemic on our future results, we believe our current cash reserves, leave us well-positioned to manage our business through this crisis as it continues to unfold. However, the impacts of the COVID-19 pandemic are broad-reaching and continuing and the financial impacts associated with the COVID-19 pandemic are still uncertain.2022.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Smaller Reporting Company
As of January 1, 2021, we arewere no longer an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. However, we remain a “smaller reporting company,” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended. We will cease to be a smaller reporting company if we have a non-affiliate public float in excess of $250 million and annual revenues in excess of $100 million, or a non-affiliate public float in excess of $700 million, determined on an annual basis. As a smaller reporting company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not smaller reporting companies. We will continue to take advantage of some or all of the available exemptions.
ITEM 3: | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK |
The primary objectivesInterest Rate Risk
We are exposed to market risks in the ordinary course of our investment activitiesbusiness and from changes in the interest rate on our debt borrowings. These market risks are principally limited to ensure liquidity and to preserve principal, while at the same time maximizing the income we receive from our cash and marketable securities without significantly increasing risk.interest rate fluctuations. As of September 30, 2022, we had2023, our cash equivalents consisted of $71.6 million that were held in a non-interest-bearing money operating accountbank deposits and an institutional U.S. Treasury money market fund.accounts and our debt is a variable interest rate instrument. Our primary exposure to market risk is interest rateincome sensitivity, which is affected by changes in the general level of U.S. interest rates. The primary objective of our investment activities is to preserve principal and liquidity while maximizing income without significantly increasing risk. We do not enter into investments for trading or speculative purposes. Due to the short-term maturitiesnature of our cash equivalentsinvestment portfolio and the low risk profile of our investments,debt agreement, we do not believe that an immediate 100 basis point changeincrease in interest rates would have a material effect on the fair market value of our portfolio, and, accordingly, we do not expect our operating results or cash equivalents. To minimizeflows to be materially affected by a sudden change in market interest rates.
Inflation generally affects us by increasing our cost of labor and pricing of contracts. We do not believe that inflation has had a material effect on our business, financial condition, or results of operations during the risk in the future, we intend to maintain our portfolio of cash equivalents and short-term investments in institutional market funds that are comprised of U.S. Treasury and Treasury backed repurchase agreements.three months ended September 30, 2023.
ITEM 4:4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
An evaluation was carried out, under the supervision of and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15 (e)) under the Securities Exchange Act of 1934, or the Exchange Act, as of the end of the period covered by this report. Based on the evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that the information required to be disclosed by us in the reports we file or submit under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) identified in connection with the evaluation identified above that occurred during the quarter ended September 30, 20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. | OTHER INFORMATION |
The information in Note 9 to the Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated herein by reference. There are no matters which constitute material pending legal proceedings to which we are a party other than those incorporated into this item by reference from Note 9 to our Condensed Consolidated Financial Statements for the quarter ended September 30, 20222023 contained in this Quarterly Report on Form 10-Q.
With the exception of the risk factorsfactor noted below, there have been no material changes from our risk factors as previously reported in our Annual Report on Form 10-K for the year ended December 31, 2021.2022. However, any investment in our business involves a high degree of risk. Before making an investment decision, you should carefully consider the information we include in this Quarterly Report on Form 10-Q, including our unaudited interim condensed consolidated financial statements and accompanying notes, our Annual Report on Form 10-K for the year ended December 31, 20212022 filed on March 31, 2022,28, 2023, including our financial statements and related notes contained therein, and the additional information in the other reports we file with the Securities and Exchange Commission. These risks may result in material harm to our business and our financial condition and results of operations. In this event, the market price of our common stock may decline and you could lose part or all of your investment. Additional risks that we currently believe are immaterial may also impair our business operations. Our business, financial conditions and future prospects and the trading price of our common stock could be harmed as a result of any of these risks.
We have identified conditions and events that raise substantial doubt regarding our ability to continue as a going concern.
We have incurred net losses and utilized cash in operations since inception. In addition, as of September 30, 2023, we had approximately $54.3 million in cash and cash equivalents, and during the nine months ended September 30, 2023, we used $18.2 million of cash in operations and expect to continue to incur significant cash outflows and incur future additional losses to execute our operating plan. While we intend to finance our cash needs principally through collaborations, strategic alliances, or license agreements with third parties and/or debt or equity financings, there is no assurance that new financing will be available to us on commercially acceptable terms or in the amounts required, if at all. Due to the uncertainty in securing additional funding, and the insufficient amount of cash and cash equivalents as of September 30, 2023, we have concluded that substantial doubt exists about our ability to continue as a going concern within one year after the date of the filing of this Quarterly Report. If we are currently operatingunsuccessful in securing sufficient financing, we may need to delay, reduce, or eliminate our research and development programs, which could adversely affect our business prospects, or cease operations.
Our unaudited condensed consolidated financial statements included in this Quarterly Report have been prepared on a periodgoing concern basis under which an entity is able to realize its assets and satisfy its liabilities in the ordinary course of economic uncertaintybusiness. The unaudited condensed consolidated financial statements do not give effect to any adjustments relating to the carrying values and capital markets disruption, which has been significantly impacted by geopolitical instability, an ongoing military conflict between Russiaclassification of assets and Ukraine, and record inflation. liabilities that would be necessary should we be unable to continue as a going concern within one year after the date that the financial statements are issued.
Our business, financial condition and results offuture operations could be materially adversely affected by any negative impactare dependent upon the successful entry into collaborations, strategic alliances, or license agreements with third parties and/or on the global economyidentification and capital markets resulting fromsuccessful completion of equity or debt financing and the conflictachievement of profitable operations at an indeterminate time in Ukraine, geopolitical tensions,the future. There can be no assurances that we will be successful in completing these collaborations or record inflation.alliances, equity or debt financing or in achieving profitability. As such, there can be no assurance that we will be able to continue as a going concern.
We are exposed to the risk of changes in social, geopolitical, legal, and economic conditions. The global economy has been, and may continue to be, negatively impacted by Russia’s invasion of Ukraine. As a result of Russia’s invasion of Ukraine, the United States, the European Union, the United Kingdom, and other G7 countries, among other countries, have imposed substantial financial and economic sanctions on certain industry sectors and parties in Russia. Broad restrictions on exports to Russia have also been imposed. These measures include: (i) comprehensive financial sanctions against major Russian banks; (ii) additional designations of Russian individuals with significant business interests and government connections; (iii) designations of individuals and entities involved in Russian military activities; and (iv) enhanced export controls and trade sanctions limiting Russia’sSubstantial doubt about our ability to import various goods.
Although the lengthcontinue as a going concern may materially and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine has led to market disruptions, including significant volatility in commodity prices, credit markets, as well as supply chain interruptions, which has contributed to record inflation globally. In addition, the ongoing Russian military actions and the resulting sanctions could continue to adversely affect the global economyprice per share of our common stock, and financial markets and lead to instability and lack of liquidity in capital markets, potentially making it may be more difficult for us to obtain additional funds. We are continuingfinancing. If potential collaborators decline to monitor inflation, the situationdo business with us or potential investors decline to participate in Ukraine and global capital markets and assessing its potential impact on our business.
Although,any future financings due to date, our business has not been materially impacted by the ongoing military conflict between Russian and Ukraine, geopolitical tensions, or record inflation, it is impossible to predict the extent to which our operations will be impacted in the short and long term, or the ways in which such matters may impact our business. The extent and duration of the conflict in Ukraine, geopolitical tensions, record inflation and resulting market disruptions are impossible to predict but could be substantial. Any such disruptions may also magnify the impact of other risks described in our Annual Report on Form 10-K for the year ended December 31, 2021.
Our results of operations and liquidity needs could be materially affected by market fluctuations and general economic conditions.
Our results of operations could be materially affected by economic conditions generally, both in the United States and elsewhere around the world. Concerns over inflation, energy costs, geopolitical issues, and the availability and cost of credit have in the past and may continue to contribute to increase volatility and diminished expectations of the economy and markets going forward. Market upheavals may have an adverse effect on us. In the event of a market downturn, our results of operations could be adversely affected. Our future cost of equity or debt capital and access to the capital markets could be adversely affected, and our stock price could decline. There may be disruption or delay in the performance of our third-party contractors and suppliers. If our contractors, suppliers and partners are unable to satisfy their contractual obligations, our business could suffer.
Our operating activities may be restricted as a result of covenants related to the outstanding indebtedness under our venture loan and security agreement with Horizon and we may be required to repay the outstanding indebtedness in an event of default, which could have a materially adverse effect on our business.
In August 2022, we entered into a Venture Loan and Security Agreement, or the Loan Agreement, for separate term loans of up to an aggregate amount of $35.0 million, with Horizon Technology Finance Corporation, or Horizon, in its capacity as a lender and collateral agent for itself and the other financial institutions that from time to time become parties to the Loan Agreement, collectively referred to as the Lenders, secured by a by a security interest in all of our respective rights, title, interests, claims and demands in, to and under all of our respective properties and other assets, subject to limited exceptions and excluding our intellectual property. The Loan Agreement contains various covenants that limitconcerns, our ability to engage in specified types of transactions. These covenants limitincrease our ability to, among other things, sell, transfer, lease or dispose of certain assets; incur indebtedness; encumber or permit liens on certain assets; make certain investments; make certain restricted payments, including paying dividends on, or repurchasing or making distributions with respect to, our common stock; and enter into certain transactions with affiliates. Our businesscash position may be adversely affected by these restrictions on our ability to operate our business. A breach of any of the covenants under the Loan Agreement could result in a default. Upon the occurrence of an event of default, the Lenders could elect to declare all amounts outstanding, if any, to be immediately due and payable. If there are any amounts outstandinglimited. The perception that we are unable to repay, the Lenders could proceed against the collateral granted to them to secure such indebtedness.
We will require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to complete the development and commercialization ofcontinue as a going concern may cause others to choose not to deal with us due to concerns about our Versamune and Infectimune based products.
We expectability to spend substantial amounts to complete the development of, seek regulatory approvals for and commercialize PDS0101. Even withmeet our current cash reserves, we will require substantial additional capital to complete the development and potential commercialization of PDS0101 and the development of other Versamune and Infectimune based products.contractual obligations. If we are unable to raise capitalcontinue as a going concern, you could lose all or find appropriate partnering or licensing collaborations or other nondilutive financing, when needed or on acceptable terms, if at all, we could be forced to delay, reduce or eliminate one or morepart of your investment in our development programs or any future commercialization efforts. In addition, attempting to secure additional financing may divert the time and attention of our management from day-to-day activities and harm our development efforts.Company.
Based upon our current operating plan, we believe that our cash reserves will be sufficient to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of this report. Our estimate as to what we will be able to accomplish is based on assumptions that may prove to be inaccurate, and we could exhaust our available capital resources sooner than is currently expected. Because the length of time and activities associated with successful development of PDS0101 is highly uncertain, we are unable to estimate the actual funds we will require for development and any approved marketing and commercialization activities. Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:
| ● | initiation the, progress, timing, costs and results of our planned clinical trials;
|
| ● | the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities;
|
| ● | the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;
|
| ● | the cost of defending potential intellectual property disputes, including any patent infringement actions brought by third parties against us now or in the future;
|
| ● | the effect of competing technological and market developments;
|
| ● | the cost of establishing sales, marketing and distribution capabilities in regions where we choose to commercialize PDS0101 on our own; and
|
| ● | the initiation, progress, timing and results of the commercialization of PDS0101, if approved, for commercial sale.
|
Additional funding may not be available on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of PDS0101 or potentially discontinue operations.
Raising additional funds by issuing securities may cause dilution to existing stockholders and raising funds through lending and licensing arrangements may restrict our operations or require us to relinquish proprietary rights.
We expect that significant additional capital will be needed in the future to continue our planned operations. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, strategic alliances and license and development agreements in connection with any collaborations.
In February 2020, we completed an underwritten public offering, in which we sold 10,000,000 shares of common stock at a public offering price of $1.30 per share. The shares sold included 769,230 shares issued upon the exercise by the underwriter of its option to purchase additional shares at the public offering price. We received gross proceeds of approximately $13 million and net proceeds of approximately $11.9 million after deducting underwriting discounts and commissions. In July 2020, we filed a shelf registration statement, or the 2020 Shelf Registration Statement, with the SEC, for the issuance of common stock, preferred stock, warrants, rights, debt securities and units, which we refer to collectively as the Shelf Securities, up to an aggregate amount of $100 million. The 2020 Shelf Registration Statement was declared effective on July 31, 2020. The 2020 Registration Statement was terminated upon effectiveness of the 2022 Registration Statement (as discussed below). On August 13, 2020, we sold 6,900,000 shares of our common stock at a public offering price of $2.75 per share pursuant to the 2020 Shelf Registration Statement, which includes 900,000 shares issued upon the exercise by the underwriter of its option to purchase additional shares at the public offering price, minus underwriting discounts and commissions. We received gross proceeds of approximately $19.0 million and net proceeds of approximately $17.1 million, after deducting underwriting discounts and offering expenses. In June 2021, we completed an underwritten public offering in which we sold 6,088,235 shares of common stock at a public offering price of $8.50 per share pursuant to the 2020 Shelf Registration Statement, which includes 794,117 shares issued upon the exercise by the underwriter of its option to purchase additional shares at the public offering price, minus underwriting discounts and commissions. We received gross proceeds of approximately $51.7 million and net proceeds of approximately $48.5 million, after deducting underwriting discounts and offering expenses.
In August 2022, we filed a shelf registration statement, or the 2022 Shelf Registration Statement, with the SEC for the issuance of common stock, preferred stock, warrants, rights, debt securities, and units up to an aggregate amount of $150 million, $50 million of which covers the offer, issuance and sale by the Company of its common stock under the Sales Agreement (as discussed below). The 2022 Shelf Registration Statement was declared effective on September 2, 2022. In August 2022, we entered into an At Market Issuance Sales Agreement, or the Sales Agreement, with B. Riley Securities, Inc. and BTIG, LLC, each an Agent and collectively the Agents, with respect to an at-the-market offering program under which we may offer and sell, from time to time at our sole discretion, shares of our common stock, having an aggregate offering price of up to $50.0 million, or the Placement Shares, through or to the Agents, as sales agents or principals. Upon delivery of a placement notice and subject to the terms and conditions of the Sales Agreement, the Agents may sell the Placement Shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act of 1933, as amended, including, without limitation, sales made through The Nasdaq Capital Market or on any other existing trading market for our common stock. The Agents will use commercially reasonable efforts to sell the Placement Shares from time to time, based upon our instructions (including any price, time or size limits or other customary parameters or conditions we may impose). We will pay the Agents a commission equal to three percent (3%) of the gross sales proceeds of any Placement Shares sold through the Agents under the Sales Agreement, and also has provided the Agents with customary indemnification and contribution rights. We are not obligated to make any sales of our common stock under the Sales Agreement. The offering of Placement Shares pursuant to the Sales Agreement will terminate upon the earlier of (i) the sale of all Placement Shares subject to the Sales Agreement or (ii) termination of the Sales Agreement in accordance with its terms. We have not sold any shares of our common stock pursuant to the Sales Agreement.
To the extent that we raise additional capital by issuing equity securities, our existing stockholders’ ownership may experience substantial dilution, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends, creating liens, redeeming our stock or making investments.
If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or Versamune Products or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, or through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties on acceptable terms, we may be required to delay, limit, reduce or terminate our PDS0101 development or future commercialization efforts or grant rights to develop and market other Versamune and Infectimune products that we would otherwise develop and market.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
There were no unregistered sales of the Company’s equity securities during the three months ended September 30, 2022.None
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.