UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2021
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period fromto
Commission File Number:
HCW Biologics Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 82-5024477 | |
( State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
2929 Miramar, Florida | 33025 | |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (954) (954) 842–2024
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange | ||
Common Stock, par value $0.0001 per share | HCWB | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation(§ (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule
As of August13,2021, 10, 2022, the registrant had 35,723,99635,833,135 shares of common stock, $0.0001 par value per share, outstanding.
Page | ||||||
PART I. | 1 | |||||
Item 1. | 1 | |||||
Unaudited condensed interim financial statements as of and for the three | ||||||
1 | ||||||
2 | ||||||
3 | ||||||
4 | ||||||
5 | ||||||
Item 2. | 12 | |||||
Item 3. | 22 | |||||
Item 4. | 22 | |||||
PART II. | 23 | |||||
Item 1. | 23 | |||||
Item 1A. | 23 | |||||
Item 2. | 23 | |||||
Item 3. | 23 | |||||
Item 4. | 23 | |||||
Item 5. | 23 | |||||
Item 6. | 24 | |||||
25 |
i
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
HCW Biologics Inc.
Condensed Balance Sheets
December 31, | June 30, | |||||||
2020 | 2021 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 8,455,834 | $ | 5,050,851 | ||||
Accounts receivable, net | 2,500,000 | 50,000 | ||||||
Prepaid expenses | 538,306 | 862,498 | ||||||
Deferred offering costs | 0 | 3,189,000 | ||||||
Other current assets | 654,528 | 893,971 | ||||||
Total current assets | 12,148,668 | 10,046,320 | ||||||
Investment | 1,599,750 | 1,599,750 | ||||||
Property and equipment, net | 1,649,668 | 1,387,324 | ||||||
Total assets | $ | 15,398,086 | $ | 13,033,394 | ||||
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT | ||||||||
Liabilities | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 155,343 | $ | 996,880 | ||||
Accrued liabilities and other current liabilities | 845,741 | 3,172,545 | ||||||
Total current liabilities | 1,001,084 | 4,169,425 | ||||||
Commitments and contingencies (Note 7) | ||||||||
Redeemable preferred stock: | ||||||||
Series A, $0.0001 par value; 14,738,948 shares authorized and 6,316,691 shares issued at December 31, 2020 and June 30, 2021 | 6,140,792 | 6,333,842 | ||||||
Series B, $0.0001 par value; 28,029,449 shares authorized and 12,012,617 shares issued at December 31, 2020 and June 30, 2021 | 13,680,306 | 14,118,483 | ||||||
Series C, $0.0001 par value; 18,181,818 shares authorized and 5,439,112 shares issued at December 31, 2020 and June 30, 2021 | 11,294,301 | 11,651,350 | ||||||
Total redeemable preferred stock | 31,115,399 | 32,103,675 | ||||||
Stockholders’ deficit: | ||||||||
Common stock: | ||||||||
Class B convertible, $0.0001 par value; 10,000,000 shares authorized and 4,285,714 shares issued at December 31, 2020 and June 30, 2021 | 429 | 429 | ||||||
Class A, $0.0001 par value; 74,950,215 shares authorized and 507,680 shares issued at December 31, 2020; 74,950,215 shares authorized and 669,886 shares issued at June 30, 2021 | 51 | 67 | ||||||
Accumulated deficit | (16,718,877 | ) | (23,240,202 | ) | ||||
Total stockholders’ deficit | (16,718,397 | ) | (23,239,706 | ) | ||||
Total liabilities, redeemable preferred stock and stockholders’ deficit | $ | 15,398,086 | $ | 13,033,394 | ||||
|
| December 31, |
|
| June 30, |
| ||
|
| 2021 |
|
| 2022 |
| ||
|
|
|
|
| (unaudited) |
| ||
ASSETS |
|
|
|
|
|
| ||
Current assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 11,730,677 |
|
| $ | 15,420,331 |
|
Short-term investments |
|
| 24,983,520 |
|
|
| 16,993,523 |
|
Accounts receivable, net |
|
| 133,000 |
|
|
| 346,934 |
|
Prepaid expenses |
|
| 2,196,557 |
|
|
| 1,397,497 |
|
Other current assets |
|
| 1,436,616 |
|
|
| 470,021 |
|
Total current assets |
|
| 40,480,370 |
|
|
| 34,628,306 |
|
Investments |
|
| 11,522,050 |
|
|
| 11,302,870 |
|
Property and equipment, net |
|
| 1,119,091 |
|
|
| 913,734 |
|
Other assets |
|
| 393,318 |
|
|
| 563,512 |
|
Total assets |
| $ | 53,514,829 |
|
| $ | 47,408,422 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
| ||
Liabilities |
|
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
|
| ||
Accounts payable |
| $ | 223,664 |
|
| $ | 296,207 |
|
Accrued liabilities and other current liabilities |
|
| 2,097,925 |
|
|
| 848,340 |
|
Total current liabilities |
|
| 2,321,589 |
|
|
| 1,144,547 |
|
Other liabilities |
|
| 0 |
|
|
| 98,447 |
|
Total liabilities |
|
| 2,321,589 |
|
|
| 1,242,994 |
|
Commitments and contingencies (Note 7) |
|
|
|
|
|
| ||
Stockholders’ equity: |
|
|
|
|
|
| ||
Common stock: |
|
|
|
|
|
| ||
Common, $0.0001 par value; 250,000,000 shares authorized |
|
| 3,577 |
|
|
| 3,582 |
|
Additional paid-in capital |
|
| 81,827,006 |
|
|
| 82,366,957 |
|
Accumulated deficit |
|
| (30,637,343 | ) |
|
| (36,205,111 | ) |
Total stockholders’ equity |
|
| 51,193,240 |
|
|
| 46,165,428 |
|
Total liabilities and stockholders’ equity |
| $ | 53,514,829 |
|
| $ | 47,408,422 |
|
See accompanying notes to the unaudited condensed interim financial statements.
1
HCW Biologics Inc.
Condensed Statements of Operations
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2021 | 2020 | 2021 | |||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | $ | 2,068,783 | $ | 1,673,163 | $ | 3,747,207 | $ | 4,002,976 | ||||||||
General and administrative | 711,224 | 1,077,830 | 1,429,792 | 2,160,190 | ||||||||||||
Total operating expenses | 2,780,007 | 2,750,993 | 5,176,999 | 6,163,166 | ||||||||||||
Loss from operations | (2,780,007 | ) | (2,750,993 | ) | (5,176,999 | ) | (6,163,166 | ) | ||||||||
Interest and other income, net | 1,522 | 631 | 23,000 | 568,808 | ||||||||||||
�� | ||||||||||||||||
Net loss | $ | (2,778,485 | ) | $ | (2,750,362 | ) | $ | (5,153,999 | ) | $ | (5,594,358 | ) | ||||
Less: cumulative preferred dividends earned in the period | (279,786 | ) | (482,662 | ) | (559,573 | ) | (960,020 | ) | ||||||||
Net loss available for distribution to common stockholders | $ | (3,058,271 | ) | $ | (3,233,024 | ) | $ | (5,713,572 | ) | $ | (6,554,378 | ) | ||||
Net loss per share, basic and diluted | $ | (0.65 | ) | $ | (0.66 | ) | $ | (1.21 | ) | $ | (1.34 | ) | ||||
Weighted average shares outstanding, basic and diluted | 4,725,083 | 4,921,121 | 4,721,313 | 4,880,496 |
|
| Three Months Ended |
|
| Six Months Ended |
|
| ||||||||||
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| ||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenues |
| $ | 0 |
|
| $ | 454,000 |
|
| $ | — |
|
| $ | 3,571,545 |
|
|
Cost of revenues |
|
| 0 |
|
|
| (287,200 | ) |
|
| — |
|
|
| (1,615,276 | ) |
|
Net revenues |
|
| 0 |
|
|
| 166,800 |
|
|
| — |
|
|
| 1,956,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Research and development |
| $ | 1,673,163 |
|
| $ | 1,969,882 |
|
| $ | 4,002,976 |
|
| $ | 3,759,558 |
|
|
General and administrative |
|
| 1,077,830 |
|
|
| 1,707,995 |
|
|
| 2,160,190 |
|
|
| 3,588,597 |
|
|
Total operating expenses |
|
| 2,750,993 |
|
|
| 3,677,877 |
|
|
| 6,163,166 |
|
|
| 7,348,155 |
|
|
Loss from operations |
|
| (2,750,993 | ) |
|
| (3,511,077 | ) |
|
| (6,163,166 | ) |
|
| (5,391,886 | ) |
|
Interest and other income (loss), net |
|
| 631 |
|
|
| 516 |
|
|
| 568,808 |
|
|
| (175,882 | ) |
|
Net loss |
| $ | (2,750,362 | ) |
| $ | (3,510,561 | ) |
| $ | (5,594,358 | ) |
| $ | (5,567,768 | ) |
|
Less: cumulative preferred dividends earned in the period |
|
| (482,662 | ) |
|
| 0 |
|
|
| (960,020 | ) |
|
| — |
|
|
Net loss available for distribution to common stockholders |
| $ | (3,233,024 | ) |
| $ | (3,510,561 | ) |
| $ | (6,554,378 | ) |
| $ | (5,567,768 | ) |
|
Net loss per share, basic and diluted |
| $ | (0.66 | ) |
| $ | (0.10 | ) |
| $ | (1.34 | ) |
| $ | (0.16 | ) |
|
Weighted average shares outstanding, basic and diluted |
|
| 4,921,121 |
|
|
| 35,814,482 |
|
|
| 4,880,496 |
|
|
| 35,796,257 |
|
|
See accompanying notes to the unaudited condensed interim financialstatements.
2
HCW Biologics Inc.
Condensed Statements of Changes in Redeemable Preferred Stock and Stockholders’ Deficit
For the Six Months Ended June 30, 20202021 and 2021
(Unaudited)
Redeemable Preferred Stock | Stockholders’ Deficit | |||||||||||||||||||||||||||||||||||||||||||
Series A | Series B | Series C | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | ||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | 6,316,691 | $ | 5,792,302 | 12,012,617 | $ | 12,883,859 | 0 | $ | 0 | 4,717,542 | $ | 472 | $ | 0 | $ | (9,676,766 | ) | $ | (9,676,294 | ) | ||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | 76 | — | 76 | ||||||||||||||||||||||||||||||||||
6% cumulative dividends on redeemable preferred stock | — | 86,646 | — | 193,140 | — | 0 | — | — | (76 | ) | (279,710 | ) | (279,786 | ) | ||||||||||||||||||||||||||||||
Accretion of issuance costs | — | — | — | 7,857 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | (2,375,514 | ) | (2,375,514 | ) | |||||||||||||||||||||||||||||||
Balance, March 31, 2020 | 6,316,691 | 5,878,948 | 12,012,617 | 13,084,856 | 0 | 0 | 4,717,542 | 472 | 0 | (12,331,990 | ) | (12,331,518 | ) | |||||||||||||||||||||||||||||||
Issuance of Class A Common Stock upon exercise of stock options | — | — | — | — | — | — | 20,742 | 2 | 2,304 | — | 2,306 | |||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | 9,515 | — | 9,515 | |||||||||||||||||||||||||||||||||
6% cumulative dividends on redeemable preferred stock | — | 86,646 | — | 193,140 | — | — | — | — | (11,819 | ) | (267,967 | ) | (279,786 | ) | ||||||||||||||||||||||||||||||
Accreation of issuance costs | — | — | — | 3,929 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | (2,778,485 | ) | (2,778,485 | ) | |||||||||||||||||||||||||||||||
Balance, June 30, 2020 | 6,316,691 | $ | 5,965,594 | 12,012,617 | $ | 13,281,925 | 0 | $ | 0 | 4,738,284 | $ | 474 | $ | 0 | $ | (15,378,442 | ) | $ | (15,377,968 | ) | ||||||||||||||||||||||||
Redeemable Preferred Stock | Stockholders’ Deficit | |||||||||||||||||||||||||||||||||||||||||||
Series A | Series B | Series C | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | ||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | 6,316,691 | $ | 6,140,792 | 12,012,617 | $ | 13,680,306 | 5,439,112 | $ | 11,294,301 | 4,793,394 | $ | 480 | $ | 0 | $ | (16,718,877 | ) | $ | (16,718,397 | ) | ||||||||||||||||||||||||
Issuance of Class A Common Stock upon exercise of stock options | — | — | — | — | — | — | 88,706 | 8 | 13,377 | — | 13,385 | |||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | 641 | — | 641 | |||||||||||||||||||||||||||||||||
6% cumulative dividends on redeemable preferred stock | — | 95,992 | — | 213,971 | — | 167,395 | — | — | (14,018 | ) | (463,340 | ) | (477,358 | ) | ||||||||||||||||||||||||||||||
Accretion of issuance costs | — | — | — | 3,929 | — | 10,200 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | (2,843,996 | ) | (2,843,996 | ) | |||||||||||||||||||||||||||||||
Balance, March 31, 2021 | 6,316,691 | 6,236,784 | 12,012,617 | 13,898,206 | 5,439,112 | 11,471,896 | 4,882,100 | 488 | 0 | (20,026,213 | ) | (20,025,725 | ) | |||||||||||||||||||||||||||||||
Issuance of Class A Common Stock upon exercise of stock options | — | — | — | — | — | — | 73,500 | 8 | 9,457 | — | 9,465 | |||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | 9,578 | — | 9,578 | |||||||||||||||||||||||||||||||||
6% cumulative dividends on redeemable preferred stock | — | 97,058 | — | 216,348 | — | 169,256 | — | — | (19,035 | ) | (463,627 | ) | (482,662 | ) | ||||||||||||||||||||||||||||||
Accreation of issuance costs | — | — | — | 3,929 | — | 10,198 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | (2,750,362 | ) | (2,750,362 | ) | |||||||||||||||||||||||||||||||
Balance, June 30, 2021 | 6,316,691 | $ | 6,333,842 | 12,012,617 | $ | 14,118,483 | 5,439,112 | $ | 11,651,350 | 4,955,600 | $ | 496 | $ | 0 | $ | (23,240,202 | ) | $ | (23,239,706 | ) | ||||||||||||||||||||||||
|
| Redeemable Preferred Stock |
|
|
| Stockholders’ Deficit |
| ||||||||||||||||||||||||||||||||||||||
|
| Series A |
|
| Series B |
|
| Series C |
|
|
| Common Stock |
|
| Additional |
|
| Accumulated |
|
| Total |
| |||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Deficit |
| |||||||||||
Balance, December 31, 2020 |
|
| 6,316,691 |
|
| $ | 6,140,792 |
|
|
| 12,012,617 |
|
| $ | 13,680,306 |
|
|
| 5,439,112 |
|
| $ | 11,294,301 |
|
|
|
| 4,793,393 |
|
| $ | 480 |
|
| $ | — |
|
| $ | (16,718,877 | ) |
| $ | (16,718,397 | ) |
Issuance of Class A |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| 88,702 |
|
|
| 8 |
|
|
| 13,377 |
|
|
| — |
|
|
| 13,385 |
|
Stock-based compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 641 |
|
|
| — |
|
|
| 641 |
|
6% cumulative dividends |
|
| — |
|
|
| 95,992 |
|
|
| — |
|
|
| 213,971 |
|
|
| — |
|
|
| 167,395 |
|
|
|
| — |
|
|
| — |
|
|
| (14,018 | ) |
|
| (463,340 | ) |
|
| (477,358 | ) |
Accretion of issuance costs |
|
| — |
|
|
| — |
| 0 |
| — |
|
|
| 3,929 |
|
|
| — |
|
|
| 10,200 |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,843,996 | ) |
|
| (2,843,996 | ) |
Balance, March 31, 2021 |
|
| 6,316,691 |
|
| $ | 6,236,784 |
|
|
| 12,012,617 |
|
| $ | 13,898,206 |
|
|
| 5,439,112 |
|
| $ | 11,471,896 |
|
|
|
| 4,882,095 |
|
| $ | 488 |
|
| $ | — |
|
| $ | (20,026,213 | ) |
| $ | (20,025,725 | ) |
Issuance of Class A |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| 73,505 |
|
|
| 8 |
|
|
| 9,457 |
|
|
| — |
|
|
| 9,465 |
|
Stock-based compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 9,578 |
|
|
| — |
|
|
| 9,578 |
|
6% cumulative dividends |
|
| — |
|
|
| 97,058 |
|
|
| — |
|
|
| 216,348 |
|
|
| — |
|
|
| 169,256 |
|
|
|
| — |
|
|
| — |
|
|
| (19,035 | ) |
|
| (463,627 | ) |
|
| (482,662 | ) |
Accretion of issuance costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,929 |
|
|
| — |
|
|
| 10,198 |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,750,362 | ) |
|
| (2,750,362 | ) |
Balance, June 30, 2021 |
|
| 6,316,691 |
|
| $ | 6,333,842 |
|
|
| 12,012,617 |
|
| $ | 14,118,483 |
|
|
| 5,439,112 |
|
| $ | 11,651,350 |
|
|
|
| 4,955,600 |
|
| $ | 496 |
|
| $ | — |
|
| $ | (23,240,202 | ) |
| $ | (23,239,706 | ) |
|
| Redeemable Preferred Stock |
|
|
| Stockholders’ Equity |
| ||||||||||||||||||||||||||||||||||||||
|
| Series A |
|
| Series B |
|
| Series C |
|
|
| Common Stock |
|
| Additional |
|
| Accumulated |
|
| Total |
| |||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Equity |
| |||||||||||
Balance, December 31, 2021 |
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | — |
|
|
|
| 35,768,264 |
|
| $ | 3,577 |
|
| $ | 81,827,006 |
|
| $ | (30,637,343 | ) |
| $ | 51,193,240 |
|
Issuance of Class A |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| 11,225 |
|
|
| 1 |
|
|
| 2,272 |
|
|
| — |
|
|
| 2,273 |
|
Stock-based compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 260,348 |
|
|
| — |
|
|
| 260,348 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2,057,207 | ) |
|
| (2,057,207 | ) |
Balance, March 31, 2022 |
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | — |
|
|
|
| 35,779,489 |
|
| $ | 3,578 |
|
| $ | 82,089,626 |
|
| $ | (32,694,550 | ) |
| $ | 49,398,654 |
|
Issuance of Class A |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| 44,434 |
|
|
| 4 |
|
|
| 5,996 |
|
|
| — |
|
|
| 6,000 |
|
Stock-based compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 271,335 |
|
|
| — |
|
|
| 271,335 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (3,510,561 | ) |
|
| (3,510,561 | ) |
Balance, June 30, 2022 |
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | — |
|
|
| — |
|
| $ | — |
|
|
|
| 35,823,923 |
|
| $ | 3,582 |
|
| $ | 82,366,957 |
|
| $ | (36,205,111 | ) |
| $ | 46,165,428 |
|
See accompanying notes to the unaudited condensed interim financial statements.
3
HCW Biologics Inc.
Condensed Statements of Cash Flows
(Unaudited)
Six Months Ended June 30, | ||||||||
2020 | 2021 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (5,153,999 | ) | $ | (5,594,358 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 306,011 | 323,897 | ||||||
Gain on extinguishment of debt | — | (567,311 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | — | 2,450,000 | ||||||
Prepaid expenses and other assets | 215,081 | (563,436 | ) | |||||
Accounts payable and other liabilities | 488,273 | 1,470,966 | ||||||
Net cash used in operating activities | (4,144,634 | ) | (2,480,242 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (45,076 | ) | (23,279 | ) | ||||
Net cash used in investing activities | (45,076 | ) | (23,279 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common stock | 2,306 | 22,850 | ||||||
Offering costs | — | (924,312 | ) | |||||
Net cash provided by (used in) financing activities | 2,306 | (901,462 | ) | |||||
Net changes in cash and cash equivalents | (4,187,404 | ) | (3,404,983 | ) | ||||
Cash and cash equivalents at the beginning of the period | 7,355,834 | 8,455,834 | ||||||
Cash and cash equivalents at the end of the period | $ | 3,168,430 | $ | 5,050,851 | ||||
Non-cash operating, investing and financing activities: | ||||||||
Purchases of property and equipment included in accounts payable and accrued liabilities | $ | 88,579 | $ | — | ||||
Cumulative dividends earned and accrued in the reporting period | $ | 559,573 | $ | 960,020 | ||||
PPP loan forgiveness | $ | — | $ | 567,311 | ||||
Offering costs | $ | — | $ | 2,264,688 | ||||
|
| Six Months Ended June 30, |
| |||||
|
| 2021 |
|
| 2022 |
| ||
Cash flows from operating activities: |
|
|
|
|
|
| ||
Net loss |
| $ | (5,594,358 | ) |
| $ | (5,567,768 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
| ||
Depreciation and amortization |
|
| 313,679 |
|
|
| 292,363 |
|
Stock-based compensation |
|
| 10,218 |
|
|
| 531,683 |
|
Gain on extinguishment of debt |
|
| (567,311 | ) |
|
| 0 |
|
Unrealized loss on investments, net |
|
| 0 |
|
|
| 209,337 |
|
Reduction in the carrying amount of right-of-use asset |
|
| 0 |
|
|
| 836 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
| ||
Accounts receivable |
|
| 2,450,000 |
|
|
| (213,934 | ) |
Prepaid expenses and other assets |
|
| (563,436 | ) |
|
| 1,863,759 |
|
Accounts payable and other liabilities |
|
| 1,470,966 |
|
|
| (1,347,729 | ) |
Operating lease liability |
|
| 0 |
|
|
| (50,545 | ) |
Net cash used in operating activities |
|
| (2,480,242 | ) |
|
| (4,281,998 | ) |
Cash flows from investing activities: |
|
|
|
|
|
| ||
Purchases of property and equipment |
|
| (23,279 | ) |
|
| (36,461 | ) |
Proceeds for sale or maturities of short-term investments |
|
| 0 |
|
|
| 7,999,840 |
|
Net cash (used in) provided by investing activities |
|
| (23,279 | ) |
|
| 7,963,379 |
|
Cash flows from financing activities: |
|
|
|
|
|
| ||
Proceeds from issuance of common stock |
|
| 22,850 |
|
|
| 8,273 |
|
Offering costs |
|
| (924,312 | ) |
|
| 0 |
|
Net cash (used in) provided by financing activities |
|
| (901,462 | ) |
|
| 8,273 |
|
Net changes in cash and cash equivalents |
|
| (3,404,983 | ) |
|
| 3,689,654 |
|
Cash and cash equivalents at the beginning of the period |
|
| 8,455,834 |
|
|
| 11,730,677 |
|
Cash and cash equivalents at the end of the period |
| $ | 5,050,851 |
|
| $ | 15,420,331 |
|
Non-cash operating, investing and financing activities: |
|
|
|
|
|
| ||
Cumulative dividends earned and accrued in the reporting period |
| $ | 960,020 |
|
| $ | 0 |
|
PPP loan forgiveness |
| $ | 567,311 |
|
| $ | 0 |
|
Offering costs |
| $ | 2,264,688 |
|
| $ | 0 |
|
Operating lease liabilities arising from obtaining right-of-use assets |
| $ | 0 |
|
| $ | 269,134 |
|
See accompanying notes to the unaudited condensed interim financial statements.
4
HCW Biologics Inc.
Notes to Condensed Financial Statements
(Unaudited)
1. Organization and Summary of Significant Accounting Policies
Organization
HCW Biologics Inc. (the “Company”) is a preclinical stageclinical-stage biopharmaceutical
Liquidity
As of June 30, 2021,2022, the Company had not generated any revenue from commercial product sales of its internally-developed immunotherapeutic products.products for the treatment of cancer and other age-related diseases. In the course of its development activities, the Company has sustained operating losses and expects to continue to incur operating losses for the foreseeable future. Since inception, substantially all the Company’s activities have consisted of research, development, establishing large-scale cGMP production for clinical trials, and raising capital.
On July 19, 2021, the Company’s registration statement on Form S-1 for its initial public offering (“IPO”) was declared effective by the Securities and Exchange Commission (“SEC”). On July 22, 2021, the Company closed its IPO with the sale of 7,000,000 shares of common stock, at a public offering price of $8.00 per share, resulting in net proceeds of approximately $49.2 million, after deducting underwriting discounts and commissions and estimated offering expenses paid by the Company. The IPO met the provisions for mandatory conversion of all shares of redeemable preferred stock according to the designations for these securities. As a result of the conversion, the Company issued 23,768,416 shares of common stock to the former holders of redeemable preferred stock. In addition, as a result of conditions for mandatory conversion, the Company was relieved of its obligation to pay $2.8 million in cumulative dividends that were accrued and unpaid on the conversion date.
As of June 30, 2021,$5.1 million.$15.4 million, short-term investments of $17.0 million held in U.S. government-backed securities, and long-term investments of $9.7 million held in U.S. government-backed securities. Since inception to June 30, 2021,2022, the Company incurred cumulative net losses of $20.7$33.5 million. Management expects to incur additional losses in the future to conduct product research and development and recognizes the need to raise additional capital to fully implement its business plan. HCW BiologicsThe Company intends to raise capital throughwhich may include the issuance of additional equity financing and/or third-party collaboration funding. However, if such financing is not available at adequate levels, the Company will need to reevaluate its operating plan and may be required to delay the development of some of its products.
5
Summary of Significant Accounting Policies
Basis of Presentation
Unaudited Interim Financial Information
The accompanying unaudited condensed interim financial statements as of June 30, 20212022 and for the three months and six months ended June 30, 20202021 and 20212022 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to Article 10 of20202021 has been derived from the audited financial statements at that date but does not include all disclosures required by U.S. GAAP for complete financial statements. Because all of
Revenue Recognition
The Company recognizes revenue when its customer or collaborator obtains control of promised goods or services,accounts for revenues in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.
(i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when |
At contract inception, the Company assesses the goods or services promised within theeach contract, to determinedetermines those that are performance obligations, and assesses whether each promised good or service is a performance obligation. The promised goods or services in the Company’s arrangements may consist of a license, or options to license, the Company’s intellectual property and research, development, and manufacturing services.distinct. The Company may provide options to additional items in such arrangements, which are accounted for as separate contracts when the customer elects to exercise such options, unless the option provides a material right to the customer. Performance obligations are promises in a contract to transfer a distinct good or service to the customer that (i) the customer can benefit from on its own or together with other readily available resources, and (ii) is separately identifiable from other promises in the contract. Goods or services that are not individually distinct performance obligations are combined with other promised goods or services until such combined group of promises meet the requirements of a performance obligation.
License Grants:
For out-licensing arrangements that include a grant of a license to the Company’s intellectual property, the Company considers whether the license grant is distinct from the other performance obligations which consist ofincluded in the arrangement. For licenses that are distinct, the Company recognizes revenues from nonrefundable, upfront payments and other promises,consideration allocated to the license when the license term has begun and the Company utilizes judgmenthas provided all necessary information regarding the underlying intellectual property to assess the naturecustomer, which generally occurs at or near the inception of the combinedarrangement.
Milestone and Contingent Payments:
At the inception of the arrangement and at each reporting date thereafter, the Company assesses whether it should include any milestone and contingent payments or other forms of variable consideration in the transaction price using the most likely amount method. If it is probable that a significant reversal of cumulative revenue would not occur upon resolution of the uncertainty, the associated milestone value is included in the transaction price. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of each such milestone and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Since milestone and contingent payments may become payable to the Company upon the initiation of a clinical study or filing for or receipt of regulatory approval, the Company reviews the relevant facts and circumstances to determine when the Company should update the transaction price, which may occur before the triggering event. When the Company updates the transaction price for milestone and contingent payments, the Company allocates the changes in the total transaction price to each performance obligation in the agreement on the same basis as the initial allocation. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment, which may result in recognizing revenue for previously satisfied performance obligations in such period. The Company’s licensees will generally pay milestones payments subsequent to achievement of the triggering event.
6
Materials Supply:
The Company provides clinical and research grade materials so that licensees may develop products based on the licensed molecules. The Company plans to enter into commercialization supply agreements when licensees enter the commercial stage of their company. The amounts billed are recognized as revenue as the performance obligations are satisfied by the Company, once the Company determines that a contract exists.
On June 18, 2021, the Company entered into a master services agreement ("MSA") with Wugen for the supply of materials for clinical development of licensed products. The terms set forth in the MSA were not sufficient to meet all the requirements for the Company to determine whetherthat a contact existed for a transaction. In order for a contract to exist, additional terms for each transaction require the combinedCompany to enter into a statement-of-work ("SOW") for each purchase. Each of these transactions represents a single performance obligation that is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress.time. The Company evaluatesrecognizes revenue using an input method based on the measurecosts incurred relative to the total expected cost, which determines the extent of the Company's progress toward completion. As part of the accounting for these arrangements, the Company must develop estimates and assumptions that require judgement to determine the progress towards completion. The Company reviews its estimate of the progress toward completion based on the best information available to recognize the cumulative progress toward completion as of the end of each reporting period, and makes revisions to such estimates, if necessary, adjustsfacts and circumstances change during each reporting period.
On March 14, 2022, the measureCompany entered into SOWs with Wugen for each of performancethe then-current and related revenue recognition.
Deferred Revenue
Deferred revenue represents amounts billed, or in certain cases yet to be billed, to the Company’s customer for which the related revenues have not been recognized because one or more of the revenue recognition criteria havehas not been met. The current portion ofCompany had deferred revenue represents the amount to be recognized within one year from the balance sheet date based on the estimated performance period of the underlying performance obligations. The long-term portion$1.8 million and $314,625 as of December 31, 2021 and June 30, 2022, respectively. All deferred revenue represents amounts to berecognized after one year.
Investments
The Company holds a minority interest in Wugen. The underlying shares of common stockWugen which is not traded on any public market and thus has limited marketability. The Company does not have significant influence over the operating and financial policies of Wugen. As a result, the Company has accounted for this investment using the measurement alternative whereby the investment is recorded at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same investee. No impairment was recognized ashas been recognized. As of December 31, 2021 and June 30, 2021.
The Company defers offering costs consistinginvests net proceeds of legal, accountingits IPO in bills and other fees and costs directly attributable to its initial public offering (“IPO”). The deferred offering costs will be offset againstnotes issued by the proceeds received upon the completion of the IPO. Deferred offering costs will beU.S. Treasury which are classified as current or long term, depending on whether an IPO is expected to be completed within aone-yearperiod. If offering expenses are paid prior to the completion of an IPO, they will be recorded in prepaid assets on the balance sheets until such time an IPO is completed. If an obligation is incurred but not settled prior to the IPO, the Company will recognize deferred offering costs as an accrued liability. In the event the IPO is terminated, all of the deferred offering costs will be expensed within the Company’s statements of operations.trading securities. As of June 30, 2021, there were approximately $3.22022, the Company held $17.0 million of current deferred offering costs, $924,312 of whichin U.S. Treasury bills included in Short-term investments and $9.7 million in U.S. Treasury notes included in Investments in the accompanying condensed balance sheet.
Operating Leases
The Company determines if an arrangement is a lease at inception. Operating leases are included within Prepaid expenses, $307,312 of which are included within Accountspayable, and $2.0 million of which are included withinin Other assets, Accrued liabilities and other current liabilities, and Other liabilities on its balance sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the accompanying condensed balance sheet. There were 0long-term deferred offeringpresent value of the future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs as of June 30, 2021.incurred. The Company has a lease agreement with lease and non-lease components, which are accounted for separately.
Net Loss Per Share
Basic net loss per share is calculated by dividing the net loss attributable to common stockholders, including both Class A and Class B common stock, by the weighted-average number of common shares outstanding for the period, without consideration of potential dilutive securities. Diluted net loss per sharestock is computed by dividing the net loss attributable to common stockholders by the sum of the weighted averageweighted-average number of shares of common shares plus the potential dilutive effects of potential dilutive securitiesstock outstanding during theeach period. Potential dilutive securities are excluded from diluted earnings orDiluted loss per share ifof common stock includes the effect, if any, from the potential exercise of such inclusion is anti-dilutive. The Company’s potentially dilutive securities, which include convertible redeemable preferred stock and outstanding stock options underand unvested shares of restricted stock, which would result in the 2019 Equity Incentive Plan (“2019 Plan”), have been excluded from the computationissuance of incremental shares of common stock. For diluted net loss per share, as they would be anti-dilutive to the weighted-average number of shares of common stock is the same for basic net loss per share. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstandingshare due to the Company’sfact that when a net loss position.exists, dilutive securities are not included in the calculation as the impact is anti-dilutive.
7
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU(“ (“Topic 842”), which requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases. The ASU will also require new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases.Company adopted Topic 842 is effective foras of January 1, 2022. Effective March 1, 2022, the Company entered into noncancelable operating leases for its current location with a two-year term. These are the only leases in the fiscal years beginning after December 15, 2021, with early adoption permitted. The Company is currently in the process of evaluating the impact of the adoptionscope of Topic 842 onor above the Company’s financial statements and related disclosures.Company's capitalization threshold.
2. Accrued Liabilities and Other Current Liabilities
As of December 31, 2020,2021, the Company had $845,741a balance of $2.1 million in Accrued liabilities and other current liabilities, primarily consisting of the PPP loan of $567,311, including principal$1.8 million related to deferred revenue, $48,750 related to manufacturing materials, $51,000 related to legal fees, and accrued but unpaid interest, and accrued liabilities of $273,907.$50,000 for other expenses. On January 8, 2021, the Company received full loan forgiveness of $567,311$567,311 for obligations related to the PPP loan. The Company accounted for the PPP loan as debt, and the loan forgiveness was accounted for as a debt extinguishment. The amount of loan and interest forgiven is recognized as a gain upon debt extinguishment and is reported within Interest and other income, net in the accompanying condensed statement of operations for the six months ended June 30, 2021.
As of June 30, 2021,2022, the Company had a balance of $3.2 million$848,340 in Accrued liabilities and other current liabilities, consisting primarily of $2.0 million related to deferred offering costs for the Company’s IPO, $696,625$314,625 related to deferred revenue, and $315,855 in compensation-related accruals, including an accrual for a performance bonus$151,000 related to the completion of the IPO.salary and benefits, $170,687 related to short-term lease liability, and $212,000 related to other current liabilities which were primarily accrued legal fees and clinical trials expenses.
3. Redeemable Preferred Stock
On July 22, 2021, the Company accrued cumulativeclosed on its IPO, and the requirements for mandatory conversion were met. All outstanding shares of Series A, Series B, and Series C Preferred Stock converted into an equal number of shares of common stock. As a result, the rights, preferences, and terms ascribed to these shares are no longer applicable. Cumulative dividends of $960,020 which is included in$2.8 million accrued as of the amounts reported for redeemableconversion date were forfeited and such forfeiture was recognized through Additional paid-in capital.
At December 31, 2021 and June 30, 2022, the Company has 10,000,000 shares of preferred stock in the accompanying condensed balance sheet as of June 30, 2021. NaN dividends have been declared or paid as of June 30, 2021.
4. Net Loss Per Share
The following table summarizes the computation of the basic and diluted net loss per share:
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
|
| ||||||||||
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| ||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net loss |
| $ | (2,750,362 | ) |
| $ | (3,510,561 | ) |
| $ | (5,594,358 | ) |
| $ | (5,567,768 | ) |
|
Less: cumulative preferred dividends earned in the period |
|
| (482,662 | ) |
|
| 0 |
|
|
| (960,020 | ) |
| $ | — |
|
|
Net loss available for distribution to common stock holders |
| $ | (3,233,024 | ) |
| $ | (3,510,561 | ) |
| $ | (6,554,378 | ) |
| $ | (5,567,768 | ) |
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted-average common shares outstanding |
|
| 4,921,121 |
|
|
| 35,814,482 |
|
|
| 4,880,496 |
|
|
| 35,796,257 |
|
|
Net loss per share, basic and diluted |
| $ | (0.66 | ) |
| $ | (0.10 | ) |
| $ | (1.34 | ) |
| $ | (0.16 | ) |
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2021 | 2020 | 2021 | |||||||||||||
Numerator: | ||||||||||||||||
Net loss | $ | ) | $ | ) | $ | (5,153,999 | ) | $ | (5,594,358 | ) | ||||||
Less: cumulative preferred dividends earned in the period | (279,786 | ) | (482,662 | ) | (559,573 | ) | (960,020 | ) | ||||||||
Net loss available for distribution to common stock holders | $ | (3,058,271 | ) | (3,233,024 | ) | $ | (5,713,572 | ) | (6,554,378 | ) | ||||||
Denominator: | ||||||||||||||||
Weighted-average common shares outstanding | 4,725,083 | 4,921,121 | 4,721,313 | 4,880,496 | ||||||||||||
Net loss per share, basic and diluted | $ | (0.65 | ) | $ | (0.66 | ) | $ | (1.21 | ) | $ | (1.34 | ) | ||||
The following table summarizes the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their inclusion would be anti-dilutive:
|
| At June 30, |
| |||||
|
| 2021 |
|
| 2022 |
| ||
Redeemable Preferred Stock |
|
| 23,768,416 |
|
|
| 0 |
|
Common stock options |
|
| 579,858 |
|
|
| 1,924,317 |
|
Potentially diluted securities |
|
| 24,348,274 |
|
|
| 1,924,317 |
|
8
At June 30, | ||||||||
2020 | 2021 | |||||||
Redeemable Preferred stock | 18,329,308 | 23,768,420 | ||||||
Common stock options | 569,400 | 579,858 | ||||||
Potentially diluted securities | 18,898,708 | 24,348,278 | ||||||
5. Fair Value of Financial Instruments
The carrying amount of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, U.S. government-backed securities with maturity dates up to one year, accounts payable and accrued liabilities, approximate fair value due to their short-term maturities.
Money market funds included in cash and cash equivalents thatand U.S. government-backed securities are measured at fair value based on quoted prices thatin active markets, which are derived from observable market data are classified asconsidered Level 1 inputs. No transfers between levels occurred during the periods presented. The following table presents the Company’s assets which were measured at fair value at December 31, 20202021 and June 30, 2022:
|
| At December 31, 2021: |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Money market funds |
| $ | 9,506,499 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 9,506,499 |
|
Treasury bills |
|
| 24,983,520 |
|
|
| 0 |
|
|
| 0 |
|
|
| 24,983,520 |
|
Treasury notes |
|
| 9,922,300 |
|
|
| 0 |
|
|
| 0 |
|
|
| 9,922,300 |
|
Total |
| $ | 44,412,319 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 44,412,319 |
|
|
| At June 30, 2022: |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Money market funds |
| $ | 14,402,855 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 14,402,855 |
|
Treasury bills |
|
| 16,993,523 |
|
|
| 0 |
|
|
| 0 |
|
|
| 16,993,523 |
|
Treasury notes |
|
| 9,703,120 |
|
|
| 0 |
|
|
| 0 |
|
|
| 9,703,120 |
|
Total |
| $ | 41,099,498 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 41,099,498 |
|
At December 31, 2020: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Money market funds | $ | 6,752,266 | $ | — | $ | — | $ | 6,752,266 | ||||||||
Total | $ | 6,752,266 | $ | — | $ | — | $ | 6,752,266 | ||||||||
At June 30, 2021: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Money market funds | $ | 3,379,887 | $ | $ | $ | 3,379,887 | ||||||||||
Total | $ | 3,379,887 | $ | — | $ | — | $ | 3,379,887 | ||||||||
6. Income Taxes
The Company computes its quarterly income tax expense/(benefit) by using a forecasted annual effective0t0t have a provision for income taxes (current or deferred tax expense) as of December 31, 2021 and June 30, 2021 and December 31, 2020.2022. The Company will continue to maintain a 100%100% valuation allowance on total deferred tax assets. The Company believes it is more likely than not that the related deferred tax asset will not be realized. As a result, the Company’s effective tax rate will remain at 0.00%0.00% because no items that are either estimated or discrete items would impact the tax provision.
7. Commitments and Contingencies
Operating Leases
The Company has operating leases its operating facilitiesfor approximately 12,250 square feet of space located in Miramar, Florida undernon-cancelableoperating lease agreementsFlorida. The leases have a two-year term which commenced on March 1, 2022 and will terminate on February 29, 2024. Upon the commencement of the leases, the Company used its incremental borrowing rate of 6.0% to determine the amounts to recognize for a ROU asset and a short-term sublease agreement for additional office space. Rent expense is recognized for leases with increasing annual rents on a straight-line basis over the termlease liability. There are no obligations under finance leases.
The components of the lease. The amount of rentlease expense in excess of cash payments is classified as deferred rent. Lease incentives received are deferred and amortized over the term of the lease.
2021 (remaining 6 months) | $ | 106,000 | ||
2022 | 36,000 | |||
Total future minimum lease payments | $ | 142,000 | ||
|
| For the Three Months |
|
| For the Six Months Ended June 30, 2022 |
| ||
Operating lease cost |
| $ | 42,413 |
|
| $ | 56,550 |
|
9
Supplemental cash flow information related to lease for the six months ended June 30, 20202022 was as follows:
|
| For the Six Months Ended June 30, 2022 |
| |
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
| |
Operating cash flows |
| $ | 69,643 |
|
Right-of-use assets obtained in exchange for lease obligations: |
|
|
| |
Operating lease |
| $ | 50,545 |
|
As of June 30, 2022, the supplemental balance sheet information related to leases was as follows:
|
| As of June 30, 2022 |
| |
Operating lease right-of-use assets |
| $ | 268,298 |
|
Other current liabilities |
| $ | 170,687 |
|
Operating lease liabilities, net of current portion |
|
| 98,447 |
|
Total operating lease liabilities |
| $ | 269,134 |
|
As of June 30, 2022, the remaining lease payments were as follows:
2022 (remaining 6 months) |
| $ | 83,572 |
|
2023 |
|
| 171,322 |
|
2024 |
|
| 28,693 |
|
Total future minimum lease payments |
| $ | 283,587 |
|
For the three months ended June 30, 2021 and 2021,2022, rent expense recognized by the Company was $31,552 and $49,966 respectively, of which $14,623 and $25,149, respectively, is included in research and development in the accompanying condensed statements of operations.
For the six months ended June 30, 2021 and 2022, rent expense recognized by the Company was $68,466 and $77,139, respectively, of which $34,790 and $32,834, respectively, is included in research and development in the accompanying condensed statements of operations. Certain comparative figures have been reclassified to conform to the current year presentation under Topic 842 for rent expense.
Contractual Commitments
The Company entered into an agreementoperates under the provisions of agreements with a third-party global contract development and manufacturer of biologics for the manufacture of the Company’s proprietary molecules for use in its clinical trials. At June 30, 2020 and June 30,December 31, 2021, future payment obligations understatements-of-workNaNand $1.3 million, respectively.In the three months ended$2.5 million. At June 30, 2020,
Legal
Management has no knowledge of any pending or unasserted claims against the Company.
Other
In March 2020, the World Health Organization declared the outbreak of a novel coronavirus
10
8. Subsequent Events
Subsequent events have been evaluated through the date the financial statements were available to be issued. As of such date, there were no material subsequent events identified that required recognition or disclosure other than as disclosed below or in the footnotes herein.
On July 19, 2021,August 2, 2022, HCW Biologics was granted U.S. Patent No. 11,401,324 which contains claims for immunotherapeutic compounds comprised of a single-chain chimeric polypeptide with 2 target-binding domains on a scaffold made of an extracellular domain of human tissue factor.
On August 10, 2022, HCW Biologics committed to purchase a building located in Miramar, Florida for approximately $10.0 million, as the Company’s registration statementCompany's new headquarters. The Company received a commitment for a five-year term facility to finance the purchase, expansion, and improvement of property. An initial takedown equal to 65% of the purchase price will be funded on FormS-1its IPO was declared effectiveexpansion and improvements of the property; however, future borrowings are subject to full credit approval and due diligence by the Securities and Exchange Commission (the “SEC”). On July 22, 2021, the Company closed its IPO with the sale of 7,000,000 shares of common stock, at a public offering price of $8.00 per share, resulting in net proceeds of approximately $49.0 million, after deducting underwriting discounts and commissions and estimated offering expenses paid by the Company.lender.
11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (i) our unaudited condensed interim financial statements and related notes appearing elsewhere in this Quarterly Report on Formmanagement’sthe discussion under the heading “Management's Discussion and analysisAnalysis of financial conditionFinancial Condition and resultsResults of operationsOperations” for the fiscal year ended December 31, 2021 included in our final prospectusthe Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission or(the “SEC”) on March 29, 2022. Our historical results are not necessarily indicative of the SEC, on July 21, 2021 pursuant to Rule 424(b)(4) underresults that may be expected for any period in the Securities Act of 1933, as amended, which we refer to as our Prospectus.future. Unless the context requires otherwise, references in this Quarterly Report on Form In preparing the Management’s Discussion and Analysis below, we presume the readers have access to and have read the Management’s DiscussionandAnalysis inourProspectus, pursuant to Instruction 2 to paragraph (b) of Item 303 of RegulationS-K.
Forward-Looking Statements
This Quarterly Report on
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Formand in our Prospectus andAnnual Report on Form 10-K, elsewhere in this Quarterly Report on Form
Overview
HCW Biologics Inc. (“HCW Biologics,” “HCW,” the “Company,” or “we”) is a clinical-stage biopharmaceutical company focused on discovering and developing novel immunotherapies to lengthen health span by disrupting the link between chronic,chronic inflammation, or “inflammaging,” is a significant contributing factor to several chronic diseases and conditions, such as cancer, cardiovascular disease, diabetes, neurodegenerative disease,diseases, and autoimmune disease.diseases. The induction and retention of low-grade inflammation in an aging human body is mainly the result of the accumulation of non-proliferative but metabolically active senescent cells, which can also be caused by persistent activation of protein complexes, known as inflammasomes, in innate immune cells. These two elements share common mechanisms in promoting secretion of pro-inflammatory proteins and in many cases interact to drive senescence, and thus, inflammaging. Our novel approach is to eliminate senescent cells and the pro-inflammatory factors they secrete systemically through multiple pathways. We believe our approach has the potential to provide an innovativefundamentally change the treatment of these
Senescence is oncology. Advancesa physiologic process important in immuno-stimulatorypromoting wound healing, tissue homeostasis, regeneration, embryogenesis, fibrosis regulation, and anti-immunosuppressive therapeutics have revolutionized cancer treatment. Ourtumorigenesis suppression. However, accumulation of senescent cells with a senescence-associated pro-inflammatory factors has been implicated as a major source of chronic sterile inflammation leading to many aging-related pathologies. Subcutaneous administration of our lead molecule,drug candidate, HCW9218, is designed with both of these functionalities – it rejuvenatesactivates Natural Killer ("NK") cells, innate lymphoid group-1, and CD8+ T cells, and neutralizes transforming growth factor beta ("TGF-β"). This bifunctionality gives HCW9218 the immune systemability to reduce senescence, and it capturesTGF-ßto neutralize its immunosuppressive activity. We are preparing to submit an IND forsenescent cells, that is function as a Phase 1b/2 clinical trial in pancreatic cancer to evaluate HCW9218, which includes completing drug product testing and nonclinical animal toxicity/ pharmacokinetic studies,senolytic, as well as finalizingeliminate senescence-associated pro-inflammatory factors, that is function as a senomorphic. As a result, HCW9218 has the ability to lower chronic inflammation and restore tissue homeostasis. HCW9218 reached the clinical protocol. Pendingstage of its development in the submission and FDA acceptancefirst half of 2022, with the IND to proceed, we expect to initiate thisinitiation of a
12
Phase 1 clinical trial by the end of 2021 after obtaining IRB approval of our clinical research, completing clinical site initiation, and finalizing clinical trial agreements. However, we have not submitted the IND for the planned trial, and we cannot provide any assurance that the FDA will authorize us to initiate our planned clinical trials on a timely basis, or at all. In the event that the FDA does not accept our IND, we may also be required to seek feedback, and the feedback may be unfavorable. In the event we do not receive feedback on a timely basis, or we are required to change the design of our clinical protocol or address other feedback, clinical development of our products would be delayed and our costs may increase. Moreover, if the FDA does not accept the IND we file, we may be required to conduct additional preclinical testing or otherIND-enablingactivities, which would result in further delay and additional costs.
HCW9302 is another lead drug candidate which is designed to activate and expand regulatory T (“Treg”) cells to reduce senescence by suppressing the sponsor. Weactivity of inflammasome-bearing cells and the inflammatory factors which they secrete. This molecule is a single-chain, IL-2-based fusion protein. Preclinical studies in mouse models have demonstrated the ability of HCW9302 to expand and activate Treg cells and reduce inflammation-related diseases, supporting the potential of HCW9302 to treat a wide variety of autoimmune and proinflammatory diseases, such as atherosclerosis. IND-enabling activities are currently engaged in preliminary discussions with an institution that has expressed interestprogress, but due to be a sponsorCOVID-related delays, the completion date for toxicology studies required by the Federal Drug Administration ("FDA") for an IND using HCW9218 as an adjunctInvestigational New Drug Application ("IND") is expected to chemotherapyextend to the first half of 2023. If we are successful in patients with solid tumors (breast, ovarian, prostate,completing IND-enabling activities and colorectal cancers). However, these discussions are preliminary, andhave no further delays in the expected schedule, we may not succeed in reaching an agreement with this institution. Depending on the course of these discussions and whether we needcontinue to seek an alternative sponsor forplan to file an IND there could be a delay in initiatingto obtain approval from the FDA for a Phase 1b/2 clinical trial to evaluate HCW9302 in an autoimmune disorder in the first half of 2023.
Recent Developments
Trends and Uncertainties –
The spread ofmarkets.markets since March 2020. There is significant uncertainty around the breadth and duration of business disruptions related toonover time.
The extent to which the COVID-19 or outbreaks of its variants may affect our operations.
13
Components of our Results of Operation
Revenues
We have no products approved for commercial sale and have not generated any revenue from commercial product sales of internally-developed immunotherapeutic products for the treatment of cancer and do not expectother age-related diseases. Our total revenues to generatedate have been generated principally from our Wugen License and MSA with Wugen. See Note 1 to our condensed interim financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for these definitions and more information.
We derive revenue from producta license agreement granting rights to Wugen to further develop and commercialize products based on two of our proprietary molecules. Consideration under our contract included a nonrefundable upfront payment, development, regulatory and commercial milestones, and royalties based on net sales for the foreseeable future. Until that occurs, our sole source of revenue will be derived fromout-licenses,collaborative agreements, andco-developmentdeals.
Performance obligations relating to the granting a license and delivery of June 30, 2021, we entered into a master services agreement related to a development supply agreement to provide cGMPlicensed product andnon-cGMPgrade licensed molecules based on industry-standard terms. We have not finalized any statements of work under R&D know-how were satisfied when transferred upon the master services agreement, which will specify the performance obligations required to be completed by the Company for supplies ordered by Wugen. We also intend to enter into a supply agreement with Wugen for commercial supply when commercialization commences. In future periods, under the termsexecution of the Wugen License we may be eligibleon December 24, 2020. The Company recognized revenue for the related consideration at a point in time. The revenues recognized from for a transaction to receive additional cash paymentssupply clinical and research grade materials entered into under the MSA and covered by a SOW, represents one performance obligation that will be recognized asis satisfied over time. The Company recognizes revenue includinggenerated for supply of material for clinical development and commercialization milestones and single-digit royaltiesusing an input method based on annual net salesthe costs incurred relative to the total expected cost, which determines the extent of licensed products.
Operating Expenses
Our operating expenses are reported as research and development expenses and general and administrative expenses.
Research and Development
Our research and development expenses consist primarily of costs incurred for the development of our product candidates, which include:
We expense research and development costs as they are incurred. Costs for contract manufacturing are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the agreement, and the pattern of payments for goods and services will change depending on the material. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses and expensed as the related goods are delivered or the services are performed.
14
We expect research and development expenses to increase substantially for the foreseeable future as we continue the development of our product candidates. We cannot reasonably determine the nature, timing, and costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates. Product candidates in later stages of development generally have higher development costs than those in earlier stages. We expectSee “Risk Factors -- Risks Related to the Development and Clinical Testing of Our Product Candidates,” in our research and development expenses will increase substantiallyAnnual Report on Form 10-K for the foreseeable future as we continue to invest in research and development activities related to developing our lead product candidates, advance into later stagesyear ended December 31, 2021 filed with the SEC for a discussion of development, begin to conduct larger clinical trials, expand our product pipeline, continue to maintain, expand, protect, and enforce our intellectual property portfolio, and establish our own manufacturing capabilities. In particular, we expect our research and development expenses will increase substantially as we progress to Phase 2 and Phase 2/3 clinical trials for our lead product candidates, primarily due to the increased size and duration of later-stage clinical trials.
General and Administrative Expenses
General and administrative expenses consist primarily of employee-related expenses, including salaries, related benefits, and stock-based compensation expense for employees in the executive, legal, finance and accounting, human resources, and other administrative functions. General and administrative expenses also include third-party costs such as insurance costs, fees for professional services, such as legal, auditing and tax services, facilities administrative costs, and other expenses.
We expect that our general and administrative expenses will be higher in the foreseeable future. We anticipate increased expenses relating to our operations as a public company, including increased costs for the hiring of additional personnel, and for payment to outside consultants, including lawyers and accountants, to comply with additional regulations, corporate governance, internal control and similar requirements applicable to public companies, as well as increased costs for insurance.
Interest and Other Income (Expense)(Loss), Net
Interest and other income, (expense), net consists of interest earned on our cash, cash equivalents, unrealized gains and losses related to our investments in U.S. government-backed securities, other income related to
Results of Operations
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2021 | 2020 | 2021 | |||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | $ | 2,068,783 | $ | 1,673,163 | $ | 3,747,207 | $ | 4,002,976 | ||||||||
General and administrative | 711,224 | 1,077,830 | 1,429,792 | 2,160,190 | ||||||||||||
Total operating expenses | 2,780,007 | 2,750,993 | 5,176,999 | 6,163,166 | ||||||||||||
Loss from operations | (2,780,007 | ) | (2,750,993 | ) | (5,176,999 | ) | (6,163,166 | ) | ||||||||
Interest and other income, net | 1,522 | 631 | 23,000 | 568,808 | ||||||||||||
Net loss | $ | (2,778,485 | ) | $ | (2,750,362 | ) | $ | (5,153,999 | ) | $ | (5,594,358 | ) |
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| 2021 |
|
| 2022 |
|
| 2021 |
|
| 2022 |
| ||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenues |
| $ | — |
|
| $ | 454,000 |
|
| $ | — |
|
| $ | 3,571,545 |
|
Cost of revenues |
|
| — |
|
|
| (287,200 | ) |
|
| — |
|
|
| (1,615,276 | ) |
Net revenues |
|
| — |
|
|
| 166,800 |
|
|
| — |
|
|
| 1,956,269 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Research and development |
|
| 1,673,163 |
|
|
| 1,969,882 |
|
|
| 4,002,976 |
|
|
| 3,759,558 |
|
General and administrative |
|
| 1,077,830 |
|
|
| 1,707,995 |
|
|
| 2,160,190 |
|
|
| 3,588,597 |
|
Total operating expenses |
|
| 2,750,993 |
|
|
| 3,677,877 |
|
|
| 6,163,166 |
|
|
| 7,348,155 |
|
Loss from operations |
|
| (2,750,993 | ) |
|
| (3,511,077 | ) |
|
| (6,163,166 | ) |
|
| (5,391,886 | ) |
Interest and other income (loss), net |
|
| 631 |
|
|
| 516 |
|
|
| 568,808 |
|
|
| (175,882 | ) |
Net loss |
| $ | (2,750,362 | ) |
| $ | (3,510,561 | ) |
| $ | (5,594,358 | ) |
| $ | (5,567,768 | ) |
15
Comparison of the Three Months ended June 30, 20202021 and June 30, 2021
Revenues
On June 18, 2021, the Company entered into a master services agreementMSA with Wugen related tofor the supply of materials for clinical development of licensed moleculesproducts. The terms set forth in the MSA were not sufficient to meet all the requirements for usethe Company to determine that a contract exists. In order for a contract to exist, additional terms are needed that must be set forth in research and clinical development. Thea SOW. Until March 14, 2022, the Company has not finalizedentered into any statements of work, which will specify the performance obligations requiredSOWs for transactions to be completed bysupply Wugen with clinical and research grade materials, and all amounts received for such transactions were recorded as deferred revenue. On March 14, 2022, the Company entered into SOWs with Wugen for supplies ordered by Wugen. The standalone selling priceeach of the then-current and historical purchases of clinical and research grade materials under the MSA. As a result, the Company determined that all requirements were met for these materials has been determined using industry-standard “cost plus” terms for supply agreements.
For any transactions to supply materials for clinical development for which a SOW has not been finalized, revenue is not recognized because one or more of the criteria for revenue recognition has not been met, in which case, the Company records deferred revenue,revenue. There were $696,625 of short-term deferred revenues as of June 30, 2021. As of June 30, 2022, there were $314,625 of short-term deferred revenues included within accruedAccrued liabilities and other current liabilities on the unauditedaudited condensed balance sheet as of June 30, 2021 that appears elsewhere in this Quarterly Report. Deferred revenue represents the payments received in advance of the satisfaction of performance obligations for delivery and acceptance of research and clinical grade materials.
Research and Development Expenses
The following table summarizes our research and development expenses for the three months ended June 30, 20202021 and June 30, 2021:
Three Months Ended June 30, | ||||||||||||||||
2020 | 2021 | $ Change | % Change | |||||||||||||
Salaries, benefits and related expenses | $ | 711,410 | $ | 775,782 | $ | 64,372 | 9 | % | ||||||||
Manufacturing and materials | 897,526 | 313,402 | (584,124 | ) | -65 | % | ||||||||||
Preclinical expenses | 305,553 | 318,595 | 13,042 | 4 | % | |||||||||||
Clinical trials | 23,003 | 107,587 | 84,584 | 368 | % | |||||||||||
Other expenses | 131,291 | 157,797 | 26,506 | 20 | % | |||||||||||
Total research and development expenses | $ | 2,068,783 | $ | 1,673,163 | $ | (395,620 | ) | -19 | % |
|
| Three Months Ended |
|
|
|
|
|
|
| |||||||
|
| 2021 |
|
| 2022 |
|
| $ Change |
|
| % Change |
| ||||
Salaries, benefits and related expenses |
| $ | 775,782 |
|
| $ | 802,033 |
|
| $ | 26,251 |
|
|
| 3 | % |
Manufacturing and materials |
|
| 313,402 |
|
|
| 304,329 |
|
|
| (9,073 | ) |
|
| (3 | )% |
Preclinical expenses |
|
| 318,595 |
|
|
| 599,520 |
|
|
| 280,925 |
|
|
| 88 | % |
Clinical trials |
|
| 107,587 |
|
|
| 83,939 |
|
|
| (23,648 | ) |
|
| (22 | )% |
Other expenses |
|
| 157,797 |
|
|
| 180,061 |
|
|
| 22,264 |
|
|
| 14 | % |
Total research and development expenses |
| $ | 1,673,163 |
|
| $ | 1,969,882 |
|
| $ | 296,719 |
|
|
| 18 | % |
Research and development expenses decreased $395,620,increased $296,719, or 19%18%, from $2.1 million for the three months ended June 30, 2020 to $1.7 million for the three months ended June 30, 2021. The decrease2021 to $2.0 million for the three months ended June 30, 2022. This increase was primarily due primarily to a decline in expenses related to manufacturing activities, offset for an increase in salaries, benefits and related expenses, preclinical and clinical activities, and other expenses.
Salaries, benefits, and related expenses increased by $64,372,$26,251, or 9%3%, from $711,410 for the three months ended June 30, 2020 to $775,782 for the three months ended June 30, 2021. The increase was due primarily2021 to an increase in salaries and wages resulting from an addition of three scientists in the three months ended June 30, 2020 versus the three months ended June 30, 2021. Salaries and wages increased by $68,785 and health insurance costs increased by $19,075, offset by reimbursement of certain expenses under the terms of the Wugen License.
Manufacturing and materials expense decreased by $9,073, or 3%, from $313,402 for the three months ended June 30, 2021. In2021 to $304,329 for the three months ended June 30, 2020, our manufacturing activities related to two molecules: (1) HCW9101, an affinity ligand we use in our manufacturing process, and (2) HCW9201, a clinical-stage molecule subject to the Wugen License. We received final master cell bank production and characterization reports, completed preparation for drug testing, and successfully completed GMP manufacturing runs in multiple quantities. In addition, the fill/finish and testing for HCW9201 was also completed.
16
Expenses associated with preclinical activities increased by $13,042,$280,925, or 4%88%, from $305,553 for the three months ended June 30, 2020 to $318,595 for the three months ended June 30, 2021. The increase is due primarily2021 to an increase in expenses for R&D outsourcing arrangements and experimental materials, offset by a decrease in toxicology expenses. Preliminary test results for the toxicology studies for HCW9218 are available to the Company, and based on these results we are preparing our IND application to evaluate HCW9218 in a pancreatic cancer trial. We may continue to deal with COVID-related delays which may impact the expected completion date for the toxicology final report for HCW9218, a requirement for filing our IND for the Phase 1b/2 clinical trial to evaluate HCW9218 in pancreatic cancer. Nonhuman primate testing is completed, and a preliminary report is expected in Q3 2021 which will allow us to prepare our IND filing. We continue to target the initial IND filing for the pancreatic cancer trial in the 2H 2021, with clinical trials to begin late this year. For our other lead molecule, HCW9302, we are currently designing a multi-dose nonhuman primate toxicology study, and we are targeting the initiation of this study in late 2021. This study will last several months. Currently, we expect the toxicology study for HCW9302 to be completed in the 1H 2022. If we succeed in doing so, we would be in position to prepare and file our IND to evaluate HCW9302 in alopecia areata inmid-2022.
Expenses associated with clinical activities decreased by $23,648, or 22%, from $107,587 for the three months ended June 30, 2021. The increase is due primarily2021 to an increase in expenses for collaborations and outsourcing.
Other expenses, which include overhead allocations, increased by $22,264, or 14%, from $157,797 for the three months ended June 30, 2021.2021 to $180,061 for the three months ended June 30, 2022. The increase is duein other expenses were primarily attributable to higher expenses for repairs and maintenance as well as an increase of $21,248 in the allocations for rent expense.
General and Administrative Expenses
The following table summarizes our general and administrative expenses for the three months ended June 30, 20202021 and June 30, 2021:
Three Months Ended June 30, | ||||||||||||||||
2020 | 2021 | $ Change | % Change | |||||||||||||
Salaries, benefits and related expenses | $ | 402,661 | $ | 611,008 | $ | 208,347 | 52 | % | ||||||||
Professional services | 138,882 | 274,875 | 135,993 | 98 | % | |||||||||||
Facilities and office expenses | 56,600 | 67,691 | 11,091 | 20 | % | |||||||||||
Depreciation | 56,672 | 61,083 | 4,411 | 8 | % | |||||||||||
Rent expense | 25,233 | 24,823 | (410 | ) | -2 | % | ||||||||||
Other expenses | 31,176 | 38,350 | 7,174 | 23 | % | |||||||||||
Total general and administrative expenses | $ | 711,224 | $ | 1,077,830 | $ | 366,606 | 52 | % |
|
| Three Months Ended |
|
|
|
|
|
|
| |||||||
|
| 2021 |
|
| 2022 |
|
| $ Change |
|
| % Change |
| ||||
Salaries, benefits and related expenses |
| $ | 611,008 |
|
| $ | 743,842 |
|
| $ | 132,834 |
|
|
| 22 | % |
Professional services |
|
| 274,875 |
|
|
| 287,199 |
|
|
| 12,324 |
|
|
| 4 | % |
Facilities and office expenses |
|
| 67,691 |
|
|
| 113,254 |
|
|
| 45,563 |
|
|
| 67 | % |
Depreciation |
|
| 61,083 |
|
|
| 16,940 |
|
|
| (44,143 | ) |
|
| (72 | )% |
Rent expense |
|
| 24,823 |
|
|
| 35,298 |
|
|
| 10,475 |
|
|
| 42 | % |
Other expenses |
|
| 38,350 |
|
|
| 511,462 |
|
|
| 473,112 |
|
| NM |
| |
Total general and administrative expenses |
| $ | 1,077,830 |
|
| $ | 1,707,995 |
|
| $ | 630,165 |
|
|
| 58 | % |
NM - Not meaningful.
General and administrative expenses increased $366,606,$630,165, or 52%58%, from $711,224$1.1 million for the three months ended June 30, 2021 to $1,077,830$1.7 million for the three months ended June 30, 2021. The2022. This increase was primarily due to an increase of $473,112 in other expenses resulting from increased insurance costs associated with being a public company. There was also an increase of $132,834 in salaries, brought about bybenefits and related expenses as a salary increase in 2021 and a performance bonuses relatedresult of stock-based compensation expense associated with an equity award to the CEO upon completion of the IPO. Professional servicesIPO and an increase for Board compensation under our non-employee director compensation program, which was more than offset by a decrease of $195,750 in performance bonuses for the same period. Facilities and office expenses increased by $45,563, or 67%, primarily due to legal services requiredan increase in software license fees. Depreciation decreased by $44,143 primarily due to a decrease of $27,382 in amortization for patent filings.
Comparison of the Six Months Endedended June 30, 20202021 and June 30, 2021
Revenues
There was no revenue for the six months ended June 30, 2021. For the six months ended June 30, 2022, the Company recognized $3.6 million of revenues in the unaudited statements of operations included elsewhere in this Quarterly Report. All revenues were generated under the MSA with Wugen. Revenue
17
For those transactions for which revenues were not recognized because one or more of the criteria for revenue recognition had not been met under Topic 606, the Company recorded deferred revenue. There were $696,625 of short-term deferred revenues as of June 30, 2021, we recognized $696,625and $314,625 of short-term deferred revenue,revenues as of June 30, 2022 included within accruedAccrued liabilities and other current liabilities on the unaudited condensed balance sheet as of June 30, 2021. This was an increase of $457,188 over the amount recognized as of March 31, 2021. Deferred revenue represents the payments received in advance of the satisfaction of performance obligations for delivery and acceptance of research and clinical grade materials.
Research and Development Expenses
The following table summarizes our research and development expenses for the six months ended June 30, 20202021 and June 30, 2021:
Six Months Ended June 30, | ||||||||||||||||
2020 | 2021 | $ Change | % Change | |||||||||||||
Salaries, benefits and related expenses | $ | 1,441,683 | $ | 1,472,753 | $ | 31,070 | 2 | % | ||||||||
Manufacturing and materials | 1,449,798 | 1,075,454 | (374,344 | ) | -26 | % | ||||||||||
Preclinical expenses | 531,514 | 994,937 | 463,423 | 87 | % | |||||||||||
Clinical trials | 64,239 | 157,553 | 93,314 | 145 | % | |||||||||||
Other expenses | 259,973 | 302,279 | 42,306 | 16 | % | |||||||||||
Total research and development expenses | $ | 3,747,207 | $ | 4,002,976 | $ | 255,769 | 7 | % |
|
| Six Months Ended |
|
|
|
|
|
|
| |||||||
|
| 2021 |
|
| 2022 |
|
| $ Change |
|
| % Change |
| ||||
Salaries, benefits and related expenses |
| $ | 1,472,753 |
|
| $ | 1,574,981 |
|
| $ | 102,228 |
|
|
| 7 | % |
Manufacturing and materials |
|
| 1,075,454 |
|
|
| 521,957 |
|
|
| (553,497 | ) |
|
| (51 | )% |
Preclinical expenses |
|
| 994,937 |
|
|
| 1,112,637 |
|
|
| 117,700 |
|
|
| 12 | % |
Clinical trials |
|
| 157,552 |
|
|
| 194,716 |
|
|
| 37,164 |
|
|
| 24 | % |
Other expenses |
|
| 302,280 |
|
|
| 355,267 |
|
|
| 52,987 |
|
|
| 18 | % |
Total research and development expenses |
| $ | 4,002,976 |
|
| $ | 3,759,558 |
|
| $ | (243,418 | ) |
|
| (6 | )% |
Research and development expenses increased by $255,769,decreased $243,418, or 7%6%, from $3.7$4.0 million for the six months ended June 30, 20202021 to $4.0$3.8 million for the sixthsix months ended June 30, 2021. The increase2022. This decrease was primarily due primarily to the increase in preclinical activities, offset by a $553,497 decrease in manufacturing and materials expenses and offset by a $117,700 increase in preclinical expenses.
Salaries, benefits, and related expenses increased by $31,070,$102,228, or 2%, for the six months ended June 30, 2020 compared with the six months ended June 30, 2021. The change was primarily due to an increase of $91,918 in salaries and bonuses and an increase of $27,971 for Company-sponsored employee health insurance costs, offset by a $100,000 reimbursement of certain expenses as required under the terms of the Wugen License.
Manufacturing and materials expense decreased by $553,497, or 51%, from $1.1million for five internally-developed molecules. As ofthe six months ended June 30, 2020, we accomplished several milestones2021 to $521,957 for two molecules, HCW9101 and HCW9201: (1) Master Cell Bank production and characterization reports; (2) Preparation for drug testing, and (3) cGMP manufacturing runs in multiple quantities. In addition, the fill/finish and testing was completed for HCW9201.
Expenses associated with preclinical activities increased $463,423,by $117,700, or 87%12%, from $531,514$1.0 million for the six months ended June 30, 20202021 to $994,937$1.1 million for the six months ended June 30, 2021. The majority of these costs2022. In the six months ended June 30, 2021, expenses were attributablerelated primarily to the cost of toxicology studystudies and experimental materials for IND-enabling activities required to completeprepare our application for an IND for Phase 1b/2 clinical trials to evaluate HCW9218 in pancreatic cancer.
18
Expenses associated with clinical activities increased $93,314,$37,164, or 145%24%, from $64,239$157,552 for the six months ended June 30, 20202021 to $157,553$194,716 for the six months ended June 30, 2021.2022. We anticipate expenses related to clinical activities will increase substantially in the future. HCW9218, our lead drug candidate, entered clinical stage in the first half of 2022, upon the initiation of an Investigator-sponsored Phase 1 clinical trial at the Masonic Cancer Center, University of Minnesota for a dose escalation study of HCW9218 as a monotherapy in solid tumors, such as breast, ovarian, prostate and colorectal cancers. The majoritytrial is designed as a dose escalation study of HCW9218 to identify the maximum tolerated dose for future evaluation. Depending on the toxicities observed in the treated patients, between 12 and 24 patients may be enrolled. We anticipate patient enrollment for a Company-sponsored Phase 1b clinical trial to evaluate HCW9218 in advanced pancreatic cancer to commence in the third quarter of 2022. For the pancreatic study, we plan to enroll up to 24 patients in several NCI-designated Comprehensive Cancer Centers, with the primary objectives of the study being to determine safety, maximum tolerated dose, and the recommended Phase 2 dose. We anticipate patient enrollment for this trial to commence in the third quarter of 2022. Due to COVID-related delays at the NCI-designated Comprehensive Cancer Centers we identified as clinical sites to participate in this trial, we were unable to initiate the pancreatic clinical trials earlier in the year. In both of these studies, we will be gathering additional data to obtain further insights for future phases of clinical trials, such as immune system reaction to HCW9218 and incidence of mucosal bleeding caused by the HCW9218 TGF-β trap.
Other expenses, which include overhead allocations, increased by $52,987, or 18%, from $302,280 for the six months ended June 30, 2021 to $355,367 for the six months ended June 30, 2022. The increase wasin other expenses is due primarily attributable to the costsan increase of a collaboration with Washington University. Professional fees for outside services also contributed$28,681 in travel and travel-related activities to this increase.
General and Administrative Expenses
The following table summarizes our general and administrative expenses for the six months ended June 30, 20202021 and June 30, 2021:
Six Months Ended June 30, | ||||||||||||||||
2020 | 2021 | $ Change | % Change | |||||||||||||
Salaries, benefits and related expenses | $ | 796,736 | $ | 1,110,230 | $ | 313,494 | 39 | % | ||||||||
Professional services | 283,836 | 668,499 | 384,663 | 136 | % | |||||||||||
Facilities and office expenses | 120,853 | 127,416 | 6,563 | 5 | % | |||||||||||
Depreciation | 116,056 | 127,725 | 11,669 | 10 | % | |||||||||||
Rent expense | 50,466 | 49,819 | (647 | ) | -1 | % | ||||||||||
Other expenses | 61,845 | 76,501 | 14,656 | 24 | % | |||||||||||
Total general and administrative expenses | $ | 1,429,792 | $ | 2,160,190 | $ | 730,398 | 51 | % |
|
| Six Months Ended |
|
|
|
|
|
|
| |||||||
|
| 2021 |
|
| 2022 |
|
| $ Change |
|
| % Change |
| ||||
Salaries, benefits and related expenses |
| $ | 1,110,230 |
|
| $ | 1,458,128 |
|
| $ | 347,898 |
|
|
| 31 | % |
Professional services |
|
| 668,501 |
|
|
| 746,363 |
|
|
| 77,862 |
|
|
| 12 | % |
Facilities and office expenses |
|
| 127,415 |
|
|
| 213,933 |
|
|
| 86,518 |
|
|
| 68 | % |
Depreciation |
|
| 127,725 |
|
|
| 52,545 |
|
|
| (75,180 | ) |
|
| (59 | )% |
Rent expense |
|
| 49,818 |
|
|
| 65,277 |
|
|
| 15,459 |
|
|
| 31 | % |
Other expenses |
|
| 76,501 |
|
|
| 1,052,351 |
|
|
| 975,850 |
|
| NM |
| |
Total general and administrative expenses |
| $ | 2,160,190 |
|
| $ | 3,588,597 |
|
| $ | 1,428,407 |
|
|
| 66 | % |
NM - Not meaningful
General and administrative expenses increased $730,398, or 51%, from $1.4 million, for the six months ended June 30, 2020 toor 66%, from $2.2 million for the six months ended June 30, 2021. This is2021 to $3.6 million for the six months ended June 30, 2022. The increase was primarily due to increasesan increase of $61,936 in salaries, benefits and related expenses, and professional fees. Thean increase in salaries, benefits, andof $499,909 related expenses is primarily attributable to performance-based bonuses earned in connectionstock-based compensation expense associated with enteringan equity award to the Wugen License andCEO upon completion of the IPO, and an increase of $83,214 for Board compensation under our IPO. non-employee director compensation program offset by a reduction in performance bonuses.
Professional services increased primarily due to legal services required$77,862 or 12%, from $668,501 for patent filings.
Liquidity and Capital Resources
Sources of Liquidity
The Company closed an IPO on July 19,22, 2021, an IPO. From our inceptionresulting in 2018 to July 19, 2021, the effective date of our IPO, we raised net proceeds of approximately $83.6$49.2 million, including $49.0 million of net proceeds fromafter deducting underwriting discounts and commissions and offering expenses paid by the IPO.Company. As of June 30, 2021,2022, we had cash and cash equivalents of $5.1$15.4 million, short-term investments in U.S. government-backed securities of $17.0 million, and long-term investments in U.S. government-backed securities of $9.7 million. After giving effect
19
On August 10, 2022, HCW Biologics committed to purchase a 36,000 square foot building located in Miramar, Florida for approximately $10.0 million, as the Company's new headquarters. The Company received a commitment for a five-year term facility for the purchase, expansion, and improvement of the property, secured by the building. An initial takedown equal to 65% of the purchase price will be funded on the closing date which is expected to be on August 15, 2022. Amounts borrowed under the term facility have a fixed interest rate of 5.75%, with interest only payments required for the first year and 25-year amortization thereafter. The term facility may be increased to provide additional funding for expansion and improvements of the property; however, future borrowings are subject to full credit approval and due diligence by the lender. With our remaining IPO proceeds and the financing commitment for the purchase of the Company's new headquarters, we estimate that we will have adequate capital to meetfund operations and complete of the buildout of our operating expenses, capital expenditure requirements, and contractual obligations for a periodnew headquarters to the end of at least 24 months following the date our most recent financial statements were issued.
We have based our projections of operation expenses and capital expenditure requirements on assumptions that may prove to be incorrect, and we may use all of our available capital sooner than we expect. Because of the numerous risks and uncertainties associated with the clinical development and commercialization of immunotherapeutics, we are unable to estimate the exact amount of capital requirements to pursue these activities. Our funding requirements will depend on many factors, including, but not limited to:
A change in the outcome of any of these or other factors with respect to the clinical development and commercialization of our product candidates could significantly change the costs and timing associated with the development of that product candidate. Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development expenditures.
Comparison of the Cash Flows for the Six Months Ended June 30, 20202021 and June 30, 2021
The following table summarizes our cash flows for the six months ended June 30, 20202021 and 2021:
Six Months Ended June 30, | ||||||||
2020 | 2021 | |||||||
Cash used in operating activities | $ | (4,144,634 | ) | $ | (2,480,242 | ) | ||
Cash used in investing activities | (45,076 | ) | (23,279 | ) | ||||
Cash provided by (used in) financing activities | 2,306 | (901,462 | ) | |||||
Net decrease in cash and cash equivalents | $ | (4,187,404 | ) | $ | (3,404,983 | ) |
|
| Six Months Ended |
| |||||
|
| 2021 |
|
| 2022 |
| ||
Cash used in operating activities |
| $ | (2,480,242 | ) |
| $ | (4,281,998 | ) |
Cash (used in) provided by investing activities |
|
| (23,279 | ) |
|
| 7,963,379 |
|
Cash (used in) provided by financing activities |
|
| (901,462 | ) |
|
| 8,273 |
|
Net (decrease) increase in cash and cash equivalents |
| $ | (3,404,983 | ) |
| $ | 3,689,654 |
|
Operating Activities
Net cash used in operating was $4.1 million andactivities were $2.5 million for the six months ended June 30, 20202021 and June 30, 2021, respectively.
20
Cash used in operating activities for the six months ended June 30, 2021 consisted primarily of a net loss of $5.6 million, as well as $567,311 from extinguishment of debt and $563,436 resulting from an increase in prepaid expenses and other assets. These were offset by cash provided from operating activities resulting from a $2.5 million decrease in accounts receivable, a $1.5 million increase in accounts payable, and a noncash adjustment of $323,897 forprimarily related to depreciation and amortization. The decrease in accounts receivable reflects collection of the $2.5 million cash payment due from Wugen under the terms of the Wugen License. The increase in accounts payable and other liabilities reflects the costs related to our IPO, which closed on July 22, 2021.
Cash used in operating activities for the six months ended June 30, 20202022 consisted primarily of a net loss of $5.6 million, as well as $1.5 million of cash used in operations, resulting from a $1.3 million decrease in accounts payable and 2021, cashother liabilities and a $213,934 increase in accounts receivable. Cash provided by operations consisted primarily of $1.9 million arising from a decrease in prepaid expenses and other assets and adjustments for noncash charges, including $292,363 for depreciation and amortization and $531,683 for compensation expense related to stock-based compensation.
Investing Activities
Cash used in investing activities reflectsfor the six months ended June 30, 2021 consisted of purchase of scientific lab equipment and general office equipment.
Cash provided by investing activities for the six months ended June 30, 2022, consisted of $8.0 million of cash provided when short-term investments reached maturity, offset by $36,461 of cash used to purchase equipment.
Financing Activities
During the six months ended June 30, 2020and 2021, cash provided by financing activities resulted from the issuance of common stock upon exercise of vested employee stock options, partially offset by offering costs.
Critical Accounting Policies, Significant Judgements and Use of Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed interim financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America.U.S. GAAP. 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 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 judgements about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgements and estimates.
Revenue Recognition
We recognize revenue when our customer obtains controlunder the guidance of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.Topic 606. To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of Topic 606, we perform the following five steps: (i) identification of the contract(s) with the customer, (ii) identification of the promised goods or services in the contract and determination of whether the promised goods or services are performance obligations, (iii) measurement of the transaction price, (iv) allocation of the transaction price to the performance obligations, and (v) recognition of revenue when (or as) we satisfy each performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to our customer.
See Note 1 to our condensed interim financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for more information.
Other than the above, there have been no material changes to our critical accounting policies and estimates from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Critical Accounting Policies, Significant Judgements and Use of Estimates” in our Annual Report on Form 10-K for the Contractsyear ended December 31, 2021, which was filed with the Customers
Recent Accounting Pronouncements
See Note 1 to our unaudited condensed interim financial statements appearing elsewhere in this Quarterly Report for more information about recent accounting pronouncements.
21
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risk related to changes in interest rates. As of June 30, 2021, we had cash and cash equivalents of $5.1 million consisting of bank deposits and monies in a money market fund. On July 22, 2021, we closed on our initial IPO and invested our proceeds in U.S. Treasury securities. As of June 30, 2022, we had cash and cash equivalents of $15.4 million, short-term investments in U.S. government-backed securities of $17.0 million, and long-term investments in U.S. government-backed securities of $9.7 million. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. We are exposed to market risk related to the marketability of our investment in Wugen common stock.stock reported within Investments in the accompanying condensed balance sheet. Until such time as these shares become publicly traded, we will have limited access to liquidity.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended or the Exchange Act, is recorded, communicated to our management to allow timely decisions regarding required disclosure, summarized and reported within the time periods specified in the SEC’sSEC's rules and forms. Any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgmentjudgement in evaluating the cost-benefit relationship of possible controls and procedures.
Under the supervision and with the participation of our management, including the Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined under Rules2021.2022. Based on that evaluation, the CEO and CFO have concluded that, as of such date, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarterthree months ended June 30, 2021, that2022, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
22
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be involved in litigation relating to claims arising out of our operations. We are not currently a party to any material legal proceedings. We may, however, be involved in material legal proceedings in the future. Such matters are subject to uncertainty and there can be no assurance that such legal proceedings will not have a material adverse effect on our business, results of operations, financial position or cash flows.
Item 1A. Risk Factors.
There have been no material changes to the risk factors previously disclosed by us in our Annual Report on Form 10-K for the Prospectusyear ended December 31, 2021 filed by us with the SEC on July 21, 2021.March 29, 2022. The risk factors included in the ProspectusForm 10-K continue to apply to us and describe risks and uncertainties that could cause actual results to differ materially from the results expressed or implied by the forward-looking statements contained in this Quarterly Report on Form
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sales of Equity Securities
None.
Issuer Repurchases of Equity Securities
None.
Use of Proceeds
Through June 30, 2022, we have used approximately $7.1 million of the SEC fornet proceeds from our IPO. At the closing of the offering on July 22, 2021, we sold 7,000,000 shares of common stock, at an IPO price of $8.00 per share and received gross proceeds of $56.0 million, which resulted in net proceeds to us of approximately $49.0 million, after deducting underwriting discounts and commissions of approximately $3.9 million and offering-related transaction costs of approximately $3.2 million. None of the expenses associated with the IPO were paid to directors, officers, persons owning ten percent or more of any class of equity securities, or to their associates, or to our affiliates. EF Hutton, division of Benchmark Investments, LLC acted as sole book-running manager and Revere Securities LLC acted asco-managerfor the offering.
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
None.
23
Item 6. Exhibits.
The exhibits filed or furnished as part of this Quarterly Report on
Exhibit Number | Incorporated by Reference | Filed | ||||||||||||||
Description | Form | Date | Number | |||||||||||||
10.1**† | X | |||||||||||||||
31.1* | X | |||||||||||||||
31.2* | X | |||||||||||||||
32.1* | X | |||||||||||||||
32.2* | X | |||||||||||||||
101 | The following materials from the Company’s Quarterly Report on Form | X | ||||||||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | X |
* |
This certification is deemed not filed for purpose of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange | |
* | The exhibits and schedules to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Registrant agrees to furnish supplementally copies of any such exhibits and schedules to the SEC upon request. |
† | Certain information in this document has been excluded pursuant to Item 601(b)(10) of Regulation S-K. Such excluded information is not material and would likely cause competitive harm to the Registrant if publicly disclosed. The Registrant agrees to furnish supplementally such information to the SEC upon request. |
24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HCW Biologics Inc. | ||||||
Date: August | By: | /s/ Hing C. Wong | ||||
Hing C. Wong | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) | ||||||
Date: August | By: | /s/ Rebecca Byam | ||||
Rebecca Byam | ||||||
Chief Financial Officer | ||||||
(Principal Financial and Accounting Officer) |
25