SCOPUS BIOPHARMA INC. The following discussion and analysis of our unaudited condensed consolidated financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 , as filed with theSecurities and Exchange Commission ("SEC") onApril 15, 2022 , as amended onMay 2, 2022 (collectively, the "2021 Form 10-K"), and certain other reports filed with theSEC as may be set forth below.
Forward Looking Statements
This quarterly report on Form 10-Q ("Quarterly Report") and other reports filed
by Scopus BioPharma Inc. (the "Company") from time to time with the SEC
(collectively, the "Filings") contains forward-looking statements within the
meaning of the federal securities laws. All statements contained in this
Quarterly Report, other than statements of historical fact, including statements
regarding our future operating results and financial position, our business
strategy and plans, potential growth or growth prospects, future research and
development, sales and marketing and general and administrative expenses, and
our objectives for future operations, are forward-looking statements. Words such
as "believes," "may," "will," "estimates," "potential," "continues,"
"anticipates," "intends," "expects," "could," "would," "projects," "plans,"
"targets," and variations of such words and similar expressions are intended to
identify forward-looking statements.
We have based these forward-looking statements largely on our current
expectations and projections about future events and trends that we believe may
affect our financial condition, results of operations, business strategy,
short-term and long-term business operations and objectives, and financial
needs. These forward-looking statements are subject to a number of risks,
uncertainties and assumptions, including those described in the "Risk Factors"
described in our 2021 Form 10-K. Readers are urged to carefully review and
consider the various disclosures made in this Quarterly Report and in other
documents we file from time to time with the SEC that disclose risks and
uncertainties that may affect our business. Moreover, we operate in a very
competitive and rapidly changing environment. New risks emerge from time to
time. It is not possible for us to predict all risks, nor can we assess the
impact of all factors on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements we may make. Unless otherwise stated
in this Quarterly Report, "we", "us", "our", "Company", "Scopus" and "Scopus
BioPharma" refer to Scopus BioPharma Inc. and its subsidiaries.
You should not rely upon forward-looking statements as predictions of future
events. The events and circumstances reflected in the forward-looking statements
may not be achieved or occur. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, performance, or achievements. In addition, the forward-looking
statements in this Quarterly Report are made as of the date of this filing, and
we do not undertake, and expressly disclaim any duty, to update such statements
for any reason after the date of this Quarterly Report or to conform statements
to actual results or revised expectations, except as required by law.
Overview
We are a biopharmaceutical company developing transformational therapeutics for
serious diseases with significant unmet medical need. We are currently focusing
our development efforts on our immuno-oncology programs. Duet BioTherapeutics,
our majority-owned subsidiary ("Duet"), integrates the management and clinical
development of the immunotherapy assets of Scopus and Olimmune Inc. (the "Duet
Platform"). Duet, formerly Olimmune, was acquired by Scopus in June 2021 .
The Duet Platform relies on a novel approach to immuno-oncology with a suite of
bifunctional oligonucleotides that activate antigen-presenting cells ("APCs")
within the tumor microenvironment, while alleviating tumor immunosuppression to
jump-start T cell-mediated immune responses. The unique mechanism-of-action of
these synthetic oligonucleotides comes from simultaneously targeting two
intracellular immune pathways - signal transducer and activator of transcription
3 ("STAT3"), a master immune checkpoint inhibitor, and toll-like receptor 9
("TLR9"). The targeted inhibition of STAT3 reawakens immune cells and allows for
the full potential of TLR9-driven innate and adaptive immune responses.
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The Duet Platform is comprised of three distinctive, complementary CpG-STAT3
inhibitors:
? RNA silencing CpG-STAT3siRNA ("DUET-01")
? Antisense CpG-STAT3ASO ("DUET-02")
? DNA-binding inhibitor CpG-STAT3decoy ("DUET-03")
An investigational new drug application ("IND") for DUET-01 for a Phase 1
clinical trial, as a monotherapy, for B-cell non-Hodgkin lymphoma ("NHL") was
filed in April 2021 . In May 2021 , the United States Food and Drug Administration
("FDA") approved this IND. The design of such investigator-sponsored clinical
protocol for DUET-01, including the number of study visits, together with
COVID-related constraints on mobility and travel have caused delays in patient
enrollment. As previously disclosed, the clinical study sponsor publicly
reported a later possible start date for enrollment. The clinical study sponsor
subsequently reported additional delays in such start date. We have engaged in
ongoing discussions with the sponsor regarding enrollment challenges and related
matters. DUET-01 is currently designed for intratumoral delivery. In April 2022 ,
we entered into a sponsored research agreement ("SRA") relating to research,
currently underway, to evaluate increasing the stability of siRNA-based
molecules, including DUET-01 and potential new chemical entities, to enable
systemic delivery. We believe that systemic delivery may enhance drug candidates
based on siRNA-based molecules. In connection with the SRA, we obtained certain
licensing rights to any intellectual property resulting from the research being
conducted under such agreement. While research relating to CpG-STAT3siRNA
continues pursuant to the SRA, we have begun prioritizing the development of
DUET-02.
DUET-02 is an antisense STAT3 inhibitor ("ASO") designed for systemic delivery.
The STAT3ASO molecule binds directly to the STAT3 mRNA, recruiting ribonuclease
H1 ("RNase H1") to degrade the STAT3 mRNA. The use of ASO permits other chemical
modifications resulting in greater stability in human blood. This allows for
systemic treatment of harder-to-reach solid tumors such as prostate or kidney
cancers. Dose-range finding studies, good laboratory practice ("GLP") toxicology
studies, and good manufacturing process ("GMP") manufacturing of the drug
substance and product are all currently in process. Duet currently anticipates
filing an IND in Q1 2024 and thereafter commencing one or more Phase 1/2
clinical trials for advanced solid malignancies.
DUET-03 uses an alternative to the destruction of mRNA to silence STAT3
activity, such as with DUET-01 and DUET-02, instead targeting the actual STAT3
transcription factor protein. We are also evaluating combination therapies with
checkpoint inhibitors.
On an ongoing basis, we continue to refine, update and enhance our
immuno-oncology pipeline and target indications. We also continually evaluate
the possibilities of additional studies with a view to enhancing, among other
things, the effectiveness and method of delivery of our drug candidates and
identifying additional protections for our intellectual property.
We are currently devoting substantially all of our efforts to our immuno-oncology programs. Due to capital constraints and other considerations, we have been winding down efforts relating to our non-immuno-oncology assets.
We do not have any products approved for sale and have not generated any revenue. We expect to continue to incur significant expenses and increasing operating losses. We anticipate that all of our expenses will increase substantially, including as we:
? continue our research and development efforts;
? contract with third-party research organizations to manage our clinical and
pre-clinical trials for our drug candidates;
? outsource the manufacturing of our drug candidates for clinical testing and
pre-clinical trials;
? seek to obtain regulatory approvals for our drug candidates;
? maintain, expand, and protect our intellectual property portfolio;
? add operational, financial and management information systems and personnel to
support our research and development and regulatory efforts;
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? continue to be engaged in litigation and actions taken by and/or against
certain adverse parties; and
? operate as a public company.
We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain marketing approval for one or more of our drug candidates, which we expect will take a number of years and is subject to significant uncertainty. Accordingly, we will need to raise additional capital to fund our operations. Until such time, if ever, as we can generate substantial revenue from product sales, we expect to finance our operating activities through equity and debt offerings. We may also raise capital through government or other third-party funding and grants, collaborations and development agreements, strategic alliances, and licensing arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Moreover, our ability to raise capital continues to be impeded by limited availability of authorized common stock. Our failure to raise capital or enter into such other arrangements as and when needed would impair our ability to develop our drug candidates and would have a material adverse effect on our financial condition, including possibly being required to substantially curtail or cease our operations. We have incurred net losses in every year since our inception. From inception (April 18, 2017 ) untilSeptember 30, 2022 , we have funded our operations through the issuance of common stock, warrants, additional investment options ("AIOs") and convertible notes. As ofSeptember 30, 2022 , we had an accumulated deficit of approximately$51.3 million .
Critical Accounting Policies and Estimates
Our unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted inthe United States ("GAAP"). Our management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements. The preparation of these condensed consolidated 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 revenues and expenses during the reporting periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions. Please refer to the information provided under the heading "Critical Accounting Policies and Estimates" included in our 2021 Form 10-K. There were no material changes to such policies in the nine months endedSeptember 30, 2022 .
JOBS Act
OnApril 5, 2012 , the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until such time as those standards apply to private companies. We have irrevocably elected to avail ourselves of this exemption from new or revised accounting standards, and, therefore, will not be subject to the same new or revised accounting standards as public companies that are not emerging growth companies. As a result of this election, our financial statements may not be comparable to companies that are not emerging growth companies. As an "emerging growth company," we also rely on exemptions from certain reporting requirements, including without limitation: (i) providing an auditor's attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an "emerging growth company" until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of$1.07 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of an initial public offering; (iii) the date on which we have issued more than$1 billion in non-convertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of theSEC . 22 Table of Contents Results of Operations
Three Months Ended
The following table summarizes our results of operation for the three months
ended
Three Months Ended
(in thousands) September 30,
2022 2021 Change % Change
Operating Expenses:
General and Administrative $ 982 $ 2,682 $ (1,700) (63.4) %
Research and Development 917 78 839 1,075.6 %
Loss from Operations (1,899) (2,760) (861) (31.2) %
Other income (expense):
Interest expense - (111) 111 (100.0) %
Change in fair value of common stock warrant
liability - 1,470 (1,470) 100.0 %
Total other expense - 1,359 (1,359) 100.0 %
Net Loss $ (1,899) $ (1,401) $ (498) 35.6 %
Revenue
We did not have any revenue during the three months ended September 30, 2022 and
2021. Our ability to generate product revenues in the future will depend almost
entirely on our ability to successfully develop, obtain regulatory approval for,
and then successfully commercialize a drug candidate, or enter into
collaborations that provide for payments to us.
Operating Expenses
General and Administrative Expenses
General and administrative expenses consist primarily of compensation and benefits to our personnel, including the costs related to our management services agreements, directors and scientific and senior advisors; professional fees and services, including accounting and legal services; and expenses related to obtaining and protecting our intellectual property. We incurred general and administrative expenses in the three months endedSeptember 30, 2022 and 2021 of approximately$1.0 million and$2.7 million , respectively, with a decrease of approximately$1.7 million or 63.4%. This decrease in general and administrative expenses during the three months endedSeptember 30, 2022 as compared to the three months endedSeptember 30, 2021 is primarily attributable to a decrease in legal and accounting fees incurred in connection with or as a result of the proxy contest and litigation, including legal services provided to the Board and certain directors and committees thereof, of approximately$1.7 million . Our general and administrative expenses are likely to increase, including to the extent we are able to obtain additional financing to enable us to expand our operations, and may increase materially based upon the activity level of ongoing litigation in any particular period.
Research and Development Expenses
We recognize research and development expenses as they are incurred. Our research and development expenses consist of the costs associated with our acquisition of intellectual property that is classified as in-process research and development, fees incurred under our agreements with licensors, including the expenses associated with securities issued in connection with such agreements, as applicable, and expenses relating to third-party research and development vendors and consultants. For the three months endedSeptember 30, 2022 and 2021, we incurred research and development expenses of approximately$0.9 million and$0.1 million , respectively, an increase of approximately$0.8 million or 1,075.6%. The increase in research and development costs during the three months endedSeptember 30, 2022 as compared to the three months endedSeptember 30, 2021 is primarily attributable to approximately$0.8 million in increased patent fees and preclinical expenses incurred in connection with DUET-02. We anticipate that our research and development expenses, exclusive of any in-process research and development relating to our acquisitions, will increase for the foreseeable future as we continue the development of our drug candidates. 23 Table of Contents Other Income (Expense) Other income (expense) consists of interest expense on our convertible notes and changes in the fair value of a warrant liability. Interest expense decreased from$0.1 million for the three months endedSeptember 30, 2021 to$0 for the three months endedSeptember 30, 2022 . EffectiveJuly 31, 2021 , all of our convertible notes were either converted into W Warrants or repaid in cash. Accordingly, we had no further obligations under the convertible notes at any time fromJuly 31, 2021 throughSeptember 30, 2022 . Other income related to the change in fair value of warrant liability was$1,470,163 for the three months endedSeptember 30, 2021 . There was no income or expense related to the warrant liability during the three months endedSeptember 30, 2022 . This income during the three months endedSeptember 30, 2021 is associated with the decrease of a liability related to certain warrants issued in August andSeptember 2020 which were reclassified from equity to warrant liability onJune 25, 2021 . Until their reclassification into equity onJuly 31, 2021 , we were required to revalue warrants classified on our balance sheet as a liability at the end of each reporting period and reflect a gain or loss from the change in fair value in the period in which the change occurred. We calculated the fair value of such warrants using aMonte Carlo daily price simulation.
Net Loss
Our net losses were approximately$1.9 million and$1.4 million for the three months endedSeptember 30, 2022 and 2021, respectively, an increase of approximately$0.5 million or 35.6%. We anticipate our net losses will continue as we advance our research and drug development activities and incur additional general and administrative expenses to meet the needs of our business.
Nine Months Ended
The following table summarizes our results of operation for the nine months
ended
Nine Months Ended
(in thousands) September 30,
2022 2021 Change % Change
Operating Expenses:
General and Administrative $ 7,943 $ 6,228 $ 1,715 27.5 %
Research and Development 1,936 14,888 (12,952) (87.0) %
Loss from Operations (9,879) (21,116) (11,237) (53.2) %
Other income (expense):
Interest expense - (775) 775 (100.0) %
Change in fair value of common stock warrant
liability - 1,456 (1,456) 100.0 %
Total other expense - 681 (681) 100.0 %
Net Loss $ (9,879) $ (20,435) $ 10,556 (51.7) %
Revenue
We did not have any revenue during the nine months endedSeptember 30, 2022 and 2021. Our ability to generate product revenues in the future will depend almost entirely on our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize a drug candidate, or enter into collaborations that provide for payments to us. 24 Table of Contents Operating Expenses
General and Administrative Expenses
General and administrative expenses consist primarily of compensation and benefits to our personnel, including the costs related to our management services agreements, directors and scientific and senior advisors; professional fees and services, including accounting and legal services; and expenses related to obtaining and protecting our intellectual property. We incurred general and administrative expenses in the nine months endedSeptember 30, 2022 and 2021 of approximately$7.9 million and$6.2 million , respectively, an increase of approximately$1.7 million or 27.5%. This increase in general and administrative expenses during the nine months endedSeptember 30, 2022 as compared to the nine months endedSeptember 30, 2021 is primarily attributable to an increase in legal and accounting fees and other expenses incurred in connection with or as a result of the proxy contest and litigation, including legal services provided to the Board and certain directors and committees thereof, of approximately$2.0 million , and additional$0.4 million of costs and expenses associated with Duet operations, which were included for the entire nine-month period in 2022 as compared to only a three-month period following the acquisition of Duet in the prior year. These increases were offset by a decrease of approximately$0.5 million in compensation expense relating to our officers and directors. Our general and administrative expenses are likely to increase, including to the extent we are able to obtain additional financing to enable us to expand our operations, and may increase materially based upon the activity level of ongoing litigation in any particular period.
Research and Development Expenses
We recognize research and development expenses as they are incurred. Our research and development expenses consist of the costs associated with our acquisition of intellectual property that is classified as in-process research and development, fees incurred under our agreements with licensors, including the expenses associated with securities issued in connection with such agreements, as applicable, and expenses relating to third-party research and development vendors and consultants. For the nine months endedSeptember 30, 2022 and 2021, we incurred research and development expenses of approximately$1.9 million and$14.9 million , respectively, a decrease of approximately$13.0 million or 87.0%. The decrease in research and development costs during the nine months endedSeptember 30, 2022 as compared to the nine months endedSeptember 30, 2021 is primarily attributable to the costs of approximately$8.1 million (of which approximately$7.7 million were non-cash) associated with the acquisition of Duet, including upfront costs of the Duet licenses, approximately$1.5 million of costs associated with the preparation for the Phase I clinical trial for DUET-01, and approximately$5.1 million of additional non-cash expense incurred in connection with achievement of a milestone relating to our acquisition of Bioscience Oncology. These decreases were partially offset by approximately$1.7 million in increased patent fees and preclinical expenses incurred in connection with DUET-02. We anticipate that our research and development expenses, exclusive of any in-process research and development relating to our acquisitions, will increase for the foreseeable future as we continue the development of our drug candidates.
Other Income (Expense)
Other income (expense) consists of interest expense on our convertible notes and changes in the fair value of a warrant liability. Interest expense decreased from$0.8 million for the nine months endedSeptember 30, 2021 to$0 for the nine months endedSeptember 30, 2022 . EffectiveJuly 31, 2021 , all of our convertible notes were either converted into W Warrants or repaid in cash. Accordingly, we had no further obligations under the convertible notes at any time fromJuly 31, 2021 throughSeptember 30, 2022 . Other income related to the change in fair value of warrant liability was$1,455,889 for the nine months endedSeptember 30, 2021 . There was no income or expense related to the warrant liability during the nine months endedSeptember 30, 2022 . This income during the nine months endedSeptember 30, 2021 is associated with the decrease of a liability related to certain warrants issued in August andSeptember 2020 which were reclassified from equity to warrant liability onJune 25, 2021 . Until their reclassification into equity onJuly 31, 2021 , we were required to revalue warrants classified on our balance sheet as a liability at the end of each reporting period and reflect a gain or loss from the change in fair value in the period in which the change occurred. We calculated the fair value of such warrants using aMonte Carlo daily price simulation.
Net Loss
Our net losses were approximately$9.9 million and$20.4 million for the nine months endedSeptember 30, 2022 and 2021, respectively, a decrease of approximately$10.6 million or 51.7%. We anticipate our net losses will continue as we advance our research and drug development activities and incur additional general and administrative expenses to meet the needs of our business. 25
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Liquidity and Capital Resources
We have incurred losses since our inception and, as ofSeptember 30, 2022 , we had an accumulated deficit of approximately$51.3 million . We anticipate that we will continue to incur losses for at least the next several years. SinceApril 18, 2017 (inception) throughSeptember 30, 2022 , we have funded our operations principally with approximately$29.1 million in gross proceeds from the sale of convertible notes, common stock, warrants and units comprised of common stock and warrants, the exercise of a portion of such warrants, and units comprised of common stock and AIOs.
During the nine months ended
We are party to litigation in several matters as of the date hereof. Litigation is highly unpredictable and the costs of litigation, including legal fees and expenses, and the possible liabilities, including monetary damages, to which we could become subject could be significant. Any such liabilities could have a material adverse effect on us. Our existing capital resources will not be sufficient to fully implement our business plan, including the development of our drug candidates, while also continuing to be subject to or pursuing ongoing litigation. We have received deficiency notification letters from the Listing Qualifications Staff of theNasdaq Stock Market LLC ("Nasdaq") indicating that we were not in compliance with certain Nasdaq listing rules relating to maintaining a minimum market value of listed securities of$50,000,000 (the "MVLS Requirement"), a minimum market value of publicly held shares of$15,000,000 (the "MVPHS Requirement"), and a minimum bid price of$1.00 for its common stock (the "Minimum Bid Price Requirement"). OnJuly 13, 2022 , we received an additional letter from Nasdaq stating that because we had not regained compliance with the MVLS Requirement as ofJuly 12, 2022 , trading of our common stock on Nasdaq would be suspended onJuly 22, 2022 and removed from listing and registration, unless we requested an appeal to a Nasdaq hearings panel byJuly 20, 2022 , which we requested prior to such deadline. Such hearing occurred onAugust 25, 2022 . In anticipation of the expiration of the MVPHS Requirement and Minimum Bid Price Requirement cure periods onAugust 30, 2022 andOctober 3, 2022 , respectively, we addressed all three requirements as part of our compliance plan ("Compliance Plan") during our hearing. By letter datedSeptember 13, 2022 , Nasdaq informed us of the Panel's decision directing that our listing be transferred to the Nasdaq Capital Market, effective at the open of business onSeptember 15, 2022 , and our common stock will continue to be listed on that market subject to, among other things, us satisfying the Compliance Plan in full by no later thanJanuary 9, 2023 . Our listing was transferred to the Nasdaq Capital Market onSeptember 15, 2022 and we are actively working to implement the Compliance Plan. There can be no assurance that the Company will be able to implement all of the elements in the Compliance Plan in the time required thereunder. If the Company is in fact not able to implement the Compliance Plan as required, the Company will be de-listed from Nasdaq. Our cash resources are extremely limited. As ofSeptember 30, 2022 , we had cash and cash equivalents of$310,821 . We have an immediate need for additional financing. Our ability to raise capital continues to be impeded by limited availability of authorized common stock and the current price of our common stock. Further, we are subject to certain Nasdaq requirements relating to, among other things, the amount and nature of the capital that we can raise. There can be no assurance that financing will be available to us on a timely basis and on satisfactory terms, or at all. We are subject to being delisted from Nasdaq if we are unable to raise the necessary capital in accordance with our Compliance Plan. Moreover, failure to obtain sufficient financing on satisfactory terms in the immediate future will have a material adverse effect on us, including possibly being required to substantially curtail or cease our operations. Our ability to fund our operations is dependent upon management's plans, which include raising capital through issuances of debt and equity securities, securing research and development grants, and controlling our expenses. A failure to raise sufficient financing and/or control expenses, among other factors, will adversely impact our ability to meet our financial obligations as they become due and payable and to achieve our intended business objectives. This evaluation is further impacted by the ongoing pandemic relating to the COVID-19 pandemic. While the extent of its impact depends largely on the spread and duration of the outbreak, the pandemic has and may still result in disruptions to capital raises, employees, and vendors which has and may still result in negative impacts to our operational and financial results.
Accordingly, based on the considerations discussed above, management has concluded there is substantial doubt as to the Company's ability to continue as a going concern within one year after the date the condensed consolidated financial statements are issued.
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Future Funding Requirements
We have not generated any revenue. We do not know when, or if, we will generate
any revenue from product sales. We do not expect to generate significant revenue
from product sales unless and until we obtain regulatory approval of and
commercialize any of our drug candidates. At the same time, we expect our
expenses to increase in connection with our ongoing development activities,
particularly as we continue to research, develop, and seek regulatory approval
for, our drug candidates. We expect to incur additional costs associated with
operating as a public company. In addition, subject to obtaining regulatory
approval of any of our drug candidates, we expect to incur significant
commercialization expenses for product sales, marketing, manufacturing and
distribution. We anticipate that we will need substantial additional funding in
connection with our continuing operations.
As a result, we anticipate that we will need substantial additional funding in
connection with our continuing operations to fund future clinical trials and
pre-clinical testing for our drug candidates, our Compliance Plan for Nasdaq,
general and administrative costs and public company and other expenses,
including potential indemnification obligations and legal fees (primarily
related to litigation). We expect to finance our cash needs primarily through
the sale of our debt and equity securities. However, our ability to raise
capital continues to be impeded by limited availability of authorized common
stock and the current price of our common stock. Further, we are subject to
certain Nasdaq requirements relating to, among other things, the amount and
nature of the capital that we can raise. We may also raise capital through
government or other third-party funding and grants, collaborations and
development agreements, strategic alliances and licensing arrangements. Because
of the numerous risks and uncertainties associated with the development and
commercialization of our drug candidates, we are unable to estimate the amounts
of additional capital outlays and operating expenditures necessary to complete
the development of our drug candidates.
Our future capital requirements will depend on many factors, including:
the progress, costs, results and timing of our drug candidates' future clinical
? studies and future pre-clinical trials, and the clinical development of our
drug candidates for other potential indications beyond their initial target
indications;
the willingness of the FDA and the EMA to accept our future drug candidate
? clinical trials, as well as our other completed and planned clinical and
pre-clinical studies and other work, as the basis for review and approval of
our drug candidates;
? the outcome, costs and timing of seeking and obtaining FDA, EMA and any other
regulatory approvals;
? the number and characteristics of drug candidates that we pursue, including our
drug candidates in future pre-clinical development;
? the ability of our drug candidates to progress through clinical development
successfully;
? our need to expand our research and development activities;
? the costs of litigations with certain adverse parties;
? the costs associated with securing and establishing commercialization and
manufacturing capabilities;
? the costs of acquiring, licensing or investing in businesses, products, drug
candidates and technologies;
our ability to maintain, expand and defend the scope of our licensed
intellectual property portfolio, including the amount and timing of any
? payments we may be required to make, or that we may receive, in connection with
the licensing, filing, prosecution, defense and enforcement of any patents or
other intellectual property rights;
? our need and ability to hire additional management and scientific and medical
personnel;
? the effect of competing technological and market developments;
? our need to implement additional internal systems and infrastructure, including
financial and reporting systems;
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? the duration and spread of the COVID-19 pandemic, and associated operational
delays and disruptions and increased costs and expenses;
? the economic factors, geopolitical risks and sanctions and other terms; and
? timing and success of any collaboration, licensing or other arrangements into
which we may enter in the future.
Until such time, if ever, as we can generate substantial revenue from product sales, we expect to finance our cash needs through a combination of debt financings and equity offerings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of debt and equity securities, the ownership interests of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through government or other third-party funding, marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates or to grant licenses on terms that may not be favorable to us.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements as defined under
Recent Accounting Pronouncements
As previously noted, we, as an emerging growth company, have elected to take advantage of the benefits of the extended transition period provided for in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards, which allows us to defer adoption of certain accounting standards until those standards would otherwise apply to private companies unless otherwise noted. Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company's financial statements.
Effect of Inflation and Changes in Prices
Increased inflation and changes in prices may result in increased operating costs, including our labor costs and research and development costs, reduced liquidity, and limitations on our ability to access credit or otherwise raise debt and equity capital.
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