Core Insights - HCW Biologics has developed a second-generation, pembrolizumab-based immune checkpoint inhibitor that shows promise against solid tumors, particularly pancreatic and ovarian cancer, utilizing its proprietary TRBC product discovery platform [1][3][4] - Immune checkpoint inhibitors (ICIs) have been recognized as a breakthrough in cancer therapy since 2011, but their efficacy is limited, with less than 20% of patients responding durably to treatment [2][3] - The new pembrolizumab-based fusion molecules aim to enhance the immune response by neutralizing immunosuppressive cytokines and promoting immune cell infiltration into tumors, potentially outperforming existing therapies [3][4] Company Overview - HCW Biologics Inc. is a clinical-stage biopharmaceutical company focused on developing novel immunotherapies to combat diseases linked to chronic inflammation, particularly age-related conditions [7] - The company has created over 50 molecules using its TRBC platform, which allows for the construction of various classes of immunotherapeutic compounds targeting cancer and other diseases [7] - The lead product candidate, HCW9302, was developed using the legacy TOBI platform, while the TRBC platform represents a new approach to immunotherapy [7] Market Context - Immune checkpoint inhibitors generated over $40 billion in global sales in 2024, indicating a significant market presence despite their limited efficacy [3] - The ongoing research into second-generation ICIs reflects a broader trend in the industry to improve treatment outcomes for patients with difficult-to-treat solid tumors [4][5]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed interim financial statements of HCW Biologics Inc. for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, financial instruments, debt, equity transactions, and commitments [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets) The balance sheet shows a decrease in total assets and a significant reduction in total liabilities, leading to a substantial improvement in stockholders' deficit from December 31, 2024, to June 30, 2025 Condensed Balance Sheets | Metric | December 31, 2024 | June 30, 2025 (Unaudited) | Change | % Change | | :-------------------------------- | :------------------ | :------------------------ | :------- | :------- | | Total assets | $30,236,578 | $28,909,636 | $(1,326,942) | -4.39% | | Total liabilities | $37,006,750 | $28,961,608 | $(8,045,142) | -21.74% | | Total stockholders' deficit | $(6,770,172) | $(51,972) | $6,718,200 | -99.23% | | Cash and cash equivalents | $4,674,572 | $2,438,962 | $(2,235,610) | -47.82% | | Investments | $1,599,751 | $3,348,438 | $1,748,687 | 109.31% | | Accounts payable | $22,332,261 | $19,354,476 | $(2,977,785) | -13.33% | [Condensed Statements of Operations](index=4&type=section&id=Condensed%20Statements%20of%20Operations) The company experienced a significant reduction in net loss for both the three and six months ended June 30, 2025, compared to the prior year, primarily driven by lower legal expenses and an unrealized gain on investment, despite a sharp decline in revenues Condensed Statements of Operations | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Change | % Change | | :--------------------------------- | :------------------------------- | :------------------------------- | :------- | :------- | | Revenues | $618,854 | $6,550 | $(612,304) | -98.94% | | Net revenues | $180,411 | $1,310 | $(179,101) | -99.28% | | Research and development | $2,029,186 | $1,226,824 | $(802,362) | -39.54% | | General and administrative | $1,594,193 | $2,096,021 | $501,828 | 31.48% | | Legal expenses (recoveries), net | $10,393,042 | $142,542 | $(10,250,500) | -98.63% | | Net loss | $(15,280,191) | $(1,927,730) | $13,352,461 | -87.39% | | Net loss per share, basic and diluted | $(16.16) | $(6.79) | $9.37 | -57.98% | | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Change | % Change | | :--------------------------------- | :----------------------------- | :----------------------------- | :------- | :------- | | Revenues | $1,745,566 | $11,615 | $(1,733,951) | -99.33% | | Net revenues | $795,158 | $2,323 | $(792,835) | -99.71% | | Research and development | $4,152,470 | $2,705,536 | $(1,446,934) | -34.84% | | General and administrative | $3,160,285 | $4,302,301 | $1,142,016 | 36.14% | | Legal expenses (recoveries), net | $14,812,076 | $(1,596,951) | $(16,409,027) | -110.78% | | Net loss | $(22,748,253) | $(4,124,606) | $18,623,647 | -81.87% | | Net loss per share, basic and diluted | $(24.25) | $(9.86) | $14.39 | -59.34% | [Condensed Statements of Changes in Stockholders' Equity (Deficit)](index=5&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20%28Deficit%29) Stockholders' deficit significantly decreased from $(6,770,172) at January 1, 2025, to $(51,972) at June 30, 2025, primarily due to substantial increases in additional paid-in capital from equity issuances and debt conversions, partially offset by net losses and an equity dividend to an investor Condensed Statements of Changes in Stockholders' Equity (Deficit) | Metric | January 1, 2025 | June 30, 2025 | | :-------------------------- | :-------------- | :------------ | | Common Stock (Amount) | $111 | $215 | | Additional Paid-In Capital | $93,785,854 | $104,628,555 | | Accumulated Deficit | $(100,556,137) | $(104,680,742) | | Total Stockholders' Deficit | $(6,770,172) | $(51,972) | - Issuance of Common Stock, pre-funded warrants, and common stock warrants, along with debt extinguishment through equity, significantly increased **Additional Paid-In Capital**[18](index=18&type=chunk) - An equity dividend of **$10,153,799** was recognized to an investor during the six months ended June 30, 2025[18](index=18&type=chunk) [Condensed Statements of Cash Flows](index=6&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Net cash used in operating activities decreased, while cash provided by financing activities also decreased, resulting in a net decrease in cash and cash equivalents for the six months ended June 30, 2025, compared to the prior year Condensed Statements of Cash Flows | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :------- | | Net cash used in operating activities | $(8,466,076) | $(6,796,159) | $1,669,917 | | Net cash (used in) provided by investing activities | $(111,142) | $0 | $111,142 | | Net cash provided by financing activities | $6,143,431 | $4,560,549 | $(1,582,882) | | Net decrease in cash and cash equivalents | $(2,433,787) | $(2,235,610) | $198,177 | - Noncash financing activities in H1 2025 included extinguishment of **$7.4 million** restructured debt, issuance of **$3.96 million** in common stock/warrants for debt extinguishment, a **$3.48 million** gain on debt extinguishment with related parties, and a **$10.15 million** equity dividend to an investor[21](index=21&type=chunk) [Notes to Condensed Interim Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Interim%20Financial%20Statements) The notes provide detailed disclosures on the company's organization, significant accounting policies, financial health (including going concern), debt obligations, equity transactions, and legal and contingent matters, offering crucial context to the condensed financial statements [1. Organization and Summary of Significant Accounting Policies](index=7&type=section&id=1.%20Organization%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's biopharmaceutical focus, the impact of a reverse stock split, and the ongoing substantial doubt about its ability to continue as a going concern, while also detailing key accounting policies including revenue recognition, fair value measurements, and the treatment of investments and equity instruments - HCW Biologics Inc. is a biopharmaceutical company developing immunotherapies for age-related diseases, incorporated in Delaware in April 2018[23](index=23&type=chunk) - A **one-for-forty (1:40) reverse stock split** was effective on April 11, 2025, retrospectively applied to all financial statements[24](index=24&type=chunk)[25](index=25&type=chunk) - The company has incurred cumulative net losses of **$102.0 million** since inception to June 30, 2025, and management concluded that substantial doubt exists about its ability to continue as a going concern[27](index=27&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - The Wugen License was suspended for **one year** (until May 29, 2026), allowing HCWB to seek alternate licensees for ex vivo use of licensed molecules[28](index=28&type=chunk)[53](index=53&type=chunk) - WY Biotech is obligated to pay a **$7.0 million** upfront license fee by September 30, 2025, for HCW11-006, but revenue recognition is deferred until collectability is probable[29](index=29&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) - The company extinguished **$7.7 million** of debt through restructuring (**$7.4 million** Secured Notes) and conversion (**$270,000** unsecured promissory notes) to equity, with related gains/losses recorded to additional paid-in capital due to related party involvement[30](index=30&type=chunk)[71](index=71&type=chunk)[73](index=73&type=chunk) - The company raised **$11.9 million** in gross proceeds from two equity offerings in November 2024 and May 2025, involving common stock and warrants[35](index=35&type=chunk) - An Equity Purchase Agreement with Square Gate Capital Master Fund allows the company to sell up to **$20.0 million** in common stock over **36 months**, with a **$150,000** commitment fee expensed[36](index=36&type=chunk)[94](index=94&type=chunk)[97](index=97&type=chunk)[102](index=102&type=chunk) - The company regained compliance with Nasdaq listing rules (Equity Rule, bid price, public float, market value of publicly held shares) as of June 26, 2025, but remains under a 'Panel Monitor' until June 23, 2026[37](index=37&type=chunk) Revenue from Wugen (YoY Change) | Period | 2024 Revenue | 2025 Revenue | Change | % Change | | :-------------------- | :----------- | :----------- | :------- | :------- | | Three Months Ended June 30 | $618,854 | $6,550 | $(612,304) | -98.94% | | Six Months Ended June 30 | $1,745,566 | $11,615 | $(1,733,951) | -99.33% | - The investment in Wugen was re-measured at fair value as of June 30, 2025, resulting in an **unrealized gain** recognized in earnings[54](index=54&type=chunk) [2. Accrued Liabilities and Other Current Liabilities](index=14&type=section&id=2.%20Accrued%20Liabilities%20and%20Other%20Current%20Liabilities) Accrued liabilities and other current liabilities increased from $981,940 at December 31, 2024, to $1.1 million at June 30, 2025, with notable changes in property taxes and legal fees Accrued Liabilities and Other Current Liabilities | Category | December 31, 2024 | June 30, 2025 | | :---------------------------------- | :------------------ | :------------ | | Total Accrued liabilities and other current liabilities | $981,940 | $1,100,000 | | Construction expenses | $422,000 | $422,000 | | Manufacturing expenses | $49,000 | $52,000 | | Legal fees | $155,000 | $193,000 | | Clinical expenses | $121,000 | $127,000 | | Salary expenses | $202,000 | $180,000 | | Property taxes | — | $87,000 | [3. Debt, Net](index=14&type=section&id=3.%20Debt,%20Net) The company's debt structure saw significant changes, including the Cogent Bank loan being reclassified as short-term due to potential acceleration, a substantial portion of Senior Secured Notes converted to equity, and new promissory notes issued, some with personal guarantees. A contingent liability was recognized for the right to receive Wugen share proceeds - The **$6.5 million** Cogent Bank loan, secured by property, had **$6.3 million** principal outstanding as of June 30, 2025, and was reclassified as Short-term debt due to a discretionary default provision related to unpaid construction invoices[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - As of June 30, 2025, **$325,000** of Senior Secured Notes remained outstanding, bearing **9% annual interest** and maturing on August 30, 2026. **$6.6 million** of these notes were extinguished via conversion to equity on May 7, 2025[66](index=66&type=chunk) - A troubled debt restructuring extinguished **$7.4 million** of Secured Notes (including **$860,462** accumulated accretion) for **$4.0 million** in common stock, warrants, and rights to Wugen share proceeds, resulting in a **$3.5 million** gain recorded to additional paid-in capital due to related party involvement[71](index=71&type=chunk) - Unsecured convertible promissory notes totaling **$270,000** were converted to **36,242 shares** of Common Stock and rights to Wugen share proceeds on May 15, 2025, resulting in a **$131,134 loss** recorded to additional paid-in capital[72](index=72&type=chunk)[73](index=73&type=chunk) - A **$150,000** promissory note was issued on May 8, 2025, with a **$75,000** original issue discount, secured by a personal guarantee from the CEO, maturing February 7, 2026[74](index=74&type=chunk) - A contingent liability of **$1.7 million** was recorded as of June 30, 2025, for the right of converted noteholders to receive proceeds from the liquidation or sale of a portion of the company's Wugen shares, measured at fair value[75](index=75&type=chunk) [4. Sale of Common Stock and Warrants](index=16&type=section&id=4.%20Sale%20of%20Common%20Stock%20and%20Warrants) The company completed two significant equity financings in November 2024 and May 2025, raising gross proceeds through the issuance of common stock, pre-funded warrants, and common stock warrants. The May 2025 financing also involved repricing existing warrants, leading to a deemed equity dividend - May 2025 Equity Financing: Raised approximately **$5.0 million** gross proceeds by issuing **158,000 shares** of Common Stock and pre-funded warrants for **513,140 shares**, along with **1,342,280 Common Stock Warrants** (exercise price **$7.45**)[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - In May 2025, existing warrants to purchase **167,925 shares** (issued in November 2024) were repriced from **$41.20 to $7.45 per share**, resulting in a **$10.2 million** deemed equity dividend to the institutional investor[78](index=78&type=chunk)[89](index=89&type=chunk) - As of June 30, 2025, all Pre-Funded Warrants from the May 2025 offering (**513,140 shares**) were exercised[81](index=81&type=chunk) - November 2024 Equity Financing: Raised approximately **$6.9 million** gross proceeds by issuing **104,000 shares** of Common Stock and pre-funded warrants for **63,925 shares**, along with **167,925 Common Stock Warrants** (initial exercise price **$41.20**)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) - All Pre-Funded Warrants from the November 2024 offering (**63,925 shares**) were exercised on November 20, 2024[88](index=88&type=chunk) [5. Preferred Stock](index=19&type=section&id=5.%20Preferred%20Stock) As of December 31, 2024, and June 30, 2025, the Company had 10,000,000 shares of preferred stock authorized but no shares issued - **10,000,000 shares** of preferred stock authorized; **no shares issued** as of December 31, 2024, and June 30, 2025[91](index=91&type=chunk) [6. Net Loss Per Share](index=19&type=section&id=6.%20Net%20Loss%20Per%20Share) The net loss per share significantly decreased for both the three and six months ended June 30, 2025, compared to the prior year, primarily due to a lower net loss and an increase in weighted-average shares outstanding Net Loss Per Share | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to Common Stockholders | $(15,280,191) | $(12,081,529) | $(22,748,253) | $(14,278,405) | | Weighted-average common shares outstanding | 945,585 | 1,780,113 | 938,087 | 1,448,502 | | Net loss per share, basic and diluted | $(16.16) | $(6.79) | $(24.25) | $(9.86) | - Potentially dilutive securities (stock options and warrants) were excluded from diluted EPS calculation due to **anti-dilutive effect** from net loss[92](index=92&type=chunk) [7. Standby Equity Purchase Agreement](index=20&type=section&id=7.%20Standby%20Equity%20Purchase%20Agreement) The company entered into a Standby Equity Purchase Agreement (SEPA) with Square Gate Capital, allowing it to sell up to $20.0 million in common stock over 36 months. The SEPA is accounted for as an asset/liability at fair value, with a $150,000 commitment fee and issuance costs expensed - Entered SEPA with Square Gate Capital on February 20, 2025, allowing sale of up to **$20.0 million** in common stock over **36 months**[94](index=94&type=chunk) - A **$150,000** commitment fee was paid in common stock and expensed as of March 31, 2025[97](index=97&type=chunk)[102](index=102&type=chunk) - The SEPA does not qualify for equity classification and is measured at fair value (**zero at inception**), with changes recognized in net income[100](index=100&type=chunk) - No draws were made under the SEPA as of June 30, 2025, but subsequent draws occurred, and the agreement was amended for intraday trading[103](index=103&type=chunk)[128](index=128&type=chunk) [8. Fair Value of Financial Instruments](index=21&type=section&id=8.%20Fair%20Value%20of%20Financial%20Instruments) The company measures certain financial instruments at fair value, classifying money market funds as Level 1 inputs and investments (Wugen shares) and contingent liabilities as Level 3 inputs using the adjusted enterprise value method Fair Value of Financial Instruments | Category | Level 1 (June 30, 2025) | Level 3 (June 30, 2025) | Total (June 30, 2025) | | :------------------ | :---------------------- | :---------------------- | :-------------------- | | Money market funds | $2,124,762 | — | $2,124,762 | | Investments | — | $3,348,438 | $3,348,438 | | Contingent Liability | — | $(1,748,356) | $(1,748,356) | | Total | $2,124,762 | $1,600,082 | $3,724,844 | - Investments and contingent liability are measured at fair value using the **adjusted enterprise value method** (Level 3 inputs)[105](index=105&type=chunk) [9. Income Taxes](index=21&type=section&id=9.%20Income%20Taxes) The company maintained a 100% valuation allowance on deferred tax assets, resulting in a 0.00% effective tax rate for the periods presented, and does not expect recent tax legislation to have a material impact - No provision for income taxes (current or deferred) as of December 31, 2024, and June 30, 2025[106](index=106&type=chunk) - Maintains a **100% valuation allowance** on total deferred tax assets, resulting in a **0.00% effective tax rate**[106](index=106&type=chunk) - Preliminary analysis suggests the One Big Beautiful Bill Act will not materially affect financial statements[126](index=126&type=chunk) [10. Segment Reporting](index=23&type=section&id=10.%20Segment%20Reporting) HCW Biologics operates as a single reportable segment focused on life science, specifically developing immunotherapies for age-related diseases. The CEO, as CODM, reviews aggregate financial information and preclinical/clinical data to allocate resources - Operates as **one reportable segment**: life science, focused on novel immunotherapies for chronic inflammation and age-related diseases[41](index=41&type=chunk)[109](index=109&type=chunk) - The Chief Executive Officer acts as the chief operating decision maker (CODM), reviewing financial information and preclinical/clinical data on an aggregate basis[41](index=41&type=chunk)[109](index=109&type=chunk)[112](index=112&type=chunk) - No product revenue from commercial sales as of June 30, 2025; significant operating losses are expected to continue[111](index=111&type=chunk) [11. Commitments and Contingencies](index=25&type=section&id=11.%20Commitments%20and%20Contingencies) The company faces various commitments and contingencies, including operating lease obligations, contractual commitments for manufacturing, a $1.3 million loss from a fraudulent scheme, and ongoing legal proceedings related to construction liens and a settled arbitration. Macroeconomic factors also pose significant uncertainties - The company has a **one-year operating lease** for its Miramar, Florida facility, expiring February 28, 2026, accounted for as a short-term lease exemption[116](index=116&type=chunk) - Contractual commitments include **$34,200** for third-party manufacturing services expected in 2025[118](index=118&type=chunk) - Recognized a **$1.3 million nonoperating loss** in Q2 2024 due to a criminal fraudulent scheme involving misdirection of funds[119](index=119&type=chunk)[187](index=187&type=chunk) - A confidential Settlement Agreement and Release was entered on July 13, 2024, resolving arbitration and legal complaints with ImmunityBio, with **no monetary payments required** between parties[33](index=33&type=chunk)[123](index=123&type=chunk)[186](index=186&type=chunk)[271](index=271&type=chunk) - Ongoing legal actions include complaints from BE&K Building Group and Fisk Electric Company regarding unpaid construction invoices and mechanics liens on the company's manufacturing facility[32](index=32&type=chunk)[124](index=124&type=chunk)[156](index=156&type=chunk)[274](index=274&type=chunk) - The company is engaged in discussions with law firms to arrange a payment plan for **$12.3 million** in legal fees incurred but not yet paid as of June 30, 2025[34](index=34&type=chunk)[124](index=124&type=chunk)[208](index=208&type=chunk)[229](index=229&type=chunk) - Operations are affected by inflationary pressures, high interest rates, global supply chain disruptions, and geopolitical tensions, impacting material procurement, employee costs, and borrowing costs[125](index=125&type=chunk)[171](index=171&type=chunk) [12. Subsequent Events](index=27&type=section&id=12.%20Subsequent%20Events) Subsequent events include the enactment of the One Big Beautiful Bill Act (tax legislation), a draw on the Equity Purchase Agreement, a motion for summary judgment in a legal case, an amendment to the Equity Purchase Agreement for intraday trading, and a notification of late filing for the 10-Q - The One Big Beautiful Bill Act was enacted on July 4, 2025; preliminary analysis indicates **no material financial impact**[126](index=126&type=chunk) - On July 22, 2025, the company submitted a Put Notice to Square Gate for **5,000 shares**, settled on July 25, 2025, for **$19,803 net**[127](index=127&type=chunk) - On August 8, 2025, B&I Contractors, Inc. filed a motion for summary judgment regarding a construction lien[127](index=127&type=chunk) - On August 14, 2025, the Equity Purchase Agreement with Square Gate was amended to allow for intraday trading[128](index=128&type=chunk) - On August 15, 2025, the company filed a 'Notification of Late Filing' for its Form 10-Q[129](index=129&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, operational results, and future outlook, detailing its biopharmaceutical focus, recent business highlights, trends, uncertainties, and critical accounting policies, while acknowledging ongoing liquidity challenges despite recent capital raising and debt restructuring efforts [Forward-Looking Statements](index=28&type=section&id=Forward-Looking%20Statements) This section cautions readers that the report contains forward-looking statements regarding future operations, financial position, product development, and market conditions, which are subject to known and unknown risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements about future results, business strategy, product approvals, R&D costs, clinical trial success, cash resources, and economic conditions[132](index=132&type=chunk) - These statements are based on current expectations and projections and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially[132](index=132&type=chunk)[133](index=133&type=chunk) [Overview](index=28&type=section&id=Overview) HCW Biologics is a clinical-stage biopharmaceutical company focused on developing immunotherapies to treat diseases driven by chronic inflammation, particularly age-related conditions (inflammaging) and cancer. The company utilizes two drug discovery platforms, TOBI™ and TRBC, and aims to develop novel senotherapeutic drugs - HCW Biologics is a clinical-stage biopharmaceutical company developing immunotherapies for diseases promoted by chronic inflammation, especially age-related and senescence-associated diseases[134](index=134&type=chunk) - The company believes chronic inflammation ('inflammaging') is a significant factor in cancer, autoimmune, and neurodegenerative diseases[135](index=135&type=chunk) - HCWB has two drug discovery platforms: **TOBI™** (Tissue factOr-Based fusIon) for multi-functional fusion proteins and the newly developed **TRBC** (T-cell Receptor β Chain constant region) platform for multi-specific cytokines, immune checkpoint inhibitors, and immune-cell engagers[138](index=138&type=chunk)[142](index=142&type=chunk) - The company's lead product candidates are considered a novel immunotherapeutic approach and a clinically promising new class of senotherapeutic drugs[137](index=137&type=chunk) [Business Highlights](index=30&type=section&id=Business%20Highlights) Recent business highlights include strategic financing activities, the suspension of the Wugen License, progress with the WY Biotech License, a $5.0 million equity offering, settlement of $7.7 million in debt, regaining Nasdaq compliance, and advancements in clinical development for HCW9302, HCW9206, T-cell engagers, and immune checkpoint inhibitors - Financing strategy includes capital raising through securities issuance and out-licensing non-core assets[141](index=141&type=chunk) - The Wugen License was suspended for **one year** (ending May 29, 2026) at Wugen's request, allowing HCWB to seek alternate licensees for ex vivo use of HCW9201 and HCW9206[145](index=145&type=chunk) - WY Biotech elected to proceed with its exclusive worldwide license for HCW11-006, obligating a **$7.0 million** upfront license fee, with payment extended to September 30, 2025[148](index=148&type=chunk) - A **$5.0 million** equity offering closed on May 15, 2025, with an existing institutional investor, which included repricing existing warrants and resulted in a **$10.2 million** deemed equity dividend[150](index=150&type=chunk) - The company settled **$7.7 million** of debt (including **$7.4 million** Secured Notes and **$270,000** unsecured promissory notes) through restructuring and conversion to equity, strengthening the balance sheet[151](index=151&type=chunk)[152](index=152&type=chunk) - HCWB regained compliance with all Nasdaq listing rules by June 26, 2025, but remains under a 'Panel Monitor' until June 23, 2026[153](index=153&type=chunk)[154](index=154&type=chunk) - FDA cleared IND for HCW9302, initiating a **Phase 1 clinical trial** for moderate-to-severe alopecia areata in Q3 2025[158](index=158&type=chunk) - HCW9206, a proprietary fusion protein, showed high effectiveness in generating CAR-Ts for immunotherapy, with a **GMP master cell bank** established and a **drug master file** filed with the FDA as an ex vivo reagent. The company is seeking a commercial partner[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) - Developed second-generation multi-specific T-cell engagers and pembrolizumab-based immune checkpoint inhibitors using the **TRBC platform** for solid tumors (e.g., pancreatic, ovarian cancer), planning to seek partners in Q3 2025[164](index=164&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[170](index=170&type=chunk) [Trends and Uncertainties](index=36&type=section&id=Trends%20and%20Uncertainties) The company's operations are significantly impacted by macroeconomic headwinds, including inflationary pressures, high interest rates, global supply chain disruptions, and geopolitical tensions, affecting costs, clinical trials, and facility buildout, with management employing mitigation strategies despite unpredictable future disruptions - Operations are affected by inflationary pressures, high interest rates, global supply chain disruptions (Middle East, Russia-Ukraine, China-Taiwan), and U.S. trade policies[171](index=171&type=chunk) - These headwinds impact material procurement, costs for manufacturing/laboratory facilities, employee recruitment/retention, and borrowing costs[171](index=171&type=chunk) - Management strategies include product redesign, alternate sourcing, and budgeting contingencies, but the extent and duration of disruptions are highly unpredictable[171](index=171&type=chunk) [Components of our Results of Operation](index=36&type=section&id=Components%20of%20our%20Results%20of%20Operation) This section details the components of the company's financial results, including revenues primarily from licensing agreements, operating expenses (R&D, G&A, legal), nonoperating loss from a fraudulent scheme, interest expense, unrealized gain on investment, and other income. It highlights the significant decline in Wugen-related revenues and the impact of legal settlements on expenses - No commercial product sales revenue; primary revenue source has been the Wugen License and Master Services Agreement[173](index=173&type=chunk) - Wugen License suspended on May 30, 2025, for **one year**, impacting future revenue from this source[174](index=174&type=chunk) - WY Biotech License upfront fee of **$7.0 million** not recognized as revenue due to collectability uncertainty, payment extended to September 30, 2025[177](index=177&type=chunk) - Research and development expenses include employee costs, manufacturing, preclinical, clinical trials, and overhead, expected to increase substantially with product candidate development[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) - General and administrative expenses cover employee costs, professional services (audit, legal, tax), facilities, and compliance, expected to increase as clinical programs build[182](index=182&type=chunk)[183](index=183&type=chunk) - Legal expenses primarily relate to the settled arbitration with ImmunityBio, which incurred significant costs in prior periods[184](index=184&type=chunk)[186](index=186&type=chunk) - A **$1.3 million nonoperating loss** was recognized in H1 2024 due to a criminal fraudulent scheme[187](index=187&type=chunk) - Unrealized gain on investment of **$1.7 million** recognized in H1 2025 from re-measuring Wugen shares at fair value[189](index=189&type=chunk)[213](index=213&type=chunk)[234](index=234&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) The company experienced a significant reduction in net loss for both the three and six months ended June 30, 2025, compared to the prior year. This improvement was primarily driven by a substantial decrease in legal expenses and an unrealized gain on investment, despite a sharp decline in revenues and an increase in general and administrative costs [Comparison of the Three Months ended June 30, 2024 and June 30, 2025](index=39&type=section&id=Comparison%20of%20the%20Three%20Months%20ended%20June%2030,%202024%20and%20June%2030,%202025) For the three months ended June 30, 2025, revenues plummeted by 98.94% YoY, while R&D expenses decreased by 40%. G&A expenses rose by 31%, and legal expenses saw a dramatic 98.63% reduction. The company recorded a $1.7 million unrealized gain on investment, leading to an 87.39% decrease in net loss Comparison of the Three Months ended June 30, 2024 and June 30, 2025 | Metric | June 30, 2024 | June 30, 2025 | Change | % Change | | :--------------------------------- | :------------ | :------------ | :------- | :------- | | Revenues | $618,854 | $6,550 | $(612,304) | -98.94% | | Research and development expenses | $2,029,186 | $1,226,824 | $(802,362) | -39.54% | | General and administrative expenses | $1,594,193 | $2,096,021 | $501,828 | 31.48% | | Legal expenses (recoveries), net | $10,393,042 | $142,542 | $(10,250,500) | -98.63% | | Interest expense | $(159,666) | $(228,714) | $(69,048) | 43.25% | | Unrealized gain on investment | $0 | $1,748,688 | $1,748,688 | NM | | Net loss | $(15,280,191) | $(1,927,730) | $13,352,461 | -87.39% | - R&D decrease primarily due to a **95% decline** in manufacturing and materials expenses and a **43% decrease** in preclinical expenses, partially offset by a **70% increase** in clinical trial expenses[194](index=194&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) - G&A increase driven by a **116% rise** in professional services (audit, accounting, SEC/Nasdaq compliance, patents) and **$102,248** in accretion of fixed bonus for Secured Notes[201](index=201&type=chunk)[202](index=202&type=chunk)[204](index=204&type=chunk)[206](index=206&type=chunk) [Comparison of the Six Months ended June 30, 2024 and June 30, 2025](index=43&type=section&id=Comparison%20of%20the%20Six%20Months%20ended%20June%2030,%202024%20and%20June%2030,%202025) For the six months ended June 30, 2025, revenues decreased by 99.33% YoY, while R&D expenses decreased by 35%. G&A expenses increased by 36%, and legal expenses showed a significant recovery due to an insurance reimbursement. The company recorded a $1.7 million unrealized gain on investment, leading to an 81.87% decrease in net loss Comparison of the Six Months ended June 30, 2024 and June 30, 2025 | Metric | June 30, 2024 | June 30, 2025 | Change | % Change | | :--------------------------------- | :------------ | :------------ | :------- | :------- | | Revenues | $1,745,566 | $11,615 | $(1,733,951) | -99.33% | | Research and development expenses | $4,152,470 | $2,705,536 | $(1,446,934) | -34.84% | | General and administrative expenses | $3,160,285 | $4,302,301 | $1,142,016 | 36.14% | | Legal expenses (recoveries), net | $14,812,076 | $(1,596,951) | $(16,409,027) | -110.78% | | Interest expense | $(159,666) | $(505,853) | $(346,187) | 216.82% | | Unrealized gain on investment | $0 | $1,748,688 | $1,748,688 | NM | | Net loss | $(22,748,253) | $(4,124,606) | $18,623,647 | -81.87% | - R&D decrease primarily due to a **78% decline** in manufacturing and materials expenses and a **40% decrease** in preclinical expenses[216](index=216&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk) - G&A increase driven by a **26% rise** in salaries/benefits (excluding prior year waiver), **63% increase** in professional services, and **$375,308** in accretion of fixed bonus for Secured Notes[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk)[227](index=227&type=chunk) - Legal expenses shifted from **$14.8 million expense** in H1 2024 to a **$1.6 million contra expense** in H1 2025, primarily due to a **$2.0 million insurance reimbursement** for Dr. Wong's defense costs[229](index=229&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had $2.4 million in cash and cash equivalents, leading to substantial doubt about its ability to continue as a going concern. Despite raising $11.9 million in equity and restructuring $7.7 million in debt, management concluded that current financing plans are insufficient to alleviate this doubt. Future liquidity relies on successful clinical trial initiations, licensing agreements, and continued access to public markets through equity issuances - As of June 30, 2025, principal liquidity was **$2.4 million** in cash and cash equivalents, leading to substantial doubt about going concern[236](index=236&type=chunk) - Raised **$11.9 million** from two equity financings and extinguished **$7.7 million** of debt through restructuring/conversion to equity[236](index=236&type=chunk) - Management concluded that financing plans are not probable enough to alleviate substantial doubt about going concern, and may need to revise business plan or curtail operations[237](index=237&type=chunk)[245](index=245&type=chunk) - Key strategies for future liquidity include initiating HCW9302 clinical trials, securing licensing agreements (e.g., for HCW9206), and utilizing the **$20.0 million** Standby Equity Purchase Agreement with Square Gate[237](index=237&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk) - The company faces **$12.3 million** in unpaid legal fees as of June 30, 2025, and ongoing legal actions related to its biologics manufacturing facility construction[242](index=242&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk) - Funding requirements are highly uncertain and depend on clinical development progress, regulatory approvals, collaboration agreements, intellectual property costs, and facility buildout[246](index=246&type=chunk)[247](index=247&type=chunk) [Comparison of the Cash Flows for the Six Months Ended June 30, 2024 and June 30, 2025](index=49&type=section&id=Comparison%20of%20the%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030,%202024%20and%20June%2030,%202025) Net cash used in operating activities decreased by $1.7 million, while net cash provided by financing activities decreased by $1.6 million, resulting in a net decrease in cash and cash equivalents of $2.2 million for the six months ended June 30, 2025. Significant noncash financing transactions included debt restructuring and an equity dividend Comparison of the Cash Flows for the Six Months Ended June 30, 2024 and June 30, 2025 | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :------- | | Cash used in operating activities | $(8,466,076) | $(6,796,159) | $1,669,917 | | Cash (used in) provided by investing activities | $(111,142) | $0 | $111,142 | | Cash provided by financing activities | $6,143,431 | $4,560,549 | $(1,582,882) | | Net decrease in cash and cash equivalents | $(2,433,787) | $(2,235,610) | $198,177 | - Operating cash outflow decreased due to lower net loss, partially offset by a decrease in accounts payable and an unrealized gain on investment[249](index=249&type=chunk)[251](index=251&type=chunk) - Financing cash inflow decreased due to lower proceeds from common stock issuance and higher issuance costs, despite new proceeds from pre-funded warrants and a promissory note[253](index=253&type=chunk) - Significant noncash financing activities in H1 2025 included restructuring **$7.4 million** of debt and a **$10.2 million** equity dividend to an investor[254](index=254&type=chunk) [Critical Accounting Policies, Significant Judgements and Use of Estimates](index=50&type=section&id=Critical%20Accounting%20Policies,%20Significant%20Judgements%20and%20Use%20of%20Estimates) The company's financial statements rely on management's estimates and judgments, particularly in revenue recognition under Topic 606 and the accounting for its Standby Equity Purchase Agreement (SEPA). The SEPA is treated as an asset or liability at fair value, with related fees expensed, due to its equity-linked nature not qualifying for equity classification - Revenue recognition follows ASC Topic 606, requiring a five-step model and significant judgment, especially regarding collectability and distinct performance obligations[256](index=256&type=chunk) - The Standby Equity Purchase Agreement (SEPA) is classified as an asset or liability and measured at fair value, with changes recognized in net income, because it does not qualify for equity classification[258](index=258&type=chunk) - Consideration provided to the investor at SEPA inception exceeding fair value is expensed, and issuance/transaction costs are recognized in earnings[259](index=259&type=chunk)[267](index=267&type=chunk) [Recent Accounting Pronouncements](index=51&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 1 of the Annual Report for information on recent accounting pronouncements - Refer to Note 1 of the Annual Report for information on recent accounting pronouncements[261](index=261&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is interest rate sensitivity, affecting its cash and cash equivalents. Additionally, the marketability of its Wugen common stock investment poses a risk due to limited liquidity until the shares become publicly traded - Primary market risk exposure is **interest rate sensitivity**, affecting cash and cash equivalents[262](index=262&type=chunk) - Marketability of Wugen common stock investment is a risk due to **limited liquidity** until publicly traded[262](index=262&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective. The section acknowledges the inherent limitations of internal controls, which can only provide reasonable assurance, and reports no material changes in internal control over financial reporting during the quarter - As of June 30, 2025, the CEO and CFO concluded that **disclosure controls and procedures were effective**[264](index=264&type=chunk) - Internal controls, by nature, provide only reasonable, not absolute, assurance and can be circumvented[265](index=265&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[266](index=266&type=chunk) [PART II. OTHER INFORMATION](index=53&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) This section details the resolution of a significant arbitration and legal complaint with ImmunityBio through a confidential settlement, which involved mutual releases and intellectual property transfers. It also addresses ongoing legal actions related to construction liens and complaints from contractors regarding the company's manufacturing facility - A confidential Settlement Agreement and Release was entered on July 13, 2024, resolving arbitration and legal complaints with ImmunityBio, involving mutual general releases and **no monetary payments**[271](index=271&type=chunk) - The settlement involved transferring ownership of certain TOBI-based intellectual property to ImmunityBio for oncology indications, while HCWB retained rights for non-oncology uses and ownership of HCW9302, HCW9206, and HCW9201[272](index=272&type=chunk)[273](index=273&type=chunk) - Ongoing legal proceedings include complaints from BE&K Building Group and Fisk Electric Company, along with counterclaims and cross-claims, regarding unpaid invoices and mechanics liens related to the company's manufacturing facility construction[274](index=274&type=chunk) [Item 1A. Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report, and those risks continue to apply, potentially causing actual results to differ from forward-looking statements - No material changes to risk factors previously disclosed in the Annual Report[275](index=275&type=chunk) - Existing risk factors continue to apply and could cause actual results to differ materially from forward-looking statements[275](index=275&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company engaged in several unregistered sales and conversions of equity securities, including a $2.5 million common stock sale to officers and directors, the conversion of $6.6 million in Senior Secured Notes to common stock and warrants, and the issuance of unregistered warrants in a November 2024 offering. Additionally, commitment shares were issued to Square Gate Capital under an Equity Purchase Agreement - On February 20, 2024, sold **1,785,718 unregistered shares** of common stock for **$2.5 million** to officers and directors at a **25% premium** to market price[276](index=276&type=chunk) - As of October 31, 2024, issued **$6.9 million** in Senior Secured Notes, with **$2.9 million** purchased by officers and directors[279](index=279&type=chunk) - On May 7, 2025, **$6.6 million** principal of Senior Secured Notes was converted into **253,083 unregistered shares** of common stock and warrants to purchase **126,540 shares**, along with rights to Wugen share proceeds[286](index=286&type=chunk)[287](index=287&type=chunk) - In November 2024, issued unregistered warrants to purchase **167,925 shares** of common stock at **$41.20 per share** in a concurrent private placement, later repriced to **$7.45 per share** on May 15, 2025[288](index=288&type=chunk)[289](index=289&type=chunk) - On March 12, 2025, issued **9,616 unregistered shares** of common stock to Square Gate Capital as a **$150,000 commitment fee** under an Equity Purchase Agreement[290](index=290&type=chunk) - No issuer repurchases of equity securities occurred during the period[292](index=292&type=chunk) [Item 3. Defaults Upon Senior Securities](index=57&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there are no applicable defaults upon senior securities - Not Applicable[293](index=293&type=chunk) [Item 4. Mine Safety Disclosures](index=57&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that there are no applicable mine safety disclosures - Not Applicable[294](index=294&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) No directors or officers informed the company of the adoption, modification, or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025 - No insider adoption, modification, or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements reported by directors or officers during Q2 2025[295](index=295&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished as part of this Quarterly Report on Form 10-Q, including various agreements, forms, and certifications, with details on their filing status and incorporation by reference - The Exhibit Index lists all exhibits filed or furnished with the Form 10-Q, including agreements, forms, and certifications[297](index=297&type=chunk)[298](index=298&type=chunk)[302](index=302&type=chunk) [SIGNATURES](index=61&type=section&id=SIGNATURES) The report is duly signed on behalf of HCW Biologics Inc. by its Founder and Chief Executive Officer, Hing C. Wong, and Chief Financial Officer, Rebecca Byam, on August 18, 2025 - The report is signed by Hing C. Wong (Founder and CEO) and Rebecca Byam (CFO) on August 18, 2025[304](index=304&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk)

Core Viewpoint - HCW Biologics Inc. reported its financial results for Q2 2025, highlighting significant developments in its clinical trials, business transactions, and financial performance, while also addressing challenges related to funding and compliance with Nasdaq listing requirements [1][8][14]. Business Highlights - The company completed a $5.0 million equity offering on May 15, 2025, to fund clinical trials for HCW9302, aimed at treating autoimmune disorders [2]. - HCW Biologics is actively negotiating licensing agreements for HCW9206, a molecule intended for CAR-T cell production, after suspending its previous licensing agreement with Wugen [6]. - The company is seeking a commercial partner for its T-cell engager compounds, which target cancer antigens and aim to reduce immunosuppression in tumor microenvironments [6]. Financing Transactions - The company extinguished $7.7 million of debt through restructuring or conversion to equity, strengthening its balance sheet [6]. - The equity offering consisted of 671,140 units priced at $7.45 each, with each unit including two warrants for common stock purchase [6]. Clinical Development and Preclinical Results - HCW Biologics plans to initiate a Phase 1 clinical trial for HCW9302 in Q3 2025, targeting alopecia areata, an autoimmune disease with no FDA-approved treatments [6]. - The company has identified second-generation T-cell engagers and immune checkpoint inhibitors for clinical development, with a focus on a pembrolizumab-based fusion molecule showing promise against pancreatic cancer [7]. Financial Results - Revenues for Q2 2025 were $6,550, a significant decrease from $618,854 in Q2 2024, with total revenues for the first half of 2025 at $11,615 compared to $1.7 million in the same period of 2024 [8]. - R&D expenses decreased by 40% in Q2 2025 to $1.2 million, while G&A expenses increased by 31% to $2.1 million [9][10]. - The net loss for Q2 2025 was $1.9 million, down from $15.3 million in Q2 2024, with a six-month net loss of $4.1 million compared to $22.7 million in the prior year [12]. Financial Guidance - As of June 30, 2025, the company expressed substantial doubt regarding its ability to continue as a going concern without additional funding [13]. - HCW Biologics received confirmation from Nasdaq that it met all listing requirements, although it will remain under a "Panel Monitor" for one year [14][15].

[Company Overview & Recent Developments](index=1&type=section&id=Company%20Overview%20%26%20Recent%20Developments) HCW Biologics Inc. is a clinical-stage biopharmaceutical company focused on novel immunotherapies, recently completing a $5 million equity offering and regaining Nasdaq compliance [Introduction and Mission](index=1&type=section&id=1.1%20Introduction%20and%20Mission) HCW Biologics Inc. is a clinical-stage biopharmaceutical company focused on discovering and developing novel immunotherapies aimed at extending healthspan by blocking the link between inflammation and age-related diseases - HCW Biologics Inc. (NASDAQ: HCWB) is a clinical-stage biopharmaceutical company dedicated to developing novel immunotherapies to extend healthspan by addressing the link between inflammation and age-related diseases[2](index=2&type=chunk) [Key Corporate Updates](index=1&type=section&id=1.2%20Key%20Corporate%20Updates) The company completed a $5 million equity offering in May 2025 and successfully regained compliance with all Nasdaq listing requirements, ensuring continued listing eligibility - On May 15, 2025, the company completed a **$5 million equity offering**, with proceeds allocated to opening clinical sites for the Phase 1 clinical trial of HCW9302 for autoimmune diseases[3](index=3&type=chunk) - On June 24, 2025, the company received formal notification from Nasdaq confirming compliance with all Nasdaq Capital Market continued listing requirements, including share price, public float, and market value of publicly held shares[3](index=3&type=chunk) [Business Highlights](index=1&type=section&id=Business%20Highlights) The company extended a $7 million license payment, paused a Wugen agreement, secured $5 million in equity, and plans to initiate a Phase 1 clinical trial for HCW9302 [Business Development Transactions](index=1&type=section&id=2.1%20Business%20Development%20Transactions) The $7 million license fee payment date with WY Biotech was extended to September 30, 2025. The licensing agreement with Wugen was paused for one year, and the company is actively seeking new licensing partners for HCW9206 and commercial partners for T-cell engager compounds - WY Biotech formally accepted the technical report and agreed to extend the **$7 million license fee** payment date to September 30, 2025[4](index=4&type=chunk) - After generating over **$16 million in revenue** from the Wugen licensing agreement, the company agreed to pause the agreement for one year, during which it will seek alternative licensing programs for HCW9206 and is in discussions with several biologics manufacturing companies for licensing as a reagent for CAR-T product manufacturing[4](index=4&type=chunk) - The company has initiated efforts to find strong commercial partners for its T-cell engager compounds, which are designed to target cancer antigens and CD3-activating effector T cells while reducing immunosuppression in the tumor microenvironment[4](index=4&type=chunk) [Financing Activities](index=1&type=section&id=2.2%20Financing%20Activities) The company completed a **$5 million equity offering** in May 2025 and eliminated **$6.9 million in debt** through restructuring or equity conversion in the same month, significantly improving its balance sheet - On May 15, 2025, the company completed a **$5 million equity offering** at $7.45 per unit, issuing 671,140 units to a single institutional investor, with each unit comprising two common stock warrants exercisable at $7.45[3](index=3&type=chunk)[9](index=9&type=chunk) - On May 7, 2025, the company eliminated **$6.9 million in debt** through restructuring or conversion to equity, thereby strengthening its balance sheet and completing a significant part of its Nasdaq listing rule compliance plan[9](index=9&type=chunk) [Clinical Development and Preclinical Results](index=2&type=section&id=2.3%20Clinical%20Development%20and%20Preclinical%20Results) The company plans to initiate a Phase 1 clinical trial for HCW9302 in patients with alopecia areata in Q3 2025. Additionally, it developed second-generation T-cell engagers and immune checkpoint inhibitors using its TRBC platform, with a pembrolizumab-based fusion molecule showing strong anti-pancreatic cancer activity in preclinical studies - The company is on track to initiate a Phase 1 first-in-human dose-escalation clinical trial for HCW9302 in patients with alopecia areata in **Q3 2025**[9](index=9&type=chunk) - The company utilized its novel TRBC platform to develop second-generation T-cell engagers and second-generation immune checkpoint inhibitors, with T-cell engager compounds targeting tissue factor and a pembrolizumab-based fusion molecule of the immune checkpoint inhibitor showing strong anti-pancreatic cancer activity in preclinical studies[9](index=9&type=chunk) [Second Quarter 2025 Financial Results](index=2&type=section&id=Second%20Quarter%202025%20Financial%20Results) Second quarter 2025 financial results show a significant revenue decline due to a paused licensing agreement, alongside reduced R&D and legal expenses [Revenues](index=2&type=section&id=3.1%20Revenues) Second quarter 2025 revenue significantly decreased to **$6,550** from **$618,854** in the prior-year period, primarily due to the paused licensing agreement with Wugen Revenue and Net Income | 指标 | 2024年第二季度 | 2025年第二季度 | 变化 | 变化率 | 2024年上半年 | 2025年上半年 | 变化 | 变化率 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 收入 | $618,854 | $6,550 | $(612,304) | -99.0% | $1,745,566 | $11,615 | $(1,733,951) | -99.3% | | 净收入 | $180,411 | $1,310 | $(179,101) | -99.3% | $795,158 | $2,323 | $(792,835) | -99.7% | - Revenue primarily derived from the sale of licensed molecules to Wugen, with the Q2 2025 revenue decrease attributed to the one-year pause in the Wugen licensing agreement[6](index=6&type=chunk) [Operating Expenses](index=2&type=section&id=3.2%20Operating%20Expenses) Operating expenses include decreased R&D, increased G&A, and significantly reduced net legal expenses for the quarter [Research and Development (R&D) Expenses](index=2&type=section&id=3.2.1%20Research%20and%20Development%20(R%26D)%20Expenses) Second quarter 2025 R&D expenses decreased by **40%** year-over-year to **$1.2 million**, primarily due to reduced manufacturing, materials, and preclinical costs Research and Development Expenses | 指标 | 2024年第二季度 | 2025年第二季度 | 变化 | 变化率 | 2024年上半年 | 2025年上半年 | 变化 | 变化率 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 研发费用 | $2,029,186 | $1,226,824 | $(802,362) | -39.5% | $4,152,470 | $2,705,536 | $(1,446,934) | -34.8% | - The decrease in 2025 R&D expenses is primarily attributable to reduced manufacturing, materials, and preclinical costs[7](index=7&type=chunk) [General and Administrative (G&A) Expenses](index=2&type=section&id=3.2.2%20General%20and%20Administrative%20(G%26A)%20Expenses) Second quarter 2025 G&A expenses increased by **31%** year-over-year to **$2.1 million**, mainly due to higher professional service fees, accrual for fixed bonuses payable, and increased insurance costs General and Administrative Expenses | 指标 | 2024年第二季度 | 2025年第二季度 | 变化 | 变化率 | 2024年上半年 | 2025年上半年 | 变化 | 变化率 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 一般及行政费用 | $1,594,193 | $2,096,021 | $501,828 | 31.5% | $3,160,285 | $4,302,301 | $1,142,016 | 36.1% | - The increase in 2025 G&A expenses is primarily related to higher professional service fees, accrual for fixed bonuses payable, and increased insurance costs[8](index=8&type=chunk) [Legal Expenses (Recoveries), Net](index=3&type=section&id=3.2.3%20Legal%20Expenses%20and%20Recoveries%2C%20Net) Second quarter 2025 net legal expenses were **$142,542**, compared to **$10.4 million** in the prior-year period. The first half of 2025 saw **$1.6 million** in net recoveries, primarily from a **$2 million** insurance reimbursement received in January 2025, though **$12.3 million** in legal fees remain unpaid Legal Expenses (Recoveries), Net | 指标 | 2024年第二季度 | 2025年第二季度 | 变化 | 变化率 | 2024年上半年 | 2025年上半年 | 变化 | 变化率 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 法律费用（回收），净额 | $10,393,042 | $142,542 | $(10,250,500) | -98.6% | $14,812,076 | $(1,596,951) | $(16,409,027) | -110.8% | - In January 2025, the company received a **$2 million insurance reimbursement**, paid directly to the law firm representing the CEO. The company is negotiating a reasonable payment plan for **$12.3 million** in unpaid legal fees with the relevant law firms[10](index=10&type=chunk) [Net Loss](index=3&type=section&id=3.3%20Net%20Loss) Second quarter 2025 net loss significantly narrowed to **$1.9 million**, compared to **$15.3 million** in the prior-year period, primarily due to a substantial reduction in legal expenses and unrealized gains on investments Net Loss | 指标 | 2024年第二季度 | 2025年第二季度 | 变化 | 变化率 | 2024年上半年 | 2025年上半年 | 变化 | 变化率 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 净亏损 | $(15,280,191) | $(1,927,730) | $13,352,461 | -87.4% | $(22,748,253) | $(4,124,606) | $18,623,647 | -81.9% | [Financial Guidance](index=3&type=section&id=Financial%20Guidance) The company faces significant doubt about its ability to continue as a going concern without additional funding, despite initial financing success [Going Concern](index=3&type=section&id=4.1%20Going%20Concern) As of June 30, 2025, the company believes there is substantial doubt about its ability to continue as a going concern without additional funding or financial support. Despite initial success in a multi-step financing plan, there is no guarantee of success for future elements - As of June 30, 2025, the company believes there is **substantial doubt** about its ability to continue as a going concern for the next 12 months without additional funding or financial support[12](index=12&type=chunk) - The company has achieved initial success on key elements of a multi-step financing plan, but there is no guarantee of continued success on the remaining elements of the plan[12](index=12&type=chunk) [About HCW Biologics](index=3&type=section&id=About%20HCW%20Biologics) HCW Biologics is a clinical-stage biopharmaceutical company leveraging its TOBI™ and TRBC platforms to develop novel immunotherapies for chronic inflammation-related diseases [Company Profile and Platforms](index=3&type=section&id=5.1%20Company%20Profile%20and%20Platforms) HCW Biologics is a clinical-stage biopharmaceutical company focused on developing immunotherapies for chronic inflammation-related diseases. The company possesses two drug discovery platforms, TOBI™ and TRBC, with the TRBC platform capable of constructing novel immunotherapies such as multifunctional immune cell stimulators, second-generation immune checkpoint inhibitors, and multi-specific targeted fusion and enhanced immune cell engagers - HCW Biologics Inc. is a clinical-stage biopharmaceutical company developing proprietary immunotherapies to treat diseases caused by chronic inflammation, particularly age-related and senescence-related conditions[13](index=13&type=chunk) - The company possesses two drug discovery platforms: TOBI™ (Tissue Factor-Based Fusion) and TRBC. The TRBC platform enables the construction of novel immunotherapies such as multifunctional immune cell stimulators, second-generation immune checkpoint inhibitors, and multi-specific targeted fusion and enhanced immune cell engagers[13](index=13&type=chunk) - The company has used the TRBC platform to construct **over 50 molecules**, including HCW11-002, HCW11-018, and HCW11-040, which are undergoing further preclinical evaluation studies[13](index=13&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements subject to significant risks and uncertainties regarding clinical development, financing, and operational capabilities [Disclaimer and Risks](index=3&type=section&id=6.1%20Disclaimer%20and%20Risks) This press release contains “forward-looking statements” subject to significant risks and uncertainties, including the company's ability to develop new immunotherapies, timing of research initiation, going concern ability, cash flow, licensing agreements, clinical trial initiation, drug efficacy, and ability to secure future financing and pay legal fees. These statements are based on current expectations and are subject to inherent uncertainties, risks, and assumptions - Forward-looking statements cover the company's ability to develop new immunotherapies, timing of research initiation, going concern ability, cash flow, licensing agreements, clinical trial initiation, drug efficacy, and ability to secure future financing and pay legal fees[14](index=14&type=chunk)[15](index=15&type=chunk) - Forward-looking statements are based on the company's current expectations and are subject to inherent uncertainties, risks, and assumptions, with actual results potentially differing due to risks and uncertainties described in “Risk Factors”[15](index=15&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section provides unaudited financial statements, including statements of operations and condensed balance sheets, for the second quarter and first half of 2025 [Unaudited Statements of Operations](index=5&type=section&id=7.1%20Unaudited%20Statements%20of%20Operations) This section provides HCW Biologics Inc.'s unaudited statements of operations for the three and six months ended June 30, 2025, detailing key financial data such as revenues, operating expenses (R&D, G&A, legal fees), and net loss Unaudited Statements of Operations | 指标 | 2024年第二季度 | 2025年第二季度 | 2024年上半年 | 2025年上半年 | | :--- | :--- | :--- | :--- | :--- | | 收入 | $618,854 | $6,550 | $1,745,566 | $11,615 | | 净收入 | $180,411 | $1,310 | $795,158 | $2,323 | | 研发费用 | $2,029,186 | $1,226,824 | $4,152,470 | $2,705,536 | | 一般及行政费用 | $1,594,193 | $2,096,021 | $3,160,285 | $4,302,301 | | 法律费用（回收），净额 | $10,393,042 | $142,542 | $14,812,076 | $(1,596,951) | | 运营总费用 | $15,316,421 | $3,465,387 | $23,424,831 | $5,410,886 | | 运营（亏损）收入 | $(15,136,010) | $(3,464,077) | $(22,629,673) | $(5,408,563) | | 利息费用 | $(159,666) | $(228,714) | $(159,666) | $(505,853) | | 投资未实现收益 | - | $1,748,688 | — | $1,748,688 | | 其他收入，净额 | $15,485 | $16,373 | $41,086 | $41,122 | | 净（亏损）收入 | $(15,280,191) | $(1,927,730) | $(22,748,253) | $(4,124,606) | [Condensed Balance Sheets](index=6&type=section&id=7.2%20Condensed%20Balance%20Sheets) This section provides HCW Biologics Inc.'s condensed balance sheets as of June 30, 2025, and December 31, 2024, presenting the financial position including assets (cash, accounts receivable, investments), liabilities (accounts payable, short-term debt), and stockholders' equity (or deficit) Condensed Balance Sheets | 指标 | 2024年12月31日 | 2025年6月30日 (未经审计) | | :--- | :--- | :--- | | **资产** | | | | 现金及现金等价物 | $4,674,572 | $2,438,962 | | 应收账款，净额 | $582,201 | $21,611 | | 预付费用 | $328,181 | $295,543 | | 其他流动资产 | $113,528 | $141,009 | | 流动资产总额 | $5,698,482 | $2,897,125 | | 投资 | $1,599,751 | $3,348,438 | | 厂房、设备及机器，净额 | $22,909,869 | $22,635,596 | | 其他资产 | $28,476 | $28,477 | | **资产总额** | **$30,236,578** | **$28,909,636** | | **负债及股东（赤字）权益** | | | | **负债** | | | | 应付账款 | $22,332,261 | $19,354,476 | | 应计负债及其他流动负债 | $981,940 | $1,070,421 | | 短期债务，净额 | $6,314,684 | $6,421,204 | | 流动负债总额 | $29,628,885 | $26,846,101 | | 债务，净额 | $7,377,865 | $367,151 | | **负债总额** | **$37,006,750** | **$28,961,608** | | **股东（赤字）权益** | | | | 普通股 | $111 | $215 | | 额外实收资本 | $93,785,854 | $104,628,555 | | 累计赤字 | $(100,556,137) | $(104,680,742) | | **股东（赤字）权益总额** | **$(6,770,172)** | **$(51,972)** | | **负债及股东（赤字）权益总额** | **$30,236,578** | **$28,909,636** |

Core Insights - HCW Biologics has developed second-generation, multi-specific T-cell engagers targeting pancreatic cancer, utilizing its proprietary TRBC product discovery platform, which activates T cells and reduces immunosuppression in the tumor microenvironment [1][2][3] Company Overview - HCW Biologics Inc. is a clinical-stage biopharmaceutical company focused on developing novel immunotherapies aimed at chronic inflammation and age-related diseases, with a belief that their products can significantly change cancer treatment and improve patients' quality of life [4][5] - The company has created over 50 molecules using the TRBC platform, which allows for the construction of various classes of immunotherapeutic compounds, including multi-functional immune cell stimulators and multi-specific targeting fusions [5] Product Development - The lead product candidate, HCW9302, was developed using the legacy TOBI platform, while the TRBC platform is designed to create immunotherapeutics that activate immune responses and specifically target cancerous cells [4][5] - The two lead T-cell engagers target tissue factor and mesothelin, demonstrating potent anti-pancreatic cancer activities in preclinical studies, with 100% survival in treated tumor-bearing mice [2][3]

Core Viewpoint - HCW Biologics Inc. has regained compliance with Nasdaq's listing requirements, ensuring its continued presence on the Nasdaq Capital Market [1][2]. Company Overview - HCW Biologics Inc. is a clinical-stage biopharmaceutical company focused on developing innovative immunotherapies targeting chronic inflammation and related diseases [3]. - The company aims to improve healthspan and quality of life by addressing age-related and senescence-associated diseases through its proprietary drug platforms [3]. Compliance Details - On June 24, 2025, HCW Biologics received formal notice from Nasdaq confirming compliance with the minimum stockholders' equity requirement [2]. - The company had previously regained compliance with other Nasdaq requirements, including bid price, public float, and market value of publicly held shares [2]. Product Development - The lead product candidate, HCW9302, was developed using the TOBI™ platform, while the TRBC platform allows for the creation of various immunotherapeutic compounds [3]. - The TRBC platform has produced over 50 molecules, with ongoing preclinical evaluations for selected candidates based on early promising data [3].

Core Insights - HCW Biologics has entered into a binding agreement with WY Biotech, earning a $7.0 million upfront payment for the licensing of the molecule HCW11-006, which is aimed at in vivo therapeutic applications [1][2] - The agreement includes potential additional milestone payments and royalties on future product sales, with HCW Biologics retaining the option to recapture rights for certain territories after Phase 1 clinical trials [2][3] Company Overview - HCW Biologics Inc. is a clinical-stage biopharmaceutical company focused on developing novel immunotherapies to combat diseases associated with chronic inflammation, particularly age-related diseases [4] - The company utilizes its proprietary TRBC drug discovery platform to create Multi-Functional Immune Cell Stimulators, which have shown effectiveness in preclinical studies for inducing anti-tumor responses without adverse side effects [3][4] - HCW Biologics has developed over 50 molecules using the TRBC platform, with ongoing preclinical evaluations for several promising candidates [4]

Core Viewpoint - HCW Biologics Inc. reported financial results for Q1 2025, highlighting a successful equity offering and advancements in clinical trials and business development efforts [1][2][8]. Financial Results - Revenues for Q1 2025 were $5.065 million, a significant increase from $1.126 million in Q1 2024, primarily from licensed molecules sold to Wugen [10]. - Research and development (R&D) expenses decreased by 30% to $1.5 million in Q1 2025 from $2.1 million in Q1 2024, attributed to lower manufacturing and preclinical costs [10]. - General and administrative (G&A) expenses rose by 42% to $2.2 million in Q1 2025 from $1.6 million in Q1 2024, mainly due to prior performance bonuses and increased professional service costs [10]. - The net loss for Q1 2025 was $2.2 million, compared to a net loss of $7.5 million in Q1 2024 [10][14]. Business Development - The company closed a $5.0 million equity offering to fund clinical trials for HCW9302, targeting autoimmune disorders [2]. - HCW Biologics delivered a technology report to WY Biotech, expecting to recognize a $7.0 million upfront licensing fee for HCW11-006 [3]. - The company plans to enhance its business development efforts in the second half of 2025, focusing on licensing its proprietary compounds [2]. Clinical Development - The FDA cleared the IND for HCW9302, initiating a Phase 1 clinical trial for moderate-to-severe alopecia areata, expected to start in Q3 2025 [5]. - HCW9206, another clinical-stage molecule, is being commercialized, showing promise in CAR-T manufacturing improvements [7]. Financing Transactions - The company completed a $5.0 million offering of 671,140 units at $7.45 per unit, and negotiated a reduction in the exercise price of existing warrants from $41.20 to $7.45 [6]. - As of March 31, 2025, the company reported cash and cash equivalents of $1.1 million, down from $4.7 million at the end of 2024 [16]. Compliance and Future Outlook - HCW Biologics regained compliance with Nasdaq listing requirements as of May 13, 2025, but must meet all remaining terms by June 16, 2025 [6]. - The company expressed substantial doubt regarding its ability to continue as a going concern without additional funding [9].

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's Q1 2025 financial statements, including balance sheets, statements of operations, changes in equity, and cash flows, along with management's discussion of the critical financial condition, operational results, liquidity challenges, and internal controls [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) For the quarter ended March 31, 2025, the company reported a significant decrease in revenue and a net loss of $2.2 million, an improvement from a $7.5 million loss in the prior-year period, primarily due to a large credit from legal expense reimbursements. The balance sheet reflects a deteriorating financial position, with cash reserves dwindling to $1.1 million and a growing stockholders' deficit of $8.6 million. The statements highlight significant liquidity challenges and a substantial doubt about the company's ability to continue as a going concern, which is further detailed in the notes [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) As of March 31, 2025, the company's total assets decreased to $26.3 million from $30.2 million at year-end 2024, driven by a significant drop in cash and cash equivalents from $4.7 million to $1.1 million. Total liabilities stood at $34.8 million, with current liabilities of $27.1 million exceeding total current assets of $1.9 million. The stockholders' deficit widened from $6.8 million to $8.6 million, indicating a worsening financial position Condensed Balance Sheet Summary (Unaudited) | Account | Dec 31, 2024 | Mar 31, 2025 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $4,674,572 | $1,107,613 | | Total current assets | $5,698,482 | $1,894,708 | | Total assets | $30,236,578 | $26,285,406 | | **Liabilities & Stockholders' Deficit** | | | | Total current liabilities | $29,628,885 | $27,142,090 | | Total liabilities | $37,006,750 | $34,847,454 | | Total stockholders' deficit | $(6,770,172) | $(8,562,048) | [Condensed Statements of Operations](index=5&type=section&id=Condensed%20Statements%20of%20Operations) For the three months ended March 31, 2025, revenues plummeted to $5,065 from $1.1 million in the prior-year period. The company reported a net loss of $2.2 million, a significant improvement from a $7.5 million net loss in Q1 2024. This improvement was primarily driven by a net credit in legal expenses of $1.7 million (due to a $2.0 million insurance reimbursement), which offset a $4.4 million expense in the prior year. Research and development expenses decreased, while general and administrative costs rose Condensed Statement of Operations (Unaudited, Three Months Ended March 31) | Metric | 2024 | 2025 | | :--- | :--- | :--- | | Revenues | $1,126,712 | $5,065 | | Net revenues | $614,747 | $1,013 | | Research and development | $2,123,284 | $1,478,711 | | General and administrative | $1,566,092 | $2,227,597 | | Legal expenses, net | $4,419,034 | $(1,739,493) | | Loss from operations | $(7,493,663) | $(1,965,802) | | Net loss | $(7,468,061) | $(2,196,875) | | Net loss per share, basic and diluted | $(0.20) | $(0.05) | [Condensed Statements of Changes in Stockholders' Equity (Deficit)](index=6&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20%28Deficit%29) For the three months ended March 31, 2025, the total stockholders' deficit increased from $6.8 million to $8.6 million. The change was primarily driven by the net loss of $2.2 million for the period, slightly offset by stock-based compensation and minor proceeds from stock option exercises - The balance of stockholders' deficit increased from **$(6,770,172)** at the beginning of the quarter to **$(8,562,048)** at the end of the quarter, mainly due to the net loss of **$(2,196,875)**[17](index=17&type=chunk) [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) For the first quarter of 2025, net cash used in operating activities was $3.5 million, similar to the prior year. There were no investing activities. Financing activities resulted in a net cash use of $53,103, a stark contrast to the $4.2 million provided by financing in Q1 2024. Consequently, cash and cash equivalents decreased by $3.6 million during the quarter, ending at $1.1 million Cash Flow Summary (Unaudited, Three Months Ended March 31) | Activity | 2024 | 2025 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,603,870) | $(3,513,856) | | Net cash used in investing activities | $(129,709) | $0 | | Net cash provided by (used in) financing activities | $4,222,554 | $(53,103) | | **Net increase (decrease) in cash** | **$488,975** | **$(3,566,959)** | | **Cash and cash equivalents at end of period** | **$4,084,076** | **$1,107,613** | [Notes to Condensed Interim Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Interim%20Financial%20Statements) The notes disclose critical information, including a reverse stock split effective April 11, 2025, and a formal conclusion that substantial doubt exists about the company's ability to continue as a going concern due to sustained operating losses and negative working capital. Key events include legal disputes with its construction contractor BE&K, the settlement of arbitration with ImmunityBio, and various financing efforts to remain solvent and compliant with Nasdaq listing rules. Subsequent events after the quarter-end, such as a $5.0 million equity offering and the conversion of $6.6 million in secured notes, are crucial to the company's immediate future - Management concluded that there is **substantial doubt** about the Company's ability to continue as a going concern for at least 12 months from the issuance date of the financial statements[26](index=26&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - A **1-for-40 reverse stock split** was effective on April 11, 2025[24](index=24&type=chunk) - The company is involved in legal proceedings with its general contractor, BE&K, which has filed a complaint and mechanics liens related to unpaid invoices for the construction of its new manufacturing facility[29](index=29&type=chunk)[90](index=90&type=chunk)[93](index=93&type=chunk) - Subsequent to quarter-end, the company closed a **$5.0 million equity offering**, converted **$6.6 million of secured notes to equity**, and gained access to a **$40.0 million equity line of credit (ELOC)** to improve its financial position and regain Nasdaq compliance[95](index=95&type=chunk)[98](index=98&type=chunk)[36](index=36&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's dire financial condition, highlighting the substantial doubt about its ability to continue as a going concern. The analysis focuses on the sharp decline in Q1 2025 revenue and the factors driving the reduced net loss, primarily a one-time insurance reimbursement for legal fees. The discussion details the company's strategy to survive, which hinges on a new financing plan launched after settling a major arbitration. This plan includes an equity line of credit, a potential $7.0 million license fee from WY Biotech, and recent equity offerings. The company is also actively working to regain compliance with all Nasdaq listing requirements to maintain its public listing [Overview](index=28&type=section&id=Overview) The company is a clinical-stage biopharmaceutical firm focused on developing immunotherapies for diseases linked to chronic inflammation and aging, a condition known as "inflammaging." It utilizes two proprietary platforms, TOBI™ and TRBC, to create its drug candidates. Following a settlement with ImmunityBio, the company has reassessed its pipeline to focus on protein-based immunotherapies for life-threatening diseases like pancreatic cancer and quality-of-life conditions such as alopecia areata - The company focuses on developing immunotherapies for diseases promoted by chronic inflammation, particularly age-related **"inflammaging"**[102](index=102&type=chunk) - The company utilizes two drug discovery platforms: the legacy **TOBI™ platform** and the new **TRBC platform** for creating multi-specific cytokines and immune-cell engagers[105](index=105&type=chunk)[108](index=108&type=chunk) - Following a legal settlement, the company has clarified its intellectual property and is focusing its clinical development on select product candidates like HCW9302, while seeking partners for non-core assets[106](index=106&type=chunk)[107](index=107&type=chunk) [Business Highlights and Clinical Development](index=30&type=section&id=Business%20Highlights%20and%20Clinical%20Development) Key business developments include amending the WY Biotech license agreement, which could yield a $7.0 million fee in June 2025, and closing a $5.0 million equity offering in May 2025. However, the project to build a manufacturing facility is stalled due to legal action from the contractor over unpaid invoices. The company is focused on regaining Nasdaq compliance, having achieved the minimum bid price requirement and making progress on other rules. Clinically, the FDA cleared an IND for a Phase 1 trial of HCW9302 for alopecia areata, expected to start in Q3 2025. The company is also seeking commercial partners for its HCW9206 compound for CAR-T therapies - The company expects to receive a **$7.0 million license fee** from WY Biotech in June 2025, pending WY Biotech's acceptance of a technology transfer report[111](index=111&type=chunk)[119](index=119&type=chunk) - Closed a **$5.0 million equity offering** on May 15, 2025, and restructured existing warrants to a lower exercise price[113](index=113&type=chunk) - The company regained compliance with the Nasdaq minimum bid price rule and is working to meet other listing requirements by a June 16, 2025 deadline[117](index=117&type=chunk)[120](index=120&type=chunk) - Received FDA clearance to initiate a **Phase 1 clinical trial for HCW9302** in patients with alopecia areata, with the study expected to begin in Q3 2025[124](index=124&type=chunk)[125](index=125&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Comparing Q1 2025 to Q1 2024, revenues fell drastically from $1.1 million to just $5,065. Research and development expenses decreased by 30% to $1.5 million, mainly due to reduced manufacturing and preclinical activities. General and administrative expenses rose 42% to $2.2 million, driven by accretion expense on secured notes and increased professional fees. Legal expenses showed a net credit of $1.7 million due to an insurance reimbursement, compared to a $4.4 million expense in the prior year, which was the primary reason for the smaller net loss of $2.2 million Comparison of Operating Results (Three Months Ended March 31) | Metric | 2024 | 2025 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $614,747 | $1,013 | $(613,734) | (99.8)% | | Research and development | $2,123,284 | $1,478,711 | $(644,573) | (30)% | | General and administrative | $1,566,092 | $2,227,597 | $661,505 | 42% | | Legal expenses, net | $4,419,034 | $(1,739,493) | $(6,158,527) | N/A | | **Net loss** | **$(7,468,061)** | **$(2,196,875)** | **$5,271,186** | **(70.6)%** | - The decrease in R&D expenses was primarily due to a **$313,503 (54%) decline** in manufacturing and materials costs and a **$107,980 (38%) decline** in preclinical expenses as certain studies were completed[152](index=152&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) - The increase in G&A expenses was mainly due to a **$273,059 accretion expense** for the Secured Notes' bonus payment and a **$100,563 increase** in professional services fees[158](index=158&type=chunk)[160](index=160&type=chunk)[162](index=162&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is critically low, with only $1.1 million in cash as of March 31, 2025, leading to substantial doubt about its ability to operate for the next twelve months. Operations are funded through stock sales, debt, and license revenues. The company faces significant liabilities, including $12.4 million in unpaid legal fees and potential acceleration of its $6.5 million bank loan due to construction-related liens. To address this, the company has secured access to a $40 million equity line of credit, raised $5.0 million in a May 2025 offering, converted $6.6 million of debt to equity, and anticipates a $7.0 million license fee. Despite these efforts, management concluded the substantial doubt was not alleviated - As of March 31, 2025, the company had **$1.1 million in cash and cash equivalents**, and management concluded there was **substantial doubt** about its ability to continue as a going concern[170](index=170&type=chunk)[185](index=185&type=chunk) - The company has significant outstanding liabilities, including **$12.4 million in unpaid legal fees** from a past arbitration and is facing lawsuits from its general contractor (BE&K) over unpaid construction invoices[174](index=174&type=chunk)[172](index=172&type=chunk) - Key financing activities to improve liquidity include a **$40M Equity Purchase Agreement (ELOC)**, a potential **$7.0M license fee** from WY Biotech, a **$5.0M equity offering** (May 2025), and the conversion of **$6.6M in Secured Notes to equity** (May 2025)[178](index=178&type=chunk)[177](index=177&type=chunk)[182](index=182&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposures are interest rate sensitivity on its cash and cash equivalents and the marketability risk of its investment in Wugen common stock, which is a private company with limited liquidity - Primary market risk is **interest rate sensitivity**. The company is also exposed to **marketability risk** for its Wugen common stock investment, as there is no public market for these shares[201](index=201&type=chunk) [Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of March 31, 2025, and concluded that they were effective. There were no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's **disclosure controls and procedures were effective**[203](index=203&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[206](index=206&type=chunk) [PART II. OTHER INFORMATION](index=53&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section details recent legal proceedings, confirms no material changes to risk factors, outlines unregistered equity sales, and provides further information on the Senior Secured Note financing and its conversion to equity [Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company has resolved its major arbitration with ImmunityBio through a settlement agreement that clarified intellectual property rights, with no monetary payments required by either party. However, the company is now facing new legal challenges. On April 17, 2025, its general contractor, BE&K, filed a complaint related to unpaid invoices for the construction of its manufacturing facility, and other subcontractors have also filed claims - The company entered into a confidential settlement agreement with ImmunityBio on July 13, 2024, resolving a major arbitration. The settlement involved transferring ownership of certain TOBI-based molecule IP to ImmunityBio while retaining key rights to lead product candidates like HCW9218 (for non-cancer diseases), HCW9302, and HCW9206[210](index=210&type=chunk)[211](index=211&type=chunk) - On April 17, 2025, the company received a complaint filed by its general contractor, BE&K Building Group, related to the construction of its new facility. Other subcontractors have also filed counterclaims and cross-claims[213](index=213&type=chunk) [Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes to the risk factors disclosed in the Annual Report have occurred[214](index=214&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details several sales of unregistered securities. In February 2024, the company sold $2.5 million of common stock to officers and directors. In November 2024, it issued unregistered warrants to purchase 6,717,000 shares of common stock in a private placement. In March 2025, it issued 384,615 shares as a commitment fee for an Equity Purchase Agreement - In February 2024, the company sold **1,785,718 unregistered shares of common stock** to certain officers and directors for aggregate proceeds of **$2.5 million**[215](index=215&type=chunk) - In November 2024, as part of a larger offering, the company issued unregistered warrants to purchase up to **6,717,000 shares of common stock** in a private placement[217](index=217&type=chunk) - On March 12, 2025, the company issued **384,615 unregistered shares of common stock** as a commitment fee for its Equity Purchase Agreement with Square Gate Capital[219](index=219&type=chunk) [Other Information](index=55&type=section&id=Item%205.%20Other%20Information) This section provides detailed information on the Senior Secured Note financing, which raised an aggregate of $6.9 million by October 2024. The notes are secured by the company's equity in Wugen, Inc. A significant development was the subsequent agreement to convert $6.6 million of this debt into equity. This conversion, approved by stockholders on March 31, 2025, and effected on May 7, 2025, was a key part of the company's plan to improve its stockholders' equity and regain compliance with Nasdaq listing rules - The company issued an aggregate of **$6.9 million in Senior Secured Notes** between March and October 2024, which are secured by the company's equity ownership in Wugen, Inc[225](index=225&type=chunk)[226](index=226&type=chunk)[228](index=228&type=chunk) - On March 31, 2025, stockholders approved the conversion of at least **$6.6 million of the Secured Notes** into common stock and warrants[233](index=233&type=chunk) - The conversion was completed on May 7, 2025, which cancelled the notes and resulted in the issuance of unregistered common stock and warrants to the participating noteholders[234](index=234&type=chunk) [Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report, including agreements related to the Equity Purchase Agreement, various promissory notes, placement agency agreements, and officer certifications

[Overview and Business Highlights](index=1&type=section&id=HCW%20Biologics%20Reports%20First%20Quarter%202025%20Business%20Highlights%20and%20Financial%20Results) This section covers the CEO's strategic financing and business development initiatives, recent equity offerings, and progress in regaining Nasdaq compliance [CEO Statement and Financing Strategy](index=1&type=section&id=CEO%20Statement%20and%20Financing%20Strategy) The CEO announced a $5.0 million equity offering to fund the HCW9302 Phase 1 trial and is intensifying business development for TRBC platform licensing, including HCW9206 - Closed a **$5.0 million** equity offering on May 15, 2025, with a single institutional investor in a difficult market[3](index=3&type=chunk) - The funding will support the initiation of a Phase 1 clinical trial for HCW9302 in an autoimmune disorder and advance the business development campaign for licensing Immune-Cell Engagers[3](index=3&type=chunk) - The company plans to increase business development efforts in the second half of 2025, focusing on licensing its portfolio of over 50 compounds, with HCW9206 being a key candidate for commercialization to improve CAR-T manufacturing[3](index=3&type=chunk) [Business Development Transactions](index=1&type=section&id=Business%20Development%20Transactions) HCW Biologics delivered its technology report for the HCW11-006 license to WY Biotech, anticipating a $7.0 million upfront fee after due diligence - On May 13, 2025, the Company provided its technology report to WY Biotech for the exclusive worldwide license of HCW11-006, a preclinical drug from the TRBC platform[4](index=4&type=chunk) - The Company expects to recognize revenue for a **$7.0 million** upfront licensing fee after WY Biotech completes its 30-day due diligence[4](index=4&type=chunk) [Financing Transactions](index=1&type=section&id=Financing%20Transactions) The company completed a $5.0 million equity offering and regained partial Nasdaq compliance, with full compliance required by June 16, 2025 - On May 15, 2025, the company completed a **$5.0 million** offering of **671,140 units** at a price of **$7.45 per unit**[5](index=5&type=chunk) - The exercise price of certain existing warrants to purchase up to **167,925 shares** was reduced from **$41.20 to $7.45 per share**[6](index=6&type=chunk) - On May 13, 2025, the company regained compliance with Nasdaq's bid price, public float, and market value of publicly held shares requirements, with a deadline of June 16, 2025, to comply with all remaining Listing Rules[6](index=6&type=chunk) [Clinical Development Results](index=2&type=section&id=Clinical%20Development%20Results) FDA cleared HCW9302 Phase 1 trial for alopecia areata, expected Q3 2025, while HCW9206 commercialization targets CAR-T manufacturing improvement - Received FDA clearance on January 28, 2025, for its IND to start a first-in-human Phase 1 trial of HCW9302 in patients with moderate-to-severe alopecia areata[9](index=9&type=chunk) - The multi-site, company-sponsored trial for HCW9302 is expected to be initiated in the third quarter of 2025[9](index=9&type=chunk) - The company is commercializing its clinical-stage molecule, HCW9206, which has shown potential to generate CAR-T cells with a stem cell-like memory phenotype, enhancing persistence and lowering manufacturing costs[9](index=9&type=chunk) [First Quarter 2025 Financial Results](index=2&type=section&id=First%20Quarter%202025%20Financial%20Results) Q1 2025 net loss improved to $2.2 million from $7.5 million in Q1 2024, driven by reduced net legal expenses despite lower revenues and increased G&A Q1 2025 vs Q1 2024 Financial Highlights | Financial Metric | Q1 2025 ($) | Q1 2024 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $5,065 | $1,126,712 | -$1,121,647 | -99.5% | | R&D Expenses | $1.5 million | $2.1 million | -$0.6 million | -30% | | G&A Expenses | $2.2 million | $1.6 million | +$0.6 million | +42% | | Legal Expenses, net | ($1.7 million) | $4.4 million | -$6.1 million | N/A | | Net Loss | $2.2 million | $7.5 million | -$5.3 million | -70.7% | - The decrease in R&D expenses by **30%** was mainly due to a decline in manufacturing, material, and preclinical expenses[9](index=9&type=chunk) - The **42%** increase in G&A expenses was primarily due to the absence of officer bonus waivers that occurred in Q1 2024 and accretion of a fixed bonus related to Secured Notes[9](index=9&type=chunk) - Net legal expenses were negative (**$1.7 million**) in Q1 2025 due to a **$2.0 million** insurance reimbursement, compared to **$4.4 million** in legal fees incurred in Q1 2024 for an arbitration case[13](index=13&type=chunk) [Financial Guidance](index=3&type=section&id=Financial%20Guidance) As of March 31, 2025, HCW Biologics concluded substantial doubt exists about its going concern ability for the next 12 months, necessitating additional funding - As of March 31, 2025, the Company concluded that substantial doubt exists regarding its ability to continue as a going concern for at least 12 months from the financial statement issuance date[11](index=11&type=chunk) - The company requires additional funding or financial support, as its current financing plan is not assured to be fully successful in mitigating the going concern risk[11](index=11&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section presents the unaudited statements of operations and condensed balance sheets for Q1 2025, detailing the company's financial performance and position [Unaudited Statements of Operations](index=5&type=section&id=Unaudited%20Statements%20of%20Operations) Q1 2025 net loss was $2.2 million ($0.05 per share), a significant improvement from Q1 2024's $7.5 million loss, primarily due to decreased net legal expenses Unaudited Statements of Operations (For the Three Months Ended March 31) | | 2024 ($) | 2025 ($) | | :--- | :--- | :--- | | **Revenues** | **$1,126,712** | **$5,065** | | Cost of revenues | ($511,965) | ($4,052) | | **Net revenues** | **$614,747** | **$1,013** | | Research and development | $2,123,284 | $1,478,711 | | General and administrative | $1,566,092 | $2,227,597 | | Legal expenses, net | $4,419,034 | ($1,739,493) | | **Total operating expenses** | **$8,108,410** | **$1,966,815** | | **Loss from operations** | **($7,493,663)** | **($1,965,802)** | | Interest expense | — | ($255,822) | | Other income, net | $25,602 | $24,749 | | **Net loss** | **($7,468,061)** | **($2,196,875)** | | Net loss per share, basic and diluted | ($0.20) | ($0.05) | | Weighted average shares outstanding | 37,223,588 | 44,675,656 | [Condensed Balance Sheets](index=6&type=section&id=Condensed%20Balance%20Sheets) As of March 31, 2025, total assets were $26.3 million, liabilities $34.8 million, and stockholders' deficit $8.6 million, with cash decreasing to $1.1 million Condensed Balance Sheet Highlights | | Dec 31, 2024 ($) | Mar 31, 2025 (Unaudited) ($) | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $4,674,572 | $1,107,613 | | Total current assets | $5,698,482 | $1,894,708 | | **Total assets** | **$30,236,578** | **$26,285,406** | | **LIABILITIES AND STOCKHOLDERS' DEFICIT** | | | | Total current liabilities | $29,628,885 | $27,142,090 | | **Total liabilities** | **$37,006,750** | **$34,847,454** | | **Total stockholders' deficit** | **($6,770,172)** | **($8,562,048)** | [About HCW Biologics](index=3&type=section&id=About%20HCW%20Biologics) HCW Biologics is a clinical-stage biopharmaceutical company developing immunotherapies for chronic inflammation-driven diseases using its TOBI™ and TRBC platforms - HCW Biologics is a clinical-stage biopharmaceutical company developing immunotherapies for diseases promoted by chronic inflammation, including cancer, autoimmune diseases, and neurodegenerative diseases[12](index=12&type=chunk) - The company's lead product candidate, HCW9302, was developed using its legacy TOBI™ platform[12](index=12&type=chunk) - A second drug discovery platform, TRBC, has been used to construct over **50 molecules** and can create multiple classes of immunotherapeutics, including Immune Cell Stimulators, Checkpoint Inhibitors, and Multi-Specific Targeting Fusions[12](index=12&type=chunk) [Forward Looking Statements](index=4&type=section&id=Forward%20Looking%20Statements) This section outlines forward-looking statements subject to significant risks and uncertainties, including going concern status, future capital, and clinical trial success - The press release contains forward-looking statements made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995[14](index=14&type=chunk) - These statements are subject to inherent uncertainties and risks, and are based on assumptions that may not prove accurate[14](index=14&type=chunk) - Key risks include the company's ability to continue as a going concern, its cash runway, ability to license its molecules, initiation of clinical trials, and future capital-raising plans[14](index=14&type=chunk)