Processa Pharmaceuticals, Inc. (Nasdaq: PCSA) November 8, 2022 3Q2022 Disclaimer: Forward Looking Statements The following summary is provided for informational purposes only and does not constitute an offer or solicitation to acquire interests in the investment or any related or associated company. The information contained here is general in nature and is not intended as legal, tax or investment advice. Furthermore, the information contained herein may not be applicable to or suitable for an individual's ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission File Number 001-39531 Processa Pharmaceuticals, Inc. (Exact name of registrant as specified in its charter) Delaware 45-1539785 (S ...

Processa Pharmaceuticals, Inc. (NASDAQ:PCSA) Q2 2022 Earnings Conference Call August 11, 2022 4:30 PM ET Company Participants James Stanker - Chief Financial Officer David Young - President and Chief Executive Officer Conference Call Participants François Brisebois - Oppenheimer & Co. Inc. Naz Rahman - Maxim Group LLC Operator Good afternoon, ladies and gentlemen, and welcome to the Processa Pharmaceuticals Second Quarter 2022 Earnings Call. At this time, all participants have been placed on a listen-only m ...

[PART I: FINANCIAL INFORMATION](index=4&type=section&id=PART%201%3A%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=ITEM%201%3A%20FINANCIAL%20STATEMENTS) The unaudited condensed consolidated financial statements for Processa Pharmaceuticals, Inc. as of June 30, 2022, and for the three and six-month periods then ended, show a net loss of **$8.4 million** and **$12.1 million** in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $12,064,142 | $16,497,581 | | Total Current Assets | $13,960,775 | $18,327,151 | | Total Assets | $21,657,590 | $26,463,505 | | Total Current Liabilities | $1,571,068 | $971,020 | | Total Liabilities | $1,575,723 | $978,405 | | Total Stockholders' Equity | $20,081,867 | $25,485,100 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Research and development expenses | $3,137,292 | $1,614,954 | $5,181,912 | $3,086,401 | | General and administrative expenses | $2,034,456 | $1,329,213 | $3,218,550 | $2,051,073 | | Operating Loss | $(5,171,748) | $(3,459,797) | $(8,400,462) | $(5,653,104) | | Net Loss | $(5,164,368) | $(3,157,043) | $(8,391,499) | $(5,256,523) | | Net Loss per Share - Basic and Diluted | $(0.32) | $(0.20) | $(0.53) | $(0.35) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,133,439) | $(4,437,494) | | Net cash (used in) provided by financing activities | $(300,000) | $9,852,465 | | Net (Decrease) Increase in Cash | $(4,433,439) | $5,414,971 | | Cash and Cash Equivalents – End of Period | $12,064,142 | $20,831,195 | [Note 1 – Organization and Summary of Significant Accounting Policies](index=8&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Summary%20of%20Significant%20Accounting%20Policies) The clinical-stage biopharmaceutical company develops treatments for unmet medical needs, with an accumulated deficit of **$45.2 million** as of June 30, 2022, but believes current cash is sufficient for the next twelve months - The company is a clinical-stage biopharmaceutical company with five drug candidates in its pipeline, focusing on conditions with high unmet medical needs[20](index=20&type=chunk) - The COVID-19 pandemic has caused delays in patient enrollment for the PCS499 Phase 2B trial, potentially increasing costs and extending timelines[23](index=23&type=chunk) - As of June 30, 2022, the company had an accumulated deficit of approximately **$45.2 million**. Management believes current cash is adequate for at least the next twelve months, supported by available financing facilities like the ATM Offering and the Lincoln Park Purchase Agreement[26](index=26&type=chunk) [Note 3 – Stockholders' Equity](index=11&type=section&id=Note%203%20%E2%80%93%20Stockholders%27%20Equity) Key equity activities include increasing authorized common stock to **50 million** shares, establishing a **$15.0 million** purchase agreement with Lincoln Park Capital, and repurchasing **100,000** shares - On January 1, 2022, the company increased its authorized shares of common stock from **30,000,000** to **50,000,000**[37](index=37&type=chunk) - On March 23, 2022, the company entered into a Purchase Agreement with Lincoln Park Capital, which committed to purchase up to **$15.0 million** of the company's common stock[39](index=39&type=chunk) - On March 29, 2022, the company repurchased **100,000** shares of its common stock from Aposense Ltd. for **$300,000**, which are now held as treasury stock[45](index=45&type=chunk) [Note 4 - Stock-based Compensation](index=12&type=section&id=Note%204%20-%20Stock-based%20Compensation) Stock-based compensation expense significantly increased in the first half of 2022, with **$4.0 million** in unrecognized RSU expense and an increase in shares available under the 2019 incentive plan to **6 million** Stock-based Compensation Expense | Period | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Total Expense | $2,838,266 | $1,173,622 | - During the six months ended June 30, 2022, the company awarded **1,363,917** RSUs. As of June 30, 2022, there were **1,777,922** RSUs outstanding[52](index=52&type=chunk) - On July 11, 2022, shareholders approved an increase in the number of shares available under the 2019 Omnibus Equity Incentive Plan by **3,000,000** shares, to a total of **6,000,000**[47](index=47&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=17&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) The MD&A details the company's business strategy, drug pipeline progress, financial results, and liquidity, reporting a **$8.4 million** net loss for H1 2022, but with **$12.0 million** cash deemed sufficient for the next twelve months [Our Drug Pipeline](index=19&type=section&id=Our%20Drug%20Pipeline) The company's pipeline includes five drug candidates, with three in active clinical trials (PCS499, PCS12852, PCS6422) targeting both non-oncology and oncology indications, with key milestones anticipated in late 2022 and 2023 Drug Pipeline and Upcoming Milestones | Drug | Disease Target | Phase | Upcoming Milestones | | :--- | :--- | :--- | :--- | | PCS499 | Ulcerative Necrobiosis Lipoidica | Phase 2B | 1H'23 - Interim Analysis; Complete Enrollment | | PCS12852 | Gastroparesis | Phase 2A | 2H'22 - Complete Enrollment; Top-Line Results | | PCS6422 | Metastatic Colorectal, Other Cancers | Phase 1B | 2H'22 - Complete Enrollment & Preliminary MTD Identification | | PCS3117 | Pancreatic, Other Cancers | Phase 2B | 2H'22 - 1H'23 - Define Possible Paths to FDA Approval | | PCS11T | Small Cell Lung, Other Cancers | Pre-IND | 2H'22 - Select Manufacturing Sites; Define Paths to Approval | - PCS499 (uNL): Phase 2B trial enrollment has been delayed due to COVID-19. An interim analysis is planned for the first half of 2023[87](index=87&type=chunk)[88](index=88&type=chunk) - PCS12852 (gastroparesis): Phase 2A trial enrolled its first patient in April 2022, with top-line results expected by the end of 2022[94](index=94&type=chunk) - PCS6422 (Next Gen Capecitabine): A modified Phase 1B trial restarted in April 2022 to better define the dosing regimen, with enrollment expected to complete by the end of 2022[103](index=103&type=chunk)[104](index=104&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) For the six months ended June 30, 2022, the company reported no revenue and a net loss of **$8.4 million**, driven by increased R&D expenses of **$5.2 million** and G&A expenses of **$3.2 million** Comparison of Operating Expenses (Six Months Ended June 30) | Expense Category | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Research and development | $5,181,912 | $3,086,401 | +$2,095,511 | | General and administrative | $3,218,550 | $2,051,073 | +$1,167,477 | | **Operating Loss** | **$(8,400,462)** | **$(5,653,104)** | **+$(2,747,358)** | - The increase in R&D expenses was mainly due to costs for three active clinical trials, including payments to CROs, regulatory fees, and drug product testing[123](index=123&type=chunk) - The increase in G&A expenses was primarily driven by a **$983,000** increase in employee stock-based compensation and a **$68,000** increase in payroll and related costs[131](index=131&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2022, the company held **$12.0 million** in cash, with management believing it sufficient for the next twelve months, supplemented by a **$15 million** Lincoln Park agreement and a **$30 million** ATM offering - The company held **$12.0 million** in cash and cash equivalents at June 30, 2022[142](index=142&type=chunk) - Management believes current cash is adequate for at least the next twelve months, without considering potential proceeds from its Lincoln Park agreement or ATM Offering[144](index=144&type=chunk) - Financing facilities include a **$15 million** purchase agreement with Lincoln Park and a **$30 million** ATM offering to provide capital flexibility[143](index=143&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This item is not applicable as the company qualifies as a smaller reporting company - Item 3 is not applicable to the company as it qualifies as a smaller reporting company[153](index=153&type=chunk) [Controls and Procedures](index=31&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of June 30, 2022[154](index=154&type=chunk) - No material changes were made to the company's internal control over financial reporting during the quarter ended June 30, 2022[155](index=155&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=31&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not currently a party to any material legal proceedings - As of the filing date, the company is not involved in any material legal proceedings[156](index=156&type=chunk) [Risk Factors](index=31&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes to risk factors from the Annual Report on Form 10-K for the year ended December 31, 2021[157](index=157&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECU%20RITIES%20AND%20USE%20OF%20PROCEEDS) The company reported no sales of unregistered securities during Q2 2022, but repurchased **100,000** shares of common stock for **$300,000** in the first six months - There were no sales of unregistered securities during the three months ended June 30, 2022[158](index=158&type=chunk) - The company purchased **100,000** shares of its common stock for **$300,000**, which are held as treasury stock[160](index=160&type=chunk) [Other Information](index=31&type=section&id=ITEM%205.%20OTHER%20INFORMATION) On July 25, 2022, the company changed its transfer agent to Continental Stock Transfer and Trust Company - The company changed its transfer agent to Continental Stock Transfer and Trust Company on July 25, 2022[163](index=163&type=chunk)

Processa Pharmaceuticals, Inc. (NASDAQ: PCSA) Clinical Pipeline Update / May 12, 2022 Disclaimer: Forward Looking Statements The following summary is provided for informational purposes only and does not constitute an offer or solicitation to acquire interests in the investment or any related or associated company. The information contained here is general in nature and is not intended as legal, tax or investment advice. Furthermore, the information contained herein may not be applicable to or suitable for ...

Processa Pharmaceuticals, Inc. (NASDAQ:PCSA) Q1 2022 Earnings Conference Call May 12, 2022 4:30 PM ET Company Participants Jim Stanker – Chief Financial Officer David Young – Chief Executive Officer Conference Call Participants Robin Garner – Craig-Hallum Naz Rahman – Maxim Group Operator Greetings, and welcome to Processa Pharmaceuticals First Quarter 2022 Earnings Conference Call and Corporate Update. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow ...

Processa Pharmaceuticals, Inc. (NASDAQ: PCSA) Clinical Pipeline Update / May 12, 2022 Disclaimer: Forward Looking Statements The following summary is provided for informational purposes only and does not constitute an offer or solicitation to acquire interests in the investment or any related or associated company. The information contained here is general in nature and is not intended as legal, tax or investment advice. Furthermore, the information contained herein may not be applicable to or suitable for ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission File Number 001-39531 Processa Pharmaceuticals, Inc. (Exact name of registrant as specified in its charter) Delaware 45-1539785 (State ...

Processa Pharmaceuticals Clinical Pipeline Update March 30, 2022 Disclaimer: Forward Looking Statements The following summary is provided for informational purposes only and does not constitute an offer or solicitation to acquire interests in the investment or any related or associated company. The information contained here is general in nature and is not intended as legal, tax or investment advice. Furthermore, the information contained herein may not be applicable to or suitable for an individual's speci ...

Financial Data and Key Metrics Changes - As of December 31, 2021, the company had a cash balance of $16.5 million, an increase of $1.1 million compared to December 31, 2020 [8][9] - The net loss for the year ending December 31, 2021, was $11.4 million or $0.75 per share, a reduction from a net loss of $14.4 million or $2.54 per share for the same period in 2020 [13] - Research and development expenses totaled $6.9 million for 2021, compared to $3.2 million for the same period in 2020, indicating a significant increase in R&D costs [15][16] Business Line Data and Key Metrics Changes - The company licensed PCS3117 from Ocuphire for cash and stock totaling $567,000, contrasting with $8.7 million in costs incurred for other licensing activities [14] - General and administrative expenses increased to $4.7 million in 2021 from $3.3 million in 2020, primarily due to higher professional fees and non-cash stock-based compensation [16] Market Data and Key Metrics Changes - The company is focused on five drugs in its pipeline, each addressing a different unmet medical need with a potential market size exceeding $1 billion [21][22] - The market potential for PCS499, aimed at treating necrobiosis lipoidica, is estimated to be around $1 billion, despite the challenges in patient enrollment due to COVID-19 [36][40] Company Strategy and Development Direction - The company is developing five drugs simultaneously, all at different stages, with multiple near-term milestones expected from March to August 2022 [22][23] - The strategy includes a focus on regulatory science to navigate FDA requirements effectively, leveraging past experiences with FDA contracts [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by COVID-19 on patient enrollment but emphasized ongoing efforts to improve recruitment through advertising and physician referrals [50][66] - The company anticipates continued increases in clinical trial costs as it progresses with its drug development activities [15] Other Important Information - A purchase agreement with Lincoln Park Capital LP allows the company to sell up to $15 million worth of common stock over the next three years, serving as a financing insurance policy [12] - The company has modified the Phase 1b protocol for the next-generation capecitabine to better understand DPD inhibition and de novo formation timelines [34] Q&A Session Summary Question: Clarification on PCS499 prevalence estimates - Management noted that while literature suggests a prevalence of 22,000 to 55,000 patients, the actual interest in enrollment has been lower, prompting remedial actions to increase recruitment [49][50] Question: Pricing flexibility based on prevalence - Management indicated that the seriousness of the condition provides pricing flexibility, estimating a potential price range of $30,000 to $50,000 per year for patients [51][54] Question: Update on prescreening patients - Management confirmed that a couple of patients died from COVID before screening, affecting the number of patients in prescreening [55][56] Question: Data expectations for DPD inhibition - Management expects to gather data on DPD inhibition timelines by mid-2022, which will inform dosing regimens for the next-generation capecitabine [58] Question: Efficacy signal for 6422 - Management clarified that the 10% estimate for 5-FU metabolism is based on previous preclinical and clinical studies [63][64] Question: Enrollment criteria for PCS499 - Management stated that the exclusion of patients was not due to strict ulcer size criteria but rather other health conditions [65][66] Question: Therapeutic window for next-generation capecitabine - Management indicated that while monitoring for neurotoxicity and cardiotoxicity, they do not expect these to limit the maximum tolerated dose [78][80] Question: Establishing maximum tolerated dose - Management explained that the focus will be on determining the maximum tolerated dose of capecitabine, with adjustments based on DPD inhibition kinetics [82][85]