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Virios Therapeutics(VIRI) - 2020 Q4 - Annual Report
VIRIVirios Therapeutics(VIRI)2021-03-23 17:42

Financial Performance - The company reported a net loss of 10,346,395fortheyearendedDecember31,2020,comparedtoanetlossof10,346,395 for the year ended December 31, 2020, compared to a net loss of 2,473,627 for the year ended December 31, 2019, representing an increase in loss of approximately 318%[445]. - Total operating expenses for 2020 were 10,005,394,significantlyhigherthan10,005,394, significantly higher than 2,178,499 in 2019, indicating a year-over-year increase of approximately 359%[445]. - The company had net cash used in operating activities of 3,895,195fortheyearendedDecember31,2020,comparedto3,895,195 for the year ended December 31, 2020, compared to 2,092,150 for the year ended December 31, 2019, indicating a 86% increase in cash outflows[463]. - As of December 31, 2020, the company had an accumulated deficit of approximately 28.0million[463].−Thecompanyhasnotgeneratedanyrevenuestodateandexpectstoincurlossesinthefutureasitcontinuesitsdevelopmentactivities[462].ExpensesBreakdown−Researchanddevelopmentexpensesdecreasedto28.0 million[463]. - The company has not generated any revenues to date and expects to incur losses in the future as it continues its development activities[462]. Expenses Breakdown - Research and development expenses decreased to 194,013 in 2020 from 800,620in2019,areductionofabout76800,620 in 2019, a reduction of about 76%[445]. - General and administrative expenses surged to 9,811,381 in 2020, up from 1,377,879in2019,reflectinganincreaseofapproximately6131,377,879 in 2019, reflecting an increase of approximately 613%[445]. - The Company recognized interest expense related to the amortization of issuance costs for convertible promissory notes amounting to 53,983 for the year ended December 31, 2020, compared to 26,325in2019[478].−Thetotalaccruedexpensesamountedto26,325 in 2019[478]. - The total accrued expenses amounted to 784,104, an increase from 525,445in2019[495].−InterestexpenserelatedtotheFourthOfferingwas525,445 in 2019[495]. - Interest expense related to the Fourth Offering was 231,364 for 2020 and 163,123for2019,whiletheFifthOfferingincurred163,123 for 2019, while the Fifth Offering incurred 98,634 in interest expense for 2020[500]. Assets and Liabilities - The company had total current assets of 31,472,731asofDecember31,2020,comparedto31,472,731 as of December 31, 2020, compared to 315,900 as of December 31, 2019, marking a substantial increase of approximately 9,895%[443]. - Total liabilities decreased to 1,531,842in2020from1,531,842 in 2020 from 5,258,409 in 2019, a reduction of about 71%[443]. - The company had cash reserves of 29,795,366asofDecember31,2020,comparedto29,795,366 as of December 31, 2020, compared to 309,384 at the end of 2019, indicating an increase of approximately 9,523%[443]. - The total prepaid expenses and other current assets as of December 31, 2020, were 1,677,365,significantlyhigherthan1,677,365, significantly higher than 6,516 in 2019[493]. Capital and Funding - The company raised approximately 31.1millioninnetproceedsfromitsinitialpublicoffering(IPO)onDecember16,2020,afterdeductingunderwritingdiscountsandofferingexpenses[461].−TheIPOinvolvedthesaleof3,450,000sharesofcommonstockataninitialofferingpriceof31.1 million in net proceeds from its initial public offering (IPO) on December 16, 2020, after deducting underwriting discounts and offering expenses[461]. - The IPO involved the sale of 3,450,000 shares of common stock at an initial offering price of 10.00 per share, generating gross proceeds of 34.5million[461].−TheCompanycompleteditsFourthOfferingin2019,raisingatotalof34.5 million[461]. - The Company completed its Fourth Offering in 2019, raising a total of 2,430,000 across three rounds: 925,000inthefirstround,925,000 in the first round, 925,000 in the second round, and 580,000inthethirdround[499].−TheCompanyraised580,000 in the third round[499]. - The Company raised 1,320,000 in its Third Offering from January to August 2018, with a total issuance cost of 69,532[515].−TheCompanywillneedtoraiseadditionalcapitaltocompleteclinicaldevelopmentandcommerciallydevelopitsproductcandidates[464].CorporateStructureandGovernance−TheCompanyconvertedfromalimitedliabilitycompanytoacorporationonDecember16,2020,priortoitsIPO[459].−TheCompanyisclassifiedasanemerginggrowthcompany,allowingittodelayadoptingnewaccountingstandardsuntiltheyapplytoprivatecompanies[487].−TheCompanyconvertedtoaDelawarecorporationandisnowsubjecttoU.S.federalandstateincometaxes,withnoincometaxexpenseorbenefitreportedfortheyearsendedDecember31,2020and2019duetolosses[552].StockandEquityCompensation−Theweightedaveragenumberofsharesoutstandingincreasedto4,926,985in2020from4,832,494in2019,reflectingagrowthofabout269,532[515]. - The Company will need to raise additional capital to complete clinical development and commercially develop its product candidates[464]. Corporate Structure and Governance - The Company converted from a limited liability company to a corporation on December 16, 2020, prior to its IPO[459]. - The Company is classified as an emerging growth company, allowing it to delay adopting new accounting standards until they apply to private companies[487]. - The Company converted to a Delaware corporation and is now subject to U.S. federal and state income taxes, with no income tax expense or benefit reported for the years ended December 31, 2020 and 2019 due to losses[552]. Stock and Equity Compensation - The weighted average number of shares outstanding increased to 4,926,985 in 2020 from 4,832,494 in 2019, reflecting a growth of about 2%[445]. - As of December 31, 2020, the Company had authorized the issuance of 45,000,000 shares, including 43,000,000 Common Stock and 2,000,000 Preferred Stock[521]. - The Company recognized share-based compensation expense of 3,441,687 during 2020 related to stock options, with no unrecognized compensation expense as the options were 100% vested upon issuance[542]. - The Company granted 172,500 warrants to underwriters at an exercise price of 12.50pershare,whichis12512.50 per share, which is 125% of the IPO price, with a five-year term[543]. - The Company issued non-qualified stock options to the President equal to 6.0% of outstanding shares prior to the IPO, with a strike price of 10.00 per share and an aggregate grant date fair value of 1,987,831[548].FutureOutlookandRisks−Thecompanyanticipatestheneedforadditionalcapitaltofundoperations,whichmayleadtodilutionforexistingshareholders[9].−ThecompanyisheavilydependentonthesuccessofitsdrugcandidateIMC−1,andfailuretoobtainregulatoryapprovalcouldsignificantlyharmitsbusiness[9].−TheCompanyhasdeterminedthatitdoesnothaveanymaterialunrecognizedtaxbenefitsorobligationsasofDecember31,2020[481].−TheCompanyrecordedanetoperatinglosscarryforwardof1,987,831[548]. Future Outlook and Risks - The company anticipates the need for additional capital to fund operations, which may lead to dilution for existing shareholders[9]. - The company is heavily dependent on the success of its drug candidate IMC-1, and failure to obtain regulatory approval could significantly harm its business[9]. - The Company has determined that it does not have any material unrecognized tax benefits or obligations as of December 31, 2020[481]. - The Company recorded a net operating loss carryforward of 2,315,510 for both Federal and Georgia income tax purposes as of December 31, 2020, which can be carried forward indefinitely[554].