Virpax Pharmaceuticals(VRPX) - 2022 Q1 - Quarterly Report

Financial Performance - For the three months ended March 31, 2022, the company reported a net loss of $5,137,002, compared to a net loss of $2,379,271 for the same period in 2021, representing a 115% increase in losses year-over-year [22]. - Total operating expenses for the first quarter of 2022 were $5,123,819, significantly higher than $2,348,572 in the same quarter of 2021, indicating a 118% increase [15]. - The company's accumulated deficit reached $27,840,909 as of March 31, 2022, up from $22,703,907 at the end of 2021 [22]. - Cash used in operating activities was $6,044,857 for the three months ended March 31, 2022, compared to $3,080,238 for the same period in 2021, indicating increased cash outflow [124]. - The company anticipates incurring additional operating losses for at least the next several years as it continues to develop its product candidates [128]. Cash and Financing - Cash and cash equivalents decreased to $30,797,135 as of March 31, 2022, down from $36,841,992 at the end of 2021, reflecting a decline of approximately 16% [12]. - Management believes that current cash is sufficient to fund operations for at least 12 months from the filing of the quarterly report, but additional financing will be needed [25]. - The company completed an underwritten public offering in September 2021, raising gross proceeds of $40 million, with net proceeds of approximately $37 million [23]. - No financing activities occurred during the three months ended March 31, 2022, following significant financing activities in the previous year [125]. - The global pandemic has caused significant volatility in financial markets, impacting the company's ability to negotiate favorable financing terms [136]. Research and Development - Research and development expenses for the first quarter of 2022 were $3,341,406, compared to $1,075,000 in the same period of 2021, marking a 210% increase [15]. - The company plans to commit substantial resources to research and development, clinical trials, and potential product acquisitions to support long-term growth [120]. - The company is focused on developing novel drug delivery systems for non-opioid pain management and CNS disorders to enhance patient quality of life [87]. - Envelta is being developed for non-addictive pain management, with IND enabling studies ongoing under a CRADA with NCATS, and two of four planned initial in vitro studies completed [89]. - Probudur, an injectable bupivacaine liposomal hydrogel, is undergoing preclinical studies, with a strategic delay to enhance formulation stability and extend patent lifetime [91]. Legal and Regulatory Risks - The company is involved in ongoing legal proceedings related to allegations of breach of contract and misappropriation of trade secrets, with trial set for September 12 to 14, 2022 [146]. - The company operates in a rapidly changing environment and is subject to risks associated with preclinical stage pharmaceutical companies, including the need for regulatory approvals [21]. - The company anticipates that disruptions caused by the COVID-19 pandemic may negatively impact its financial condition and liquidity in 2022 and potentially beyond [45]. Stock and Compensation - Stock-based compensation expense for Q1 2022 was $211,340, a decrease of 43% from $369,884 in Q1 2021 [54]. - The company recognized $22,013 in stock-based compensation for vested restricted shares in Q1 2022, compared to $14,844 in Q1 2021, reflecting a 48% increase [51]. - The company has total unrecognized compensation costs related to unvested stock options amounting to $878,060, expected to be recognized over a weighted average period of 2.16 years [58]. - The fair value of stock options granted during Q1 2022 was estimated at $2.16 per share, with no options granted in Q1 2021 [58]. Operational Challenges - Disruptions in supply chains and worker shortages have affected production and demand for certain goods and services, leading to uncertainty in business operations [136]. - The company anticipates that these disruptions may negatively impact its results of operations, financial condition, and liquidity in 2022 and potentially beyond [138]. - General and administrative expenses increased by $508,841, or 40%, to $1,782,413 for the three months ended March 31, 2022, primarily due to legal defense costs and new hires [116].