Virpax Pharmaceuticals(VRPX) - 2022 Q2 - Quarterly Report

Financial Performance - For the six months ended June 30, 2022, the company incurred a net loss of $11,021,717, compared to a net loss of $4,722,690 for the same period in 2021, representing an increase of 133% in losses year-over-year [23]. - Total operating expenses for the three months ended June 30, 2022, were $5,904,089, a significant increase of 156% compared to $2,305,537 for the same period in 2021 [16]. - The company's accumulated deficit as of June 30, 2022, was $33,725,624, up from $22,703,907 as of December 31, 2021, indicating a worsening financial position [23]. - Cash and cash equivalents decreased to $26,061,135 as of June 30, 2022, from $36,841,992 at the end of 2021, reflecting a cash burn rate due to operating losses [19]. - The company anticipates incurring additional losses until it can generate significant revenue from its product candidates currently in development [23]. - The company plans to commit substantial resources to research and development, preclinical and clinical trials, and potential product acquisitions [138]. - Cash used in operations was $10,780,857 for the six months ended June 30, 2022, compared to $4,877,749 for the same period in 2021, reflecting a significant increase in net loss and prepaid expenses [144]. Research and Development - Research and development expenses for the six months ended June 30, 2022, were $6,599,877, compared to $1,391,565 for the same period in 2021, marking a 373% increase [15]. - Research and development expenses increased by 929% to $3,258,471 for the three months ended June 30, 2022, primarily due to preclinical activities related to AnQlar and other product candidates [128]. - Total research and development expenses for specific programs reached $3,221,976 for the three months ended June 30, 2022, compared to $278,532 in the same period of 2021 [130]. - AnQlar is being developed as a viral barrier to prevent or reduce the risk of viral infections, with positive results from animal studies indicating inhibited viral replication [111]. - The company is focused on developing non-opioid and non-addictive pain management treatments and CNS disorder therapies [96]. - Probudur, an injectable bupivacaine liposomal hydrogel, is undergoing formulation enhancements to increase stability for manufacturing [100]. - Epoladerm, a Topical Spray Film Delivery Technology, aims to manage osteoarthritis pain with a focus on safety and effectiveness [104]. Capital and Financing - 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 for clinical development [26]. - The company completed an underwritten public offering on September 16, 2021, raising gross proceeds of $40 million, which were intended to support its operations [24]. - The company has not generated any revenue since its inception and continues to rely on capital raises to fund operations and R&D activities [22]. - The company anticipates significant operating losses for the foreseeable future and will require additional capital [93]. - The global pandemic has caused significant volatility in financial markets, impacting the company's ability to negotiate favorable financing terms [154]. Legal and Regulatory Matters - The company is involved in ongoing legal proceedings with Sorrento Therapeutics, with trial set for September 12 to 14, 2022 [164]. - The company plans to pursue an OTC regulatory pathway for AnQlar, which is expected to expedite drug development and approval processes [117]. - The Company has entered into a license agreement with LipoCureRx, Ltd. for exclusive global rights to develop and commercialize bupivacaine liposome, requiring an upfront fee of $150,000 and potential milestone payments of up to $19.8 million [71]. Operational Challenges - The company operates in a challenging macroeconomic environment, which may impact its financial stability and operational plans [25]. - The company is facing potential disruptions due to the ongoing COVID-19 pandemic, which may impact its financial condition and liquidity in 2022 and beyond [45]. - Disruptions from the pandemic may negatively impact the company's results of operations, financial condition, and liquidity in 2022 and potentially beyond [156]. Stock and Equity - The company had 1,187,872 stock options outstanding as of June 30, 2022, compared to 736,593 in the same period of 2021, marking an increase of about 61% [31]. - The total number of shares authorized for common stock issuance is 100,000,000, with a par value of $0.00001 per share [48]. - The company issued 1,800,000 shares of common stock related to its IPO, generating net proceeds of $15,783,207 [48]. - Unvested restricted stock awards decreased from 6,196 as of December 31, 2021, to 1,185 as of June 30, 2022, a decline of approximately 81% [53]. Internal Controls and Governance - Management evaluated the effectiveness of disclosure controls and procedures as of June 30, 2022, concluding they were effective at the reasonable assurance level [160]. - No changes in internal control over financial reporting occurred during the reporting period that materially affected internal control [161]. - There were no significant changes to critical accounting policies during the six months ended June 30, 2022 [158].