iBio(IBIO) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and related notes, along with management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for iBio, Inc. and its subsidiaries, including the balance sheets, statements of operations and comprehensive loss, statements of equity (deficiency), and statements of cash flows, along with detailed notes explaining the company's business, accounting policies, and specific financial line items Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | Metric | September 30, 2020 (Unaudited) | June 30, 2020 (See Note 2) | | :-------------------------------- | :----------------------------- | :------------------------- | | Cash and cash equivalents | $77,543 | $55,112 | | Total Current Assets | $84,959 | $61,748 | | Total Assets | $117,254 | $94,189 | | Total Current Liabilities | $5,046 | $5,236 | | Total Liabilities | $37,212 | $37,582 | | Total Equity | $80,042 | $56,607 | - Total assets increased from $94.189 million at June 30, 2020, to $117.254 million at September 30, 2020, primarily driven by an increase in cash and cash equivalents and investments in debt securities[8] Condensed Consolidated Statements of Operations and Comprehensive Loss This section outlines the company's financial performance, including revenues, operating expenses, and net loss over specific periods Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | Three Months Ended September 30, 2020 | Three Months Ended September 30, 2019 | | :---------------------------------------------- | :------------------------------------ | :------------------------------------ | | Revenues | $410 | $108 | | Research and development | $1,762 | $977 | | General and administrative | $5,572 | $2,986 | | Total operating expenses | $7,334 | $3,963 | | Operating loss | $(6,924) | $(3,855) | | Consolidated net loss | $(7,534) | $(4,464) | | Net loss available to iBio, Inc. | $(7,599) | $(4,529) | | Loss per common share attributable to iBio, Inc. stockholders – basic and diluted | $(0.05) | $(0.21) | - Revenues significantly increased from $108,000 in Q3 2019 to $410,000 in Q3 2020. However, operating expenses also rose substantially, leading to a higher consolidated net loss of $7.534 million compared to $4.464 million in the prior year[11] Condensed Consolidated Statements of Equity (Deficiency) This section details changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Equity (Deficiency) (in thousands) | Metric | September 30, 2020 | July 1, 2020 | | :----------------------------------- | :----------------- | :----------- | | Common Stock (Shares) | 180,318 | 140,071 | | Common Stock (Amount) | $180 | $140 | | Additional Paid-In Capital | $237,867 | $206,931 | | Accumulated Deficit | $(157,953) | $(150,420) | | Total Equity | $80,042 | $56,607 | - Total equity increased from $56.607 million at July 1, 2020, to $80.042 million at September 30, 2020, primarily due to capital raises and common stock issuances, despite an increase in accumulated deficit[14] Condensed Consolidated Statements of Cash Flows This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Three Months Ended September 30, 2020 | Three Months Ended September 30, 2019 | | :-------------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | $(7,070) | $(2,287) | | Net cash used in investing activities | $(6,600) | $(30) | | Net cash provided by financing activities | $36,101 | $- | | Net increase (decrease) in cash | $22,431 | $(2,318) | | Cash - end of period | $77,543 | $2,103 | - The company experienced a significant net increase in cash of $22.431 million for the three months ended September 30, 2020, primarily driven by $36.101 million in financing activities, offsetting cash used in operating and investing activities[16] Notes to Condensed Consolidated Financial Statements This section provides detailed notes explaining the company's business, accounting policies, and specific financial line items Note 1. Nature of Business This note describes iBio, Inc.'s core business as a biotechnology company and biologics CDMO, focusing on its FastPharming System and product development pipeline - iBio, Inc. is a biotechnology company and biologics CDMO, utilizing its FastPharming System for rapid development and manufacturing of novel products for fibrotic diseases, cancers, infectious diseases, and 3D-bioprinting applications[18][193] - The company shifted its primary focus from CDMO business to biologics development programs, including new vaccines and therapeutics, during the second half of 2020[19][194] - CDMO Services: Process development, manufacturing, fill/finish, and bioanalytics using FastPharming System and Glycaneering Services[20][195] - Therapeutics: IBIO-100 for fibrotic diseases (orphan drug designation), ACE2-Fc fusion protein for COVID-19 (in-licensed)[23][197] - Vaccines: IBIO-200 (SARS-CoV-2 VLP antigen), IBIO-201 (LicKM-subunit vaccine for COVID-19), IBIO-400 (E2 antigen for classical swine fever)[24][198][199] - Research & Bioprocess Products: Protein scaffolds for 3D-bioprinting, cytokines, growth factors, and biomaterials[200][204] Note 2. Basis of Presentation This note explains the basis for preparing the unaudited condensed consolidated financial statements in accordance with U.S. GAAP and SEC rules - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and SEC Rule 8-03 of Regulation S-X[29] - Management believes the company has adequate cash ($83.6 million as of September 30, 2020, plus $3.0 million from subsequent stock sales) to support activities through fiscal year 2022, addressing prior going concern doubts[32] Note 3. Summary of Significant Accounting Policies This note outlines the key accounting policies applied, including revenue recognition, lease accounting, research and development costs, and cash management - Revenue recognition follows ASU 2014-09 (Topic 606), recognizing revenue when customers obtain control of promised goods or services. For the three months ended September 30, 2020, $410,000 was recognized at a point in time, compared to $61,000 in the prior year[37][42] - The company adopted ASU 2016-02 (ASC 842) for leases effective July 1, 2019, using a modified retrospective approach, which increased non-current assets and liabilities by recognizing Right-of-Use (ROU) assets and lease liabilities[49] - Research and development costs are expensed as incurred, and third-party R&D costs are expensed when contracted work is performed or milestones are achieved[58] - The company maintains cash balances in one financial institution, with approximately $57.162 million in excess of insured limits at September 30, 2020[67] - During the three months ended September 30, 2020, 100% of revenue came from two customers: Corteva Agriscience (50.5%) and AzarGen Biotechnologies (49.5%)[68] Note 4. Financial Instruments and Fair Value Measurement This note discusses the fair value measurements of the company's financial instruments, including cash, receivables, payables, and debt securities - The carrying values of cash, accounts receivable, accounts payable, and finance lease obligations approximated their fair values due to their short-term nature or market-approximated interest rates[74] - Investments in debt securities are classified as available-for-sale and valued using Level 2 inputs (observable market data for similar assets/liabilities)[75][76] Note 5. Investments in Debt Securities This note provides details on the company's investments in debt securities, including their fair value, adjusted cost, and maturity profiles Investments in Debt Securities (in thousands) | Metric | September 30, 2020 | | :---------------------- | :----------------- | | Adjusted cost | $6,017 | | Gross unrealized losses | $(7) | | Fair value | $6,010 | - Investments in debt securities, consisting of AA and A rated corporate bonds, had a fair value of $6.010 million as of September 30, 2020, with maturities ranging from April 2021 to August 2022[78] Note 6. Finance Lease ROU's This note details the company's finance lease right-of-use assets and their associated accumulated amortization Finance Lease ROU's (in thousands) | Metric | September 30, 2020 | June 30, 2020 | | :-------------------------- | :----------------- | :------------ | | ROU - Facility | $25,761 | $25,761 | | ROU - Equipment | $7,728 | $7,728 | | Accumulated amortization | $(6,288) | $(5,873) | | Net finance lease ROU | $27,201 | $27,616 | - Net finance lease ROU assets decreased slightly from $27.616 million at June 30, 2020, to $27.201 million at September 30, 2020, with amortization expense of $415,000 for the three months ended September 30, 2020[80] Note 7. Fixed Assets This note provides a breakdown of the company's fixed assets, including facility improvements, medical equipment, and accumulated depreciation Fixed Assets (in thousands) | Metric | September 30, 2020 | June 30, 2020 | | :-------------------------- | :----------------- | :------------ | | Facility improvements | $1,496 | $1,465 | | Medical equipment | $2,589 | $1,760 | | Office equipment and software | $453 | $398 | | Construction in progress | $146 | $787 | | Accumulated depreciation | $(850) | $(753) | | Net fixed assets | $3,834 | $3,657 | - Net fixed assets increased to $3.834 million at September 30, 2020, from $3.657 million at June 30, 2020, with depreciation expense of $97,000 for the quarter[82] Note 8. Intangible Assets This note details the company's intangible assets, including intellectual property and patents, along with their amortization Intangible Assets (in thousands) | Metric | September 30, 2020 | June 30, 2020 | | :----------------------------------- | :----------------- | :------------ | | Intellectual property – gross carrying value | $3,100 | $3,100 | | Patents – gross carrying value | $2,792 | $2,628 | | Accumulated amortization | $(4,656) | $(4,584) | | Net intangible assets | $1,236 | $1,144 | - Net intangible assets increased to $1.236 million at September 30, 2020, from $1.144 million at June 30, 2020, with amortization expense of $72,000 for the quarter[87] - Intangible assets include intellectual property (technology, know-how, data, protocols for plant-based protein production) and patents, amortized over 16-23 years and 10 years, respectively[83][85] Note 9. Notes Payable – PPP Loan This note describes the Paycheck Protection Program loan received by the company and its terms, including potential for forgiveness - The company received a $600,000 Paycheck Protection Program (PPP) loan on April 16, 2020, with $362,000 due in the next 12 months and $238,000 thereafter[88][89] - Forgiveness of the loan is dependent on SBA approval, and while expected, there is no certainty[88] Note 10. Finance Lease Obligation This note outlines the company's finance lease obligations, primarily for its Bryan, Texas facility and equipment, including future payment schedules - iBio CDMO leases its Bryan, Texas facility and equipment under a 34-year sublease expiring in 2050, with annual base rent of $2.1 million subject to CPI increases and percentage rent based on gross sales[90][91] Finance Lease Obligations (in thousands) | Metric | September 30, 2020 | | :-------------------------------------- | :----------------- | | Finance lease right-of-use assets | $27,201 | | Finance lease obligation – current portion | $306 | | Finance lease obligation - non-current portion | $31,928 | | Weighted average remaining lease term | 29.43 years | | Weighted average discount rate | 7.608% | Minimum Lease Payments | Fiscal period ending on September 30: | Principal | Interest | Total | | :------------------------------------ | :---------- | :---------- | :---------- | | 2021 | $306,334 | $2,443,666 | $2,750,000 | | 2022 | $330,312 | $2,419,688 | $2,750,000 | | 2023 | $356,167 | $2,393,833 | $2,750,000 | | 2024 | $384,046 | $2,365,954 | $2,750,000 | | 2025 | $414,106 | $2,335,894 | $2,750,000 | | Thereafter | $30,443,565 | $36,931,435 | $67,375,000 | | Total minimum lease payments | $32,234,530 | $48,890,470 | $81,125,000 | Note 11. Stockholders' Equity This note details the components of stockholders' equity, including authorized and outstanding shares, capital raises, and warrant conversions - The company has authorized 1 million shares of preferred stock and 275 million shares of common stock. As of November 16, 2020, 182.1 million common shares and one iBio CMO Preferred Tracking Stock share were outstanding[107][251] - All Series A, B, and C Convertible Preferred Stock were converted into common stock by September 30, 2020, eliminating these preferred share classes[100][103][106] - The company raised significant capital through equity offerings, including $68.97 million net proceeds from UBS Equity Distribution Agreement and $25.23 million gross proceeds from Lincoln Park March 2020 Purchase Agreement[217][218][250] - All Series A and B Warrants were exchanged for common stock and promissory notes, resulting in no outstanding warrants as of September 30, 2020[141][144] Note 12. Earnings (Loss) Per Common Share This note presents the calculation of basic and diluted earnings (loss) per common share, reflecting net loss and weighted-average shares outstanding Earnings (Loss) Per Common Share (in thousands, except per share data) | Metric | Three Months Ended September 30, 2020 | Three Months Ended September 30, 2019 | | :---------------------------------------------- | :------------------------------------ | :------------------------------------ | | Net loss available to iBio, Inc. stockholders | $(7,599) | $(4,529) | | Weighted-average common shares outstanding | 162,442 | 21,923 | | Per share amount | $(0.05) | $(0.21) | - Basic and diluted loss per common share was $(0.05) for the three months ended September 30, 2020, an improvement from $(0.21) in the prior year, despite a higher net loss, due to a significant increase in weighted-average common shares outstanding[146][147] Note 13. Share-Based Compensation This note describes the company's share-based compensation plans and the associated expense recognized for stock options and other equity awards Share-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended September 30, 2020 | Three Months Ended September 30, 2019 | | :------------------------ | :------------------------------------ | :------------------------------------ | | Research and development | $47 | $7 | | General and administrative | $304 | $61 | | Total | $351 | $68 | - Total share-based compensation expense increased significantly to $351,000 for the three months ended September 30, 2020, from $68,000 in the prior year, primarily in general and administrative expenses[148] - The 2018 Omnibus Equity Incentive Plan was amended to increase authorized shares to 6.5 million and include restricted stock units and performance-based awards[150] - A new 2020 Omnibus Equity Incentive Plan, seeking shareholder approval, proposes 32 million reserved shares and expanded award types, with non-employee director award limits[156] Note 14. Related Party Transactions This note discloses transactions and agreements with related parties, including consulting services and joint venture arrangements - Research and development expenses related to Novici Biotech, LLC (where iBio's President is a minority stockholder) decreased from $97,000 in Q3 2019 to $0 in Q3 2020[157] - The company has ongoing agreements with Eastern Capital Limited and its affiliates, including a contract manufacturing joint venture (iBio CDMO) and a 34-year sublease for the Bryan, Texas facility[159][160] - Consulting expenses for KBI Consulting (Mr. Isett's wife) totaled $17,000 for Q3 2020, up from $0 in Q3 2019[166] - TechCXO LLC was retained in July 2020 for interim principal financial officer services, incurring $191,000 in consulting expenses for Q3 2020[167] Note 15. Income Taxes This note explains the company's income tax position, including the absence of tax expense and the valuation allowance against deferred tax assets - The company recorded no income tax expense for the three months ended September 30, 2020 and 2019, maintaining a valuation allowance against net deferred tax assets due to the unlikelihood of realization[168] Note 16. Commitments and Contingencies This note outlines the company's significant commitments and contingencies, including the impact of the COVID-19 pandemic and license agreements - The COVID-19 pandemic has caused reduced CDMO capacity and a three-day operational shutdown in April 2020, but the company does not anticipate significant future threats to operations or liquidity[169][170] - iBio entered an exclusive worldwide license agreement with Planet Biotechnology Inc. for the COVID-19 therapeutic candidate ACE2-F, making an upfront payment of $150,000 and committing to future milestone payments up to $5.15 million[172][173][174] Note 17. Employee 401(K) Plan This note details the company's contributions to its employee 401(K) retirement plan - Employer contributions to the 401(K) Plan totaled $32,000 for the three months ended September 30, 2020, a slight increase from $30,000 in the prior year[182] Note 18. Segment Reporting This note provides financial information disaggregated by the company's operating segments: biologics development and licensing, and CDMO - The company operates in two segments: biologics development and licensing (iBio, Inc.) and CDMO (iBio CDMO)[183] Segment Reporting (in thousands) | Metric (in thousands) | iBio, Inc. (Q3 2020) | iBio CDMO (Q3 2020) | Total (Q3 2020) | | :-------------------- | :------------------- | :------------------ | :-------------- | | Revenues – external | $207 | $203 | $410 | | Operating loss | $(2,569) | $(4,355) | $(6,924) | | Consolidated net loss | $(2,566) | $(4,968) | $(7,534) | | Total assets | $132,207 | $33,320 | $117,254 | - For Q3 2020, iBio CDMO reported a higher operating loss ($4.355 million) and consolidated net loss ($4.968 million) compared to iBio, Inc.'s biologics segment[184] Note 19. Compliance to Satisfy a Continued Listing Rule or Standard This note addresses the company's compliance with NYSE American continued listing standards, including market capitalization and equity requirements - On October 1, 2020, the company regained compliance with all NYSE American continued listing standards by meeting the $50 million market capitalization exemption[186] - Previously, the company received notifications regarding non-compliance with stockholders' equity and low share price standards, which were resolved by June 9, 2020, for the share price and October 1, 2020, for equity standards[185][186] Note 20. Subsequent Events This note discloses significant events that occurred after the balance sheet date, such as new agreements and investments - On October 1, 2020, iBio entered a master services agreement with Safi Biosolutions, Inc. to evaluate its FastPharming System for expressing key proteins in blood cell therapy bioprocessing[188] - iBio also invested $1.5 million in Safi via a convertible promissory note bearing 5% interest, maturing October 1, 2023[189] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for the three months ended September 30, 2020, compared to the same period in 2019, highlighting key financial changes, recent business developments, liquidity, and critical accounting policies Overview This section provides a high-level summary of iBio's business as a biotechnology company and CDMO, highlighting its FastPharming System and product pipeline - iBio is a biotechnology company and CDMO, leveraging its FastPharming System for rapid development of novel products for fibrotic diseases, cancers, infectious diseases, and 3D-bioprinting[193] - The company shifted its primary focus to biologics development programs, including new vaccines and therapeutics, during the second half of 2020[194] - CDMO Services: Process development and manufacturing of protein products in plants using FastPharming System[195] - Therapeutics: IBIO-100 for fibrotic diseases, ACE2-Fc fusion protein for COVID-19[197][198] - Vaccines: IBIO-200 and IBIO-201 for SARS-CoV-2, IBIO-400 for classical swine fever[199][200] - Research & Bioprocess Products: Protein scaffolds for 3D-bioprinting, cytokines, growth factors, and biomaterials[204] Recent Developments This section outlines key corporate and product development updates, including equity agreements, licensing deals, and vaccine candidate selection - The Equity Distribution Agreement with UBS Securities LLC was amended on July 29, 2020, increasing the potential sale of common stock by $27 million to an aggregate gross sale price of $72 million[201] - iBio entered an exclusive worldwide license agreement with Planet Biotechnology Inc. on August 28, 2020, for the development of Planet's COVID-19 therapeutic candidate, ACE2-F[202] - IBIO-201 was selected as the lead candidate for SARS-CoV-2 prevention in September 2020, based on preclinical studies showing strong anti-spike neutralizing antibody production[203] - On October 1, 2020, iBio partnered with Safi Biosolutions, Inc. to evaluate its FastPharming System for bioprocessing blood cell therapy products and invested $1.5 million in Safi via a convertible promissory note[204] Results of Operations - Comparison of Three Months ended September 30, 2020 and September 30, 2019 This section analyzes the company's financial performance for the three months ended September 30, 2020, compared to the prior year, focusing on revenue and expense changes Results of Operations Comparison | Metric | Three Months Ended September 30, 2020 | Three Months Ended September 30, 2019 | Change ($) | Change (%) | | :---------------------------------------------- | :------------------------------------ | :------------------------------------ | :--------- | :--------- | | Revenues | $410,000 | $108,000 | $302,000 | 279.6% | | Research and Development Expenses | $1,762,000 | $977,000 | $785,000 | 80.3% | | General and Administrative Expenses | $5,572,000 | $2,986,000 | $2,586,000 | 86.6% | | Total Operating Expenses | $7,334,000 | $3,963,000 | $3,371,000 | 85.1% | | Operating Loss | $(6,924,000) | $(3,855,000) | $(3,069,000)| 79.6% | | Net Loss Attributable to iBio, Inc. | $(7,533,000) | $(4,463,000) | $(3,070,000)| 68.8% | | Loss per common share attributable to iBio, Inc. stockholders – basic and diluted | $(0.05) | $(0.21) | $0.16 | -76.2% | - Revenue increased by $302,000 (279.6%) due to completion of deliverables for Corteva Agriscience and AzarGen Biotechnologies[205] - R&D expenses increased by $785,000 (80.3%) due to higher laboratory consumables, supplies, and personnel costs, partially offset by reduced payments to Novici[206] - G&A expenses increased by $2,586,000 (86.6%) primarily due to increases in professional and consulting fees, facility repairs, board fees, and personnel costs[207] Liquidity and Capital Resources This section discusses the company's cash position, sources and uses of cash, and overall financial resources available for operations Cash Flow Summary | Metric | Three Months Ended September 30, 2020 | Three Months Ended September 30, 2019 | | :-------------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | $(7,070,000) | $(2,287,000) | | Net cash used in investing activities | $(6,600,000) | $(30,000) | | Net cash provided by financing activities | $36,101,000 | $- | - Cash and cash equivalents plus debt securities totaled $83.6 million as of September 30, 2020, up from $55.1 million at June 30, 2020[214] - Net cash provided by financing activities was $36.101 million, primarily from the UBS Equity Distribution Agreement and Lincoln Park March 2020 Purchase Agreement[217] Funding Requirements This section addresses the company's historical losses, future capital needs, and strategies for funding operations through commercialization and equity offerings - The company has incurred significant losses and negative cash flows, with an accumulated deficit of approximately $158.0 million as of September 30, 2020[219] - Management believes current cash resources of $83.6 million (plus $3.0 million from subsequent stock sales) are sufficient to fund operations through fiscal year 2022, mitigating prior going concern doubts[220] - Future funding will rely on commercialization of technologies, license/collaboration arrangements, CDMO operations, and additional equity sales, with risks of dilution or operational scaling back if funds are not available[221] Off-Balance Sheet Arrangements This section confirms the absence of any off-balance sheet arrangements or special purpose entities as of the reporting date - As of September 30, 2020, the company was not involved in any off-balance sheet arrangements or special purpose entities[223] Critical Accounting Policies and Estimates This section highlights the accounting policies that require significant management judgment and estimates, which could impact the financial statements - Valuation of intellectual property - Revenue recognition - Lease accounting - Legal and contractual contingencies - Research and development expenses - Share-based compensation expenses[227] - The preparation of financial statements requires management to make estimates and assumptions, which, if actual results differ, could materially affect the condensed consolidated financial statements[225][226] Item 3 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, iBio, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a smaller reporting company[228] Item 4. Controls and Procedures Management evaluated the effectiveness of disclosure controls and procedures, concluding they were effective as of September 30, 2020, after remediating a previously identified material weakness related to the timely recording of common stock sales - Management concluded that disclosure controls and procedures were effective as of September 30, 2020, providing reasonable assurance[229] - A material weakness in controls over recording common stock sales, identified in prior periods, was remediated through retention of consultants and implementation of additional, timely procedures[229][230][231] - No other changes in internal control over financial reporting materially affected or are reasonably likely to materially affect internal control during the quarter ended September 30, 2020[232] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, other information, exhibits, and required signatures for the report Item 1. Legal Proceedings This section details ongoing legal proceedings, primarily a lawsuit against Fraunhofer USA, Inc. regarding intellectual property ownership and contract breaches - iBio is engaged in ongoing litigation against Fraunhofer USA, Inc. for material and continuing breaches of contracts, with the court ruling in iBio's favor on the scope of technology ownership[177][234] - On September 25, 2020, the court granted in part and denied in part Fraunhofer's motion for summary judgment, allowing iBio's claims for declaratory judgment, breach of contract, misappropriation of trade secrets, tortious interference, and deceptive trade practices to proceed to trial[179][236] - The case is set for trial from March 1 to 5, 2021, and the company is unable to predict the further outcome at this time[181][238] Item 1A. Risk Factors This section updates the risk factors, emphasizing the risks associated with customer concentration, the company's history of significant losses and need for additional capital, and potential dilution from future equity offerings - The company faces significant risk from customer concentration, with 100% of its revenue for the three months ended September 30, 2020, derived from just two customers: Corteva Agriscience (50.5%) and AzarGen Biotechnologies (49.5%)[241][242] - iBio has incurred substantial operating losses and negative cash flows since inception, with an accumulated deficit of approximately $158.0 million as of September 30, 2020, and expects to incur losses for at least the next year[244][245] - Future equity offerings could lead to substantial dilution for existing stockholders, and the sale of a large number of shares could negatively impact the stock price and future fundraising ability[247][252] Item 5. Other Information This section discloses that the Board of Directors ratified the issuance of certain stock options, which were determined to be defective corporate acts, under Section 204 of the General Corporation Law of the State of Delaware - On November 13, 2020, the Board of Directors ratified the issuance of certain stock options, acknowledging they were defective corporate acts in contravention of Section 157(c) of Delaware law[253] - Any claim challenging the ratification of these defective corporate acts must be brought within 120 days from the filing date of this report[253] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including amendments to agreements, corporate organizational documents, certifications, and resolutions related to option grants - The exhibits include Amendment No. 1 to the Equity Distribution Agreement, Certificate of Incorporation amendments, First Amended and Restated Bylaws, various certifications (CEO, PFO), and Resolutions adopted by the Board of Directors Ratifying Option Grants[254] SIGNATURES This section contains the required signatures of the registrant's authorized officers, including the Chairman and Chief Executive Officer and the Principal Accounting Officer, certifying the filing of the report - The report is signed by Thomas F. Isett, Chairman and Chief Executive Officer, and John Delta, Principal Accounting Officer (Principal Financial Officer and Principal Accounting Officer), on November 16, 2020[256][257]