Processa Pharmaceuticals(PCSA) - 2025 Q1 - Quarterly Report

Part I. Financial Information Financial Statements Unaudited Q1 2025 financial statements show a $2.83 million net loss and increased assets, raising going concern doubts Condensed Consolidated Balance Sheets (unaudited) | | March 31, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $2,897,072 | $1,191,325 | | Total Current Assets | $3,757,886 | $1,873,619 | | Total Assets | $4,809,574 | $3,229,289 | | Liabilities and Stockholders' Equity | | | | Total Current Liabilities | $1,282,966 | $1,532,631 | | Total Liabilities | $1,282,966 | $1,533,118 | | Total Stockholders' Equity | $3,526,608 | $1,696,171 | | Total Liabilities and Stockholders' Equity | $4,809,574 | $3,229,289 | Condensed Consolidated Statements of Operations (unaudited) | | Three months ended March 31, 2025 ($) | Three months ended March 31, 2024 ($) | | :--- | :--- | :--- | | Research and development expenses | $1,588,540 | $1,539,070 | | General and administrative expenses | $1,258,450 | $1,270,528 | | Operating Loss | ($2,846,990) | ($2,809,598) | | Net Loss | ($2,834,405) | ($2,726,381) | | Net Loss Per Common Share - Basic and Diluted | ($0.30) | ($1.11) | Condensed Consolidated Statements of Cash Flows (unaudited) | | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | ($2,729,848) | ($2,048,884) | | Net cash provided by financing activities | $4,435,595 | $6,263,050 | | Net Increase (Decrease) in Cash | $1,705,747 | $4,214,166 | | Cash and Cash Equivalents - End of Period | $2,897,072 | $8,920,363 | - The company has incurred losses since inception, with an accumulated deficit of $90.1 million as of March 31, 2025. Management has expressed substantial doubt about the company's ability to continue as a going concern for one year, as current cash of $2.9 million is only expected to fund operations into mid-2025[22][24][27] - In January 2025, the company raised net proceeds of $4.4 million from a public offering of common stock and various warrants[23][36] Management's Discussion and Analysis of Financial Condition and Results of Operations Q1 2025 saw a net loss of $2.8 million and increased R&D expenses, with current cash only funding operations into mid-2025, necessitating additional financing - The company's strategy is to develop Next Generation Cancer (NGC) therapies by modifying existing, well-understood cancer drugs to improve their therapeutic effect and reduce toxicity. The pipeline includes NGC-Cap, NGC-Gem, and NGC-Iri[58][59] Comparison of Operations for the three months ended March 31, | | 2025 ($) | 2024 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Research and development expenses | $1,588,540 | $1,539,070 | $49,470 | | General and administrative expenses | $1,258,450 | $1,270,528 | ($12,078) | | Net Loss | ($2,834,405) | ($2,726,381) | ($108,024) | - R&D expenses increased slightly due to higher preclinical and clinical trial costs for NGC-Cap's Phase 1B and Phase 2 trials, partially offset by a decrease in salaries from employee departures[67] - G&A expenses decreased slightly, primarily due to lower professional fees, offset by salary increases for C-suite executives and higher stock-based compensation expense[71] - The company's cash and cash equivalents of $2.9 million as of March 31, 2025, are projected to fund operations only into mid-2025, raising substantial doubt about its ability to continue as a going concern without securing additional funding[80][81] - Net cash used in operating activities increased by approximately $681,000 in Q1 2025 compared to Q1 2024, primarily due to increased clinical trial costs and a paydown of accounts payable[76] Quantitative and Qualitative Disclosures about Market Risk This section is not applicable as the company qualifies as a smaller reporting company - As a smaller reporting company, this item is not applicable and has been omitted[91] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[92] - There were no changes in internal control over financial reporting during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control[93] Part II. Other Information Legal Procedures The company is involved in two significant legal proceedings: a dispute with Elion Oncology, Inc. over a license agreement and a lawsuit alleging fraud from a 2021 private offering - The company is in a legal dispute with Elion Oncology, Inc. regarding the termination of a license agreement. The company believes Elion's claims are without merit and has filed a complaint seeking damages and injunctive relief[94] - A lawsuit was filed against the company by two investors from a February 2021 private offering, alleging fraud and negligent misrepresentation. The company has filed a motion to dismiss the complaint[96] Risk Factors This section updates risk factors, highlighting potential FDA disruptions and Nasdaq delisting risk due to failing to maintain the minimum bid price - A new risk factor was added concerning potential disruptions at the FDA, such as funding cuts and staffing issues, which could hinder the timely approval of new products[99][100] - On February 4, 2025, the company received a deficiency letter from Nasdaq for failing to maintain a minimum bid price of $1.00 per share. The company has until August 4, 2025, to regain compliance[101] - Potential delisting from Nasdaq could lead to significant adverse consequences, including reduced liquidity, classification as a "penny stock," and a decreased ability to obtain future financing[101][108] Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2025, the company issued 6,252 shares of common stock to Berg Capital Markets, LLC as part of a consulting agreement, relying on registration exemptions - During the quarter ended March 31, 2025, the company issued 6,252 shares of common stock to Berg Capital Markets, LLC in connection with a consulting agreement[103] - The shares were issued as restricted securities, exempt from registration requirements in reliance on Section 4(a)(2) of the Securities Act[103] Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[104] Mine Safety Disclosures This item is not applicable to the company - Not applicable[105] Other Information During Q1 2025, no directors or officers adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the three months ended March 31, 2025[106] Exhibits This section lists the exhibits filed with the Form 10-Q, including warrants, agreements related to the January 2025 financing, and officer certifications - The report includes exhibits related to the January 2025 public offering, such as the forms for Series A and B Common Warrants, Pre-Funded Warrants, the Securities Purchase Agreement, and the Placement Agency Agreement[107][109] - Certifications by the Principal Executive Officer and Principal Financial Officer are also filed as exhibits[109]