Indaptus Therapeutics(INDP) - 2025 Q2 - Quarterly Report

Filing Information - The report is a Quarterly Report on Form 10-Q for the period ended June 30, 2025, filed by INDAPTUS THERAPEUTICS, INC., a Delaware corporation[2] - The company's common stock trades on the Nasdaq Capital Market under the symbol INDP[3] - The registrant is classified as a non-accelerated filer and a smaller reporting company[4] Cautionary Note Regarding Forward-Looking Statements - This Quarterly Report contains forward-looking statements about product development, clinical trials, market potential, business strategy, and financial condition[7] - These statements are predictions based on current expectations and projections, subject to known and unknown risks, uncertainties, and assumptions, and actual results may differ materially[8][9] - The company does not plan to publicly update or revise any forward-looking statements unless required by applicable law[10] Summary Risk Factors - The company is a clinical-stage entity with a limited operating history, is not currently profitable, and may never become profitable[12] - Substantial doubt exists regarding the company's ability to continue as a going concern, necessitating additional capital raises which could dilute existing shareholders[12][13] - Clinical and preclinical development is lengthy and expensive with uncertain outcomes, and the commercial success of product candidates depends on market acceptance and adequate reimbursement[13] PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Indaptus Therapeutics, Inc., including the Balance Sheets, Statements of Operations and Comprehensive Loss, Statements of Stockholders' Equity, Statements of Cash Flows, and accompanying notes, covering the periods ended June 30, 2025, and December 31, 2024 (for balance sheet) or June 30, 2024 (for income statement and cash flow) Unaudited Condensed Consolidated Balance Sheets Unaudited Condensed Consolidated Balance Sheets (Selected Data) | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------ | :---------------- | :--------- | :--------- | | Cash and cash equivalents | $6,157,701 | $5,786,753 | $370,948 | 6.4% | | Total current assets | $6,413,058 | $6,618,330 | $(205,272) | (3.1)% | | Total assets | $6,839,207 | $7,338,756 | $(499,549) | (6.8)% | | Total current liabilities | $8,512,563 | $3,393,881 | $5,118,682 | 150.8% | | Fair value of convertible promissory notes | $6,502,503 | $- | $6,502,503 | N/A | | Total stockholders' equity (deficit) | $(1,673,356) | $3,944,875 | $(5,618,231) | (142.4)% | Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss Unaudited Condensed Consolidated Statements of Operations (Selected Data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Research and development | $2,167,114 | $1,713,973 | $453,141 | 26.4% | | General and administrative | $2,289,649 | $2,394,912 | $(105,263) | (4.4)% | | Total operating expenses | $4,456,763 | $4,108,885 | $347,878 | 8.5% | | Net loss | $(5,228,919) | $(4,015,267) | $(1,213,652) | 30.2% | | Net loss per share, basic and diluted | $(9.09) | $(13.16) | $4.07 | (30.9)% | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Research and development | $4,977,954 | $3,305,115 | $1,672,839 | 50.6% | | General and administrative | $4,051,368 | $4,747,009 | $(695,641) | (14.7)% | | Total operating expenses | $9,029,322 | $8,052,124 | $977,198 | 12.1% | | Net loss | $(9,761,349) | $(7,821,944) | $(1,939,405) | 24.8% | | Net loss per share, basic and diluted | $(18.09) | $(25.79) | $7.70 | (29.9)% | Unaudited Condensed Consolidated Statements of Stockholders' Equity Total Stockholders' Equity (Deficit) | Date | Total Stockholders' Equity (Deficit) | | :------------------- | :----------------------------------- | | January 1, 2025 | $3,944,875 | | March 31, 2025 | $2,799,731 | | June 30, 2025 | $(1,673,356) | - The decrease in equity was primarily driven by a net loss of $(9,761,349) for the six months ended June 30, 2025, partially offset by approximately $3.72 million from the issuance of common stock and warrants[20][23] Unaudited Condensed Consolidated Statements of Cash Flows Unaudited Condensed Consolidated Statements of Cash Flows (Selected Data) | Cash Flow Activity (Six Months Ended June 30) | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------------------ | :----------- | :----------- | :--------- | :--------- | | Net cash used in operating activities | $(9,065,316) | $(6,414,413) | $(2,650,903) | 41.3% | | Net cash provided by financing activities | $9,436,264 | $354,111 | $9,082,153 | 2564.7% | | Net increase (decrease) in cash and cash equivalents | $370,948 | $(6,060,302) | $6,431,250 | (106.1)% | | Cash and cash equivalents at end of period | $6,157,701 | $7,301,751 | $(1,144,050) | (15.7)% | Notes to Unaudited Condensed Consolidated Financial Statements - The company is a biotechnology firm focused on developing anti-cancer and anti-viral immunotherapy, facing risks typical of its industry, including the need for additional capital[29][30] - The company incurred a net loss of approximately $9.8 million and used $9.1 million cash in operations for the six months ended June 30, 2025, resulting in an accumulated deficit of $70.2 million, raising substantial doubt about its ability to continue as a going concern[31][32] - On June 26, 2025, the company effected a 1-for-28 reverse stock split to regain Nasdaq compliance, reducing outstanding common stock from 16,946,528 shares to 604,963 shares[33] - In June 2025, the company issued convertible promissory notes totaling approximately $5.7 million, which automatically converted into 501,566 common shares and 190,795 pre-funded warrants on July 27, 2025, at a conversion price of $8.3024 per share[31][58][61] - As of June 30, 2025, the fair value of the convertible notes was $6.5 million, resulting in a recognized increase in fair value of approximately $0.8 million for the three and six months ended June 30, 2025[48][64] - The company operates in a single business segment focused on immunotherapy development, with the CEO as the chief operating decision maker[68] - Subsequent to June 30, 2025, the conversion of the convertible notes into equity is expected to help the company satisfy Nasdaq's minimum shareholders' equity requirement of $2.5 million[71] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results for the periods presented. It covers the company's business overview, clinical development progress of Decoy20, detailed analysis of operating expenses, liquidity, and future funding requirements, emphasizing the ongoing need for capital and the associated risks Overview - Indaptus Therapeutics is a clinical biotechnology company developing Decoy20, a novel systemically-administered anti-cancer and anti-viral immunotherapy[76] - The Phase 1 clinical trial for Decoy20 in advanced solid tumors has progressed through single-dose and weekly dosing, observing generally anticipated transient adverse events (e.g., hemodynamic changes, transaminase elevations, lymphopenia) and transient induction of over 50 biomarkers[77][78][79][82] - The company initiated a combination study of Decoy20 with BeOne's anti-PD-1 antibody, Tislelizumab, in June 2025, building on preclinical results showing tumor eradication synergy[83] Components of Operating Results - Research and development expenses, primarily for CROs, CMOs, and personnel, are expensed as incurred and are expected to increase substantially with ongoing clinical development[86][87][88] - General and administrative expenses, including compensation, benefits, and professional fees, are expected to increase due to business growth and public company operating costs[90][91] - Other income, net, primarily includes interest earned on cash and cash equivalents[92] Results of Operations Operating Results Comparison (Three Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :------------------------- | :----------- | :----------- | :--------- | :--------- | | Research and development | $2,167,114 | $1,713,973 | $453,141 | 26.4% | | General and administrative | $2,289,649 | $2,394,912 | $(105,263) | (4.4)% | | Net loss | $(5,228,919) | $(4,015,267) | $(1,213,652) | 30.2% | Operating Results Comparison (Six Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :------------------------- | :----------- | :----------- | :--------- | :--------- | | Research and development | $4,977,954 | $3,305,115 | $1,672,839 | 50.6% | | General and administrative | $4,051,368 | $4,747,009 | $(695,641) | (14.7)% | | Net loss | $(9,761,349) | $(7,821,944) | $(1,939,405) | 24.8% | Liquidity and Resources - The company has funded operations primarily through public and private equity offerings[104] - Recent financing activities include a $5.7 million private placement of convertible notes (June 2025), $1.75 million net from a Standby Equity Purchase Agreement (February 2025), and $2.25 million gross from a private placement of common stock and warrants (January 2025)[105][106][107] - As of June 30, 2025, cash and cash equivalents were approximately $6.2 million, expected to fund operations into the fourth quarter of 2025, but substantial doubt about the company's ability to continue as a going concern persists without additional financing[109] Cash Flows - Net cash used in operating activities increased to approximately $9.1 million for the six months ended June 30, 2025, up from $6.4 million in the prior year, mainly due to higher R&D and transaction-related expenses[111] - Net cash provided by financing activities surged to approximately $9.4 million for the six months ended June 30, 2025, from $0.4 million in the prior year, primarily from convertible notes and equity/warrant issuances[112] Funding Requirements - Operating expenses are expected to continue increasing due to clinical development and potential commercialization activities[113] - A cost-reduction plan was implemented in May 2025, focusing on the Combination Study, eliminating non-essential expenses, and temporary salary/board fee reductions[114] - Future capital requirements are highly dependent on the scope and costs of preclinical/clinical trials, regulatory approvals, intellectual property, manufacturing, and market conditions, with no guarantee of securing adequate additional financing[115][116] Contractual Obligations - Total minimum operating lease payments for 2025 are $34,745, with a present value of operating lease liability of $34,373[66] - The company has no off-balance sheet arrangements[118] Critical Accounting Policies - No material changes to Critical Accounting Policies from those discussed in the 2024 Annual Report on Form 10-K[120] Recently Issued Accounting Pronouncements - Refer to Note 2 of the financial statements for details on Recently Issued Accounting Pronouncements[121] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Indaptus Therapeutics, Inc. is exempt from providing quantitative and qualitative disclosures about market risk under SEC rules - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[122] Item 4. Controls and Procedures Management, including the principal executive and financial officers, evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of June 30, 2025[124] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[125] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings or claims that are expected to significantly impact its business, financial position, or operating results - No pending material legal proceedings or claims against the company that are expected to have a significant effect on its business, financial position, or operating results[128] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Form 10-K filed on March 13, 2025 - No material changes to risk factors from those disclosed in the Form 10-K filed on March 13, 2025[129] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item reports that there were no unregistered sales of equity securities or use of proceeds to disclose for the period - No unregistered sales of equity securities and use of proceeds to report[130] Item 3. Defaults Upon Senior Securities This item is not applicable to the company for the reporting period - This item is not applicable[131] Item 4. Mine Safety Disclosures This item is not applicable to the company for the reporting period - This item is not applicable[132] Item 5. Other Information During the three months ended June 30, 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[133] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including corporate organizational documents (e.g., Certificate of Incorporation, Bylaws) and certifications from executive officers - Exhibits include amendments to the Certificate of Incorporation, Amended and Restated Bylaws, and certifications from the Principal Executive Officer and Principal Financial Officer[134] SIGNATURES - The report is signed by Jeffrey A. Meckler, Chief Executive Officer, and Nir Sassi, Chief Financial Officer, on August 13, 2025[136]