PART I: FINANCIAL INFORMATION Item 1. Financial Statements The company reported a significantly increased net loss of $11.5 million for the nine months ended September 30, 2021, driven by higher R&D and personnel costs Consolidated Balance Sheet Highlights (Unaudited) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $8,441,297 | $12,846,113 | | Total current assets | $10,992,175 | $14,050,237 | | Total Assets | $11,096,529 | $14,187,964 | | Liabilities & Equity | | | | Total current liabilities | $3,419,587 | $3,672,553 | | Total Liabilities | $3,469,475 | $3,735,482 | | Accumulated deficit | ($45,556,105) | ($34,061,836) | | Total stockholders' equity | $7,627,054 | $10,452,482 | Consolidated Statement of Operations Highlights (Unaudited) | Metric | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Revenues | $1,000,641 | $757,790 | | Research and development | $7,739,379 | $4,859,794 | | Total operating expenses | $12,497,385 | $7,037,732 | | Loss from operations | ($11,496,744) | ($6,279,942) | | Net Loss | ($11,494,269) | ($6,261,993) | | Basic and Diluted Net Loss per Share | ($1.90) | ($4.34) | Consolidated Statement of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($12,393,627) | ($5,478,838) | | Net cash provided by (used in) investing activities | $4,488 | ($27,259) | | Net cash provided by financing activities | $7,984,323 | $4,960,002 | | Net decrease in cash and cash equivalents | ($4,404,816) | ($546,095) | Notes to Consolidated Financial Statements The notes detail the company's clinical focus, significant liquidity challenges, and recent capital-raising activities to fund operations - The company is a clinical-stage biotechnology company developing cyclodextrin-based products, with its lead candidate, Trappsol® Cyclo™, in a pivotal Phase III study for Niemann-Pick Type C (NPC) disease and a Phase II program planned for Alzheimer's disease3234 - The company has incurred significant losses, with an accumulated deficit of approximately $45.6 million as of September 30, 2021, raising substantial doubt about the company's ability to continue as a going concern7174 - For the nine months ended September 30, 2021, four major customers accounted for 65% of total revenues, indicating significant customer concentration80 - Through September 30, 2021, the company raised approximately $8.0 million in gross proceeds from the exercise of warrants and established an Equity Distribution Agreement to potentially sell up to $20 million in common stock9598100 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses rising operating expenses and net losses alongside clinical trial progress, highlighting the critical need for additional capital Overview The company is advancing its lead drug candidate, Trappsol® Cyclo™, through late-stage clinical trials for NPC and preparing for a Phase II study in Alzheimer's disease - The company's lead drug candidate is Trappsol® Cyclo™ for the treatment of Niemann-Pick Type C disease (NPC), a rare and fatal cholesterol metabolism disease113 - In June 2021, the company commenced enrollment in TransportNPC™, a pivotal Phase III study of Trappsol® Cyclo™ for the treatment of NPC, with potential regulatory approval as early as 2023117 - The company is also developing Trappsol® Cyclo™ for Alzheimer's disease and intends to submit an IND to the FDA for a Phase II program in the second half of 2021120 Results of Operations Revenues grew 32% year-over-year for the nine-month period, but this was offset by significant increases in R&D, personnel, and professional fee expenses Revenue Comparison (Nine Months Ended Sep 30) | Period | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $1,001,000 | $758,000 | +32% | Operating Expense Comparison (Nine Months Ended Sep 30) | Expense Category | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Personnel | $2,770,000 | $1,328,000 | +109% | | Research & Development | $7,739,000 | $4,860,000 | +59% | | Professional Fees | $1,047,000 | $435,000 | +141% | | Office and Other | $800,000 | $306,000 | +161% | - The increase in personnel expense was due to moving the CFO to full-time, executive bonus accruals, and non-cash compensation from stock option awards135 - The increase in R&D expense is attributed to increased activity in the International Clinical Program and U.S. clinical trials, with costs expected to rise further with the Phase III trial136 Liquidity and Capital Resources The company's cash position has declined due to high operational cash burn for drug development, necessitating reliance on equity financing - Cash decreased to $8.4 million as of September 30, 2021, from $12.8 million at December 31, 2020, with cash used in operations at approximately $12.4 million for the nine months ended September 30, 2021140 - Subsequent to its December 2020 Public Offering, the company received gross proceeds of approximately $9.0 million from the exercise of warrants through September 30, 2021147 - The company will need to raise additional capital to support ongoing operations and clinical trials, which raises substantial doubt about its ability to continue as a going concern149 Critical Accounting Policies and Estimates No significant changes were made to the company's critical accounting policies during the third quarter of 2021 - There were no significant changes to the company's critical accounting policies during the quarter ended September 30, 2021155 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is not applicable to the company for this reporting period - The company stated that this item is not applicable157 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective with no material changes to internal controls - Based on an evaluation as of September 30, 2021, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective159 - No material changes were made to the company's internal control over financial reporting during the last fiscal quarter160 PART II: OTHER INFORMATION Item 1A. Risk Factors The company reports no new risk factors beyond those previously disclosed in its 2020 Annual Report on Form 10-K - No additional risk factors have been identified other than those included in the Annual Report on Form 10-K for the year ended December 31, 2020163 Item 6. Exhibits This section lists all exhibits filed with the report, including officer certifications and Inline XBRL data files - The exhibits filed with this 10-Q include certifications by the CEO and CFO, and Inline XBRL documents164
Cyclo Therapeutics(CYTH) - 2021 Q3 - Quarterly Report