Financial Performance - Revenues for the three months ended September 30, 2023, were $853,102, a decrease of 53% from $1.8 million in the same period of 2022[86]. - The net loss for the three months ended September 30, 2023, was $4,938,641, compared to a net loss of $3,914,194 in Q3 2022[85]. - Cash used in operating activities increased from $6.6 million in 2022 to $18.6 million in 2023, reflecting a net loss of $14.3 million in 2023[121][123]. - Cash provided by investing activities decreased from $14.8 million in 2022 to $7.5 million in 2023, with $10.0 million from short-term investments maturing in 2023[124][125]. - Cash provided by financing activities dropped significantly from $6.3 million in 2022 to $716 in 2023, primarily due to the repayment of principal under the 2022 Loan Agreement[126]. - The net increase in cash and cash equivalents turned negative, decreasing from $14.5 million in 2022 to a decrease of $11.1 million in 2023[121]. - As of September 30, 2023, the company had cash and cash equivalents of $11.2 million and a deposit for interest reserve of $5.3 million[131]. - The company believes its cash and cash equivalents will be sufficient to meet capital requirements for at least the next 12 months[119]. Research and Development - In a Phase 1 clinical trial of HCW9218, 50% of patients evaluated showed stable disease lasting over 6 months, with 66% of ovarian cancer patients demonstrating similar results[69]. - HCW9218 significantly reduced blood levels of TGF-β in cancer patients in a dose-dependent manner, promoting NK and T cell proliferation without causing cytokine release syndrome[69]. - The company plans to submit an Investigational New Drug application for HCW9302 in the fourth quarter of 2023, targeting autoimmune diseases[67]. - HCW9218 is designed to enhance the effectiveness of chemotherapy and immune checkpoint inhibitors by addressing exhausted T cells and reducing immunosuppressive factors[64][65]. - The company anticipates completing the Phase 1b portion of the pancreatic cancer study in late 2023 or early 2024, with a human data readout expected in the first half of 2024[92]. - The company expects research and development expenses to increase substantially in the foreseeable future as product candidates continue to be developed[77]. Expenses and Costs - Research and development expenses decreased by $981,352, or 37%, from $2.6 million for the three months ended September 30, 2022, to $1.7 million for the same period in 2023[88]. - Manufacturing and materials expenses decreased by $545,795, or 73%, from $751,945 in Q3 2022 to $206,150 in Q3 2023[89]. - General and administrative expenses increased by $1.9 million, or 107%, from $1.7 million for the three months ended September 30, 2022, to $3.6 million for the same period in 2023[94]. - Clinical trial expenses increased by $51,545, or 18%, from $292,276 in Q3 2022 to $343,821 in Q3 2023[91]. - Total operating expenses for the three months ended September 30, 2023, were $5,252,657, an increase from $4,381,460 in the same period of 2022[85]. - General and administrative expenses increased by $4.4 million, or 83%, from $5.3 million for the nine months ended September 30, 2022, to $9.7 million for the same period in 2023[107]. - Research and development expenses decreased by $868,434, or 14%, from $6.4 million for the nine months ended September 30, 2022, to $5.5 million for the same period in 2023[102]. - Clinical trial expenses increased by $301,124, or 62%, from $486,992 for the nine months ended September 30, 2022, to $788,116 for the same period in 2023[106]. Legal and Regulatory Matters - Legal expenses related to ongoing litigation are expected to continue to incur material costs through the end of 2023 and into 2024[80]. - The company continues to assess the impact of ongoing clinical trials and regulatory reviews on its financial performance[122]. Capital and Financing - The company expects to draw down funds under the 2023 Loan Agreement, with a maximum loan amount of $26.3 million, primarily for the renovation of its new headquarters and repayment of previous borrowings[73]. - The 2023 Loan Agreement allows the company to draw up to $26.3 million, with funds expected to be drawn over the next ten months[116]. - The company intends to raise capital through additional debt or equity financings and is focused on business development transactions[114]. - The company purchased a 36,000 square foot building for approximately $10.1 million, funded partially by a $6.5 million loan[115]. Market and Operational Challenges - The company has been impacted by inflationary pressures and global supply chain disruptions, employing strategies like product redesign and alternate sourcing to navigate these challenges[70]. - The company is exposed to market risk related to interest rate sensitivity and the marketability of its common stock[131]. Intellectual Property - The company was granted two patents in August 2023 related to methods for promoting the activation and proliferation of NK and T cells[73]. - The company has retained manufacturing rights and will provide Wugen with clinical and research grade materials for the development of licensed products[72]. Product Development - HCW9218 has shown potential to convert 'cold' tumors into 'hot' tumors, indicating its utility in combination with standard-of-care anti-cancer therapies[63].
HCW Biologics(HCWB) - 2023 Q3 - Quarterly Report