HCW Biologics(HCWB) - 2023 Q1 - Quarterly Report

Financial Performance - Revenues decreased significantly from $3.1 million in Q1 2022 to $41,883 in Q1 2023, primarily due to the recognition of deferred revenues in the prior year [80]. - Net loss increased from $2.1 million in Q1 2022 to $5.1 million in Q1 2023, reflecting a worsening operational performance [80]. - Cash used in operating activities more than doubled from $1.6 million in Q1 2022 to $3.6 million in Q1 2023, reflecting higher operational losses [96]. - Cash used in operating activities for Q1 2023 was $5.1 million, compared to $2.1 million in Q1 2022, indicating a significant increase in net loss [99]. - The company reported a $112,500 unrealized loss on investments in Q1 2023, which was a contributing factor to the overall cash used in operations [99]. Research and Development - HCW9218 is currently being evaluated in two Phase 1/1b clinical trials for chemo-refractory/chemo-resistant solid tumor cancers [62]. - HCW9302 is in the process of completing IND-enabling studies, with plans to submit an IND application to the FDA in 2023 [63]. - Research and development expenses are expected to increase substantially as the company continues to develop its product candidates [74]. - Research and development expenses rose by $466,135, or 26%, from $1.8 million in Q1 2022 to $2.3 million in Q1 2023, driven by increased preclinical and clinical trial costs [82]. - Clinical trial expenses surged by $136,991, or 125%, from $109,367 in Q1 2022 to $246,358 in Q1 2023, related to ongoing trials for HCW9218 [86]. Expenses and Costs - General and administrative expenses are anticipated to rise as the company scales operations and complies with public company requirements [77]. - General and administrative expenses increased by $1.2 million, or 66%, from $1.9 million in Q1 2022 to $3.1 million in Q1 2023, largely due to a rise in professional services costs [88]. - Professional services expenses skyrocketed by $1.2 million, or 272%, from $459,164 in Q1 2022 to $1.7 million in Q1 2023, primarily due to legal fees related to ongoing litigation [90]. - Manufacturing and materials expenses increased by $65,867, or 30%, from $219,038 in Q1 2022 to $284,905 in Q1 2023, associated with production runs of HCW9302 [84]. Liquidity and Financing - The company held $17.0 million in a federal money market fund as of March 31, 2023, to maintain liquidity and stability [66]. - As of March 31, 2023, the company had $18.4 million in cash and cash equivalents and $9.8 million in short-term investments, providing liquidity for operations [91]. - The company entered into a $26.25 million development line of credit to refinance an existing mortgage and finance the buildout of its new headquarters [67]. - The company entered into a $26.3 million development line of credit agreement on April 21, 2023, to support future funding needs [91]. Legal and Regulatory Matters - Legal proceedings initiated by Altor/NantCell against the company are now proceeding in arbitration [76]. - The company has retained manufacturing rights and agreed to provide Wugen with clinical and research grade materials under separate agreements [69]. - The company continues to recognize revenue under Topic 606, ensuring compliance with accounting standards for revenue recognition [103]. - There were no material changes to critical accounting policies from the previous year, maintaining consistency in financial reporting [104]. Market Risks - The company has been affected by inflationary pressures, rising interest rates, and supply chain disruptions due to geopolitical tensions [65]. - The primary market risk exposure for the company is interest rate sensitivity, influenced by changes in U.S. interest rates [106]. - The company has limited liquidity access for its common stock investments until they become publicly traded [106].