Indaptus Therapeutics(INDP) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Unaudited financials show total assets decreased to $20.8M, net loss increased to $7.5M, with significant going concern uncertainty Condensed Consolidated Balance Sheet Data (Unaudited) | Balance Sheet Items | June 30, 2023 ($) | December 31, 2022 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | 12,698,387 | 9,626,800 | | Marketable securities | 6,993,588 | 16,806,009 | | Total current assets | 19,872,759 | 27,244,242 | | Total assets | 20,844,709 | 28,063,806 | | Total current liabilities | 2,103,046 | 3,433,341 | | Total liabilities | 2,219,216 | 3,433,341 | | Total stockholders' equity | 18,625,493 | 24,630,465 | Condensed Consolidated Statements of Operations (Unaudited) | Statement of Operations | Three Months Ended June 30, 2023 ($) | Three Months Ended June 30, 2022 ($) | Six Months Ended June 30, 2023 ($) | Six Months Ended June 30, 2022 ($) | | :--- | :--- | :--- | :--- | :--- | | Research and development | 1,480,485 | 1,506,165 | 3,360,385 | 2,803,263 | | General and administrative | 2,014,777 | 2,363,095 | 4,590,043 | 4,468,070 | | Loss from operations | (3,495,262) | (3,869,260) | (7,950,428) | (7,271,333) | | Net loss | (3,245,065) | (3,835,502) | (7,498,303) | (7,200,656) | | Net loss per share, basic and diluted | (0.39) | (0.46) | (0.89) | (0.87) | Condensed Consolidated Statements of Cash Flows (Unaudited, Six Months Ended June 30) | Cash Flow Items | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (7,068,981) | (6,265,890) | | Net cash provided by (used in) investing activities | 10,140,568 | (18,607,463) | | Net increase (decrease) in cash | 3,071,587 | (24,873,353) | | Cash and cash equivalents at end of period | 12,698,387 | 14,258,812 | - The company has identified substantial doubt about its ability to continue as a going concern, as it does not have adequate cash to fund ongoing activities beyond the second quarter of 2024 without obtaining additional financing[29][30] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Decoy20's Phase 1 trial, increased operating expenses, and liquidity concerns, raising going concern doubts - The company is a clinical-stage biotechnology firm developing Decoy20, a systemically-administered anti-cancer and anti-viral immunotherapy, with a Phase 1 clinical trial initiated in December 2022 and the first patient cohort completed in August 2023[57][58] Comparison of Operating Expenses (Six Months Ended June 30) | Expense Category | 2023 ($) | 2022 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | 3,360,385 | 2,803,263 | 557,122 | 20% | | General and administrative | 4,590,043 | 4,468,070 | 121,973 | 3% | | Total operating expenses | 7,950,428 | 7,271,333 | 679,095 | 9% | - The increase in R&D expenses for the first six months of 2023 was primarily driven by a $350,000 increase for the Phase 1 clinical trial and a $250,000 increase in payroll and related expenses[74] - As of June 30, 2023, the company had approximately $19.7 million in cash, cash equivalents, and marketable securities, sufficient to fund operations only into the second quarter of 2024, raising substantial doubt about its ability to continue as a going concern[82] Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, the company is exempt from providing market risk disclosures - As a smaller reporting company, Indaptus Therapeutics, Inc. is not required to provide quantitative and qualitative disclosures about market risk[94] Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2023, with no material changes in internal controls - Based on an evaluation as of June 30, 2023, the company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective at a reasonable assurance level[96] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[97] PART II. OTHER INFORMATION Legal Proceedings No material legal proceedings are pending; a previous arbitration with LTS Lohmann Therapie Systeme AG was settled - There are currently no pending material legal proceedings against the company[100] - A dispute with LTS Lohmann Therapie Systeme AG was settled on February 7, 2023, with a payment of Euro 800,000[49] Risk Factors Significant risks include financial viability, Decoy20 clinical trial uncertainty, third-party reliance, competition, and regulatory hurdles - Financial Risk: The company has a history of net losses ($7.5 million for the six months ended June 30, 2023) and an accumulated deficit of $37.5 million, with conditions raising substantial doubt about its ability to continue as a going concern[103][105] - Development Risk: The company is highly dependent on the success of its lead product candidate, Decoy20, where clinical development is a lengthy, expensive, and uncertain process, and positive early results do not guarantee later success[113][116] - Third-Party Reliance Risk: The company relies on third-party CROs to conduct clinical trials and CMOs for manufacturing, increasing risks related to quality control, meeting deadlines, and regulatory compliance (cGMP, GCP)[157][161] - Commercialization Risk: The success of any approved product depends on market acceptance and obtaining adequate reimbursement from government and private payors, which remains uncertain[154][170] Other Items (Unregistered Sales, Defaults, Mine Safety, Other Info, Exhibits) This section covers no unregistered equity sales, no defaults, no mine safety issues, and no Rule 10b5-1 trading changes - There were no unregistered sales of equity securities during the period[259] - 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, 2023[262]