NanoViricides(NNVC) - 2023 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements The company reported a net loss of $1.6 million for Q3 2022, with total assets decreasing to $22.1 million and cash at $12.9 million Balance Sheets Total assets decreased to $22.1 million by September 30, 2022, primarily due to reduced cash, while equity declined to $21.6 million Balance Sheet Summary (in thousands) | Balance Sheet Items | Sep 30, 2022 (Unaudited) | June 30, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $12,918 | $14,066 | | Total current assets | $13,150 | $14,416 | | Property and equipment, net | $8,557 | $8,694 | | Total assets | $22,082 | $23,495 | | Liabilities & Equity | | | | Total current liabilities | $518 | $413 | | Total stockholders' equity | $21,564 | $23,082 | | Total liabilities and stockholders' equity | $22,082 | $23,495 | Statements of Operations Net loss for Q3 2022 improved to $1.57 million ($0.14 per share) from $2.61 million in Q3 2021, driven by lower R&D expenses Statement of Operations Summary (in thousands) | Metric | Q3 2022 (3 months ended Sep 30) | Q3 2021 (3 months ended Sep 30) | | :--- | :--- | :--- | | Research and development | $1,112.7 | $2,096.9 | | General and administrative | $509.7 | $515.4 | | Total operating expenses | $1,622.4 | $2,612.4 | | Loss from operations | $(1,622.4) | $(2,612.4) | | Net loss | $(1,570.6) | $(2,613.1) | | Net loss per share | $(0.14) | $(0.23) | Statements of Cash Flows Net cash used in operating activities increased to $1.03 million, resulting in a $1.15 million net decrease in cash, ending at $12.9 million Cash Flow Summary (in thousands) | Cash Flow Activity | Q3 2022 (3 months ended Sep 30) | Q3 2021 (3 months ended Sep 30) | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,032.9) | $(724.2) | | Net cash used in investing activities | $(44.5) | $(24.3) | | Net cash used in financing activities | $(71.0) | $(71.3) | | Net change in cash | $(1,148.3) | $(819.9) | | Cash at end of period | $12,918.0 | $19,696.8 | Notes to the Financial Statements The notes detail the company's antiviral R&D, accumulated deficit of $124 million, going concern status, and related-party transactions - The company's lead drug program is NV-CoV-2 for COVID-19, for which IND-enabling studies are complete. The company is preparing for Phase I/II human clinical trials[21] - New limited drug development programs have been initiated for Monkeypox virus (MPXV) and Enterovirus D68 (EV68) in response to recent outbreaks[22][23] - As of September 30, 2022, the company had an accumulated deficit of approximately $124 million and has not generated any revenue. Management believes existing cash of $12.9 million is sufficient to fund operations for at least the next 12 months[29][35] - The company has an At The Market (ATM) sales agreement for up to $50 million, under which it previously sold $6.1 million worth of common stock in March 2021[31][32] - The company has exclusive license agreements with TheraCour Pharma, Inc., an entity controlled by the company's CEO, for its core technology. In Q3 2021, a milestone payment of 100,000 Series A preferred shares (valued at $935,088) was made to TheraCour under the COVID-19 license agreement[26][27][41] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the development-stage biopharma's lead COVID-19 drug candidates, manufacturing capabilities, reduced net loss, and future capital needs Organization and Nature of Business NanoViricides is a development-stage antiviral drug company with lead COVID-19 candidates, in-house cGMP manufacturing, and broad-spectrum technology - The company's most advanced drug candidates, NV-CoV-2 and NV-CoV-2-R, are for COVID-19. The company is working towards filing an IND for NV-CoV-2 to begin human clinical trials[65] - NanoViricides possesses its own cGMP-compliant manufacturing facility, enabling it to produce clinical supplies of its drug candidates, which simplifies and expedites manufacturing operations[76] - The company has developed multiple formulations for NV-CoV-2, including oral gummies, oral syrup, and a solution for injection, infusion, or inhalation, to treat different patient populations and disease severities[82][94] - The company's technology platform is based on biomimetic engineering, creating drugs that viruses are unlikely to escape through mutation. This is a key differentiator from vaccines and antibody therapies that have lost effectiveness against new variants[77][80] Financial Status and Drug Programs The company holds $12.9 million in cash, sufficient for initial trials, with a pipeline focused on COVID-19, HerpeCide™, Monkeypox, and Enterovirus - As of September 30, 2022, the company had approximately $12.9 million in cash and cash equivalents, which is considered sufficient for more than twelve months of operations at the current expenditure rate[117][118] - The company's drug pipeline priority is: 1) COVID-19 (NV-CoV-2), 2) HerpeCide™ program (NV-HHV-1 for shingles, followed by HSV-1/HSV-2), and 3) newly initiated programs for Monkeypox and Enterovirus[120][121][122] - The market for anti-viral drugs was estimated at $40 billion in 2018 and projected to be $65.5 billion in 2023, excluding the COVID-19 market, indicating a large potential market for the company's pipeline[124] - The company has demonstrated cGMP manufacturing capabilities for complex nanomedicine drugs at its own facility, a significant milestone that saves time and money compared to using external contract manufacturers[133][134][135] Results of Operations Net loss decreased to $1.6 million due to a $0.98 million reduction in R&D expenses, primarily from a prior-year non-cash milestone payment Comparison of Operating Results (in thousands) | Expense Category | Q3 2022 (3 months ended Sep 30) | Q3 2021 (3 months ended Sep 30) | Change | | :--- | :--- | :--- | :--- | | Research and Development | $1,112.7 | $2,096.9 | $(984.2) | | General and Administration | $509.7 | $515.4 | $(5.7) | | Net Loss | $(1,570.6) | $(2,613.1) | $1,042.5 | - The decrease in R&D expenses was mainly due to a one-time milestone payment in Q3 2021, where 100,000 shares of Series A preferred stock (fair value ~$935,000) were issued to TheraCour for the COVID-19 license[230] Liquidity and Capital Reserves With $12.9 million in cash, the company has sufficient liquidity for 12 months but requires additional capital for long-term R&D and trials, with an ATM agreement in place - The company has an accumulated deficit of $124.1 million as of September 30, 2022, and expects losses to continue[236] - An At The Market (ATM) Sales Agreement for up to $50 million is in place, providing a mechanism to raise capital. To date, approximately $6.4 million has been raised under this agreement[236] - Management believes existing resources are sufficient for the next twelve months, but long-term plans, including later-stage clinical trials, will require additional capital[237] Quantitative and Qualitative Disclosures About Market Risk The company faces minimal market risk, primarily non-material interest rate risk on cash equivalents, with no foreign currency exposure - The company's primary market risk is interest rate risk associated with short-term cash equivalents, which is deemed non-material[242] - The company has no foreign operations and is not exposed to foreign currency fluctuations[242] Controls and Procedures Disclosure controls and procedures were ineffective due to a material weakness in financial reporting, with a remediation plan including a new controls committee - Management concluded that disclosure controls and procedures were not effective as of September 30, 2022[244] - The ineffectiveness is due to an unremediated material weakness in internal control over financial reporting, stemming from inadequate resources and review of the period-end closing process[244] - A remediation plan has been initiated, which includes a new financial reporting controls committee to provide oversight and ensure reliability and accuracy[246] PART II OTHER INFORMATION Legal Proceedings There are no pending or threatened legal proceedings against the company as of the filing date - There are no pending or threatened legal proceedings against the Company as of the filing date[250] Unregistered Sales of Equity Securities and Use of Proceeds The company issued unregistered equity securities, including preferred and common stock, and warrants, for compensation and services during the quarter - Issued 10,204 shares of Series A preferred stock to CEO Dr. Anil Diwan as part of a one-year employment agreement extension[251] - Issued a total of 17,864 shares of common stock for consulting and director services, and warrants to purchase 286 shares of common stock to the Scientific Advisory Board[253][254][255] - All securities were issued without registration under the Securities Act, in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D[256] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and Inline XBRL data files - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (101 series)[262]