Outlook Therapeutics(OTLK) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited statements show a significant net loss and accumulated deficit, reflecting the company's pre-commercial stage Consolidated Balance Sheets Total assets grew to $38.6 million, driven by increased cash, while stockholders' equity rose due to stock offerings Consolidated Balance Sheet Highlights (as of June 30, 2022 vs. September 30, 2021) | Metric | June 30, 2022 | September 30, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $26,021,429 | $14,477,324 | | Total current assets | $37,513,385 | $21,508,147 | | Total assets | $38,587,727 | $22,811,451 | | Liabilities & Equity | | | | Total current liabilities | $18,429,964 | $6,752,217 | | Total liabilities | $18,505,632 | $18,204,002 | | Accumulated deficit | $(394,590,493) | $(342,883,254) | | Total stockholders' equity | $20,082,095 | $4,607,449 | Consolidated Statements of Operations Net loss for the nine months ended June 30, 2022, widened to $51.7 million due to higher R&D and G&A expenses Statement of Operations Summary | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Nine Months Ended June 30, 2022 | Nine Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $11,249,191 | $8,545,279 | $33,341,333 | $29,023,253 | | General and administrative | $5,774,769 | $2,929,717 | $15,741,888 | $9,267,962 | | Loss from operations | $(17,023,960) | $(11,474,996) | $(49,083,221) | $(38,291,215) | | Net loss | $(17,539,961) | $(12,196,547) | $(51,707,239) | $(39,758,982) | | Net loss per share | $(0.08) | $(0.07) | $(0.25) | $(0.27) | Consolidated Statements of Stockholders' Equity (Deficit) Stockholders' equity increased to $20.1 million, primarily driven by over $60 million raised from stock sales Changes in Stockholders' Equity (Nine Months Ended June 30, 2022) | Description | Amount | | :--- | :--- | | Balance at October 1, 2021 | $4,607,449 | | Sale of common stock, net of issuance costs | $60,641,318 | | Stock-based compensation expense | $6,334,717 | | Net loss | $(51,707,239) | | Other (warrant/option exercises) | $205,850 | | Balance at June 30, 2022 | $20,082,095 | Consolidated Statements of Cash Flows Net cash from financing of $58.0 million offset operating cash use, resulting in a period-end cash balance of $26.0 million Cash Flow Summary (Nine Months Ended June 30) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(46,423,872) | $(45,263,124) | | Net cash provided by financing activities | $57,967,977 | $52,419,173 | | Net increase in cash and cash equivalents | $11,544,105 | $7,156,049 | | Cash and cash equivalents at end of period | $26,021,429 | $19,692,035 | Notes to Unaudited Interim Consolidated Financial Statements Notes highlight the company's focus on ONS-5010, going concern risks, and significant financing activities - The company is a pre-commercial biopharmaceutical firm focused on developing and commercializing ONS-5010, an ophthalmic formulation of bevacizumab for retinal indications[21] - There is substantial doubt about the company's ability to continue as a going concern due to recurring losses, an accumulated deficit of $394.6 million, and upcoming debt maturities[24] - In November 2021, the company raised $54.0 million in net proceeds from an underwritten public offering of 46 million shares of common stock at $1.25 per share[60][149] - During the nine months ended June 30, 2022, the company sold 3.44 million shares under its At-the-Market (ATM) Offering, generating $6.9 million in gross proceeds[63] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses rising expenses and limited cash runway, raising substantial doubt about the company's going concern status Overview The company is focused on the BLA re-submission for its sole product candidate, ONS-5010, for retinal indications - The company's primary goal is to launch the first FDA-approved ophthalmic formulation of bevacizumab (ONS-5010) for retinal indications[90] - The company voluntarily withdrew its BLA for ONS-5010 in May 2022 and plans to re-submit it by September 2022 after confirming the additional information required by the FDA[91] - The pivotal NORSE TWO trial met its primary endpoint, with 41.7% of patients treated with ONS-5010 gaining at least 15 letters in vision, compared to 23.1% for ranibizumab (p=0.0052)[92][93] Going Concern Existing cash of $26.0 million is insufficient to fund operations beyond Q1 2023, raising substantial going concern doubt - Current cash resources of $26.0 million as of June 30, 2022, are expected to fund operations only into the first calendar quarter of 2023[99] - Substantial doubt exists about the company's ability to continue as a going concern due to recurring losses and an unsecured promissory note of $10.8 million maturing on January 1, 2023[101][102] Results of Operations The nine-month net loss widened to $51.7 million, driven by increased R&D spending and pre-launch G&A expenses Comparison of Three Months Ended June 30, 2022 and 2021 | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Research and development | $11,249,191 | $8,545,279 | $2,703,912 | | General and administrative | $5,774,769 | $2,929,717 | $2,845,052 | | Net loss | $(17,539,961) | $(12,196,547) | $(5,343,414) | Comparison of Nine Months Ended June 30, 2022 and 2021 | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Research and development | $33,341,333 | $29,023,253 | $4,318,080 | | General and administrative | $15,741,888 | $9,267,962 | $6,473,926 | | Net loss | $(51,707,239) | $(39,758,982) | $(11,948,257) | - The increase in R&D expenses for the nine-month period was primarily due to $3.1 million in BLA submission fees and a $1.6 million increase in stock-based compensation from vested performance-based options[136] Liquidity and Capital Resources The company relies on equity and debt financing, but its current cash of $26.0 million is only sufficient until Q1 2023 - The company's cash of $26.0 million as of June 30, 2022, is projected to fund operations into the first calendar quarter of 2023[151][155] - In November 2021, the company raised $54.0 million in net proceeds from an underwritten public offering[149][161] - During the nine months ended June 30, 2022, the company generated $6.7 million in net proceeds from its ATM Offering[150] Quantitative and Qualitative Disclosures About Market Risk This disclosure is not required as the company qualifies as a Smaller Reporting Company - As a "Smaller Reporting Company", this item and the related disclosure are not required[167] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2022 - The chief executive officer and chief financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period[168] - There have been no material changes in internal control over financial reporting during the third fiscal quarter ended June 30, 2022[169] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material pending legal proceedings - The company is not party to any material pending legal proceedings[170] Risk Factors A new risk factor has been added concerning the Russia-Ukraine conflict's potential business impact - A new risk factor has been added regarding the armed conflict between Russia and Ukraine, which could adversely affect the company's business, financial condition, and results of operations through significant market and other disruptions[171][172] Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period - Not applicable[178] Defaults Upon Senior Securities This item is not applicable for the reporting period - Not applicable[179] Mine Safety Disclosures This item is not applicable for the reporting period - Not applicable[180] Other Information There is no other information to report for this period - None[181] Exhibits This section lists all exhibits filed with the report, including key agreements and officer certifications - Exhibits filed include corporate governance documents, an amended investor rights agreement, an executive employment agreement, and required officer certifications (31.1, 31.2, 32.1)[183]