Revelation Biosciences(US:REVB)2022-04-15 20:50Part I Business Revelation Biosciences, Inc. is a clinical-stage biopharmaceutical company developing innate immune system therapeutics and diagnostics, with a pipeline including REVTx-99a, REVTx-99b, REVTx-200, and REVDx-501, following its January 2022 business combination with Petra Acquisition, Inc. - The company is a clinical-stage biopharmaceutical firm focused on innate immune system therapeutics and diagnostics39 - On January 10, 2022, the company consummated a business combination with Petra Acquisition, Inc., a former blank check company, and changed its name to Revelation Biosciences, Inc1141 Product Pipeline Overview | Product Candidate | Indication | Development Stage | | :--- | :--- | :--- | | REVTx-99a | Prevention/treatment of respiratory viral infections | Phase 2b (Primary endpoint not met) | | REVTx-99b | Prevention/treatment of chronic nasal congestion and allergic rhinitis | Phase 1b | | REVTx-200 | Intranasal adjunct to intramuscular vaccines | Nonclinical | | REVDx-501 | Rapid diagnostic for respiratory viral infections | Development | Our Programs The company's programs leverage PHAD to stimulate the innate immune system, with REVTx-99a failing its Phase 2b endpoint, REVTx-99b in Phase 1b for allergic rhinitis, REVTx-200 as a nonclinical vaccine adjunct, and REVDx-501 as a rapid diagnostic - The therapeutic platform is based on the active ingredient PHAD, a synthetic molecule that mimics lipopolysaccharide (LPS) to activate the Toll-like receptor 4 (TLR4) pathway, stimulating an innate immune response4445 - The Phase 2b study for REVTx-99a in preventing influenza infection did not meet its primary endpoint of statistically significant viral load reduction4886106 - REVTx-99b is in a Phase 1b allergen challenge study for chronic nasal congestion and allergic rhinitis, with top-line data expected in the second half of 202252109121 REVDx-501 Preliminary Correlation with PCR for SARS-CoV-2 | PCR vs. REVDx-501 Test Kit | PCR POSITIVE | PCR NEGATIVE | | :--- | :--- | :--- | | Test Kit POSITIVE | 37 | 21 | | Test Kit NEGATIVE | 0 | 132 | | TOTAL SAMPLES | 37 | 153 | Competition Operating in a highly competitive biopharmaceutical industry, the company faces strong competition for its REVTx-99a, REVTx-99b, and REVDx-501 programs from established players with greater resources - The biopharmaceutical industry is intensely competitive and subject to rapid innovation, with key competitive factors including efficacy, safety, convenience, price, and reimbursement141 - Competitors for REVTx-99a include Regeneron, Eli Lily, and Gilead; for REVTx-99b include Benadryl and Claritin; and for REVDx-501 include Quest Diagnostics, Abbott Laboratories, and Ellume Limited142143144 Manufacturing and Intellectual Property The company relies on third-party contract manufacturers and a single supplier for its key ingredient PHAD, while protecting its technology through six U.S. provisional and two international patent applications as of April 2022 - The company relies on third parties for manufacturing and has a single supplier, Avanti Polar Lipids, Inc., for its key active pharmaceutical ingredient (PHAD), with whom it does not have a long-term supply agreement146 - As of April 13, 2022, the company's patent portfolio includes six U.S. provisional patent applications and two international (PCT) patent applications for its various programs154 Government Regulation The company's products are subject to extensive FDA regulation, requiring multi-phase clinical trials and NDA submission for therapeutics, de novo clearance for diagnostics, and ongoing compliance with cGMP and healthcare laws like the Anti-Kickback Statute and HIPAA - Therapeutic product candidates must undergo a multi-step approval process including preclinical studies, an Investigational New Drug (IND) application, and three phases of clinical trials before submitting a New Drug Application (NDA) to the FDA160161166 - The REVDx-501 in vitro diagnostic test is regulated as a medical device and is expected to be subject to review under a de novo clearance pathway, which is for novel devices without a marketed predicate176180 - The company's operations are subject to numerous other healthcare laws, including the federal Anti-Kickback Statute, the False Claims Act (FCA), and the Health Insurance Portability and Accountability Act (HIPAA)191192196 Risk Factors The company faces significant risks including limited operating history, no approved products, persistent net losses, high clinical development uncertainty (exacerbated by REVTx-99a's failure), reliance on single-source third-party manufacturing, intellectual property protection challenges, intense competition, and complex regulatory compliance - The company has a limited operating history, no products approved for sale, and has incurred net losses since its inception in May 2020, with an accumulated deficit of $14.5 million as of December 31, 2021256257258 - Clinical development is lengthy, expensive, and uncertain, with the primary endpoint of the Phase 2b study for the lead candidate, REVTx-99a, not meeting statistical significance, representing a significant setback267 - The company relies on a single supplier, Avanti Polar Lipids, Inc., for PHAD, the active pharmaceutical ingredient in its therapeutic candidates, and does not have a long-term supply agreement301 - The company faces risks from the COVID-19 pandemic, which could cause delays in patient enrollment, clinical site initiation, and supply chain disruptions for its clinical studies295 Unresolved Staff Comments Not applicable Properties The company leases approximately 2,140 square feet of laboratory space in San Diego, California, with the lease expiring on December 31, 2022 - The company leases 2,140 sq. ft. of lab space in San Diego, CA, with the lease expiring at the end of 2022422 Legal Proceedings On February 18, 2022, LifeSci Capital LLC filed a lawsuit against the company seeking approximately $2.7 million in cash and $2.6 million in equity for unpaid banking and advisory fees related to pre-merger contracts, which the company is disputing - LifeSci Capital LLC filed a lawsuit seeking damages of approximately $2.7 million in cash and $2.6 million in equity for unpaid fees from pre-merger contracts423 Mine Safety Disclosures Not applicable Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Following the business combination on January 10, 2022, the company's common stock and warrants are listed on Nasdaq under the symbols "REVB" and "REVBW", and the company has not paid any cash dividends to date nor intends to in the foreseeable future - The company's common stock and warrants are listed on Nasdaq under the ticker symbols "REVB" and "REVBW", respectively427 - The company has never paid cash dividends and does not intend to in the foreseeable future, planning to reinvest any earnings into its programs429 Reserved Not applicable Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the financial results of Petra Acquisition, Inc., the predecessor blank check company, for the years ended December 31, 2021 and 2020, showing a net loss of $2.1 million in 2021 primarily from operating costs and a change in warrant liability value, with liquidity sourced from its IPO, private warrant sales, and promissory notes - All financial activity through December 31, 2021, relates to the formation, IPO, and business combination search of the predecessor company, Petra Acquisition, Inc435 Results of Operations (Pre-Merger) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net Loss | ($2,130,625) | ($1,630,500) | | Operating Costs | $3,088,248 | $145,492 | | Change in Fair Value of Warrant Liability | $1,009,620 (gain) | ($1,494,092) (loss) | - As of December 31, 2021, the company had $78,532 in cash and cash equivalents outside of the trust account, and $48.3 million held in the Trust Account449451 - In October 2021, the company entered into promissory notes for up to $750,000 to fund contributions to the trust account to extend the deadline for completing a business combination446456 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Revelation Biosciences, Inc. is not required to provide this information - The company is a smaller reporting company and is not required to provide the information under this item462 Financial Statements and Supplementary Data This section contains the audited financial statements for the predecessor company, Petra Acquisition, Inc., for the years ended December 31, 2021 and 2020, showing a net loss of $2.1 million for 2021 and an accumulated deficit of $7.8 million, with key balance sheet items including $48.3 million in cash held in the Trust Account and a warrant liability of $2.4 million Key Balance Sheet Data (as of Dec 31, 2021) | Account | Amount | | :--- | :--- | | Cash and cash equivalents | $78,532 | | Cash held in Trust Account | $48,302,521 | | Total Assets | $48,385,887 | | Warrant liability | $2,390,258 | | Total Liabilities | $8,397,377 | | Common stock subject to possible redemption | $47,811,164 | | Total stockholder's deficit | ($7,822,654) | - The business combination on January 10, 2022, will be accounted for as a reverse recapitalization, with Old Revelation treated as the accounting acquirer604692 - Subsequent to year-end, in January 2022, the company raised approximately $7.76 million in gross proceeds from a PIPE investment696697 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None Controls and Procedures Management concluded that as of December 31, 2021, the company's disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting - Management concluded that disclosure controls and procedures were not effective as of December 31, 2021, due to a material weakness in internal control over financial reporting466 Other Information None Part III Directors, Executive Officers and Corporate Governance This section provides information on the company's leadership team, including Chairman George Tidmarsh, M.D., Ph.D., and CEO James Rolke, detailing the board's staggered classes and its established Audit, Compensation, and Nominating and Governance committees, along with the adopted Code of Ethics - The company's board is classified into three classes with staggered three-year terms, which may delay or prevent a change in control490491 - The board has three standing committees: Audit, Nominating and Governance, and Compensation, each with a written charter and composed of independent directors as required by Nasdaq497498500501 Executive Compensation The company's executive compensation for its named executive officers, CEO James Rolke and CFO Chester S. Zygmont, III, consists of base salary, performance bonuses, and equity awards, with Mr. Rolke's total compensation at $618,443 and Mr. Zygmont's at $403,020 in 2021, while non-employee directors received $74,996 each 2021 Executive Compensation Summary | Name and Position | Salary ($) | Bonus ($) | Stock Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | James Rolke, CEO | 400,000 | 66,630 | 151,813 | 618,443 | | Chester S. Zygmont, III, CFO | 320,000 | 46,641 | 36,379 | 403,020 | - Executive Employment Agreements provide for annual base salaries of $400,000 for the CEO and $320,000 for the CFO, with target annual bonuses of 40% and 35% of base salary, respectively509 - Each non-employee director received $25,000 in cash fees and $49,996 in stock-based awards for their service in 2021520 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters As of April 13, 2022, the company's directors and executive officers as a group beneficially owned 24.3% of the outstanding common stock, with major beneficial owners including George F. Tidmarsh (13.9%), AXA IM Prime Impact Fund (13.0%), Petra Investment Holdings, LLC (11.7%), Armistice Capital Master Fund Ltd. (8.6%), LifeSci Venture Partners II, LP & Affiliates (6.9%), and Monashee Solitario Fund LP (6.1%) Beneficial Ownership as of April 13, 2022 | Holder | Percentage Ownership | | :--- | :--- | | Directors and Officers as a Group (6 individuals) | 24.3% | | George F. Tidmarsh M.D., Ph.D (Chairman) | 13.9% | | AXA IM Prime Impact Fund | 13.0% | | Petra Investment Holdings, LLC (Sponsor) | 11.7% | | Armistice Capital Master Fund Ltd. | 8.6% | | LifeSci Venture Partners II, LP & Affiliates | 6.9% | | Monashee Solitario Fund LP | 6.1% | Certain Relationships and Related Transactions, and Director Independence This section details related party transactions primarily involving the predecessor company, Petra Acquisition, Inc., and its sponsor, Petra Investment Holdings, LLC, including the initial sale of Founder Shares, private placement of warrants, and loans for offering expenses, as well as Backstop Agreements and a Forward Share Purchase Agreement to support the business combination, with the board determining all directors except CEO James Rolke are independent - Petra's sponsor, Petra Investment Holdings, LLC, purchased Founder Shares and 3.2 million Private Warrants, and provided initial loans for IPO expenses527531532 - To facilitate the business combination, the company entered into Backstop Agreements with investors to purchase up to $4.5 million of common stock to offset redemptions544 - A Forward Share Purchase Agreement was made with Meteora Capital Partners, committing them to hold at least 750,000 shares through the business combination closing, with an option for the company to repurchase them post-closing546547 - The board of directors has determined that all directors are independent under Nasdaq rules, with the exception of CEO James Rolke556 Principal Accounting Fees and Services This section summarizes the fees paid to the independent registered public accounting firm, dbbmckennon, with aggregate audit fees of $60,440 and $72,969 for the fiscal years ended December 31, 2021 and 2020, respectively, and no fees for audit-related, tax, or other services in either period Fees Paid to dbbmckennon | Fee Category | 2021 | 2020 | | :--- | :--- | :--- | | Audit Fees | $60,440 | $72,969 | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | Part IV Exhibits, Financial Statement Schedules This section lists the exhibits filed as part of the Annual Report on Form 10-K, including the Agreement and Plan of Merger, corporate governance documents, warrant agreements, material contracts, and certifications Form 10-K Summary Not applicable