Vaccinex(VCNX) - 2022 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements Presents the company's unaudited condensed consolidated financial statements and notes for the period ended June 30, 2022 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands): | Metric | June 30, 2022 | December 31, 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $11,400 | $8,589 | $2,811 | 32.7% | | Total current assets | $12,261 | $9,405 | $2,856 | 30.4% | | TOTAL ASSETS | $12,572 | $9,843 | $2,729 | 27.7% | | Total current liabilities | $1,491 | $2,256 | $(765) | -33.9% | | TOTAL LIABILITIES | $1,629 | $2,431 | $(802) | -33.0% | | TOTAL STOCKHOLDERS' EQUITY | $10,943 | $7,412 | $3,531 | 47.6% | Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands, except per share data): | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $- | $- | $- | $850 | | Research and development | $3,843 | $4,064 | $6,809 | $9,577 | | General and administrative | $1,558 | $1,605 | $3,186 | $3,182 | | Total costs and expenses | $5,401 | $5,669 | $9,995 | $12,759 | | Net loss | $(5,383) | $(5,969) | $(9,978) | $(12,543) | | Net loss per share, basic and diluted | $(0.13) | $(0.21) | $(0.25) | $(0.47) | | Weighted-average shares outstanding (basic/diluted) | 42,664,051 | 28,577,779 | 40,711,167 | 26,897,283 | Condensed Consolidated Statements of Stockholders' Equity Changes in Stockholders' Equity (in thousands): | Metric | Balance as of Jan 1, 2022 | Issuance of Common Shares | Stock-based compensation | Net loss | Balance as of June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | | Common Stock (Amount) | $3 | $1 | — | — | $4 | | Additional Paid-in Capital| $307,281 | $13,229 | $141 | — | $320,789 | | Accumulated Deficit | $(299,861) | — | — | $(9,978) | $(309,839) | | Total Stockholders' Equity| $7,412 | $13,230 | $141 | $(9,978) | $10,943 | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands): | Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(10,329) | $(14,096) | | Net cash used in investing activities | $(52) | $(22) | | Net cash provided by financing activities | $13,192 | $25,907 | | NET INCREASE IN CASH AND CASH EQUIVALENTS | $2,811 | $11,789 | | CASH AND CASH EQUIVALENTS–End of period | $11,400 | $22,385 | Notes to Condensed Consolidated Financial Statements - The Company is a clinical-stage biotechnology company focused on discovering and developing targeted biotherapeutics for cancer, neurodegenerative diseases, and autoimmune disorders[24] - The Company has incurred significant losses and negative cash flows, with an accumulated deficit of $309.8 million, raising substantial doubt about its ability to continue as a going concern[27][28] - The COVID-19 pandemic delayed the initiation of a pepinemab trial for Alzheimer's disease and impacted capital raising efforts, leading the Company to obtain a PPP Loan[31] Property and Equipment, Net (in thousands): | Category | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Leasehold improvements | $3,259 | $3,213 | | Research equipment | $3,505 | $3,499 | | Furniture and fixtures | $350 | $350 | | Computer equipment | $284 | $284 | | Property and equipment, gross | $7,398 | $7,346 | | Less: accumulated depreciation | $(7,144) | $(7,049) | | Property and equipment, net | $254 | $297 | Accrued Expenses (in thousands): | Category | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Accrued clinical trial cost | $619 | $468 | | Accrued payroll and related benefits | $365 | $409 | | Accrued consulting and legal | $87 | $74 | | Accrued other | $24 | $29 | | Total Accrued expenses | $1,095 | $980 | - In January 2022, the Company completed a private placement, issuing 8,747,744 shares of common stock for approximately $9.7 million in gross proceeds, with participation from entities affiliated with directors and officers[89][90] Stock-based Compensation Expense (in thousands): | Category | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $55 | $45 | $97 | $73 | | General and administrative | $83 | $83 | $182 | $159 | | Total stock-based compensation expense | $138 | $128 | $279 | $232 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on financial condition, operational results, liquidity, and capital resources for the period Cautionary Note Regarding Forward-Looking Statements - Forward-looking statements involve risks including the company's ability to continue as a going concern, COVID-19 impacts, financing sufficiency, and clinical trial success[93][94] Company Overview - Vaccinex, a clinical-stage biotech company, incurred net losses of $5.4 million (Q2 2022) and $9.9 million (YTD 2022), holding $11.4 million in cash as of June 30, 2022[96][98] - Recurring net losses and negative cash flows raise substantial doubt about its ability to continue as a going concern, with future operations dependent on external financing[100] - The COVID-19 pandemic has adversely impacted clinical trial operations and capital raising, with potential for further disruptions[101] Financial Overview - The Company has not generated product revenue and does not expect to in the foreseeable future, as profitability hinges on successful commercialization of its candidates[102] Research and Development Expenses (in thousands): | Category | Three Months Ended June 30, 2022 | % of Total R&D | Three Months Ended June 30, 2021 | % of Total R&D | Six Months Ended June 30, 2022 | % of Total R&D | Six Months Ended June 30, 2021 | % of Total R&D | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Clinical trial costs | $2,153 | 56% | $2,215 | 54% | $3,553 | 52% | $5,905 | 62% | | Wages, benefits, and related costs | $1,129 | 29% | $1,081 | 27% | $2,155 | 32% | $2,123 | 22% | | Preclinical supplies and equipment depreciation | $419 | 11% | $498 | 12% | $814 | 12% | $1,001 | 10% | | Consulting, non-clinical trial services, and other | $142 | 4% | $270 | 7% | $287 | 4% | $548 | 6% | | Total research and development expenses | $3,843 | | $4,064 | | $6,809 | | $9,577 | | - Current R&D focuses on the clinical development of pepinemab for cancer, Alzheimer's Disease, and Huntington's Disease[106] Results of Operations Revenue and Operating Expenses (in thousands): | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | % Change (QoQ) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $- | $- | 0% | $- | $850 | -100% | | Research and development | $3,843 | $4,064 | -5% | $6,809 | $9,577 | -29% | | General and administrative| $1,558 | $1,605 | -3% | $3,186 | $3,182 | 0% | | Total operating expenses | $5,401 | $5,669 | -5% | $9,995 | $12,759 | -22% | | Net loss | $(5,383) | $(5,969) | -10% | $(9,978) | $(12,543) | -20% | - The decrease in R&D expenses was primarily due to the completion of prior studies, partially offset by setup costs for new clinical trials[109][112] Liquidity and Capital Resources - As of June 30, 2022, the Company's $11.4 million in cash and cash equivalents is insufficient to fund operations for one year, reinforcing the 'going concern' doubt[120][121][114] - In early 2022, the Company raised $9.7 million from a private placement and $3.5 million (net) through an Open Market Sale Agreement[115][116] - Future financing strategies may include equity or debt sales, collaborations, or licensing, and failure to secure capital could halt product development[122][123] Cash Flows Summary (in thousands): | Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Cash used in operating activities | $(10,329) | $(14,096) | | Cash used in investing activities | $(52) | $(22) | | Cash provided by financing activities | $13,192 | $25,907 | Critical Accounting Policies and Estimates - There have been no material changes to the Company's critical accounting policies compared to its 2021 Annual Report on Form 10-K[131] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exempt from market risk disclosures as a smaller reporting company - The Company, as a smaller reporting company, is exempt from providing quantitative and qualitative disclosures about market risk[134] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes in internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2022[135] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2022[136] PART II – OTHER INFORMATION Item 1A. Risk Factors Refers to the Annual Report on Form 10-K for risk factors, noting no material changes have occurred - Investors should carefully consider the risks outlined in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021[138] - There have been no material changes from the risk factors disclosed in the Annual Report[138] Item 6. Exhibits Lists the exhibits filed with the report, including officer certifications and XBRL data - Key exhibits include CEO and CFO certifications pursuant to the Sarbanes-Oxley Act of 2002 and various Inline XBRL documents[143] Signatures Contains the official signatures of the CEO and CFO, dated August 15, 2022 - The report was signed by Maurice Zauderer, Ph.D., President & Chief Executive Officer, and Scott E. Royer, CFA, MBA, Chief Financial Officer, on August 15, 2022[146]