TapImmune Inc. (10-Q) — Quarter Ended March 31, 2017
Entity note: The supplied filing is for TapImmune Inc., not Marker Therapeutics, Inc. It describes TapImmune as a clinical-stage immuno-oncology company developing peptide- and gene-based vaccines and immunotherapies.
Financial results and liquidity
- The company reported no revenue; management stated it had generated no revenue since inception. Net loss was $2.42 million, or $0.29 per share, compared with $4.75 million, or $0.81 per share, in Q1 2016. Profit margins are not meaningful for this pre-revenue company.
- Operating expenses were $2.42 million, up from $1.75 million. Research and development expense was $989,000 (roughly flat year over year); general and administrative expense rose to $1.43 million from $768,000.
- Cash used in operating activities was $1.92 million, versus $830,000 in Q1 2016. Cash declined to $5.93 million at quarter-end from $7.85 million at December 31, 2016. Management estimated existing cash could fund operations through 2017.
- Working capital was $4.14 million, down from $6.18 million at year-end. Total liabilities were $1.96 million, including $492,000 of research-agreement obligations and a $5,000 promissory note bearing 10% interest. No financing cash flows occurred in Q1.
Material changes and notable items
- The smaller year-over-year net loss largely reflects the prior-year $3.00 million expense from revaluing warrant liabilities; the comparable Q1 2017 warrant fair-value expense was $3,000. The company said amendments to certain warrants in August 2016 removed the feature that had caused liability classification.
- Higher general and administrative costs reflected increased stock compensation, headcount, investor relations, public-company expenses, and legal and professional fees. Stock-based compensation was $376,000 versus $214,000 a year earlier.
- Common shares outstanding increased to 8,470,833 at March 31, 2017 from 8,421,185 at year-end, including shares issued for management bonuses and consulting/vendor arrangements. The filing reports a 1-for-12 reverse split effective September 16, 2016; historical share and per-share data were adjusted accordingly.
Outlook, programs, and risks
- Management expected spending to continue at a similar pace through the remainder of 2017 and into 2018, primarily to support Phase II trials. It anticipated needing substantial additional capital and planned to pursue debt or equity financing, partnerships, or other transactions; availability and terms were uncertain and additional equity could dilute shareholders.
- Management stated that the company had no revenue source to sustain operations and that these conditions raised substantial doubt about its ability to continue as a going concern. The financial statements include no adjustments for a possible failure to continue operations.
- TPIV 200 studies were enrolling in triple-negative breast cancer and ovarian cancer. Management expected enrollment in the company-sponsored 80-patient breast cancer trial to finish by year-end 2017, with top-line data expected in early 2018; an interim analysis for the 40-patient platinum-resistant ovarian cancer study was planned for Q4 2017. A separate 80-patient platinum-sensitive ovarian cancer study was expected to complete enrollment in mid-2019.
- A Mayo Clinic/U.S. Department of Defense 280-patient TPIV 200 trial was expected to begin enrolling in 2017 and was supported by a $13.3 million grant to Mayo Clinic. A separate Mayo Clinic Phase II study of the HER2-targeted TPIV 110 in DCIS was expected to enroll 40–45 patients, supported by a $3.8 million grant.
- Management expected to pursue an amended IND for TPIV 110 in 2017, subject to FDA feedback. Polystart remained in preclinical development; the company reported a patent allowance in February 2017.
- On April 27, 2017, President and COO John Bonfiglio resigned and CEO Glynn Wilson was appointed president; the board was reduced from seven members to six. The agreement was subject to a revocation period through May 4, 2017.
- Management concluded disclosure controls and procedures were not effective as of quarter-end. It reported no material changes in internal control over financial reporting during the quarter. The filing reported no material pending legal proceedings and no material off-balance-sheet arrangements.
Important facts for investors to verify
- Confirm the issuer identity: this filing names TapImmune Inc., whereas the request identifies Marker Therapeutics, Inc.
- Assess cash runway against the stated clinical-trial spending plans, the need for additional financing, and the explicit going-concern uncertainty.
- Track trial enrollment, interim and top-line data timing, FDA requirements for TPIV 110, and whether anticipated study funding and collaborations proceed as described.
- Review the causes and remediation of ineffective disclosure controls, and monitor potential dilution from future financing and equity compensation.
- Reconcile the reported cash burn and working capital with subsequent filings and events; the filing provides no revenue or product-sales outlook quantified in dollars.