Genprex, Inc. 10-Q Summary
Business Context and Reporting Period
Genprex is a clinical-stage gene therapy company developing oncology and diabetes therapies. Its lead candidate, REQORSA Immunogene Therapy, uses the ONCOPREX Nanoparticle Delivery System and is being evaluated in combination with approved therapies for non-small cell and small cell lung cancer. Diabetes candidates GPX-002 and GPX-003 remain in preclinical development. This unaudited Form 10-Q covers the three and nine months ended September 30, 2023, compared with the comparable 2022 periods. The filing was signed November 14, 2023.
Key Financial Metrics
| Metric | Three Months Ended September 30 | Nine Months Ended September 30 |
|---|---|---|
| Revenue | $0; no product revenue | $0; no product revenue |
| Research and development expense | $4.6 million vs. $3.2 million | $13.9 million vs. $8.1 million |
| General and administrative expense | $3.2 million vs. $3.0 million | $11.2 million vs. $9.1 million |
| Net loss | $7.7 million, or $0.13 per share, vs. $6.1 million, or $0.13 per share | $24.9 million, or $0.47 per share, vs. $17.2 million, or $0.36 per share |
| Net cash used in operating activities | Not separately provided | $19.8 million vs. $13.1 million |
| Cash and cash equivalents | $11.7 million at September 30, 2023, versus $21.0 million at December 31, 2022 | |
| Total current liabilities | $4.3 million versus $2.8 million at December 31, 2022 | |
| Accumulated deficit | $127.8 million at September 30, 2023 |
Operating margins and profitability ratios are not meaningful because the company has no revenue and is generating recurring operating losses. The filing does not identify material outstanding debt. Total assets were $16.6 million and stockholders’ equity was $12.3 million at September 30, 2023.
Material Changes Versus the Prior Comparable Period
- R&D expense increased 46% in the third quarter and 71% year to date, primarily due to clinical-trial activity, manufacturing and testing of clinical materials, CDMO transition costs, third-party research, and increased R&D staffing.
- G&A expense increased 5% in the quarter and 23% year to date, reflecting higher headcount, professional fees, share-based compensation, and financing-related expenses.
- Net loss increased 26% in the quarter and 45% year to date.
- Operating cash usage increased 51% year to date to $19.8 million.
- Genprex raised approximately $10.5 million net from registered direct offerings during the first nine months, including the March and July 2023 offerings, but issued substantial equity and warrants. Common shares outstanding increased from 48.1 million at December 31, 2022 to 59.4 million at September 30, 2023.
- At September 30, 2023, the company had 13.96 million outstanding warrants and 11.67 million outstanding stock options, creating significant potential dilution.
- Share-based compensation increased to $4.4 million for the first nine months, compared with $3.4 million in the prior-year period.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- Management estimates existing cash will fund necessary operations and expected clinical-trial activities into the second quarter of 2024, but states that additional capital is required and that the financial statements contain a substantial doubt regarding the company’s ability to continue as a going concern.
- Genprex expects to open the Acclaim-1 Phase 2 expansion and Acclaim-3 Phase 1 dose-escalation portions between December 2023 and the end of the first quarter of 2024, subject to availability of a new REQORSA batch. Acclaim-2 dose-escalation enrollment is expected to be completed in the second half of 2024, subject to manufacturing availability.
- A delayed production transition to a new LNP CDMO has affected REQORSA supply. The company estimates current inventory is sufficient through December 2023; failure to produce a new batch could delay ongoing treatment and planned enrollment.
- Acclaim-2 enrollment has been slower than expected, partly because of competition from other Keytruda combination trials.
- Acclaim-1 Phase 1 data presented in October 2023 showed no dose-limiting toxicities among 12 patients, with early efficacy signals reported by management. These results are preliminary and do not establish regulatory approval or commercial efficacy.
- The FDA granted Fast Track Designations for the Acclaim-1, Acclaim-2, and Acclaim-3 combinations. REQORSA also received Orphan Drug Designation for SCLC in August 2023.
- Genprex received a Nasdaq deficiency notice on August 30, 2023 for failure to maintain the $1.00 minimum bid price. The initial compliance period runs through February 26, 2024, with a possible additional period. A reverse stock split is among the options being considered.
- Disclosure controls and procedures were ineffective at September 30, 2023 because of material weaknesses involving segregation of duties and insufficient accounting personnel with expertise in complex transactions. Remediation efforts are ongoing and have not yet been demonstrated to be effective for a sufficient period.
- The company recorded an approximately $302,000 out-of-period adjustment in the third quarter related to fundraising expense and additional paid-in capital.
- There are no material legal proceedings identified by management. Commitments include CDMO obligations, sponsored research agreements, university licenses, milestone payments, royalties, and potential NIH obligations contingent on regulatory approval.
- Subsequent events included issuance of 5,000 shares for services on October 2, 2023 and termination of the Chief Technology and Manufacturing Officer effective October 20, 2023.
Most Important Facts for Investors to Verify
- Whether Genprex can raise sufficient capital before its projected second-quarter 2024 liquidity horizon and the terms and dilution associated with future financing.
- Whether the new REQORSA batch is produced successfully and on schedule, avoiding clinical-trial interruptions.
- Actual enrollment, safety, efficacy, and interim results for Acclaim-1, Acclaim-2, and Acclaim-3, rather than relying on preliminary company commentary.
- Whether Genprex regains Nasdaq minimum-bid-price compliance by February 26, 2024 or obtains an additional compliance period.
- Progress in remediating material weaknesses in internal controls and whether subsequent filings report effective controls.
- The potential dilution from 59.4 million shares outstanding, 13.96 million warrants, 11.67 million options, and 2.28 million unvested restricted stock units.
- The filing presents an accumulated deficit of $127.8 million in the financial statements, while a risk-factor discussion refers to approximately $128.8 million; investors should verify the intended figure and reconcile the discrepancy.