Indaptus Therapeutics, Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022; unaudited. Indaptus is a preclinical biotechnology company developing immune-based therapies for cancer and viral disease. It reported no product revenue.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Research and development expense | $1.61 million | $0.70 million | $4.41 million | $1.58 million |
| General and administrative expense | $1.94 million | $2.67 million | $6.41 million | $2.93 million |
| Total operating expenses | $3.55 million | $3.37 million | $10.82 million | $4.51 million |
| Net loss | $3.47 million | $3.37 million | $10.67 million | $4.50 million |
| Basic and diluted loss per share | $0.42 | $0.81 | $1.29 | $1.67 |
- Liquidity: At September 30, cash and cash equivalents were $6.72 million and marketable securities were $21.74 million, totaling approximately $28.46 million, compared with $39.13 million in cash at December 31, 2021. Marketable securities were U.S. Treasury bonds classified as available-for-sale.
- Cash flow: Nine-month operating cash use was $10.87 million, versus $7.75 million in 2021. Investing cash use was $21.55 million, principally from purchases of marketable securities. There were no financing cash flows in the 2022 period; 2021 financing provided $47.97 million, mainly from the merger and private placement.
- Balance sheet and debt: Total assets were $30.45 million and total liabilities were $2.89 million. The filing reports no borrowings; lease liabilities totaled approximately $0.10 million. Stockholders’ equity was $27.57 million.
- Margins: Not meaningful because the company reported no revenue.
Material changes versus prior comparable periods
- Q3 R&D expense rose approximately $0.91 million, mainly due to clinical-trial preparation, manufacturing work for the lead candidate, and payroll. Nine-month R&D rose $2.83 million, including IND and Phase 1 preparation costs.
- Q3 G&A expense declined approximately $0.73 million, principally because of lower payroll, stock compensation, and merger-related professional fees. Nine-month G&A increased $3.48 million, reflecting higher headcount, stock compensation, directors’ and officers’ insurance, and public-company costs.
- Nine-month net loss increased $6.17 million as operating expenses rose. Loss per share was lower than the prior-year comparison, alongside a larger weighted-average share count in 2022.
- Cash and cash equivalents fell from year-end, in part because cash was moved into marketable securities; total cash plus securities was approximately $28.46 million at quarter-end.
Outlook, risks, and unusual items
- The FDA cleared the IND for a Phase 1 trial in May 2022. Management planned to begin a Phase 1 study in advanced solid tumors before year-end 2022; this filing does not report that the trial had started. Management expected R&D and G&A costs to increase as clinical development and operations expand.
- Management stated that available cash and marketable securities were expected to fund operations for at least one year after the financial statements’ issuance. The company nevertheless expects to need substantial additional financing, and future financing is not assured. Failure to raise capital could require delaying, reducing, or ending programs.
- Indaptus accrued approximately €1 million (about $1 million) for an arbitration claim by LTS, which alleges it is owed €2 million related to the discontinued Accordion Pill business. The company had paid approximately €1 million and disputes any further obligation; arbitration was expected to continue through Q1 2023.
- The company had an at-the-market facility of up to $6.3 million, but reported that no shares had been sold under it as of the filing.
- Risks include clinical and regulatory uncertainty, manufacturing and trial delays, dependence on additional capital, competition, intellectual-property matters, and possible effects of COVID-19 and market disruption related to the Russia-Ukraine conflict. The company cited prior GMP-process delays related to COVID-19.
- Management reported effective disclosure controls as of September 30, 2022, and no material changes in internal control over financial reporting during the quarter.
Investor verification priorities
- Confirm whether the planned Phase 1 trial began, its timing, enrollment, and costs.
- Track quarterly cash burn and the composition and liquidity of the Treasury securities; assess runway against the company’s stated financing needs.
- Check for use of the $6.3 million ATM facility or other financing, and potential dilution from outstanding options and warrants.
- Follow the LTS arbitration, including any settlement, ruling, or change to the accrued amount.
- Monitor clinical manufacturing, regulatory milestones, and any delays or changes to development plans.