Indaptus Therapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Indaptus is a preclinical biotechnology company developing immunotherapy candidates; it reported no revenue. The company completed its merger with Decoy Biosystems in August 2021, and the business comparison with Q1 2021 therefore reflects a different post-merger operating profile.
Financial performance and position
| Metric | Q1 2022 / March 31, 2022 | Comparable / prior balance |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $1.30 million | $0.49 million in Q1 2021; up 165% |
| General and administrative expense | $2.10 million | $0.12 million in Q1 2021; up 1,594% |
| Total operating expenses | $3.40 million | $0.61 million in Q1 2021; up 454% |
| Net loss | $3.37 million | $0.61 million in Q1 2021; loss increased 450% |
| Basic and diluted loss per share | $0.41 | $0.31 in Q1 2021 |
| Net cash used in operating activities | $3.12 million | $0.83 million in Q1 2021 |
| Cash and cash equivalents | $33.22 million | $39.13 million at December 31, 2021 |
| Marketable securities | $2.96 million | None at December 31, 2021 |
| Total current assets / current liabilities | $36.92 million / $3.68 million | Working capital: approximately $33.24 million |
| Total liabilities | $3.73 million | Primarily accounts payable and operating lease liabilities; no borrowing debt reported |
Operating expenses substantially increased, in part because of greater payroll and stock-based compensation, preparation for clinical development, and costs of operating as a public company. Stock-based compensation was $831,000, compared with $20,000 in Q1 2021. There was no operating margin to assess because the company had no revenue.
Investing activities used $2.80 million, mainly to purchase marketable securities; the company received $173,000 from the sale of assets held for sale. There was no financing cash flow in Q1 2022, versus $3.68 million of SAFE proceeds in Q1 2021. Cash and cash equivalents declined by $5.92 million during the quarter.
Business developments, outlook, and risks
- Management said an IND application had recently been filed with the FDA and planned to begin a Phase 1 solid-tumor trial in the second half of 2022, subject to the IND becoming effective.
- The company reported successful GMP manufacturing of its lead candidate, Decoy20, and completion of other IND-enabling studies. Its therapeutic claims and activity described in the filing are based on preclinical models.
- Management expected R&D and G&A expenses to increase as clinical development and operations expand. The company stated it believed available cash would fund operations for more than one year from the filing date, while also stating that substantial additional funding would be needed to meet longer-term development and commercialization objectives.
- The filing identifies financing availability, clinical and regulatory outcomes, manufacturing, intellectual-property protection, and dependence on third parties as risks. COVID-19 had lengthened GMP work and could disrupt suppliers, trials, regulatory activity, and access to capital. Management also cited uncertainty from financial-market disruptions related to COVID-19 and the Russia-Ukraine conflict.
- The company had an accumulated deficit of $19.0 million and expects future losses. Management’s plans to obtain additional capital or pursue collaborations were not within its control and were not considered probable. If financing is unavailable, the company may need to delay, reduce, or eliminate programs or operations.
- No pending legal proceedings expected to have a material adverse effect were disclosed. The company reported operating lease liabilities of $148,000 and stated it had no material off-balance-sheet arrangements. Disclosure controls were assessed as effective; no material change in internal control over financial reporting was reported.
Investor verification points
- Check the FDA’s status of the IND and whether the planned Phase 1 trial began on the stated timeline.
- Track cash, marketable securities, quarterly operating cash use, and management’s funding runway assumptions; the filing’s runway statement is an estimate, not a guarantee.
- Monitor clinical-development spending and the drivers of the sharp year-over-year increase in operating expenses, including stock-based compensation and public-company costs.
- Assess potential dilution: at March 31, 2022, 3.09 million warrants and 1.58 million options were outstanding, in addition to 8.26 million common shares outstanding.
- Review subsequent filings for changes in financing plans, trial or manufacturing timing, and the effects of pandemic or market conditions.