Business Context and Reporting Period
Company: Processa Pharmaceuticals, Inc. (PCSA)
Filing Type: Form 10-K (Annual Report)
Period Ended: December 31, 2025
Business Overview: Processa is a clinical-stage biopharmaceutical company developing "Next Generation Cancer" (NGC) therapies designed to improve the safety and efficacy of existing cancer drugs by altering their metabolism or distribution. The company also maintains a digital asset treasury strategy, holding Chiliz (CHZ) tokens.
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(13,563,834) | $(11,850,118) |
| Operating Expenses | $13,988,505 | $12,051,206 |
| Cash and Cash Equivalents (Year End) | $5,536,955 | $1,191,325 |
| Digital Assets (Fair Value) | $1,145,180 | $0 |
| Accumulated Deficit | $(100,783,033) | $(87,219,199) |
| Net Cash Used in Operating Activities | $(11,385,195) | $(11,245,042) |
Liquidity: As of December 31, 2025, the company held $5.5 million in cash and $1.1 million in digital assets. Management states that substantial doubt exists regarding the company's ability to continue as a going concern without additional financing, which is expected to be required in the second quarter of 2026.
Material Changes vs. Prior Period
- Increased Operating Loss: Net loss increased by approximately $1.7 million (14.5%) year-over-year, driven by higher research and development (R&D) and general and administrative (G&A) expenses.
- R&D Expenses: Increased by $541,000 to $7.8 million, primarily due to costs associated with the Phase 1B trial for NGC-Cap and the initiation of the Phase 2 trial.
- G&A Expenses: Increased by $1.4 million to $6.2 million, attributed to higher salaries, stock-based compensation, professional fees, and investment fees.
- Digital Asset Strategy: The company initiated a digital asset treasury strategy in 2025, purchasing $850,000 of CHZ tokens, resulting in an unrealized gain of $295,180 for the year.
- Capital Raises: Financing activities provided $16.6 million in net proceeds in 2025, compared to $7.7 million in 2024, through public offerings, private placements, and an At-The-Market (ATM) program.
Guidance, Outlook, and Risks
Outlook and Management Commentary
- Clinical Progress: The Phase 2 trial for NGC-Cap (breast cancer) has enrolled 20 patients; enrollment is temporarily on hold pending an interim analysis expected in the first half of 2026. The Phase 1B trial for NGC-Cap (GI tumors) is complete.
- Non-Oncology Assets: A binding term sheet for PCS12852 (gastroparesis) with Intact Therapeutics expired in February 2026 without a definitive agreement. The company is exploring other partnership opportunities.
- Capital Needs: Management explicitly states the need to raise additional capital in Q2 2026 to fund operations and clinical trials. Failure to secure funding could force delays or termination of development programs.
Risks and Contingencies
- Going Concern: The auditor has issued a "substantial doubt" opinion regarding the company's ability to continue as a going concern due to recurring losses and negative cash flows.
- Litigation: The company is involved in active litigation with Elion Oncology regarding the termination of a license agreement for NGC-Cap. Additionally, a lawsuit filed by investors alleging fraud is ongoing, with discovery in progress.
- Digital Asset Volatility: The company faces significant risks related to the volatility, regulation, and custody of its digital asset holdings (CHZ tokens).
- License Agreements: The company has not met certain diligence milestones under its license agreement with Yuhan Corporation, creating a risk of termination.
Investor Verification Checklist
- Capital Runway: Verify the timeline and certainty of the anticipated Q2 2026 capital raise to confirm the company can fund operations through the interim analysis of the NGC-Cap Phase 2 trial.
- Litigation Status: Monitor the discovery phase and potential outcomes of the Elion Oncology license dispute and the investor fraud lawsuit, as adverse rulings could impact core assets or financial stability.
- Clinical Trial Data: Await the interim analysis results for the NGC-Cap Phase 2 trial (expected H1 2026) to validate the safety and efficacy profile compared to monotherapy.
- Digital Asset Exposure: Review the valuation and custody arrangements for the CHZ token holdings, given the high volatility and regulatory uncertainty associated with digital assets.
- License Compliance: Confirm the status of diligence milestones with Yuhan Corporation to ensure the PCS12852 license remains in good standing.