RenovoRx, Inc. — Q3 2023 Form 10-Q
Business and reporting period. This unaudited quarterly report covers the three and nine months ended September 30, 2023. RenovoRx is a clinical-stage biopharmaceutical company developing targeted cancer therapies using its TAMP delivery platform. Its lead candidate, RenovoGem, is in a Phase III trial for locally advanced pancreatic cancer (LAPC); it is not approved for sale, and the company has no product revenue.
Financial performance and position
| Metric | Q3 2023 / September 30, 2023 | Comparable period / prior balance |
|---|---|---|
| Revenue | None | None reported |
| Research and development expense | $1.629 million for Q3; $4.892 million for nine months | $0.846 million and $3.525 million, respectively, in 2022 |
| General and administrative expense | $1.354 million for Q3; $4.727 million for nine months | $1.315 million and $4.255 million, respectively, in 2022 |
| Total operating expenses / operating loss | $2.983 million / $(2.983) million for Q3; $9.619 million / $(9.619) million for nine months | $2.161 million / $(2.161) million and $7.780 million / $(7.780) million in 2022 |
| Net loss | $(1.421) million for Q3; $(7.005) million for nine months | $(2.136) million and $(7.733) million in 2022 |
| Net loss per share, basic and diluted | $(0.13) for Q3; $(0.69) for nine months | $(0.24) and $(0.86) in 2022 |
| Cash and cash equivalents | $3.226 million | $4.391 million at December 31, 2022; additionally, $2.049 million of short-term securities then |
| Cash flows, nine months | Operating $(8.205) million; investing $2.032 million; financing $5.008 million | 2022: operating $(7.130) million; investing $(5.008) million; financing $0.039 million |
| Liabilities and equity | Total liabilities $3.513 million, including $1.908 million warrant liability; stockholders’ equity $0.006 million | At December 31, 2022: liabilities $1.102 million; equity $6.163 million |
Amounts are in U.S. dollars. No product-sales margins are reported because the company has no product revenue. No debt balance or credit facility is reported; the company says it has no committed sources of capital.
Material changes and operating developments
- Q3 operating expenses rose 38% year over year, mainly because of higher Phase III trial costs and employee-related expenses. Nine-month operating expenses increased 24%.
- Net loss narrowed versus 2022, despite higher operating expenses. The improvement primarily reflects noncash gains from remeasuring the March 2023 common warrant liability: $1.519 million in Q3 and $3.092 million for the nine-month period. These gains do not represent operating revenue or cash generated.
- Cash declined by $1.165 million during the first nine months of 2023. The company received approximately $5.0 million gross ($4.4 million net, per management’s discussion) from its March 2023 offering of common stock, pre-funded warrants and common warrants.
- At September 30, the company reported an accumulated deficit of $38.178 million. It has incurred recurring losses and expects losses and negative operating cash flows to continue.
Outlook, risks and unusual items
- Liquidity and going concern: Management estimated that existing capital would fund operating expenses and capital requirements only through February 2024. The filing concludes that substantial doubt exists about the company’s ability to continue as a going concern. Additional financing may not be available on acceptable terms, or at all; without it, the company may delay, reduce or discontinue programs or operations.
- Clinical program: The first TIGeR-PaC interim analysis was completed in March 2023, and the Data Monitoring Committee recommended continuing the trial. Following FDA comments received in August 2023, the company responded in September and planned to submit a revised statistical analysis plan and protocol amendment. As of October 26, 2023, 59 of the planned 114 SBRT patients had been randomized; management anticipated enrollment completion in 2024, a second interim analysis in late 2024 and final readout in 2025. These are estimates, and the FDA may object to proposed changes.
- The company is finalizing a Phase III protocol for RenovoGem in extrahepatic cholangiocarcinoma, incorporating durvalumab. It expects to launch the trial after finalizing the protocol; timing and progress are uncertain. RenovoGem has FDA Orphan Drug Designation for pancreatic cancer and cholangiocarcinoma, but designation does not assure approval or market exclusivity.
- Nasdaq listing: Nasdaq notified the company in August 2023 that it did not meet the $2.5 million stockholders’ equity requirement, based on June 30 equity of $1.188 million. Nasdaq granted an extension through February 19, 2024, to demonstrate compliance. Failure to do so could lead to delisting; the company says there is no assurance it will comply.
- Financial reporting controls: Management concluded disclosure controls were ineffective due to previously identified material weaknesses, including limited accounting staffing and expertise, gaps in written procedures and insufficient segregation of duties. Remediation is underway, with completion intended during 2024; the filing says the financial statements were fairly presented after additional analysis.
- Other principal risks include clinical-trial enrollment and outcome uncertainty, regulatory review, reliance on third-party manufacturers and trial providers, potential dilution from future financing, and possible disruption from COVID-19 or other events. The company reported no material legal proceedings and no significant changes to contractual obligations.
Investor verification priorities
- Verify current cash runway, burn rate and financing plans, especially against the February 2024 runway estimate and going-concern warning.
- Track compliance with Nasdaq’s equity requirement by the February 19, 2024 deadline and any subsequent listing notices.
- Review FDA feedback and the final protocol/statistical analysis plan for TIGeR-PaC, trial enrollment, interim-analysis timing and eventual results.
- Separate recurring operating performance from noncash warrant fair-value gains and monitor warrant liability and potential dilution.
- Follow progress and launch timing for the proposed cholangiocarcinoma trial, including the final protocol and use of durvalumab.
- Assess whether the company remediates material weaknesses in internal controls and whether future filings report effective controls.