Indaptus Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Indaptus is a preclinical biotechnology company developing immunotherapy candidates. It reported no product revenue; operating expenses and losses reflect research and development and public-company operations.
Key financial metrics
| Metric | Q2 2022 / June 30, 2022 | Comparable period / December 31, 2021 |
|---|---|---|
| Revenue | No revenue reported | No revenue reported |
| Research and development expense | $1.51 million for Q2; $2.80 million for six months | $0.39 million for Q2 2021; $0.88 million for six months 2021 |
| General and administrative expense | $2.36 million for Q2; $4.47 million for six months | $0.14 million for Q2 2021; $0.26 million for six months 2021 |
| Net loss | $3.84 million for Q2; $7.20 million for six months | $0.52 million for Q2 2021; $1.13 million for six months 2021 |
| Net loss per share, basic and diluted | $0.46 for Q2; $0.87 for six months | $0.27 for Q2 2021; $0.58 for six months 2021 |
| Cash, cash equivalents and marketable securities | $33.01 million | $39.13 million in cash and equivalents; no marketable securities |
| Current assets / current liabilities | $33.27 million / $3.62 million | $40.39 million / $4.60 million |
| Total liabilities | $3.65 million, including operating lease liabilities | $4.68 million |
| Operating cash flow | $(6.27) million for the six months | $(2.12) million for the six months ended June 30, 2021 |
The company reported no borrowing debt. Marketable securities were short-term U.S. Treasury bonds; their six-month unrealized loss was $26,937. The company’s current-asset excess over current liabilities was approximately $29.65 million. Six-month comprehensive loss was $7.23 million. No revenue-based margins are applicable.
Changes versus prior comparable periods
- Six-month operating expenses increased to $7.27 million from $1.14 million, and net loss rose to $7.20 million from $1.13 million. Q2 net loss increased to $3.84 million from $0.52 million.
- Management attributed higher R&D spending primarily to staffing and preparation for the Phase 1 trial and IND submission. Higher G&A mainly reflected increased headcount, stock-based compensation, public-company insurance and professional fees.
- Six-month stock-based compensation increased to $1.74 million from $41,118. Cash and equivalents declined, while the company invested $18.78 million in marketable securities; operating cash use also increased.
- Prior-year periods preceded the August 2021 merger and public listing, so the sharp expense and loss increases also reflect the company’s changed operating structure. Weighted-average shares were 8.26 million in 2022 versus 1.94 million in 2021.
Outlook, risks and notable items
- The FDA cleared the IND for Decoy20 in May 2022. Management planned to begin a Phase 1 trial in advanced solid tumors in the second half of 2022 and expected R&D and G&A expenses to rise as development and operations expand.
- Management stated cash resources were adequate for at least one year after issuance of the financial statements and, in MD&A, for more than one year from the report date. It also expects to need substantial additional financing; future funding availability and terms are uncertain, and inability to raise capital could require delaying, reducing or ending programs.
- On July 13, 2022, LTS filed for arbitration seeking €2 million under a process-development agreement related to the discontinued Accordion Pill business. Indaptus accrued approximately $2.1 million at June 30, 2022 for the potential obligation.
- Disclosed risks include clinical and regulatory uncertainty, development and manufacturing costs, financing needs, intellectual-property and litigation exposure, and potential COVID-19 and Russia-Ukraine-related effects on operations, markets and financing. The filing states the ultimate effects of these events were uncertain.
- Outstanding options totaled 1.61 million and warrants to purchase 3.09 million shares were outstanding at June 30, 2022, creating potential dilution. The company reported effective disclosure controls and no material quarterly change in internal control over financial reporting.
Investor facts to verify
- Whether the planned Phase 1 trial began on schedule, and its enrollment, safety and cost trajectory.
- Cash runway assumptions and the timing, amount and terms of any future financing or partnering arrangements.
- The status and outcome of the LTS arbitration and whether the accrued amount changes.
- Actual quarterly operating cash use, and the fair value and liquidity of the Treasury securities.
- Potential dilution from options and warrants; 8,258,597 common shares were outstanding as of August 4, 2022.