Business context and reporting period
The supplied filing is TapImmune Inc.’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2014—not a filing identified as Marker Therapeutics, Inc. Investors should verify the issuer and filing before relying on this summary. TapImmune described itself as a clinical-stage biotechnology company developing cancer and infectious-disease immunotherapies. It reported no revenue in the periods presented.
Key financial metrics
| Metric | Q3 2014 / September 30, 2014 | Comparison |
|---|---|---|
| Revenue | None reported | None reported in Q3 2013 or the comparable nine-month period |
| Operating expenses | $1.384 million for Q3; $2.977 million for nine months | Q3 2013: $0.290 million; nine months 2013: $1.454 million |
| Net loss | $1.568 million for Q3; $30.147 million for nine months | Q3 2013: $0.966 million; nine months 2013: $2.057 million |
| Cash and cash equivalents | $613,645 | $48,589 at December 31, 2013 |
| Current liabilities | $1.300 million | $8.845 million at December 31, 2013 |
| Working capital | Deficit of $656,195 | Deficit of $8.768 million at December 31, 2013 |
| Operating cash flow | Cash used of $1.518 million for nine months | $0.755 million used in the comparable 2013 period |
| Financing cash flow | $2.083 million provided for nine months | $0.726 million provided in the comparable 2013 period |
| Debt and other obligations | No convertible notes or related-party loans reported at quarter-end; $52,942 promissory notes and $492,365 research agreement obligations remained | Convertible notes payable were $3.162 million and related-party loans $42,200 at December 31, 2013 |
No gross profit or operating margin is applicable because the company reported no revenue. The nine-month net loss included a $26.838 million non-cash loss on debt settlement, a principal reason the reported loss rose sharply. Basic and diluted loss per share was $0.09 for Q3 and $2.27 for nine months, versus $0.76 and $2.00, respectively, in 2013.
Material changes and unusual items
- During the first nine months, convertible notes, accrued interest, other debt and payables were converted into equity. The filing reports approximately $8.426 million of debt and bridge debt converted, while the fair value assigned to shares issued for convertible notes and related interest was approximately $32.250 million. Debt settlement accounting produced the large non-cash loss.
- Common shares outstanding increased substantially, from 1,465,712 at December 31, 2013 to approximately 19.604 million at September 30, 2014, reflecting conversions, equity placements and other share issuances. The company also completed a 1-for-100 reverse split in January 2014; prior share data was restated.
- August financing included a registered direct offering described as approximately $2 million, with shares and warrants. The cash flow statement reports $2.098 million of net share issuance proceeds for the nine-month period.
- Q3 consulting, general and administrative, and professional expenses increased year over year, attributed principally to stock-based consulting compensation, investor-relations activity, and legal work related to restructuring and other matters.
Outlook, risks and contingencies
- Management expected substantial continuing losses and estimated approximately $7.5 million of expenditures over the next 12 months, assuming one Phase II trial and subject to obtaining financing. It stated that available capital was insufficient to support operations and that substantial doubt existed about the company’s ability to continue as a going concern.
- Management planned to seek additional debt or equity financing, strategic partnerships and non-dilutive funding. There was no assurance financing would be available on favorable terms, or at all.
- Clinical plans included advancing HER2/neu and folate receptor alpha cancer vaccine programs toward Phase II. The filing described Phase I studies as enrolled or completed in recruitment, but later-stage trials, regulatory steps and anticipated data remained subject to execution and funding. Smallpox vaccine work was also described as dependent on grants or partners.
- On November 5, 2014, after quarter-end, TapImmune announced a research collaboration with VGTI Florida intended to advance targeted breast and ovarian cancer vaccines into Phase II trials; the filing said TapImmune held exclusive commercialization rights.
- A consultant dispute included an arbitration award requiring a consultant to pay TapImmune $196,204 plus 9% interest; the company said it was pursuing collection. The company also disclosed unfiled income tax returns in certain jurisdictions and possible penalties and interest that it could not reliably estimate.
- Management concluded that disclosure controls and procedures were not effective at period-end. It reported no material changes in internal control over financial reporting during the nine-month period.
Important facts for investors to verify
- Confirm that this TapImmune 2014 filing is the intended filing, given the request’s reference to Marker Therapeutics.
- Check subsequent filings for cash runway, financing terms, and whether the stated $7.5 million spending plan was funded or revised.
- Review the debt-conversion accounting and the $26.838 million settlement loss, including the difference between debt converted and the fair value recorded for shares issued.
- Verify clinical-trial progress, regulatory milestones, and the status and economics of the VGTI Florida collaboration.
- Monitor remediation of ineffective disclosure controls, collection of the arbitration award, and any tax or other contingency assessments.