Business context and reporting period
The supplied filing is TapImmune Inc.’s unaudited Form 10-Q for the quarter ended September 30, 2017; it does not identify Marker Therapeutics. TapImmune described itself as a clinical-stage immuno-oncology company developing peptide- and gene-based therapies. Its lead programs included TPIV200 for breast and ovarian cancers and TPIV110 for HER2/neu-positive cancers. The filing says the company had generated no revenue since inception.
Financial results and position
| Metric | Three months ended September 30, 2017 | Nine months ended September 30, 2017 | Comparable 2016 period |
|---|---|---|---|
| Revenue | No product revenue reported | No product revenue reported | No product revenue reported |
| Research and development expense | $1.62 million | $3.82 million | $1.11 million and $3.34 million, respectively |
| General and administrative expense | $2.55 million | $5.17 million | $1.61 million and $3.56 million, respectively |
| Total operating expenses | $4.17 million | $8.98 million | $2.72 million and $6.90 million, respectively |
| Net loss | $3.99 million; $0.39 per share | $8.30 million; $0.91 per share | $2.10 million and $0.88 million, respectively |
Gross margin and operating margin are not meaningful for the reported periods because the company reported no product revenue. Nine-month net cash used in operations was $5.96 million, compared with $4.76 million in 2016. Financing activities provided $5.72 million, and cash declined by $0.24 million to $7.61 million. At September 30, cash was $7.61 million, working capital was approximately $5.94 million, and total current liabilities were $1.77 million. The balance sheet included a $5,000 promissory note due and bearing 10% annual interest; no material debt balance was reported.
Changes, financing and unusual items
- Operating expenses rose year over year, reflecting clinical-trial spending and higher G&A, including stock compensation, increased headcount, professional fees and investor-relations costs. Nine-month stock-based compensation was $2.33 million.
- Net loss widened substantially versus the first nine months of 2016. The comparison is affected by 2016 noncash warrant fair-value income of $5.93 million; 2017 also included a $492,000 gain from extinguishing an accrued Crucell research-agreement obligation after legal review concluded the amount was time-barred. The company also reported $183,000 of grant income in the first nine months of 2017.
- A June 2017 private placement of common shares and warrants generated $6.2 million gross proceeds; offering fees and legal costs were $0.8 million. The company also received approximately $0.7 million from warrant exercises. It repriced several existing warrant series, with a reported $622,000 fair-value amount treated as a deemed dividend. Shares outstanding increased to 10.54 million at September 30, from 8.42 million at year-end 2016.
- The company said existing cash was expected to fund operations into the third quarter of 2018, but substantial additional capital would be needed. It disclosed substantial doubt about its ability to continue as a going concern and said financing might not be available on acceptable terms or at all.
Outlook, developments and risks
- Management expected expenses to continue at a similar pace through the remainder of 2017 and into 2018, primarily to support Phase II trials. It cited $17.1 million in combined Department of Defense grants to Mayo Clinic for two studies and a separate $3.8 million grant announced for a Mayo Clinic DCIS study.
- Clinical updates included more than 90% enrollment in TapImmune’s 80-patient TPIV200 triple-negative breast cancer study, with top-line data expected in early 2018; six patients enrolled in its 120-patient platinum-sensitive ovarian cancer study; and more than 50% enrollment in an MSKCC study combining TPIV200 with AstraZeneca’s durvalumab. These were management-reported expectations and progress updates, not trial outcomes.
- Management planned an amended IND and a Phase II protocol for TPIV110; the filing described regulatory and development work as ongoing. Product candidates remained investigational and subject to clinical and regulatory risk.
- Management stated disclosure controls and procedures were not effective as of September 30, 2017. It reported no material change in internal control over financial reporting during the quarter.
- Registration-rights agreements tied to the June placement could require liquidated damages of about $57,000 per month if registration requirements were missed. Management said payment was not probable as of September 30, 2017.
Key facts investors should verify
- Confirm issuer identity: this source is TapImmune Inc.’s 2017 10-Q, not a filing naming Marker Therapeutics.
- Review the going-concern disclosure, cash runway assumptions and the company’s ability to secure additional financing.
- Track clinical enrollment, timing and eventual results against management’s stated expectations; verify grant funding and which trial costs the company bears.
- Assess potential dilution from outstanding warrants, repriced exercise prices, equity awards and future capital raises.
- Check registration-statement compliance and any resulting liquidated-damage exposure, and follow remediation of ineffective disclosure controls.