Filing summary
Registrant note: The supplied filing is TapImmune Inc.’s Form 10-Q for the quarter ended June 30, 2015, not a filing identifying Marker Therapeutics, Inc. as the registrant.
Business context and reporting period
TapImmune is a clinical-stage biotechnology company developing peptide- and gene-based immunotherapies and vaccines. This unaudited report covers the three and six months ended June 30, 2015, with comparisons to 2014. The company reported no revenue in either current or comparable period.
Key financial metrics
| Metric | Three months ended June 30, 2015 | Six months ended June 30, 2015 |
|---|---|---|
| Revenue | None | None |
| Operating expenses | $1.138 million | $2.166 million |
| Net loss | $18.446 million | $19.427 million |
| Basic and diluted loss per share | $0.55 | $0.64 |
| Net cash used in operations | Not provided separately for the quarter | $1.828 million |
| Net cash provided by financing | Not provided separately for the quarter | $4.791 million |
At June 30, 2015, cash was $3.105 million, current assets were $3.248 million, current liabilities were $13.061 million, and working capital was negative $9.813 million. The balance sheet included a $11.673 million warrant derivative liability, $492,365 of research agreement obligations, and $52,942 of promissory notes. The filing does not report a meaningful gross margin; there was no revenue.
Changes versus prior comparable periods
- Second-quarter net loss swung from income of $753,480 in 2014 to a loss of $18.446 million in 2015. The 2015 loss included $9.052 million of expense from changes in warrant derivative fair value and $8.256 million of warrant inducement expense.
- Six-month net loss improved from $28.954 million in 2014 to $19.427 million in 2015. The prior-year period included a $26.743 million loss on debt extinguishment; the 2015 period included the derivative and inducement expenses noted above.
- Operating expenses rose 123% for the quarter to $1.138 million, with general and administrative expense increasing to $937,000 and research and development to $201,000. For the six-month period, operating expenses increased to $2.166 million: lower G&A ($1.356 million versus $1.688 million) was more than offset by higher R&D ($811,000 versus $45,000).
- Six-month operating cash use increased from $611,442 to $1.828 million. Financing cash inflows rose to $4.791 million, principally from private placements and warrant exercises. Cash increased from $141,944 at year-end 2014.
- Common shares outstanding were 38,038,921 at June 30, versus 20,318,815 at December 31, 2014. The filing reported 46,140,771 shares outstanding as of August 14, 2015.
Outlook, commentary, risks and unusual items
- Management estimated approximately $7.5 million of spending over the next 12 months, assuming one Phase II clinical trial, and said additional financing would be necessary. It stated current capital resources were insufficient to support operations; the going-concern uncertainty raises substantial doubt about the company’s ability to continue.
- Management planned to advance HER2/neu and folate receptor alpha programs toward Phase II, continue Polystart preclinical development, and seek additional capital. It described Phase I results as safe and reported immune responses in 19 of 20 evaluable HER2/neu patients and 20 of 21 evaluable folate receptor alpha patients. These are management-reported results, not proof of clinical efficacy.
- After quarter-end, TapImmune reported $1.578 million of proceeds from 7.89 million Series B warrant exercises. It also entered a Mayo Foundation license agreement for folate receptor alpha immunotherapy intellectual property, paid $350,000 upfront, assumed responsibility for the related IND, and agreed to potential further payments, milestones and royalties.
- Warrants were substantially repriced and expanded in May; the company recorded $8.256 million of inducement expense. The warrant liability’s fair value depends on Level 3 valuation inputs and could differ materially from eventual settlement value. Potentially dilutive securities totaled 84.848 million at June 30, though excluded from diluted loss per share as anti-dilutive.
- Management concluded disclosure controls and procedures were not effective at period-end. The filing also describes consultant-related litigation and a $51,000 vendor judgment that the company intended to settle in the third quarter of 2015.
Important facts for investors to verify
- Confirm the intended issuer: this filing names TapImmune Inc., whereas the request names Marker Therapeutics, Inc.
- Verify current cash, financing availability, and expected runway against the stated $7.5 million 12-month spending estimate and going-concern warning.
- Review warrant terms, potential dilution, derivative-liability valuation assumptions, and subsequent warrant exercises.
- Check progress and independently assess clinical evidence, Phase II plans, regulatory milestones, and obligations under the Mayo license.
- Follow remediation of ineffective disclosure controls and the status or resolution of the disclosed legal and vendor matters.