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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                         

Commission File Number: 001-39676

 

INHIBIKASE THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

26-3407249

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)  

3350 Riverwood Parkway SE, Suite 1900
Atlanta, GA 

30339

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (678) 392-3419

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.001 par value

 

IKT

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  

As of July 31, 2021, the registrant had 25,133,345 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Condensed Financial Statements (Unaudited)

1

 

Condensed Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020

1

 

Condensed Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited)

2

 

Condensed Statements of Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited)

3

 

Condensed Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020 (unaudited)

4

 

Notes to Unaudited Condensed Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

11

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

20

Item 4.

Controls and Procedures

20

PART II.

OTHER INFORMATION

21

Item 1.

Legal Proceedings

21

Item 1A.

Risk Factors

21

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

21

Item 3.

Defaults Upon Senior Securities

21

Item 4.

Mine Safety Disclosures

21

Item 5.

Other Information

21

Item 6.

Exhibits

23

Signatures

24

 

 

i


 

 

PART I—FINANCIAL INFORMATION

Item 1. Condensed Financial Statements (Unaudited).

Inhibikase Therapeutics, Inc.

Condensed Balance Sheets

 

 

 

 

June 30,

2021

 

 

December 31,

2020

 

 

 

(unaudited)

 

 

(Note 3)

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$

46,836,556

 

 

$

13,953,513

 

Grants receivable

 

 

586,581

 

 

 

 

Prepaid research and development

 

 

958,779

 

 

 

774,356

 

Prepaid expenses and other current assets

 

 

833,963

 

 

 

54,837

 

Total assets

 

$

49,215,879

 

 

$

14,782,706

 

Liabilities and stockholders’ equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

897,226

 

 

$

1,720,680

 

Accrued expenses and other current liabilities

 

 

872,771

 

 

 

632,934

 

Deferred revenue

 

 

142,619

 

 

 

2,325,741

 

Notes payable

 

 

 

 

 

42,534

 

Total

 

 

1,912,616

 

 

 

4,721,889

 

Notes payable, net of current portion

 

 

248,911

 

 

 

276,461

 

Total liabilities

 

 

2,161,527

 

 

 

4,998,350

 

Commitments and contingencies (see Note 11)

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized at June 30,

   2021, and December 31, 2020; 0 shares issued and outstanding at June 30, 2021, and

   December 31, 2020

 

 

 

 

 

 

Common stock, $0.001 par value; 100,000,000 and 30,000,000 shares authorized;

   25,133,345 and 10,050,849 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively.

 

 

25,134

 

 

 

10,051

 

Additional paid-in capital

 

 

67,334,089

 

 

 

24,805,929

 

Accumulated deficit

 

 

(20,304,871

)

 

 

(15,031,624

)

Total

 

 

47,054,352

 

 

 

9,784,356

 

Total liabilities and stockholders' equity

 

$

49,215,879

 

 

$

14,782,706

 

 

See accompanying notes to condensed financial statements.

1


Inhibikase Therapeutics, Inc.

Condensed Statements of Operations

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant revenue

 

$

1,363,037

 

 

$

219,585

 

 

$

2,770,202

 

 

$

490,372

 

Total revenue

 

 

1,363,037

 

 

 

219,585

 

 

 

2,770,202

 

 

 

490,372

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

2,382,433

 

 

 

263,175

 

 

 

4,814,293

 

 

 

546,289

 

Selling, general and administrative

 

 

1,608,972

 

 

 

370,331

 

 

 

3,209,548

 

 

 

898,019

 

Total costs and expenses

 

 

3,991,405

 

 

 

633,506

 

 

 

8,023,841

 

 

 

1,444,308

 

Loss from operations

 

 

(2,628,368

)

 

 

(413,921

)

 

 

(5,253,639

)

 

 

(953,936

)

Interest expense

 

 

(7,811

)

 

 

(7,948

)

 

 

(19,608

)

 

 

(15,373

)

Net loss

 

$

(2,636,179

)

 

$

(421,869

)

 

$

(5,273,247

)

 

$

(969,309

)

Net loss per share – basic and diluted

 

$

(0.22

)

 

$

(0.05

)

 

$

(0.47

)

 

$

(0.12

)

Weighted-average number of common shares – basic and diluted

 

 

12,241,935

 

 

 

8,181,938

 

 

 

11,153,986

 

 

 

8,181,836

 

 

See accompanying notes to condensed financial statements.

2


Inhibikase Therapeutics, Inc.

Condensed Statements of Stockholders’ Equity (Deficit)

(Unaudited)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Deficit

 

 

Total

Stockholders’

Equity

 

Balance at December 31, 2020

 

 

10,050,849

 

 

$

10,051

 

 

$

24,805,929

 

 

$

(15,031,624

)

 

$

9,784,356

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

591,124

 

 

 

 

 

 

591,124

 

Warrant expense

 

 

 

 

 

 

 

 

237,768

 

 

 

 

 

 

237,768

 

Issuance of common stock

 

 

9,000

 

 

 

9

 

 

 

60,382

 

 

 

 

 

 

60,391

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,637,068

)

 

 

(2,637,068

)

Balance at March 31, 2021

 

 

10,059,849

 

 

$

10,060

 

 

$

25,695,203

 

 

$

(17,668,692

)

 

$

8,036,571

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

322,483

 

 

 

 

 

 

322,483

 

Warrant expense

 

 

 

 

 

 

 

 

239,415

 

 

 

 

 

 

239,415

 

Issuance of common stock, follow on offering

 

 

15,000,000

 

 

 

15,000

 

 

 

41,120,357

 

 

 

 

 

 

41,135,357

 

Issuance of common stock, stock options exercised

 

 

73,496

 

 

 

74

 

 

 

(43,369

)

 

 

 

 

 

(43,295

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,636,179

)

 

 

(2,636,179

)

Balance at June 30, 2021

 

 

25,133,345

 

 

$

25,134

 

 

$

67,334,089

 

 

$

(20,304,871

)

 

$

47,054,352

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Deficit

 

 

Total

Stockholders’

Equity (Deficit)

 

Balance at December 31, 2019

 

 

8,180,937

 

 

$

8,181

 

 

$

7,685,533

 

 

$

(12,183,730

)

 

$

(4,490,016

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

139,758

 

 

 

 

 

 

139,758

 

Warrent expense

 

 

 

 

 

 

 

 

190,993

 

 

 

 

 

 

190,993

 

Issuance of common stock

 

 

874

 

 

 

1

 

 

 

4,870

 

 

 

 

 

 

4,871

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(547,440

)

 

 

(547,440

)

Balance March 31, 2020

 

 

8,181,811

 

 

$

8,182

 

 

$

8,021,154

 

 

$

(12,731,170

)

 

$

(4,701,834

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

139,759

 

 

 

 

 

 

139,759

 

Issuance of warrants

 

 

 

 

 

 

 

 

89,515

 

 

 

 

 

 

89,515

 

Conversion of notes

 

 

11,594

 

 

 

11

 

 

 

63,789

 

 

 

 

 

 

63,800

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(421,869

)

 

 

(421,869

)

Balance at June 30, 2020

 

 

8,193,405

 

 

$

8,193

 

 

$

8,314,217

 

 

$

(13,153,039

)

 

$

(4,830,629

)

 

See accompanying notes to condensed financial statements.

 

3


 

Inhibikase Therapeutics, Inc.

Condensed Statements of Cash Flows

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(5,273,247

)

 

$

(969,309

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

913,607

 

 

 

279,517

 

Non-cash consulting fees

 

 

60,391

 

 

 

75,000

 

Non-cash PPP loan forgiveness

 

 

(27,550

)

 

 

 

Warrant expense

 

 

477,183

 

 

 

280,509

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Grants receivable

 

 

(586,581

)

 

 

 

Prepaid expenses and other assets

 

 

(779,126

)

 

 

(5,640

)

Prepaid research and development

 

 

(184,423

)

 

 

 

Accounts payable

 

 

(837,705

)

 

 

(211,076

)

Accrued expenses and other current liabilities

 

 

239,837

 

 

 

209,149

 

Deferred revenue

 

 

(2,183,122

)

 

 

83,508

 

Net cash used in operating activities

 

 

(8,180,736

)

 

 

(258,342

)

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

Proceeds from notes payable

 

 

 

 

 

272,800

 

Proceeds from issuance of common stock

 

 

41,149,608

 

 

 

4,870

 

Deferred initial public offering costs

 

 

 

 

 

(30,000

)

Issuance of common stock  from exercise of stock options

 

 

34,357

 

 

 

 

Payment of employee taxes in connection with stock option exercise

 

 

(77,652

)

 

 

 

Repayments of note payable

 

 

(42,534

)

 

 

 

Net cash provided by financing activities

 

 

41,063,779

 

 

 

247,670

 

Net increase (decrease) in cash

 

 

32,883,043

 

 

 

(10,672

)

Cash at beginning of period

 

 

13,953,513

 

 

 

18,457

 

Cash at end of period

 

$

46,836,556

 

 

$

7,785

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

19,608

 

 

$

3,132

 

Non-cash financing activities

 

 

 

 

 

 

 

 

Notes payable settled with new notes payable

 

$

 

 

$

42,534

 

Notes payable settled with common stock

 

$

 

 

$

63,800

 

PPP loan forgiveness

 

$

27,550

 

 

$

 

Accrued deferred initial public offering costs

 

$

 

 

$

303,417

 

 

See accompanying notes to condensed financial statements.

4


Inhibikase Therapeutics, Inc.

Notes to Condensed Financial Statements

(Unaudited)

1.

Nature of Business

Inhibikase Therapeutics, Inc. (the “Company”, “we” or “our”)  is a clinical stage pharmaceutical company developing therapeutics for Parkinson’s Disease, or PD, and related disorders that arise inside and outside of the brain. In 2021, we commenced clinical development of IkT-148009, a small molecule Abelson Tyrosine Kinase inhibitor we believe can modify the course of Parkinson’s disease and its manifestation in the gastrointestinal tract, or GI.  Results to date of our ongoing Phase 1 Single and Multiple Ascending Dose escalation study (SAD and MAD, respectively) in older and elderly healthy volunteers have revealed important insights into the metabolism of IkT-148009 in human subjects.  Outcomes of this study have led to an acceleration of the clinical development program by more than 6 months.  In July 2021, the U.S. Food and Drug Administration (“FDA”) agreed with the Company’s plan to initiate its Phase 1b study in Parkinson’s patients.  We plan to initiate dosing in a Parkinson’s patient population in the third quarter of 2021.  Clinical development of IkT-148009 for the GI complications in PD patients will cross-reference the Phase 1 study of IkT-148009 for the treatment of PD.  Clinical development of the Company’s lead oncology asset, IkT-001Pro, is anticipated to begin shortly after submission of Company’s Investigational New Drug application for IkT-001Pro in the third quarter of 2021.

 

2.

Liquidity and Going Concern

The Company has recognized recurring losses. At June 30, 2021, the Company had working capital of $47,303,263, an accumulated deficit of $20,304,871, cash of $46,836,556, accounts payable and accrued expenses of $1,769,997 and notes payable of $248,911. The Company had active grants in the amount of $1,546,730, of which $772,420 remained available in accounts held by the U.S. Treasury as of April 30, 2021.

The future success of the Company is dependent on its ability to successfully obtain additional working capital, obtain regulatory approval for and successfully launch and commercialize its product candidates and to ultimately attain profitable operations. Historically, the Company has funded its operations primarily through cash received in connection with revenue from its various grant programs. In addition, in June 2021 and December 2020, the Company raised approximately $41.1 million and $14.6 million in working capital from its underwritten public offering (the “June 2021 Offering”) and its initial public offering (“IPO”), respectively.

The Company is subject to a variety of risks similar to other early-stage life science companies including, but not limited to, the successful development, regulatory approval, and market acceptance of the Company’s product candidates, development by its competitors of new technological innovations, protection of proprietary technology, and raising additional working capital. The Company has incurred significant research and development expenses and general and administrative expenses related to its product candidate programs. The Company anticipates costs and expenses to increase in the future as the Company continues to develop its product candidates.

The Company may seek to fund its operations through additional public equity, private equity, or debt financings, as well as other sources. However, the Company may be unable to raise additional working capital, or if it is able to raise additional capital, it may be unable to do so on commercially favorable terms. The Company’s failure to raise capital or enter into such other arrangements if and when needed, would have a negative impact on the Company’s business, results of operations and financial condition and the Company’s ability to continue to develop its product candidates.

The Company estimates that its working capital at June 30, 2021 is sufficient to fund its normal operations into the first half of fiscal 2023.

The accompanying condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

 

3.

Basis of Presentation and Significant Accounting Policies

Basis of Presentation of Interim Financial Statements

The accompanying unaudited condensed financial statements were prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all normal and recurring

5


adjustments necessary to present fairly the results of the interim periods shown. The December 31, 2020 balance sheet was derived from December 31, 2020 audited financial statements. Certain information and footnote disclosures normally included in financial  statements prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. The results for the interim periods are not necessarily indicative of results to be expected for the fiscal year ending December 31, 2021. The condensed unaudited financial statements contained herein should be read in conjunction with the Company’s annual audited financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report filed on SEC Form 10-K.

These condensed financial statements have been prepared on the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. The condensed financial statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

On August 21, 2020, the Company filed a Certificate of Amendment of its Certificate of Incorporation with the Secretary of State of the State of Delaware that effected a one-for-1.14396 (1:1.14396) reverse stock split of its common stock, par value $.001 per share, effective August 24, 2020. All warrant, option, share, and per share information in the Company’s financial statements gives retroactive effect to the one-for-1.14396 reverse stock split that was effected on August 24, 2020.

The condensed financial statements have been prepared in conformity with US GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative US GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are generally adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. The JOBS Act permits an emerging growth company such as the Company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. The Company has elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that it either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company.

Use of Estimates

The preparation of the Company’s financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the fair value of its stock options and warrants, deferred tax valuation allowances and revenue recognition, to record expenses relating to research and development contracts and accrued expenses. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from such estimates.

Concentrations of Credit Risk

For the three months ended June 30, 2021 and 2020, the Company derived more than 90% of its total revenue from a single source, the United States Government, in the form of federal research grants.

Revenue Recognition

The Company generates revenue from research and development grants under contracts with third parties that do not create customer-vendor relationships.  The Company’s research and development grants are non-exchange transactions and are not within the scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”).  Contribution revenue earned from activities performed pursuant to research and development grants is reported as grant revenue in the Company’s condensed statements of operations. Revenue from these grants is recognized as the Company incurs qualifying expenses as stipulated by the terms of the respective grant.  Cash received from grants in advance of incurring qualifying expenses is recorded as deferred revenue. The Company records revenue and a corresponding receivable when qualifying costs are incurred before the grants are received.

 

6


 

4.

Supplemental Balance Sheet Information

Accrued expenses and other current liabilities consist of the following:

 

 

 

June 30,

2021

 

 

December 31,

2020

 

Accrued consulting

 

$

222,525

 

 

$

115,405

 

Accrued legal and professional fees

 

 

 

 

 

383,286

 

Accrued research and development

 

 

542,189

 

 

 

83,491

 

Accrued interest

 

 

653

 

 

 

1,673

 

Accrued bonuses

 

 

101,907

 

 

 

 

Accrued other

 

 

5,497

 

 

 

49,079

 

Total accrued expenses and other current liabilities

 

$

872,771

 

 

$

632,934

 

 

5.

Notes Payable

Notes payable outstanding were $248,911 and $318,995 at June 30, 2021 and December 31, 2020, respectively.

 

 

 

June 30,

2021

 

 

December 31,

2020

 

Fifth Restated Note

 

$

 

 

$

42,534

 

PPP Note

 

 

 

 

 

27,550

 

CEO Restated Note

 

 

248,911

 

 

 

248,911

 

Total notes payable

 

$

248,911

 

 

$

318,995

 

 

Future principal payments on the notes payable as of June 30, 2021, are as follows: 

 

Year ending December 31,

 

 

 

 

2021

 

$

 

2022

 

 

248,911

 

2023

 

 

 

2024

 

 

 

2025

 

 

 

Total notes payable

 

$

248,911

 

     

Revolving Demand Promissory Note

During 2019 and 2020, the Company entered into a series of promissory notes that were renegotiated and partially settled over 2019 and 2020.

On January 1, 2020, the Company issued a note (the “2020 Note”) in the face amount of $103,586 bearing 5.25% APR simple interest as settlement in full on the 2019 Note principal of $98,419 plus accrued interest of $5,167 that matured on January 1, 2020. The 2020 Note was scheduled to mature on January 1, 2021. Upon occurrence of certain conditions including the sale of a division of the Company or upon the date on which the Company closes on certain financings, the due date for some or all of the unpaid principal and accrued and unpaid interest may be accelerated. The Company assessed the terms and features of the 2020 Note and determined that none of the terms and features represented embedded derivatives that require bifurcation.

On June 30, 2020, the holder of the 2020 Note and the Company entered into an agreement to settle the 2020 Note early. As full consideration and settlement of the 2020 Note’s June 30, 2020 principal balance plus accrued and unpaid interest in the amount of $106,334, the Company issued a new promissory note to the holder in the amount of $42,534 (the “Fifth Restated Note”) with substantially similar terms as the 2020 Note.  In addition, the holder subscribed for the purchase of 11,594 unregistered shares of the Company’s common stock at a subscription price of $63,800, or $5.50 per share. The issuance of shares under the subscription agreement and the issuance of the Fifth Restated Note satisfied the payoff of the 2020 Note without premium or discount.  The balance of the Fifth Restated Note was $42,534 on December 31, 2020 and is included in Notes payable.

The Fifth Restated Note was scheduled to mature on the earlier of a significant transaction, including an initial public offering, sale of substantially all assets or change of control, or January 1, 2021. The Company consummated its IPO on December 28, 2020 and the principal balance of the Fifth Restated Note plus accrued and unpaid interest was settled in full in cash on January 1, 2021.  

7


Note Payable to CEO

On February 5, 2020 (the “Issue Date”), the Company issued a note payable to its CEO (the “CEO Note”) in the face amount of $245,250 bearing 1.59% APR simple interest in exchange for cash. The net proceeds of $245,250 were used as working capital by the Company. The note carried an original maturity of the earlier of the sixth month following the Issue Date or the date the Company has sufficient funds to repay the CEO Note.  If an event of default occurs and is continuing, the Company agrees to issue a warrant to the holder with a strike price of $4.87 per share for a number of shares equal to 150% of the value of the loan.  The Company assessed the terms and features of the CEO Note and determined that none of the terms and features represented embedded derivatives that require bifurcation.

On June 13, 2020, the holder of the CEO Note and the Company entered into a restated agreement (the “CEO Restated Note”). The CEO Restated Note in the amount of $248,911 extends the stated maturity date of the CEO Note from the earlier of the sixth month following the (original) Issue Date or the date the Company has sufficient funds to repay the note to the earlier of the 30th month following the (original) Issue Date or the date the Company has sufficient funds to repay the CEO Restated Note. The Issue Date, February 5, 2020, is unchanged. In addition, the interest rate was reduced, effective as of the Issue Date, from 1.59% APR to 0.25%. The CEO Restated Note also changed the exercise price of the warrant from $4.87 to $4.81 per share in the case of any default. The other provisions of the CEO Restated Note are the same, in all material respects, to the CEO Note. The Company and its CEO have agreed that the CEO Restated Note will not be repaid for a minimum of 12 months following the closing of its IPO.  The principal balance of the CEO Note was $248,911 at June 30, 2021 and at December 31, 2020 and is included on the condensed balance sheets in Notes payable, net of current portion.

The Payroll Protection Program Loan (the “PPP Loan”)

On May 4, 2020 the Company received $27,550 in loan proceeds as part of the Federal CARES Act Paycheck Protection Program (the “PPP Act” or “PPP”) with a 1% annual interest rate. Some or all of this loan qualified for forgiveness if the Company expended not less than 60% of the loan proceeds on qualified payroll costs.  During the six months ended June 30, 2021, it was determined by the lender and by the Small Business Administration that the Company met the contractual conditions for forgiveness of the entire PPP Loan plus accrued interest and it was forgiven.   The $27,550 principal balance of the PPP Loan at December 31, 2020 is included on the condensed balance sheet in Notes payable, net of current portion.

 

6.

Stockholders’ Deficit

Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors, subject to the prior rights of holders of all classes of stock outstanding. A total of 5,186,570 and 4,318,357 shares of common stock were reserved for issuance upon the exercise of outstanding stock options and warrants as of June 30, 2021 and December 31, 2020, respectively.

Reverse Stock Split

On August 20, 2020, the board of directors adopted resolutions proposing that each 1.14396 shares of the Company’s issued and outstanding common stock, par value $0.001 per share, be automatically converted into one fully paid and non-assessable share of common stock, par value $0.001 (the “Reverse Stock Split”) with cash in lieu of fractional shares. On August 21, 2020, shareholders representing a majority of the issued and outstanding common stock approved the Reverse Stock Split. On August 21, 2020, the Company filed with the Delaware Secretary of State its Certificate of Amendment to its Certificate of Incorporation, effective as of August 24, 2020.

Share Issuances

In January 2020, an accredited investor subscribed for, and the Company issued, 874 shares of its stock in a private placement transaction at a per share price of $5.57. Net proceeds were approximately $4,870. Issuance costs were not material. No additional rights or options were granted to this accredited investor in connection with this issuance.

During the six months ended June 30, 2021, an accredited investor subscribed for, and the Company issued, 9,000 shares of its stock in exchange for consulting services.  The fair value of the stock was $60,391 based upon the closing price of the shares on the date of the transaction. Issuance costs were not material. No additional rights or options were granted to this accredited investor in connection with this issuance.  The $60,391 fair value is a component of selling, general and administrative costs for the six months ended June 30, 2021.

During the six months ended June 30, 2020 the Company issued 73,496 shares of its stock in connection with the exercise of non-qualified stock options.

In connection with the June 2021 Offering, the Company issued and sold 15,000,000 fully paid non-assessable shares of its common stock at a public offering price of $3.00 per share.  Proceeds from the June 2021 Offering were $41.1 million after deducting offering costs, underwriting discounts and commissions of approximately $3.9 million.  The net proceeds are and will be used as working capital by the Company.  

8


 

7.

Stock-Based Compensation

2020 Equity Incentive Plan

The Company’s 2020 Equity Incentive Plan (the “2020 Plan”) was established for granting stock incentive awards to directors, officers, employees and consultants to the Company.

 

Stock Options

During the six months ended June 30, 2021, the Company granted 68,628 options to its scientific advisory board members with a strike price of $6.82 per share, vesting immediately, with an aggregate grant date fair value of $259,674. No options were granted during the six months ended June 30, 2020.

On June 25, 2021, the Company granted a total of 90,708 options to members of its board of directors with a strike price of $2.92 per share, vesting one year from the date of the grant, with an aggregate grant date fair value of $160,000.

 

Stock-Based Compensation Expense

The following table summarizes the stock-based compensation expense for stock options granted to employees and non-employees:

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

Research and development

 

$

480,415

 

 

$

130,041

 

Selling, general and administrative

 

 

433,192

 

 

 

149,476

 

Total stock-based compensation expense

 

$

913,607

 

 

$

279,517

 

 

8.

Warrants

 

Warrants Issued

 

On March 31, 2020, the Company issued a warrant to purchase up to 26,225 shares of its stock to one of its consultants in exchange for services. The warrant contains a strike price of $5.67 per share and has a seven-year contractual term. The warrant is classified within stockholders’ equity at its fair value and was treated as a standalone instrument. The fair value of the warrant was determined to be $101,478 utilizing the Black-Scholes-Merton option-pricing model at the time of issuance and is included in selling, general and administrative expenses for the six months ended June 30, 2020.  There were no warrants issued during the six months ended June 30, 2021.  The Company recognized $237,768 in warrant expense for the six months ended June 30, 2021 included in selling, general and administration expense.

 

In connection with the June 2021 Offering the Company issued and sold to its underwriters, a warrant to purchase up to 750,000 shares of its common stock for an aggregate purchase price of $100 pursuant to its written agreement with the underwriters.  This warrant is exercisable beginning June 15, 2022 at an initial exercise price of $3.75 per share of common stock.  

 

Warrants Exercised

 

No warrants were exercised for the three months ended June 30, 2021 and 2020.

 

9


 

9.

Net Loss Per Share

The following table presents the calculation of basic and diluted net loss per share applicable to common stockholders:

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

Numerator:

 

 

 

 

 

 

 

 

Net loss

 

$

(5,273,247

)

 

$

(969,309

)

Denominator:

 

 

 

 

 

 

 

 

Weighted-average number of common shares

   outstanding – basic and diluted

 

 

11,153,986

 

 

 

8,181,836

 

Net loss per share applicable to common

   stockholders – basic and diluted

 

$

(0.47

)

 

$

(0.12

)

 

The following shares were excluded from the calculation of diluted net loss per share applicable to common stockholders, prior to the application of the treasury stock method, because their effect would have been anti-dilutive for the periods presented:

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

Options to purchase shares of stock

 

 

3,624,657

 

 

 

3,369,144

 

Warrants to purchase shares of stock

 

 

1,561,913

 

 

 

474,723

 

Total

 

 

5,186,570

 

 

 

3,843,867

 

 

10.

Income Taxes

During the six months ended June 30, 2021 and 2020, there was no provision for income taxes as the Company incurred losses during those periods. Deferred tax assets and liabilities reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company recorded a full valuation allowance against its deferred tax assets as the Company believes it is more likely than not the deferred tax assets will not be realized.

 

11.

Commitments and Contingencies

Impact of the COVID-19 Pandemic on Our Operations

The novel coronavirus SARS-Cov2, or COVID-19, pandemic is causing significant, industry-wide delays in clinical trials. There are multiple causes of these delays, including reluctance of patients to enroll or continue in trials for fear of exposure to COVID-19, local and regional shelter-in-place orders and regulations that discourage, hamper, or prohibit patient visits, healthcare providers and health systems shifting away from clinical trials toward the acute care of COVID-19 patients and the FDA and other regulators making product candidates for the treatment of COVID-19 a priority over product candidates unrelated to the pandemic.

As a result of the COVID-19 pandemic, commencement of enrollment of our clinical trials may be delayed. In addition, after enrollment in these trials, if patients contract COVID-19 during participation in the Company’s trials or are subject to isolation or shelter-in-place restrictions, this may cause them to drop out of the Company’s trials, miss scheduled doses or follow-up visits or otherwise fail to follow trial protocols. If patients are unable to follow the trial protocols or if the Company’s trial results are otherwise affected by the consequences of the COVID-19 pandemic on patient participation or actions taken to mitigate COVID-19 spread, the integrity of data from the Company’s trials may be compromised or not accepted by the FDA or other regulatory authorities, which could impact or delay a clinical development program. The Company anticipates that the COVID-19 pandemic may also impact manufacturing and distribution of materials necessary for the conductance of its clinical trials.

Although the Company did not experience a material impact on its operations during the six months ended June 30, 2021 and 2020, the Company notes the high level of difficulty in determining the future potential adverse financial impact and other effects of COVID-19 on the Company and its programs, given the rapid and dramatic evolution in the course and impact of the pandemic and the societal and governmental response to it.

Litigation

From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company will record a liability for the loss. In addition to the estimated loss, the recorded liability would include probable and estimable legal costs associated with the claim or potential claim. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business.

 

 

    

 

10


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Forward-Looking Statements

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes to those statements included elsewhere in this Quarterly Report on From 10-Q (“Report”). This discussion and analysis and other parts of this Report contain forward-looking statements based upon current beliefs, plans and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements regarding our intentions, plans, objectives, expectations, forecasts and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors.

All statements included or incorporated by reference in this Report, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates, approximations and projections about our industry and business, management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” and similar expressions and variations or negatives of these words. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. These forward-looking statements speak only as of the date of this Report. We undertake no obligation to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law.

Overview

We are a clinical stage pharmaceutical company developing therapeutics for Parkinson’s Disease, or PD, and related disorders that arise inside and outside of the brain. In 2021, we commenced clinical development of IkT-148009, a small molecule Abelson Tyrosine Kinase inhibitor we believe can modify the course of Parkinson’s disease and its manifestation in the gastrointestinal tract, or GI.  Results to date of our ongoing Phase 1 Single and Multiple Ascending Dose escalation study (SAD and MAD, respectively) in older and elderly healthy volunteers have revealed important insights into the metabolism of IkT-148009 in human subjects.  We enrolled 56 subjects in the Phase 1 study. To date, 42 subjects have received IkT-148009. Results from the Phase 1 study have shown that IkT-148009 has a half-life of greater than 24 hours and just a 25 mg once daily oral dose in older and elderly healthy subjects in our Phase 1 study reached exposures that are consistent with the exposure to the drug that resulted in therapeutic efficacy in animal models of progressive Parkinson’s disease.   This has led to an acceleration of the clinical development program by more than 6 months.  Following agreements with the FDA, we will initiate dosing in a Parkinson’s patient population as part of the Phase 1 MAD study in 3Q21. Clinical development of IkT-148009 for the GI complications in PD patients will cross-reference the Phase 1 Study of IkT-148009 for the treatment of PD. In support of our clinical development program, we have now completed 3 months of our chronic toxicology program of IkT-148009 in both rats and monkeys. These toxicology studies will continue for 3 additional months in rats and 6 additional months in monkeys. We have also advanced clinical batch manufacturing and pill formulation for our platform prodrug technology involving IkT-001Pro.

 

Our programs utilize small molecule, oral protein kinase inhibitors to treat PD and its GI complications. We have shown in animal models of progressive disease that IkT-148009 is a brain penetrant Abelson tyrosine kinase, or c-Abl, inhibitor that halts disease progression and reverses functional loss in the brain and reverses neurological dysfunction in the GI tract. The ability to halt progression and restore function was shown in animal models of progressive disease that mimic the rate of disease progression and the extent of functional loss in the brain and/or the GI tract as found in patients with PD. We believe our therapeutic approach is disease-modifying. Our understanding of how and why PD progresses has led us to believe that functional loss in Parkinson’s patients may be at least partially reversed. Based on the measurements in animal models, we believe patients treated with IkT-148009 may have their disease progression slowed or halted, we may see a progressive reduction in the need for symptomatic or supportive therapy and/or we may ultimately eliminate the need for symptomatic therapy. However, it is unknown whether the disease modification seen in the animal models will occur in the human disease following treatment with IkT-148009.

 

In our opinion, the multi-decade failures in the treatment of neurodegenerative diseases such as PD result from a lack of understanding of the biochemistry of the disease processes involved. Neurodegeneration is marked by a progressive degeneration and loss of function of neurons which send and receive signals to and from the brain. Historically, the cause of a neurodegenerative disease was thought to be a “plaque” made up of a misfolded and/or aggregated protein(s). Therapeutic approaches, therefore, sought to remove “plaque” from the brain. A “plaque”-focused treatment strategy has failed to alter the course of Parkinson’s disease in two Phase 2 trials that reported results in 2020 and 2021. We believe we are different. We identified the proteins that become

11


dysfunctional in a disease pathway and sought to understand how a dysfunctional protein causes disease. We believe our approach to PD and other neurological diseases has identified the underlying cause of disease and led to an understanding of how individual proteins are linked together to define the disease process. Using this strategy, we believe we have discovered at least one enzyme that plays a pivotal role in the disease process for PD, the Abelson Tyrosin Kinase c-Abl. We have developed novel protein kinase inhibitors against c-Abl, which we believe can alter the disease course for PD. c-Abl chemically modifies one of the “plaque” proteins in PD, known as alpha-synuclein. Chemical modification creates what we believe to be the true toxic entity of the disease. Treatment with IkT-148009 may prevent chemical modification and, at least in animal models of progressive disease, leads to clearance of the toxic form of alpha-synuclein from the affected neurons.

 

In addition to programs in PD, our platform drug discovery and delivery technologies have identified additional opportunities, including a potential treatment for bacterial or viral infections in the brain using a single agent at fixed dose, and an oncology opportunity in stable-phase Chronic Myelogenous Leukemia, or CML. Our product for CML, IkT-001Pro, is a prodrug of the anticancer agent Imatinib. A prodrug is a compound that, after administration, is metabolized by the body into a pharmacologically active drug. Imatinib is an FDA designated Orphan Drug and is the standard-of-care treatment for stable-phase CML. In the United States, orphan drug designation entitles a party to incentives such as opportunities for grant funding towards clinical trial costs, tax advantages, and user-fee waivers. We intend to submit an IND to initiate clinical development for IkT-001Pro for the treatment of CML in the third quarter of 2021. Subject to future FDA agreements related to the clinical protocol design and execution of the clinical development program and additional funding, we believe that clinical development of IkT-001Pro could possibly be completed in 2022. We intend to submit a new drug application, or NDA, for IkT-001Pro pursuant to Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act, which specifies the requirements for approval. This pathway would allow us to rely, in part, on data in the public domain or the FDA’s prior conclusions regarding the safety and effectiveness of an approved compound. Consistent with FDA guidance on the 505(b)(2) pathway, we will seek input from the FDA as to what should be included in the application prior to submission of the 505(b)(2) application. Pursuit of this oncology opportunity will seek to validate the pharmacology advantage of our prodrug technology in a well understood patient population with an approved drug substance. If we are able to validate IkT-001Pro in oncology, we will evaluate whether the pharmacology advantages we discover about IkT-001Pro could be applied to novel drug substances, such as IkT-148009.

 

We believe we are one of the pioneers of the application of protein kinase inhibitors to non-oncology indications, including neurodegeneration and infectious diseases, as well as their more traditional role in the treatment of cancer. As of the date of this Report, more than $20 million of the Company’s total funding has been received from Private, State and Federal granting agencies, including the National Institutes of Health, the Department of Defense and the Michael J. Fox Foundation, with the approximately $55.7 million raised from public offerings of our common stock. Private, State and Federal granting agencies use extensive scientific peer review in deciding which projects to fund that could impact human disease. We believe our ability to advance the Company on the basis of scientific peer review reflects the potential our scientific peers see for the possible success of our therapeutic programs.

 

In the ensuing 12 months, the Company anticipates reporting the full outcomes of its completed Phase 1 study of IkT-148009 in older and elderly healthy subjects, completing the ongoing chronic toxicology studies in rats and monkeys for IkT-148009 to enable chronic drug administration in Parkinson’s patients, completing a Phase 1b extension study of IkT-148009 in Parkinson’s patients and initiating its Phase 2 efficacy study in Parkinson’s patients. Advancement of IkT-148009 into Phase 1b was approved by the FDA July 22, 2021; advancement to proceed with the Phase 2 programs with IkT-148009 is subject to agreement on the protocol to be proposed for these trials. We further intend to advance IkT-001Pro through clinical development, possibly completing clinical development in 2022.

Our Programs

Our portfolio is focused on developing protein kinase inhibitors to treat PD in the brain and GI tract that arise from dysfunctional alpha-synuclein in PD patients.  Using IkT-148009, we intend to clinically evaluate the impact of c-Abl inhibition on newly diagnosed PD patients, patients early in the course of PD, and PD patients with GI complications.  We are pursuing clinical development using a sequential Phase 1/ Phase 2 development approach, with the details of the Phase 2 studies subject to agreements with the FDA regarding trial design and the outcome of the Phase 1 clinical trial.  The Phase 1/Phase 2 development program, subject to FDA approval, would be followed with one or more Phase 3 clinical trials that we believe could lead to completion of the clinical development program in 2023 or 2024.  IkT-148009 is intended to treat PD in treatment-naïve and early-stage PD patients, along with GI complications such as difficulty in swallowing, or dysphagia, and for treatment of neurogenic constipation.  

In addition to programs in PD, our platform drug discovery and delivery technologies have identified additional opportunities, including a potential treatment for bacterial or viral infections in the brain using a single agent at fixed dose, and an oncology opportunity in stable-phase Chronic Myelogenous Leukemia, or CML.  Our product for CML, IkT-001Pro, is a prodrug of the anticancer agent Imatinib.  A prodrug is a compound that, after administration, is metabolized by the body into a pharmacologically

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active drug.  Imatinib is an FDA designated Orphan Drug and is the standard-of-care treatment for stable-phase CML.  In the United States, Orphan Drug designation entitles a party to incentives such as opportunities for grant funding towards clinical trial costs, tax advantages, and user-fee waivers.  We remain on track to submit an IND to initiate clinical development for IkT-001Pro in the third quarter of 2021.  Subject to future FDA agreements related to the clinical protocol design and execution of the clinical development program and additional funding, we believe that clinical development of IkT-001Pro could possibly be completed in 2022.  We intend to submit a new drug application, or NDA, for IkT-001Pro pursuant to Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act, which specifies the requirements for approval.  This pathway would allow us to rely, in part, on data in the public domain or the FDA’s prior conclusions regarding the safety and effectiveness of an approved compound.  Consistent with FDA guidance on the 505(b)(2) pathway, we will seek input from the FDA as to what should be included in the application prior to submission of the 505(b)(2) application.  Pursuit of this oncology opportunity will seek to validate the pharmacology advantage of our prodrug technology in a well understood patient population with an approved drug substance.  If we are able to validate IkT-001Pro in oncology, we will evaluate whether the pharmacology advantages we discover about IkT-001Pro could be applied to novel drug substances, such as IkT-148009.

Additional research programs will seek to develop medications for other alpha-synuclein-related diseases, specifically Dementia with Lewy Body, or DLB, and Multiple System Atrophy, or MSA, as well as our programs in anti-infectives that target host-factors to block viral or bacterial infections in the brain with a single agent at fixed dose.  Our first application intends to treat infectious disease by suppressing John Cunningham virus, or JCV, virus infection, the cause of Progressive Multifocal Leukoencephalopathy, or PML.

Components of Operating Results

Operating Expenses

Research and Development

Research and development activities account for a significant portion of our operating expenses.  Research and development expenses accounted for 26% and 37% of our operating expenses for the years ended December 31, 2020 and 2019, respectively. We record research and development expenses as incurred. Research and development expenses incurred by us for the discovery and development of our product candidates and prodrug technologies include:

 

external research and development expenses, including: expenses incurred under arrangements with third parties, such as CROs, preclinical testing organizations, clinical testing organizations, CMOs, academic and non-profit institutions and consultants;

 

fees related to our license and collaboration agreements;

 

personnel related expenses, including salaries, benefits and non-cash stock-based compensation expense; and

 

other expenses, which include direct and allocated expenses for laboratory, facilities and other costs.

A portion of our research and development expenses are direct external expenses, which we track on a program-specific basis from inception of the program.

Program expenses include expenses associated with our most advanced product candidates and the discovery and development of compounds that are potential future candidates. We also track external expenses associated with our third-party research and development efforts. All external costs are tracked by therapeutic indication. We do not track personnel or other operating expenses incurred for our research and development programs on a program-specific basis. These expenses primarily relate to salaries and benefits and stock-based compensation and office consumables.

At this time, we can only estimate the nature, timing and costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from sales or licensing of our product candidates. This is due to the numerous risks and uncertainties associated with drug development, including the uncertainty of:

 

our ability to add and retain key research and development personnel and other key employees;

 

our ability to successfully file investigational new drug (“IND”) and new drug applications (“NDA”) with the FDA;

 

our ability to conduct and commence trials;

 

our ability to establish an appropriate safety profile with IND-enabling toxicology studies;

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our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize, our product candidates;

 

our successful enrollment in and completion of our current and future clinical trials;

 

the costs associated with the development of any additional product candidates we identify in-house or acquire through collaborations;

 

our ability to discover, develop and utilize biomarkers to demonstrate target engagement, pathway engagement and the impact on disease progression of our molecules;

 

our ability to establish agreements with third-party manufacturers for clinical supply for any future clinical trials and commercial manufacturing, if our product candidates are approved;

 

the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder;

 

our ability to obtain and maintain patent, trade secret and other intellectual property protection and regulatory exclusivity for our product candidates if and when approved;

 

our receipt of marketing approvals from applicable regulatory authorities;

 

the impact of the outbreak of the novel coronavirus disease, COVID-19, pandemic which has had an adverse impact on our business, including our preclinical studies and clinical trials;

 

our ability to commercialize products, if and when approved, whether alone or in collaboration with others; and

 

the continued acceptable safety profiles of the product candidates following approval.

A change in any of these variables with respect to the development of any of our product candidates would significantly change the costs, timing and viability associated with the development of that product candidate. We expect our research and development expenses to increase for the next several years as we continue to implement our business strategy, advance our current programs, expand our research and development efforts, seek regulatory approvals for any product candidates that successfully complete clinical trials, access and develop additional product candidates and incur expenses associated with hiring additional personnel to support our research and development efforts. In addition, product candidates in later stages of clinical development generally incur higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

Selling, General and Administrative

Selling, general and administrative expenses include personnel related expenses, such as salaries, benefits, travel and non-cash stock-based compensation expense, expenses for outside professional services and allocated expenses. Outside professional services consist of legal, accounting and audit services and other consulting fees. Allocated expenses consist of rent expenses related to our offices in Cambridge, Massachusetts and Atlanta, Georgia not otherwise included in research and development expenses.

We expect to incur additional expenses as compared to when we were a private company, including expenses related to compliance with the rules and regulations of the SEC and those of any national securities exchange on which our securities are traded, additional insurance expenses, investor relations activities and other administrative and professional services. We also expect to increase our administrative headcount when operating as a public company and as we advance our product candidates through clinical development, which will also likely require us to increase our selling, general and administrative expenses.

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Results of Operations

Comparison of the Three Months Ended June 30, 2021 and 2020

The following table sets forth the significant components of our results of operations:

 

 

 

For the Three Months Ended June 30,

 

 

Change

 

 

 

2021

 

 

2020

 

 

($)

 

 

(%)

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

Grant revenue

 

$

1,363,037

 

 

$

219,585

 

 

$

1,143,452

 

 

 

520.7

 

Research and development

 

 

(2,382,433

)

 

 

(263,175

)

 

 

(2,119,258

)

 

 

805.3

 

Selling, general and administrative

 

 

(1,608,972

)

 

 

(370,331

)

 

 

(1,238,641

)

 

 

334.5

 

Loss from operations

 

 

(2,628,368

)

 

 

(413,921

)

 

 

(2,214,447

)

 

 

(535.0

)

Interest expense, net

 

 

(7,811

)

 

 

(7,948

)