RENOVORX, INC. Unless the context otherwise requires, all references in this section to the
"Company," "we," "us," or "our" refer to
This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, that reflect our plans, estimates, and beliefs that involve risks and uncertainties, including those described in the section titled "Forward Looking Statements." Our actual results and the timing of selected events could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those set forth under the section titled "Risk Factors" included elsewhere in this Quarterly Report and in the Annual Report.
Overview
We are a clinical-stage biopharmaceutical company focused on developing therapies for the local treatment of solid tumors.
We are currently conducting a Phase 3 registrational trial for our lead product
candidate RenovoGem™. Our therapy platform, RenovoRx Trans-Arterial
Micro-Perfusion, or RenovoTAMP™, utilizes approved chemotherapeutics with
validated mechanisms of action and well-established safety and side effect
profiles, with the goal of increasing their efficacy, improving their safety,
and widening their therapeutic window by combining such chemotherapeutics with
our proprietary drug delivery system. RenovoTAMP combines our patented
As previously disclosed, in
We are also planning to evaluate RenovoGem in a second indication in a Phase 2/3 trial in extrahepatic (or outside the liver) cholangiocarcinoma (or eCCA), cancer that occurs in the bile ducts that lead out of the liver and join with the gallbladder. After significant input from key opinion leaders across the spectrum of relevant medical specialties and feedback from the FDA, we submitted the protocol for a Phase 2/3 eCCA clinical trial to FDA. If FDA does not object to our study protocol, we anticipate launching the eCCA trial and enrolling the first patient in the fourth quarter of 2022. In addition, we may evaluate RenovoGem in other indications, potentially including locally advanced lung cancer, locally advanced uterine tumors, and glioblastoma (an aggressive type of cancer that can occur in the brain or spinal cord). To date, we are focused on developing drug/device candidates with gemcitabine, but in the future, we may develop other product candidates with other chemotherapeutic agents for intra-arterial delivery via our RenovoTAMP therapy platform.
Since our inception, we have devoted substantially all of our efforts to
developing our cancer therapy platform and product candidates, raising capital
and organizing and staffing our Company. To date, we have financed our
operations primarily through issuance of convertible preferred stock with net
proceeds of
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We have incurred significant operating losses and generated negative cash flows
from operations since our inception. As of
? Advance clinical development of RenovoGem and our platform technology by
continuing to enroll patients in our ongoing TIGeR-PaC Phase 3 clinical trial,
expanding the number of clinical trials including our planned clinical trial
in eCCA, and advancing RenovoGem through preclinical and clinical development
in additional indications;
? Hire additional research, development, engineering, and general and
administrative personnel;
? Maintain, expand, enforce, defend, and protect our intellectual property
portfolio; and
? Expand our operational, financial and management systems and increase
personnel, including personnel to support our clinical development,
manufacturing and commercialization efforts and our operations as a public
company.
In addition to the variables described above, if and when any of our product candidates successfully complete development, we will incur substantial additional costs associated with establishing a sales, marketing, medical affairs and distribution infrastructure to commercialize products for which we may obtain marketing approval, regulatory filings, marketing approval, and post-marketing requirements, in addition to other commercial costs. We cannot reasonably estimate these costs at this time.
As a result, we will need significant additional funding to support our continuing operations. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through equity issuances, debt financings and collaborations, licenses or other similar arrangements. We currently have no credit facility or committed sources of capital. To the extent that we raise additional capital through the future sale of equity or debt, the ownership interests of our stockholders will be diluted and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. If we raise additional funds through the issuance of debt securities, these securities could contain covenants that would restrict our operations. We may require additional capital beyond our currently anticipated amounts and additional capital may not be available on reasonable terms, or at all. If we raise additional funds through collaboration arrangements or other strategic transactions in the future, we may have to relinquish valuable rights to our technologies or future revenue streams or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate development or future commercialization efforts.
Impact of COVID-19
In
In response to public health directives and orders and to help minimize the risk of the virus to employees, we have taken precautionary measures, including implementing hybrid work policies for certain employees. The ongoing COVID-19 global pandemic also has negatively affected, and we expect will continue to negatively affect, our clinical studies. For example, we have faced challenges in conducting our clinical trials, including recruiting subjects and accommodating patient visits. Additionally, our service providers and their operations may be disrupted, temporarily closed or experience worker or supply shortages, which could result in additional disruptions or delays in shipments of purchased materials or the continued development of our product candidates. To date, we have not suffered material supply chain disruptions.
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We are not able to estimate the duration of the pandemic and the potential
impact on our business. As the COVID-19 global pandemic continues to evolve, it
could result in significant long-term disruption of global financial markets,
including a period of a rising rate of inflation, reducing our ability to raise
additional capital when needed and on acceptable terms, if at all, which could
negatively affect our liquidity. The extent to which the COVID-19 pandemic
impacts our clinical development and regulatory efforts will depend on future
developments that are highly uncertain and cannot be predicted with confidence,
such as the duration of the continued outbreak, new travel restrictions,
quarantines and social distancing requirements in
Components of Our Results of Operations
Revenue
We have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products for several years, if at all. If our development efforts for our current or future product candidates are successful and result in marketing approval or collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from collaboration or license agreements.
Operating Expenses Research and Development
Research and development expenses consist of costs related to the research and development of our platform technology. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. We outsource a substantial portion of our clinical trial activities, utilizing the service of third-party clinical trial sites and contract research organizations to assist us with the execution of our clinical trials. In addition, we have FDA 510(k) clearance for the RenovoCath delivery device, which comprises part of the RenovoGem product. Accordingly, we are able to charge our clinical trial sites for the RenovoCath delivery device. To date, payments from clinical trial sites in consideration for RenovoCath delivery devices have been adequate to cover our direct manufacturing costs. Any payments we receive from clinical trial sites as consideration for use of RenovoCath delivery devices offset our research and development expenses. We expect our research and development expenses to increase for the foreseeable future as we continue the development of our product candidates and enroll subjects in our ongoing Phase 3 clinical trial, initiate new clinical trials and pursue regulatory approval of our product candidates. It is difficult to predict with any certainty the duration and costs of completing our current or future clinical trials of our product candidates or if, when or to what extent we will achieve regulatory approval and generate revenue from the commercialization and sale of our product candidates. The duration, costs and timing of clinical trials and other development of our product candidates will depend on a variety of factors, including uncertainties in clinical trial enrollment, timing and extent of future clinical trials, development of new product candidates and significant and changing government regulation. We may never succeed in achieving regulatory approval for any of our product candidates.
Our research and development expenses include:
? expenses incurred under agreements with clinical trial sites, contract
research organizations, and consultants that are involved in conducting our
clinical trials;
? costs of acquiring and developing clinical trial materials;
? personnel costs, including salaries, benefits, bonuses, and stock-based
compensation for employees engaged in preclinical and clinical research and
development;
? costs related to compliance with regulatory requirements;
? third-party vendor costs related to manufacturing materials and testing;
? costs related to preclinical studies and pilot testing;
? travel expenses; and
? allocated general and administrative expenses which includes facilities and
other indirect administrative expenses to support research and development
activities.
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Research and development costs are expensed as incurred. Costs for certain development activities, such as clinical trials and preclinical studies, are recognized based on evaluation of progress to completion of specific tasks using data such as subject enrollment, clinical site activations or information provided to us by third party vendors.
Due to the impact of the COVID-19 pandemic and work-from-home policies and other operational limitations mandated by federal, state, and local governments as a result of the pandemic, certain of our research and development activities have been delayed and may be further delayed until we and our vendors return to pre-pandemic capacity.
General and Administrative
General and administrative expenses consist of salaries, benefits, and
stock-based compensation for personnel in executive, finance and administrative
functions, professional services and associated costs related to accounting,
tax, audit, legal, intellectual property and other matters, consulting costs,
conferences, travel and allocated expenses for rent, insurance and other general
overhead costs. We expect to continue to incur additional expenses as a result
of operating as a public company, including costs to comply with the rules and
regulations of the
Other Income (Expenses), Net Interest Income (Expense) Net
Interest income, net during the three and six months ended
Interest expense, net during the three and six months ended
Other Income (Expense), Net
Other expense, net during the three and six months ended
Gain on Loan Extinguishment
The gain on loan extinguishment during the six months ended
Income Tax Expense
We account for income taxes using the asset and liability method. Under this method, deferred income tax assets and liabilities are recorded based on the estimated future tax effects of differences between the financial statement and income tax basis of existing assets and liabilities. Deferred income tax assets and liabilities are recorded net and classified as noncurrent on the balance sheets. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.
We are subject to income taxes in the federal and state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. In accordance with the authoritative guidance on accounting for uncertainty in income taxes, we recognize tax liabilities for uncertain tax positions when it is more likely than not that a tax position will not be sustained upon examination and settlement with various taxing authorities. Liabilities for uncertain tax positions are measured based upon the largest amount of benefit that is more-likely-than-not (greater than 50%) of being realized upon settlement. Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense.
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On
Results of Operations
The following table summarizes the significant components of our results of operations for the periods presented (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
Statements of Operations Data:
Operating expenses:
Research and development $ 1,390 $ 536 $ 2,679 $ 1,170
General and administrative 1,224 330 2,940 749
Total operating expenses 2,614 866 5,619 1,919
Loss from operations (2,614 ) (866 ) (5,619 ) (1,919 )
Other income (expense), net
Interest income (expense), net 20 (397 ) 21 (627 )
Other income (expense), net - (47 ) 1 (52 )
Gain on loan extinguishment - - - 140
Total other expense, net 20 (444 ) 22 (539 )
Net loss $ (2,594 ) $ (1,310 ) $ (5,597 ) $ (2,458 ) Comparison of the Three Months Ended
The following table summarizes the significant components of our results of operations for the periods presented (in thousands, except percentages):
Three Months Ended
June 30, Increase / (Decrease)
2022 2021 $ %
(unaudited)
Operating expenses:
Research and development $ 1,390 $ 536 $ 854 159 %
General and administrative 1,224 330 894 271 %
Total operating expenses 2,614 866 1,748 202 %
Loss from operations (2,614 ) (866 ) (1,748 ) (202 )%
Other income (expense), net
Interest income (expense), net 20 (397 ) 417 105 %
Other income (expense), net - (47 ) 47 100 %
Gain on loan extinguishment - - - - %
Total other expense, net 20 (444 ) 464 105 %
Net loss $ (2,594 ) $ (1,310 ) $ (1,284 ) (98 )%
Research and Development
Research and development expenses were
15 General and Administrative
General and administrative expenses were
Interest Income (Expense), Net
Interest income (expense), net for the three months ended
Comparison of the Six Months Ended
The following table summarizes the significant components of our results of operations for the periods presented (in thousands, except percentages):
Six Months Ended
June 30, Increase / (Decrease)
2022 2021 $ %
(unaudited)
Operating expenses:
Research and development $ 2,679 $ 1,170 $ 1,509 129 %
General and administrative 2,940 749 2,191 293 %
Total operating expenses 5,619 1,919 3,700 193 %
Loss from operations (5,619 ) (1,919 ) (3,700 ) (193 )%
Other income (expense), net
Interest income (expense), net 21 (627 ) 648 103 %
Other income (expense), net 1 (52 ) 53 102 %
Gain on loan extinguishment - 140 (140 ) (100 )%
Total other expense, net 22 (539 ) 561 104 %
Net loss $ (5,597 ) $ (2,458 ) $ (3,139 ) (128 )%
Research and Development
Research and development expenses were
16 General and Administrative
General and administrative expenses were
Interest Income (Expense), Net
Interest income for the six months ended
Gain on Loan Extinguishment
The gain on loan extinguishment for the six months ended
Liquidity and Capital Resources
For the three and six months ended
As of
Based on our operating plans, we expect that our current cash and cash
equivalents as of
Sources of Liquidity
Since our inception, we have not generated any revenue from product sales and we have incurred significant operating losses and negative cash flows from our operations. We do not have any products that have achieved regulatory marketing approval and we do not expect to generate revenue from sales of any product candidates for several years, if ever.
We have financed our operations primarily through the issuance and sale of
convertible preferred stock and convertible debt. Through the date of this
report, we have raised an aggregate of
17 Cash Flows
Our primary uses of cash are to fund our operations including research and development and general and administrative expenses. We will continue to incur operating losses in the future and expect that our research and development and general and administrative expenses will continue to increase as we continue our research and development efforts with respect to clinical development of our product candidates, further develop our therapy platform and ensure that we are complying with the requirements of being a public company. Cash used to fund operating expenses is impacted by the timing of when we pay expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.
The following table summarizes our cash flows for the period indicated (in
thousands):
Six Months Ended
June 30,
2022 2021
Net cash provided by (used in):
Operating activities $ (4,458 ) $ (2,239 )
Investing activities (8,000 ) (15 )
Financing activities 35 2,016
Decrease in cash and cash equivalents
Cash used in operating activities for the six months ended
Cash Used in Investing Activities
Cash used in investing activities for the six months ended
Cash Provided by Financing Activities
Net cash provided by financing activities for the six months ended
Contractual Obligations and Other Commitments
As of the date of this report, we have no contractual obligations or other commitments.
Critical Accounting Policies and Significant Judgments and Estimates
The accompanying Management's Discussion and Analysis of Financial Condition and
Results of Operations section is based upon our unaudited condensed interim
financial statements and the related disclosures, which have been prepared in
accordance with accounting principles generally accepted in
There have been no significant changes to our critical accounting policies or
significant judgments and estimates for the three and six months ended
During the three months ended
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All marketable securities and short-term investments are classified as
available-for-sale and consist of
Emerging Growth Company and Smaller Reporting Company Status
We are an "emerging growth company" as defined in the JOBS Act. Under the JOBS
Act, companies have extended transition periods available for complying with new
or revised accounting standards. We have elected this exemption to delay
adopting new or revised accounting standards. We will remain an emerging growth
company until the earlier of (1)
? we may present only two years of audited financial statements, plus unaudited
interim condensed financial statements for any interim period, and related
Management's Discussion and Analysis of Financial Condition and Results of
Operations;
? we may avail ourselves of the exemption from the requirement to obtain an
attestation and report from our auditors on the assessment of our internal
control over financial reporting pursuant to the Sarbanes-Oxley Act;
? we may provide reduced disclosure about our executive compensation
arrangements; and
? we do not require stockholder non-binding advisory votes on executive
compensation or golden parachute arrangements.
We have elected to take advantage of certain reduced disclosure obligations in this Quarterly Report on Form 10-Q and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to you may differ from what other public reporting companies provide.
We are also a "smaller reporting company," as defined in Rule 12b-2 of the
Exchange Act. We may continue to be a smaller reporting company if, on the last
business day of the second quarter of our calendar year, either (1) the market
value of our stock held by nonaffiliates is less than
Recently Issued and Adopted Accounting Pronouncements
There were no new accounting pronouncements that were issued or became effective since the issuance of our 2021 Annual Report on Form 10-K that had, or are expected to have, a material impact on our unaudited condensed balance sheets, unaudited condensed statement of operations or unaudited condensed statement of cash flows.
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Off-Balance Sheet Arrangements
During the periods presented, we did not have, nor do we currently have, any
off-balance sheet arrangements, as defined in the rules and regulations of the
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