The following discussion may contain forward-looking statements that involve risks and uncertainties. As described under the caption "Cautionary Note Regarding Forward-Looking Statements," our actual results could differ materially from those discussed here. Factors that could cause or contribute to such differences include, but are not limited to, any factors discussed in this section as well as factors described in Part II, Item 1A. "Risk Factors" and under the caption "Cautionary Note Regarding Forward-Looking Statements."
Overview
We are a biotechnology company focused on developing and preparing to commercialize cellular therapies for cancer and diabetes based upon our proprietary cellulose-based live cell encapsulation technology we refer to as Cell-in-a-Box®. We are working to advance clinical research and development of new cellular-based therapies in the oncology and diabetes arenas.
We are actively engaged with Austrianova and other entities in preparation for a
Phase 2b clinical trial in LAPC using encapsulated live cells like those used in
the previous Phase 1/2 and Phase 2 clinical trials discussed above. A Pre-IND
meeting with the FDA was held on
Also, we are conducting research relating to the use of constituents of Cannabis, known as cannabinoids, in treating cancer and its symptoms.
In addition, we have been involved in preclinical studies to determine if our cancer therapy can slow the production or accumulation of malignant ascites fluid in the abdomen that accompanies the growth of several types of abdominal cancers. In regard to the latter, one final study remains to be completed.
We are also developing a therapy for Type 1 diabetes and insulin-dependent Type 2 diabetes based upon the encapsulation of a human liver cell line genetically engineered to produce, store and secrete insulin at levels in proportion to the levels of blood sugar in the human body. We are also exploring the possibility of encapsulating human insulin-producing stem cells and islet cells and then transplanting them into a diabetic patient. All three types of cells will be encapsulated using the Cell-in-a-Box® encapsulation technology. Each approach is designed to function as a bio-artificial pancreas for purposes of insulin production.
However, with respect to our programs involving cannabinoids, malignant ascites fluid and diabetes, until the FDA allow us to commence the clinical trial involving LAPC described in our IND to filed with the FDA, we are not spending any further resources developing this program.
Finally, we are working with
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COVID-19 Potential Impact on the Financial Condition and Results of Operations
The development of our product candidates could be disrupted and materially
adversely affected in the future by a pandemic like the recent outbreak of
COVID-19. For example, as a result of measures imposed by the governments in
states affected by COVID-19, businesses and schools have been suspended due to
quarantines or stay at home orders intended to contain the pandemic. COVID-19
continues to spread globally and, as of
We are still assessing our business plans and the impact COVID-19 may have on our ability to advance the development of our product candidates or to raise financing to support the development of our product candidates, but no assurances can be given that this analysis will enable us to avoid part or all of any impact from the spread of COVID-019 or its consequences, including downturns in the business sector generally or in our sector in particular. The spread of COVID-19 may also result in the inability of our suppliers to deliver components or raw materials on a timely basis or materially and adversely affect our collaborators' and potential strategic partners' ability to conduct our planned clinical trial in LAPC and our other operations. See "Risk Factors - The recent and ongoing COVID-19 pandemic could materially affect our operations, as well as the business or operations of third parties with whom we conduct business. Our business could be adversely affected by the effects of other future health pandemics in regions where we or third parties on which we rely have significant business operations. See Page 39 for a more detailed presentation of our risks associated with the COVID-19 pandemic.
Performance Indicators
Non-financial performance indicators used by management to manage and assess how the business is progressing will include, but are not limited to, the ability to: (i) acquire appropriate funding for all aspects of our operations; (ii) acquire and complete necessary contracts; (iii) complete activities for producing genetically modified human cells and having them encapsulated for our preclinical studies and the planned Phase 2b clinical trial in LAPC; (iv) have regulatory work completed to enable studies and trials to be submitted to regulatory agencies; (v) complete all required tests and studies on the cells and capsules we plan to use in our clinical trial in patients with LAPC; and (vi) ensure completion of the production of encapsulated cells according to cGMP regulations to use in our planned clinical trial.
There are numerous items required to be completed successfully to ensure our final product candidate is ready for use in our planned clinical trial in LAPC. The effects of material transactions with related parties, and certain other parties to the extent necessary for such an undertaking, may have substantial effects on both the timeliness and success of our current and prospective financial position and operating results. Nonetheless, we are actively working to ensure strong ties and interactions to minimize the inherent risks regarding success. We do not believe there are factors which will cause materially different amounts to be reported than those presented in this Report. We aim to assess this regularly to provide accurate information to our shareholders.
Liquidity and Capital Resources
Our Consolidated Financial statements and related Notes have been prepared on a
going-concern basis, however, the following conditions raise substantial doubt
about the Company's ability to do so. Therefore, the Consolidated Financial
Statements do not include any adjustments that might be necessary should we be
unable to continue in existence. We have not generated any revenues and have not
yet achieved profitable operations. There is no assurance that profitable
operations, if ever achieved, could be sustained on a continuing basis. Also,
development activities, preclinical studies, clinical trials and
commercialization of our product candidates will require significant additional
capital resources. Our deficit accumulated through
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Our ability to successfully pursue our business is subject to certain risks and uncertainties, including, among other things, uncertainty of product development, uncertainty of FDA approval of our IND when submitted to the FDA, need to raise additional capital to fund our various studies and FDA submissions, competition from third parties, uncertainty of capital availability, in particular, when we lose the ability to utilize our S-3 registration statement upon the filing of this Report, uncertainty in our ability to enter agreements with collaborative partners, dependence on third parties and dependence on key personnel. We plan to finance future operations with a combination of proceeds from the issuance of equity, debt, licensing fees and revenues from future product sales, if any. We have not generated positive cash flows from operations. There are no assurances that we will be successful in obtaining an adequate level of funding for the development and commercialization of our product candidates.
We do not believe there are trends, events or uncertainties that have, or are reasonably likely to have, a material effect on our short-term or long-term liquidity. Our R&D activities are scalable. This means that we can increase or decrease the expenses associated with our planned preclinical studies and clinical trials based on our available cash. We have no contractual obligations to perform preclinical studies or clinical trials. For the time being, the principal source of our cash is the sale of our common stock in registered offerings and private placements. However, there are no assurances that such sales will be sufficient to fund our planned clinical trial and other R&D costs.
The Statement of Cash Flow is the focal point for our liquidity, although the exercising of warrants and/or options at appropriate times by our investors, consultants, officers and directors will have potentially important positive effects on our liquidity. We also believe that the relationship between changes in operating results may induce changes in liquidity. For example, we may experience material changes in working capital components due to the acquisition of new capital through the "at-the-market" facility described below and the conversion of warrants and/or options by our investors, consultants, officers and directors. We rely solely on working capital as our liquidity indicator, since we do not presently have any open credit lines; however, we may try to obtain credit lines or other credit facility in the future. Further, as has often been a part of our mechanism to maintain overall liquidity, internal sources of liquidity from others associated with us may be utilized when needed.
We do not utilize any advanced methodology of cash management beyond paying our normal expenses.
On
Sales of our common stock will be made, if we are eligible under applicable law,
under our second Registration Statement on Form S-3 filed on
From
We require substantial additional capital to finance our planned business operations and expect to incur operating losses in the future due to the expenses related to our core businesses. We have not realized material revenue since we commenced doing business as a biotechnology company, and there can be no assurance that we will be successful in generating revenues in the future in this sector.
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As of
We believe our cash on hand, potential sales of unregistered shares of our
common stock and any public offerings of common stock in which we may engage in
will provide sufficient capital to meet our capital requirements and to fund our
operations through
We will continue to be dependent on outside capital to fund our research and operating expenditures for the foreseeable future. If we fail to generate positive cash flows or fail to obtain additional capital when required, we may need to modify, delay or abandon some or all our business plans.
Year ended
Revenue
We had no revenues in the fiscal years ended
Operating Expenses
The total operating expenses during the year ended
Change - Year ended Increase Year ended April 30, (Decrease) April 30, Operating expenses: 2020 and Percent 2019 R&D$ 301,221 $ (158,831 ) $ 460,052 (35% ) Compensation expense$ 1,586,583 $ 31,325 $ 1,555,258 2% Director fees$ 316,892 $ (89,920 ) $ 406,812 (22% )
General and administrative, legal and professional
(3% ) Loss from Operations
Loss from operations during the year ended
Other Income (Expenses), Net
Other income for the year ended
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Discussion of Operating, Investing and Financing Activities
The following table presents a summary of our sources and uses of cash for the
years ended
Year Ended Year EndedApril 30 ,April 30, 2020 2019
Net cash used in operating activities:
$ (7,867 ) $ (9,133 ) Increase (decrease) in cash$ 379,608 $ (544,545 ) Operating Activities:
The cash used in operating activities for the years ended
Investing Activities: We had no investing activities for the years ended
Financing Activities:
The cash provided from financing activities for the years ended
Off-Balance Sheet Arrangements
Except as described below, we have no off-balance sheet arrangements that could have a material current effect or that are reasonably likely to have a material adverse effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
On
Critical Accounting Estimates and Policies
Our Consolidated Financial Statements are prepared in accordance with
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Our significant accounting policies are discussed in Note 2 of the Notes to our Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data" of this Report. Management believes that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results and require management's most difficult, subjective or complex judgments resulting from the need to make estimates about the effects of matters that are inherently uncertain. Management has reviewed these critical accounting estimates and related disclosures with our Board.
Research and Development Expenses
R&D expenses consist of costs incurred for direct and overhead-related research expenses and are expensed as incurred. Costs to acquire technologies, including licenses, that are utilized in R&D and that have no alternative future use are expensed when incurred. Technology developed for use in our product candidates is expensed as incurred until technological feasibility has been established.
Stock-Based Compensation
Our stock-based compensation plans are described in Note 4 and 5 of the Notes of
the Consolidated Financial Statements to this Report. We follow the provisions
of ASC 718, Compensation - Stock Compensation ("ASC 718"), which requires the
measurement and recognition of compensation expense for all stock-based awards
made to employees. Effective
Net Income (Loss) Per Share
Basic net income (loss) per share of common stock is computed using the
weighted-average number of common stock shares outstanding. Diluted net income
(loss) per share of common stock is computed using the weighted-average number
of shares of common stock and shares of common stock equivalents outstanding.
Potentially dilutive stock options and warrants to purchase 115,090,155 and
149,527,797 shares of common stock at
New Accounting Pronouncements
For a discussion of all recently adopted and recently issued but not yet adopted accounting pronouncements, see "Recent Accounting Pronouncements" in Note 2 of our Notes to our Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data" of this Report.
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