Cautionary Note Regarding Forward-Looking Statements
This Report on Form 10-Q ("Report") includes "forward-looking statements" within
the meaning of the federal securities laws. All statements other than statements
of historical fact are "forward-looking statements" for purposes of this Report,
including any projections of earnings, revenue or other financial items, any
statements regarding the plans and objectives of management for future
operations, any statements concerning proposed new products or services, any
statements regarding future economic conditions or performance, any statements
regarding expected benefits from any transactions and any statements of
assumptions underlying any of the foregoing. In some cases, forward-looking
statements can be identified by use of terminology such as "may," "will,"
"should," "believes," "intends," "expects," "plans," "anticipates," "estimates,"
"goal," "aim," "potential" or "continue," or the negative thereof or other
comparable terminology regarding beliefs, plans, expectations or intentions
regarding the future, including risks relating to the recent outbreak of
COVID-19. Although we believe that the expectations reflected in the
forward-looking statements contained in this Report are reasonable, there can be
no assurance that such expectations or any of the forward-looking statements
will prove to be correct, and actual results could differ materially from those
projected or assumed in the forward-looking statements. Thus, investors should
refer to and carefully review information in future documents we file with the
Commission. Our future financial condition and results of operations, as well as
any forward-looking statements, are subject to inherent risk and uncertainties,
including, but not limited to, the risk factors set forth in "Part I, Item 1A -
Risk Factors" set forth in our Form 10-K for period ended
Product Candidates
We are a biotechnology company focused on developing cellular therapies for cancer and diabetes based upon a proprietary cellulose-based live cell encapsulation technology known as "Cell-in-a-Box®." The Cell-in-a-Box® technology is intended to be used as a platform upon which therapies for several types of cancer, including LAPC and Type 1 and insulin dependent Type 2 diabetes will be developed.
We are developing therapies for pancreatic and other solid cancerous tumors by using genetically engineered live human cells that we believe are capable of converting a cancer prodrug into its cancer-killing form, encapsulating those cells using the Cell-in-a-Box® technology and placing those capsules in the body as close as possible to the tumor. In this way, we believe that when the cancer prodrug is administered to a patient with a particular type of cancer that may be affected by the prodrug, the killing of the patient's tumor may be optimized.
On
We must wait a minimum of 30 calendar days from the date of the IND submission
before initiating our clinical trial. During this time, the FDA has an
opportunity to review the IND to ensure that it is complete and that the planned
clinical trial research patients will not be subject to unreasonable risk. It
also gives the FDA time to ask for more information and clarification about the
information submitted as was done with the
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We are also examining ways to exploit the benefits of the Cell-in-a-Box® technology to develop therapies for cancer that involve prodrugs based upon certain constituents of the Cannabis plant; these constituents are of the class of compounds known as "cannabinoids". Until the FDA allows us to commence the clinical trial involving LAPC described in our recently submitted IND, we will not spend any further resources developing this program.
In addition, we are developing a therapy to delay the production and accumulation of malignant ascites fluid that results from many types of abdominal cancerous tumors. Malignant ascites fluid is secreted by abdominal cancerous tumors into the abdomen after the tumors have reached a certain stage of growth. This fluid contains cancer cells that can seed and form new tumors throughout the abdomen. This fluid accumulates in the abdominal cavity, causing swelling of the abdomen, severe breathing difficulties and extreme pain. We are using our therapy for pancreatic cancer to determine if it can prevent or delay the production and accumulation of malignant ascites fluid. As with our Cannabis program, until the FDA allows us to commence the clinical trial involving LAPC described in our recently submitted IND, we will not spend any further resources developing this program.
We are also developing a therapy for Type 1 diabetes and insulin-dependent Type 2 diabetes. Our diabetes therapy consists of encapsulated genetically modified human liver cells and insulin-producing stem cells. The encapsulation for each type of cell will be done using the Cell-in-a-Box® technology. Implanting these cells in the body is designed to function as a bio-artificial pancreas for purposes of insulin production. As with the two previous programs, we are not spending any further resources developing this program until the FDA allows us to commence the clinical trial involving LAPC described in our recently submitted IND. However, work at UTS on the Melligen cells continues. Melligen cells are human liver cells that have been genetically engineered to produce, store and release insulin in response to the levels of blood sugar in the body.
Finally, we have licensed from
We are required to use its commercially reasonable efforts to develop and
commercialize at least one Product in the Territory. This obligation to develop
and commercialize a Product includes, among other things, the performance of
non-clinical and clinical studies of any Product, the preparation, filing and
prosecution of certain regulatory requests for authorization or approval for
such Product (including to allow the Company to market and sell the Product and
to get the Product approved for reimbursement).
During the term of the Hai Kang License Agreement, we are required to pay a
monthly fee to
With respect to the Hai Kang License Agreement and related products, including
the Kits, we may not be able to (i) develop a related product candidate with our
current resources, on a timely basis, or at all; (ii) obtain the necessary
regulatory authorizations or approvals for such a product candidate or for a
Kit; (iii) commercialize any such product candidate or Kit; or (iv) obtain
reimbursement for such a product candidate or Kit in the
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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 assessment will enable us to avoid part or all
of any impact from the spread of COVID-19 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. 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 the risk factors set forth in "Part I, Item 1A - Risk
Factors" set forth in our Form 10-K for period ended
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 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 regulationsto use in our planned clinical trial involving LAPC.
There are numerous items required to be completed successfully to ensure our final product candidate is ready for use in our planned clinical trial involving 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.
Results of Operations
Three months ended
Revenue
We had no revenues for the three months ended
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Operating Expenses and Loss from Operations
The following table summarizes our operating expenses and loss from operations
for the three months ended
Three Months EndedJuly 31, 2020 2019$ 881,676 $ 1,134,075
The total operating expenses for the three-month period ended
Other expense The following table sets forth our other expense for the three months endedJuly 31, 2020 and 2019: Three Months Ended July 31, 2020 2019 $ 2,268 $ -
Total other expense for the three months ended
Discussion of Operating, Investing and Financing Activities
The following table presents a summary of our sources and uses of cash for the
three months ended
Three Months EndedJuly 31, 2020 July 31, 2019
Net cash used in operating activities:
- - Net cash provided by financing activities: 1,820,060 582,500 Effect of currency rate exchange 2,677 (6,862 ) Net increase (decrease) in cash$ 1,271,735 $ (187,502 ) Operating Activities:
The net cash used in operating activities for the three months ended
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There were no investing activities in the three months ended
Financing Activities:
The cash provided from financing activities is mainly attributable to the proceeds from the sale of our common stock net of the use of funds for payment of insurance financing.
Liquidity and Capital Resources
As of
During the three months ended
As of
In Note 2 - Going Concern to our Condensed Consolidated Financial Statements set forth in this Report, we note that certain conditions raise substantial doubt about our ability to continue as a going concern.
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
Service Agreements
We entered into several service agreements, with both independent and related
parties, pursuant to which services will be provided over the next twenty-four
months related to our IND and clinical trial involving LAPC. The services
include regulatory affairs strategy, advice and follow up work of the IND
submission to the FDA and services related to the planned LAPC trial. They also
cover a 24-month stability study, which includes the container closure integrity
testing, of the clinical trial product syringes. The total cost is estimated to
be approximately
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New Accounting Pronouncements
For a discussion of all recently adopted and recently issued but not yet adopted accounting pronouncements, see Note 2 "Summary of Significant Accounting Policies" of the Notes to our Condensed Consolidated Financial Statements contained in this Report.
Available Information
Our website is located at www.PharmaCyte.com.In addition, all our filings submitted to the Commission, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all our other reports and statements filed with the Commission are available on the Commission's web site at www.sec.gov. Such filings are also available for download free of charge on our website. The contents of the website are not, and are not intended to be, incorporated by reference into this Report or any other report or document filed with the Commission or furnished by us, and any reference to the websites are intended to be inactive textual references only.
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