GOVX 10-Q
GeoVax Labs, Inc. (GOVX)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended | |
| 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:
GEOVAX LABS, INC.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction | (IRS Employer Identification No.) |
| of incorporation or organization) | |
| (Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each Class | Trading Symbol | Name of each Exchange on which Registered |
| | | The |
| | | The |
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.
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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 | ☐ | |
| ☒ | Emerging growth company | |||
| Smaller reporting 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
As of August 3, 2022,
TABLE OF CONTENTS
Page
| PART I – FINANCIAL INFORMATION | ||
| Item 1 | Condensed Consolidated Financial Statements: | |
| Condensed Consolidated Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021 | 1 | |
| Condensed Consolidated Statements of Operations for the three-month and six-month periods ended June 30, 2022 and 2021 (unaudited) | 2 | |
| Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three-month and six-month periods ended June 30, 2022 and 2021 (unaudited) | 3 | |
| Condensed Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2022 and 2021 (unaudited) | 4 | |
| Notes to Condensed Consolidated Financial Statements (unaudited) | 5 | |
| Item 2 | Management's Discussion and Analysis of Financial Condition and Results of Operations | 9 |
| Item 3 | Quantitative and Qualitative Disclosures about Market Risk | 14 |
| Item 4 | Controls and Procedures | 14 |
| PART II – OTHER INFORMATION | ||
| Item 1 | Legal Proceedings | 15 |
| Item 1A | Risk Factors | 15 |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 15 |
| Item 3 | Defaults Upon Senior Securities | 15 |
| Item 4 | Mine Safety Disclosures | 15 |
| Item 5 | Other Information | 15 |
| Item 6 | Exhibits | 16 |
| SIGNATURES | 17 | |
Part I -- FINANCIAL INFORMATION
Item 1 Financial Statements
| GEOVAX LABS, INC. |
||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Grant funds receivable | - | |||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Total current liabilities | ||||||||
| Other liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments (Note 4) | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, $ par value: | ||||||||
| Authorized shares – Issued and outstanding shares – and at June 30, 2022 and December 31, 2021, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements.
GEOVAX LABS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2022 |
2021 |
2022 |
2021 |
|||||||||||||
| Grant revenue |
$ | $ | $ | $ | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
||||||||||||||||
| General and administrative |
||||||||||||||||
| Total operating expenses |
||||||||||||||||
| Loss from operations |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other income (expense): |
||||||||||||||||
| Interest income |
||||||||||||||||
| Interest expense |
( |
) | ( |
) | ||||||||||||
| Gain on debt extinguishment |
||||||||||||||||
| Total other income (expense) |
||||||||||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Basic and diluted: |
||||||||||||||||
| Net loss per common share |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Weighted average shares outstanding |
||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
GEOVAX LABS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
| Three-Month and Six-Month Periods Ended June 30, 2022 |
||||||||||||||||||||||||||||
| Total |
||||||||||||||||||||||||||||
| Preferred Stock |
Common Stock |
Additional |
Accumulated |
Stockholders’ |
||||||||||||||||||||||||
| Shares |
Amount |
Shares |
Amount |
Paid-in Capital |
Deficit |
Equity |
||||||||||||||||||||||
| Balance at December 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||
| Sale of common stock and warrants for cash |
||||||||||||||||||||||||||||
| Issuance of common stock upon warrant exercise |
( |
) | ||||||||||||||||||||||||||
| Stock option expense |
- | - | ||||||||||||||||||||||||||
| Net loss for the three months ended March 31, 2022 |
- | - | - | - | ( |
) | ( |
) | ||||||||||||||||||||
| Balance at March 31, 2022 |
- | - | ( |
) | ||||||||||||||||||||||||
| Sale of common stock and warrants for cash |
- | - | - | |||||||||||||||||||||||||
| Issuance of common stock upon warrant exercises |
- | - | ( |
) | - | |||||||||||||||||||||||
| Issuance of common stock for services |
- | - | - | |||||||||||||||||||||||||
| Stock option expense |
- | - | - | - | ||||||||||||||||||||||||
| Net loss for the three months ended June 30, 2022 |
- | - | - | - | - | ( |
) | ( |
) | |||||||||||||||||||
| Balance at June 30, 2022 |
- | $ | - | $ | $ | $ | ( |
) | $ | |||||||||||||||||||
| Three-Month and Six-Month Periods Ended June 30, 2021 |
||||||||||||||||||||||||||||
| Total |
||||||||||||||||||||||||||||
| Preferred Stock |
Common Stock |
Additional |
Accumulated |
Stockholders’ |
||||||||||||||||||||||||
| Shares |
Amount |
Shares |
Amount |
Paid-in Capital |
Deficit |
Equity |
||||||||||||||||||||||
| Balance at December 31, 2020 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||
| Sale of common stock for cash |
||||||||||||||||||||||||||||
| Issuance of common stock upon warrant exercise |
||||||||||||||||||||||||||||
| Issuance of common stock for services |
||||||||||||||||||||||||||||
| Stock option expense |
- | - | - | - | - | |||||||||||||||||||||||
| Net loss for the three months ended March 31, 2021 |
- | - | - | - | - | ( |
) | ( |
) | |||||||||||||||||||
| Balance at March 31, 2021 |
( |
) | ||||||||||||||||||||||||||
| Repurchase of preferred stock |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Issuance of common stock for services |
||||||||||||||||||||||||||||
| Stock option expense |
- | - | ||||||||||||||||||||||||||
| Net loss for the three months ended June 30, 2021 |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||
| Balance at June 30, 2021 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||
See accompanying notes to consolidated financial statements.
| GEOVAX LABS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
| Six Months Ended June 30, |
||||||||
| 2022 |
2021 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
||||||||
| Stock-based compensation expense |
||||||||
| Gain on debt extinguishment |
( |
) | ||||||
| Changes in assets and liabilities: |
||||||||
| Grant funds and other receivables |
||||||||
| Prepaid expenses and other current assets |
( |
) | ||||||
| Deposits and other assets |
( |
) | ||||||
| Accounts payable and accrued expenses |
( |
) | ( |
) | ||||
| Total adjustments |
( |
) | ( |
) | ||||
| Net cash used in operating activities |
( |
) | ( |
) | ||||
| Cash flows from investing activities |
||||||||
| Purchase of equipment |
( |
) | ( |
) | ||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| Cash flows from financing activities: |
||||||||
| Net proceeds from sale of common stock |
||||||||
| Net proceeds from warrant exercises |
||||||||
| Repurchase of preferred stock |
( |
) | ||||||
| Principal repayment of note payable |
( |
) | ||||||
| Net cash provided by financing activities |
||||||||
| Net increase in cash and cash equivalents |
||||||||
| Cash and cash equivalents at beginning of period |
||||||||
| Cash and cash equivalents at end of period |
$ | $ | ||||||
Supplemental disclosure of non-cash financing activities:
During the six months ended June 30, 2021, we issued 145,866 shares of common stock upon the cashless exercise of 188,668 stock purchase warrants, and $172,056 of principal and accrued interest was extinguished upon loan forgiveness by the lender.
GEOVAX LABS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2022
(unaudited)
1. Nature of Business
GeoVax Labs, Inc., headquartered in the Atlanta, Georgia metropolitan area, is a clinical-stage biotechnology company incorporated under the laws of the State of Delaware. GeoVax Labs, Inc. and its wholly owned subsidiary, GeoVax, Inc., a Georgia corporation, are collectively referred to as “GeoVax” or the “Company”.
The Company is focused on developing immunotherapies and vaccines against infectious diseases and cancers using novel vector vaccine platforms. GeoVax’s product pipeline includes ongoing human clinical trials in COVID-19 and head and neck cancer. Additional research and development programs include preventive vaccines against Zika Virus, hemorrhagic fever viruses (Ebola, Sudan, Marburg, and Lassa) and malaria, as well as immunotherapies for solid tumors.
2. Summary of Significant Accounting Policies
We disclosed in Note 2 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 those accounting policies that we consider significant in determining our results of operations and financial position. During the six months ended June 30, 2022, there have been no material changes to, or in the application of, the accounting policies previously identified and described in the Form 10-K.
Basis of Presentation – The accompanying condensed consolidated financial statements include the accounts of GeoVax Labs, Inc. and GeoVax, Inc. All intercompany transactions have been eliminated in consolidation. The financial statements are unaudited, but include all adjustments, consisting of normal recurring entries, which we believe to be necessary for a fair presentation of interim periods presented. Interim results are not necessarily indicative of results for a full year. The financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. We expect our operating results to fluctuate for the foreseeable future; therefore, period-to-period comparisons should not be relied upon as predictive of the results in future periods.
Our financial statements have been prepared assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As of the date these financial statements are issued, the Company expects its existing cash and cash equivalents to be sufficient to fund its operations for at least the next twelve months. Since inception, the Company’s activities have consisted primarily of performing research and development to advance its technologies. The Company expects to continue to generate operating losses in the foreseeable future and will require additional funding to continue its research and development activities. The Company may seek funds through further equity financings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements.
Recent Accounting Pronouncements – During the six months ended June 30, 2022, there have been no new accounting pronouncements or changes in accounting pronouncements which we expect to have a material impact on our financial statements.
3. Balance Sheet Components
Prepaid Expenses – Prepaid expenses consist of the following:
| June 30, 2022 | December 31, 2021 | |||||||
| Prepaid clinical trial expenses | $ | $ | ||||||
| Prepaid insurance premiums | ||||||||
| Prepaid rent | ||||||||
| Other prepaid expenses | ||||||||
| Total prepaid expenses | $ | $ | ||||||
Property and Equipment – Property and equipment consist of the following:
| June 30, 2022 | December 31, 2021 | |||||||
| Equipment and furnishings | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Total property and equipment | ||||||||
| Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Other Assets – Other assets consist of the following:
| June 30, 2022 | December 31, 2021 | |||||||
| Prepaid clinical trial expenses | $ | $ | ||||||
| Lease deposit | ||||||||
| Total other assets | $ | $ | ||||||
Accrued Expenses – Accrued expenses consist of the following:
| June 30, 2022 | December 31, 2021 | |||||||
| Accrued technology license fees – current portion | $ | $ | ||||||
| Accrued compensation | ||||||||
| Other accrued expenses | ||||||||
| Total accrued expenses | $ | $ | ||||||
Other Liabilities – Other liabilities were $
4. Commitments
Operating Lease – We lease approximately
License Agreements – We have entered into license agreements for various technologies and patent rights associated with our product development activities. These agreements may contain provisions for upfront payments, milestone fees due upon the achievement of selected development and regulatory events, minimum annual royalties or other fees, and royalties based on future net sales. Aggregate unrecorded future minimum payments under these agreements (excluding milestone and royalty payments due upon contingent future events) are approximately $
Other Commitments – In the normal course of business, we enter into various firm purchase commitments and other contractual obligations related to production and testing of our product candidates, conduct of clinical trials and preclinical research studies, and other activities. As of June 30, 2022, there are approximately $
5. Stockholders’ Equity
January 2022 Private Placement – On January 19, 2022, we closed a private placement of
May 2022 Private Placement – On May 27, 2022, we closed a private placement of
The May 2022 Pre-Funded Warrants were exercised as to
As of June 30, 2022, the May 2022 Preferred Investment Options are currently exercisable (subject to certain common stock ownership restrictions contained in the warrant agreements) and expire as to
Other Common Stock Transactions – During the six months ended June 30, 2022, we issued
Stock Options – We have a stock-based incentive plan (the “2020 Plan”) pursuant to which our Board of Directors may grant stock options and other stock-based awards to our employees, directors and consultants. A total of
Stock Purchase Warrants – The table below presents summary information about our warrants outstanding as of June 30, 2022.
| Warrant Description | Number of Shares | Exercise Price | Expiration | ||||||
| 2020 Warrants | $ | Jun 2025 | |||||||
| 2020 Unit Warrants | Sep 2025 | ||||||||
| 2020 Representative Warrants | Mar 2024 | ||||||||
| 2021 Representative Warrants | Aug 2024 | ||||||||
| 2021 Warrants | Sep 2026 | ||||||||
| Jan 2022 Common Warrants | Feb 2027 | ||||||||
| May 2022 Pre-Funded Warrants | perpetual | ||||||||
| May 2022 Preferred Investment Options | May 2028 | ||||||||
| May 2022 Preferred Investment Options | May 2027 | ||||||||
| Total Warrants Outstanding at June 30, 2022 | |||||||||
6. Stock-Based Compensation Expense
Stock-based compensation expense related to stock options is recognized on a straight-line basis over the requisite service period for the award and is allocated to research and development expense or general and administrative expense based upon the classification of the individual to whom the award is granted. As of June 30, 2022, there is $
We also have issued shares of restricted common stock to consultants and recognize the related expense over the terms of the related agreements. As of June 30, 2022, there is $
The following table summarizes our total stock-based compensation expense:
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2022 |
2021 |
2022 |
2021 |
|||||||||||||
| Stock options: |
||||||||||||||||
| Research and development |
$ | $ | $ | $ | ||||||||||||
| General and administrative |
||||||||||||||||
| Total stock option expense |
||||||||||||||||
| Stock awards (consultants): |
||||||||||||||||
| General and administrative |
||||||||||||||||
| Total stock-based compensation expense |
$ | $ | $ | $ | ||||||||||||
7. Net Loss Per Share
Basic and diluted loss per common share are computed based on the weighted average number of common shares outstanding, including the May 2022 Pre-Funded Warrants outstanding at June 30, 2022. The Company’s additional potentially dilutive securities, which include stock options and stock purchase warrants, have been excluded from the computation of diluted net loss per share as the effect would be antidilutive. The securities that could potentially dilute basic earnings per share in the future and that have been excluded from the computation of diluted net loss per share totaled
8. Income Taxes
No provision for income taxes was recorded in either of the six-month periods ended June 30, 2022 and 2021. The Company remains in a cumulative loss position with a full valuation allowance recorded against its net deferred income tax assets as of June 30, 2022.
9. Subsequent Events
During July 2022, we issued
During July 2022, we issued an aggregate of
During August 2022, we issued an aggregate of
Item 2 Management’s Discussion and Analysis of Financial Condition And Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying notes thereto and other disclosures included in this Quarterly Report on Form 10-Q (this “Report”), and our audited financial statements and the accompanying notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission on March 9, 2022.
Forward-Looking Statements
Information included in this Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are not statements of historical facts, but rather reflect our current expectations concerning future events and results. We generally use the words “believes,” “expects,” “intends,” “plans,” “anticipates,” “likely,” “will” and similar expressions to identify forward-looking statements. All statements in this Report, other than statements of historical facts, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans, intentions, expectations and objectives could be forward-looking statements. Such forward-looking statements, including those concerning our expectations, involve risks, uncertainties and other factors, some of which are beyond our control, which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and factors include, but are not limited to, those factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. We operate in a highly competitive, highly regulated and rapidly changing environment and our business is constantly evolving. Therefore, it is likely that new risks will emerge, and that the nature and elements of existing risks will change, over time. It is not possible for management to predict all such risk factors or changes therein, or to assess either the impact of all such risk factors on our business. We assume no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this Report.
Overview
GeoVax is a clinical-stage biotechnology company developing immunotherapies and vaccines against infectious diseases and cancers using novel vector vaccine platforms. GeoVax’s product pipeline includes ongoing human clinical trials in COVID-19 and head and neck cancer. Additional research and development programs include preventive vaccines against Zika Virus, hemorrhagic fever viruses (Ebola, Sudan, Marburg, and Lassa) and malaria, as well as immunotherapies for solid tumors.
Our programs are in various stages of development, the most significant of which are summarized below:
| ● |
GEO-CM04S1 is currently undergoing a Phase 2 clinical trial (NCT04977024), evaluating its safety and efficacy as a preventive COVID-19 vaccine in patients who have previously received either an allogeneic hematopoietic cell transplant, an autologous hematopoietic cell transplant or chimeric antigen receptor (CAR) T cell therapy. GEO-CM04S1 is the only COVID-19 vaccine that includes both SARS-CoV-2 spike and nucleocapsid proteins to advance to a Phase 2 trial in cancer patients. The trial is also the first to compare an investigational multi-antigenic COVID-19 vaccine to the current Food and Drug Administration (FDA)-approved mRNA vaccine from Pfizer/BioNTech in people who are immunocompromised. |
| ● |
GEO-CM04S1 is also undergoing the Phase 2 portion of a Phase 1/2 trial (NCT04639466), evaluating its use as a universal booster vaccine to current FDA-approved two-shot mRNA vaccines from Pfizer/BioNTech and Moderna. |
| ● |
Gedeptin® is currently undergoing a Phase 1/2 clinical trial (NCT03754933) for treatment of patients with recurrent head and neck squamous cell carcinoma (HNSCC). The initial stage of this trial is being conducted with funding support from the U.S. Food & Drug Administration (FDA) pursuant to its Orphan Products Clinical Trials Grants Program. |
| ● |
GEO-CM02 (our pan coronavirus vaccine) has shown promising results in preclinical studies to date and we have recently initiated additional studies to prepare for IND (Investigational New Drug) filing and subsequent human clinical trials. |
| ● |
Our research program for treatment of solid tumors (MVA-VLP-MUC1) is progressing with additional preclinical studies recently initiated. The initial animal studies of our MVA-VLP-MUC1 vaccine and ICI combination, have been encouraging, showing that a combination of our MVA-VLP-MUC1 vaccine candidate with a MUC1 synthetic peptide was capable of breaking tolerance to human MUC1 in transgenic mice and inducing immune responses with efficacy against challenge in a lymphoma tumor model. Our studies also demonstrated a significant reduction of the tumor burden in a mouse model for colorectal cancer. We have initiated animal studies to determine the optimal course and schedule of vaccination to define a protocol that can be evaluated in a Phase 1 clinical trial. |
| ● |
Our additional research programs for vaccines against Zika virus, malaria and hemorrhagic fever viruses are at various stages of preclinical development. |
Financial Overview
Revenues
Our grant revenues relate to grants and contracts from agencies of the U.S. government in support of our vaccine development activities. We record revenue associated with these grants as the related costs and expenses are incurred. We have not generated any revenues from product sales to date. Our product candidates will require significant additional research and development efforts, including extensive preclinical and clinical testing. All product candidates that we advance to clinical testing will require regulatory approval prior to commercial use and will require significant costs for commercialization.
Research and development expenses
Since our inception, we have focused and we continue to focus significant resources on our research and development activities, including developing our vector platform and analytical testing methods, conducting preclinical studies, developing manufacturing processes, and conducting clinical trials. Research and development costs are expensed as incurred and consist primarily of the following:
| ● |
personnel costs in our research, development and regulatory functions, which include salaries, benefits and stock-based compensation; |
| ● |
expenses incurred under agreements with contract research organizations (“CROs”), that conduct clinical trials on our behalf; |
| ● |
expenses incurred under agreements with contract manufacturing organizations (“CMOs”), that manufacture product used in the clinical trials; |
| ● |
expenses incurred in procuring materials and for analytical and release testing services required to produce vaccine candidates used in clinical trials; |
| ● |
process development expenses incurred internally and externally to improve the efficiency and yield of the bulk vaccine; |
| ● |
laboratory supplies, vendor expenses and other third-party contract expenses related to preclinical research activities; |
| ● |
technology license fees; |
| ● |
consultant expenses for services supporting our clinical, regulatory and manufacturing activities; and |
| ● |
facilities, depreciation and other general overhead expenses. |
We track our external research and development costs on a program-by-program basis. We do not track our internal research and development expenses on a program-by-program basis as they primarily relate to shared costs deployed across multiple projects under development.
Our research and development expenses can fluctuate considerably on a period-to-period basis. We expect our research and development expenses to increase substantially in the future as we advance our existing and future product candidates into and through clinical trials and pursue regulatory approval. The process of conducting the necessary clinical studies to obtain regulatory approval is costly and time-consuming. Clinical trials generally become larger and more costly to conduct as they advance into later stages.
At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of any product candidates that we develop from our programs. We are also unable to predict when, if ever, material net cash inflows will commence from sales of product candidates we develop, if at all. This is due to the numerous risks and uncertainties associated with developing product candidates.
General and administrative expenses
Our general and administrative expenses consist primarily of personnel costs in our executive, finance and investor relations, business development and administrative functions, including stock-based compensation. Other general and administrative expenses include consulting fees, professional service fees for accounting and legal services, lease expenses related to our offices, insurance premiums, intellectual property costs incurred in connection with filing and prosecuting patent applications, depreciation and other costs. We expect our general and administrative expenses to continue to increase in the future as we expand our operating activities and prepare for potential commercialization of our current and future product candidates, increase our headcount and investor relations activities and maintain compliance with requirements of Nasdaq and the Securities and Exchange Commission.
Critical Accounting Policies and Estimates
This discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates and adjusts the estimates as necessary. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.
For a description of critical accounting policies that require significant judgments and estimates during the preparation of our financial statements, refer to Item 7 in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 2 to our Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes to our critical accounting policies from those disclosed in our 2021 Annual Report.
Information regarding recent accounting pronouncements is contained in Note 2 to the condensed consolidated financial statements, included in this Quarterly Report.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that are likely or reasonably likely to have a material effect on our financial condition or results of operations, other than the operating lease for our office and laboratory space.
Results of Operations
The following tables summarize our results of operations for the three-month and six-month periods ended June 30, 2022 and 2021:
| Three Months Ended June 30, |
||||||||||||
| 2022 |
2021 |
Change |
||||||||||
| Grant revenue |
$ | - | $ | 79,708 | $ | (79,708 | ) | |||||
| Operating expenses: |
||||||||||||
| Research and development |
1,307,177 | 832,835 | 474,342 | |||||||||
| General and administrative |
935,311 | 733,499 | 201,812 | |||||||||
| Total operating expenses |
2,242,488 | 1,566,334 | 676,154 | |||||||||
| Loss from operations |
(2,242,488 | ) | (1,486,626 | ) | (755,862 | ) | ||||||
| Total other income (expense), net |
789 | 172,593 | (171,804 | ) | ||||||||
| Net loss |
$ | (2,241,699 | ) | $ | (1,314,033 | ) | $ | (927,666 | ) | |||
| Six Months Ended June 30, |
||||||||||||
| 2022 |
2021 |
Change |
||||||||||
| Grant revenue |
$ | 81,526 | $ | 190,125 | $ | (108,599 | ) | |||||
| Operating expenses: |
||||||||||||
| Research and development |
2,637,721 | 1,435,618 | 1,202,103 | |||||||||
| General and administrative |
2,114,335 | 1,805,209 | 309,126 | |||||||||
| Total operating expenses |
4,752,056 | 3,240,827 | 1,511,229 | |||||||||
| Loss from operations |
(4,670,530 | ) | (3,050,702 | ) | (1,619,828 | ) | ||||||
| Total other income (expense), net |
1,316 | 173,891 | (172,575 | ) | ||||||||
| Net loss |
$ | (4,669,214 | ) | $ | (2,876,811 | ) | $ | (1,792,403 | ) | |||
Grant Revenues
The following table summarizes our grant revenues for the three-month and six-month periods ended June 30, 2022 and 2021:
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2022 |
2021 |
2022 |
2021 |
|||||||||||||
| Lassa Fever – U.S. Army Grant |
$ | - | $ | - | $ | 81,526 | $ | - | ||||||||
| COVID-19 – NIH SBIR Grant |
- | 79,708 | - | 190,125 | ||||||||||||
| Total |
$ | - | $ | 79,708 | $ | 81,526 | $ | 190,125 | ||||||||
Total grant revenues decreased by $79,708 (100%) for the three-month period ended June 30, 2022 and by $108,599 (57%) for the six-month period ended June 30, 2022, versus the comparable 2021 periods, attributable to the differing mix of active grants as shown in the table above, as well as the timing of expenditures related to such grants. As of June 30, 2022, all grant funds approved for direct use by GeoVax have been utilized.
Research and Development Expenses
For the three-month and six-month periods ending June 30, 2022, research and development expenses increased by $474,342 (57%) and $1,202,103 (84%), respectively, versus the comparable 2021 periods. The overall increase during the 2022 periods relates primarily to higher personnel costs (including the use of external consultants), costs of conducting clinical trials for GEO-CM04S1 and Gedeptin, costs of manufacturing materials for use in our clinical trials, and a generally higher level of activity. Research and development expense for the three-month and six-month periods of 2022 included stock-based compensation expense of $54,293 and $108,585, respectively; as compared to $21,468 and $42,936, respectively, for the comparable 2021 periods.
General and Administrative Expenses
For the three-month and six-month periods ending June 30, 2022, general and administrative expenses increased by $201,812 (28%) and $309,126 (17%), respectively, versus the comparable 2021 periods. The overall increase during the 2022 periods relates primarily to higher personnel costs (including the use of external consultants), patent costs and travel expenses. General and administrative expense for the three-month and six-month periods of 2022 included stock-based compensation expense of $152,885 and $303,744, respectively; as compared to $65,295 and $120,617, respectively, for the comparable periods of 2021.
Other Income (Expense)
Interest income for the three-month and six-month periods ended June 30, 2022 was $789 and $1,316, respectively, as compared to $1,068 and $3,121, respectively, for comparable periods of 2021. The variances between periods are primarily attributable to cash available for investment and interest rate fluctuations.
No interest expense was recorded during the three-month and six-month periods ended June 30, 2022. Interest expense for the three-month and six-month periods ended June 30, 2021 was $531 and $1,286, respectively.
During the three-month and six-month periods ended June 30, 2021, we recorded a $172,056 one-time gain on debt extinguishment associated with the forgiveness of the principal and accrued interest related to our Paycheck Protection Program (PPP) loan.
Liquidity, Capital Resources and Cash Flows
The following tables summarize our liquidity and capital resources as of June 30, 2022 and December 31, 2021, and our cash flows for the six-month periods ended June 30, 2022 and 2021:
| Liquidity and Capital Resources |
June 30, 2022 |
December 31, 2021 |
||||||
| Cash and cash equivalents |
$ | 30,902,454 | $ | 11,423,870 | ||||
| Working capital |
28,670,366 | 6,193,756 | ||||||
| Six Months Ended June 30, |
||||||||
| Cash Flow Data |
2022 |
2021 |
||||||
| Net cash provided by (used in): |
||||||||
| Operating activities |
$ | (8,166,818 | ) | $ | (2,879,566 | ) | ||
| Investing activities |
(82,383 | ) | (19,929 | ) | ||||
| Financing activities |
27,727,785 | 12,554,212 | ||||||
| Net increase in cash and cash equivalents |
$ | 19,478,584 | $ | 9,654,717 | ||||
Operating Activities – Net cash used in operating activities of $8,166,818 for the six months ended June 30, 2022, was primarily due to our net loss of $4,669,214, as adjusted by non-cash items such as depreciation expense and stock-based compensation expense, and by changes in our working capital accounts. Net cash used in operating activities of $2,879,566 for the six months ended June 30, 2021, was primarily due to our net loss of $2,876,811, also adjusted by non-cash charges such as depreciation and stock-based compensation expense, and by changes in our working capital accounts.
Investing Activities – Net cash used in investing activities was $82,383 and $19,929 for the six-month periods ended June 30, 2022 and 2021, respectively, and relates primarily to purchases of laboratory equipment.
Financing Activities – Net cash provided by financing activities was $27,727,785 for the six-month period ended June 30, 2022, consisting of net proceeds from a private placement of our common stock and warrants as described in Note 5 to the condensed consolidated financial statements, included in this Quarterly Report. Net cash provided by financing activities was $12,554,212 for the six-month period ended June 30, 2021, consisting primarily of (i) net proceeds of $9,408,920 from a public offering of our common stock, (ii) $3,174,156 of net proceeds from the exercise of warrants, and (iii) $27,864 in principal repayments in retirement of a note payable.
Funding Requirements
We have no products approved for commercial sale. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize our product candidates. We do not know when, or if, this will occur. As of June 30, 2022, we have an accumulated deficit of approximately $69 million and we expect to incur operating losses and generate negative cash flows from operations for the foreseeable future. We have funded our operations to date primarily from sales of our equity securities and from government grants and clinical trial assistance.
Our primary uses of capital are for personnel costs, costs of conducting clinical trials, manufacturing costs for materials used in clinical trials, third-party research services, laboratory and related supplies, technology license fees, legal and other regulatory expenses, and general overhead costs. We expect these costs will continue to be the primary operating capital requirements for the near future.
Our future expenditures are likely to be highly volatile in future periods depending on the outcomes of our clinical trials and preclinical studies. We expect our research and development costs to increase as we continue development of our various programs and as we move toward later stages of development, especially with regard to the ongoing clinical trials for Gedeptin and CEO-CM04S1. We expect our general and administrative expenses to increase commensurately in support of expanded research and development efforts.
As of the date of this Quarterly Report, we expect our existing cash and cash equivalents will be sufficient to fund our operations over at least the next twelve months.
We have based our projections of operating capital requirements on assumptions that may prove to be incorrect, and we may use our available capital resources sooner than we expect. Our future capital requirements will depend on many factors, which include but are not limited to:
| ● |
the timing and costs of our ongoing and planned clinical trials; |
| ● |
the timing and costs of manufacturing material for use in clinical trials; |
| ● |
the number and scope of our research programs and the speed at which they are advanced; |
| ● |
the progress and success of our preclinical and clinical development activities; |
| ● |
the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; |
| ● |
the costs to attract and retain skilled personnel; |
| ● |
the costs to maintain and expand our infrastructure to support our operations, our product development, and planned future commercialization efforts; |
| ● |
the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; |
| ● |
the costs associated with any products or technologies that we may in-license or acquire; and |
| ● |
the costs and timing of regulatory approvals. |
We will need to continue to raise additional capital to support our future operating activities, including progression of our development programs, preparation for commercialization, and other operating costs. Financing strategies we may pursue include, but are not limited to, the public or private sale of equity, debt financings or funds from other capital sources, such as government funding, collaborations, strategic alliances or licensing arrangements with third parties. There can be no assurances additional capital will be available to secure additional financing, or if available, that it will be sufficient to meet our needs on favorable terms. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development of one or more of our product candidates.
Item 3 Quantitative and Qualitative Disclosures About Market Risk
Not applicable to smaller reporting companies.
Item 4 Controls and Procedures
Evaluation of disclosure controls and procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that the information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (Exchange Act), is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to management, including the Chief Executive Officer and Principal Financial and Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.
Our management has carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and our Principal Financial and Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 or 15d-15 as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
Changes in internal control over financial reporting
There were no significant changes in our internal control over financial reporting that occurred during the three months ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Controls
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
PART II -- OTHER INFORMATION
Item 1 Legal Proceedings
None.
Item 1A Risk Factors
For information regarding factors that could affect our results of operations, financial condition or liquidity, see the risk factors discussed under “Risk Factors” in Item 1A of our most recent Annual Report on Form 10-K. See also “Forward-Looking Statements,” included in Part I - Item 2 of this Quarterly Report on Form 10-Q. As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 1A concerning any material changes from the risk factors previously disclosed in our most recent Annual Report on Form 10-K.
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
Effective as of May 1, 2022, we renewed our agreement with Content Carnivores, LLC for an additional one-year period. In connection with the renewal, in May 2022, we issued 68,500 shares of our common stock to Content Carnivores, LLC as a restricted stock award under our 2020 Stock Incentive Plan with a value at that date of $72,000. The Company relied on an exemption from the registration requirements of the Securities Act afforded by Section 4(a) (2) thereof and Rule 506 of Regulation D.
There were no other sales of unregistered securities during the period covered by this report that have not previously been reported on Form 8-K.
Item 3 Defaults Upon Senior Securities
None.
Item 4 Mine Safety Disclosures
Not applicable.
Item 5 Other Information
During the period covered by this report, there was no information required to be disclosed by us in a Current Report on Form 8-K that was not so reported, nor were there any material changes to the procedures by which our security holders may recommend nominees to our board of directors.
| * | Filed herewith |
| ** | Indicates a management contract or compensatory plan or arrangement |
| (1) | These interactive data files shall not be deemed filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under these sections. |
| (2) | Incorporated by reference from the registrant’s Current Report on Form 8-K filed January 20, 2022. |
| (3) | Incorporated by reference from the registrant’s Annual Report on Form 10-K filed March 9, 2022. |
| (4) | Incorporated by reference from the registrant’s Current Report on Form 8-K filed May 27, 2022. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this quarterly report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
| GEOVAX LABS, INC. | |||
| (Registrant) | |||
| Date: August 3, 2022 | By: | /s/ Mark W. Reynolds | |
| Mark W. Reynolds | |||
| Chief Financial Officer | |||
| (duly authorized officer and principal | |||
| financial officer) |