HCW Biologics Inc 10-Q for FY2021 Q3

HCW Biologics Inc. (HCWB)

10-Q 2021-11-12 For: 2021-09-30

Added on April 09, 2026

About this 10-Q

HCW Biologics Inc filed this 10-Q on November 12, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $0; compared with $0 a year earlier
Net loss: $4.09M; compared with a net loss of $2.71M a year earlier

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Delaware	82-5024477
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2929 N. Commerce Parkway Miramar, Florida	33025
(Address of principal executive offices)	(Zip Code)


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☒


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements	1
	Unaudited condensed interim financial statements as of and for the three and nine months ended September 30, 2020 and September 30, 2021:
	Balance sheets	1
	Statements of operations	2
	Statements of changes in redeemable preferred stock and stockholders’ (deficit) equity	3
	Statements of cash flows	5
	Notes to financial statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION	27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
Signatures		29


	December 31,			September 30,
	2020			2021
				(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	8,455,834		$	15,125,073
Short-term investment		—			24,989,700
Accounts receivable, net		2,500,000			70,000
Prepaid expenses		538,306			1,990,890
Other current assets		654,528			1,383,436
Total current assets		12,148,668			43,559,099
Investments		1,599,750			11,577,850
Property and equipment, net		1,649,668			1,269,001
Total assets	$	15,398,086		$	56,405,950
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY
Liabilities
Current liabilities:
Accounts payable	$	155,343		$	637,193
Accrued liabilities and other current liabilities		845,741			1,757,309
Total current liabilities		1,001,084			2,394,502
Commitments and contingencies (Note 7)
Redeemable preferred stock:
Series A, $0.0001 par value; 14,738,948 shares authorized and 6,316,691 shares issued at December 31, 2020; nil shares authorized or issued at September 30, 2021		6,140,792			—
Series B, $0.0001 par value; 28,029,449 shares authorized and 12,012,617 shares issued at December 31, 2020; nil shares authorized or issued at September 30, 2021		13,680,306			—
Series C, $0.0001 par value; 18,181,818 shares authorized and 5,439,112 shares issued at December 31, 2020; nil shares authorized or issued at September 30, 2021		11,294,301			—
Total redeemable preferred stock		31,115,399			—
Stockholders’ (deficit) equity:
Common stock:
Class B convertible, $0.0001 par value; 10,000,000 shares authorized and 4,285,714 shares issued at December 31, 2020; nil shares authorized or issued at September 30, 2021		429			—
Common, $0.0001 par value; 74,950,215 shares authorized and 507,680 shares issued at December 31, 2020; 250,000,000 shares authorized and 35,728,112 shares issued at September 30, 2021		51			3,573
Additional paid-in capital		—			81,471,813
Accumulated deficit		(16,718,877	)		(27,463,938	)
Total stockholders’ (deficit) equity		(16,718,397	)		54,011,448
Total liabilities, redeemable preferred stock and stockholders’ (deficit) equity	$	15,398,086		$	56,405,950


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2021			2020			2021
Operating expenses:
Research and development	$	2,098,688		$	2,687,341		$	5,845,895		$	6,690,317
General and administrative		609,944			1,404,823			2,039,738			3,565,013
Total operating expenses		2,708,632			4,092,164			7,885,633			10,255,330
Loss from operations		(2,708,632	)		(4,092,164	)		(7,885,633	)		(10,255,330	)
Interest and other income, net		(374	)		(2,540	)		22,627			566,268
Net loss	$	(2,709,006	)	$	(4,094,704	)	$	(7,863,006	)	$	(9,689,062	)
Less: cumulative preferred dividends earned in the period, net of forfeitures		(282,861	)		—			(842,433	)		—
Net loss available for distribution to common stockholders	$	(2,991,867	)	$	(4,094,704	)	$	(8,705,439	)	$	(9,689,062	)
Net loss per share, basic and diluted	$	(0.63	)	$	(0.14	)	$	(1.84	)	$	(0.74	)
Weighted average shares outstanding, basic and diluted		4,743,823			29,572,267			4,728,816			13,111,087


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


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


	Redeemable Preferred Stock													Stockholders’ Deficit
	Series A					Series B				Series C				Common Stock				Additional Paid-In			Accumulated			Total Stockholders’
	Shares		Amount			Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Deficit
Balance, December 31, 2019		6,316,691	$	5,792,302			12,012,617	$	12,883,859		—	$	—		4,717,542	$	472	$	—		$	(9,676,766	)	$	(9,676,294	)
Stock-based compensation		—		—			—		—		—		—		—		—		76			—			76
6% cumulative dividends on redeemable preferred stock		—		86,646			—		193,140		—		—		—		—		(76	)		(279,710	)		(279,786	)
Accretion of issuance costs		—		—			—		7,857		—		—		—		—		—			—			—
Net loss		—		—			—		—		—		—		—		—		—			(2,375,514	)		(2,375,514	)
Balance, March 31, 2020		6,316,691		5,878,948			12,012,617		13,084,856		—		—		4,717,542		472		—			(12,331,990	)		(12,331,518	)
Issuance of Class A Common Stock upon exercise of stock options		—		—			—		—		—		—		20,742		2		2,304			—			2,306
Stock-based compensation		—		—			—		—		—		—		—		—		9,515			—			9,515
6% cumulative dividends on redeemable preferred stock		—		86,646			—		193,140		—		—		—		—		(11,819	)		(267,967	)		(279,786	)
Accretion of issuance costs		—		—			—		3,929		—		—		—		—		—			—			—
Net loss		—		—			—		—		—		—		—		—		—			(2,778,485	)		(2,778,485	)
Balance, June 30, 2020		6,316,691		5,965,594			12,012,617		13,281,925		—		—		4,738,284		474		—			(15,378,442	)		(15,377,968	)
Issuance of Series C Redeemable Preferred Stock, net of issuance costs		—		—			—		—		3,004,048		6,141,940		—		—		—			—			—
Commitment of Series C Redeemable Preferred Stock		—		—			—		—		2,435,064		5,000,000		—		—		—			—			—
Issuance of Class A Common Stock upon exercise of stock options		—		—			—		—		—		—		6,685		1		813			—			814
Stock-based compensation		—		—			—		—		—		—		—		—		1,752			—			1,752
6% cumulative dividends on redeemable preferred stock		—		87,599			—		195,262		—		—		—		—		(2,565	)		(280,296	)		(282,861	)
Accretion of issuance costs		—		—			—		3,929		—		—		—		—		—			—			—
Net loss		—		—			—		—		—		—		—		—		—			(2,709,006	)		(2,709,006	)
Balance, September 30, 2020		6,316,691	$	6,053,193	—		12,012,617	$	13,481,116		5,439,112	$	11,141,940		4,744,969	$	475	$	—		$	(18,367,744	)	$	(18,367,269	)


	Nine Months Ended September 30,
	2020			2021
Cash flows from operating activities:
Net loss	$	(7,863,006	)	$	(9,689,062	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		432,225			448,013
Gain on extinguishment of debt		—			(567,311	)
Changes in operating assets and liabilities:
Accounts receivable		—			2,430,000
Prepaid expenses and other assets		19,595			(2,181,492	)
Accounts payable and other liabilities		517,017			1,960,729
Net cash used in operating activities		(6,894,169	)		(7,599,123	)
Cash flows from investing activities:
Purchases of property and equipment		(150,291	)		(27,411	)
Purchases of short-term investments		—			(24,989,700	)
Purchases of long-term investments		—			(9,977,900	)
Net cash used in investing activities		(150,291	)		(34,995,011	)
Cash flows from financing activities:
Proceeds from the sale of Series C Preferred Stock		6,168,319			—
Proceeds from initial public offering		—			56,000,000
Issuance costs of initial public offering		—			(6,760,053	)
Proceeds from issuance of common stock		3,119			23,426
Net cash provided by (used in) financing activities		6,171,438			49,263,373
Net changes in cash and cash equivalents		(873,022	)		6,669,239
Cash and cash equivalents at the beginning of the period		7,355,834			8,455,834
Cash and cash equivalents at the end of the period	$	6,482,812		$	15,125,073
Non-cash operating, investing and financing activities:
Committed proceeds from redeemable preferred stock	$	5,000,000		$	—
Cumulative dividends earned, accrued and forfeited in the reporting period	$	842,433		$	100,776
Forfeiture of cumulative dividends, upon conversion of Series A Preferred Stock	$	—		$	753,307
Forfeiture of cumulative dividends, upon conversion of Series B Preferred Stock	$	—		$	1,550,403
Forfeiture of cumulative dividends, upon conversion of Series C Preferred Stock	$	—		$	518,371
PPP loan forgiveness	$	—		$	567,311


i.	identify the contract(s) with a customer;
ii.	identify the performance obligations in the contract;
iii.	determine the transaction price;
iv.	allocate the transaction price to the performance obligations within the contract; and
v.	recognize revenue when (or as) the entity satisfies a performance obligation.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2021			2020			2021
Numerator:
Net loss	$	(2,709,006	)	$	(4,094,704	)	$	(7,863,006	)	$	(9,689,062	)
Less: cumulative preferred dividends earned in the period, net of forfeitures		(282,861	)		—			(842,433	)		—
Net loss available for distribution to common stock holders	$	(2,991,867	)	$	(4,094,704	)	$	(8,705,439	)	$	(9,689,062	)
Denominator:
Weighted-average common shares outstanding		4,743,823			29,572,267			4,728,816			13,111,087
Net loss per share, basic and diluted	$	(0.63	)	$	(0.14	)	$	(1.84	)	$	(0.74	)


	At September 30,
	2020		2021
Redeemable Preferred Stock		23,768,416		—
Common stock options		555,634		1,710,817
Potentially diluted securities		24,324,050		1,710,817


	At December 31, 2020:
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	6,752,266	$	—	$	—	$	6,752,266
Total	$	6,752,266	$	—	$	—	$	6,752,266


	At September 30, 2021:
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	10,823,904	$	—	$	—	$	10,823,904
Short-term cash investment		2,999,850		—		—		2,999,850
Short-term investment		24,989,700		—		—		24,989,700
Long-term investment		9,978,100		—		—		9,978,100
Total	$	48,791,554	$	—	$	—	$	48,791,554


2021 (remaining 3 months)	$	54,000
2022		36,000
Total future minimum lease payments	$	90,000


	Three Months Ended September 30,
	2020		2021		$ Change			% Change
Salaries, benefits and related expenses	$	721,890	$	675,155	$	(46,735	)		(6	)%
Manufacturing and materials		824,859		1,034,080		209,221			25	%
Preclinical expenses		322,987		769,179		446,192			138	%
Clinical trials		87,988		69,556		(18,432	)		(21	)%
Other expenses		140,964		139,371		(1,593	)		(1	)%
Total research and development expenses	$	2,098,688	$	2,687,341	$	588,653			28	%


	Three Months Ended September 30,
	2020		2021		$ Change			% Change
Salaries, benefits and related expenses	$	384,705	$	523,818	$	139,113			36	%
Professional services		50,784		331,706		280,922			553	%
Facilities and office expenses		59,663		83,623		23,960			40	%
Depreciation		56,753		44,820		(11,933	)		(21	)%
Rent expense		25,233		24,893		(340	)		(1	)%
Other expenses		32,806		395,963		363,157			—		*
Total general and administrative expenses	$	609,944	$	1,404,823	$	794,879			130	%


	Nine Months Ended September 30,
	2020		2021		$ Change			% Change
Salaries, benefits and related expenses	$	2,163,573	$	2,147,907	$	(15,666	)		(1	)%
Manufacturing and materials		2,274,657		2,109,534		(165,123	)		(7	)%
Preclinical expenses		854,502		1,764,117		909,615			106	%
Clinical trials		152,226		227,108		74,882			49	%
Other expenses		400,937		441,651		40,714			10	%
Total research and development expenses	$	5,845,895	$	6,690,317	$	844,422			14	%


	Nine Months Ended September 30,
	2020		2021		$ Change			% Change
Salaries, benefits and related expenses	$	1,181,440	$	1,634,048	$	452,608			38	%
Professional services		334,622		1,000,206		665,584			199	%
Facilities and office expenses		180,516		211,038		30,522			17	%
Depreciation		172,809		172,545		(264	)		0	%
Rent expense		75,698		74,711		(987	)		(1	)%
Other expenses		94,653		472,465		377,812			399	%
Total general and administrative expenses	$	2,039,738	$	3,565,013	$	1,525,275			75	%


Exhibit Number		Incorporated by Reference			Filed Herewith
Exhibit Number	Description	Form	Date	Number	Filed Herewith

31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X

31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X

32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X

32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X

101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Balance Sheets as of December 31, 2020 and September 30, 2021 (unaudited); (ii) the Condensed Statements of Operations for the three and nine months ended September 30, 2020 (unaudited) and September 30, 2021 (unaudited); (iv) the Condensed Statements of Stockholders’ Equity as of September 30, 2020 (unaudited) and September 30, 2021 (unaudited); (v) the Condensed Statements of Cash Flows for the nine months ended September 30, 2020 (unaudited) and September 30, 2021 (unaudited); and (vi) the notes to the Condensed Financial Statements (unaudited).

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


	HCW Biologics Inc.

Date: November 12, 2021	By:	/s/ Hing C. Wong
		Hing C. Wong
		Chief Executive Officer
		(Principal Executive Officer)

Date: November 12, 2021	By:	/s/ Rebecca Byam
		Rebecca Byam
		Chief Financial Officer
		(Principal Financial and Accounting Officer)