PCSA 10-K

Processa Pharmaceuticals, Inc. (PCSA)

10-K 2025-03-20 For: 2024-12-31

View Original

Added on April 10, 2026

Title of Each Class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 par value per share		PCSA		The Nasdaq Stock Market LLC

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

Part I
Item 1.	Business.	5
Item 1A.	Risk Factors	29
Item 1B.	Unresolved Staff Comments	52
Item 1C.	Cybersecurity	52
Item 2.	Properties.	53
Item 3.	Legal Proceedings.	53
Item 4.	Mine Safety Disclosures.	53

Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and issuer Purchases of Equity Securities.	53
Item 6.	[Reserved]	55
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	55
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	62
Item 8.	Financial Statements and Supplementary Data	62
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	63
Item 9A.	Controls and Procedures	63
Item 9B.	Other Information	64
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspection	64

Part III
Item 10.	Directors, Executive Officers and Corporate Governance	65
Item 11.	Executive Compensation	70
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	76
Item 13.	Certain Relationships and Related Transactions, and Director Independence	78
Item 14.	Principal Accounting Fees and Services	78

Part IV
Item 15.	Exhibits, Financial Statement Schedules	79
Item 16.	Form 10-K Summary	80

Signatures		81

	●	our ability to obtain funding for our future clinical trials, preclinical activities and our operations;

	●	our ability to meet obligations under our license agreements;

	●	our ability to contract with third-party suppliers, manufacturers and other service providers and their ability to perform adequately;

	●	our ability to obtain and maintain regulatory approval of our product;

	●	the potential market size, opportunity and growth potential for our product candidates, if approved;

	●	our ability to build our own sales and marketing capabilities, or seek collaborative partners, to commercialize our product candidates, if approved;

	●	our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;

	●	our ability to advance product candidates into, and successfully complete, clinical trials;

	●	our ability to recruit and enroll suitable patients in our clinical trials;

	●	the initiation, timing, progress and results of clinical trials and pre-clinical studies for our NGC drugs;

	●	the timing or likelihood of the accomplishment of various scientific, clinical, regulatory filings and approvals and other product development objectives;

	●	the pricing and reimbursement of our product candidates, if approved;

	●	the rate and degree of market acceptance of our product candidates by physicians, patients, third-party payors and others in the medical community, if approved;

	●	the implementation of our business model, strategic plans for our business, product candidates and technology;

	●	the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;

	●	developments relating to our competitors and our industry;

	●	the accuracy of our estimates regarding expenses, capital requirements and needs for additional financing;

	●	our financial performance; and

	●	other risks and uncertainties, including those described under part I, Item 1A. Risk Factors of this Annual Report.

	●	PCS12852 is a highly specific and potent 5HT4 agonist that is Phase 2B ready as potentially the first meaningful treatment for diabetic gastroparesis patients. Gastroparesis is a chronic digestive disorder characterized by delayed gastric emptying of solid food without obstruction. Gastroparesis symptoms include: nausea, vomiting, postprandial fullness, early satiety, abdominal pain, heartburn and poor appetite. Global prevalence of gastroparesis is over 30 million, with a diabetic population of over 8 million.

		We have completed a Phase 2A trial for PCS12852 in gastroparesis patients with positive results.

	●	PCS499 is a drug that can be used to treat unmet medical need conditions caused by multiple pathophysiological changes. We are presently defining the development plan for the use of PCS499 in a primary glomerular disease. We believe that PCS499 could be successfully developed in a primary glomerular disease such as focal segmental glomerulosclerosis, or FSGS, and IgA. We intend to design a development program with the next study being an adaptive designed Phase 3 trial, meet with the FDA, and then find a partner to take the drug to approval.

	●	Greater efficiencies (e.g., the right trial design and trial readouts);
	●	Greater possibility of drug approval by the FDA or other regulatory authorities; and
	●	Greater ability to evaluate the benefit-risk of a drug compared to existing therapy, which allows prescribers to provide better treatment options for each patient.

	●	31% (14 patients) had progression-free survival for 8 weeks or more
	●	12% (5 patients) had stable disease for more than 4 months
	●	One patient had a tumor reduction of 40% after 28 days of treatment
	●	Mild to moderate adverse events were reported with a better overall safety profile than gemcitabine.

	●	Tumor-to-muscle ratio of approximately 200 for NGC-Iri and less than 15 for irinotecan and Onivyde®
	●	Tumor-to-plasma ratio approximately 10 for NGC-Iri and less than 7 for irinotecan and Onivyde®

	●	Increasing Cancer Prevalence: The rising incidence of cancers such as breast and colorectal cancers in the U.S. is a significant driver. The American Cancer Society estimated that over 313,000 new cases of breast cancer would be diagnosed and over 42,000 deaths in 2024. They also estimated over 152,000 new cases of colorectal cancer would be diagnosed and over 53,000 deaths.
	●	Aging Population: The growing elderly population, particularly the baby boomer generation, contributes to a higher incidence of cancer, thereby increasing the demand for capecitabine.

	●	2022: The U.S. capecitabine market was valued at approximately USD 408.2 million (GMI Insights, 2023).
	●	2032 Projection: The market is expected to reach USD 652.9 million, reflecting a compound annual growth rate (CAGR) of 4.9% from 2023 to 2032 (GMI Insights, 2023).
	●	In 2021 more than 9,200,000 dosing units of capecitabine were reported by Medicare Part B, suggesting a total that may exceed 17,000,000 when considering non-Medicare patients.

	●	2023: The U.S. gemcitabine market was valued at approximately USD 727.5 million (Fact.MR, 2023).
	●	2033 Projection: The market is expected to reach USD 1.43 billion, reflecting a compound annual growth rate (CAGR) of 7% from 2023 to 2033 (Fact.MR, 2023).
	●	In 2021 more than 840,000 dosing units of capecitabine were reported by Medicare Part B, suggesting a total that may exceed 1,700,000 when considering non-Medicare patients.

	●	The global irinotecan market is experiencing significant growth, primarily driven by the increasing prevalence of colorectal cancer and advancements in cancer therapeutics. In 2023, the market was valued at approximately USD 9.2 billion and is projected to reach around USD 14.7 billion by 2032, reflecting a compound annual growth rate (CAGR) of 6.5% during this period (Dataintelo, 2024).
	●	In 2021 more than 1,800,000 dosing units of capecitabine were reported by Medicare Part B, suggesting a total that may exceed 3,000,000 when considering non-Medicare patients.

	●	Colon Cancer: Irinotecan is a cornerstone in the treatment regimen for metastatic colon cancer, often used in combination therapies.
	●	Rectal Cancer: Employed in cases where the disease has advanced or recurred, enhancing patient survival rates.
	●	Other: Includes applications in treating small cell lung cancer and other malignancies where irinotecan has shown efficacy.

	●	Rising Cancer Prevalence: The global increase in colorectal and other cancers necessitates effective treatments like irinotecan.
	●	Adverse Effects: Common side effects, such as neutropenia and diarrhea, can limit patient compliance and pose challenges in treatment management.

		CoNCERT				Yuhan				Aposense				Elion				Ocuphire				Total
U.S. patents			9				6				3				2				6				25

	●	obtain and maintain international and domestic patent and other legal protections for the proprietary technology, inventions and improvements we consider important to our business;

	●	prosecute and defend our existing and future patents, once obtained;

	●	preserve confidentiality of our own and our licensed methods, processes and know-how; and

	●	operate without infringing the patents and proprietary rights of other parties.

	●	completion of pre-clinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice (GLP) regulations;

	●	submission to the FDA of an IND application, which must become effective before human clinical trials may begin;

	●	approval by an independent Institutional Review Board (IRB), at each clinical site before each trial may be initiated;

	●	performance of adequate and well-controlled human clinical trials in accordance with good clinical practices (GCP) requirements to establish the safety and efficacy of the proposed drug product for each indication;

	●	submission to the FDA of an NDA;

	●	satisfactory completion of an FDA advisory committee review, if applicable;

	●	satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;

	●	FDA review and approval of the NDA, including consideration of the views of any FDA advisory committee, prior to commercial marketing or sale of the drug in the United States; and

	●	compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy (REMS) or to conduct a post-approval study.

	●	Phase 1 clinical trials generally involve a small number of healthy volunteers or disease-affected patients who are initially exposed to a single dose and then multiple doses of the product candidate. The primary purpose of these clinical trials is to assess the metabolism, pharmacologic action, side effect tolerability and safety of the drug.

	●	Phase 2 clinical trials involve studies in disease-affected patients to determine the dose required to produce the desired benefits. At the same time, safety and further pharmacokinetic and pharmacodynamic information is collected, possible adverse effects and safety risks are identified, and a preliminary evaluation of efficacy is conducted. The goal of the Phase 2 trial is to also determine the “best” dosage regimen(s) to evaluate in the Phase 3 trial. The “best” regimen(s) means the regimen(s) that is(are) most likely to provide a safe-efficacious regimen that appropriately balances the risk-benefit analysis that the FDA is required to evaluate in each drug approval. The ideal way to define this “best” regimen for FDA is to evaluate the adverse event-drug exposure and efficacy-drug exposure relationships, which has also been previously called dose-response relationships or studies, and which has now become the foundation for both the FDA’s Project Optimus Oncology initiative and the draft Guidance to determine the optimal dose for an oncology drug.

	●	restrictions on the marketing or manufacturing of the product;

	●	complete withdrawal of the product from the market or product recalls;

	●	safety alerts, Dear Healthcare Provider letters, press releases or other communications containing warning or other safety information about the product;

	●	fines, warning letters or holds on post-approval clinical trials;

	●	refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals; product seizure or detention, or refusal to permit the import or export of products; or

	●	injunctions or the imposition of civil or criminal penalties.

	●	the federal Anti-Kickback Statute, which makes it illegal for any person, including a prescription drug manufacturer (or a party acting on its behalf), to knowingly and willfully solicit, receive, offer or pay any remuneration that is intended to induce or reward referrals, including the purchase, recommendation, order or prescription of a particular drug, for which payment may be made under a federal healthcare program, such as Medicare or Medicaid. Moreover, the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the ACA), provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act;

	●	federal civil and criminal false claims and civil monetary penalties laws, including the civil False Claims Act that can be enforced by private citizens through civil whistleblower or qui tam actions, prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;

	●	the Federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) which prohibits, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

	●	HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their implementing regulations, which also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

	●	federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;

	●	the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices;

	●	the federal Physician Payments Sunshine Act, which requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to CMS information regarding payments and other transfers of value to physicians and teaching hospitals as well as information regarding ownership and investment interests held by physicians and their immediate family members; and

	●	We need to raise additional capital to fund our operations.
	●	We have incurred a history of operating losses and expect to continue to incur substantial costs for the foreseeable future. We are not currently profitable, and we may never achieve or sustain profitability. Our financial situation creates doubt whether we will continue as a going concern.
	●	We have limited cash resources and will require additional financing.
	●	We will need to raise additional capital to complete the development efforts for NGC-Cap, NGC-Gem, and/or NGC-Iri. If we are unable to raise capital when needed, we could be forced to delay, reduce or terminate certain of our development programs or other operations.
	●	Our financial statements contain a statement regarding a substantial doubt about our ability to continue as a going concern.
	●	Our ability to use our net operating loss carryforwards and other tax attributes may be limited.

	●	Our licenses are subject to termination by the licensor in certain circumstances and any termination of a license agreement would result in a loss of important rights and have a material adverse impact on our business and prospects.
	●	We currently do not have, and may never develop, any FDA-approved, licensed or commercialized products.
	●	We depend entirely on the successful development of our product candidates, which have not yet demonstrated efficacy for their target indications in clinical trials. We may never be able to demonstrate efficacy for our product candidates, thus preventing us from licensing, obtaining marketing approval by any regulatory agency, and/or commercializing our product(s).
	●	We must successfully complete clinical trials for our product candidates before we can apply for marketing approval.
	●	We have little corporate history of conducting clinical trials. Our planned clinical trials or those of our collaborators may reveal significant adverse events, toxicities or other side effects not seen in our preclinical studies and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of our product candidates.
	●	Disruptions at the FDA and other government agencies could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved, or commercialized in a timely manner or at all, which could negatively impact our business.

	●	Even if we receive regulatory approval for any of our product candidates, we may not be able to successfully license or commercialize the product and the revenue that we generate from its sales, if any, may be limited.
	●	We are completely dependent on third parties to manufacture our product candidates, and our commercialization of our product candidates could be halted, delayed or made less profitable if those third parties fail to obtain manufacturing approval from the FDA or comparable foreign regulatory authorities, fail to provide us with sufficient quantities of our product candidates or fail to do so at acceptable quality levels or prices.
	●	Even if we obtain marketing approval for any of our product candidates, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expenses.
	●	Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions.
	●	Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and affect the prices we may obtain.
	●	We could face competition from other biotechnology and pharmaceutical companies, and our operating results would suffer if we fail to innovate and compete effectively.
	●	We rely on third parties to conduct clinical trials for our product candidates. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize any of our product candidates and our business would be substantially harmed.
	●	Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.
	●	Even though we may apply for orphan drug designation for a product candidate, we may not be able to obtain orphan drug marketing exclusivity.
	●	Although we may pursue expedited regulatory approval pathways for a product candidate, it may not qualify for expedited development or, if it does qualify for expedited development, it may not actually lead to a faster development, regulatory review or approval process.
	●	Third-party coverage and reimbursement, health care cost containment initiatives and treatment guidelines may constrain our future revenues.
	●	Legal, regulatory and legislative changes with respect to reimbursement, pricing and contracting may adversely affect our business and future prospects.
	●	We may face product liability exposure, and if successful claims are brought against us, we may incur substantial liability if our insurance coverage for those claims is inadequate.
	●	If any of our product candidates are approved for marketing and we are found to have improperly promoted off-label uses, or if physicians misuse our products or use our products off-label, we may become subject to prohibitions on the sale or marketing of our products, product liability claims and significant fines, penalties and sanctions, and our brand and reputation could be harmed.
	●	We may choose not to continue developing or commercializing any of our product candidates at any time during development or after approval, which would reduce or eliminate our potential return on investment for those product candidates.
	●	Changes in U.S. and international trade policies, particularly with respect to China, Europe and India may adversely impact our business and operating results.

	●	We cannot ensure protection of our licensed intellectual property rights.
	●	Our product candidates may infringe the intellectual property rights of others, which could increase our costs and delay or prevent our development and commercialization efforts.
	●	Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

	●	Litigation or legal proceedings could expose us to significant liabilities and have a negative impact on our business.
	●	If we lose key management personnel, or if we fail to recruit additional highly skilled personnel, our ability to identify and develop new or next generation product candidates will be impaired, could result in loss of markets or market share and could make us less competitive.
	●	If our information technology systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions, interruptions or disruptions to operations or clinical trials, reputational harm, litigation, fines and penalties.
	●	We are exposed to cyber-attacks and data breaches, including the risks and costs associated with protecting our systems and maintaining integrity and security of our business information, as well as personal data of our guests, employees and business partners.

	●	Our failure to maintain compliance with Nasdaq’s continued listing requirements could result in the delisting of our Common Stock.
	●	Future equity offerings, license transactions or acquisitions may dilute our existing stockholders’ ownership and/or have other adverse effects on our operations.
	●	Our common stock price is expected to be volatile.
	●	We are a “smaller reporting company,” and the reduced disclosure requirements applicable to us as such may make our common stock less attractive to our stockholders and investors.
	●	We do not currently intend to pay dividends to our stockholders in the foreseeable future, and consequently, your ability to achieve a return on your investment will depend on appreciation in our value.
	●	If securities or industry analysts do not publish research or reports about our business, or if they publish negative evaluations of our stock or negative reports about our business, our stock price and trading volume could decline.
	●	Provisions in our corporate documents and Delaware law could have the effect of delaying, deferring, or preventing a change in control of us, even if that change may be considered beneficial by some of our stockholders.
	●	Provisions in our bylaws provide for indemnification of officers and directors, which could require us to direct funds away from our business and the development of our product candidates.

	●	the timing, rate of progress and cost of any clinical trials and other manufacturing/product development activities for our current and any future product candidates that we develop, in-license or acquire;
	●	the results of the clinical trials for our product candidates;
	●	the timing of, and the costs involved in, FDA approval and any foreign regulatory approval of our product candidates, if at all;
	●	the number and characteristics of any additional future product candidates we develop or acquire;
	●	our ability to establish and maintain strategic collaborations, licensing, co-promotion or other arrangements and the terms and timing of such arrangements;
	●	the degree and rate of market acceptance of any approved products;
	●	costs under our third-party manufacturing and supply arrangements for our current and any future product candidates and any products we commercialize;
	●	costs and timing of completion of any additional outsourced commercial manufacturing or supply arrangements that we may establish;
	●	costs of preparing, filing, prosecuting, maintaining, defending and enforcing any patent claims and other intellectual property rights associated with our product candidates;
	●	costs associated with prosecuting or defending any litigation that we are or may become involved in and any damages payable by us that result from such litigation;
	●	costs of operating as a public company;
	●	the emergence, approval, availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing products or treatments;
	●	costs associated with any acquisition or in-license of products and product candidates, technologies or businesses; and
	●	personnel, facilities and equipment requirements.

	●	demonstration of clinical safety and efficacy;

	●	relative convenience, dosing burden and ease of administration;

	●	the prevalence and severity of any adverse effects;

	●	the willingness of physicians to prescribe our product candidates, and the target patient population to try new therapies;

	●	efficacy of our product candidates compared to competing products;

	●	the introduction of any new products that may in the future become available targeting indications for which our product candidates may be approved;

	●	new procedures or therapies that may reduce the incidences of any of the indications in which our product candidates may show utility;

	●	pricing and cost-effectiveness;

	●	the inclusion or omission of our product candidates in treatment guidelines;

	●	the effectiveness of our own or any future collaborators’ sales and marketing strategies;

	●	limitations or warnings contained in approved labeling from regulatory authorities;

	●	our ability to obtain and maintain sufficient third-party coverage or reimbursement from government health care programs, including Medicare and Medicaid, private health insurers and other third-party payors or to receive the necessary pricing approvals from government bodies regulating the pricing and usage of therapeutics; and

	●	the willingness of patients to pay out-of-pocket in the absence of third-party coverage or reimbursement or government pricing approvals.

	●	withdrawal of clinical trial participants;

	●	termination of clinical trial sites or entire trial programs;

	●	the inability to commercialize our product candidates;

	●	decreased demand for our product candidates;

	●	impairment of our business reputations;

	●	product recall or withdrawal from the market or labeling, marketing or promotional restrictions;

	●	substantial costs of any related litigation or similar disputes;

	●	distractions of management’s attention and other resources from our primary business;

	●	substantial monetary awards to patients or other claimants against us that may not be covered by insurance; or

	●	loss of revenue.

	●	relatively low trading volume, which can result in significant volatility in the market price of our common stock based on a relatively smaller number of trades and dollar amount of transactions;

	●	changes in estimates or recommendations by securities analysts, if any, who cover our common stock;

	●	our ability to remain listed on The NASDAQ Capital Market;

	●	the timing and results of our current and any future preclinical or clinical trials of our product candidates;

	●	the entry into or termination of key agreements, including, among others, key collaboration and license agreements;

	●	the results and timing of regulatory reviews relating to the approval of our product candidates;

	●	the initiation of, material developments in, or conclusion of, litigation to enforce or defend any of our intellectual property rights;

	●	failure of any of our product candidates, if approved, to achieve commercial success;

	●	general and industry-specific economic conditions that may affect our research and development expenditures;

	●	the results of clinical trials conducted by others on products that would compete with our product candidates;

	●	issues in manufacturing our product candidates or any approved products;

	●	the introduction of technological innovations or new commercial products by our competitors;

	●	developments or disputes concerning patent applications, issued patents or other proprietary rights;

	●	future sales of our common stock by us, our insiders or our other stockholders;

	●	a negative outcome in any litigation or potential legal proceeding;

	●	additions and departures of key personnel;

	●	negative publicity or announcements regarding regulatory developments relating to our products;

	●	actual or anticipated fluctuations in our financial condition and operating results, including our cash and cash equivalents balance, operating expenses, cash burn rate or revenue levels;

	●	our filing for protection under federal bankruptcy laws; or

	●	the other factors described in this “Risk Factors” section.

	●	providing that the number of members of our Board is limited to a range fixed by our bylaws;
	●	establishing advance notice requirements for nominations of candidates for election to our Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings; and
	●	authorizing the issuance of “blank check” preferred stock, which could be issued by our Board of Directors to issue securities with voting rights and thwart a takeover attempt.