UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2023

☐ 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 001-40652

Indaptus Therapeutics, Inc.

(Exact name of Registrant as specified in its Charter)

Delaware		86-3158720
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3 Columbus Circle 15th Floor New York, New York		10019
(Address of principal executive offices)		(Zip Code)

(Registrant’s telephone number, including area code) +(646) 427-2727

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.01 per share		INDP		Nasdaq Capital Market

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. YES ☒ NO ☐

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth 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 ☐ NO ☒

The number of shares of the Registrant’s common stock outstanding as of November 3, 2023 was 8,401,047.

TABLE OF CONTENTS

		Page

Part I. FINANCIAL INFORMATION		F-1

Item 1.	Financial Statements	F-1
	Unaudited Condensed Consolidated Balance Sheets	F-1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss	F-2
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity	F-3
	Unaudited Condensed Consolidated Statements of Cash Flows	F-4
	Notes to Unaudited Condensed Consolidated Financial Statements	F-5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	8
Item 4.	Controls and Procedures	8

Part II. OTHER INFORMATION		8

Item 1.	Legal Proceedings	8
Item 1A.	Risk Factors	9
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	44

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or Quarterly Report, contains, and management may make, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, forward-looking statements can be identified by the use of terms such as “believe,” “expect,” “intend,” “plan,” “may,” “should,” “anticipate,” “could,” “might,” “seek,” “target,” “will,” “project,” “forecast,” “continue” or their negatives or variations of these words or other comparable words. These statements include, without limitation, our statements about: our product candidates development, including the timing and design of the Phase 1 clinical trial of Decoy20; our expectations regarding the recommended Phase 2 dose for subsequent multi-dosing and combination studies and related timing; the anticipated effects of our product candidates; our plans to develop and commercialize our product candidates; the market potential and treatment potential of our product candidates, including Decoy20; our commercialization, marketing and manufacturing capabilities and strategy; our expectations about the willingness of healthcare professionals to use our product candidates; our general business strategy and the plans and objectives of management for future operations; our research and development activities and costs; our future results of operations and condition; the sufficiency of our cash and cash equivalents to fund our ongoing activities; the impact of current macroeconomic conditions on our operations, ability to access capital, and liquidity; and any impact of a pandemic, epidemic or other future health crisis, such as the COVID-19 pandemic on our business.

The forward-looking statements in this Quarterly Report are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties and assumptions, including those described under the sections in this Quarterly Report entitled “Summary Risk Factors,” Part II. Item 1A. “Risk Factors” and Part I. Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.

Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. We intend the forward-looking statements contained in this Quarterly Report to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Summary Risk Factors

The principal factors and uncertainties that make investing in our common stock risky, include, among others:

	●	We are a clinical-stage company with a limited operating history. We are not currently profitable, do not expect to become profitable in the near future and may never become profitable.

	●	We have identified conditions and events that raise substantial doubt regarding our ability to continue as going concern.

	●	Given our lack of current cash flow, we will need to raise additional capital. If we are unable to raise a sufficient amount of capital when needed on acceptable terms or at all, we may be forced to delay, limit or eliminate some or all of our research programs, product development activities and commercialization efforts.

	●	Raising additional capital would cause dilution to our existing shareholders and may restrict our operations or require us to relinquish rights to our technologies or product candidates.

	●	Clinical and preclinical development involves lengthy and expensive processes with uncertain outcomes. Any difficulties or delays in the commencement or completion, or the termination or suspension, of our current or planned clinical trials could result in increased costs to us, delay or limit our ability to generate revenue or adversely affect our commercial prospects.

	●	We expect to continue to incur significant research and development expenses and other operating expenses, which may make it difficult for us to attain profitability.

	●	We may expend our limited resources to pursue a limited number of research programs, product candidates and specific indications and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

	●	Our product candidates may cause undesirable side effects that could delay or prevent their regulatory approval or commercialization or have other significant adverse implications on our business, financial condition and results of operations.

	●	The commercial success of our product candidates depends upon their market acceptance among physicians, patients, healthcare payors and the medical community.

	●	We rely on third parties to conduct our preclinical studies and clinical trials and perform other tasks. If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business, financial condition and results of operations could be substantially harmed.

	●	We currently rely on third parties for the manufacture of our product candidates during clinical development, and expect to continue to rely on third parties for the foreseeable future. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates, or such quantities at an acceptable cost, which could delay, prevent or impair our development or potential commercialization efforts.

	●	The successful commercialization of Decoy20 or any future product candidates, if approved, will depend in part on the extent to which governmental authorities and health insurers establish coverage, adequate reimbursement levels and favorable pricing policies. Failure to obtain or maintain coverage and adequate reimbursement for our products could limit our ability to market those products and decrease our ability to generate revenue.

	●	Recently enacted legislation, future legislation and healthcare reform measures may increase the difficulty and cost for us to obtain marketing approval for and commercialize Decoy20 and any future product candidates and may affect the prices we may set.

	●	If our competitors have product candidates that are approved faster, marketed more effectively, are better tolerated, have a more favorable safety profile or are demonstrated to be more effective than our product candidates, our commercial opportunity may be adversely affected.

	●	Any product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.

	●	We may not be able to adequately protect our proprietary or licensed technology in the marketplace.

	●	We may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses.

	●	We are subject to various U.S. federal, state and foreign healthcare laws and regulations, which could increase compliance costs, and our failure to comply with these laws and regulations could harm our results of operations and financial condition.

	●	Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition.

	●	A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, may materially and adversely affect our business and operations.

	●	Our business and operations may suffer in the event of information technology system failures, cyberattacks or deficiencies in our cybersecurity.

	●	Maintaining and improving our financial controls and the requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.

	●	Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.

	●	The market price of our common stock is volatile and you may sustain a complete loss of your investment.

iii

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

INDAPTUS THERAPEUTICS, INC.

Unaudited Condensed Consolidated Balance Sheets

	September 30, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	15,963,998		$	9,626,800
Marketable securities		-			16,806,009
Prepaid expenses and other current assets		879,524			811,433

Total current assets		16,843,522			27,244,242

Non-current assets:
Property and equipment, net		1,055			2,019
Right-of-use asset		194,751			79,294
Other assets		754,728			738,251

Total non-current assets		950,534			819,564

Total assets	$	17,794,056		$	28,063,806

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and other current liabilities	$	2,264,062		$	3,352,847
Operating lease liability, current portion		101,004			80,494

Total current liabilities		2,365,066			3,433,341

Non-current liabilities:
Operating lease liability, net of current portion		95,237			-

Total non-current liabilities		95,237			-

Total liabilities		2,460,303			3,433,341

Commitments and contingent liabilities (Note 7)		-			-

Stockholders’ equity:
Common stock: $0.01 par value, 200,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 8,401,047 shares issued and outstanding as of September 30, 2023 and December 31, 2022		84,011			84,011
Additional paid in capital		56,664,118			54,443,705
Accumulated deficit		(41,414,376	)		(29,993,685	)
Accumulated other comprehensive income		-			96,434

Total stockholders’ equity		15,333,753			24,630,465

Total liabilities and stockholders’ equity	$	17,794,056		$	28,063,806

See accompanying notes to the unaudited condensed consolidated financial statements

F-1

INDAPTUS THERAPEUTICS, INC.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

	2023			2022			2023			2022
	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Operating expenses:
Research and development	$	2,226,688		$	1,609,554		$	5,587,073		$	4,412,817
General and administrative		2,021,724			1,942,995			6,611,767			6,411,066

Total operating expenses		4,248,412			3,552,549			12,198,840			10,823,883

Loss from operations		(4,248,412	)		(3,552,549	)		(12,198,840	)		(10,823,883	)

Other income, net		326,024			86,184			778,149			156,862

Net loss	$	(3,922,388	)	$	(3,466,365	)	$	(11,420,691	)	$	(10,667,021	)

Net loss available to common stockholders per share of common stock, basic and diluted	$	(0.47	)	$	(0.42	)	$	(1.36	)	$	(1.29	)

Weighted average number of shares used in calculating net loss per share, basic and diluted		8,401,047			8,258,597			8,401,047			8,258,597

Net loss	$	(3,922,388	)	$	(3,466,365	)	$	(11,420,691	)	$	(10,667,021	)
Other comprehensive income:
Reclassification adjustment for interest earned on marketable securities included in net loss		(140,567	)		(7,836	)		(430,993	)		(7,836	)
Change in unrealized gain on marketable securities		6,412			49,904			334,559			22,967
Comprehensive loss	$	(4,056,543	)	$	(3,424,297	)	$	(11,517,125	)	$	(10,651,890	)

See accompanying notes to the unaudited condensed consolidated financial statements

F-2

INDAPTUS THERAPEUTICS, INC.

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

	Shares		Amount		capital		deficit			Income (Loss)			Total
	Common stock				Additional paid in		Accumulated			Other Comprehensive
	Shares		Amount		capital		deficit			Income (Loss)			Total

Balance, January 1, 2022		8,258,597	$	82,586	$	51,487,881	$	(15,670,887	)	$	-		$	35,899,580
Stock-based compensation		-		-		831,183		-			-			831,183
Other comprehensive loss		-		-		-		-			(9,221	)		(9,221	)
Net loss		-		-		-		(3,365,154	)		-			(3,365,154	)
Balance, March 31, 2022		8,258,597		82,586		52,319,064		(19,036,041	)		(9,221	)		33,356,388

Stock-based compensation		-		-		904,395		-			-			904,395
Other comprehensive loss		-		-		-		-			(17,716	)		(17,716	)
Net loss		-		-		-		(3,835,502	)		-			(3,835,502	)
Balance, June 30, 2022		8,258,597		82,586		53,223,459		(22,871,543	)		(26,937	)		30,407,565

Stock-based compensation		-		-		584,041		-			-			584,041
Reclassification adjustment for interest earned on marketable securities included in net loss		-		-		-		-			(7,836	)		(7,836	)
Change in unrealized gain on marketable securities		-		-		-		-			49,904			49,904
Net loss		-		-		-		(3,466,365	)		-			(3,466,365	)
Balance, September 30, 2022		8,258,597	$	82,586	$	53,807,500	$	(26,337,908	)	$	15,131		$	27,567,309

Balance, January 1, 2023		8,401,047	$	84,011	$	54,443,705	$	(29,993,685	)	$	96,434		$	24,630,465
Stock-based compensation		-		-		727,144		-			-			727,144
Reclassification adjustment for interest earned on marketable securities included in net loss		-		-		-		-			(129,229	)		(129,229	)
Change in unrealized gain on marketable securities		-		-		-		-			210,252			210,252
Net loss		-		-		-		(4,253,238	)		-			(4,253,238	)

Balance, March 31, 2023		8,401,047		84,011		55,170,849		(34,246,923	)		177,457			21,185,394

Stock-based compensation		-		-		728,466		-			-			728,466
Reclassification adjustment for interest earned on marketable securities included in net loss		-		-		-		-			(161,197	)		(161,197	)
Change in unrealized gain on marketable securities		-		-		-		-			117,895			117,895
Net loss		-		-		-		(3,245,065	)		-			(3,245,065	)
Balance, June 30, 2023		8,401,047		84,011		55,899,315		(37,491,988	)		134,155			18,625,493
Balance		8,401,047	$	84,011	$	55,899,315	$	(37,491,988	)	$	134,155		$	18,625,493

Stock-based compensation		-		-		764,803		-			-			764,803
Reclassification adjustment for interest earned on marketable securities included in net loss		-		-		-		-			(140,567	)		(140,567	)
Change in unrealized gain on marketable securities		-		-		-		-			6,412			6,412
Net loss		-		-		-		(3,922,388	)		-			(3,922,388	)
Balance, September 30, 2023		8,401,047	$	84,011	$	56,664,118	$	(41,414,376	)	$	-		$	15,333,753
Balance		8,401,047	$	84,011		56,664,118		(41,414,376	)		-			15,333,753

See accompanying notes to the unaudited condensed consolidated financial statements

F-3

INDAPTUS THERAPEUTICS, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

	2023			2022
	For the Nine Months Ended
	September 30,
	2023			2022
Cash flows from operating activities:
Net loss	$	(11,420,691	)	$	(10,667,021	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		964			1,460
Stock-based compensation		2,220,413			2,319,619
Interest earned on marketable securities		(430,993	)		(7,836	)
Realized gain on assets held for sale		-			(24,155	)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(84,568	)		(26,739	)
Accounts payable and other current liabilities		(1,088,785	)		(1,725,592	)
Other assets		-			(738,251	)
Operating lease right-of-use asset and liability, net		290			1,081
Net cash used in operating activities		(10,803,370	)		(10,867,434	)

Cash flows from investing activities:
Proceeds received for assets held for sale		-			172,555
Maturity of marketable securities including interest earned		24,000,000			2,000,000
Purchase of marketable securities		(6,859,432	)		(23,719,073	)
Net cash provided by (used in) investing activities		17,140,568			(21,546,518	)

Net increase (decrease) in cash and cash equivalents		6,337,198			(32,413,952	)

Cash and cash equivalents at beginning of period		9,626,800			39,132,165

Cash and cash equivalents at end of period	$	15,963,998		$	6,718,213

Noncash investing and financing activities
Change in unrealized gain/loss on marketable securities	$	(96,434	)	$	-
ASC 842 lease renewal option exercise	$	236,506		$	-
Reclassification of security deposit	$	16,477		$	-
Supplemental disclosures
Cash paid for income taxes	$	1,600		$	2,400
Cash received for interest earned on deposits	$	317,261		$	70,353

See accompanying notes to the unaudited condensed consolidated financial statements

F-4

INDAPTUS THERAPEUTICS, INC.

Notes to the unaudited condensed consolidated financial statements

NOTE 1: GENERAL

Indaptus Therapeutics, Inc. and its wholly-owned subsidiaries, Decoy Biosystems, Inc. and Intec Pharma Ltd., collectively (the “Company”), is a biotechnology company dedicated to enhancing and expanding curative cancer immunotherapy for patients with unresectable or metastatic solid tumors and lymphomas, which are responsible for more than 90% of all cancer deaths. The Company is developing a novel, multi-targeted product that activates both innate and adaptive anti-tumor and anti-viral immune responses.

Risks and uncertainties

The Company is subject to a number of risks similar to those of other companies of similar size in its industry, including, but not limited to, the need for successful development of products, the need for additional capital (or financing) to fund operating losses (see below), competition from substitute products and services from larger companies, protection of proprietary technology, patent litigation, and dependence on key individuals.

The Company is subject to general conditions and macroeconomic factors in the global economy including increasing concerns over banking failures and bailouts and their potential broader effect on the banking sector generally and on the biotechnology industry. Additionally, inflation, rising interest rates, overall economic conditions and uncertainties, and the risk of a severe or prolonged economic downturn could result in a variety of risks, including the Company’s ability to raise additional funding on a timely basis or on acceptable terms and may additionally impact third parties upon which the Company relies to carry out its operations.

Going concern and management’s plans

The Company has incurred net losses and utilized cash in operations since inception. For the nine months ended September 30, 2023, the Company incurred a net loss of approximately $11.4 million, and as of September 30, 2023, the Company had an accumulated deficit of approximately $41.4 million. In addition, during the nine months ended September 30, 2023, the Company used approximately $10.8 million of cash in operations and expects to continue to incur significant cash outflows and incur future additional losses as clinical trials and commercialization of the Company’s product candidates will require significant additional financing. The Company believes that, as of the date of the issuance of these condensed consolidated financial statements, it will not have adequate cash to fund its ongoing activities beyond the second quarter of 2024 based on its current operating plan. The Company plans to execute its operating plan by obtaining additional capital, principally through entering into collaborations, strategic alliances, or license agreements with third parties and/or additional public or private debt and equity financing. However, there is no assurance that additional capital and/or financing will be available to the Company, and even if available, whether it will be on terms acceptable to the Company or in the amounts required. If the Company is unsuccessful in securing sufficient financing, it may need to delay, reduce, or eliminate its research and development programs, which could adversely affect its business prospects, or cease operations.

As a result of these uncertainties, there is substantial doubt about the Company’s ability to continue as a going concern. The unaudited condensed consolidated financial statements do not include any adjustments to the carrying amounts and classifications of assets and liabilities that would result if the Company was unable to continue as a going concern.

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and SEC Regulation S-X Article 10 for interim financial statements. Accordingly, they do not contain all information and notes required by US GAAP for annual financial statements. In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s consolidated financial position as of September 30, 2023, and the consolidated results of operations and changes in stockholders’ equity for the three- and nine-month periods ended September 30, 2023 and 2022 and cash flows for the nine-month periods ended September 30, 2023 and 2022.

F-5

These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on March 17, 2023. The condensed consolidated balance sheet data as of December 31, 2022, included in these unaudited condensed consolidated financial statements was derived from the audited financial statements for the year ended December 31, 2022, but does not include all disclosures required by US GAAP for annual financial statements.

The results for the nine-month period ended September 30, 2023, are not necessarily indicative of the results expected for the year ending December 31, 2023.

Principles of consolidation

The unaudited condensed consolidated financial statements include the accounts of Indaptus Therapeutics, Inc. and its subsidiaries. Intercompany balances and transactions have been eliminated upon consolidation.

Use of estimates

The preparation of the unaudited condensed consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting periods. The most significant estimates relate to the determination of the fair value of stock-based compensation and the determination of period-end obligations to certain contract research organizations. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and adjusts when facts and circumstances dictate. These estimates are based on information available as of the date of the condensed consolidated financial statements; therefore, actual results could differ from those estimates.

Loss per share

Loss per share, basic and diluted, is computed on the basis of the net loss for the period divided by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is based upon the weighted average number of shares of common stock and of common stock equivalents outstanding when dilutive. Common stock equivalents include outstanding stock options and warrants which are included under the treasury stock method when dilutive.

The following number of stock options and warrants were excluded from the calculation of diluted loss per share because their effect would have been anti-dilutive for the periods presented (share data):

SCHEDULE OF ANTI-DILUTIVE SECURITIES

	Weighted average
	Three months ended				Nine months ended
	September 30,				September 30,
	2023		2022		2023		2022
Outstanding stock options		2,034,562		1,608,837		1,955,182		1,543,931
Warrants		3,090,787		3,090,787		3,090,787		3,090,787

Research and development expenses

Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, share-based compensation expenses, payroll taxes and other employee benefits, subcontractors and materials used for research and development activities, including clinical trials and professional services. All costs associated with research and development are expensed as incurred.

F-6

The Company accrues for expenses resulting from obligations under agreements with contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”), and other outside service providers for which payment flows do not match the periods over which services or materials are provided to the Company. Accruals are recorded based on estimates of services received and efforts expended pursuant to agreements with CROs, CMOs, and other outside service providers. These estimates are typically based on contracted amounts applied to the proportion of work performed and determined through analysis with internal personnel and external service providers as to the progress or stage of completion of the services. In the event advance payments are made to a CRO, CMO, or outside service provider, the payments will be recorded as a prepaid expense, which will be amortized or expensed as the contracted services are performed.

Recently adopted accounting standard

On January 1, 2023, the Company adopted ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. This standard amended guidance on the recognition of impairment losses of certain financial instruments. The ASU established the current expected credit loss model, which is based on expected losses rather than incurred losses. Adoption of this standard had no impact on the Company’s condensed consolidated financial statements.

NOTE 3: PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets are comprised of the following:

	September 30,		December 31,
	2023		2022
Prepaid insurance	$	737,881	$	610,208
Prepaid research and development		19,457		80,910
Other prepaid expenses		122,186		120,315
Total prepaid expenses and other current assets	$	879,524	$	811,433

NOTE 4: ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES

Accounts payable and other current liabilities are comprised of the following:

	September 30,		December 31,
	2023		2022
Accounts payable	$	617,270	$	1,378,316
Accrued employee costs		795,183		1,216,242
Accrued professional fees		124,852		172,356
Accrued research and development		559,044		311,036
Accrued board fees		117,750		116,000
Delaware franchise taxes payable		30,000		128,929
Other accrued expenses		19,963		29,968
Total accounts payable and other current liabilities	$	2,264,062	$	3,352,847

NOTE 5: STOCK-BASED COMPENSATION

The Company has an equity incentive plan for grants to employees, officers, consultants, directors, and other service providers that was approved in 2021 (the “2021 Plan”). The maximum aggregate number of shares that may be issued pursuant to this 2021 Plan is 1,864,963 shares (the “Pool”); provided, however that the Pool will increase on January 1 of each calendar year beginning on January 1, 2022 and ending on and including January 1, 2024 (each, an “Evergreen Date”), in an amount equal to the lesser of (i) 3% of the total number of shares of common stock outstanding on the December 31st immediately preceding the applicable Evergreen Date and (ii) such lesser number of shares of common stock as determined to be appropriate by the Committee (as defined in the 2021 Plan) in its sole discretion. On January 1, 2022 and January 1, 2023, the Pool was increased by 247,758 shares and 252,031 shares, respectively. In no event shall more than 1,864,963 shares be available for issuance for Incentive Stock Options (as defined in the 2021 Plan) under the 2021 Plan.

F-7

The 2021 Plan provides for the grant of non-qualified stock options, incentive stock options, restricted stock awards, restricted stock units, unrestricted stock awards, stock appreciation rights and other forms of stock-based compensation. The 2021 Plan permits the Company’s board to change the type, terms and conditions of awards as circumstances may change. This flexibility to adjust the type of compensation to be granted is particularly important given current economic and world events.

A summary of the stock option activity during the nine months ended September 30, 2023, is presented in the table below:

SCHEDULE OF SHARE BASED COMPENSATION

				Weighted average
	Number of options			Exercise price		Remaining contractual life (in years)		Intrinsic value
Outstanding as of January 1, 2023		1,672,873		$	13.01		8.5	$	-
Granted		425,750		$	1.70		-	$	-
Forfeited and cancelled		(48,426	)	$	4.34		-	$	-
Outstanding as of September 30, 2023		2,050,197		$	10.86		8.1	$	556,523
Exercisable as of September 30, 2023		1,080,701		$	16.37		7.6	$	62,993
Vested and expected to vest September 30, 2023		2,050,197		$	10.86		8.1	$	556,523

The following table summarizes the total stock-based compensation expense included in the condensed consolidated statements of operations for the periods presented:


	For the three months ended September 30,				For the nine months ended September 30,
	2023		2022		2023		2022
Research and development	$	200,624	$	217,379	$	586,854	$	602,069
General and administrative		564,179		366,662		1,633,559		1,717,550
Total stock-based compensation expense	$	764,803	$	584,041	$	2,220,413	$	2,319,619

As of September 30, 2023, total compensation cost not yet recognized related to unvested stock options was approximately $3.0 million, which is expected to be recognized over a weighted-average period of 0.9 years.

The Company estimates the fair value of stock options on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires estimates of highly subjective assumptions, which affect the fair value of each stock option. The weighted average inputs used to measure the value of the options granted during the nine months ended September 30, 2023 are presented in the table below. The weighted average fair value of stock options issued during the nine months ended September 30, 2023 was $1.43 per share.

	2023
Stock price	$	1.70
Exercise price	$	1.70
Expected term (in years)		5.8
Volatility		110.9	%
Risk free rate		3.7	%
Dividend yield		0	%

F-8

The following table presents the exercise price of outstanding stock options as of September 30, 2023:

Exercise price	Options outstanding
$0.01 - $8.00		1,023,249
$8.01 - $16.00		992,250
$16.00 or higher		34,698
Total		2,050,197

NOTE 6: CAPITALIZATION

As of September 30, 2023 and December 31, 2022, the Company had 200,000,000 shares of common stock authorized and 8,401,047 shares of common stock issued and outstanding. As of September 30, 2023 and December 31, 2022, there were warrants outstanding to purchase an aggregate of 3,090,787 shares of common stock of Indaptus. As of September 30, 2023, these warrants are exercisable at a weighted average price of $12.50 and their weighted average remaining contractual term is 3.2 years.

NOTE 7: COMMITMENTS AND CONTINGENCIES

Litigation

On July 13, 2022, LTS Lohmann Therapie Systeme AG (“LTS”) filed a Request for Arbitration with the International Chamber of Commerce (“Request”), naming as respondent the Company’s subsidiary, Intec Israel. The Request alleges that LTS is entitled to payment of Euro 2 million under a process development agreement (“PDA”) following discontinuation of the former Accordion Pill business. Intec Israel had previously accrued this amount along with other related costs. In 2022, Intec Israel paid approximately Euro 1 million (approximately $1 million USD) towards the alleged obligation.

On February 7, 2023, Intec Israel settled the dispute with LTS by paying Euro 800,000 (approximately $860,000). As the settlement amount was less than the amount accrued, the Company also recognized other income of approximately Euro 345,000 (approximately $365,000) during the year ended December 31, 2022.

From time to time, the Company could become involved in additional disputes and various litigation matters that arise in the normal course of business. These may include disputes and lawsuits related to intellectual property, licensing, contract law and employee relations matters. Periodically, the Company reviews the status of significant matters, if any exist, and assesses its potential financial exposure. If the potential loss from any claim or legal claim is considered probable and the amount of such potential loss can be estimated, the Company accrues liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation.

Leases

On October 1, 2021, the Company entered into a noncancelable two-year operating lease agreement for approximately 2,000 square feet of office space in San Diego, California. The base rent is $7,999 per month with an increase of 3% after the first anniversary of the lease term commencement, which was November 1, 2021.

On April 19, 2023, the Company executed an amendment to the lease agreement to extend the lease through October 31, 2025. Accordingly, the Company remeasured its operating lease liability under the agreement and recognized an incremental lease liability and right-of-use asset of $236,506. The remeasurement was based on a 9% incremental borrowing rate.

Future minimum lease payments for the years ending December 31, under the Company’s noncancelable operating lease as of September 30, 2023 are as follows:

SUMMARY OF MINIMUM LEASE PAYMENTS


2023 (remaining)	$	25,105
2024		101,705
2025		86,862
Total minimum lease payments		213,672
Less: amount representing interest		(17,431	)
Present value of operating lease liability		196,241
Less: current portion		(101,004	)
Operating lease liability, net of current portion	$	95,237

The Company recognized rent expense of $75,280 and $73,069 during the nine months ended September 30, 2023 and 2022, respectively. The Company recognized rent expense of $25,462 and $24,356 during the three months ended September 30, 2023 and 2022, respectively. Total cash payments for the operating lease totaled $74,148 and $71,989 during the nine months ended September 30, 2023 and 2022, respectively.

NOTE 8: SUBSEQUENT EVENTS

The Company evaluated subsequent events from September 30, 2023, the date of these unaudited condensed consolidated financial statements, through November 6, 2023, which represents the date the condensed consolidated financial statements were issued, for events requiring recognition or disclosure in the condensed consolidated financial statements for the nine months ended September 30, 2023. The Company concluded that no events have occurred that would require recognition or disclosure in the condensed consolidated financial statements.

F-9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context indicates otherwise, in this Quarterly Report, the terms “Indaptus,” “the Company,” “we,” “us” and “our” refer to Indaptus Therapeutics, Inc. (formerly Intec Parent, Inc., the successor of Intec Pharma Ltd. following the domestication merger) and, where appropriate, its consolidated subsidiaries following the domestication merger and the reverse merger described in our previous periodic reports. References to “Intec Israel” refer to Intec Pharma Ltd., the predecessor of Indaptus prior to the domestication merger, and references to “Decoy” refer to Decoy Biosystems, Inc., the entity acquired by Indaptus in connection with the reverse merger.

You should read the following discussion and analysis of our financial condition and results of operations along with our consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on March 17, 2023 (the “2022 Annual Report on Form 10-K”). The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions. You should review the sections titled “Summary Risk Factors” and Part II. Item 1A. Risk Factors” in this Quarterly Report for a discussion of important factors that could cause actual results to differ materially from the results described below. Please also see the “Cautionary Note Regarding Forward-Looking Statements” section in the forepart of this Quarterly Report.

Overview

We are a clinical biotechnology company developing a novel and patented systemically-administered anti-cancer and anti-viral immunotherapy. We have evolved from more than a century of immunotherapy advances. Our approach is based on the hypothesis that efficient activation of both innate and adaptive immune cells and associated anti-tumor and anti-viral immune responses will require a multi-targeted package of immune system activating signals that can be administered safely intravenously. Our patented technology is composed of single strains of attenuated and killed, non-pathogenic, Gram-negative bacteria, designed to have reduced i.v. toxicity, but largely uncompromised ability to prime or activate many of the cellular components of innate and adaptive immunity. This approach has led to broad anti-tumor and anti-viral activity in preclinical models, including durable anti-tumor response synergy observed with each of five different classes of existing agents, including checkpoint therapy, targeted antibody therapy and low-dose chemotherapy. Tumor eradication by our technology has demonstrated activation of both innate and adaptive immunological memory and, importantly, did not require provision of or targeting a tumor antigen in pre-clinical models. We have carried out successful current cGMP manufacturing of our lead clinical candidate, Decoy20, and completed other IND-enabling studies.

In May 2022, the U.S. Food and Drug Administration, or the FDA, cleared our Investigational New Drug, or IND, application for a Phase 1 clinical trial in patients with advanced solid tumors where currently approved therapies have failed, and in December 2022, we initiated this Phase 1 clinical trial which is an open label, multi-center, dose escalation and expansion, single arm (monotherapy) study conducted in 2 parts. The Phase 1 study has begun with a single dose escalation, which is planned to be followed by an expansion part with continuous weekly administration of Decoy20. The study is enrolling patients with advanced/metastatic solid tumors, who have exhausted approved treatment options. The study’s objectives are to assess the safety and tolerability of Decoy20, to determine the maximum tolerated dose and recommended Phase 2 dose, as well as to assess Decoy20 pharmacokinetics (“PK”), pharmacodynamics and clinical activity. The primary endpoint of the study is incidence, relatedness and severity of adverse events and treatment-emergent adverse events and determining the number of subjects per cohort with dose limiting toxicity-based adverse events. Secondary endpoints include the incidence of anti-drug antibodies and neutralizing antibodies pre- and post-treatment, change in Decoy20 PK parameters over time, objective response rate in subjects with measurable disease and duration of response. In August 2023, we completed the first cohort of patients who received a single dose in Part 1 of the Phase 1 clinical trial. Four patients were enrolled and evaluable in the first cohort. Overall, patients experienced symptoms or adverse events (AEs) that were short-lived and consistent with the mechanism of action of Decoy20. In September 2023, we advanced into the second cohort of the Phase 1 clinical trial after receiving authorization from the Safety Review Committee. The second cohort dose is a reduction from the dosing in the first cohort based on the significant pharmacodynamic effect seen with the first cohort and anticipated optimal Decoy20 safety profile for both weekly dosing and combination approaches. As we continue to analyze the data generated, we anticipate that the data from the dose finding studies will guide the selection for the recommended Phase 2 dose for subsequent multi-dosing and combination studies, which are planned for 2024.

Impact of Macroeconomic Conditions on our Operations

Economic developments such as supply chain constraints and rising inflation and interest rates have negatively affected the global financial markets and may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity. The ultimate impact of the current economic downturn is highly uncertain and subject to change. While it is unknown how long these conditions will last and what the complete financial effect will be to us, capital raise efforts and additional development of our technologies may be negatively affected. In addition, our business operations expose us to risks associated with public health crises and epidemics/pandemics, such as COVID-19. A resurgence of the COVID-19 pandemic or any new public health crisis could again affect our operations and those of third parties on which we rely, including by causing disruptions in the supply of our product candidates and the conduct of current and future clinical trials.

Components of Operating Results

Operating Expenses

Research and Development

Research and development expenses account for a significant portion of our operating expenses. Research and development expenses consist primarily of fees paid to contract research organizations, or CROs, and contract manufacturing organizations, or CMOs, as well as compensation expenses for certain employees involved in the planning, managing, and analyzing the work of the CROs and CMOs and materials used for research and development activities. We expense research and development costs as incurred.

We accrue expenses for manufacturing, preclinical studies and clinical trial activities performed by third parties based on estimates of services received and efforts expensed pursuant to agreements with CROs, CMOs, and other outside service providers. We determine these estimates based on contracted amounts applied to the proportion of work performed and determined through analysis with internal personnel and external service providers as to the progress or stage of completion of the services. In the event advance payments are made to a CRO, CMO, or outside service provider, we record the payments as a prepaid asset, which will be amortized or expensed as the contracted services are performed. However, actual costs and timing of these activities are highly uncertain, subject to risks and may change depending upon a number of factors, including our clinical development plan.

We expect our research and development expenses to increase substantially for the foreseeable future as we continue to ramp up our clinical development activities and incur expenses associated with hiring additional personnel to support our research and development efforts. Our expenditures on future nonclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion. The duration, costs and timing of pre-clinical studies and clinical trials and development of product candidates will depend on a variety of factors, including:

	●	the timing and receipt of regulatory approvals;

	●	the scope, rate of progress and expenses of pre-clinical studies and clinical trials and other research and development activities;

	●	potential safety monitoring and other studies requested by regulatory agencies; and

	●	significant and changing government regulation.

The process of conducting the necessary clinical research to obtain FDA and other regulatory approval is costly and time consuming and the successful development of product candidates is highly uncertain. These risks and uncertainties associated with our research and development projects are discussed more fully in “Part II. Item 1A. Risk Factors - We expect to continue to incur significant research and development expenses and other operating expenses, which may make it difficult for us to attain profitability.” As a result of these risks and uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects, or if, when, or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our product candidates.

General and Administrative

General and administrative expenses include compensation, employee benefits, and stock-based compensation for executive management, finance administration and human resources, facility costs (including rent), professional service fees, and other general overhead costs, including depreciation, to support our operations.

We expect our general and administrative expenses to increase substantially for the foreseeable future as we continue to increase our headcount to support our research and development activities and operations generally, the growth of our business and, if any of our product candidates receive marketing approval, commercialization activities. We also expect to continue to incur additional expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC, additional director and officer insurance expenses, investor relations activities, and other administrative and professional services.

Other Income, Net

Other income, net includes interest earned on deposits and investments and other items of income, expense, gain and loss that are incidental to the core operations of the Company.

Results of Operations

Three months ended September 30, 2023 compared to three months ended September 30, 2022

The following tables sets forth our results of operations for the three months ended September 30, 2023 and 2022 and the relative dollar change between the two periods.

	Three months ended
	September 30,						Change
	2023			2022			$			%
Operating expenses:
Research and development	$	2,226,688		$	1,609,554		$	617,134			38	%
General and administrative		2,021,724			1,942,995			78,729			4	%

Total operating expenses		4,248,412			3,552,549			695,863			20	%

Loss from operations		(4,248,412	)		(3,552,549	)		(695,863	)		20	%

Other income, net		326,024			86,184			239,840			278	%

Net loss	$	(3,922,388	)	$	(3,466,365	)	$	(456,023	)		13	%
Net loss attributable to common stockholders per share, basic and diluted	$	(0.47	)	$	(0.42	)	$	(0.05	)		12	%
Weighted average number of shares used in calculating net loss per share, basic and diluted		8,401,047			8,258,597

Research and Development Expenses

Our research and development expenses for the three months ended September 30, 2023 amounted to approximately $2.2 million, an increase of approximately $600,000, or approximately 38%, compared to approximately $1.6 million for the three months ended September 30, 2022. This increase was attributable primarily to our Phase 1 clinical trial and activities related to the expansion of our pipeline. We expect our research and development expenses to increase for the remainder of the year as our Phase 1 clinical trial progresses.

General and Administrative Expenses

During the three months ended September 30, 2023, our general and administrative expenses were approximately $2.0 million, which represented an increase of approximately $80,000 as compared to the three months ended September 30, 2022. We expect our general and administrative expenses to increase for the remainder of the year as we continue to support our research and development activities.

Other Income, Net

Other income, net increased in the three months ended September 30, 2023 compared to the same period in 2022 primarily as a result of increased interest rates in the current period that increased interest earned on deposits and interest earned on marketable securities.

Nine months ended September 30, 2023 compared to nine months ended September 30, 2022

The following tables sets forth our results of operations for the nine months ended September 30, 2023 and 2022 and the relative dollar change between the two periods.

	Nine months ended
	September 30,						Change
	2023			2022			$			%
Operating expenses:
Research and development	$	5,587,073		$	4,412,817		$	1,174,256			27	%
General and administrative		6,611,767			6,411,066			200,701			3	%

Total operating expenses		12,198,840			10,823,883			1,374,957			13	%

Loss from operations		(12,198,840	)		(10,823,883	)		(1,374,957	)		13	%

Other income, net		778,149			156,862			621,287			396	%

Net loss	$	(11,420,691	)	$	(10,667,021	)	$	(754,670	)		7	%
Net loss attributable to common stockholders per share, basic and diluted	$	(1.36	)	$	(1.29	)	$	(0.07	)		5	%
Weighted average number of shares used in calculating net loss per share, basic and diluted		8,401,047			8,258,597

Research and Development Expenses

Our research and development expenses for the nine months ended September 30, 2023 amounted to approximately $5.6 million, an increase of approximately $1.2 million, or approximately 27%, compared to approximately $4.4 million for the nine months ended September 30, 2022. This increase was attributable primarily to our Phase 1 clinical trial and activities related to the expansion of our pipeline. We expect our research and development expenses to increase for the remainder of the year as our Phase 1 clinical trial progresses.

General and Administrative Expenses

Our general and administrative expenses for the nine months ended September 30, 2023 amounted to approximately $6.6 million, an increase of approximately $200,000, or approximately 3%, compared to approximately $6.4 million for the nine months ended September 30, 2022. This increase was attributable primarily to an increase of approximately $540,000 for legal fees, payroll and related expenses, recruitment costs and other professional fees, which were partially offset by a decrease of approximately $340,000 in directors’ and officers’ insurance expenses. We expect our general and administrative expenses to increase for the remainder of the year as we continue to support our research and development activities.

Other Income, Net

Other income, net increased in the nine months ended September 30, 2023 compared to the same period in 2022 primarily as a result of increased interest rates in the current period that increased interest earned on deposits and interest earned on marketable securities.

Liquidity and Resources

We do not currently have any approved products and have never generated any revenue from product sales. Since our inception, we have funded our operations primarily through public and private offerings of our equity securities.

In August 2021, we sold a pre-funded warrant to purchase 2,727,273 shares of our common stock and a warrant to purchase 2,727,273 shares of our common stock in a private placement. The warrant was exercisable at an exercise price of $11.00 per share. In September 2021, the pre-funded warrant was fully exercised at an exercise price of $0.01 per share. The pre-funded warrant and the warrant were sold together at a combined price of $11.00, including the pre-funded exercise price. The total net proceeds to us were approximately $27.3 million, after deducting placement agent fees and offering expenses in the amount of approximately $2.7 million.

In June 2022, we entered into an At The Market Offering Agreement (the “ATM Agreement”) which was amended on September 1, 2022 with H.C. Wainwright & Co., LLC, as sales agent (“Wainwright”), pursuant to which we may offer and sell, from time to time through Wainwright, shares of our common stock, par value $0.01 per share, for aggregate gross proceeds of up to $6.3 million. The issuance and sale of common stock by us under the ATM Agreement is being made pursuant to our effective “shelf” registration statement on Form S-3 filed with the SEC on September 1, 2022 and declared effective on September 9, 2022. No shares of common stock have been sold to date under the ATM Agreement.

On December 22, 2022, we entered into a purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which we have the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase from us up to an aggregate of $20.0 million of our common stock (subject to certain limitations) from time to time over the term of the purchase agreement. We also filed a registration statement on Form S-1 to cover the resale of shares of our common stock issuable under the purchase agreement.

Upon execution of the purchase agreement, we issued to Lincoln Park 142,450 initial commitment shares and are obligated to issue additional shares of common stock to Lincoln Park with a value of $125,000, calculated in accordance with the purchase agreement, on the date we have sold over $10.0 million in shares of common stock under the purchase agreement, up to a maximum of 76,220 shares of common stock (to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction), in each case as consideration for Lincoln Park’s irrevocable commitment to purchase shares of our common stock at our direction under the purchase agreement. Additionally, we have reserved up to 3,781,330 shares of our common stock for issuance and sale to Lincoln Park under the purchase agreement from time to time, if and when we determine to sell additional shares to Lincoln Park. No shares of common stock have been sold to Lincoln Park to date.

As of September 30, 2023, we had approximately $16.0 million in cash and cash equivalents, which we believe will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2024. While we intend to finance our cash needs principally through collaborations, strategic alliances, or license agreements with third parties and/or debt or equity financings, we cannot provide any assurance that new financing will be available to us on commercially acceptable terms or in the amounts required, if at all. These conditions raise substantial doubt regarding our ability to continue as a going concern within one year after the date of the filing of this Quarterly Report. For additional information, see Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.

Cash Flows

Operating Activities

Net cash used in operating activities was approximately $10.8 million for the nine months ended September 30, 2023, compared with net cash used in operating activities of approximately $10.9 million for the nine months ended September 30, 2022.

Investing Activities

Net cash provided by investing activities was approximately $17.1 million for the nine months ended September 30, 2023, which was related to the maturity of $24.0 million in marketable securities, offset by net investment of approximately $6.9 million in marketable securities. Net cash used in investing activities was approximately $21.5 million for the nine months ended September 30, 2022, which was primarily related to net investment in marketable securities in the amount of approximately $23.7 million, offset by approximately $0.2 million from the proceeds received for assets held for sale and by $2.0 million from the maturity of marketable securities.

Financing Activities

There was no net cash provided by or used in financing activities in the nine months ended September 30, 2023 and 2022.

Funding Requirements

Our operating expenses have increased substantially since 2022 and are expected to continue to increase in the future in connection with our ongoing activities, particularly as we expect our research and development expenses to increase substantially as we continue to ramp up our clinical development activities and incur expenses associated with our Phase 1 clinical trial and with hiring additional personnel to support our research and development efforts. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Furthermore, we expect to continue to incur significant costs associated with operating as a public company.

Our future capital requirements will depend on many factors, including, but not limited to:

	●	the scope, progress, results and costs of preclinical studies and clinical trials;

	●	the scope, prioritization and number of our clinical trials and other research and development programs;

	●	the amount of revenues we receive under future licensing, collaboration, development and commercialization arrangements with respect to our product candidates;

	●	the impact of any pandemic, such as the COVID-19 pandemic, epidemic or other future health crisis on our business and operations;

	●	the costs of the development and expansion of our operational infrastructure;

	●	the costs, timing and outcome of regulatory review of our product candidates;

	●	the ability of us, or our collaborators, to achieve development milestones, marketing approval and other events or developments under our potential future licensing agreements;

	●	the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights;

	●	the costs and timing of securing manufacturing arrangements for clinical or commercial production;

	●	the costs of contracting with third parties to provide sales and marketing capabilities for us or establishing such capabilities ourselves;

	●	the costs of acquiring or undertaking development and commercialization efforts for any future products, product candidates or technology;

SEC Form 10-Q filed by Indaptus Therapeutics Inc.