plxp20210331

10-Q 1 plxp20210331_10q.htm FORM 10-Q plxp20210331_10q.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒	Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2021

☐	Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 001-36351

Commission File Number 001-36351

PLx Pharma Inc.

(Exact name of registrant as specified in its charter)

Delaware		46-4995704
State or other jurisdiction of incorporation or organization		(I.R.S. Employer Identification No.)

9 Fishers Lane, Suite E Sparta, NJ		07871
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (973) 409-6541

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

Common Stock, $0.001 par value	PLXP	The NASDAQ Capital Market

(Title of each class)	(Trading Symbol)	(Name of each exchange on which registered)

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

As of May 11, 2021, there were 22,840,078 shares of common stock, $0.001 par value, issued and outstanding.

			Page #

PART I -		FINANCIAL INFORMATION	5

	Item 1.	Consolidated Financial Statements (unaudited)	5

		Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020	5

		Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020 (unaudited)	6

		Consolidated Statements of Changes in Series A and Series B Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2021 and 2020 (unaudited)	7

		Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 (unaudited)	8

		Notes to Consolidated Financial Statements (unaudited)	9

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22

	Item 4.	Controls and Procedures	22

PART II -		OTHER INFORMATION	23

	Item 1.	Legal Proceedings	23

	Item1A.	Risk Factors	23

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23

	Item 3.	Defaults Upon Senior Securities	23

	Item 4.	Mine Safety Disclosure	23

	Item 5.	Other Information	23

	Item 6.	Exhibits	24

		Signatures	25

		Certificates

	●	our ability to bring our lead product candidates, VAZALORE™ 325 mg and VAZALORE™ 81 mg (referred to together as “VAZALORE”), to market-readiness;
	●	our ability to maintain regulatory approval of VAZALORE and any future product candidates;
	●	the benefits of the use of VAZALORE;
	●	the projected dollar amounts of future sales of established and novel gastrointestinal(“GI”)-safer technologies for non-steroidal anti-inflammatory drugs (“NSAIDs”) and other analgesics;
	●	our ability to successfully commercialize our VAZALORE products, or any future product candidates;
	●	the rate and degree of market acceptance of our VAZALORE products or any future product candidates;
	●	our expectations regarding government and third-party payor coverage and reimbursement;
	●	our ability to scale up manufacturing of our VAZALORE products to commercial scale;
	●	our ability to successfully build a specialty sales force and commercial infrastructure or collaborate with a firm that has these capabilities;
	●	our ability to compete with companies currently producing GI-safer technologies for NSAIDs and other analgesics;
	●	our reliance on third parties to conduct our clinical studies;
	●	our reliance on third-party contract manufacturers to manufacture and supply our product candidates for us;
	●	our reliance on our collaboration partners’ performance over which we do not have control;
	●	our ability to retain and recruit key personnel, including development of a sales and marketing function;
	●	our ability to obtain and maintain intellectual property protection for our VAZALORE products or any future product candidates;
	●	our estimates of our expenses, ongoing losses, future revenue, capital requirements and our needs for or ability to obtain additional financing;
	●	our ability to identify, develop, acquire and in-license new products and product candidates;
	●	our ability to successfully establish and successfully maintain appropriate collaborations and derive significant revenue from those collaborations, including but not limited to any milestone payments or royalties;
	●	legal, political, judicial and regulatory changes;
	●	any impact of the COVID-19 pandemic on our business and financial results;
	●	our financial performance; and
	●	developments and projections relating to our competitors or our industry.

	●	PLX®

	●	PLX PHARMA®

	●	PLXGUARD™

	●	VAZALORE™

	●	FIRST LIQUID-FILLED ASPIRIN CAPSULES™

	●	™

PART I.	FINANCIAL INFORMATION

ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

	March 31, 2021			December 31, 2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	84,423,464		$	22,448,651
Inventory		143,380			143,380
Prepaid expenses and other current assets		300,556			393,470
TOTAL CURRENT ASSETS		84,867,400			22,985,501
NON-CURRENT ASSETS
Property and equipment, net		1,125,719			1,225,879
Right of use assets		249,738			327,161
Goodwill		2,061,022			2,061,022
Security deposit		17,036			17,036
TOTAL ASSETS	$	88,320,915		$	26,616,599

LIABILITIES, SERIES A AND SERIES B CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	962,608		$	862,568
Accrued bonuses		246,647			1,184,823
Accrued interest		-			597,411
Term loan, net of discount and fees		-			622,265
Other current liabilities		199,939			275,247
TOTAL CURRENT LIABILITIES		1,409,194			3,542,314
NON-CURRENT LIABILITIES
Warrant liability		17,626,158			9,691,271
Accrued dividends		3,118,066			2,795,795
Other liabilities		121,651			134,184
TOTAL LIABILITIES		22,275,069			16,163,564

Series A convertible preferred stock: $0.001 par value; liquidation value of $17,603,176; 45,000 shares authorized, 15,000 issued and outstanding		13,661,578			13,661,578
Series B convertible preferred stock: $0.001 par value; liquidation value of $8,514,890; 25,000 shares authorized, 8,000 and 0 issued and outstanding		7,723,312			7,723,312

Commitments and contingencies

STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock; $0.001 par value; 930,000 shares authorized; none issued and outstanding		-			-
Common stock; $0.001 par value; 100,000,000 shares authorized; 22,836,333 and 13,911,633 shares issued and outstanding, respectively		22,836			13,912
Additional paid-in capital		158,327,448			91,203,050
Accumulated deficit		(113,689,328	)		(102,148,817	)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		44,660,956			(10,931,855	)
TOTAL LIABILITIES, SERIES A AND SERIES B CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)	$	88,320,915		$	26,616,599

	Three Months Ended
	March 31, 2021			March 31, 2020
REVENUES:
Federal grant	$	-		$	2,523
TOTAL REVENUES		-			2,523

OPERATING EXPENSES:
Research and development		959,503			513,914
General and administrative		2,636,329			2,493,251
TOTAL OPERATING EXPENSES		3,595,832			3,007,165
OPERATING LOSS		(3,595,832	)		(3,004,642	)

OTHER INCOME (EXPENSE):
Interest expense, net of interest income		(9,792	)		(98,525	)
Change in fair value of warrant liability		(7,934,887	)		4,599,253
TOTAL OTHER INCOME (EXPENSE)		(7,944,679	)		4,500,728

INCOME (LOSS) BEFORE INCOME TAXES		(11,540,511	)		1,496,086
Income taxes		-			-
NET INCOME (LOSS)		(11,540,511	)		1,496,086

Preferred dividends		(322,271	)		(320,290	)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(11,862,782	)	$	1,175,796

Net income (loss) per common share - basic	$	(0.73	)	$	0.08
Net income (loss) per common share - diluted	$	(0.73	)	$	0.08

Weighted average shares of common shares - basic		16,361,583			9,156,260
Weighted average shares of common shares - diluted		16,361,583			9,216,667

	Temporary Equity								Permanent Equity
	Series A Convertible Preferred Stock				Series B Convertible Preferred Stock				Common stock				Additional paid-in			Accumulated			Total stockholders'
	Shares		Amount		Shares		Amount		Shares		Amount		capital			deficit			equity (deficit)

Balance at December 31, 2020		15,000	$	13,661,578		8,000	$	7,723,312		13,911,633	$	13,912	$	91,203,050		$	(102,148,817	)	$	(10,931,855	)

Stock-based compensation expense														573,722						573,722
Series A Preferred - declared dividends														(217,206	)					(217,206	)
Series B Preferred - declared dividends														(105,065	)					(105,065	)
Public offering										8,924,700		8,924		66,872,947						66,881,871
Net loss																	(11,540,511	)		(11,540,511	)

Balance at March 31, 2021		15,000		13,661,578		8,000		7,723,312		22,836,333	$	22,836	$	158,327,448		$	(113,689,328	)	$	44,660,956




Balance at December 31, 2019		15,000	$	13,661,578		15,000	$	13,661,578		9,156,260	$	9,156	$	74,837,046		$	(86,938,163	)	$	(12,091,961	)

Stock-based compensation expense														272,537						272,537
Series A Preferred - declared dividends														(320,290	)					(320,290	)
Net income																	1,496,086			1,496,086

Balance at March 31, 2020		15,000	$	13,661,578		15,000	$	13,661,578		9,156,260	$	9,156	$	74,789,293		$	(85,442,077	)	$	(10,643,628	)

	Basic earnings per share			Diluted earnings per share
Net income	$	1,496,086		$	1,496,086

Preferred stock dividends		(320,290	)		(320,290	)
Impact of participation rights		(479,236	)		(479,236	)

Net income available for common shares	$	696,560		$	696,560

Weighted average outstanding common shares		9,156,260			9,156,260

Impact of stock options		-			60,407

Weighted average outstanding common shares		9,156,260			9,216,667

Earnings per share	$	0.08		$	0.08

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding, December 31, 2020		2,979,047	$	9.35		7.84	$	2,074,150
Granted		54,000	$	5.38
Exercised, cancelled, or forfeited		-
Outstanding, March 31, 2021		3,033,047	$	9.28		7.64	$	9,797,453

Exercisable, March 31, 2021		1,481,097	$	14.21		5.92	$	2,887,420

Lease costs, net of sublease income, for the three months ended March 31, 2021 consisted of the following:
Operating lease cost	$	88,035
Sublease income		(62,582	)
Total lease costs	$	25,453

	Three months ended
	March 31, 2021			March 31, 2020

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(11,540,511	)	$	1,496,086
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation of property and equipment		26,555			31,868
Stock-based compensation		573,722			272,537
Amortization of right of use assets		77,423			70,069
Amortization of debt discounts and issuance costs		2,735			34,969
Change in fair value of warrant liability		7,934,887			(4,599,253	)
Loss on disposal of property and equipment		28,363			-
Changes in operating assets and liabilities
Accounts receivable		-			16,160
Prepaid expenses and other assets		138,156			14,671
Accounts payable and accrued liabilities		100,040			(210,851	)
Accrued bonuses		(938,176	)		(849,187	)
Accrued interest		(597,411	)		20,853
Other current and long-term liabilities		(87,841	)		(72,609	)
Net cash used in operating activities		(4,282,058	)		(3,774,687	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		-			(2,346	)
Net cash used in investing activities		-			(2,346	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of common stock		66,881,871			-
Repayments of long-term debt		(625,000	)		(937,500	)
Net cash provided by (used in) financing activities		66,256,871			(937,500	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		61,974,813			(4,714,533	)
Cash and cash equivalents, beginning of period		22,448,651			14,001,304
Cash and cash equivalents, end of period	$	84,423,464		$	9,286,771

SUPPLEMENTAL INFORMATION
Cash paid during the period for:
Income taxes	$	-		$	-
Interest	$	601,951		$	90,006

NON-CASH INVESTING AND FINANCING TRANSACTIONS

Future undiscounted cash flows:
2021		166,785
2022		60,819
2023		60,264
2024		30,132
Total		318,000

Discount factor		(30,618	)
Lease liability		287,382
Current lease liability		(165,731	)
Non-current lease liability	$	121,651

	●	Level 1: Quoted prices in active markets for identical assets or liabilities that the organization has the ability to access at the reporting date.
	●	Level 2: Inputs other than quoted prices included in Level 1, which are either observable or that can be derived from or corroborated by observable data as of the reporting date.
	●	Level 3: Inputs include those that are significant to the fair value of the asset or liability and are generally less observable from objective resources and reflect the reporting entity’s subjective determinations regarding the assumptions market participants would use in pricing the asset or liability.

	●	Level 1: Quoted prices in active markets for identical assets or liabilities that the organization has the ability to access at the reporting date.
	●	Level 2: Inputs other than quoted prices included in Level 1, which are either observable or that can be derived from or corroborated by observable data as of the reporting date.
	●	Level 3: Inputs include those that are significant to the fair value of the asset or liability and are generally less observable from objective resources and reflect the reporting entity’s subjective determinations regarding the assumptions market participants would use in pricing the asset or liability.

Description	Level 1		Level 2		Level 3		Total

Warrant liability	$	-	$	-	$	17,626,158	$	17,626,158
Balance at March 31, 2021	$	-	$	-	$	17,626,158	$	17,626,158

	Three Months Ended March 31,				Increase (Decrease)
	2021		2020				%
Operating Expenses
Research and development expenses	$	959,503	$	513,914	$	445,589		87	%
General and administrative expenses		2,636,329		2,493,251		143,078		6	%
Total operating expenses	$	3,595,832	$	3,007,165	$	588,667		20	%

Number	Description

10.1	Termination of Equity Distribution Agreement, dated March 2, 2021, by and between the Company and JMP Securities LLC (incorporated by reference herein to Exhibit 10.1 to the Company’s Form 8-K, filed with the SEC on March 2, 2021).

31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2	Certification of the Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1	Certification of the Principal Executive Officer and Principal Financial and Accounting Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*


101.INS	XBRL Instance Document.*

101.SCH	XBRL Taxonomy Extension Schema Document.*

101.CAL	XBRL Taxonomy Calculation Linkbase Document.*

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.*

101.LAB	XBRL Taxonomy Label Linkbase Document.*

101.PRE	XBRL Taxonomy Presentation Linkbase Document.*

	PLX PHARMA INC.

Date: May 14, 2021		/s/ Natasha Giordano
		By: Natasha Giordano
		Title: President and Chief Executive Officer (Principal Executive Officer)

		/s/ Rita O’Connor
		By: Rita O’Connor
		Title: Chief Financial Officer (Principal Financial and Accounting Officer)

SEC Form 10-Q filed by PLx Pharma Inc.