SEC Form 10-Q filed by Celsion Corporation
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________ to ____________
Commission
file number:
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act
| Title of each class | Trading symbol(s) | 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.
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).
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 (Check One):
| Large accelerated filer ☐ | 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 ☐
As of August 7, 2023, the Registrant had shares of common stock, $0.01 par value per share, outstanding.
IMUNON, INC.
QUARTERLY REPORT ON
FORM 10-Q
TABLE OF CONTENTS
| i |
Cautionary Note Regarding Forward-Looking Statements
This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are “forward-looking statements” for purposes of this Quarterly Report on Form 10-Q, including, without limitation, any projections of earnings, revenue or other financial items, any statements of the plans and objectives of management for future operations (including, but not limited to, pre-clinical development, clinical trials, manufacturing and commercialization), uncertainties and assumptions regarding the impact of the COVID-19 pandemic on our business, operations, clinical trials, supply chain, strategy, goals and anticipated timelines, any statements concerning proposed drug candidates, potential therapeutic benefits, or other new products or services, any statements regarding future economic conditions or performance, any changes in the course of research and development activities and in clinical trials, any possible changes in cost and timing of development and testing, capital structure, financial condition, working capital needs and other financial items, and any statements of assumptions underlying any of the foregoing. In some cases, forward-looking statements can be identified using terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “estimates,” “potential” or “continue,” or the negative thereof or other comparable terminology. Although we believe that our expectations are based on reasonable assumptions within the bounds of our knowledge of our industry, business, and operations, we cannot guarantee that actual results will not differ materially from our expectations.
Our future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties, including, but not limited to, the inherent uncertainty in the drug development process, our ability to raise additional capital to fund our planned future operations, our ability to obtain or maintain FDA and foreign regulatory approvals for our drug candidates, potential impact of the outbreak, duration and severity of the COVID-19 pandemic on our business, our ability to enroll patients in our clinical trials, risks relating to third parties conduct of our clinical trials, risks relating to government, private health insurers and other third-party payers coverage or reimbursement, risks relating to commercial potential of a drug candidate in development, changes in technologies for the treatment of cancer, impact of development of competitive drug candidates by others, risks relating to intellectual property, volatility in the market price of our common stock, potential inability to maintain compliance with The Nasdaq Marketplace Rules and the impact of adverse capital and credit market conditions. These and other risks, assumptions are described in Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and in other documents that we file or furnish with the SEC. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. All forward-looking statements speak only as of the date they are made, and we do not intend to update any forward-looking statements, except as required by law or applicable regulations. We operate in a highly competitive, highly regulated, and rapidly changing environment and our business is in a state of evolution. Therefore, it is likely that new risks will emerge, and that the nature and elements of existing risks will change, over time. It is not possible for management to predict all such risk factors or changes therein, or to assess either the impact of all such risk factors on our business or the extent to which any individual risk factor, combination of factors, or new or altered factors, may cause results to differ materially from those contained in any forward-looking statement.
Except where the context otherwise requires, in this Quarterly Report on Form 10-Q, the “Company,” “Imunon,” “we,” “us,” and “our” refer to Imunon, Inc., a Delaware corporation and its wholly owned subsidiaries.
Trademarks
The Company’s brand and product names contained in this document are trademarks, registered trademarks, or service marks of Imunon, Inc. or its subsidiary in the United States (“U.S.”) and certain other countries. This document also contains references to trademarks and service marks of other companies that are the property of their respective owners.
| ii |
PART I: FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
IMUNON, INC.
CONDENSED CONSOLIDATED
BALANCE SHEETS
June 30, 2023 | December 31, 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Investment in debt securities - available for sale, at fair value | ||||||||
| Accrued interest receivable on investment securities | ||||||||
| Money market investments, restricted cash | ||||||||
| Advances and deposits on clinical programs and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment (at cost, less accumulated depreciation and amortization) | ||||||||
| Other assets: | ||||||||
| Money market investments, restricted cash | ||||||||
| Deferred income tax asset | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Deposits and other assets | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| 1 |
IMUNON, INC.
CONDENSED CONSOLIDATED
BALANCE SHEETS
(Continued)
June 30, 2023 | December 31, 2022 | |||||||
| (Unaudited) | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable – trade | $ | $ | ||||||
| Other accrued liabilities | ||||||||
| Note payable – current portion, net of deferred financing costs | ||||||||
| Operating lease liabilities - current portion | ||||||||
| Total current liabilities | ||||||||
| Notes payable – non-current portion, net of deferred financing costs | ||||||||
| Operating lease liabilities - non-current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock - $ par value ( shares authorized, and shares issued or outstanding at June 30, 2023 and December 31, 2022) | ||||||||
| Common stock - $ par value ( shares authorized; and shares issued at June 30, 2023 and December 31, 2022, respectively; and shares outstanding at June 30, 2023 and December 31, 2022, respectively) | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity before treasury stock | ||||||||
| Treasury stock, at cost ( shares at June 30, 2023 and December 31, 2022) | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| 2 |
IMUNON, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Licensing revenue | $ | $ | $ | $ | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (expense) income: | ||||||||||||||||
| Investment income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on extinguishment of debt | ( | ) | ( | ) | ||||||||||||
| Other income | ||||||||||||||||
| Total other (expense) income, net | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share | ||||||||||||||||
| Basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average shares outstanding | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| 3 |
IMUNON, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Other comprehensive loss | ||||||||||||||||
| Changes in: | ||||||||||||||||
| Realized gains on debt securities recognized in investment income, net | $ | $ | $ | $ | ||||||||||||
| Unrealized gains (losses) on debt securities, net | ( | ) | ( | ) | ( | ) | ||||||||||
| Change in realized and unrealized gains (losses) on available for sale securities, net | ( | ) | ( | ) | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| 4 |
IMUNON, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of right-of-use assets | ||||||||
| Recognition of deferred revenue | ( | ) | ||||||
| Realized and unrealized gains (losses), net, on investment securities | ( | ) | ||||||
| Stock-based compensation | ||||||||
| Realization of deferred income tax asset | ||||||||
| Loss on extinguishment of debt | ||||||||
| Amortization of deferred finance charges and debt discount associated with notes payable | ||||||||
| Net changes in: | ||||||||
| Accrued interest receivable on investment securities | ||||||||
| Advances, deposits, and other current assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of investment securities | ( | ) | ( | ) | ||||
| Proceeds from sale and maturity of investment securities | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from redeemable convertible preferred stock offering | ||||||||
| Payment upon redemption of redeemable convertible preferred stock | ( | ) | ||||||
| Proceeds from sale of common stock equity, net of issuance costs | ||||||||
| Payoff of the SVB loan and accrued end-of-term fees | ( | ) | ||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net change in cash, cash equivalents and restricted cash | ( | ) | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | ||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| 5 |
IMUNON, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid | $ | ( | ) | $ | ( | ) | ||
| Recognition of right of use asset and liability | $ | $ | ||||||
| Cash paid for amounts included in measurement of lease liabilities: | ||||||||
| Operating cash flows for lease payments | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| 6 |
IMUNON, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND 2022
Common Stock Outstanding | Additional Paid-in | Treasury Stock | Accum. Other Compr. Income | Accumulated | |||||||||||||||||||||||||||||
| Shares | Amount | Capital | Shares | Amount | (Loss) | Deficit | Total | ||||||||||||||||||||||||||
| Balance at April 1, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Sale of equity through equity financing facilities | - | ||||||||||||||||||||||||||||||||
| Realized and unrealized gains and losses, net, on investment securities | - | - | |||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | |||||||||||||||||||||||||||||||
| Balance at June 30, 2023 | $ | | $ | | $ | ( | ) | $ | | $ | ( | ) | $ | | |||||||||||||||||||
Common Stock Outstanding | Additional Paid-in | Treasury Stock | Accum. Other Compr. Income | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Capital | Shares | Amount | (Loss) | Deficit | Total | |||||||||||||||||||||||||
| Balance at April 1, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Sale of equity through equity financing facilities | - | |||||||||||||||||||||||||||||||
| Realized and unrealized gains and losses, net, on investment securities | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | ||||||||||||||||||||||||||||||
| Balance at June 30, 2022 | $ | | $ | | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | | |||||||||||||||||
| 7 |
IMUNON, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
Common Stock Outstanding | Additional Paid-in | Treasury Stock | Accum. Other Compr. | Accumulated | ||||||||||||||||||||||||||||
| Shares | Amount | Capital | Shares | Amount | (Loss) | Deficit | Total | |||||||||||||||||||||||||
| Balance at January 1, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Sale of equity through equity financing facilities | - | |||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of options | - | |||||||||||||||||||||||||||||||
| Realized and unrealized gains and losses, net, on investment securities | - | - | ||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | ||||||||||||||||||||||||||||||
| Balance at June 30, 2023 | $ | | $ | | $ | ( | ) | $ | | $ | ( | ) | $ | | ||||||||||||||||||
| Series
A & B Preferred | Common Stock Outstanding | Additional Paid-in | Treasury Stock | Accum. Other Compr. Income | Accumulated | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Shares | Amount | (Loss) | Deficit | Total | ||||||||||||||||||||||||||||||||
| Balance at January 1, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Other | - | ( | ) | - | |||||||||||||||||||||||||||||||||||||
| Issuance of preferred stock upon financing | - | - | |||||||||||||||||||||||||||||||||||||||
| Redemption of preferred stock | ( | ) | ( | ) | - | - | |||||||||||||||||||||||||||||||||||
| Sale of equity through equity financing facilities | - | - | |||||||||||||||||||||||||||||||||||||||
| Realized and unrealized gains and (losses), net, on investment securities | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2022 | $ | $ | $ | | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| 8 |
IMUNON, INC.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2023
Note 1. Business Description
On September 19, 2022, Celsion Corporation announced a corporate name change to Imunon, Inc. (“Imunon” or the “Company”) reflecting the evolution of the Company’s business focus and its commitment to developing cutting-edge immunotherapies and next-generation vaccines to treat cancer and infectious diseases. The Company’s common stock continues to trade on the Nasdaq Stock Market under the ticker symbol “IMNN.”
Imunon is a fully integrated, clinical stage biotechnology company focused on advancing a portfolio of innovative treatments that harness the body’s natural mechanisms to generate safe, effective, and durable responses across a broad array of human diseases, constituting a differentiating approach from conventional therapies. Imunon has two platform technologies: TheraPlas® platform for the development of immunotherapies and other anti-cancer nucleic acid-based therapies, and PLACCINE platform for the development of nucleic acid vaccines for infectious diseases and cancer. The Company’s lead clinical program, IMNN-001, is a DNA-based immunotherapy for the localized treatment of advanced ovarian cancer currently in Phase II development. IMNN-001 works by instructing the body to produce safe and durable levels of powerful cancer fighting molecules, such as interleukin-12 and interferon gamma, at the tumor site. Additionally, the Company is conducting preclinical proof-of-concept studies on a nucleic acid vaccine candidate targeting SARS-CoV-2 virus in order to validate its PLACCINE platform. Imunon’s platform technologies are based on the delivery of nucleic acids with novel synthetic delivery systems that are independent of viral vectors or devices. The Company will continue to leverage these platforms and to advance the technological frontier of plasmid DNA to better serve patients with difficult to treat conditions.
Note 2. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements, which include the accounts of the Company and its wholly owned subsidiaries, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. All significant intercompany balances and transactions have been eliminated in consolidation. During the quarter ended June 30, 2023, there have been no changes to the Company’s accounting policies. Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.
In the opinion of management, all adjustments, consisting only of normal recurring accruals considered necessary for a fair presentation, have been included in the accompanying unaudited condensed consolidated financial statements. Operating results for the six months ended June 30, 2023 and 2022, are not necessarily indicative of the results that may be expected for any other interim period(s) or for any full year. For further information, refer to the 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, filed with the Securities and Exchange Commission (“SEC”) on March 30, 2023.
The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates, and assumptions that affect the amount reported in the Company’s financial statements and accompanying notes. Actual results could differ materially from those estimates. Events and conditions arising subsequent to the most recent balance sheet date have been evaluated for their possible impact on the unaudited condensed consolidated financial statements and accompanying notes.
The
Company has $
| 9 |
Note 3. New Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued accounting pronouncements will not have a material impact on the Company’s condensed consolidated financial position, results of operations, and cash flows, or do not apply to its operations.
Note 4. Restricted Cash
As
a condition of the SVB Loan Facility entered into on June 18, 2021, as further discussed in Note 10, the Company was required at all
times to maintain on deposit with SVB as cash collateral in a segregated money market bank account in the name of the Company, unrestricted
and unencumbered cash (other than a lien in favor of SVB) in an amount of at least 100% of the aggregate outstanding amount of the SVB
loan facility. SVB may restrict withdrawals or transfers by or on behalf of the Company that would violate this requirement. The loan
was repaid in full during the quarter ended June 30, 2023, thus removing this requirement. The required reserve totaled $
The following table reconciles cash and cash equivalents and restricted cash per the condensed consolidated balance sheets to the condensed consolidated statements of cash flows:
| June 30, 2023 | December 31, 2022 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Money market investments, restricted cash | ||||||||
| Total | $ | $ | ||||||
Basic loss per share is calculated based upon the net loss available to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted loss per share is calculated after adjusting the denominator of the basic earnings per share computation for the effects of all dilutive potential common shares outstanding during the period. The dilutive effects of preferred stock, options and warrants and their equivalents are computed using the treasury stock method.
The total number of shares of common stock issuable upon exercise of warrants, stock option grants and equity awards was and shares for the three-month and six-month periods ended June 30, 2023 and 2022, respectively. For the three-month and six-month periods ended June 30, 2023 and 2022, diluted loss per common share was the same as basic loss per common share as the other warrants and equity awards that were convertible into shares of the Company’s common stock were excluded from the calculation of diluted loss per common share as their effect would have been anti-dilutive. The Company did not pay any dividends during the three-month and six-month periods ended June 30, 2023 and 2022.
Note 6. Investment in Debt Securities-Available for Sale
Investments
in debt securities available for sale with a fair value of $
| 10 |
Investments in debt securities available for sale are evaluated periodically to determine whether a decline in their value is other than temporary. The term “other than temporary” is not intended to indicate a permanent decline in value. Rather, it means that the prospects for near term recovery of value are not necessarily favorable, or that there is a lack of evidence to support fair values equal to, or greater than, the carrying value of the security. Management reviews criteria such as the magnitude and duration of the decline, as well as the reasons for the decline, to predict whether the loss in value is other than temporary. Once a decline in value is determined to be other than temporary, the value of the security is reduced and a corresponding charge to earnings is recognized. A summary of the cost, fair value and maturities of the Company’s short-term investments is as follows:
| June 30, 2023 | December 31, 2022 | |||||||||||||||
| Cost | Fair Value | Cost | Fair Value | |||||||||||||
| Short-term investments | ||||||||||||||||
| U.S. Treasury securities | $ | $ | $ | $ | ||||||||||||
| Corporate debt securities | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| June 30, 2023 | December 31, 2022 | |||||||||||||||
| Cost | Fair Value | Cost | Fair Value | |||||||||||||
| Short-term investment maturities | ||||||||||||||||
| Within 3 months | $ | $ | $ | $ | ||||||||||||
| Between 3-12 months | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The following table shows the Company’s investment in debt securities available for sale gross unrealized gains (losses) and fair value by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2023 and December 31, 2022. The Company has reviewed individual securities to determine whether a decline in fair value below the amortizable cost basis is other than temporary.
| June 30, 2023 | December 31, 2022 | |||||||||||||||
| Available for sale securities (all unrealized holding gains and losses are less than 12 months at date of measurement) | Fair Value | Unrealized Holding Gains (Losses) | Fair Value | Unrealized Holding Gains (Losses) | ||||||||||||
| Investments in debt securities with unrealized gains | $ | $ | $ | $ | ||||||||||||
| Investments in debt securities with unrealized losses | ( | ) | ( | ) | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Investment (loss) income, which includes net realized losses on sales of available for sale securities and investment income interest and dividends, is summarized as follows:
For the Three Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Interest and dividends accrued and paid | $ | $ | ||||||
| Realized losses | ( | ) | ( | ) | ||||
| Investment income, net | $ | $ | ||||||
For the Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Interest and dividends accrued and paid | $ | $ | ||||||
| Realized losses | ( | ) | ( | ) | ||||
| Investment income, net | $ | $ | ||||||
| 11 |
Note 7. Fair Value Measurements
FASB ASC Section 820, “Fair Value Measurements and Disclosures,” establishes a three-level hierarchy for fair value measurements which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows:
Level 1: Quoted prices (unadjusted) or identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date;
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data; and
Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions that market participants would use in pricing an asset or liability.
Cash and cash equivalents, other current assets, accounts payable and other accrued liabilities are reflected in the condensed consolidated balance sheets at their approximate estimated fair values primarily due to their short-term nature. The fair values of securities available for sale is determined by relying on the securities’ relationship to other benchmark quoted securities and classified its investments as Level 2 items in both 2023 and 2022. There were no transfers of assets or liabilities between Level 1 and Level 2 and no transfers in or out of Level 3 during the six-month period ended June 30, 2023 or during the year ended December 31, 2022. The earnout milestone liability is valued using a risk-adjusted assessment of the probability of payment of each milestone, discounted to present value using an estimated time to achieve the milestone (see Note 13).
Assets and liabilities measured at fair value are summarized below.
| Total Fair Value | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant (Level 3) | |||||||||||||
| Assets: | ||||||||||||||||
| Recurring items as of June 30, 2023 | ||||||||||||||||
| Corporate debt securities and U.S. Treasury obligations, available for sale | $ | $ | $ | $ | ||||||||||||
| Recurring items as of December 31, 2022 | ||||||||||||||||
| Corporate debt securities, available for sale | $ | $ | $ | $ | ||||||||||||
Note 8. Intangible Assets
In June 2014, the Company completed the acquisition of substantially all of the assets of EGEN, Inc., an Alabama corporation (“EGEN”), which changed its company name to EGWU, Inc. after the closing of the acquisition (the “EGEN Acquisition”). The Company acquired EGEN’s rights, title and interest in and to substantially all of the assets of EGEN, including cash and cash equivalents, patents, trademarks and other intellectual property rights, clinical data, certain contracts, licenses and permits, equipment, furniture, office equipment, furnishings, supplies and other tangible personal property. In addition, CLSN Laboratories assumed certain specified liabilities of EGEN, including the liabilities arising out of the acquired contracts and other assets relating to periods after the closing date.
Acquired In-process Research and Development
Acquired
in-process research and development (“IPR&D”) consists of EGEN’s drug technology platforms: TheraPlas and TheraSilence.
The fair value of the IPR&D drug technology platforms was estimated to be $
| 12 |
As
of December 31, 2022, the Company assessed whether there were indicators of impairment for the Company’s IPR&D and determined
that the IPR&D asset was impaired during that period. Due to the continuing deterioration of public capital markets in the biotech
industry in 2022 and its impact on market capitalization rates in this sector, IPR&D was reviewed for impairment. Having conducted
a quantitative analysis of its IPR&D assets, the Company concluded the IPR&D asset was impaired during the fourth quarter of
2022. As of December 31, 2022, the Company wrote off the $
Note 9. Accrued Liabilities
Other accrued liabilities at June 30, 2023 and December 31, 2022 include the following:
| June 30, 2023 | December 31, 2022 | |||||||
| Amounts due to contract research organizations and other contractual agreements | $ | $ | ||||||
| Accrued payroll and related benefits | ||||||||
| Accrued interest | ||||||||
| Accrued professional fees | ||||||||
| Other | ||||||||
| Total | $ | $ | ||||||
Note 10. Notes Payable
The SVB Loan Facility
On
June 18, 2021, the Company entered into a $
The
SVB Loan Facility is in the form of money market secured indebtedness bearing interest at a calculated WSJ Prime-based variable rate
(currently
In
connection with the SVB Loan Facility, the Company incurred financing fees and expenses totaling $
| 13 |
On April 21, 2023, the Company repaid the outstanding principal balance, an early termination fee and the end-of-term charges in full satisfaction of the SVB Loan Facility. The following is a schedule of the amounts paid to SVB on April 21, 2023:
| Principal balance at April 21, 2023 | $ | |||
| Early termination fee | ||||
| End-of-term charges | ||||
| Total | $ |
During
the three and six months ended June 30, 2023, the Company recorded a loss of $
Note 11. Stockholders’ Equity
On September 19, 2022, the Company announced a corporate name change to Imunon, Inc. The Company’s common stock will continue to trade on the Nasdaq Stock Market under the ticker symbol “IMNN” and its CUSIP number (15117N602) remained unchanged.
Reverse Stock Split
The reverse stock split was previously approved by the Company’s stockholders at the 2022 Special Meeting held on February 24, 2022, and the Company subsequently filed a Certificate of Amendment to its Certificate of Incorporation to effect the stock consolidation.
Immediately
prior to the reverse stock split, the Company had shares of common stock outstanding which consolidated into shares
of the Company’s common stock. No fractional shares were issued in connection with the reverse stock split. Holders of fractional
shares have been paid out in cash for the fractional portion with the Company’s overall exposure for such payouts consisting of
a nominal amount. The amount of the Company’s outstanding convertible preferred stock was not affected by the reverse stock split.
The number of outstanding options, stock awards and warrants were adjusted accordingly, with outstanding options and stock awards being
reduced from approximately million to approximately million and outstanding warrants being reduced from approximately
At the Market Offering Agreement
On
May 25, 2022, the Company entered into an At the Market Offering Agreement (the “Agreement”) with H.C. Wainwright & Co.,
LLC, as sales agent (“Wainwright”), pursuant to which the Company may offer and sell, from time to time, through Wainwright,
shares of the Company’s common stock having an aggregate offering price of up to $
| 14 |
Series A and Series B Convertible Redeemable Preferred Stock Offering
On
January 10, 2022, the Company entered into a Securities Purchase Agreement (the “Preferred Stock Purchase Agreement”) with
several institutional investors, pursuant to which the Company agreed to issue and sell, in concurrent registered direct offerings (the
“Preferred Offerings”), (i) shares of the Company’s Series A Convertible Redeemable Preferred Stock, par value
$ per share (the “Series A Preferred Stock”), and (ii) shares of the Company’s Series B Convertible Redeemable
Preferred Stock, par value $ per share (the “Series B Preferred Stock” and together with the Series A Preferred Stock,
the “Preferred Stock”), in each case at an offering price of $ per share, representing a
The Company held a special meeting of stockholders to consider an amendment (the “Amendment”) to the Company’s Certificate of Incorporation, as amended, to effect a reverse stock split of the outstanding shares of common stock (“Common Stock”) by a ratio to be determined by the Board of Directors of the Company (the “Reverse Stock Split”). The investors of the Preferred Stock Purchase Agreement had agreed to not transfer, offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of the shares of the Preferred Stock until the Reverse Stock Split, to vote the shares of the Series A Preferred Stock purchased in the Preferred Offerings in favor of such Amendment and to vote the shares of the Series B Preferred Stock purchased in the Preferred Offerings in a manner that “mirrors” the proportions on which the shares of Common Stock (excluding any shares of Common Stock that are not voted) and Series A Preferred Stock are voted on the Reverse Stock Split and the Amendment.
Pursuant
to the Preferred Stock Purchase Agreement, the Company filed two certificates of designation (the “Certificates of Designation”)
with the Secretary of the State of Delaware designating the rights, preferences, and limitations of the shares of Preferred Stock. The
Certificates of Designation provided, in particular, that the Preferred Stock had no voting rights, other than the right to vote as a
class on certain specified matters, except that (i) each share of Series A Preferred Stock had the right to vote, on an as converted
basis, on the Reverse Stock Split (together with the Company’s Common Stock and the Series B Preferred Stock as a single class),
and (ii) each share of Series B Preferred Stock had the
The holders of Preferred Stock were entitled to dividends, on an as-if converted basis, equal to dividends actually paid, if any, on shares of Common Stock. The Preferred Stock was convertible into shares of Common Stock at a rate of $ per share for the Series A Preferred Stock and $ per share for the Series B Preferred Stock, subject to adjustment. The Preferred Stock was convertible at the option of the holder at any time after the Company had received stockholder approval for the Reverse Stock Split and filed the requisite Amendment with the Delaware Secretary of State’s office to effectuate the Reverse Stock Split (the “Reverse Stock Split Date”), subject to beneficial ownership limitations set forth in the applicable Certificate of Designation. In addition, on or after the Reverse Stock Split Date, and subject to the satisfaction of certain conditions, the Company had the right to cause the holders of the Preferred Stock to convert their shares of Preferred Stock, subject to such beneficial ownership limitations.
| 15 |
On March 3, 2022, the Company redeemed for cash at a price equal to 105% of the $ stated value per share all of its outstanding shares of Series A Preferred Stock and all of its shares of Series B Preferred Stock. As a result, all shares of the Preferred Stock have been retired and are no longer outstanding and the Company’s only class of outstanding stock is its common.
The
Series A Preferred Stock and Series B Preferred Stock were recorded as a liability on the condensed consolidated balance sheet during
the first quarter of 2022 until the preferred shares were redeemed during the same quarter. The Company recognized $
April 2022 Registered Direct Offering
On
April 6, 2022, the Company entered into a Securities Purchase Agreement (the “April 2022 Purchase Agreement”) with several
institutional investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “April 2022
Offering”), an aggregate of shares of the Company’s common stock at an offering price of $ per share for gross
proceeds of $
The Company has long-term compensation plans that permit the granting of equity-based awards in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, other stock awards, and performance awards.
At the 2018 Annual Stockholders Meeting of the Company held on May 15, 2018, stockholders approved the 2018 Stock Incentive Plan (the “2018 Plan”). The 2018 Plan, as adopted, permits the granting of shares of common stock as equity awards in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, other stock awards, performance awards, or in any combination of the foregoing. At the 2019 Annual Stockholders Meeting of the Company held on May 14, 2019, stockholders approved an amendment to the 2018 Plan whereby the Company increased the number of common stock shares available by to a total of under the 2018 Plan, as amended. At the 2020 Annual Stockholders Meeting of the Company held on June 15, 2020, stockholders approved an amendment to the 2018 Plan, as previously amended, whereby the Company increased the number of shares of common stock available by to a total of under the 2018 Plan, as amended. At the 2021 Annual Stockholders Meeting of the Company held on June 10, 2021, stockholders approved an amendment to the 2018 Plan, as previously amended, whereby the Company increased the number of shares of common stock available by to a total of under the 2018 Plan, as amended. At the 2023 Annual Stockholders Meeting of the Company held on June 14, 2023, stockholders approved an amendment to the 2018 Plan, as previously amended, whereby the Company increased the number of shares of common stock available by to a total of under the 2018 Plan, as amended. Prior to the adoption of the 2018 Plan, the Company had maintained the 2007 Stock Incentive Plan (the “2007 Plan”).
The
Company has issued stock awards to employees and directors in the form of stock options and restricted stock.
| 16 |
Option and restricted stock awards vest upon terms determined by the Compensation Committee of the Board of Directors and are subject to accelerated vesting in the event of a change of control or certain terminations of employment. The Company issues new shares to satisfy its obligations from the exercise of options or the grant of restricted stock awards.
On July 19, 2022, September 27, 2022, December 13, 2022, March 17, 2023 and June 26, 2023, the Compensation Committee of the Board of Directors approved the grant of (i) inducement stock options (the “Inducement Option Grants”) to purchase a total of shares, shares, shares, shares and shares of common stock, respectively, and (ii) inducement restricted stock awards (the “Inducement Stock Grants”) totaling shares, shares, shares, shares and shares of common stock, respectively, to eleven employees. Each award has a grant date of the date of grant. Each Inducement Option Grant has an exercise price per share equal to $, $, $, $, and $ which represents the closing price of the Company’s common stock as reported by Nasdaq on July 19, 2022, September 27, 2022, December 13, 2022, March 17, 2023, and June 26, 2023, respectively. Each Inducement Option Grant vests over three to four years, with one-third or one-fourth vesting on the one-year anniversary of the employee’s first day of employment with the Company and one-third or one-fourth vesting on the second thru fourth anniversaries thereafter, subject to the new employee’s continued service relationship with the Company on each such date. Each Inducement Option Grant has a ten-year term and is subject to the terms and conditions of the applicable stock option agreement. Each of Inducement Stock Grant vested on the one-year anniversary of the employee’s first day of employment with the Company is subject to the new employee’s continued service relationship with the Company through such date and is subject to the terms and conditions of the applicable restricted stock agreement. As of June 30, 2023, there were a total of shares of the Company’s common stock subject to outstanding inducement awards.
As of June 30, 2023, there were a total of shares of the Company’s common stock reserved for issuance under the 2018 Plan, which were comprised of shares of the Company’s common stock subject to equity awards previously granted under the 2018 Plan and 2007 Plan and shares of the Company’s common stock available for future issuance under the 2018 Plan.
A summary of stock option awards and restricted stock grants, inclusive of awards granted under the 2018 Stock Plan and Inducement Option Grants for the six-months ended June 30, 2023 is presented below.
| Stock Options | Restricted Stock Awards | Weighted Average | ||||||||||||||||||
Options Outstanding | Weighted Average Exercise Price | Non-vested Restricted Stock Outstanding | Weighted Average Grant Date Fair Value | Contractual Terms of Equity Awards (in years) | ||||||||||||||||
| Equity awards outstanding at January 1, 2023 | $ | $ | ||||||||||||||||||
| Equity awards granted | $ | $ | ||||||||||||||||||
| Equity Awards vested and issued | ( | ) | ||||||||||||||||||
| Equity awards terminated | ( | ) | $ | ( | ) | $ | ||||||||||||||
| Equity awards outstanding at June 30, 2023 | $ | $ | ||||||||||||||||||
| Aggregate intrinsic value of outstanding equity awards at June 30, 2023 | $ | $ | ||||||||||||||||||
| Equity awards exercisable at June 30, 2023 | $ | |||||||||||||||||||
| Aggregate intrinsic value of equity awards exercisable at June 30, 2023 | $ | |||||||||||||||||||
| 17 |
Total compensation cost related to stock options and restricted stock awards amounted to approximately $ million and $ million for the six-month periods ended June 30, 2023 and 2022, respectively. Of these amounts, $ million and $ million were charged to research and development during the six-month periods ended June 30, 2023 and 2022, respectively, and $ million and $ million were charged to general and administrative expenses during the six-month periods ended June 30, 2023 and 2022, respectively.
As of June 30, 2023, there was $ million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements. That cost is expected to be recognized over a period of to years. The weighted average grant date fair values of the stock options granted were $ and $ during the six-month periods ended June 30, 2023 and 2022, respectively.
For the Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Risk-free interest rate | % | % | ||||||
| Expected volatility | to | % | % | |||||
| Expected life (in years) | to | to | ||||||
| Expected dividend yield | % | % | ||||||
Expected volatilities utilized in the model are based on historical volatility of the Company’s stock price. The risk-free interest rate is derived from values assigned to U.S. Treasury bonds with terms that approximate the expected option lives in effect at the time of grant.
Note 13. Earn-Out Milestone Liability
The
total aggregate purchase price for the EGEN Acquisition included potential future earn-out payments contingent upon achievement of certain
milestones. The difference between the aggregate $
On
March 28, 2019, the Company and EGWU, Inc. entered into an amendment to its purchase agreement (“Amended Asset Purchase Agreement”),
whereby payment of the earnout milestone liability related to the Ovarian Cancer Indication of $
| a) | $ |
| b) | $ |
At
December 31, 2022, the Company wrote off the carrying value of the earn-out milestone liability as a result of the requirements not being
achieved and recognized a non-cash gain of $
| 18 |
Note 14. Warrants
The following is a summary of all warrant activity for the three-month period ended June 30, 2023:
| Warrants | Number of Issued | Weighted Average Exercise Price | ||||||
| Warrants outstanding at December 31, 2022 | $ | |||||||
| Warrants expired during the six months ended June 30, 2023 | ( | ) | $ | |||||
| Warrants outstanding at June 30, 2023 | $ | |||||||
| Aggregate intrinsic value of outstanding warrants at June 30, 2023 | $ | |||||||
| Weighted average remaining contractual terms at June 30, 2023 | years | |||||||
Note 15. Leases
The following is a table of the lease payments and maturity of the Company’s operating lease liabilities as of June 30, 2023:
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Thereafter | ||||
| Subtotal future lease payments | ||||
| Less imputed interest | ( | ) | ||
| Total lease liabilities | $ | |||
| Weighted average remaining life | ||||
| Weighted average discount rate | % |
For
the three-month and six-month periods ended June 30, 2023, operating lease expense was $
For
the three-month and six-month periods ended June 30, 2022, operating lease expense was $
| 19 |
Note 16. Technology Development and Licensing Agreements
On May 7, 2012, the Company entered into a long-term commercial supply agreement with Zhejiang Hisun Pharmaceutical Co. Ltd. (“Hisun”) for the production of ThermoDox® in the China territory. In accordance with the terms of the agreement, Hisun will be responsible for providing all of the technical and regulatory support services, including the costs of all technical transfer, registration and bioequivalence studies, technical transfer costs, Imunon consultative support costs and the purchase of any necessary equipment and additional facility costs necessary to support capacity requirements for the manufacture of ThermoDox®. Imunon will repay Hisun for the aggregate amount of these development costs and fees commencing on the successful completion of three registration batches of ThermoDox®. Hisun is also obligated to meet certain performance requirements under the agreement. The agreement will initially be limited to a percentage of the production requirements of ThermoDox® in the China territory with Hisun retaining an option for additional global supply after local regulatory approval in the China territory. In addition, Hisun will collaborate with Imunon around the regulatory approval activities for ThermoDox® with the China State Food and Drug Administration.
On
January 18, 2013, the Company entered into a technology development contract with Hisun, pursuant to which Hisun paid it a non-refundable
research and development fee of $
Note 17. Commitments and Contingencies
On October 29, 2020, a putative securities class action was filed against the Company and certain of its officers and directors (the “Spar Individual Defendants”) in the U.S. District Court for the District of New Jersey, captioned Spar v. Celsion Corporation, et al., Case No. 1:20-cv-15228. The plaintiff alleged that the Company and Individual Defendants made false and misleading statements regarding one of the Company’s drug candidates, ThermoDox®, and brings claims for damages under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder against all Defendants, and under Section 20(a) of the Exchange Act of 1934 against the Individual Defendants. At this stage of the case neither the likelihood that a loss, if any, will be realized, nor an estimate of possible loss or range of loss, if any, can be determined. On February 6, 2023, the U.S. District Court granted a Motion to Dismiss filed by the Company and Spar Individual Defendants and granted Plaintiff leave to file an amended complaint within 30 days. Plaintiff did not file an amended complaint within the 30-day deadline.
In February 2021, a derivative shareholder lawsuit was filed against the Company, as the nominal defendant, and certain of its directors and officers as defendants in the U.S. District Court for the District of New Jersey, captioned Fidler v. Michael H. Tardugno, et al., Case No. 3:21-cv-02662. The plaintiff alleges breach of fiduciary duty and other claims arising out of alleged statements made by certain of the Company’s directors and/or officers regarding ThermoDox®. The Company believes it has meritorious defenses to these claims and intends to vigorously contest this suit. At this stage of the case neither the likelihood that a loss, if any, will be realized, nor an estimate of possible loss or range of loss, if any, can be determined.
In August 2021, a complaint regarding a corporate books and records demand was filed against the Company in the Court of Chancery of the State of Delaware, captioned Pacheco v. Celsion Corporation, Case No. 2021-0705. The plaintiff alleged he was entitled to inspect the Company’s books and records concerning the OPTIMA Study and other materials. On May 31, 2023, the Court of Chancery entered the parties’ stipulation dismissing the case without prejudice.
In
October 2021, an arbitration was commenced against the Company before the CPR Institute for Conflict Prevention & Resolution, captioned
Curia New Mexico, LLC v. Celsion Corp., Case No. G-22-85-S. The claimant alleged that the Company failed to pay invoices for the manufacture
of two batches of ThermoDox®. On April 19, 2023, the arbitral tribunal issued an interim award, upholding claimant’s claim
with respect to one of the two batches of ThermoDox® for an aggregate amount of approximately $
Note 18. Related Party Transaction
On
November 16, 2022, the Company entered into a Convertible Note Purchase Agreement with Transomic Technologies, Inc. (“Transomic”)
whereby the Company purchased $
Note 19. Subsequent Events
The Company has evaluated its subsequent events from June 30, 2023, through the date these condensed consolidated financial statements were issued.
| 20 |
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of our financial condition and results of operations This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed above under “Cautionary Note Regarding Forward-Looking Statements,” and in Item 1A. Risk factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Strategic and Clinical Overview
On September 19, 2022, Celsion Corporation announced a corporate name change to Imunon, Inc., reflecting the evolution of the Company’s business focus and its commitment to developing cutting-edge immunotherapies and next-generation vaccines to treat cancer and infectious diseases. The Company’s common stock continues to trade on the Nasdaq Stock Market under the ticker symbol “IMNN.”
Imunon, Inc. (“Imunon” and the “Company”) is a fully integrated, clinical stage biotechnology company focused on advancing a portfolio of innovative treatments that harness the body’s natural mechanisms to generate safe, effective, and durable responses across a broad array of human diseases, constituting a differentiating approach from conventional therapies. Imunon is developing its non-viral DNA technology across 4 modalities, The first modality, Theraplas®, is developed for the coding of proteins and cytokines in the treatment of solid tumors where an immunological approach is deemed promising. The second modality, PlaCCine® is developed for the coding of viral antigens that can elicit a strong immunological response. This technology may represent a promising platform for the development of vaccines against infectious diseases. Out third modality, Fixplas®, is for the application of our DNA technology to produce universal cancer vaccines also called tumor associated antigen cancer vaccines. Finally, our fourth modality, which is still in the discovery phase, Indiplas®, will focus on the development of personalized cancer vaccines, or neoepitope cancer vaccines. The Company’s lead clinical program, IMNN-001, is a DNA-based immunotherapy for the localized treatment of advanced ovarian cancer currently in Phase II development. IMNN-001 works by instructing the body to produce safe and durable levels of powerful cancer fighting molecules, such as interleukin-12 and interferon gamma, at the tumor site. Additionally, the Company is conducting IND enabling pre-clinical studies for the development of a COVID-19 booster vaccine: IMNN-101. The Company has also initiated pre-clinical work to develop a Trp2 tumor associated antigen cancer vaccine in melanoma: IMNN-201 We will continue to leverage these modalities and to advance the technological frontier of plasmid DNA to better serve patients with difficult to treat conditions.
Technology Platform
IMUNON’s technology platform is optimized for the delivery of DNA and mRNA therapeutics via synthetic non-viral carriers and is capable of providing cell transfection for double-stranded DNA plasmids and large therapeutic RNA segments such as mRNA. There are two components to the system, a backbone with plasmid DNA or mRNA payload encoding therapeutic proteins, or pathogen antigens or tumor associated antigens or cancer neoantigens and a delivery system. The delivery system is designed to protect the DNA/mRNA from degradation and promote trafficking into cells and through intracellular compartments. We designed the delivery system by chemically modifying the low molecular weight polymer to improve its gene transfer activity without increasing toxicity. We believe that our non-viral DNA technology may be a viable alternative to current approaches to gene delivery due to several distinguishing characteristics, including enhanced molecular versatility that allows for complex modifications to potentially improve activity and safety.
The biocompatibility of these polymers reduces the risk of adverse immune response, thus allowing for repeated administration. Compared to naked DNA or cationic lipids, our delivery systems are generally safer, more efficient, and cost effective. We believe that these advantages place Imunon in a position to capitalize on this technology platform.
| 21 |
THERAPLAS MODALITY: IMNN-001 DEVELOPMENT PROGRAM
Ovarian Cancer Overview
Ovarian cancer is the most lethal of gynecological malignancies among women with an overall five-year survival rate of 45%. This poor outcome is due in part to the lack of effective prevention and early detection strategies. There were approximately 20,000 new cases of ovarian cancer in the U.S. in 2021 with an estimated 13,000 deaths. Mortality rates for ovarian cancer declined very little in the last forty years due to the unavailability of detection tests and improved treatments. Most women with ovarian cancer are not diagnosed until Stages III or IV, when the disease has spread outside the pelvis to the abdomen and areas beyond causing swelling and pain. The five-year survival rates for Stages III and IV are 39 percent and 17 percent, respectively. Firstline chemotherapy regimens are typically platinum-based combination therapies. Although this first line of treatment has an approximate 80 percent response rate, 55 to 75 percent of women will develop recurrent ovarian cancer within two years and ultimately will not respond to platinum therapy. Patients whose cancer recurs or progresses after initially responding to surgery and first-line chemotherapy have been divided into one of the two groups based on the time from completion of platinum therapy to disease recurrence or progression. This time period is referred to as platinum-free interval. The platinum-sensitive group has a platinum-free interval of longer than six months. This group generally responds to additional treatment with platinum-based therapies. The platinum-resistant group has a platinum-free interval of shorter than six months and is resistant to additional platinum-based treatments. Pegylated liposomal doxorubicin, topotecan, and Avastin are the only approved second-line therapies for platinum-resistant ovarian cancer. The overall response rate for these therapies is 10 to 20 percent with median overall survival (“OS”) of eleven to twelve months. Additionally, 10% to 15% of ovarian cancer cases nationwide are a result of germline or somatic BRCA mutations. With cognizance of tumor genetics, practice has shifted to include targeted agents in ovarian cancer treatment.
PARP enzymes are responsible for detecting and repairing single-stranded and double-stranded DNA breaks during cell replication. BRCA1/2 mutations hinder the homologous recombination repair pathway, and tumor cells utilize PARP enzymes to repair DNA. For this reason, these tumors are particularly sensitive to the mechanism of PARP inhibitors. PARP inhibitors have expanded treatment options in ovarian cancer, but few treatment options are left for women who are not eligible to receive PARP inhibitors.
Immunotherapy is an attractive novel approach for the treatment of ovarian cancer particularly since ovarian cancers are considered immunogenic tumors. IL-12 is one of the most active cytokines for the induction of potent anti-cancer immunity acting through the induction of T-lymphocyte and natural killer cell proliferation. The precedence for a therapeutic role of IL-12 in ovarian cancer is based on epidemiologic and preclinical data.
IMNN-001 Immunotherapy
IMNN-001 is a DNA-based immunotherapeutic drug candidate for the localized treatment of ovarian cancer by intraperitoneally administering an Interleukin-12 (“IL-12”) plasmid formulated with our proprietary TheraPlas delivery system. In this DNA-based approach, the immunotherapy is combined with a standard chemotherapy drug, which can potentially achieve better clinical outcomes than with chemotherapy alone. We believe that increases in IL12 concentrations at tumor sites for several days after a single administration could create a potent immune environment against tumor activity and that a direct killing of the tumor with concomitant use of cytotoxic chemotherapy could result in a more robust and durable antitumor response than chemotherapy alone. We believe the rationale for local therapy with IMNN-001 is based on the following:
| ● | Loco-regional production of the potent cytokine IL-12 avoids toxicities and poor pharmacokinetics associated with systemic delivery of recombinant IL-12; | |
| ● | Persistent local delivery of IL-12 lasts up to one week and dosing can be repeated; and | |
| ● | Local therapy is ideal for long-term maintenance therapy. |
| 22 |
OVATION I Study. In February 2015, we announced that the U.S. Food and Drug Administration (“FDA”) accepted, without objection, the Phase I dose-escalation clinical trial of IMNN-001 in combination with the standard of care in neoadjuvant ovarian cancer (the “OVATION I Study”). On September 30, 2015, we announced enrollment of the first patient in the OVATION I Study. The OVATION I Study was designed to:
| (i) | identify a safe, tolerable, and therapeutically active dose of IMNN-001 by recruiting and maximizing an immune response; | |
| (ii) | enroll three to six patients per dose level and evaluate safety and efficacy; and | |
| (iii) | attempt to define an optimal dose for a follow-on Phase I/II study. |
In addition, the OVATION I Study established a unique opportunity to assess how cytokine-based compounds such as IMNN-001, directly affect ovarian cancer cells and the tumor microenvironment in newly diagnosed ovarian cancer patients. The study was designed to characterize the nature of the immune response triggered by IMNN-001 at various levels of the patients’ immune system, including:
| ● | Infiltration of cancer fighting T-cell lymphocytes into primary tumor and tumor microenvironment including peritoneal cavity, which is the primary site of metastasis of ovarian cancer; | |
| ● | Changes in local and systemic levels of immuno-stimulatory and immune-suppressive cytokines associated with tumor suppression and growth, respectively; and | |
| ● | Expression profile of a comprehensive panel of immune related genes in pre-treatment and IMNN-001-treated tumor tissue. |
We initiated the OVATION I Study at four clinical sites at the University of Alabama at Birmingham, Oklahoma University Medical Center, Washington University in St. Louis, and the Medical College of Wisconsin. During 2016 and 2017, we announced data from the first fourteen patients in the OVATION I Study. On October 3, 2017, we announced final translational research and clinical data from the OVATION I Study.
Key translational research findings from all evaluable patients are consistent with the earlier reports from partial analysis of the data and are summarized below:
| ● | The intraperitoneal treatment of IMNN-001 in conjunction with NACT resulted in dose dependent increases in IL-12 and Interferon-gamma (IFNγ) levels that were predominantly in the peritoneal fluid compartment with little to no changes observed in the patients’ systemic circulation. These and other post-treatment changes including decreases in VEGF levels in peritoneal fluid are consistent with an IL-12 based immune mechanism; | |
| ● | Consistent with the previous partial reports, the effects observed in the IHC analysis were pronounced decreases in the density of immunosuppressive T-cell signals (Foxp3, PD-1, PDL-1, IDO-1) and increases in CD8+ cells in the tumor microenvironment; | |
| ● | The ratio of CD8+ cells to immunosuppressive cells was increased in approximately 75% of patients suggesting an overall shift in the tumor microenvironment from immunosuppressive to pro-immune stimulatory following treatment with IMNN-001. An increase in CD8+ to immunosuppressive T-cell populations is a leading indicator and believed to be a good predictor of improved OS; and | |
| ● | Analysis of peritoneal fluid by cell sorting, not reported before, shows a treatment-related decrease in the percentage of immunosuppressive T-cell (Foxp3+), which is consistent with the reduction of Foxp3+ T-cells in the primary tumor tissue, and a shift in tumor naïve CD8+ cell population to more efficient tumor killing memory effector CD8+ cells. |
The Company also reported encouraging clinical data from the first fourteen patients who completed treatment in the OVATION I Study. IMNN-001 plus standard chemotherapy produced no dose limiting toxicities and positive dose dependent efficacy signals which correlate well with positive surgical outcomes as summarized below:
| ● | Of the fourteen patients treated in the entire study, two patients demonstrated a complete response, ten patients demonstrated a partial response and two patients demonstrated stable disease, as measured by RECIST criteria. This translates to a 100% disease control rate and an 86% objective response rate (“ORR”). Of the five patients treated in the highest dose cohort, there was a 100% ORR with one complete response and four partial responses; |
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| ● | Fourteen patients had successful resections of their tumors, with nine patients (64%) having a complete tumor resection (“R0”), which indicates a microscopically margin-negative resection in which no gross or microscopic tumor remains in the tumor bed. Seven out of eight (88%) patients in the highest two dose cohorts experienced a R0 surgical resection. All five patients treated at the highest dose cohort experienced a R0 surgical resection; and | |
| ● | All patients experienced a clinically significant decrease in their CA-125 protein levels as of their most recent study visit. CA-125 is used to monitor certain cancers during and after treatment. CA-125 is present in greater concentrations in ovarian cancer cells than in other cells. |
On March 26, 2020, the Company announced with Medidata, a Dassault Systèmes company, that examining matched patient data provided by Medidata in a synthetic control arm (“SCA”) with results from the Company’s completed Phase Ib dose-escalating OVATION I Study showed positive results in progression-free survival (“PFS”). The hazard ratio (“HR”) was 0.53 in the ITT group, showing strong signals of efficacy. The Company believes these data may warrant consideration of strategies to accelerate the clinical development program for IMNN-001 in newly diagnosed, advanced ovarian cancer patients by the FDA. In its March 2019 discussion with the Company, the FDA noted that preliminary findings from the Phase Ib OVATION I Study were exciting but lacked a control group to evaluate IMNN-001’s independent impact on impressive tumor response, surgical results and PFS. The FDA encouraged the Company to continue its IMNN-001 development program and consult with FDA with new findings that may have a bearing on designations such as Fast Track and Breakthrough Therapy.
SCAs have the potential to revolutionize clinical trials in certain oncology indications and some other diseases where randomized control is not ethical or practical. SCAs are formed by carefully selecting control patients from historical clinical trials to match the demographic and disease characteristics of the patients treated with the new investigational product. SCAs have been shown to mimic the results of traditional randomized controls so that the treatment effects of an investigational product can be visible by comparison to the SCA. SCAs can help advance the scientific validity of single arm trials, and in certain indications, reduce time and cost, and expose fewer patients to placebos or existing standard-of-care treatments that might not be effective for them.
On July 29, 2021, the Company announced final progression free survival (“PFS”) results from the OVATION I Study published in the Journal of Clinical Cancer Research. Median PFS in patients treated per protocol (n=14) was 21 months and was 18.4 months for the intent-to-treat (“ITT”) population (n=18) for all dose cohorts, including three patients who dropped out of the study after 13 days or less, and two patients who did not receive full NAC and IMNN001 cycles. Under the current standard of care, in women with Stage III/IV ovarian cancer undergoing NAC, their disease progresses within about 12 months on average. The results from the OVATION I Study support continued evaluation of IMNN-001 based on promising tumor response, as reported in the PFS data, and the ability for surgeons to completely remove visible tumors at interval debulking surgery. IMNN-001 was well tolerated, and no dose-limiting toxicities were detected. Intraperitoneal administration of IMNN-001 was feasible with broad patient acceptance.
OVATION 2 Study. The Company held an Advisory Board Meeting on September 27, 2017 with the clinical investigators and scientific experts including those from Roswell Park Cancer Institute, Vanderbilt University Medical School, and M.D. Anderson Cancer Center to review and finalize clinical, translational research and safety data from the OVATION I Study to determine the next steps forward for our IMNN-001 immunotherapy program. On November 13, 2017, the Company filed its Phase I/II clinical trial protocol with the FDA for IMNN-001 for the localized treatment of ovarian cancer. The protocol is designed with a single dose escalation phase to 100 mg/m² to identify a safe and tolerable dose of IMNN-001 while maximizing an immune response. The Phase I portion of the study will be followed by a continuation at the selected dose in approximately 110 patients randomized Phase II study.
In the OVATION 2 Study, patients in the IMNN-001 treatment arm will receive IMNN-001 plus chemotherapy pre- and post-interval debulking surgery (“IDS”). The OVATION 2 Study will include up to 110 patients with Stage III/IV ovarian cancer, with 12 to 15 patients in the Phase I portion and up to 95 patients in Phase II. The study is powered to show a 33% improvement in the primary endpoint, PFS, when comparing IMNN-001 with neoadjuvant + adjuvant chemotherapy versus neoadjuvant + adjuvant chemotherapy alone. The PFS primary analysis will be conducted after at least 80 events have been observed or after all patients have been followed for at least 16 months, whichever is later.
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In March 2020, the Company announced encouraging initial clinical data from the first 15 patients enrolled in the Phase I portion of the OVATION 2 Study for patients newly diagnosed with Stage III and IV ovarian cancer. The OVATION 2 Study combines IMNN-001, the Company’s IL-12 gene-mediated immunotherapy, with standard-of-care neoadjuvant chemotherapy (“NACT”). Following NACT, patients undergo interval debulking surgery (IDS), followed by three additional cycles of chemotherapy.
IMNN-001 plus standard NACT produced positive dose-dependent efficacy results, with no dose-limiting toxicities, which correlates well with successful surgical outcomes as summarized below:
| ● | Of the fifteen patients treated in the Phase I portion of the OVATION 2 Study, nine patients were treated with IMNN-001 at a dose of 100 mg/m² plus NACT and six patients were treated with NACT only. All fifteen patients had successful resections of their tumors, with eight out of nine patients (88%) in the IMNN-001 treatment arm having an R0 resection, which indicates a microscopically margin-negative complete resection in which no gross or microscopic tumor remains in the tumor bed. Only three out of six patients (50%) in the NACT only treatment arm had a R0 resection. |
| ● | When combining these results with the surgical resection rates observed in the Company’s OVATION 1 Study, a population of patients with inclusion criteria identical to the OVATION 2 Study, the data reflect the strong dose-dependent efficacy of adding IMNN-001 to the current standard of care NACT: |
| % of Patients R0 Resections | ||||||
| 0, 36, 47 mg/m² of IMNN-001 plus NACT | N =12 | 42 | % | |||
| 61, 79, 100 mg/m² of IMNN-001 plus NACT | N = 17 | 82 | % | |||
| ● | The ORR as measured by Response Evaluation Criteria in Solid Tumors (“RECIST”) criteria for the 0, 36, 47 mg/m² dose IMNN-001 patients were comparable, as expected, to the higher (61, 79, 100 mg/m²) dose IMNN-001 patients, with both groups demonstrating an approximate 80% ORR. |
On March 23, 2020, the Company announced that the European Medicines Agency (the “EMA”) Committee for Orphan Medicinal Products (“COMP”) has recommended that IMNN-001 be designated as an orphan medicinal product for the treatment of ovarian cancer. IMNN-001 is an IL-12 DNA plasmid vector encased in a non-viral nanoparticle delivery system, which enables cell transfection followed by persistent, local secretion of the IL-12 protein. IMNN-001 previously received orphan designation from the FDA.
In February 2021, the Company announced that it has received Fast Track designation from the FDA for IMNN-001, its DNA-mediated IL-12 immunotherapy currently in Phase II development for the treatment of advanced ovarian cancer and also provided an update on the OVATION 2 Study. The Company reported that approximately one-third, or 34 patients, of the anticipated 110 patients had been enrolled into the OVATION 2 Study, of which 20 are in the treatment arm and 14 are in the control. Of the 34 patients enrolled in the trial, 27 patients have had their interval debulking surgery with the following results:
| ● | 80% of patients treated with IMNN-001 had a R0 resection, which indicates a microscopically margin-negative complete resection in which no gross or microscopic tumor remains in the tumor bed. | |
| ● | 58% of patients in the control arm had an R0 resection. | |
| ● | This interim data represents a 38% improvement in R0 resection rates for IMNN-001 patients compared with control arm patients and is consistent with the reported improvement in resection scores noted in the encouraging Phase I OVATION I Study, the manuscript of which has been submitted for peer review publication. |
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In June 2022, the Company announced that following a pre-planned interim safety review of 87 as treated patients (46 patients in the experimental arm and 41 patients in the control arm) randomized in the OVATION 2 Study, the Data Safety Monitoring Board (“DSMB”) unanimously recommended that the OVATION 2 Study continue treating patients with the dose of 100 mg/m2. The DSMB also determined that safety is satisfactory with an acceptable risk/benefit, and that patients tolerate IMNN-001 during a course of treatment that lasts up to six months. No dose-limiting toxicities were reported. Interim clinical data from patients who have undergone interval debulking surgery showed that the IMNN-001 treatment arm is continuing to show improvement in R0 surgical resection rates and CRS 3 chemotherapy response scores over the control arm. A complete tumor resection (R0) is a microscopically margin-negative resection in which no gross or microscopic tumor remains in the tumor bed. The chemotherapy response score is a three-tier standardized scoring system for histological tumor regression into complete/near complete (CRS 3), partial (CRS 2) and no/minimal (CRS 1) response based on omental examination.
In September 2022, the Company announced that its Phase I/II OVATION 2 Study with IMNN-001 in advanced ovarian cancer has completed enrollment with 110 patients. Topline results are expected in the first half of 2024.
In April 2023, the Company presented a poster at the American Association for Cancer Research Annual Meeting Demonstrating Preclinical Immune Response of IMNN-001. The findings from a mouse model of peritoneally disseminated ovarian cancer suggest biweekly dosing regimen for further evaluation in human clinical studies. This research in mice will underpin the dosing frequency being investigated in our upcoming Phase 1/2 combination study with IMNN-001 and bevacizumab following neoadjuvant chemotherapy in advanced ovarian cancer
IMNN-001 in Combination with bevacizumab. In February 2023, the Company and Break Through Cancer, a public foundation dedicated to supporting translational research in the most difficult-to-treat cancers that partners with top cancer research centers, announced the commencement of patient enrollment in a collaboration to evaluate IMNN-001 in combination with Avastin® (bevacizumab) in patients with advanced ovarian cancer in the frontline, neoadjuvant clinical setting.
This Phase 1/2 study, titled “Targeting Ovarian Cancer Minimal Residual Disease (MRD) Using Immune and DNA Repair Directed Therapies,” is expected to enroll 50 patients with Stage III/IV advanced ovarian cancer and is being led by principal investigator Amir Jazaeri, M.D., Vice Chair for Clinical Research and Director of the Gynecologic Cancer Immunotherapy Program in the Department of Gynecologic Oncology and Reproductive Medicine at MD Anderson. Dana-Farber Cancer Institute, The Sidney Kimmel Comprehensive Cancer Center at Johns Hopkins and Memorial Sloan Kettering Cancer Center will also be participating in the trial. In addition, The Koch Institute for Integrative Cancer Research at the Massachusetts Institute of Technology (MIT) will provide artificial intelligence services including biomarker and genomic analysis.
Patients will be randomized 1:1 in a two-arm trial. The primary endpoint is second look laparoscopy (SLL) and the secondary endpoint is progression-free survival (PFS). Initial SLL data are expected within one year from the completion of enrollment and final PFS data are expected approximately three years from the completion of enrollment.
PLACCINE DNA VACCINE MODALITY: IMNN-101
In January 2021, the Company announced the filing of a provisional U.S. patent application for a novel DNA-based, investigational vaccine for preventing or treating infections from a broad range of infectious agents including the coronavirus disease using its PLACCINE DNA vaccine technology platform (“PLACCINE”). The provisional patent covers a family of novel composition of multi-cistronic vectors and polymeric nanoparticles that comprise the PLACCINE DNA vaccine platform technology for preventing or treating infectious agents that have the potential for global pandemics, including the SARS-CoV-2 virus and its variations, using the Company’s TheraPlas platform technology.
Imunon’s PLACCINE DNA vaccine technology modality is characterized by a single mono-cistronic or multi-cistronic DNA plasmid vector expressing single or multiple pathogen antigens delivered with a synthetic delivery system. We believe it is adaptable to creating vaccines for a multitude of pathogens, including emerging pathogens leading to pandemics as well as infectious diseases that have yet to be effectively addressed with current vaccine technologies. This flexible vaccine platform is well supported by an established supply chain to produce any plasmid vector and its assembly into a respective vaccine formulation.
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The need for new vaccine technologies is urgent. Since 1980 more than 80 pathogenic viruses have been discovered, yet fewer than 4% have a commercially available prophylactic vaccine. We have engaged with the Biomedical Advanced Research and Development Authority (BARDA), a division of the U.S. Department of Health and Human Services, to pursue certain pathogens BARDA has identified as the most urgent and the most important.
PLACCINE is an extension of the Company’s synthetic, non-viral TheraPlas delivery technology currently in a Phase II trial for the treatment of late-stage ovarian cancer with IMNN-001. Imunon’s proprietary multifunctional DNA vaccine technology concept is built on the flexible PLACCINE technology platform that is amenable to rapidly responding to the SARS-CoV-2 virus, as well as possible future mutations of SARS-CoV-2, other future pandemics, emerging bioterrorism threats, and novel infectious diseases. Imunon’s extensive experience with TheraPlas suggests that the PLACCINE-based nanoparticles are stable at storage temperatures of 4oC to 25oC, making vaccines developed on this platform easily suitable for broad world-wide distribution.
Imunon’s vaccine approach is designed to optimize the quality of the immune response dictating the efficiency of pathogen clearance and patient recovery. Imunon has taken a multivalent approach in an effort to generate an even more robust immune response that not only results in a strong neutralizing antibody response, but also a more robust and durable T-cell response. Delivered with Imunon’s synthetic polymeric system, the proprietary DNA plasmid is protected from degradation and its cellular uptake is facilitated.
COVID-19 Vaccine Overview
Emerging data from the recent literature indicates that the quality of the immune response as opposed to its absolute magnitude is what dictates SARSCoV-2 viral clearance and recovery and that an ineffective or non-neutralizing enhanced antibody response might actually exacerbate disease. The first-generation COVID-19 vaccines were developed for rapid production and deployment and were not optimized for generating cellular responses that result in effective viral clearance. Though early data has indicated some of these vaccines to be over 95% effective, these first-generation vaccines were primarily designed to generate a strong antibody response, and while they have been shown to provide prophylactic protection against disease, the durability of this protection is currently unclear. Most of these vaccines have been specifically developed to target the SARS-CoV-2 Spike (S) protein (antigen), though it is known that restricting a vaccine to a sole viral antigen creates selection pressure that can serve to facilitate the emergence of viral resistance. Indeed, even prior to full vaccine rollout, it has been observed that the S protein is a locus for rapid evolutionary and functional change as evidenced by the D614G, Y453F, 501Y.V2, and VUI-202012/01 mutations/deletions. This propensity for mutation of the S protein leads to future risk of efficacy reduction over time as these mutations accumulate.
Our Next Generation Vaccine Initiative
Imunon’s vaccine candidate comprises a single plasmid vector containing the DNA sequence encoding multiple SARS-CoV-2 antigens. Delivery will be evaluated intramuscularly, intradermally, or subcutaneously with a non-viral synthetic DNA delivery carrier that facilitates vector delivery into the cells of the injected tissue and has potential immune adjuvant properties. Unique designs and formulations of Imunon vaccine candidates may offer several potential key advantages. The synthetic polymeric DNA carrier is an important component of the vaccine composition as it has the potential to facilitate the vaccine immunogenicity by improving vector delivery and, due to potential adjuvant properties, attract professional immune cells to the site of vaccine delivery.
Future vaccine technology will need to address viral mutations and the challenges of efficient manufacturing, distribution, and storage. We believe an adaptation of our TheraPlas technology, PLACCINE, has the potential to meet these challenges. Our approach is described in our provisional patent filing and is summarized as a DNA vaccine technology platform characterized by a single plasmid DNA with multiple coding regions. The plasmid vector is designed to express multiple pathogen antigens. It is delivered via a synthetic delivery system and has the potential to be easily modified to create vaccines against a multitude of infectious diseases, addressing:
| ● | Viral Mutations: PLACCINE may offer broad-spectrum and mutational resistance (variants) by targeting multiple antigens on a single plasmid vector. |
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| ● | Durable Efficacy: PLACCINE delivers a DNA plasmid-based antigen that could result in durable antigen exposure and a robust vaccine response to viral antigens. | |
| ● | Storage & Distribution: PLACCINE allows for stability that is compatible with manageable vaccine storage and distribution. | |
| ● | Simple Dosing & Administration: PLACCINE is a synthetic delivery system that should require a simple injection that does not require viruses or special equipment to deliver its payload. |
We are conducting preliminary research associated with our recently announced proprietary DNA vaccine platform provisional patent filing. At the same time, we are redoubling our efforts and R&D resources in our immuno-oncology and next generation vaccine program.
On September 2, 2021, the Company announced results from preclinical in vivo studies showing production of antibodies and cytotoxic T-cell response specific to the spike antigen of SARS-CoV-2 when immunizing BALB/c mice with the Company’s next-generation PLACCINE DNA vaccine platform. Moreover, the antibodies to SARS-CoV-2 spike antigen prevented the infection of cultured cells in a viral neutralization assay. The production of antibodies predicts the ability of PLACCINE to protect against SARS-CoV-2 exposure, and the elicitation of cytotoxic T-cell response shows the vaccine’s potential to eradicate cells infected with SARS-CoV-2. These findings demonstrate the potential immunogenicity of Imunon’s PLACCINE DNA vaccine, which is intended to provide broad-spectrum protection and resistance against variants by incorporating multiple viral antigens, to improve vaccine stability at storage temperatures of 4°C and above, and to facilitate cheaper and easier manufacturing.
On January 31, 2022, the Company announced it had engaged BIOQUAL, Inc., a preclinical testing contract research organization, to conduct a nonhuman primate (NHP) challenge study with Imunon’s DNA-based approach for a SARS-CoV-2 vaccine. The NHP pilot study follows the generation of encouraging mouse data and will evaluate the Company’s lead vaccine formulations for safety, immunogenicity and protection against SARS-CoV-2. In completed preclinical studies, Imunon demonstrated safe and efficient immune responses including IgG response, neutralizing antibodies and T-cell responses that parallel the activity of commercial vaccines following intramuscular (IM) administration of novel vaccine compositions expressing a single viral antigen. In addition, vector development has shown promise of neutralizing activity against a range of SARS-CoV-2 variants. Imunon’s DNA-based vaccines have been based on a simple intramuscular injection that does not require viral encapsulation or special equipment for administration.
In April 2022, the Company presented its PLACCINE platform technology at the 2022 World Vaccine Congress. In an oral presentation during a Session on Cancer and Immunotherapy, Dr. Khursheed Anwer, the Company’s Chief Science Officer, highlighted the Company’s technology platform in his presentation entitled: “Novel DNA Approaches for Cancer Immunotherapies and Multivalent Infectious Disease Vaccines.” PLACCINE is demonstrating the potential to be a powerful platform that provides for rapid design capability for targeting two or more different variants of a single virus in one vaccine. There is a clear public health need for vaccines today that address more than one strain of viruses, like COVID-19, which have fast evolving variant capability to offer the widest possible protection. Murine model data has thus far been encouraging and suggests that the Company’s approach provides not only flexibility, but also the potential for efficacy comparable to benchmark COVID-19 commercial vaccines with durability to protect for more than 6 months.
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In September 2022, the Company provided an update on the progress made in the development of a DNA-based vaccine using its PLACCINE platform technology. The Company reported evidence of IgG, neutralizing antibody, and T-cell responses to its SARS-CoV-2 PLACCINE vaccines in normal mice. In this murine model, the Company’s multivalent PLACCINE vaccine targeted against two different variants showed to be immunogenic as determined by the levels of IgG, neutralizing antibodies, and T-cell responses. Additionally, our multivalent vaccine was equally effective against two different variants of the COVID-19 virus while the commercial mRNA vaccine appeared to have lost some activity against the newer variant.
Final data from its now completed proof-of-concept mouse challenge study confirmed that a PLACCINE DNA-based vaccine can produce robust levels of IgG, neutralizing antibodies, and T-cell responses. The data demonstrates the ability of the Company’s PLACCINE vaccine to protect a SARS-CoV-2 mouse model in a live viral challenge. In the study, mice were vaccinated with a PLACCINE vaccine expressing the SARS-CoV-2 spike antigen from the D614G variant or the Delta variant, or a combination vaccine expressing both the D614G and Delta spike variants. The vaccination was administered by intramuscular injection on Day 0 and Day 14, followed by challenge with live SARS-CoV-2 virus on Day 42. All three vaccines, including the single and dual antigen vaccines, were found to be safe and elicited IgG responses and inhibited the viral load by 90-95%. The dual antigen vaccine was equally effective against both variants of the SARS CoV-2 virus.
In October 2022, the Company reported partial results from an ongoing non-human primate study designed to examine the immunogenicity of its proprietary PLACCINE vaccine which supports PLACCINE as a viable alternative to mRNA vaccines. The study examined a single plasmid DNA vector containing the SARS-CoV-2 Alpha variant spike antigen formulated with a synthetic DNA delivery system and administered by intramuscular injection. In the study, Cynomolgus monkeys were vaccinated with the PLACCINE vaccine or a commercial mRNA vaccine on Day 1, 28 and 84. Analysis of blood samples for IgG and neutralizing antibodies showed evidence of immunogenicity both in PLACCINE and mRNA vaccinated subjects. Analysis of bronchoalveolar lavage for viral load by quantitative PCR showed viral clearance by >90% of the non-vaccinated controls. Viral clearance from nasal swab followed a similar pattern in a majority of vaccinated animals and a similar clearance profile was observed when viral load was analyzed by the tissue culture infectious dose method.
In March 2023, the Company announced final results from the non-human primate study involving three vaccine-treated non-human primates. The final data are consistent with the earlier data and show excellent immunological response and viral clearance. More specifically, in this NHP study, we examined PLACCINE activity against a more advanced SARS-CoV-2 variants and at a DNA dose that was not previously tested in NHP and demonstrated robust IgG responses, neutralizing antibody responses and complete clearance of virus following the challenge as seen in the previous study.
In a recent mouse study, a single dose of PLACCINE vaccine without a booster dose produced longer duration of IgG responses and higher T-cell activation than an mRNA vaccine. A 12-month PLACCINE stability study has now completed 9 months demonstrating continued drug stability at 4° C (standard refrigerated temperature).
In March 2023, these compelling data were presented at the Vaccine Technology Summit 2023 in Boston. All the generated data to date were presented. They showed: robust immunogenicity and protection in SARS-CoV-2 models, durable cellular or humoral responses detectable for more than 12 months, comparable protection activity to a commercial mRNA vaccine in a booster-dose comparison and superior immune quality versus the mRNA vaccine in a single-dose comparison.
In March 2023, the Company filed with the U.S. Food and Drug Administration (FDA) a pre-IND package in advance of beginning human testing of a SARS-CoV-2 seasonal booster vaccine. In July 2023, The FDA confirmed in a written response our plug and play strategy agreeing that a platform approach to pre-clinical toxicology testing with reference to updated SARS -CoV-2 genes that align with current variant of concern may be used without additional need for toxicology studies. This confirms the flexibility and versatility of our platform which allows for the rapid production and development of any vaccine by simply changing the antigen coding cassette. During 2023, the Company intends to choose the next pathogen target for our PLACCINE modality. Incremental investments to generate novel vaccine designs with optimized antigens will allow Imunon to quickly generate early clinical data against additional pathogen targets that position the company to partner with large vaccine companies who will fund remaining clinical development.
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THERMODOX® - DIRECTED CHEMOTHERAPY
OPTIMA Study
The OPTIMA Study represents an evaluation of ThermoDox® in combination with a first line therapy, RFA, for newly diagnosed, intermediate stage HCC patients. The OPTIMA Study was designed to enroll up to 550 patients globally at approximately 65 clinical sites in the U.S., Canada, European Union (“EU”), China and other countries in the Asia-Pacific region to evaluate ThermoDox® in combination with standardized RFA, which required a minimum of 45 minutes across all investigators and clinical sites for treating lesions three to seven centimeters, versus standardized RFA alone. The primary endpoint for the OPTIMA Study is OS, and the secondary endpoints are progression free survival and safety. The statistical plan called for two interim efficacy analyses by an independent Data Monitoring Committee (“DMC”).
| ● | In August 2018, the Company announced that the OPTIMA Study was fully enrolled. | |
| ● | On August 5, 2019, the Company announced that the prescribed number of OS events had been reached for the first prespecified interim analysis of the OPTIMA Phase III Study. Following preparation of the data, the first interim analysis was conducted by the DMC. The DMC’s pre-planned interim efficacy review followed 128 patient events, or deaths, which occurred in August 2019. | |
| ● | On November 4, 2019, the Company announced that the DMC unanimously recommended the OPTIMA Study continue according to protocol. The recommendation was based on a review of blinded safety and data integrity from 556 patients enrolled in the OPTIMA Study. Data presented demonstrated that PFS and OS data appeared to be tracking with patient data observed at a similar point in the Company’s subgroup of patients followed prospectively in the earlier Phase III HEAT Study, upon which the OPTIMA Study was based. | |
| ● | On April 15, 2020, the Company announced that the prescribed minimum number of events of 158 patient deaths had been reached for the second pre-specified interim analysis of the OPTIMA Phase III Study. The hazard ratio for success at 158 deaths is 0.70, which represents a 30% reduction in the risk of death compared with RFA alone. | |
| ● | On July 13, 2020, the Company announced that it has received a recommendation from the DMC to consider stopping the global OPTIMA Study. The recommendation was made following the second pre-planned interim safety and efficacy analysis by the DMC on July 9, 2020. The DMC analysis found that the prespecified boundary for stopping the trial for futility of 0.900 was crossed with an actual value of 0.903. However, the 2-sided p-value of 0.524 for this analysis provided uncertainty, subsequently, the DMC left the final decision of whether or not to stop the OPTIMA Study to the Company. There were no safety concerns noted during the interim analysis. The Company followed the advice of the DMC and considered its options either to stop the study or continue to follow patients after a thorough review of the data, and an evaluation of our probability of success. On August 4, 2020, the Company announced it would continue following patients for OS, noting that the unexpected and marginally crossed futility boundary, suggested by the Kaplan-Meier analysis at the second interim analysis on July 9, 2020, may be associated with a data maturity issue. | |
| ● | On October 12, 2020, the Company provided an update on the ongoing data analysis from its Phase III OPTIMA Study with ThermoDox® as well as growing interest among clinical investigators in conducting studies with ThermoDox® as a monotherapy or in combination with other therapies. | |
| ● | On February 11, 2021, the Company provided a final update on the Phase III OPTIMA Study and the decision to stop following patients in the Study. Independent analyses conducted by a global biometrics contract research organization and the NIH, did not find any evidence of significance or factors that would justify continuing to follow patients for OS. Therefore, the Company notified all clinical sites to discontinue following patients. The OPTIMA Study database of 556 patients has been frozen at 185 patient deaths. While the analyses did identify certain patient subgroups that appear to have had a clinical benefit, the Company concluded that it would not be in its best interest to pursue these retrospective findings as the regulatory hurdles supporting further discussion will be significant. |
The Company continues to work with the NIH and other supporting investigations by others to evaluate the use of Thermodox® for the treatment of various cancers. The NIH is pursuing their interest in a study of Thermodox® to treat patients with bladder cancer. The Company plans to support these investigator sponsored studies in manner that will not interfere with its current focus on our IMNN-001 program and vaccine developmental iniatives.
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Business Plan
Since inception, the Company has incurred substantial operating losses, principally from expenses associated with the Company’s research and development programs, clinical trials conducted in connection with the Company’s drug candidates, and applications and submissions to the U.S. Food and Drug Administration. The Company has not generated significant revenue and has incurred significant net losses in each year since our inception. As of June 30, 2023, the Company has incurred approximately $380 million of cumulative net losses and had approximately $24.1 million in cash and cash equivalents, short-term investments, and interest receivable. We have substantial future capital requirements to continue our research and development activities and advance our drug candidates through various development stages. The Company believes these expenditures are essential for the commercialization of its technologies.
The Company expects its operating losses to continue for the foreseeable future as it continues its product development efforts, and when it undertakes marketing and sales activities. The Company’s ability to achieve profitability is dependent upon its ability to obtain governmental approvals, manufacture, and market and sell its new drug candidates. There can be no assurance that the Company will be able to commercialize its technology successfully or that profitability will ever be achieved. The operating results of the Company have fluctuated significantly in the past.
In March 2020, the World Health Organization declared COVID-19, to be a Global pandemic and recommended containment and mitigation measures worldwide. The Company’s operations have not been materially affected by the COVID-19 outbreak, if not for delayed inclusions of patients in the OVATION 2 studies. The recruitment of the trial was fully completed in September 2022. The global COVID-19 pandemic continues to evolve. As a result of the COVID-19 pandemic, we have faced and may continue to face delays in meeting our anticipated timelines for our ongoing and planned clinical trials.
The Company’s ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, financial markets in the U.S. and worldwide resulting from the COVID-19 pandemic and the Russian invasion of Ukraine.. The Company continues to monitor its operating activities in light of these events, and it is possible that these events could result in a variety of risks to the business. The specific impact, if any, is not readily determinable as of the date of the Financial Statements.
The actual amount of funds the Company will need to operate is subject to many factors, some of which are beyond the Company’s control. These factors include the following:
| ● | the progress of research activities; | |
| ● | the number and scope of research programs; | |
| ● | the progress of preclinical and clinical development activities; | |
| ● | the progress of the development efforts of parties with whom the Company has entered into research and development agreements; | |
| ● | the costs associated with additional clinical trials of drug candidates; | |
| ● | the ability to maintain current research and development licensing arrangements and to establish new research and development and licensing arrangements; | |
| ● | the ability to achieve milestones under licensing arrangements; | |
| ● | the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and | |
| ● | the costs and timing of regulatory approvals. |
Since 2018, the Company has annually submitted applications to sell a portion of the Company’s State of New Jersey net operating losses (“NOLs”) as part of the Technology Business Tax Certificate Program (the “NOL Program”) sponsored by The New Jersey Economic Development Authority. Under the program, emerging biotechnology companies with unused NOLs and unused research and development credits are allowed to sell these benefits to other New Jersey-based companies. As part of the NOL Program, the Company sold $1.6 million of its New Jersey NOLs in 2022. The sale of these net operating losses resulted in net proceeds to the Company of approximately $1.6 million in January 2023. During 2021, the New Jersey State Legislature increased the maximum lifetime benefit per company from $15 million to $20 million, which will allow the Company to participate in this funding program in future years for up to an additional $1.8 million in net operating losses under this maximum lifetime benefit.
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With $24.1 million in cash and cash equivalents, short-term investments, and interest receivable, coupled with approximately $1.8 million of future planned sales of the Company’s State of New Jersey net operating losses, the Company believes it has sufficient capital resources to fund its operations for twelve months from the issuance of these financial statements.
The Company has based its estimates on assumptions that may prove to be wrong. The Company may need to obtain additional funds sooner or in greater amounts than it currently anticipates. Potential sources of financing include strategic relationships, public or private sales of the Company’s shares or debt, the sale of the Company’s New Jersey NOLs and other sources. If the Company raises funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of existing stockholders may be diluted.
Financing Overview
Equity, Debt and Other Forms of Financing
During 2022 and 2023 through the date of this Quarterly Report filed on Form 10-Q, we issued a total of 3.5 million shares of common stock as discussed below for approximately $9.4 million in net proceeds.
| ● | On January 10, 2022, the Company entered into the Preferred Stock Purchase Agreement with several institutional investors, pursuant to which the Company agreed to issue and sell, in the Preferred Offerings, (i) 50,000 shares of Series A Preferred Stock, and (ii) 50,000 shares of Series B Preferred Stock, in each case at an offering price of $285 per share, representing a 5% original issue discount to the stated value of $300 per share, for gross proceeds of each Preferred Offering of $14.25 million, or approximately $28.50 million in the aggregate for the Preferred Offerings, before the deduction of the Placement Agent’s (as defined below) fee and offering expenses. The shares of Series A Preferred Stock had a stated value of $300 per share and were convertible, at a conversion price of $13.65 per share, into 1,098,901 shares of common stock (subject in certain circumstances to adjustments). The shares of Series B Preferred Stock had a stated value of $300 per share and were convertible, at a conversion price of $15.00 per share, into 1,000,000 shares of common stock (subject in certain circumstances to adjustments). The closing of the Preferred Offerings occurred on January 13, 2022.
The Company held a special meeting of stockholders to consider an amendment (the “Amendment”) to the Company’s Certificate of Incorporation, as amended, to effect a reverse stock split of the outstanding shares of common stock by a ratio to be determined by the Board of Directors of the Company (the “Reverse Stock Split”). |
| The holders of Preferred Stock were entitled to dividends, on an as-if converted basis, equal to dividends actually paid, if any, on shares of Common Stock. The Preferred Stock was convertible into shares of Common Stock at a rate of $13.65 per share for the Series A Preferred Stock and $15.00 per share for the Series B Preferred Stock, subject to adjustment. The Preferred Stock was convertible at the option of the holder at any time after the Company had received stockholder approval for the Reverse Stock Split and filed the requisite Amendment with the Delaware Secretary of State’s office to effectuate the Reverse Stock Split (the “Reverse Stock Split Date”), subject to beneficial ownership limitations set forth in the applicable Certificate of Designation. In addition, on or after the Reverse Stock Split Date, and subject to the satisfaction of certain conditions, the Company had the right to cause the holders of the Preferred Stock to convert their shares of Preferred Stock, subject to such beneficial ownership limitations. |
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| Each holder of the Preferred Stock had the right to cause the Company to redeem all or part of their shares of the Preferred Stock from the earlier of receipt of stockholder approval of the Reverse Stock Split or of 90 days following the original issue date until 120 days following the original issue date, the “Redemption Date,” in cash at a redemption price equal to 105% of the stated value plus an amount equal to accumulated but unpaid dividends, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends) up to, but excluding, the Redemption Date. In connection with the Preferred Offerings, the Company entered into a placement agent agreement (the “Placement Agent Agreement”) with AGP in which the Company paid $1,000,000 as a placement agent fee and $110,000 to reimburse AGP for certain expenses related to the Preferred Stock offering. | ||
| On March 3, 2022, the Company redeemed for cash at a price equal to 105% of the $300 stated value per share all of its 50,000 outstanding shares of Series A Preferred Stock and all of its 50,000 shares of outstanding Series B Preferred Stock. As a result, all shares of the Preferred Stock have been retired and are no longer outstanding and the Company’s only class of outstanding stock is its common stock. | ||
| The Series A Preferred Stock and Series B Preferred Stock were recorded as a liability on the condensed consolidated balance sheet during the first quarter of 2022 until the preferred shares were redeemed during the same quarter. The Company recognized $4,551,567 as interest expense for the preferred shares during the first quarter of 2022, which was composed of: (a) $3,000,000 as the difference between the redemption price for the preferred shares and the net proceeds received from the issuance of the preferred shares, (b) $1,110,000 paid to AGP as a placement agent fee and reimbursement for certain expenses, and (c) $441,567 in legal fees recognized in the first quarter that were attributed to the preferred shares. |
| ● | On April 6, 2022, the Company entered into a Securities Purchase Agreement (the “April 2022 Purchase Agreement”) with several institutional investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “April 2022 Offering”), an aggregate of 1,328,274 shares of the Company’s common stock at an offering price of $5.27 per share for gross proceeds of $7.0 million before the deduction of the April 2022 Placement Agent (as defined below) fees and offering expenses. The closing of the April 2022 Offering occurred on April 8, 2022.
In connection with the April 2022 Offering, the Company entered into a placement agent agreement with A.G.P./Alliance Global Partners (the “April 2022 Placement Agent”) pursuant to which the Company agreed to pay the April 2022 Placement Agent a cash fee equal to 6.5% of the aggregate gross proceeds raised from the sale of the securities sold in the April 2022 Offering and reimburse the April 2022 Placement Agent for certain of their expenses in an amount not to exceed $50,000. The Company sold 1,328,274 shares for net proceeds of $6.2 million | |
| ● | On May 25, 2022, the Company entered into an At the Market Offering Agreement (the “Agreement”) with H.C. Wainwright & Co., LLC, as sales agent (“Wainwright”), pursuant to which the Company may offer and sell, from time to time, through Wainwright, shares of the Company’s common stock having an aggregate offering price of up to $7,500,000. The Company intends to use the net proceeds from the offering, if any, for general corporate purposes, including research and development activities, capital expenditures and working capital. In 2022, the Company sold 336,075 shares of common stock for net proceeds of $0.5 million. During the first six months of 2023, the Company sold 1,815,584 shares of common stock for net proceeds of $2.7 million. |
Significant Accounting Policies
Our significant accounting policies are more fully described in Note 1 to our consolidated financial statements included in our 2022 Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 30, 2023. See Note 3 to the Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.
As a clinical stage biopharmaceutical company, our business, and our ability to execute our strategy to achieve our corporate goals are subject to numerous risks and uncertainties. Material risks and uncertainties relating to our business and our industry are described in “Item 1A. Risk Factors” under “Part II: Other Information” included herein.
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FINANCIAL REVIEW FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND 2022
Results of Operations
For the three months ended June 30, 2023 our net loss was $5.6 million compared to a net loss of $6.0 million for the same three-month period of 2022.
With $24.1 million in cash and cash equivalents, short-term investments, and interest receivable, coupled with approximately $1.8 million of future planned sales of the Company’s State of New Jersey net operating losses, the Company believes it has sufficient capital resources to fund its operations for twelve months from the issuance of the financial statements included in this Quarterly Report on Form 10-Q.
| For the Three Months Ended June 30, | ||||||||||||||||
| (In thousands) | Change Increase (Decrease) | |||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Licensing Revenue: | $ | - | $ | 125 | $ | (125 | ) | (100.0 | )% | |||||||
| Operating Expenses: | ||||||||||||||||
| Clinical Research | ||||||||||||||||
| OVATION | 308 | 374 | (66 | ) | (17.6 | )% | ||||||||||
| OPTIMA | - | 468 | (468 | ) | (100.0 | )% | ||||||||||
| Other Clinical and regulatory | 417 | 662 | (245 | ) | (37.0 | )% | ||||||||||
| Subtotal | 725 | 1,504 | (779 | ) | (51.8 | )% | ||||||||||
| Non-Clinical R&D and CMC | ||||||||||||||||
| OVATION | 421 | 872 | (451 | ) | (51.7 | )% | ||||||||||
| PlaCCine Vaccine | 1,264 | 582 | 682 | 117.2 | % | |||||||||||
| Manufacturing (CMC) | 724 | 268 | 456 | 170.1 | % | |||||||||||
| Subtotal | 2,409 | 1,722 | 687 | 39.9 | % | |||||||||||
| Research and development expenses | 3,134 | 3,226 | (92 | ) | (2.9 | )% | ||||||||||
| General and administrative expenses | 2,340 | 2,877 | (537 | ) | (18.7 | )% | ||||||||||
| Total operating expenses | 5,474 | 6,103 | (629 | ) | (10.3 | )% | ||||||||||
| Loss from operations | $ | (5,474 | ) | $ | (5,978 | ) | $ | (504 | ) | (8.4 | )% | |||||
Licensing Revenue
In January 2013, we entered into a technology development contract with Hisun, pursuant to which Hisun paid us a non-refundable technology transfer fee of $5.0 million to support our development of ThermoDox® in the China territory. The $5.0 million received as a non-refundable payment from Hisun in the first quarter 2013 has been recorded to deferred revenue and will be amortized over the ten-year term of the agreement; therefore, we recorded deferred revenue of $125,000 in the three months ended June 30, 2022. As of December 31, 2022, this contract has been fully amortized and recognized as revenue.
Research and Development Expenses
Research and development (“R&D”) expenses were $3.1 million in the second quarter of 2023 compared to $3.2 million in same period of 2022. Costs associated with the OVATION Study were $0.3 million in the second quarter of 2023 compared to $0.4 million in the same period of 2022. Costs associated with the OPTIMA Study were insignificant in the second quarter of 2023 compared to $0.5 million in the same period of 2022. Other clinical and regulatory costs were $0.4 million the second quarter of 2023 compared to $0.8 million in the same period of 2022. R&D costs associated with the development of IMNN-001 to support the OVATION 2 Study were $0.4 million in the second quarter 2023 a decrease from $0.9 million in same period of 2022. The development of the PLACCINE DNA vaccine technology platform increased to $1.3 million in the second quarter of 2023 compared to $0.6 million in the same period of 2022. CMC costs increased to $0.7 million in the second quarter of 2023 compared to $0.3 million in the same period of 2022.
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General and Administrative Expenses
General and administrative expenses were $2.3 million in the first quarter of 2023 compared to $2.9 million in the same period of 2022. The decrease was primarily attributable to lower non-cash stock compensation expenses offset by higher professional fees including legal fees to defend various lawsuits filed after the announcement in July 2020 of the OPTIMA Phase 3 study results, higher compensation expenses related to the CEO succession plan announced in July 2022 and higher staffing costs.
Other non-operating expense was $84,580 in the second quarter of 2023 compared to other non-operating expense of $64,666 in the comparable prior year period. The Company incurred debt extinguishment expense on its loan facility with Silicon Valley Bank in the second quarter of 2023 of $0.3 million. Investment income from the Company’s short-term investments increased by $0.2 million for the second quarter of 2023 compared with the prior year period in 2022 due to higher returns on these investments.
Impairment of IPR&D Liability
Due to the continuing deterioration of public capital markets in the biotech industry and its impact on market capitalization rates in this sector, IPR&D related to the ovarian cancer indication was reviewed for impairment during the second quarter of 2022. Based on the Company’s analysis of the IPR&D, the Company has concluded that it is not more than likely that the asset had been impaired as of June 30, 2022. As such, no impairment charges for IPR&D related to the ovarian cancer indication were recorded during the first quarter of 2022. As of December 31, 2022, the Company wrote off the $13.4 million carrying value of this asset, thereby recognizing a non-cash charge of $13.4 million in the fourth quarter of 2022. The fair value of the IPR&D is zero at June 30, 2023.
Change in Earn-out Milestone Liability
As of June 30, 2022 the Company fair-valued the earn-out milestone liability at $5.4 million with no change recorded to the fair value of the earn-out milestone during the second quarter of 2022. At December 31, 2022, the Company wrote off the earn-out milestone liability as a result of the requirements not being achieved.
FINANCIAL REVIEW FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
Results of Operations
For the six months ended June 30, 2023 our net loss was $11.2 million compared to a net loss of $16.5 million for the same six-month period of 2022.
With $24.1 million in cash and cash equivalents, short-term investments, and interest receivable, coupled with approximately $1.8 million of future planned sales of the Company’s State of New Jersey net operating losses, the Company believes it has sufficient capital resources to fund its operations for twelve months from the issuance of the financial statements included in this Quarterly Report of Form 10-Q.
| For the Six Months Ended June 30, | ||||||||||||||||
| (In thousands) | Change Increase (Decrease) | |||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Licensing Revenue: | $ | - | $ | 250 | $ | (250 | ) | (100.0 | )% | |||||||
| Operating Expenses: | ||||||||||||||||
| Clinical Research | ||||||||||||||||
| OVATION | 592 | 784 | (192 | ) | (24.5 | )% | ||||||||||
| OPTIMA | - | 529 | (529 | ) | (100.0 | )% | ||||||||||
| Other Clinical and regulatory | 747 | 1,513 | (766 | ) | (50.6 | )% | ||||||||||
| Subtotal | 1,339 | 2,826 | (1,487 | ) | (52.6 | )% | ||||||||||
| Non-Clinical R&D and CMC | ||||||||||||||||
| OVATION | 759 | 1,760 | (1,001 | ) | (56.8 | )% | ||||||||||
| PlaCCine Vaccine | 2,281 | 1,173 | 1,108 | 94.5 | % | |||||||||||
| Manufacturing (CMC) | 1,375 | 563 | 812 | 144.2 | % | |||||||||||
| Subtotal | 4,415 | 3,496 | 919 | 26.3 | % | |||||||||||
| Research and development expenses | 5,754 | 6,322 | (568 | ) | (9.0 | )% | ||||||||||
| General and administrative expenses | 5,405 | 5,748 | (343 | ) | (6.0 | )% | ||||||||||
| Total operating expenses | 11,159 | 12,070 | (911 | ) | (7.6 | )% | ||||||||||
| Loss from operations | $ | (11,159 | ) | $ | (11,820 | ) | $ | (661 | ) | (5.6 | )% | |||||
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Licensing Revenue
In January 2013, we entered into a technology development contract with Hisun, pursuant to which Hisun paid us a non-refundable technology transfer fee of $5.0 million to support our development of ThermoDox® in the China territory. The $5.0 million received as a non-refundable payment from Hisun in the first quarter 2013 has been recorded to deferred revenue and will be amortized over the ten-year term of the agreement; therefore, we recorded deferred revenue of $250,000 in the six months ended June 30, 2022. As of December 31, 2022, this contract has been fully amortized and recognized as revenue.
Research and Development Expenses
Research and development (“R&D”) expenses were $5.8 million in the first half of 2023 compared to $6.3 million in same period of 2022. Costs associated with the OVATION 2 Study were $0.6 million in the first half of 2023 compared to $0.8 million in the same period of 2022. Costs associated with the OPTIMA Study were insignificant in the first half of 2023 compared to $0.5 million in the same period of 2022. Other clinical and regulatory costs were $0.8 million the first half of 2023 compared to $1.5 million in the same period of 2022. R&D costs associated with the development of IMNN-001 to support the OVATION 2 Study were $0.8 million in the first half of 2023 a decrease from $1.7 million in same period of 2022. The development of the PLACCINE DNA vaccine technology platform increased to $2.3 million in the first half of 2023 compared to $1.2 million in the same period of 2022. CMC costs increased to $1.4 million in the first half of 2023 compared to $0.6 million in the same period of 2022.
General and Administrative Expenses
General and administrative expenses were $5.4 million in the first half of 2023 compared to $5.7 million in the same period of 2022. The decrease was primarily attributable to lower non-cash stock compensation expenses offset by higher professional fees including legal fees to defend various lawsuits filed after the announcement in July 2020 of the OPTIMA Phase 3 study results, higher compensation expenses related to the CEO succession plan announced in July 2022 and higher staffing costs.
Other non-operating income was $8,505 in the first half of 2023 compared to other non-operating expenses of $4.7 million in the comparable prior year period. In the first quarter of 2022, the Company incurred a one-time payment of $4.5 million in interest and offering expenses resulting from the sale and subsequent redemption of $30.0 million of convertible redeemable preferred stock. The Company incurred higher interest expense on its loan facility with Silicon Valley Bank in the first quarter of 2023 due to raising interest rates. Investment income from the Company’s short-term investments increased by $0.5 million for the first half of 2023 compared with the prior year period in 2022 due to higher returns on these investments.
Impairment of IPR&D Liability
Due to the continuing deterioration of public capital markets in the biotech industry and its impact on market capitalization rates in this sector, IPR&D related to the ovarian cancer indication was reviewed for impairment during the second quarter of 2022. Based on the Company’s analysis of the IPR&D, the Company has concluded that it is not more than likely that the asset had been impaired as of June 30, 2022. As such, no impairment charges for IPR&D related to the ovarian cancer indication were recorded during the first half of 2022. As of December 31, 2022, the Company wrote off the $13.4 million carrying value of this asset, thereby recognizing a non-cash charge of $13.4 million in the fourth quarter of 2022. The company fair value of the IPR&D is zero at June 30, 2023.
Change in Earn-out Milestone Liability
As of June 30, 2022 the Company fair-valued the earn-out milestone liability at $5.4 million with no change recorded to the fair value of the earn-out milestone during the first half of 2022. At December 31, 2022, the Company wrote off the earn-out milestone liability as a result of the requirements not being achieved.
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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Since inception we have incurred significant losses and negative cash flows from operations. We have financed our operations primarily through the net proceeds from the sales of equity, credit facilities, the sale of the Company’s NOLs, amounts received under our product licensing agreement with Yakult and our technology development agreement with Hisun. The process of developing IMNN-001 and other drug candidates and technologies requires significant research and development work and clinical trial studies, as well as significant manufacturing and process development efforts. We expect these activities, together with our general and administrative expenses to result in significant operating losses for the foreseeable future. Our expenses have significantly and regularly exceeded our revenue, and we had an accumulated deficit of $380 million at June 30, 2023.
At June 30, 2023, we had total current assets of $26.7 million and current liabilities of $6.1 million, resulting in net working capital of $20.6 million. At June 30, 2023, we had cash and cash equivalents, short-term investments, interest receivable on short-term investments, net proceeds on the sale of net operating losses and money market investments of $24.1 million. At December 31, 2022, we had total current assets of $37.2 million and current liabilities of $10.0 million, resulting in net working capital of $27.2 million. We have substantial future capital requirements to continue our research and development activities and advance our drug candidates through various development stages. The Company believes these expenditures are essential for the commercialization of its technologies.
Net cash used in operating activities for the first six months of 2023 was $10.8 million. Net cash provided by investing activities was $3.6 million during the first six months of 2023. Cash used by financing activities during the first six months of 2023 totaled $3.7 million due to the early repayment of the SVB loan (see Note 10). At June 30, 2023, we had cash and cash equivalents, short-term investments, interest receivable on short term investments, net proceeds on the sale of net operating losses and money market investments of $24.1 million. The Company believes it has sufficient capital resources to fund its operations for twelve months from the issuance of the financial statements included in this Quarterly Report on Form 10-Q. See Financing Overview.
We expect to seek additional capital through further public or private equity offerings, debt financing, additional strategic alliance and licensing arrangements, collaborative arrangements, potential sales of our net operating losses, or some combination of these financing alternatives. If we raise additional funds through the issuance of equity securities, the percentage ownership of our stockholders could be significantly diluted, and the newly issued equity securities may have rights, preferences, or privileges senior to those of the holders of our common stock. If we raise funds through the issuance of debt securities, those securities may have rights, preferences, and privileges senior to those of our common stock. If we seek strategic alliances, licenses, or other alternative arrangements, such as arrangements with collaborative partners or others, we may need to relinquish rights to certain of our existing or future technologies, product candidates, or products we would otherwise seek to develop or commercialize on our own, or to license the rights to our technologies, product candidates, or products on terms that are not favorable to us. The overall status of the economic climate could also result in the terms of any equity offering, debt financing, or alliance, license, or other arrangement being even less favorable to us and our stockholders than if the overall economic climate were stronger. We also will continue to look for government sponsored research collaborations and grants to help offset future anticipated losses from operations and, to a lesser extent, interest income.
If adequate funds are not available through either the capital markets, strategic alliances, collaborators, or sales of our net operating losses, we may be required to delay or, reduce the scope of, or terminate our research, development, clinical programs, manufacturing, or commercialization efforts, or effect additional changes to our facilities or personnel, or obtain funds through other arrangements that may require us to relinquish some of our assets or rights to certain of our existing or future technologies, product candidates, or products on terms not favorable to us.
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Off-Balance Sheet Arrangements and Contractual Obligations
None.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting companies.
Item 4. CONTROLS AND PROCEDURES
We have carried out an evaluation, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as that term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended. Based on that evaluation, our principal executive officer and principal financial officer have concluded that, as of June 30, 2023, which is the end of the period covered by this report, our disclosure controls and procedures are effective at the reasonable assurance level in alerting them in a timely manner to material information required to be included in our periodic reports with the SEC.
There were no changes in our internal control over financial reporting identified in connection with the evaluation that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II: OTHER INFORMATION
Item 1. Legal Proceedings
On October 29, 2020, a putative securities class action was filed against the Company and certain of its officers and directors (the “Spar Individual Defendants”) in the U.S. District Court for the District of New Jersey, captioned Spar v. Celsion Corporation, et al., Case No. 1:20-cv-15228. The plaintiff alleged that the Company and Individual Defendants made false and misleading statements regarding one of the Company’s drug candidates, ThermoDox®, and brings claims for damages under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder against all Defendants, and under Section 20(a) of the Exchange Act of 1934 against the Individual Defendants. At this stage of the case neither the likelihood that a loss, if any, will be realized, nor an estimate of possible loss or range of loss, if any, can be determined. On February 6, 2023, the U.S. District Court granted a Motion to Dismiss filed by the Company and Spar Individual Defendants and granted Plaintiff leave to file an amended complaint within 30 days. Plaintiff did not file an amended complaint within the 30-day deadline.
In February 2021, a derivative shareholder lawsuit was filed against the Company, as the nominal defendant, and certain of its directors and officers as defendants in the U.S. District Court for the District of New Jersey, captioned Fidler v. Michael H. Tardugno, et al., Case No. 3:21-cv-02662. The plaintiff alleges breach of fiduciary duty and other claims arising out of alleged statements made by certain of the Company’s directors and/or officers regarding ThermoDox®. The Company believes it has meritorious defenses to these claims and intends to vigorously contest this suit. At this stage of the case neither the likelihood that a loss, if any, will be realized, nor an estimate of possible loss or range of loss, if any, can be determined.
In August 2021, a complaint regarding a corporate books and records demand was filed against the Company in the Court of Chancery of the State of Delaware, captioned Pacheco v. Celsion Corporation, Case No. 2021-0705. The plaintiff alleged he was entitled to inspect the Company’s books and records concerning the OPTIMA Study and other materials. On May 31, 2023, the Court of Chancery entered the parties’ stipulation dismissing the case without prejudice.
In October 2021, an arbitration was commenced against the Company before the CPR Institute for Conflict Prevention & Resolution, captioned Curia New Mexico, LLC v. Celsion Corp., Case No. G-22-85-S. The claimant alleged that the Company failed to pay invoices for the manufacture of two batches of ThermoDox®. On April 19, 2023, the arbitral tribunal issued an interim award, upholding claimant’s claim with respect to one of the two batches of ThermoDox® for an aggregate amount of approximately $583,500 including interest and legal fees which was paid in second quarter 2023 and the arbitrators denied their claim with respect to the other batch of ThermoDox®.
Item 1A. Risk Factors
There have been no material changes to our risk factors from those disclosed under “Risk Factors” in Part I, Item 1A of our 2022 Annual Report on Form 10-K. The risks and uncertainties described in our 2022 Annual Report on Form 10-K are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also materially adversely affect our business, financial condition, or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
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Item 6. Exhibits.
| 10.1 | IMUNON, Inc. 2018 Stock Incentive Plan as amended as of June 14, 2023 incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on June 15, 2023 (SEC File No. 001-15911). | |
| 31.1+ | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2+ | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1* | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101** | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 formatted in XBRL (Extensible Business Reporting Language): (i) the unaudited Consolidated Balance Sheets, (ii) the unaudited Consolidated Statements of Operations, (iii) the unaudited Consolidated Statements of Comprehensive Loss, (iv) the unaudited Consolidated Statements of Cash Flows, (v) the unaudited Consolidated Statements of Change in Stockholders’ Equity (Deficit), and (vi) Notes to Consolidated Financial Statements. | |
| + | Filed herewith. | |
| * | Exhibit 32.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall such exhibit be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Securities Exchange Act, except as otherwise stated in such filing. | |
| ** | XBRL information is filed herewith. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| August 10, 2023 | IMUNON, INC. | |
| Registrant | ||
| By: | /s/ Corinne Le Goff | |
| Corinne Le Goff | ||
| President and Chief Executive Officer | ||
| By: | /s/ Jeffrey W. Church | |
| Jeffrey W. Church | ||
| Executive Vice President and Chief Financial Officer | ||
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