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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For the quarterly period ended September 30, 2022
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: 001-38624
Vaccinex, Inc.
(Exact name of registrant as specified in its charter)
|
Delaware
|
16-1603202
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
1895 Mount Hope Avenue
Rochester, New York
|
14620
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Registrant’s telephone number, including area code: (585)
271-2700
Securities registered pursuant to Section 12(b) of the Securities
Exchange Act of 1934:
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
Common Stock, $0.0001 par value
|
VCNX
|
Nasdaq Capital Market
|
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such
files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
|
Large accelerated filer
|
|
☐
|
|
Accelerated filer
|
|
☐
|
|
|
|
|
|
|
|
|
|
Non-accelerated filer
|
|
☒
|
|
Smaller reporting company
|
|
☒
|
|
|
|
|
|
|
|
|
|
Emerging growth company
|
|
☒
|
|
|
|
|
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No ☒
As of November 9, 2022, the registrant had 42,718,957 shares of
common stock, $0.0001 par value per share, outstanding.
VACCINEX, INC.
FORM 10-Q
TABLE OF CONTENTS
2
PART I -
FINANCIAL INFORMATION
Item 1. Financial Statements
VACCINEX, INC.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)
|
|
|
As of
September 30, 2022
|
|
|
As of
December 31, 2021
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
7,186
|
|
|
$
|
8,589
|
|
|
Accounts receivable
|
|
|
50
|
|
|
|
-
|
|
|
Prepaid expenses and other current assets
|
|
|
789
|
|
|
|
816
|
|
|
Total current assets
|
|
|
8,025
|
|
|
|
9,405
|
|
|
Property and equipment, net
|
|
|
236
|
|
|
|
297
|
|
|
Operating lease right-of-use asset
|
|
|
351
|
|
|
|
141
|
|
|
TOTAL ASSETS
|
|
$
|
8,612
|
|
|
$
|
9,843
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
494
|
|
|
$
|
1,061
|
|
|
Accrued expenses
|
|
|
1,256
|
|
|
|
980
|
|
|
Current portion of long-term debt
|
|
|
74
|
|
|
|
74
|
|
|
Operating lease liability
|
|
|
163
|
|
|
|
141
|
|
|
Total current liabilities
|
|
|
1,987
|
|
|
|
2,256
|
|
|
Long-term debt
|
|
|
119
|
|
|
|
175
|
|
|
Operating lease liability, net of current portion
|
|
|
188
|
|
|
|
-
|
|
|
TOTAL LIABILITIES
|
|
|
2,294
|
|
|
|
2,431
|
|
|
Commitments and contingencies (Note 7)
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit):
|
|
|
|
|
|
|
|
|
|
Common stock, par value of $0.0001 per share; 100,000,000 shares
authorized
as of September 30, 2022, and December 31, 2021;
42,664,903 and 30,801,962
shares issued as of September 30, 2022 and December
31, 2021, respectively;
42,664,051 and 30,801,110 shares outstanding as of
September 30, 2022
and December 31, 2021, respectively
|
|
|
4
|
|
|
|
3
|
|
|
Additional paid-in capital
|
|
|
320,923
|
|
|
|
307,281
|
|
|
Treasury stock, at cost; 852 shares of common stock as of September
30, 2022 and
December 31, 2021, respectively
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
Accumulated deficit
|
|
|
(314,598
|
)
|
|
|
(299,861
|
)
|
|
TOTAL STOCKHOLDERS’ EQUITY
|
|
|
6,318
|
|
|
|
7,412
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
8,612
|
|
|
$
|
9,843
|
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
VACCINEX, INC.
Condensed Consolidated Statements of Operations and Comprehensive
Loss (Unaudited)
(in thousands, except share and per share data)
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
|
Revenue
|
|
$
|
50
|
|
|
$
|
50
|
|
|
$
|
50
|
|
|
$
|
900
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
3,429
|
|
|
|
3,629
|
|
|
|
10,238
|
|
|
|
13,206
|
|
|
General and administrative
|
|
|
1,413
|
|
|
|
1,484
|
|
|
|
4,599
|
|
|
|
4,666
|
|
|
Total costs and expenses
|
|
|
4,842
|
|
|
|
5,113
|
|
|
|
14,837
|
|
|
|
17,872
|
|
|
Loss from operations
|
|
|
(4,792
|
)
|
|
|
(5,063
|
)
|
|
|
(14,787
|
)
|
|
|
(16,972
|
)
|
|
Interest expense
|
|
|
(1
|
)
|
|
|
(142
|
)
|
|
|
(2
|
)
|
|
|
(825
|
)
|
|
Other income (expense), net
|
|
|
34
|
|
|
|
(1
|
)
|
|
|
52
|
|
|
|
48
|
|
|
Loss before provision for income taxes
|
|
|
(4,759
|
)
|
|
|
(5,206
|
)
|
|
|
(14,737
|
)
|
|
|
(17,749
|
)
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net loss
|
|
|
(4,759
|
)
|
|
|
(5,206
|
)
|
|
|
(14,737
|
)
|
|
|
(17,749
|
)
|
|
Net loss attributable to noncontrolling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net loss attributable to Vaccinex, Inc. common stockholders
|
|
$
|
(4,759
|
)
|
|
$
|
(5,206
|
)
|
|
$
|
(14,737
|
)
|
|
$
|
(17,749
|
)
|
|
Comprehensive loss
|
|
$
|
(4,759
|
)
|
|
$
|
(5,206
|
)
|
|
$
|
(14,737
|
)
|
|
$
|
(17,749
|
)
|
|
Net loss per share attributable to Vaccinex, Inc. common
stockholders, basic and diluted
|
|
$
|
(0.11
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.36
|
)
|
|
$
|
(0.63
|
)
|
|
Weighted-average shares used in computing net loss per share
attributable to Vaccinex, Inc. common stockholders,
basic and
diluted
|
|
|
42,664,051
|
|
|
|
30,801,110
|
|
|
|
41,362,128
|
|
|
|
28,198,559
|
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
VACCINEX, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(in thousands, except share data)
|
|
|
Common Stock
|
|
|
|
|
|
|
Treasury Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Additional
Paid-in
Capital
|
|
|
Common
Stock
Shares
|
|
|
Amount
|
|
|
Accumulated
Deficit
|
|
|
Total
Vaccinex, Inc.
Stockholders’
Equity (Deficit)
|
|
|
Noncontrolling
Interests
|
|
|
Total
Stockholders’
Equity (Deficit)
|
|
|
Balance as of January 1, 2021
|
|
|
22,388,027
|
|
|
$
|
3
|
|
|
$
|
250,914
|
|
|
|
852
|
|
|
$
|
(11
|
)
|
|
$
|
(277,481
|
)
|
|
$
|
(26,575
|
)
|
|
$
|
23,963
|
|
|
$
|
(2,612
|
)
|
|
Issuance of Common Shares
|
|
|
5,937,900
|
|
|
|
-
|
|
|
|
32,848
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,848
|
|
|
|
-
|
|
|
|
32,848
|
|
|
Common shares issuance costs
|
|
|
-
|
|
|
|
-
|
|
|
|
(985
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(985
|
)
|
|
|
-
|
|
|
|
(985
|
)
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
104
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
104
|
|
|
|
-
|
|
|
|
104
|
|
|
Shares issued for compensation
|
|
|
9,979
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Exchange of partnership units for common shares (Note 5)
|
|
|
109,900
|
|
|
|
-
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,000
|
|
|
|
(2,000
|
)
|
|
|
-
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,574
|
)
|
|
|
(6,574
|
)
|
|
|
-
|
|
|
|
(6,574
|
)
|
|
Balance as of March 31, 2021
|
|
|
28,445,806
|
|
|
|
3
|
|
|
|
284,881
|
|
|
|
852
|
|
|
|
(11
|
)
|
|
|
(284,055
|
)
|
|
|
818
|
|
|
|
21,963
|
|
|
|
22,781
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
128
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
128
|
|
|
|
-
|
|
|
|
128
|
|
|
Exchange of partnership units for common shares (Note 5)
|
|
|
2,356,156
|
|
|
|
-
|
|
|
|
21,963
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21,963
|
|
|
|
(21,963
|
)
|
|
|
-
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,969
|
)
|
|
|
(5,969
|
)
|
|
|
-
|
|
|
|
(5,969
|
)
|
|
Balance as of June 30, 2021
|
|
|
30,801,962
|
|
|
|
3
|
|
|
|
306,972
|
|
|
|
852
|
|
|
|
(11
|
)
|
|
|
(290,024
|
)
|
|
|
16,940
|
|
|
|
-
|
|
|
|
16,940
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
156
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
156
|
|
|
|
-
|
|
|
|
156
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,206
|
)
|
|
|
(5,206
|
)
|
|
|
-
|
|
|
|
(5,206
|
)
|
|
Balance as of September 30, 2021
|
|
|
30,801,962
|
|
|
$
|
3
|
|
|
$
|
307,128
|
|
|
|
852
|
|
|
$
|
(11
|
)
|
|
$
|
(295,230
|
)
|
|
$
|
11,890
|
|
|
$
|
-
|
|
|
$
|
11,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
Treasury Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Additional
Paid-in
Capital
|
|
|
Common
Stock
Shares
|
|
|
Amount
|
|
|
Accumulated
Deficit
|
|
|
Total
Vaccinex, Inc.
Stockholders’
Equity
|
|
|
Noncontrolling
Interests
|
|
|
Total
Stockholders’
Equity
|
|
|
Balance as of January 1, 2022
|
|
|
30,801,962
|
|
|
$
|
3
|
|
|
$
|
307,281
|
|
|
|
852
|
|
|
$
|
(11
|
)
|
|
$
|
(299,861
|
)
|
|
$
|
7,412
|
|
|
$
|
-
|
|
|
$
|
7,412
|
|
|
Issuance of Common Shares
|
|
|
11,862,941
|
|
|
|
1
|
|
|
|
13,229
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
13,230
|
|
|
|
-
|
|
|
|
13,230
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
141
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
141
|
|
|
|
-
|
|
|
|
141
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,595
|
)
|
|
|
(4,595
|
)
|
|
|
-
|
|
|
|
(4,595
|
)
|
|
Balance as of March 31, 2022
|
|
|
42,664,903
|
|
|
|
4
|
|
|
|
320,651
|
|
|
|
852
|
|
|
|
(11
|
)
|
|
|
(304,456
|
)
|
|
|
16,188
|
|
|
|
-
|
|
|
|
16,188
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
138
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
138
|
|
|
|
-
|
|
|
|
138
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,383
|
)
|
|
|
(5,383
|
)
|
|
|
-
|
|
|
|
(5,383
|
)
|
|
Balance as of June 30, 2022
|
|
|
42,664,903
|
|
|
|
4
|
|
|
|
320,789
|
|
|
|
852
|
|
|
|
(11
|
)
|
|
|
(309,839
|
)
|
|
|
10,943
|
|
|
|
-
|
|
|
|
10,943
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
134
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
134
|
|
|
|
-
|
|
|
|
134
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,759
|
)
|
|
|
(4,759
|
)
|
|
|
-
|
|
|
|
(4,759
|
)
|
|
Balance as of September 30, 2022
|
|
|
42,664,903
|
|
|
$
|
4
|
|
|
$
|
320,923
|
|
|
|
852
|
|
|
$
|
(11
|
)
|
|
$
|
(314,598
|
)
|
|
$
|
6,318
|
|
|
$
|
-
|
|
|
$
|
6,318
|
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
5
VACCINEX, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(14,737
|
)
|
|
$
|
(17,749
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
162
|
|
|
|
128
|
|
|
Debt related charges included in interest expense
|
|
|
-
|
|
|
|
458
|
|
|
Stock-based compensation
|
|
|
413
|
|
|
|
388
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(50
|
)
|
|
|
107
|
|
|
Prepaid expenses and other current assets
|
|
|
27
|
|
|
|
(538
|
)
|
|
Accounts payable
|
|
|
(567
|
)
|
|
|
(2,220
|
)
|
|
Accrued expenses
|
|
|
277
|
|
|
|
(729
|
)
|
|
Net cash used in operating activities
|
|
|
(14,475
|
)
|
|
|
(20,155
|
)
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(101
|
)
|
|
|
(32
|
)
|
|
Net cash used in investing activities
|
|
|
(101
|
)
|
|
|
(32
|
)
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
3,519
|
|
|
|
32,848
|
|
|
Redemption of convertible debt
|
|
|
-
|
|
|
|
(8,531
|
)
|
|
Payments of long-term debt
|
|
|
(56
|
)
|
|
|
-
|
|
|
Proceeds from private offering of common stock
|
|
|
9,710
|
|
|
|
-
|
|
|
Payments of common stock issuance costs
|
|
|
-
|
|
|
|
(985
|
)
|
|
Net cash provided by financing activities
|
|
|
13,173
|
|
|
|
23,332
|
|
|
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(1,403
|
)
|
|
|
3,145
|
|
|
CASH AND CASH EQUIVALENTS–Beginning of period
|
|
|
8,589
|
|
|
|
10,596
|
|
|
CASH AND CASH EQUIVALENTS–End of period
|
|
$
|
7,186
|
|
|
$
|
13,741
|
|
|
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment in accounts payable
|
|
$
|
-
|
|
|
$
|
7
|
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
6
VACCINEX, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
|
Note
1.
|
COMPANY AND NATURE OF BUSINESS
|
Vaccinex, Inc. (together with its subsidiaries, the “Company”) was
incorporated in Delaware in April 2001 and is headquartered in
Rochester, New York. The Company is a clinical-stage biotechnology
company engaged in the discovery and development of targeted
biotherapeutics to treat serious diseases and conditions with unmet
medical needs, including cancer, neurodegenerative diseases, and
autoimmune disorders. Since its inception, the Company has devoted
substantially all of its efforts toward product research,
manufacturing and clinical development, and raising capital.
The Company is subject to a number of risks and uncertainties
common to other early-stage biotechnology companies including, but
not limited to, dependency on the successful development and
commercialization of its product candidates, rapid technological
change and competition, dependence on key personnel and
collaborative partners, uncertainty of protection of proprietary
technology and patents, clinical trial uncertainty, fluctuation in
operating results and financial performance, the need to obtain
additional funding, compliance with governmental regulations,
technological and medical risks, management of growth and
effectiveness of marketing by the Company. The Company is also
subject to risks related to the ongoing COVID-19 pandemic,
discussed under “COVID-19 Pandemic” below. If the Company does not
successfully commercialize or partner any of its product
candidates, it will be unable to generate product revenue or
achieve profitability.
Going Concern
These condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting
principles applicable to a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business.
The Company has incurred significant losses and negative cash flows
from operations since inception and expects to incur additional
losses until such time that it can generate significant revenue
from the commercialization of its product candidates. The Company
had negative cash flow from operations of $14.5 million for
the nine months ended September 30, 2022, and an accumulated
deficit of $314.6 million as of September 30, 2022. Given the
Company’s projected operating requirements and its existing cash
and cash equivalents, the Company is projecting insufficient
liquidity to sustain its operations through one year following the
date that the condensed consolidated financial statements are
issued. These conditions and events raise substantial
doubt about the Company’s ability to continue as a going
concern.
In response to these conditions, management is currently evaluating
different strategies to obtain the required funding for future
operations. Financing strategies may include, but are not limited
to, the public or private sale of equity, debt financings or funds
from other capital sources, such as government funding,
collaborations, strategic alliances, or licensing arrangements with
third parties. There can be no assurances that the
Company will be able to secure additional financing, or if
available, that it will be sufficient to meet its needs or on
favorable terms. Because management’s plans have not yet
been finalized and are not within the Company’s control, the
implementation of such plans cannot be considered
probable. As a result, the Company has concluded that
management’s plans do not alleviate substantial doubt about the
Company’s ability to continue as a going concern.
The condensed consolidated financial statements do not include any
adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classification of
liabilities that might result from the outcome of this
uncertainty.
7
COVID-19 Pandemic
In order to mitigate the spread of COVID-19, governments have at
times imposed unprecedented restrictions on business operations,
travel, and gatherings, resulting in a global economic downturn and
other adverse economic and societal impacts. The Company has
complied with state reopening guidance and has allowed research and
development staff to begin working in the laboratory when necessary
and using recommended health and safety precautions. The
COVID-19 pandemic has impacted the expected timing of the Company’s
clinical trials, the economy, the biotechnology industry, and the
Company’s business. For example, the Company previously anticipated
initiating a trial of pepinemab in Alzheimer’s disease in mid-2020
but the initial enrollment date was delayed until the first half of
2021. In addition, to mitigate the impacts of the
COVID-19 pandemic, including impacts on the Company’s ability to
raise capital and to maintain its personnel, the Company applied
for and received a PPP Loan (See Note 9). The Company
may experience further disruptions as a result of the COVID-19
pandemic that could adversely impact its business, including
disruption of research and development activities, plans for
release of data, manufacturing, supply, and interactions with
regulators and other third parties, and difficulties in raising
additional capital. The extent to which the COVID-19
pandemic may impact the Company’s business will depend on future
developments, which are highly uncertain and cannot be predicted
with confidence.
|
Note
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis of Presentation and Consolidation
Through the period ended September 3, 2021, the Company’s accounts
included Vaccinex Products, LP, a Delaware limited partnership
(“Vaccinex Products”), and VX3 (DE) LP, a Delaware limited
partnership (“VX3”). Subsequently on September 3, 2021, Vaccinex
Products and VX3 were dissolved when all remaining partnership
interests were exchanged for shares of our common stock.
Accordingly, prior to dissolution, these condensed consolidated
financial statements reflect the accounts and operations of the
Company for the nine months ended September 30, 2021and those of
its subsidiaries in which the Company had a controlling financial
interest.
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”) for interim financial information (Accounting Standards
Codification (“ASC”) 270, Interim Reporting) and with the
instructions to Form 10-Q and Article 8 of Regulation S-X.
Accordingly, these financial statements do not include all of the
information necessary for a full presentation of financial
position, results of operations, and cash flows in conformity with
GAAP. In the opinion of management, the condensed consolidated
financial statements reflect all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation
of the results of the Company for the periods presented.
Intercompany transactions and balances have been fully eliminated
in consolidation.
These condensed consolidated financial statements should be read in
conjunction with the Company’s audited consolidated financial
statements and related notes included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2021,
filed with the SEC on March 31, 2022.
Use of Estimates
These condensed consolidated financial statements have been
prepared in conformity with U.S. GAAP. The preparation of financial
statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and
liabilities as of the date of the condensed consolidated financial
statements and the reported amount of expenses during the reporting
period. Such management estimates include those relating to
assumptions used in the valuation of stock option awards, and
valuation allowances against deferred income tax assets. Actual
results could differ from those estimates.
8
Concentration of Credit Risk, Other Risks and Uncertainties
The Company is subject to a number of risks, including, but not
limited to, the lack of available capital; the possible delisting
of our common stock from Nasdaq, possible failure of preclinical
testing or clinical trials; inability to obtain regulatory approval
of product candidates; competitors developing new technological
innovations; potential interruptions in the manufacturing and
commercial supply operations; unsuccessful commercialization
strategy and launch plans for its proprietary drug candidates;
risks inherent in litigation, including purported class actions;
market acceptance of the Company’s products; and protection of
proprietary technology.
Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash and cash
equivalents. Cash equivalents are deposited in interest-bearing
money market accounts. Although the Company deposits its cash with
multiple financial institutions, cash balances may occasionally be
in excess of the amounts insured by the Federal Deposit Insurance
Corporation. Management believes the financial risk associated with
these balances is minimal and has not experienced any losses to
date.
The Company depends on third-party manufacturers for the
manufacture of drug substance and drug product for clinical trials.
The Company also relies on certain third parties for its supply
chain. Disputes with these third- party manufacturers or shortages
in goods or services from third-party suppliers could delay the
manufacturing of the Company’s product candidates and adversely
impact its results of operations.
Convertible Instruments
The Company applies the accounting standards for derivatives and
hedging and for distinguishing liabilities from equity when
accounting for hybrid contracts that contain conversion options and
other embedded features. The accounting standards require companies
to bifurcate embedded features from their host instruments and
account for them as free-standing derivative financial instruments
according to certain criteria. The criteria include circumstances
in which (i) the economic characteristics and risks of the embedded
derivative instrument are not clearly and closely related to the
economic characteristics and risks of the host contract, (ii) the
hybrid instrument that embodies both the embedded derivative
instrument and the host contract is not re-measured at fair value
under otherwise applicable generally accepted accounting principles
with changes in fair value reported in earnings as they occur and
(iii) a separate instrument with the same terms as the embedded
derivative instrument would be considered a derivative
instrument.
The Company’s derivative instrument related to certain features
embedded within the Company’s 8% Original Issue Discount Senior
Secured Convertible Debenture (“the Debenture”) was extinguished in
connection with the repayment of the Debenture, which is described
in Note 10. The derivative was accounted for as a derivative
liability and remeasured to fair value as of each balance sheet
date and the related remeasurement adjustments were included in
interest expense in the Company’s condensed consolidated statement
of operations and comprehensive loss.
Recent Accounting Pronouncements Not Yet Adopted
In June 2016, the Financial Accounting Standards Board (“the FASB”)
issued Accounting Standards Update (“ASU”) No. 2016-13,
“Measurement of Credit Losses on
Financial Instruments” to improve reporting requirements
specific to loans, receivables, and other financial instruments.
The new standard requires that credit losses on financial assets
measured at amortized cost be determined using an expected loss
model, instead of the current incurred loss model, and requires
that credit losses related to available-for-sale debt securities be
recorded through an allowance for credit losses and limited to the
amount by which carrying value exceeds fair value. The new standard
also requires enhanced disclosure of credit risk associated with
financial assets. The standard is effective for interim and annual
periods beginning after December 15, 2022 with early adoption
permitted. Based on the composition of the Company’s financial
assets, current market conditions and historical credit loss
activity, the adoption of this standard is not expected to have a
material impact on the Company’s condensed consolidated financial
statements.
9
Note 3. BALANCE SHEET COMPONENTS
Property and Equipment
Property and equipment consist of the following (in thousands):
|
|
|
As of
September 30, 2022
|
|
|
As of
December 31, 2021
|
|
|
Leasehold improvements
|
|
$
|
3,259
|
|
|
$
|
3,213
|
|
|
Research equipment
|
|
|
3,515
|
|
|
|
3,499
|
|
|
Furniture and fixtures
|
|
|
352
|
|
|
|
350
|
|
|
Computer equipment
|
|
|
321
|
|
|
|
284
|
|
|
Property and equipment, gross
|
|
|
7,447
|
|
|
|
7,346
|
|
|
Less: accumulated depreciation and amortization
|
|
|
(7,211
|
)
|
|
|
(7,049
|
)
|
|
Property and equipment, net
|
|
$
|
236
|
|
|
$
|
297
|
|
Depreciation expense related to property and equipment
was $67,000 and $162,000
for the three and nine months ended September 30, 2022 and $37,000
and $128,000 for the three and nine months ended September 30,
2021, respectively.
Accrued Expenses
Accrued expenses consist of the following (in thousands):
|
|
|
As of
September 30, 2022
|
|
|
As of
December 31, 2021
|
|
|
Accrued clinical trial cost
|
|
$
|
811
|
|
|
$
|
468
|
|
|
Accrued payroll and related benefits
|
|
|
321
|
|
|
|
409
|
|
|
Accrued consulting and legal
|
|
|
101
|
|
|
|
74
|
|
|
Accrued other
|
|
|
23
|
|
|
|
29
|
|
|
Accrued expenses
|
|
$
|
1,256
|
|
|
$
|
980
|
|
|
Note
4.
|
FAIR VALUE MEASUREMENTS OF FINANCIAL MEASUREMENTS
|
Assets and Liabilities Measured at Fair Value on a Nonrecurring
Basis
Assets and liabilities recorded at fair value on a nonrecurring
basis in the condensed consolidated balance sheets are categorized
based upon the level of judgment associated with the inputs used to
measure their fair values. Financial instruments consist of cash,
accounts receivable, accounts payable, accrued liabilities, and
long-term debt. Cash, accounts receivable, accounts payable,
accrued liabilities, and debt, are stated at their carrying value,
which approximates fair value due to the short time to the expected
receipt or payment date of such amounts.
Assets and Liabilities Measured at Fair Value on a Recurring
Basis
Fair value measurement
standards also apply to certain financial assets and liabilities
that are measured at fair value on a recurring basis (each
reporting period). For the Company, these financial assets and
liabilities include its cash equivalents deposited in money market
funds and derivative instruments. The Company does not have any
nonfinancial assets or liabilities that are measured at fair value
on a recurring basis.
10
The following table sets forth the fair value of the Company’s
financial assets by level within the fair value hierarchy (in
thousands):
|
|
|
As of September 30, 2022
|
|
|
|
|
Fair Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market fund
|
|
$
|
4,588
|
|
|