VACCINEX INC

Previous wording

The following discussion and other parts of this Report contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations and intentions. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipate,” “believes,” “estimates,” “potential,” “intend” or “continue,” or the negative of these terms or other comparable terminology. Forward-looking statements include, but are not limited to, statements about:

Current wording

The following discussion and other parts of this Report contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations, and intentions. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “expects,” “plans,” “anticipate,” “believes,” “estimates,” “potential,” or “continue,” or the negative of these terms or other comparable terminology. Forward-looking statements include, but are not limited to, statements about:

Previous wording

We have generated a limited amount of service revenue from collaboration agreements but have not generated any revenue from sales of our product candidates to date. We continue to incur significant development and other expenses related to our ongoing operations. As a result, we are not and have never been profitable and have incurred losses in each period since our inception, resulting in substantial doubt in our ability to continue as a going concern. We reported a net loss of $3.9 million and $5.0 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, and December 31, 2023, we had cash and cash equivalents of $3.0 million and $1.5 million, respectively. We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our product candidates. We may also encounter unforeseen expenses, difficulties, complications, delays and other unknown factors which may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues, if any.

Current wording

We have generated a limited amount of service revenue from collaboration agreements but have not generated any revenue from sales of our product candidates to date. We continue to incur significant development and other expenses related to our ongoing operations. As a result, we are not and have never been profitable and have incurred losses in each period since our inception, resulting in substantial doubt in our ability to continue as a going concern. We reported a net loss of $5.6 million and $7.1 million for the three months ended June 30, 2024 and 2023, respectively, and a net loss of $9.5 million and $12.0 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, and December 31, 2023, we had cash and cash equivalents of $0.2 million and $1.5 million, respectively. We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our product candidates. We may also encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors which may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues, if any.

Previous wording

Our recurring net losses and negative cash flows from operations raised substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our condensed financial statements for the three months ended March 31, 2024. Until we can generate sufficient revenue from the commercialization of our product candidates, we expect to finance our operations through the public or private sale of equity, debt financing or other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties. To date, the Company has relied on equity and debt financing to fund its operations, in addition to capital contributions from noncontrolling interests and a limited amount of service revenue from collaboration agreements.

Current wording

Our recurring net losses and negative cash flows from operations raised substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our condensed financial statements for the three and six months ended June 30, 2024. Until we can generate sufficient revenue from the commercialization of our product candidates, we expect to finance our operations through the public or private sale of equity, debt financing or other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties. To date, the Company has relied on equity and debt financing to fund its operations, in addition to capital contributions from noncontrolling interests and a limited amount of service revenue from collaboration agreements.

Previous wording

Our cash and cash equivalents were $3.0 million and total current assets were $7.15 million at March 31, 2024, which will be insufficient to fund our planned operations through one year of the date that these condensed financial statements are available for issuance. See Note 1 of our unaudited condensed financial statements. There can be no assurances that we will be able to secure additional financing when needed, or if available, that it will be sufficient to meet our needs or on favorable terms.

Current wording

Our cash and cash equivalents were $0.2 million and total current assets were $2.2 million at June 30, 2024, which will be insufficient to fund our planned operations through one year of the date that these condensed financial statements are available for issuance. See Note 1 of our unaudited condensed financial statements. There can be no assurances that we will be able to secure additional financing when needed, or if available, that it will be sufficient to meet our needs or on favorable terms.

Previous wording

On April 11, 2024, the Company received a letter from the Listing Qualifications staff of Nasdaq notifying the Company that based on the financial statements contained in its Form 10-K for the year-ended December 31, 2023, it no longer complies with the requirement under Nasdaq Listing Rule 5550(b)(1) to maintain a minimum of $2.5 million in stockholders’ equity for continued listing on the Nasdaq Capital Market (the “Equity Standard”) or the alternative requirements of having a market value of listed securities of $35.0 million or net income from continuing operations of $500,000 in the most recently completed fiscal year or two of the last three most recently completed fiscal years (the “Alternative Standards”) , and may be subject to delisting. The notification letter had no immediate effect on the Company’s listing on the Nasdaq Capital Market. Nasdaq provided the Company until May 13, 2024, to submit a plan to regain compliance with the Equity Standard (the “Compliance Plan”). The Company timely submitted a Compliance Plan to Nasdaq to regain compliance with the Equity Standard. While there is no certainty we will be granted additional time, we may receive a compliance period, typically of no more than 180 days, to regain compliance with the Equity Standard. As of March 31, 2024, we had a stockholders' equity of $2.7 million, which exceeds the minimum stockholders’ equity required under the Equity Standard. However, Nasdaq has discretion in determining compliance with the Equity Standard to consider the Company’s historic use of cash. If the Company fails to regain compliance with the Nasdaq continued listing standards, after any compliance period, if granted, Nasdaq will provide notice that the Company’s common stock will be subject to delisting. There can be no assurance that the Company will be able to regain or maintain compliance with the Equity Standard.

Current wording

On April 11, 2024, the Company received a letter from the Listing Qualifications staff of Nasdaq notifying the Company that based on the financial statements contained in its Form 10-K for the year-ended December 31, 2023, it no longer complies with the requirement under Nasdaq Listing Rule 5550(b)(1) to maintain a minimum of $2.5 million in stockholders’ equity for continued listing on the Nasdaq Capital Market (the “Equity Standard”) or the alternative requirements of having a market value of listed securities of $35.0 million or net income from continuing operations of $500,000 in the most recently completed fiscal year or two of the last three most recently completed fiscal years (the “Alternative Standards”) , and may be subject to delisting. The notification letter had no immediate effect on the Company’s listing on the Nasdaq Capital Market and the Company timely submitted a plan to regain compliance with the Equity Standard.

Previous wording

The Company initiated a randomized, placebo-controlled, multi-center phase 1/2a clinical study of pepinemab in AD, or the SIGNAL-AD trial, in 2021. In December 2019, we announced a funding grant of $750,000 from the Alzheimer’s Association and an award in the form of investment in our common stock of up to $3 million from the Alzheimer’s Drug Discovery Foundation, each in support of SIGNAL-AD. On March 28, 2024, we entered into a second agreement with Alzheimer’s Drug Discovery Foundation pursuant to which we sold shares of a newly designated series of convertible preferred stock, our Series A Preferred Stock, and warrants to purchase up to 229,057 shares of our common stock for an aggregate purchase price of $1.75 million. This trial is based on evidence from the SIGNAL clinical trial in HD that showed treatment with pepinemab reduced cognitive decline and induced a sharp increase in glucose metabolism in the brain during HD disease progression as detected by conventional FDG-PET imaging. Previous studies in AD have shown that decline in glucose metabolism correlates with cognitive decline. In April 2023, we reached our enrollment target for the Phase 1b/2 SIGNAL-AD study evaluating pepinemab as a potential treatment for people with mild dementia due to AD. On April 25, the Company provided an update regarding plans for analysis of biomarkers and clinical outcome measures during a presentation at 12th Annual Alzheimer’s & Parkinson’s Drug Development Summit. It is anticipated that all 50 participants will have completed 12-months of treatment by June 30, 2024, and SIGNAL-AD topline data will be reported in the third quarter of 2024.

Current wording

The Company initiated a randomized, placebo-controlled, multi-center phase 1/2a clinical study of pepinemab in AD, or the SIGNAL-AD trial, in 2021. In December 2019, we announced a funding grant of $750,000 from the Alzheimer’s Association and an award in the form of investment in our common stock of up to $3 million from the Alzheimer’s Drug Discovery Foundation, each in support of SIGNAL-AD. On March 28, 2024, we entered into a second agreement with Alzheimer’s Drug Discovery Foundation pursuant to which we sold shares of a newly designated series of convertible preferred stock, our Series A Preferred Stock, and warrants to purchase up to 229,057 shares of our common stock for an aggregate purchase price of $1.75 million. This trial is based on evidence from the SIGNAL clinical trial in HD that showed treatment with pepinemab reduced cognitive decline and induced a sharp increase in glucose metabolism in the brain during HD disease progression as detected by conventional FDG-PET imaging. Previous studies in AD have shown that decline in glucose metabolism correlates with cognitive decline. In April 2023, we reached our enrollment target for the Phase 1b/2 SIGNAL-AD study evaluating pepinemab as a potential treatment for people with Mild Cognitive Impairment (MCI) or mild dementia due to AD. On April 25, the Company provided an update regarding plans for analysis of biomarkers and clinical outcome measures during a presentation at 12th Annual Alzheimer’s & Parkinson’s Drug Development Summit. All 50 participants have completed 12-months of treatment on June 30, 2024, and SIGNAL-AD topline data was reported by Eric Siemers, MD, Principal Investigator of the SIGNAL-AD trial at the Alzheimer's Association International Conference in Philadelphia on July 31, 2024.

Previous wording

To date, we have not generated any revenue from sales of our product candidates. The Company recorded service revenue of $104,000 and $50,000 during the three months ended March 31, 2024 and 2023, respectively, and $500,000 in revenue during the three months ended March 31, 2023 from our collaboration agreement with Surface Oncology.

Current wording

To date, we have not generated any revenue from sales of our product candidates. The Company recorded service revenue of $232,050 and $50,000 during the three months ended June 30, 2024 and 2023, respectively, and

Previous wording

SIGNAL clinical trial in HD that showed treatment with pepinemab reduced cognitive decline and induced a sharp increase in glucose metabolism in the brain during HD disease progression as detected by conventional FDG-PET imaging. Previous studies in AD have shown that decline in glucose metabolism correlates with cognitive decline. In April 2023, we reached our enrollment target for the Phase 1b/2 SIGNAL-AD study evaluating pepinemab as a potential treatment for people with mild dementia due to AD. It is anticipated that all 50 participants will have completed 12-months of treatment by June 30, 2024, and SIGNAL-AD topline data will be reported in the third quarter of 2024.

Current wording

Alzheimer’s Disease. We initiated a randomized, placebo-controlled, multi-center phase 1/2a clinical study of pepinemab in AD, or the SIGNAL-AD trial, in 2021. This trial is based on evidence from the SIGNAL clinical trial in HD that showed treatment with pepinemab reduced cognitive decline and induced a sharp increase in glucose metabolism in the brain during HD disease progression as detected by conventional FDG-PET imaging. Previous studies in AD have shown that decline in glucose metabolism correlates with cognitive decline. In April 2023, we reached our enrollment target for the Phase 1b/2 SIGNAL-AD study evaluating pepinemab as a potential treatment for people with mild dementia due to AD. As of June 6, 2024, the last patient completed their last visit in the SIGNAL-AD Phase 1b/2 study of pepinemab treatment for Alzheimer’s disease. SIGNAL-AD topline data was reported by Eric Siemers, MD, Principal Investigator of the SIGNAL-AD trial at the Alzheimer's Association International Conference in Philadelphia on July 31, 2024.

Previous wording

Research and Development. Research and development expenses in the three months ended March 31, 2024 decreased by $0.43 million, or 11%, compared to the three months ended March 31, 2023.

Current wording

Research and Development. Research and development expenses in the three months ended June 30, 2024 decreased by $1.2 million, or 23%, compared to the three months ended June 30, 2023. The decrease was primarily attributable to the winding down of the SIGNAL-AD trial, a pause in enrollment for the head and neck cancer trial, and less drug manufacturing costs.

Previous wording

General and Administrative. General and administrative expenses consist primarily of the necessary costs associated with maintaining the Company’s daily operations and administration of the Company’s business. General and administrative expenses in the three months ended March 31, 2024 increased by $0.071 million, or 4%, compared to the three months ended March 31, 2023. This increase was attributable to increased legal and patent related services.

Current wording

General and Administrative. General and administrative expenses consist primarily of the necessary costs associated with maintaining the Company’s daily operations and administration of the Company’s business. General and administrative expenses in the six months ended June 30, 2024 increased by $0.1 million, or 4%, compared to the six months ended June 30, 2023.

Previous wording

To date, we have not generated any revenue from sales of our product candidates. Our recurring net losses and negative cash flows from operations raised substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our unaudited condensed financial statements. During the three months ended March 31, 2024 and the year-ended December 31, 2023, we have generated a limited amount of revenue through the achievement of contractually stated milestones as well as grants, and the performance of services from collaboration agreements, including through our ActivMAb platform. See Note 1 of our unaudited condensed financial statements. Since our inception in 2001, we have relied on public and private sales of equity and debt financing to fund our operations, in addition to capital contributions from noncontrolling interests and limited-service revenue from collaboration agreements.

Current wording

To date, we have not generated any revenue from sales of our product candidates. Our recurring net losses and negative cash flows from operations raised substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our unaudited condensed financial statements. During the six months ended June 30, 2024 and the year-ended December 31, 2023, we have generated a limited amount of revenue through the achievement of contractually stated milestones as well as grants, and the performance of services from collaboration agreements, including through our ActivMAb platform. See Note 1 of our unaudited condensed financial statements. Since our inception in 2001, we have relied on public and private sales of equity and debt financing to fund our operations, in addition to capital contributions from noncontrolling interests and limited-service revenue from collaboration agreements.

Previous wording

During the three months ended March 31, 2024, the Company sold 208 shares, of the Company’s common stock at a weighted average price per share of $10.30 through the Open Market Sale Agreement, for net proceeds of $2,077, respectively.

Current wording

During the six months ended June 30, 2024, the Company sold 208 shares of the Company’s common stock at a weighted average price per share of $10.30 through the Open Market Sale Agreement, for net proceeds of $2,077, respectively.

Previous wording

Additionally, during the three months ended March 31, 2024 the Company received aggregate gross proceeds of approximately $6.1 million from (i) private placements of 433,865 shares of common stock, 90,363 pre-funded warrants and 717,228 warrants to purchase shares of common stock, and (ii) a public offering of 193,000 shares of common stock.

Current wording

Additionally, during the six months ended June 30, 2024 the Company received aggregate gross proceeds of approximately $7.9 million from (i) private placements of 433,865 shares of common stock, 90,363 pre-funded warrants and 717,228 warrants to purchase shares of common stock (ii) a public offering of 193,000 shares of common stock, and (iii) sale of 10 shares of our Series A Preferred Stock, and warrants to purchase up to 229,057 shares of our common stock.

Previous wording

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party research services and amounts due to vendors for research supplies. As of March 31, 2024 and December 31, 2023, our principal source of liquidity was cash and cash equivalents in the amount of $3.0 million and $1.5 million, respectively. Given our projected operating requirements, our existing cash and cash equivalents and marketable securities, we will seek to complete an additional financing transaction or transactions in order to continue operations.

Current wording

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party research services and amounts due to vendors for research supplies. As of June 30, 2024 and December 31, 2023, our principal source of liquidity was cash and cash equivalents in the amount of $0.2 million and $1.5 million, respectively. Given our projected operating requirements, our existing cash and cash equivalents and marketable securities, we will seek to complete an additional financing transaction or transactions in order to continue operations.

Previous wording

Since our inception in 2001, we have incurred significant net losses and negative cash flows from operations. For the three months ended March 31, 2024 and 2023, we reported a net loss of $3.9 million and $5.0 million, respectively. For the three months ended March 31, 2024 and 2023, we reported cash used in operations of $4.6 million and $5.0 million, respectively. As of March 31, 2024 and December 31, 2023, we had an accumulated deficit of $343.8 million and $339.9 million, respectively. We anticipate that we will continue to generate losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, our product candidates. We are subject to risks associated with the development of new biopharmaceutical products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors, which may adversely affect our business.

Current wording

Since our inception in 2001, we have incurred significant net losses and negative cash flows from operations. For the six months ended June 30, 2024 and 2023, we reported a net loss of $9.5 million and $12.0 million, respectively. For the six months ended June 30, 2024 and 2023, we reported cash used in operations of $9.0 million and $10.5 million, respectively. As of June 30, 2024 and December 31, 2023, we had an accumulated deficit of $349.5 million and $339.9 million, respectively. We anticipate that we will continue to generate losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, our product candidates. We are subject to risks associated with the development of new biopharmaceutical products, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors, which may adversely affect our business.

Previous wording

Our recurring net losses and negative cash flows from operations, as well as forecast of continued losses and negative cash flows from operations, raised substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our financial statements for the year ended December 31, 2023. Until we can generate a sufficient amount of revenue from the commercialization of our product candidates, we expect to finance our operations through the public or private sale of equity, debt financing, or other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties. Our cash and cash equivalents were $3.0 million and total current assets were $7.15 million at March 31, 2024, which the Company is projecting will be insufficient to sustain its operations through one year following the date that the financial statements are issued. Please see Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q for a description of our capital raising activities in the first quarter of 2024.

Current wording

Our recurring net losses and negative cash flows from operations, as well as forecast of continued losses and negative cash flows from operations, raised substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our financial statements for the year ended December 31, 2023. Until we can generate a sufficient amount of revenue from the commercialization of our product candidates, we expect to finance our operations through the public or private sale of equity, debt financing, or other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties. Our cash and cash equivalents were $0.2 million and total current assets were $2.2 million at June 30, 2024, which the Company is projecting will be insufficient to sustain its operations through one year following the date that the financial statements are issued.

Previous wording

During the three months ended March 31, 2024 and 2023, operating activities used $4.6 million and $5.0 million, respectively, in cash, primarily as a result of our continued efforts of discovery and development of targeted biotherapeutics to treat serious diseases and conditions with unmet medical needs without any product revenue, resulting in a net loss of $3.9 million and $5.0 million, respectively.

Current wording

During the six months ended June 30, 2024 and 2023, operating activities used $9.0 million and $10.5 million, respectively, in cash, primarily as a result of our continued efforts of discovery and development of targeted biotherapeutics to treat serious diseases and conditions with unmet medical needs without any product revenue, resulting in a net loss of $9.5 million and $12.0 million, respectively.

Previous wording

Investing Activities. The investing activities during the three months ended March 31, 2024 and 2023, were due to purchases of property and equipment.

Current wording

Investing Activities. The investing activities during the six months ended June 30, 2024 and 2023, were due to purchases of property and equipment.

Previous wording

Financing Activities. During the three months ended March 31, 2024, financing activities provided $6.1 million, from the private placement of common stock and pre-funded warrants, with accompanying warrants; the public offering of common stock and private placement of accompanying warrants. During the three months ended March 31, 2023, financing activities provided $2.0 million, from the private placement of common stock.

Current wording

Financing Activities. During the six months ended June 30, 2024, financing activities provided $7.8 million, from the private placement of common stock and pre-funded warrants, with accompanying warrants; the public offering of common stock and private placement of accompanying warrants, and the sale of Series A Preferred Stock and accompanying warrants. During the six months ended June 30, 2023, financing activities provided a net of $6.1 million, of which $5.0 million was due to private placements of common stock, $1.0 million through an award from the Alzheimer’s Drug Discovery Foundation in the form of an investment in our common stock, and $0.1 million was due to the issuance of the Company’s common stock pursuant to the Open Market Sale Agreement.

Previous wording

There have been no material changes to our critical accounting policies and significant judgments during the three months ended March 31, 2024, other than those discussed in Note 2 of our unaudited condensed financial statements as of and for the three months ended March 31, 2024, included elsewhere in this quarterly report on Form 10-Q.

Current wording

There have been no material changes to our critical accounting policies and significant judgments during the six months ended June 30, 2024, other than those discussed in Note 2 of our unaudited condensed financial statements as of and for the six months ended June 30, 2024, included elsewhere in this quarterly report on Form 10-Q.