Processa Pharmaceuticals, Inc.

Previous wording

We are a clinical-stage biopharmaceutical company developing a pipeline of Next Generation Cancer therapy (“NGC”) small molecules, two of which are in, or have completed, Phase 2 trials, and one is in pre-clinical development. Our risk-mitigated strategy is to identify existing cancer therapies where the mechanism of action is well understood and that are cornerstones of current treatment regimens, but are highly toxic, with side effects that are often treatment limiting. We devise technologies to change the way the body metabolizes them, or the way they are distributed within the body, to improve the therapeutic effect and reduce toxicity. We then efficiently develop our pipeline of Next Generation Cancer therapies utilizing our proprietary Regulatory Science Approach, which we believe will further increase the likelihood of regulatory approval. Since the underlying active metabolites of these drugs are already commonly used in cancer therapy, we believe that if our clinical trials are successful and are showing better efficacy and tolerability than the currently used drugs, the commercial adoption for our NGC therapies will be rapid and broad.

Current wording

We are a clinical-stage biopharmaceutical company developing a pipeline of Next Generation Cancer therapy (“NGC”) small molecules, one of which is currently in a Phase 2 trial, while the other is in pre-clinical development. Our risk-mitigated strategy is to identify existing cancer therapies where the mechanism of action is well understood and that are cornerstones of current treatment regimens, but are highly toxic, with side effects that are often treatment limiting. We devise technologies to change the way the body metabolizes them, or the way they are distributed within the body, to improve the therapeutic effect and reduce toxicity. We then efficiently develop our pipeline of Next Generation Cancer therapies utilizing our proprietary Regulatory Science Approach, which we believe will further increase the likelihood of regulatory approval. Since the underlying active metabolites of these drugs are already commonly used in cancer therapy, we believe that if our clinical trials are successful and are showing better efficacy and tolerability than the currently used drugs, the commercial adoption for our NGC therapies will be rapid and broad.

Previous wording

Our oncology pipeline currently consists of NGC-Cap, NGC-Gem and NGC-Iri (also identified as PCS6422, PCS3117, and PCS11T, respectively) and two non-oncology drugs (PCS12852 and PCS499). We are exploring options for our non-oncology drugs, which may include out-licensing or partnership opportunities. The current status of our drug pipeline is set forth below:

Current wording

Our oncology pipeline currently consists of NGC-Cap and NGC-Iri (also identified as PCS6422 and PCS11T, respectively) and two non-oncology drugs (PCS12852 and PCS499). We are exploring options for our non-oncology drugs, which may include out-licensing or partnership opportunities. The current status of our drug pipeline is set forth below:

Previous wording

Over the last six months since the first patient was dosed in the NGC-Cap Phase 2 advanced or metastatic breast cancer trial, the study has been actively adding more U.S. clinical study sites while screening and enrolling more patients. We plan to obtain preliminary safety-efficacy data in these breast cancer patients in order to provide insight into the benefit of this treatment over existing treatments. This preliminary data should provide information that could also help to adaptively modify the protocol to increase the efficiency and/or improve the information obtained from the study.

Current wording

Over the last nine months since the first patient was dosed in the NGC-Cap Phase 2 advanced or metastatic breast cancer trial, the study has been actively adding additional U.S. clinical study sites and screening and enrolling more patients. We plan to obtain preliminary safety-efficacy data from these breast cancer patients in order to provide insight into the benefit of NGC-Cap over existing treatments. This preliminary data should provide information that could also help to adaptively modify the protocol to increase the efficiency and/or improve the information obtained from the study.

Previous wording

In addition, since FDA now accepts surrogate endpoints for nephrology diseases such as primary glomerular diseases (PGDs), we have more recently begun to re-evaluate the potential clinical safety and efficacy of PCS499 in PGDs. These analyses have been based on PCS499 and pentoxifylline (PTX) safety-efficacy in diabetic nephropathy and, for PTX, in primary glomerular diseases. PTX is a generic drug with similar pharmacological properties to PCS499 and is approved for the treatment of patients with intermittent claudication. The data suggests that PCS499 may not only be safer, but also more efficacious in more patients than PTX or other drugs presently used on- and off-label for PGDs. We have been designing a drug development strategy and program to obtain approval of PCS499 in rare PGDs while demonstrating the benefit of PCS499 over all other treatments.

Current wording

Since FDA now accepts surrogate endpoints for nephrology diseases, such as primary glomerular diseases (PGDs), we have recently begun to re-evaluate the potential clinical safety and efficacy of PCS499 in PGDs. These analyses have been based on PCS499 and pentoxifylline (PTX) safety-efficacy in diabetic nephropathy and, for PTX, in primary glomerular diseases. PTX is a generic drug with similar pharmacological properties to PCS499 and is approved for the treatment of patients with intermittent claudication. The data suggests that PCS499 may not only be safer, but also more efficacious in more patients than PTX or other drugs presently used on- and off-label for PGDs.

Previous wording

On January 27, 2025, we raised net proceeds in a public offering of $4.4 million from the sale of 1,030,972 shares of our common stock, pre-funded warrants to purchase up to 7,019,700 shares of our common stock, accompanying Series A warrants to purchase up to 8,050,672 shares of our common stock and Series B warrants to purchase up to 4,025,336 shares of common stock, as described in Note 2. Since the Offering closed, all pre-funded warrants were exercised. We plan to use the net proceeds from this financing for continued research and development for NCG-Cap, and for working capital and general corporate purposes.

Current wording

As described in Note 2, during the six months ended June 30, 2025, we raised net proceeds of $10.6 million from the January and June POs. We sold a cumulative 15,340,972 shares of common stock, pre-funded warrants to purchase up to 20,709,700 shares of common stock, accompanying Series A Warrants to purchase up to 8,050,672 shares of our common stock and Series B Warrants to purchase up to 4,025,336 shares of common stock in the January PO and common accompanying warrants to purchase up to 28,000,000 shares of common stock in the June PO. During the six months ended June 30, 2025, all pre-funded warrants were exercised.

Previous wording

Comparison of the three months ended March 31, 2025 and 2024

Current wording

Comparison of the three and six months ended June 30, 2025 and 2024

Previous wording

The slight increase in research and development expenses was primarily due to an increase in preclinical, clinical trial and other costs for our Phase 1B and Phase 2 clinical trials for NGC-Cap during the three months ended March 31, 2025 when compared to the same period in 2024. During the same period in 2024, we were only incurring costs related to the Phase 1B trial for NGC-Cap. The increase was offset by a decrease in salaries and benefits from the voluntary departures of research and development employees since March 2024.

Current wording

The increase in research and development expenses was due to an increase in preclinical, clinical trial and other costs for our Phase 1B and Phase 2 clinical trials for NGC-Cap during the three and six months ended June 30, 2025 when compared to the same period in 2024. During the same period in 2024, the majority of the costs incurred were related to our Phase 1B trial for NGC-Cap, as well as the IND/initiation of our Phase 2 trial for NGC-Cap. The increase was offset by a decrease in salaries and benefits from the voluntary departures of research and development employees since March 2024.

Previous wording

We estimate preclinical and clinical trial expenses based on the services performed, pursuant to contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on our behalf. In accruing service fees, we estimate the time period over which services will be performed and the level of patient enrollment and activity expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we will adjust the accrual accordingly. Payments made to third parties under these arrangements in advance of the receipt of the related services are recorded as prepaid expenses and expensed when the services are rendered.

Current wording

We estimate preclinical and clinical trial expenses based on the services performed, pursuant to contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on our behalf. In accruing service fees, we estimate the period over which services will be performed and the level of patient enrollment and activity expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we will adjust the accrual accordingly. Payments made to third parties under these arrangements in advance of the receipt of the related services are recorded as prepaid expenses and expensed when the services are rendered.

Previous wording

Our general and administrative expenses for the three months ended March 31, 2025 decreased by approximately $12,000 to $1,258,450 from $1,270,528 for the three months ended March 31, 2024. This decrease was due primarily to decreases in professional fees of approximately $151,000; office expenses of approximately $11,000; repairs and maintenance of approximately $9,000; and insurance of $6,000. The decreases were offset by increases in salaries and other-payroll related costs of $77,000, primarily due to salary increases to our C-suite executives; an increase in employee stock-based compensation of $84,000 since our 2024 stock grant was contingent on receiving stockholder approval to increase the number of shares available for issuance under our Incentive Plan, so we did not recognize any expense related to that grant during the first quarter of 2024; and taxes and other miscellaneous office expenses of $9,000. We received approximately $6,000 more in reimbursements from CorLyst during the three months ended March 31, 2025 when compared to the same period in 2024.

Current wording

Our general and administrative expenses for the three months ended June 30, 2025 increased by approximately $152,000 to $1.5 million from $1.4 million for the three months ended June 30, 2024. This increase was due primarily to increases in salaries and other-payroll related costs of $105,000, primarily due to salary increases to our C-suite executives; an increase in employee stock-based compensation of $82,000 (our 2024 stock grant was contingent on receiving stockholder approval to increase the number of shares available for issuance under our Incentive Plan, so we did not recognize any expense related to grants made during the first quarter of 2024 and awards that were previously not probable of occurring that vested in 2025); and net increases in taxes and other miscellaneous office expenses of $24,000. The increases were offset by decreases in office expenses of $32,000; professional fees of $19,000 and travel expenses of $4,000. We received approximately $4,000 more in reimbursements from CorLyst during the three months ended June 30, 2025 when compared to the same period in 2024.

Previous wording

We did not recognize any income tax benefit for the three months ended March 31, 2025 or 2024.

Current wording

We did not recognize any income tax benefit for the three or six months ended June 30, 2025 or 2024.

Previous wording

The following table sets forth our sources and uses of cash and cash equivalents for the three months ended March 31, 2025 and 2024:

Current wording

The following table sets forth our sources and uses of cash and cash equivalents for the six months ended June 30, 2025 and 2024:

Previous wording

As we continue our development of NGC-Cap and evaluate the other NGC drugs in our portfolio, we anticipate our research and development efforts and ongoing general and administrative costs will continue to generate negative cash flows from operating activities for the foreseeable future. As we continue our Phase 2 clinical trial for NGC-Cap in 2025, we anticipate our clinical trial costs will increase when compared to prior periods since activities in 2024 were primarily related to the completion of our Phase 1B trial and setup of our Phase 2 trial for NGC-Cap.

Current wording

As we continue our development of NGC-Cap and evaluate the other NGC drug in our portfolio, we anticipate our research and development efforts and ongoing general and administrative costs will continue to generate negative cash flows from operating activities for the foreseeable future. As we continue our Phase 2 clinical trial for NGC-Cap in 2025, we anticipate our clinical trial costs will increase when compared to prior periods since activities in 2024 were primarily related to the completion of our Phase 1B trial and setup of our Phase 2 trial for NGC-Cap.

Previous wording

During the three months ended March 31, 2025, as described in Note 2, we sold 1,030,972 shares of common stock; Pre-Funded Warrants to purchase up to 7,019,700 shares of common stock in lieu of shares of common stock; andaccompanying Series A warrants to purchase up to 8,050,672 shares of our common stock and Series B warrants to purchase up to 4,025,336 shares of common stock(which are subject to stockholder approval), pursuant to a public offering for net proceeds of $4.4 million. We also used cash classified as financing activities of $1,439 to pay income taxes owed on stock-based compensation, and $1,536 for payments owed under a financing lease obligation.

Current wording

During the six months ended June 30, 2025, as described in Note 2, we solda cumulative 15,340,972 shares of common stock, pre-funded warrants to purchase up to 20,709,700 shares of common stock, accompanying Series A Warrants to purchase up to 8,050,672 shares of our common stock and Series B Warrants to purchase up to 4,025,336 shares of common stock in the January PO and common accompanying warrants to purchase up to 28,000,000 shares of common stock in the June PO. We also received $100,000 from the exercise of warrants to purchase 400,000 shares of common stock sold in the June PO. We used cash classified as financing activities of approximately $10,000 to pay income taxes owed on stock-based compensation, and $3,000 for payments owed under a financing lease obligation.

Previous wording

During the three months ended March 31, 2024, we sold 476,000 shares of common stock, pre-funded warrants to purchase up to 1,079,555 shares of common stock in lieu of shares of common stock, all of which were exercised into shares of our common stock, and warrants to purchase up to 1,555,555 shares of our common stock pursuant to a public offering for net proceeds of $6.3 million. We also used cash classified as financing activities of $9,924 to pay income taxes owed on stock-based compensation, $8,561 for the settlement of a stock award and $895 for payments owed under a financing lease obligation.

Current wording

During the six months ended June 30, 2024, we sold 476,000 shares of common stock, pre-funded warrants to purchase up to 1,079,555 shares of common stock in lieu of shares of common stock, all of which were exercised into shares of our common stock, and warrants to purchase up to 1,555,555 shares of our common stock pursuant to a public offering for net proceeds of $6.3 million. We also used cash classified as financing activities of $12,000 to pay income taxes owed on stock-based compensation, $8,600 for the settlement of a stock award and $2,300 for payments owed under a financing lease obligation.

Previous wording

At March 31, 2025, we had cash and cash equivalents totaling $2.9 million which, based on our current business plans, we believe will satisfy our capital needs into mid-2025. However, absent additional funding, our current cash and cash equivalents will not be sufficient to fund our planned operations for a period of one year or more after the date that these condensed consolidated financial statements were available to be issued based on the timing and amount of our projected net loss from continuing operations and the related amount of cash to be used in operating activities during that period of time. Our ability to execute our longer-term operating plans, including future preclinical studies and clinical trials for our portfolio of drugs depend on our ability to obtain additional funding from the sale of equity and/or debt securities, a strategic transaction or other funding transactions.

Current wording

At June 30, 2025, we had cash and cash equivalents totaling $6.9 million. Based on our current business plans, we believe these funds, together with the $2.4 million in gross proceeds we receivedin August 2025, will satisfy our capital needs into the first quarter of 2026. However, absent additional funding, our current cash and cash equivalents will not be sufficient to fund our planned operations for a period of one year or more after the date that these condensed consolidated financial statements were available to be issued based on the timing and amount of our projected net loss from continuing operations and the related amount of cash to be used in operating activities during that period of time. Our ability to execute our longer-term operating plans, including future preclinical studies and clinical trials for our portfolio of drugs depend on our ability to obtain additional funding from the sale of equity and/or debt securities, a strategic transaction or other funding transactions.

Previous wording

We have incurred losses since inception, currently devoting substantially all our efforts toward research and development of our next generation chemotherapy drug product candidates, including conducting clinical trials and providing general and administrative support for these operations, and have an accumulated deficit of $90.1 million at March 31, 2025. During the three months ended March 31, 2025, we generated a net loss of $2.8 million and used $2.7 million in net cash for operating activities from continuing operations. To date, none of our drug candidates have been approved for sale, and therefore we have not generated any product revenue and do not expect positive cash flow from operations in the foreseeable future. We will continue to be dependent upon equity and/or debt financing until we are able to generate positive cash flows from its operations.

Current wording

We have incurred losses since inception, currently devoting substantially all our efforts toward research and development of our next generation cancer therapy drug product candidates, including conducting clinical trials and providing general and administrative support for these operations, and have an accumulated deficit of $94.0 million at June 30, 2025. During the six months ended June 30, 2025, we generated a net loss of $6.8 million and used $5.0 million in net cash for operating activities from continuing operations. To date, none of our drug candidates have been approved for sale, and therefore we have not generated any product revenue and do not expect positive cash flow from operations in the foreseeable future. We will continue to be dependent upon equity and/or debt financing until we are able to generate positive cash flows from its operations.

Previous wording

On January 27, 2025, we sold 1,030,972 shares of our common stock, pre-funded warrants to purchase up to 7,019,700 shares of our common stock, andaccompanying Series A warrants to purchase up to 8,050,672 shares of our common stock and Series B warrants to purchase up to 4,025,336 shares of common stockfor net proceeds of $4.4 million, after deducting placement agent fees and offering-related expenses.

Current wording

On January 29, 2025, we sold 1,030,972 shares of common stock, pre-funded warrants to purchase up to 7,019,700 shares of common stock, andaccompanying Series A Warrants to purchase up to 8,050,672 shares of our common stock and Series B Warrants to purchase up to 4,025,336 shares of common stockfor net proceeds of $4.4 million, after deducting placement agent fees and offering-related expenses. On June 18, 2025, we sold 14,310,000 shares of common stock, pre-funded warrants to purchase up to 13,690,000 shares of common stock, and accompanying common warrants to purchase up to 28,000,000 shares of common stock for net proceeds of $6.2 million, after deducting placement agent fees and offering-related expenses. On August 4, 2025, we entered into a Securities Purchase Agreement with an accredited investor and sold 5,467,181 shares for $1.3 million in gross proceeds. We also sold 4,597,612 shares for $1.1 million in gross proceeds under our ATM agreement. Following these investments, we are exploring options to pursue a cryptocurrency treasury strategy.