Processa Pharmaceuticals, Inc.
For the period ended Dec 31, 2024. Filed Mar 20, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 20, 2025
PCSA$1.93+4.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-29.
0001493152-24-011976
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-20.
0001641172-25-000070
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 78 previous paragraphs and 69 current paragraphs.
45 unchanged; 15 reworded; 9 added; 18 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
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 (see Our Strategy above). 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 (see Regulatory Science Approach above), which we believe will further increase the likelihood of regulatory approval. Since the underlying 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 report
Next Generation Cancer Therapy Pipeline
Current report
(see Our Drug Pipeline above for a more detailed discussion of our NGC programs)
Current report
Other Drugs in Our Pipeline
Current report
PCS12852 is a highly specific and potent 5HT4 agonist that is Phase 2B ready as potentially the first meaningful treatment for diabetic gastroparesis patients. Gastroparesis is a chronic digestive disorder characterized by delayed gastric emptying of solid food without obstruction. Gastroparesis symptoms include: nausea, vomiting, postprandial fullness, early satiety, abdominal pain, heartburn and poor appetite. Global prevalence of gastroparesis is over 30 million, with a diabetic population of over 8 million. We have completed a Phase 2A trial for PCS12852 in gastroparesis patients with positive results. We are exploring options for PCS12852, which may include licensing, partnering and/or collaborating opportunities.
Current report
PCS499 is a drug that can be used to treat unmet medical need conditions caused by multiple pathophysiological changes. We are presently defining the development plan for the use of PCS499 in a primary glomerular disease. We believe that PCS499 could be successfully developed in a primary glomerular disease such as focal segmental glomerulosclerosis, or FSGS, and IgA. We intend to design a development program with the next study being an adaptive designed Phase 3 trial, meet with the FDA, and then find a partner to take the drug to approval.
Current report
ATM Offering
Current report
In May 2024, we filed with the SEC a registration statement on Form S-3 (Registration No. 333-279588) (the “Registration Statement”), including a base prospectus relating to the offering of up to $50,000,000 in the aggregate of the securities identified in the base prospectus from time to time in one or more offerings; and a prospectus supplement relating to the shares of our common stock that may be issued and sold under a sales agreement dated May 21, 2024 (the “Sales Agreement”) between us and A.G.P./Alliance Global Partners (the “Sales Agent”), through which we may issue and sell in a registered “at the market offering” shares of our common stock having an aggregate offering price of up to $2.4 million (subject to adjustment) from time to time through or to our Sales Agent (the “ATM Offering”). We expect to use net proceeds, if any, from the ATM Offering over time for continued research and development for our portfolio of drug candidates, especially our oncology products, and working capital and general corporate purposes. The shares under the ATM Offering will be sold and issued pursuant to the Registration Statement. During the year ended December 31, 2024, we received $1.5 million in net proceeds from the sale of 800,994 shares of common stock under the ATM Offering, of which 426,804 shares of common stock were sold during the quarter ended December 31, 2024 for net proceeds of approximately $575,000.
Current report
At December 31, 2024, we had $1.2 million in cash and cash equivalents. On January 27, 2025, we closed a public offering where we sold 1,030,972 shares of our common stock, and/or 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 (the “Series A Warrants”) and Series B warrants to purchase up to 4,025,336 shares of our common stock (the “Series B Warrants” and collectively with the Series A Warrants, the “Common Warrants”) for net proceeds of $4.5 million, after deducting placement agent fees and offering-related expenses (see Note 14 to the Consolidated Financial Statements for additional details). On January 30, 2025, pre-funded warrants to purchase 525,700 shares of our common stock were exercised. As of March 12, 2025, pre-funded warrants for the purchase of 6,494,000 remain outstanding.
Removed paragraphs (18)
Previous report
We are a clinical-stage biopharmaceutical company focused on utilizing our “regulatory science” approach, including the principles associated with FDA’s Project Optimus Oncology initiative and the related FDA Draft Guidance, in the development of Next Generation Chemotherapy (“NGC”) oncology drug products. Our mission is to provide better treatment options than those that presently exist by extending a patient’s survival and/or improving a patient’s quality of life. This is achieved by improving upon FDA-approved, widely used oncology drugs or the cancer-killing metabolites of these drugs by altering how they are metabolized and/or distributed in the body, including how they are distributed to the actual cancer cells.
Previous report
Our regulatory science approach was conceived in the early 1990s when the founders of Processa and other faculty at the University of Maryland worked with the FDA to develop multiple FDA Guidances. Regulatory science is the science of developing new tools, standards, and approaches to assess the safety, efficacy, quality, and performance of all FDA-regulated products. Over the last 30 years, two of our founders, Dr. David Young and Dr. Sian Bigora, have expanded the original regulatory science concept by including the pre-clinical and clinical studies to justify the benefit-risk assessment required for FDA approval when designing the development programs of new drug products.
Previous report
Our regulatory science approach defines the scientific information that the FDA requires to determine if the benefit outweighs the risk of a drug in a specific population of patients and at a specific dosage regimen for a specific drug product. The studies are designed to obtain the necessary scientific information to support the regulatory decision.
Previous report
Recently, the FDA has taken steps to define some of the regulatory science required for the FDA approval of oncology products. Through the FDA’s Project Optimus Oncology Initiative and the related Draft Guidance on determining the “optimal” dosage regimen for an oncology drug, the FDA has chosen to make the development of oncology drugs more science-based than in the past. Since the principles of the FDA’s Project Optimus and the related Draft Guidance have been used by our regulatory science approach in a number of non-oncology drugs in the past, our experience with the principles of Project Optimus differentiates us from other biotechnology companies by focusing us not only on the clinical science, but also on the equally important regulatory process. We believe utilizing our regulatory science approach provides us with three distinct advantages:
Previous report
Our strategic prioritization is to advance our pipeline of NGC proprietary small molecule oncology drugs. The NGC products are new chemical entities, but they work by changing the metabolism, distribution and/or elimination of already FDA-approved cancer drugs or their active metabolites while maintaining the mechanism of how the drug kills cancer cells. We believe our NGC treatments will provide improved safety-efficacy profiles when compared to their currently marketed counterparts – capecitabine, gemcitabine, and irinotecan. All future studies of these drugs are subject to availability of capital to conduct the trials.
Previous report
The three NGC treatments in our pipeline are as follows:
Previous report
Historically, much of oncology drug development has searched for novel or different ways to treat cancer. Our approach is to take three current FDA-approved cancer drugs, e.g. capecitabine, gemcitabine and irinotecan, and modify and improve how the human body metabolizes and/or distributes these NGC treatments compared to their presently approved counterpart chemotherapy drugs while maintaining the cancer-killing mechanism of action; thus, our reason for calling our drugs Next Generation Chemotherapy (or NGC) treatments. Part of the development includes determining the optimal dosage regimen based on the dose-response relationship as described in the FDA’s Project Optimus Initiative and Draft Optimal Dosage Regimen Oncology Guidance. To date, we have data that we believe suggests our NGC treatments are likely to have a better safety-efficacy profile than the current widely used marketed counterpart drugs, not only potentially making the development and approval process more efficient, but also clearly differentiating our NGC treatments from the existing treatment. We believe our NGC treatments have the potential to extend the survival and/or quality of life for more patients diagnosed with cancer while decreasing the number of patients who are required to dose-adjust or discontinue treatment because of side effects or lack of response.
Previous report
In 2023, we completed our Phase 2A trial for PCS12852 in gastroparesis patients with positive results. Additionally, in February 2023, due primarily to the inability to identify and enroll patients in our rare disease Phase 2 trial for PCS499 in ulcerative Necrobiosis Lipoidica (uNL), we decided to cease further enrollment in the PCS499 trial and terminated the trial. We did not experience any safety concerns during the conduct of either the PCS12852 or PCS499 trial. We continue to evaluate options to monetize these non-core drug assets, which may include out-licensing or partnering these assets with one or more third parties.
Previous report
Reverse Stock Split
Previous report
On January 22, 2024, we effected a 1-for-20 reverse stock split, reducing the number of our common shares issued on that date from 24,706,474 shares to 1,291,000 shares. There is no corresponding reduction in the number of authorized shares of common stock and no change in the par value per share. All share and per share amounts and conversion and exercise prices presented herein have been adjusted retroactively to reflect this change.
Previous report
During the year ended December 31, 2022, we amended the third Milestone Event of our License Agreement with Elion changing the third Milestone Event. As a result, we recorded research and development expense and a related liability of $189,000, which represents the value of the 5,000 shares of our common stock we issued to Elion in 2024 in satisfaction of the third Milestone Event (as modified) at the fair value on the date of modification.
Previous report
On January 30, 2024, we raised net proceeds of $6.3 million, which we intend to use for continued research and development for NCG-Cap and for working capital. We are also incurring costs in preparation for our planned Phase 2 trial for NGC-Cap, including the cost of having drug product manufactured and other pre-trial tasks, as well as costs we may incur in connection with the submission of any Phase 2B protocol for NGC-Gem. In early 2025, we will need to raise additional capital to fund our operations and continue our planned development of our NGC drugs.
Previous report
Impairment of Intangible Asset.
Previous report
Our gross intangible assets consisted primarily of costs we capitalized related to the acquisition of license rights to PCS499 from CoNCERT Pharmaceuticals. Inc. (“CoNCERT”) for shares of our common stock. We capitalized $8.0 million, which was the fair value of the common stock we issued to CoNCERT when we acquired the license rights to PCS499 on March 19, 2018.
Previous report
We review amounts previously capitalized for impairment whenever events or changes in circumstances indicate to us that the carrying value of the assets might not be recoverable. In May 2021, we enrolled our first patient in our Phase 2B trial for the treatment of ulcerative NL with PCS499. Although we initiated a number of recruitment programs to increase the enrollment of patients in this study, we were only able to recruit four patients by December 31, 2022. We experienced extremely slow enrollment in the study given the extreme rarity of the condition (rarer than reported in the literature), the impact of COVID-19, and the reluctance of patients to be in a clinical study. As a result, we terminated the trial early. At December 31, 2022, as a result of our decision to halt future enrollment and terminate our PCS499 clinical trial for ulcerative necrobiosis lipoidica, we recognized an impairment of the remaining book value of the intangible asset of $7.3 million, thereby reducing the value of our intangible asset to zero. Our assessment was based on the uncertainty of determining whether we will be able to out-license PCS499 or enter into a partnering/collaborating arrangement for its future development.
Previous report
At December 31, 2023, we had $4.7 million in cash and cash equivalents and raised an additional $6.3 million net proceeds in January 2024. On January 30, 2024, we sold, pursuant to securities purchase agreements (the “Purchase Agreement”), 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 (the “Pre-Funded Warrants”), and warrants to purchase up to 1,555,555 shares of our common stock (the “Common Warrants’) pursuant to a public offering (the “Offering”). The Common Warrants have an exercise price of $4.50, are immediately exercisable and will remain exercisable until the date that is five years after their original issuance. The Shares were offered at a combined public offering price of $4.50 per share and accompanying Common Warrant and $4.4999 per Pre-Funded Warrant and accompanying Common Warrant. The Pre-Funded Warrants had an exercise price of $0.0001 and were exercised in full simultaneously with the closing of the Offering in exchange for 1,079,555 shares of our common stock. Gross proceeds in connection with the Offering were $7.0 million. We received $6.3 million in net proceeds from the Offering, after deducting the fees of the placement agent and other offering-related expenses. We also issued to the placement agent warrants to purchase 62,222 shares of common stock, exercisable at $5.625 per share that expire on February 1, 2027.
Previous report
Impairment of PCS499 In-process Research and Development Asset
Previous report
In February 2023, we suspended further enrollment in our PCS499 trial for uNL due to difficulties we encountered in enrolling the trial, along with our limited resources. In May 2021, we enrolled our first patient in our Phase 2B trial for the treatment of ulcerative NL with PCS499. Although we initiated a number of recruitment programs to increase the enrollment of patients in this study, we were only able to recruit four patients by December 31, 2022. We experienced extremely slow enrollment in the study given the extreme rarity of the condition (rarer than reported in the literature), the impact of COVID-19, and the reluctance of patients to be in a clinical study. We completed the study for those currently enrolled and halted further efforts to enroll new patients. As a result, we recognized a non-cash expense of $7.3 million as of December 31, 2022 related to the impairment of the intangible asset for PCS499. We originally recognized this intangible asset in conjunction with its acquisition from CoNCERT Pharmaceuticals, Inc. in 2018.
Reworded paragraphs (15)
Previous wording
Our shift in prioritization to NGC oncology drugs does not change our mission. We continue to be focused on drug products that improve the survival and/or quality of life for patients by improving the safety and/or efficacy of the drug in a targeted patient population, while providing a more efficient and probable path to FDA approval and differentiating our drugs from those on the market or are currently being developed.
Current wording
We are focused on drug products that improve the survival and/or quality of life for patients by improving the safety and/or efficacy of the drug in a targeted patient population, while providing a more efficient and probable path to FDA approval and differentiating our drugs from those on the market or are currently being developed.
Previous wording
On January 30, 2024, we raised gross proceeds of $7.0 million (net proceeds of $6.3 million) from the sale of 476,000 shares of our common stock, pre-funded warrants to purchase up to 1,079,555 shares of our common stock and warrants to purchase 1,555,555 shares of our common stock in a public offering, as described in Note 13. Simultaneously with the closing of the sale, the pre-funded warrants were exercised in exchange for 1,079,555 shares of our common stock. We plan to use the net proceeds from this financing for continued research and development for NCG-Cap, and working capital and general corporate purposes.
Current wording
On January 27, 2025, we raised gross proceeds in a public offering of $5.0 million (net proceeds of $4.5 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 14. Since the offering closed, pre-funded warrants were exercised in exchange for 525,700 shares of our common stock and, as of March 12, 2025, pre-funded warrants to purchase up to 6,494,000 shares of our common stock remain available to be 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.
Previous wording
Our research and development costs are expensed as incurred. Research and development expenses include (i) program and testing related expenses including external consulting and professional fees related to the product testing and our development activities and (ii) internal research and development staff related salaries and other payroll costs including stock-based compensation, payroll taxes and employee benefits. In 2022, we also had expenses related to the amortization of the exclusive PCS499 license intangible asset. Non-refundable advance payments for goods and services to be used in future research and development activities are recorded as prepaid expenses and expensed when the research and development activities are performed.
Current wording
Our research and development costs are expensed as incurred. Research and development expenses include (i) program and testing related expenses including external consulting and professional fees related to the product testing and our development activities and (ii) internal research and development staff related salaries and other payroll costs including stock-based compensation, payroll taxes and employee benefits.
Previous wording
During the year ended December 31, 2023, our research and development expenses decreased by $5.7 million to $5,799,518 when compared to $11,494,230 for the year ended December 31, 2022. The decrease in preclinical, clinical trial and other costs during 2023 when compared to 2022 was attributable to the completion of our clinical trial for PCS12852 and the early termination of our clinical trial for PCS499. Expenses include costs related to contract research organizations, regulatory filing and maintenance fees, drug product testing and stability, consulting, and other clinical fees. We also did not have any amortization expense in 2023, as we fully impaired our PCS499 intangible asset at December 31, 2022. In 2022, we had three active clinical trials and amortization expense for our intangible asset. We also experienced decreases in stock-based compensation of $2.5 million as a result of a reduction in stock awards granted. During 2023, we also experienced a decrease in salaries and related expenses of $29,000. While we have promoted and/or increased salary rates for some personnel, we have fewer full-time R&D employees in 2023 than 2022.
Current wording
During the year ended December 31, 2024, our research and development expenses increased by $1.5 million to $7.3 million when compared to $5.8 million for the year ended December 31, 2023. This was primarily attributable to an increase of approximately $2.0 million for ongoing testing and related expenses related to our Phase 1B trial for NGC-Cap and the IND/initiation of our Phase 2 trial for NGC-Cap. Expenses include costs related to contract research organizations, regulatory filing and maintenance fees, drug product testing and stability, consulting, and other clinical fees. The increase was offset by a $352,000 decrease in professional fees and in employee stock-based compensation of $195,000. While we have increased salary rates for some personnel, we had fewer full-time R&D employees in 2024 than 2023.
Previous wording
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 series are recorded as prepaid expenses until the services are rendered. At December 31, 2023, we have recorded $570,000 in prepaid expenses for advanced payments made to our CRO for our NGC-Cap clinical trial.
Current wording
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 series are recorded as prepaid expenses until the services are rendered. At December 31, 2024, we have recorded $1.3 million in prepaid expenses for advanced payments made to our CRO and other vendors for our NGC-Cap Phase 2 clinical trial.
Previous wording
Our general and administrative expenses for the year ended December 31, 2023 decreased by $3.1 million to $5,657,543 when compared to $8,763,058 for the same period in 2022. The decrease was mostly due to employee stock-based compensation of $4.9 million as a result of a reduction in stock awards granted. We also experienced net decreases in taxes, travel and other miscellaneous office expenses of $38,000. The decreases were primarily offset by increases in professional fees of $1.3 million related to the warrants we issued to Spartan Capital as compensation for services provided under a consulting agreement and for salaries and related expenses of $493,000. We share office space with CorLyst, a related party, and during the years ended December 31, 2023 and 2022, they reimbursed us $112,000 and $124,000, respectively, for rent and other costs we incurred on their behalf.
Current wording
Our general and administrative expenses for the year ended December 31, 2024 decreased by approximately $875,000 to $4.8 million when compared to $5.7 million for the same period in 2023. This was mostly due to a $1.2 million decrease in professional fees and approximately $201,000 decrease in employee stock-based compensation. The decreases were primarily offset by increases in salaries and other payroll-related costs of approximately $443,000 and net increases in taxes, travel, and other office expenses of approximately $50,000. We share office space with CorLyst, a related party, and during the years ended December 31, 2024 and 2023, they reimbursed us approximately $110,000 and $112,000, respectively, for rent and other costs we incurred on their behalf.
Previous wording
Net other income consisting primarily of interest income was $335,541 and $101,202 for the years ended December 31, 2023 and 2022, respectively.
Current wording
Net other income consisting primarily of interest income was $207,567 and $335,541 for the years ended December 31, 2024 and 2023, respectively.
Previous wording
We did not recognize any income tax benefit for the year ended December 31, 2023 or 2022. At December 31, 2023, we recorded deferred tax assets totaling $17,639,071, including $7,685,377 of net operating losses that are fully offset by a valuation allowance.
Current wording
We did not recognize any income tax benefit for the year ended December 31, 2024 or 2023. At December 31, 2024, we recorded deferred tax assets totaling $19.9 million, including $9.6 million of net operating losses that are fully offset by a valuation allowance.
Previous wording
We have incurred losses and net cash used in our operating activities during the year ended December 31, 2023, which we expect to continue for the foreseeable future. We have incurred losses since our inception, devoting substantially all of our efforts toward research and development, and have an accumulated deficit of approximately $75.4 million at December 31, 2023. During the year ended December 31, 2023, we generated a net loss of approximately $11.1 million, of which $2.4 million were non-cash expenses. Based on our current business plans, we believe these funds will satisfy our capital needs into early 2025. Our ability to execute our longer-term operating plans, including unplanned future 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. We plan to continue to actively pursue financing alternatives, but there can be no assurance that we will obtain the necessary funding in the future when needed.
Current wording
We have incurred losses and net cash used in our operating activities during the year ended December 31, 2024, which we expect to continue for the foreseeable future. We have incurred losses since our inception, devoting substantially all of our efforts toward research and development, and have an accumulated deficit of approximately $87.2 million at December 31, 2024. During the year ended December 31, 2024, we generated a net loss of approximately $11.9 million. Based on our current business plans, we believe these funds will satisfy our capital needs into mid-2025. Our ability to execute our longer-term operating plans, including unplanned future 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. We plan to continue to actively pursue financing alternatives, but there can be no assurance that we will obtain the necessary funding in the future when needed.
Previous wording
Our future capital requirements will depend on many factors, including:
Current wording
Our future capital requirements will depend on many factors, including but not limited to:
Previous wording
Until such time as we can generate substantial product revenues to support our capital requirements, if ever, we expect to finance our cash needs through a combination of public or private equity offerings, debt financings, collaborations and licensing arrangements or other capital sources. We currently have an effective shelf registration statement on Form S-3 on file with the SEC, which provides us flexibility and optionality to raise capital, including pursuant to a Purchase Agreement with Lincoln Park Capital or a future at-the-market offering, but there can be no assurance that capital will continue to be available to us on acceptable terms, won’t be limited, or be available at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders.
Current wording
Until such time as we can generate substantial product revenues to support our capital requirements, if ever, we expect to finance our cash needs through a combination of public or private equity offerings, debt financings, collaborations and licensing arrangements or other capital sources. We currently have an effective shelf registration statement on Form S-3 on file with the SEC, which provides us flexibility and optionality to raise capital, including pursuant to a future at-the-market offering, but there can be no assurance that capital will continue to be available to us on acceptable terms, won’t be limited, or be available at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders.
Previous wording
We used net cash in our operating activities of $8,063,346 and $9,605,143 during the years ended December 31, 2023 and 2022, respectively. As we continue our clinical trial for 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. Until we begin our Phase 2 clinical trial for NGC-Cap, we anticipate clinical trial costs will decrease when compared to prior periods since we are only conducting one clinical trial for NGC-Cap.
Current wording
We used net cash in our operating activities of $11,245,042 and $8,063,346 during the years ended December 31, 2024 and 2023, respectively. The increase in cash used in operating activities was primarily attributable to increased costs related to closing our Phase 1B and commencing our Phase 2 trial for NGC-Cap, including the prepayment of expenses to our CRO for the Phase 2 trial; increased salaries and other payroll-related expenses; and professional fees during the year ended December 31, 2024. As we continue our Phase 2 trial for 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.
Previous wording
At December 31, 2023, our prepaid expense and other consisted primarily of $570,000 for advanced payments we made to our NGC-Cap CRO that have not yet been applied to our clinical trial and $212,000 in various insurance policies, such as directors’ and officers’ insurance and product liability insurance for conducting our clinical trials. Our prepaid expense and other at December 31, 2022 also included an additional $394,000 for advanced payments made to CROs for our PCS499 and PCS12852 clinical trials; an unamortized non-cash commitment fee we paid to Lincoln Park of approximately $334,000; and unamortized ATM offering related costs of $186,000.
Current wording
At December 31, 2024, our prepaid expense and other consisted primarily of $1.8 million for advanced payments we made to the CRO and other vendors related to our Phase 1B and Phase 2 trials of NGC-Cap that have not yet been applied and approximately $85,000 in various insurance policies, such as directors’ and officers’ insurance and product liability insurance for conducting our clinical trials.
Previous wording
We used net cash in our investing activities of $2,776 during year ended December 31, 2023 to purchase property and equipment. We did not have a similar expense during the same period in 2022.
Current wording
We used net cash in our investing activities of $3,244 and $2,776 during year ended December 31, 2024 and 2023 to purchase property and equipment.
Previous wording
During the year ended December 31, 2023, we raised net proceeds of $6.4 million from the sale of 421,611 shares of our common stock and used $31,000 in legal expenses related to our January 2024 raise and $53,000 for the settlement of a stock award. During the year ended December 31, 2022, we used net cash in financing activities of $300,000 to purchase 5,000 shares of our common stock from a licensee in early 2022 and $89,000 to pay income taxes owed on vested stock-based compensation.
Current wording
During the year ended December 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 sold 800,994 shares of common stock under our ATM Offering for net proceeds of approximately $1.5 million. We used cash, classified as financing activities, of approximately $16,000 to pay income taxes owed on stock-based compensation, approximately $9,000 for the settlement of a stock award, and approximately $5,000 for payments owed under a financing lease obligation. During the year ended December 31, 2023, we raised net proceeds of $6.4 million from the sale of 421,611 shares of our common stock and used $31,000 in legal expenses related to our January 2024 raise and $53,000 for the settlement of a stock award.