CNS Pharmaceuticals Inc

Previous wording

On December 28, 2017, we obtained the rights to a worldwide, exclusive royalty-bearing, license to the chemical compound commonly known as Berubicin from HPI in an agreement we refer to as the HPI License. HPI is affiliated with Dr. Priebe, who controls a majority of our shares. Under the HPI License we obtained the exclusive right to develop certain chemical compounds for use in the treatment of cancer anywhere in the world. In the HPI License we agreed to pay HPI: (i) development fees of $750,000 over a three-year period beginning November 2019; (ii) a 2% royalty on net sales; (iii) a $50,000 per year license fee; (iv) milestone payments of $100,000 upon the commencement of a Phase II trial and $1.0 million upon the approval of a New Drug Application (“NDA”) for Berubicin; and (v) 6,667 shares of our common stock. The patents we licensed from HPI expired in March 2020. On May 14, 2024, the Company provided notice to HPI of its intent to terminate the HPI License effective on or about July 14, 2024.

Current wording

On December 28, 2017, we obtained the rights to a worldwide, exclusive royalty-bearing, license to the chemical compound commonly known as Berubicin from HPI in an agreement we refer to as the HPI License. HPI is affiliated with Dr. Priebe, who controls a majority of our shares. Under the HPI License we obtained the exclusive right to develop certain chemical compounds for use in the treatment of cancer anywhere in the world. In the HPI License we agreed to pay HPI: (i) development fees of $750,000 over a three-year period beginning November 2019; (ii) a 2% royalty on net sales; (iii) a $50,000 per year license fee; (iv) milestone payments of $100,000 upon the commencement of a Phase II trial and $1.0 million upon the approval of a New Drug Application (“NDA”) for Berubicin; and (v) 134 shares of our common stock. The patents we licensed from HPI expired in March 2020. On May 14, 2024, the Company provided notice to HPI of its intent to terminate the HPI License effective on or about July 14, 2024.

Previous wording

On January 10, 2020, we entered into a Patent and Technology License Agreement (the “WP1244 Agreement”) with The Board of Regents of The University of Texas System, an agency of the State of Texas, on behalf of the UTMDACC. Pursuant to the WP1244 Agreement, we obtained a royalty-bearing, worldwide, exclusive license to certain intellectual property rights, including patent rights, related to our portfolio of WP1244 drug technology. In consideration, we must make payments to UTMDACC including an up-front license fee, annual maintenance fee, milestone payments and royalty payments (including minimum annual royalties) for sales of licensed products developed under the WP1244 Agreement. The term of the WP1244 Agreement expires on the last to occur of: (a) the expiration of all patents subject to the WP1244 Agreement, or (b) fifteen years after execution; provided that UTMDACC has the right to terminate the WP1244 Agreement in the event that we fail to meet certain commercial diligence milestones. We have not met the commercial diligence milestones and have not paid the annual maintenance fee required as of the date hereof. On April 25, 2024, UTMDACC provided notice to us if its intent to terminate the WP1244 Agreement if we fail to pay the annual maintenance fee of $50,000, as well as $1,300 in expenses. As of the date hereof, the we have not determined whether to cure the foregoing defaults. If we fail to cure the defaults, on May 25, 2024, the WP1244 Agreement will terminate.

Current wording

On January 10, 2020, we entered into a Patent and Technology License Agreement (the “WP1244 Agreement”) with The Board of Regents of The University of Texas System, an agency of the State of Texas, on behalf of the UTMDACC. Pursuant to the WP1244 Agreement, we obtained a royalty-bearing, worldwide, exclusive license to certain intellectual property rights, including patent rights, related to our portfolio of WP1244 drug technology. On April 25, 2024, UTMDACC provided notice to us if its intent to terminate the WP1244 Agreement if we fail to pay the annual maintenance fee of $50,000, as well as $1,300 in expenses. On May 25, 2024 the WP1244 Agreement was terminated. There are no termination penalty provisions in the Agreement.

Previous wording

General and administrative expense was approximately $1,114,000 for the three months ended March 31, 2024 compared to approximately $1,359,000 for the comparable period in 2023. The decrease in general and administrative expense was mainly attributable to decreases of approximately $118,000 in legal and professional expenses, $20,000 in insurance expenses and $58,000 in stock compensation, $39,000 in travel expenses and $29,000 in other general and administrative expenses, which were offset by increases of approximately $19,000 in marketing and advertising expenses.

Current wording

General and administrative expense was approximately $1,412,000 for the three months ended June 30, 2024 compared to approximately $1,180,000 for the comparable period in 2023. The increase in general and administrative expense was mainly attributable to increases of approximately $333,000 in legal and professional expenses, which were offset by decreases of approximately $65,000 in marketing and advertising expenses, $34,000 in insurance expense and $2,000 in other expenses.

Previous wording

The net loss for the three months ended March 31, 2024 was approximately $3,545,000 compared to approximately $4,932,000 for the comparable period in 2023. The change in net loss is attributable to an decrease in CRO expenses related to continued progress with our Phase II clinical trial, as well as decreases in legal and professional fees and other expenses.

Current wording

The net loss for the three months ended June 30, 2024 was approximately $2,531,000 compared to approximately $4,021,000 for the comparable period in 2023. The change in net loss is attributable to a decrease in CRO expenses related to continued progress with our potentially pivotal Phase II clinical trial of Berubicin, as well as decreases in legal and professional fees and other expenses.

Previous wording

Research and development expense was approximately $2,430,000 for the three months ended March 31, 2024 compared to approximately $3,568,000 for the comparable period in 2023. The decrease in research and development expenses during the period were mainly attributed to the timing of research organization (CRO) expenses related to continued progress with our Phase II clinical trial. Our CRO expenditures are primarily for labor related to activating selected trial sites, managing patient enrollment processes, collecting and managing data from patient treatments throughout the trial, processing reimbursement to the sites for patient treatment, and assisting with necessary submissions to amend the IND. CRO expenditures are expected to remain relatively consistent with the current quarter throughout the remainder of the trial as site activation efforts and the associated costs thereof transition into reimbursing clinical trial sites for patient treatment costs as site and patient enrollment increases. We expect to incur increased research and development costs in the future as we continue our Phase II clinical trial.

Current wording

Research and development expense was approximately $3,547,000 for the six months ended June 30, 2024 compared to approximately $6,413,000 for the comparable period in 2023. The decrease in research and development expenses during the period were mainly attributed to the timing of research organization (CRO) expenses related to continued progress with our Phase II clinical trial. Our CRO expenditures are primarily for labor related to activating selected trial sites, managing patient enrollment processes, collecting and managing data from patient treatments throughout the trial, processing reimbursement to the sites for patient treatment, and assisting with necessary submissions to amend the IND. CRO expenditures are expected to continue to decline throughout the remainder of the trial as the final patients complete treatment and enter follow-up.

Previous wording

On March 31, 2024, we had cash of approximately $815,000 and we had a working capital deficit of approximately $4,490,000. We fund our operations from proceeds from equity sales.

Current wording

On June 30, 2024, we had cash of approximately $1,492,000 and we had a working capital deficit of approximately $4,617,000. We fund our operations from proceeds from equity sales.

Previous wording

On January 29, 2024, we entered into a placement agency agreement with A.G.P./Alliance Global Partners (“AGP”) and Maxim Group LLC (“Maxim”) for the public offering of (i) 2,215,667 shares of our common stock; (ii) pre-funded warrants to purchase 11,117,667 shares of common stock; (iii) Series A Warrants to purchase up to an aggregate of 13,333,334 shares of common stock; and (iv) Series B Warrants to purchase up to an aggregate of 13,333,334 shares of common stock. The combined purchase price of one share of common stock and accompanying Series A & B common warrants was $0.30 and the combined purchase price of one pre-funded warrant and accompanying Series A & B common warrants was $0.299 (with the pre-funded warrants having an exercise price of $0.001). The closing of the sales of these securities occurred on February 1, 2024. The gross proceeds from the offering were approximately $4.0 million, before deducting the placement agent’s fees and other offering expenses.

Current wording

On January 29, 2024, we completed a public offering of (i) 44,314 shares of our common stock; (ii) pre-funded warrants to purchase 222,354 shares of common stock; (iii) Series A Warrants to purchase up to an aggregate of 266,667 shares of common stock; and (iv) Series B Warrants to purchase up to an aggregate of 266,667 shares of common stock. The combined purchase price of one share of common stock and accompanying Series A & B common warrants was $15 and the combined purchase price of one pre-funded warrant and accompanying Series A & B common warrants was $14.95 (with the pre-funded warrants having an exercise price of $0.001). The closing of the sales of these securities occurred on February 1, 2024. The gross proceeds from the offering were approximately $4.0 million, before deducting the placement agent’s fees and other offering expenses.

Previous wording

Our plan of operations is primarily focused on completing a clinical trial for Berubicin. We estimate that we will require additional financing of approximately $13 to $15 million to complete the potentially pivotal Phase 2 trial for Berubicin (taking into account our cash on hand as of March 31, 2024 of approximately $0.8 million) plus such additional working capital to fund our operations during the pendency of the trial (with such operations estimated at $4.5 to $5.0 million per annum). If capital is available to fund WP1244/WP1874 preclinical work to prepare for a Phase 1 trial, we would need to raise an additional $5.0 million to support near-term development of that program. Our current expectation is that our cash on hand is sufficient to fund our operations into the latter half of the second quarter of 2024. The timing and costs of clinical trials are difficult to predict and trial plans may change in response to evolving circumstances and as such the foregoing estimates may prove to be inaccurate.

Current wording

Our plan of operations is primarily focused on completing a clinical trial for Berubicin. Our current expectation is that our cash on hand as of the date of this filing is sufficient to fund our operations through the first quarter of 2025. We currently expect to release final top-line data for our potentially pivotal trial of Berubicin in the first half of 2025. If capital is available to fund TPI 287 clinical preparations and drug manufacturing for a potentially pivotal Phase 2 trial of TPI 287, we would need to raise an additional $4.0 million to support near-term development of that program. The timing and costs of clinical trials are difficult to predict and trial plans may change in response to evolving circumstances and as such the foregoing estimates may prove to be inaccurate.

Previous wording

We will need to raise very significant additional capital in the near term in order to meet our past due and future obligations and execute our business plan. If we are unable to raise sufficient funds, we will be required to develop and implement an alternative plan to further extend payables, reduce overhead or scale back our business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful and if it is not successful we may need to cease operations entirely.

Current wording

We will need to raise additional capital in the near term in order to continue to meet the Nasdaq minimum equity requirement. If we are unable to raise sufficient funds, we may be delisted by Nasdaq and we will be required to develop and implement an alternative plan to further extend payables, reduce overhead or scale back our business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful and if it is not successful we may need to cease operations entirely.

Previous wording

Net cash used in operating activities was approximately $3,192,000 and $4,825,000 for the three months ended March 31, 2024 and 2023, respectively, and mainly included payments made for clinical trial preparation, officer compensation, insurance, marketing and professional fees to our consultants, attorneys and accountants.

Current wording

Net cash used in operating activities was approximately $4,842,000 and $8,227,000 for the six months ended June 30, 2024 and 2023, respectively, and mainly included payments made for clinical trial preparation, officer compensation, insurance, marketing and professional fees to our consultants, attorneys and accountants.

Previous wording

Net cash provided by financing activities was approximately $3,459,000 for the three months ended March 31, 2024, related to the sale of common stock and exercise of warrants, which were offset by the repayment of notes payable. Net cash used in financing activities was approximately $120,000 for the three months ended March 31, 2023, related to the repayment of notes payable, which were offset by the exercise of warrants.

Current wording

Net cash provided by financing activities was approximately $5,785,000 for the six months ended June 30, 2024, related to the sale of common stock and exercise of warrants, which were offset by the repayment of notes payable and payment of deferred offering costs. Net cash provided by financing activities was approximately $2,451,000 for the six months ended June 30, 2023, related to the sale of common stock and exercise of warrants, which were offset by the repayment of notes payable.

Previous wording

We do not have any material commitments for capital expenditures, although we are required to pay certain milestones fees to HPI as described in the section “Overview” above.

Current wording

We do not have any material commitments for capital expenditures, although we are required to pay certain milestones fees to HPI, Reata and Cortice as described in the section “Overview” above.