PharmaCyte Biotech Inc
For the period ended Jul 31, 2024. Filed Sep 17, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 31, 2024 · Filed Sep 17, 2024
PMCB$0.36-4.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-01-31; filed 2024-03-18.
0001683168-24-001525
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-07-31; filed 2024-09-17.
0001683168-24-006441
Item 2. 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 76 previous paragraphs and 57 current paragraphs.
27 unchanged; 20 reworded; 10 added; 29 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 14 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 (10)
Current report
Among others, these include:
Current report
All forward- looking statements and reasons why results may differ included in this Report are made as of the date hereof, and we do not intend to update any forward-looking statements except as required by law or applicable regulations. New risk factors emerge from time to time, and it is not possible to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements are not guarantees of performance. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.
Current report
Except where the context otherwise requires, in this Report, the “Company,” “we,” “us” and “our” refer to PharmaCyte Biotech, Inc., a Nevada corporation, and, where appropriate, its subsidiaries.
Current report
During the year ended April 30, 2024, we determined that research and development in the treatment of diabetes would no longer be pursued.
Current report
In addition to reengaging SG Austria, we are also identifying alternative approaches to expand the prodrug/activator technology for cancer treatment. These discussions may expand our prodrug/activation options to use highly toxic cancer-killing drugs in tightly controlled perivascular spaces.
Current report
On May 20, 2024, we entered into a Securities Purchase Agreement (the “TNF Purchase Agreement”) with a public company operating in the medical industry, MyMD Pharmaceuticals, Inc., which subsequently changed its name to TNF Pharmaceuticals, Inc. (“TNF”). Pursuant to the TNF Purchase Agreement, we purchased (i) 7,000 shares of TNF’s Series G Convertible Preferred Stock (the “Preferred Shares” or “Series G Preferred Stock”), representing approximately 33% of TNF’s issued and outstanding share capital on an as-converted basis (and approximately 78% of all shares of Series G Preferred Stock outstanding), at a price of $1.816 per Preferred Share, which are convertible into 3,854,626 shares of Common Stock (as defined below); (ii) warrants to purchase up to 3,854,626 shares of TNF’s Common Stock with a five-year term; and (iii) warrants to purchase up to 3,854,626 shares of TNF’s Common Stock with a 18-month, for an aggregate purchase price of $7,000,000.
Current report
See Note 14 – Investment in Series G Preferred Stock of MyMD Pharmaceuticals, Inc.
Current report
Fair Value of Financial Instruments
Current report
Fair value measurements are based upon certain market assumptions and pertinent information available as of and during the year ended April 30, 2024. The fair value of the bifurcated embedded derivative related to the convertible preferred stock was estimated using a Monte Carlo simulation model, which uses as inputs the fair value of our common stock and estimates for the equity volatility and traded volume volatility of our common stock, the time to maturity of the convertible preferred stock, the risk-free interest rate for a period that approximates the time to maturity, dividend rate, a penalty dividend rate, and our probability of default. The fair value of the warrant liability was estimated using the Black Scholes Model which uses as inputs the following weighted average assumptions: dividend yield, expected term in years; equity volatility; and risk-free interest rate.
Current report
In addition, the Company elects to account for its convertible note receivable, which meets the required criteria, at fair value at inception and at each subsequent reporting date. Subsequent changes in fair value, including interest, are recorded as a component of non-operating income (loss) in the condensed consolidated statements of operations. The Company estimates the fair value of the convertible note receivable using the income approach, which uses as inputs the fair value of debtor’s common stock and estimates for the equity volatility and volume volatility of debtor’s common stock, the time to expiration of the convertible note, the discount rate, the stated interest rate compared to the current market rate, the risk-free interest rate for a period that approximates the time to expiration, and probability of default. Therefore, the estimate of expected future volatility is based on the actual volatility of debtor’s common stock and historical volatility of debtor’s common stock utilizing a lookback period consistent with the time to expiration. The time to expiration is based on the contractual maturity date. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of measurement for time periods approximately equal to the time to expiration. The probability of default is estimated using the S&P Global default rate for companies with a similar credit rating to debtors. The fair value in our warrant asset investment is estimated using a Monte Carlo simulation model, which uses as inputs the fair value of the underlying common stock and estimates for the equity volatility and traded volume volatility of the investee’s common stock, the risk-free interest rate for a period that approximates the expected life of the warrants, and the expected life of the warrants.
Removed paragraphs (29)
Previous report
This Quarterly Report on Form 10-Q (including but not limited to this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are intended to qualify for the “safe harbor” created by those sections. In addition, we may make forward-looking statements in other documents filed with or furnished to the Securities and Exchange Commission (“SEC”), and our management and other representatives may make forward-looking statements orally or in writing to analysts, investors, representatives of the media and others. These statements relate to future events or to our future operating or financial performance and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements.
Previous report
Forward-looking statements can generally be identified by the fact that they do not relate strictly to historical or current facts and include, but are not limited to, statements using terminology such as “can”, “may”, “could”, “should”, “assume”, “forecasts”, “believe”, “designed to”, “will”, “expect”, “plan”, “anticipate”, “estimate”, “potential”, “position”, “predicts”, “strategy”, “guidance”, “intend”, “seek”, “budget”, “project” or “continue”, or the negative thereof or other comparable terminology regarding beliefs, plans, expectations or intentions regarding the future. You should read statements that contain these words carefully because they:
Previous report
Any or all of our forward-looking statements may turn out to be wrong. They may be affected by inaccurate assumptions that we might make or by known or unknown risks and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in our forward-looking statements. Among the factors that could affect future results are:
Previous report
All forward-looking statements and risk factors included in this Quarterly Report are made as of the date hereof, in each case based on information available to us as of the date hereof, and we assume no obligations to update any forward-looking statement or risk factor, unless we are required to do so by law. If we do update one or more forward-looking statements, no inference should be drawn that we will make updates with respect to other forward-looking statements or that we will make any further updates to those forward-looking statements at any future time.
Previous report
Forward-looking statements may include our plans and objectives for future operations, including plans and objectives relating to our product candidates and our future economic performance, projections, business strategy and timing and likelihood of success. Assumptions relating to the forward-looking statements included in this Quarterly Report involve judgments with respect to, among other things, future economic, competitive and market conditions, future business decisions, and the time and money required to successfully complete development and commercialization of our technologies, all of which are difficult or impossible to predict accurately and many of which are beyond our control.
Previous report
Any of the assumptions underlying the forward-looking statements contained in this Quarterly Report could prove inaccurate and, therefore, we cannot assure you that any of the results or events contemplated in any of such forward-looking statements will be realized. Based on the significant uncertainties inherent in these forward-looking statements, the inclusion of any such statement should not be regarded as a representation or as a guarantee by us that our objectives or plans will be achieved, and we caution you against relying on any of the forward-looking statements contained herein.
Previous report
We have also been developing a way to delay the production and accumulation of malignant ascites that results from many types of abdominal cancerous tumors. Our potential therapy for malignant ascites involves using the same encapsulated cells we employ for pancreatic cancer but placing the encapsulated cells in the peritoneal cavity of a patient and administering ifosfamide intravenously.
Previous report
We have also been developing a potential therapy for Type 1 diabetes and insulin-dependent Type 2 diabetes. Our product candidate for the treatment of diabetes consists of encapsulated genetically modified insulin-producing cells. The encapsulation will be done using the Cell-in-a-Box® technology. Implanting these encapsulated cells in the body is designed to have them function as a bio-artificial pancreas for purposes of insulin production.
Previous report
In addition to the two cancer programs discussed above, we have been working on ways to exploit the benefits of the Cell-in-a-Box® technology to develop therapies for cancer that involve prodrugs based upon certain constituents of theCannabis plant. However, until the FDA allows us to commence our clinical trial in LAPC and we are able to validate our Cell-in-a-Box® encapsulation technology in a clinical trial, we are not spending any further resources developing our Cannabis Program.
Previous report
Finally, we have been developing a potential therapy for Type 1 diabetes and insulin-dependent Type 2 diabetes. Our product candidate for the treatment of diabetes consists of encapsulated genetically modified insulin-producing cells. The encapsulation will be done using the Cell-in-a-Box® technology. Implanting these encapsulated cells in the body is designed to have them function as a bio-artificial pancreas for purposes of insulin production.
Previous report
We assembled a scientific and regulatory team of experts to address the FDA requests. That team has been working diligently to complete the items requested by the FDA. We are in the latter stages of conducting the studies and providing the information requested by the FDA. We have completed the pilot study of two pigs and are evaluating the preliminary data before it commences the larger study of 90 pigs.
Previous report
The total operating expenses and loss from operations during the nine months ended January 31, 2024 decreased by $198,419 to $5,353,792 compared to the nine months ended January 31, 2023. The decrease is mainly attributable to decreases in R&D costs, legal and professional expense, and consulting expense in 2024 from 2023, net of increases in compensation expense, director fees and general and administrative costs of $1,095,225, which includes warrant issuance costs of $913,640 and convertible note receivable transactional costs of $58,002.
Previous report
Other income (expenses), net for the nine months ended January 31, 2024 was $4,340,854 as compared to other income (expenses), net of $1,362,556 for the nine months ended January 31, 2023. Other income (expenses), net for the nine months ended January 31, 2024 is attributable to interest income of $2,651,721 net of changes in fair value of warrant liability of $2,633,000, a change in fair value of derivative liability of $(663,000) a change in the fair value of convertible note receivable of $138,000, a change in the fair value of the warrant asset of $(416,000) and other expenses of $(2,867). Other income, net for the nine months ended January 31, 2023 is attributable to interest income of $1,214,562 net of other income of $147,994. The increase in interest income is attributable to an increase in the rates of interest.
Previous report
On November 14, 2023, we entered into a securities purchase agreement, pursuant to which agreed to purchase a convertible note receivable in the amount of $5 million, convertible into common stock. See Note 3 – Investment in Debt and Equity Securities. We had no investing activities for the nine months ended January 31, 2023.
Previous report
On November 14, 2023, we entered into the Femasys Purchase Agreement. Pursuant to the agreement we agreed to purchase (i) senior unsecured convertible notes in an aggregate principal amount of $5 million, convertible into shares of Femasys common stock at a conversion price of $1.18 per share, and (ii) Series A warrants to purchase up to an aggregate of 4,237,288 shares of Femasys common stock at an exercise price of $1.18 and (iii) Series B warrants to purchase an aggregate of 4,237,288 shares of Femasys common stock at an exercise price $1.475 per share.
Previous report
On November 20, 2023, the Board granted to each non-employee director (i) a cash retainer fee of $60,000 and (ii) options to purchase 61,248 shares at an exercise price of $2.18 per share, vesting in full on the first business day after the Company’s next annual meeting of stockholders. Additionally, the Board granted each non-employee director who chairs the audit, compensation or nominating and corporate governance committees an additional cash retainer fee of $10,000.
Previous report
On November 20, 2023, the Board adopted a non-employee director compensation policy, which provides for the automatic annual grant of nonqualified stock options with a grant date fair value of $60,000 to each non-employee director. Such grants shall occur annually on the first business day after the Company’s annual meeting of stockholders and shall vest on the one-year anniversary of the grant date, subject to the director’s continued service on the Board on the vesting date. The policy also provides for the payment of an annual $60,000 cash retainer fee to each non-employee director, plus, for each non-employee director who chairs the audit, compensation or nominating and corporate governance committees, an additional annual $10,000 cash retainer fee. Finally, the policy provides for the automatic grant of nonqualified stock options with a grant date fair value of $50,000 to each new non-employee director upon joining the Board.
Previous report
Convertible Note Receivable and Warrant Asset
Previous report
We account for the convertible note receivable, which is not traded in active markets and determined the fair value using the Monte Carlo simulation method. The convertible note receivable is accounted for as available-for-sale debt securities based on “Level 3” inputs, which consist of unobservable inputs and reflect management’s estimates of assumptions that market participants would use in pricing the asset. The warrant asset is accounted for as an equity security and is valued using the Monte Carlo simulation method based on “Level 3” inputs, which consist of unobservable inputs and reflect management’s estimates of assumptions that market participants would use in pricing the asset, recorded at fair value.
Previous report
For both the convertible note receivable and the warrant asset, changes in the estimated fair value are recognized as a non-cash gain or loss on the condensed consolidated statements of operations.
Previous report
Warrant Liabilities
Previous report
We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
Previous report
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, or date of modification, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the warrant liability was estimated using a Black Scholes valuation approach with assumption relevant as of the valuation date.
Previous report
Derivative Financial Instruments
Previous report
The Company evaluates all its financial instruments to determine if such instruments contain features that qualify as embedded derivatives. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the statement of operations each period. Bifurcated embedded derivatives are classified with the related host contract in the Company’s balance sheet.
Previous report
Preferred Stock
Previous report
In accordance with ASC 480, the Company’s Series B Preferred Stock is classified as temporary equity as it is redeemable upon certain contingent events that are considered outside of the Company’s control. Further, in accordance with ASC 815-40,Derivatives and Hedging – Contracts in an Entity’s Own Equity, the Series B Preferred Stock does not meet any of the criteria that would preclude equity classification. The stock discount is amortized from the date of issuance using the effective interest method.
Previous report
Net Income (Loss) Per Share
Previous report
Basic net income (loss) per share of common stock is computed using the weighted-average number of shares of common stock outstanding. Diluted net income (loss) per share of common stock is computed using the weighted-average number of shares of common stock and shares of common stock equivalents outstanding.
Reworded paragraphs (20)
Previous wording
We believe it is important to communicate our expectations. However, forward-looking statements are based on our current expectations, assumptions, estimates and projections about our business and our industry and are subject to known and unknown risks, uncertainties and other factors. Accordingly, our actual results and the timing of certain events may differ materially from those expressed or implied in such forward-looking statements due to a variety of factors and risks, including, but not limited to, those set forth in this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report, those set forth from time to time in our other filings with the U.S. Securities and Exchange Commission (“Commission”), including our Annual Report on Form 10-K for the fiscal year ended April 30, 2023 and the following factors and risks:
Current wording
This Quarterly Report on Form 10-Q (“Report”) includes “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements other than statements of historical fact are “forward-looking statements” for purposes of this Report, including any projections of earnings, revenue or other financial items, any statements regarding the plans and objectives of management for future operations, any statements concerning proposed new products or services, any statements regarding future economic conditions or performance, any statements regarding expected benefits from any transactions and any statements of assumptions underlying any of the foregoing. In some cases, forward-looking statements can be identified by use of terminology such as “may,” “will,” “should,” “believes,” “intends,” “expects,” “plans,” “anticipates,” “estimates,” “goal,” “aim,” “potential” or “continue,” or the negative thereof or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained in this Report are reasonable, there can be no assurance that such expectations or any of the forward-looking statements will prove to be correct, and actual results could differ materially from those projected or assumed in the forward-looking statements. Thus, investors should refer to and carefully review information in future documents we file with the U.S. Securities and Exchange Commission (“Commission”). Our future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risk and uncertainties, including, those set forth in this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report, those set forth from time to time in our other filings with the Commission, including our Annual Report on Form 10-K for the fiscal year ended April 30, 2024 and the following factors and risks:
Previous wording
We are a biotechnology company focused on developing cellular therapies for cancer, diabetes, and malignant ascites based upon a proprietary cellulose-based live cell encapsulation technology known as “Cell-in-a-Box®.” The Cell-in-a-Box® technology is intended to be used as a platform upon which therapies for several types of cancer, including LAPC, will be developed. The current generation of our product candidate is referred to as “CypCaps™.”
Current wording
We are a biotechnology company focused on developing cellular therapies for cancer based upon a proprietary cellulose-based live cell encapsulation technology known as “Cell-in-a-Box®.” The Cell-in-a-Box® technology is intended to be used as a platform upon which therapies for several types of cancer, including LAPC, will be developed. The current generation of our product candidate is referred to as “CypCaps™.”
Previous wording
On August 15, 2022, we entered into a Cooperation Agreement (the “Cooperation Agreement”) with Iroquois Master Fund Ltd. and its affiliates, pursuant to which we elected a reconstituted board of directors (the “Board”). The Board then formed a Business Review Committee to evaluate, investigate and review our business, affairs, strategy, management and operations and in its sole discretion, to make recommendations to our management and Board with respect thereto. The Business Review Committee is also reviewing many of the risks relative to our business. In addition, the Board is reviewing risks associated with our development programs and our relationship with SG Austria Pte. Ltd (“SG Austria”), including that all licensed patents have expired, that know-how relating to our Cell-in-a-Box® technology solely resides with SG Austria, and that the incentives of SG Austria and its management may not be currently aligned with ours. The Board has curtailed spending on our programs, including pre-clinical and clinical activities, until the review by the Business Review Committee and the Board is complete and the Board has determined the actions and plans to be implemented. The Business Review Committee’s recommendations will include potentially seeking a new framework for our relationship with SG Austria and its subsidiaries. If we are unsuccessful in seeking an acceptable new framework, we will reevaluate whether we should continue those programs which are dependent on SG Austria, including our development programs for locally advanced, inoperable, non-metastatic pancreatic cancer (“LAPC”), diabetes and malignant ascites. The issues involving SG Austria have delayed our timeline for addressing the FDA clinical hold for its planned clinical trial in LAPC and could result in other delays or termination of the development activities. In addition, the curtailment of spending on our programs pending the review by the Business Review Committee and the Board may cause additional delays.
Current wording
On August 15, 2022, we entered into a Cooperation Agreement (the “Cooperation Agreement”) with Iroquois Master Fund Ltd. and its affiliates, pursuant to which we elected a reconstituted board of directors (the “Board”). On November 17, 2023, the Board formed the Strategic Scientific Committee (the “Scientific Committee”), chaired by Dr. Michael Abecassis. The Scientific Committee and our independent consultants are reviewing many of the risks relative to our business. In addition, the Board is reviewing risks associated with our development programs and our relationship with SG Austria Pte. Ltd (“SG Austria”), including that all licensed patents have expired and that know-how relating to our Cell-in-a-Box® technology solely resides with SG Austria. The Board has reduced spending on our programs, including pre-clinical and clinical activities, until the review by the Scientific Committee and the Board is complete and the Board has determined the actions and plans to be implemented. The Scientific Committee’s recommendations will include potentially seeking a new framework for our relationship with SG Austria and its subsidiaries. We are reevaluating those programs which are dependent on SG Austria and the U.S. Food and Drug Administration’s (the “FDA”) acceptance of its technologies, including our development programs for locally advanced, inoperable, non-metastatic pancreatic cancer (“LAPC”). Our reevaluation for addressing the FDA concerns has resulted in delays stemming from the review of the non-clinical package provided by SG Austria and changes to the FDA review process.
Previous wording
The Cell-in-a-Box® encapsulation technology potentially enables genetically engineered live human cells to be used as a means to produce various biologically active molecules. The technology is intended to result in the formation of pinhead-sized cellulose-based porous capsules in which genetically modified live human cells can be encapsulated and maintained. In a laboratory setting, this proprietary live cell encapsulation technology has been shown to create a micro-environment in which encapsulated cells survive and flourish. They are protected from environmental challenges, such as the sheer forces associated with bioreactors and passage through catheters and needles, which we believe enables greater cell growth and production of the active molecules. The capsules are largely composed of cellulose (cotton) and are bioinert.
Current wording
The Cell-in-a-Box® encapsulation technology is designed to present genetically engineered live human cells to targeted tissues. The technology is intended to result in the formation of pinhead-sized cellulose-based porous capsules in which genetically modified live human cells can be encapsulated, grown to confluence and maintained in a cryopreserved (frozen) state until shortly before they are injected into an appropriate patient. In a laboratory setting, this proprietary live cell encapsulation technology has been shown to create a micro-environment in which encapsulated cells survive and flourish. Encapsulated cells are protected from environmental challenges, such as the shear forces associated with bioreactors and passage through catheters and needles, which we believe enables greater cell growth and production of the active molecules. The capsules are largely composed of cellulose (cotton) and are bioinert. During the past year, SG Austria has generated data and reports to support submission to the FDA concerning the safety of the microcapsules.
Previous wording
We have been developing therapies for pancreatic and other solid cancerous tumors by using genetically engineered live human cells that we believe are capable of converting a cancer prodrug into its cancer-killing form. We encapsulate those cells using the Cell-in-a-Box® technology and place those capsules in the body as close as possible to the tumor. In this way, we believe that when a cancer prodrug is administered to a patient with a particular type of cancer that may be affected by the prodrug, the killing of the patient’s cancerous tumor may be optimized.
Current wording
We have been developing therapies for pancreatic tumors by using genetically engineered live human cells that we believe are capable of converting a cancer prodrug into its cancer-killing form. We encapsulate those cells using the Cell-in-a-Box® technology and place those capsules in the body as close as possible to the tumor. In this way, we believe that when a cancer prodrug is administered to a patient with a particular type of cancer that may be affected by the resulting active drug, the killing of the patient’s cancerous tumor may be optimized both by enhanced potency and limited exposure away from the target tumor. We believe that the prodrug/activator technology is well suited to address the shift from cure/enhanced survival to creating a zone of clearance around blood vessels adjacent to tumor. This zone of clearance improves the probability of successful surgical resection of LAPC, which has been shown to improve survival.
Previous wording
Until the Business Review Committee completes its evaluation of our programs and we enter into a new framework for its relationship with SG Austria, spending on our development programs has been curtailed.
Current wording
Until the Strategic Scientific Committee completes its evaluation of our programs and we enter into a new framework for its relationship with SG Austria, spending on our development programs has been curtailed
Previous wording
Non-financial performance indicators used by management to manage and assess how the business is progressing will include, but are not limited to, the ability to: (i) acquire appropriate funding for all aspects of our operations; (ii) acquire and complete necessary contracts; (iii) complete activities for producing genetically modified human cells and having them encapsulated for our preclinical studies and the planned clinical trial in LAPC; (iv) have regulatory work completed to enable studies and trials to be submitted to regulatory agencies; (v) complete all required tests and studies on the cells and capsules we plan to use in our clinical trial in patients with LAPC; (vi) ensure completion of the production of encapsulated cells according to cGMP regulations to use in our planned clinical trial; (vii) complete all of the tasked the FDA requires of us in order to have the clinical hold lifted; and (viii) obtain approval from the FDA to lift the clinical hold on our IND so that we may commence our clinical trial in LAPC.
Current wording
Non-financial performance indicators used by management to manage and assess how the business is progressing will include, but are not limited to, the ability to: (i) acquire appropriate funding for all aspects of our operations; (ii) acquire and complete necessary contracts; (iii) complete activities for producing genetically modified human cells and having them encapsulated for our preclinical studies and the planned clinical trial in LAPC; (iv) have regulatory work completed to enable studies and trials to be submitted to regulatory agencies; (v) complete all required tests and studies on the cells and capsules we plan to use in our clinical trial in patients with LAPC; (vi) ensure completion of the production of encapsulated cells according to cGMP regulations to use in our planned clinical trial; (vii) complete all of the tasked the FDA requires of us in order to have the clinical hold lifted; and (viii) obtain approval from the FDA to lift the clinical hold on our IND that we may commence our planned clinical trial in LAPC.
Previous wording
There are numerous items required to be completed successfully to ensure our final product candidate is ready for use in our planned clinical trial in LAPC. The effects of material transactions with related parties, and certain other parties to the extent necessary for such an undertaking, may have substantial effects on both the timeliness and success of our current and prospective financial position and operating results. In addition, the review of our programs by our Business Review Committee and reconstituted Board and the curtailment of spending until their review is complete and recommendations are made may have an adverse effect on the timeliness and success of our programs. In addition, if we are unsuccessful in seeking a new framework for the Company’s relationship with SG Austria and its subsidiaries, the Company will reevaluate whether it should continue those programs which are dependent on SG Austria, including its programs for LAPC, diabetes and malignant ascites. See “Overview of Business.” We will assess these factors on a regular basis to provide accurate information to our shareholders.
Current wording
There are numerous items required to be completed successfully to ensure our final product candidate is ready for use in our planned clinical trial in LAPC. The effects of material transactions with related parties, and certain other parties to the extent necessary for such an undertaking, may have substantial effects on both the timeliness and success of our current and prospective financial position and operating results. Nonetheless, we are actively working to ensure strong ties and interactions to minimize the inherent risks regarding success. We do not believe there are factors which will cause materially different amounts to be reported than those presented in this Report. We aim to assess this regularly to provide accurate information to our shareholders.
Previous wording
Three and nine months ended January 31, 2024, compared to three and nine months ended January 31, 2023
Current wording
Three months ended July 31, 2024, compared to three months ended July 31, 2023
Previous wording
We had no revenues for the three and nine months ended January 31, 2024 and 2023.
Current wording
We had no revenues for the three months ended July 31, 2024, and 2023.
Previous wording
The total operating expenses and loss from operations during the three months ended January 31, 2024 were $1,868,946, an increase of $315,963 compared to the three months ended January 31, 2023. The increase is mainly attributable to increases in R&D costs, compensation expense and legal and professional expense costs, net of decreases in general and administrative costs, convertible note receivable transactional costs of $58,002 and director fees in the three months ended January 31, 2024.
Current wording
The total operating expenses and loss from operations during the three months ended July 31, 2024, were $1,268,887, a decrease of $806,439 compared to the three months ended July 31, 2023. The decrease is mainly attributable to decreases in general and administrative costs relating primarily to warrant issuance costs of $913,640 and R&D cost, net of increases in compensation expense, director fees and legal and professional expense costs.
Previous wording
Other income (expenses), net for the three months ended January 31, 2024 was $1,249,409 as compared to other income (expenses), net of $788,847 for the three months ended January 31, 2023. Other income (expenses), net for the three months ended January 31, 2024 is attributable to interest income of $881,662 net of changes in fair value of warrant liability of $10,000, a change in fair value of derivative liability of $636,000, a change in the fair value of convertible note receivable of $138,000, a change in the fair value of the warrant asset of $(416,000) and other expenses of $(253). Other income, net for the three months ended January 31, 2023 is attributable to interest income of $635,889 and other income of $152,958. The increase in interest income is attributable to an increase in the rates of interest.
Current wording
Other income (expenses), net, for the three months ended July 31, 2024 was $24,690,242 as compared to other income (expense), net of $(1,107,971) for the three months ended July 31, 2023. Other income (expenses), net, for the three months ended July 31, 2024 is attributable to interest income of $547,432 net of changes in fair value of warrant liability of $2,084,000, a change in fair value of derivative liability of $1,204,000, a change in fair value of convertible note receivable of $245,000, a change in fair value warrant assets of $(1,510,000), a gain on related party investment of $21,395,734 a change in fair value of the TNF warrant assets of $724,266, and other expenses of $190. Other income (expense), net, for the three months ended July 31, 2023, is attributable to interest income of $875,878, changes in fair value of warrant liability of $(1,452,000) and derivative liability of $(530,000), net of other expenses of $1,849.
Previous wording
The following table presents a summary of our sources and uses of cash for the nine months ended January 31, 2024 and 2023.
Current wording
The following table presents a summary of our sources and uses of cash for the three months ended July 31, 2024, and 2023.
Previous wording
The cash and cash equivalents used in operating activities for the nine months ended January 31, 2024 is a result of our net losses and offset by the change in fair value of warrant liability of $2,633,000 offset by the change in the fair value of the derivative liability of $663,000, a change in fair value of convertible note receivable of $138,000, offset by the change in fair value of warrant asset of $416,000 and changes to prepaid expenses and other current assets, accounts payable, and accrued expenses, totaling approximately $211,746. The cash and cash equivalents used in operating activities for the nine months ended January 31, 2023 is a result of our net losses offset by securities issued for services and compensation of approximately $647,684, non-cash expense of $165,868 and changes to prepaid expenses, accounts payable and accrued expenses of approximately $129,240.
Current wording
The cash and cash equivalents used in operating activities for the three months ended July 31, 2024 is a result of our net income, change in fair value of warrant asset note receivable of $1,510,000, stock based compensation of $222,677 offset by the gain on related party investment of $(21,395,734) the changes in fair value of warrant liability of $(2,084,000), derivative liability of $(1,204,000), convertible note receivable of $(245,000), investment in TNF $(724,266), and changes to prepaid expenses, accounts payable, accrued expenses, and accrued dividends totaling approximately $126,000. The cash and cash equivalents provided by operating activities for the three months ended July 31, 2023 is a result of our net losses offset by changes in fair value of warrant liability of $1,452,000, derivative liability of $530,000, warrant issuance costs of $913,640 and changes to prepaid expenses, accounts payable and accrued expenses of approximately $631,000.
Previous wording
The cash and cash equivalents provided by in financing activities for the nine months ended January 31, 2024 is mainly attributable to the repurchase of common stock of approximately $27,023,000, redemption of preferred stock of approximately $6,638,000 and net of the proceeds from the issuance of preferred stock of approximately $33,650,000, net of issuance costs. The cash and cash equivalents used in operating activities for the nine months ended January 31, 2023 is mainly attributable to the repurchase of common stock of approximately $9,254,000.
Current wording
The cash and cash equivalents used in financing activities for the three months ended July 31, 2024 is mainly attributable to the repurchase of common stock of approximately $742,000 and redemption of preferred stock of approximately 9,430,000. For the three months ended July 31, 2023, the cash provided by the proceeds from the issuance of preferred stock of approximately $32,736,000, net of issuance costs and the repurchase of common stock of approximately $26,457,000.
Previous wording
As of January 31, 2024, our cash and cash equivalents totaled approximately $61 million, compared to approximately $73 million as of January 31, 2023. Working capital was approximately $62 million as of January 31, 2024, compared to approximately $68 million as of January 31, 2023. The increase in cash for the nine months ended January 31, 2024 is attributable to a decrease in our operating expenses of approximately $0.2 million and the repurchase of our common stock of approximately $27 million, redemption of preferred stock of approximately $7 million, net of proceeds from the issuance of preferred stock and warrants of $34 million.
Current wording
As of July 31, 2024, our cash and cash equivalents totaled approximately $33 million, compared to approximately $50 million as of April 30, 2024. Working capital was approximately $25 million as of July 31, 2024, compared to approximately $43 million as of April 30, 2024. The decrease in cash is attributable to an increase in the redemption of preferred stock of approximately $9.4 million the repurchase of our common stock of approximately $0.7 million, and in the investment in TNF of $7 million, operating expenses of approximately $1.3 million.
Previous wording
We entered into several service agreements, with both independent and related parties, pursuant to which services will be provided over the next twelve months related to the clinical hold on our IND submission involving LAPC. The services include developing studies and strategies relating to clearing the clinical hold. The total cost is estimated to be approximately $332,000, of which the related party portion will be approximately $157,000. These agreements are under review by our Business Review Committee and reconstituted Board which has curtailed spending on this program until their review is complete and recommendations are made.
Current wording
We entered into several service agreements, with both independent and related parties, pursuant to which services will be provided over the next twelve months related to the clinical hold on our IND submission involving LAPC. The services include developing studies and strategies relating to clearing the clinical hold. The total cost is estimated to be approximately $212,000, of which the related party portion will be approximately $157,000. These agreements are under review by our Business Review Committee and reconstituted Board which has curtailed spending on this program until their review is complete and recommendations are made.
Previous wording
Our financial statements are prepared in accordance with U.S. GAAP. We are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our financial statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.
Current wording
Our Condensed Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). We are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our Condensed Consolidated Financial Statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our Condensed Consolidated Financial Statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.
Previous wording
Our significant accounting policies are discussed in Note 2 of the Notes to our Condensed Consolidated Financial Statements contained in this Quarterly Report. Management believes that the accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results and require management’s most difficult, subjective or complex judgments resulting from the need to make estimates about the effects of matters that are inherently uncertain. Management has reviewed these critical accounting estimates and related disclosures with our Board.
Current wording
Our significant accounting policies are discussed in Note 2 of the Notes to our Condensed Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data” of this Report. Management believes that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results and require management’s most difficult, subjective or complex judgments resulting from the need to make estimates about the effects of matters that are inherently uncertain. Management has reviewed these critical accounting estimates and related disclosures with our Board.
Previous wording
Realizable Value of Intangible Assets and Investments
Current wording
Realizable Value of Intangible Assets