As used herein, the terms the "Company," "NGIO," "we," "us," or "our" refer to
NuGenerex Immuno Oncology, Inc., a Delaware corporation. The following
discussion and analysis by management provides information with respect to our
financial condition and results of operations for the six-month periods ended
January 31, 2021 and 2020.
Forward-Looking Statements
We have made statements in this Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations and elsewhere in this Quarterly
Report on Form 10-Q of NGIO for the six months ended January 31, 2021 that may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Act"). The Act limits our
liability in any lawsuit based on forward-looking statements that we have made.
All statements, other than statements of historical facts, included in this
Quarterly Report that address activities, events or developments that we expect
or anticipate will or may occur in the future, including such matters as our
projections, future capital expenditures, business strategy, competitive
strengths, goals, expansion, market and industry developments and the growth of
our businesses and operations, are forward-looking statements. These statements
are based on currently available operating, financial and competitive
information. These statements can be identified by introductory words such as
"may," "expects," "anticipates," "plans," "intends," "believes," "will,"
"estimates" or words of similar meaning, and by the fact that they do not relate
strictly to historical or current facts. Our forward-looking statements address,
among other things:
• the risks associated with international operations; (including pandemics and
public health problems, such as the outbreak of novel coronavirus (COVID-19);
• our expectations concerning product candidates for our technologies;
• our expectations concerning existing or potential development and license
agreements for third-party collaborations, acquisitions, and joint ventures;
• our expectations concerning product candidates for our technologies;
• our expectations regarding the cost of raw materials and labor, consumer
preferences, the effect of government regulations on the Company's business,
the Company's ability to compete in its industry, as well as future economic
and other conditions both generally and in the Company's specific geographic
markets;
• our expectations of when regulatory submissions may be filed or when regulatory
approvals may be received; and
• Our expectations of when commercial sales of our products in development may
commence and when actual revenue from the product sales may be received.
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:
• the inherent uncertainties of product development based on our new and as yet
not fully proven technologies;
• the risks and uncertainties regarding the actual effect on humans of seemingly
safe and efficacious formulations and treatments when tested in the clinic;
• the inherent uncertainties associated with clinical trials of product
candidates;
• the inherent uncertainties associated with the process of obtaining regulatory
approval to market product candidates;
• the inherent uncertainties associated with commercialization of products that
have received regulatory approval;
• the decline in our stock price; and
• our current lack of financing for operations and our ability to obtain the
necessary financing to fund our operations and effect our strategic development
plan.
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We caution investors that the forward-looking statements contained in this
Quarterly Report must be interpreted and understood in light of conditions and
circumstances that exist as of the date of this Quarterly Report. We expressly
disclaim any obligation or undertaking to update or revise forward-looking
statements to reflect any changes in management's expectations resulting from
future events or changes in the conditions or circumstances upon which such
expectations are based.
Overview
We are an oncology company focused on the modulation of the immune system to
treat cancer. To that end, we are developing immunotherapeutic products and
vaccines based on our proprietary, patented platform technology, Ii-Key. The
Ii-Key is a peptide derived from the major histocompatibility complex ("MHC")
Class II associated invariant chain (Ii) that regulates the formation,
trafficking, and antigen-presenting functions of MHC class II complexes,
essential for the activation of T cells in the immune response. T cells
recognize antigenic epitopes when they are 'presented' to them by specific
molecules, termed (MHC) on the surface of infected or malignant cells. This
interaction activates the T cells, stimulating a multicellular cascade of
actions that eliminates the diseased cell and protects against future disease
recurrence.
The following discussion and analysis by management provides information with
respect to our financial condition and results of operations for the three and
six months ended January 31, 2021 and 2020.
Results of Operations
Three months ended January 31, 2021 compared to Three months ended January 31,
2020
We reported a net loss of $2,081,761 and $292,367 for the three month periods
ended January 31, 2021 and January 31, 2020, respectively, reflecting an
increase in the reported net loss of $1,789,394. The increase in the net loss
resulted from a $40,848 increase in interest expense, an increase of $1,334,419
in research and development expense and an increase of $414,127 in general and
administrative expenses.
We incurred an overall increase of $414,127 in general and administrative
expenses for the three months ended January 31, 2021 versus the prior period due
to primarily professional fees, which accounted for approximately $86,149 of the
increase that were related to consulting. The Company also incurred $151,342 of
accounting fees in relation to regulatory reporting and $204,414 of executive
compensation.
We incurred an overall increase of $1,334,419 in research and development
expenses for the three months ending January 31, 2021 versus the comparative
period. Considering the total increase, $129,869 is attributable to retain
regulatory experts to provide strategic and operational regulatory input for the
Company's Ii-Key-SARS-CoV-2 peptide vaccine development program, including gap
analysis, pre-IND meeting and IND authoring, publication and FDA submission. The
Company enlisted the assistance of certain consultants for monitoring and data
analysis, which incurred expenses amounting to $488,075. The Company also
incurred expenses testing the Ii-Key-SARS-CoV-2 Peptide Vaccine and laboratory
testing and analysis Company engaged a consultant to provide services for
individual studies and projects, which include synthetic process development,
chemical synthesis, analytical method development and analysis of peptides and
any other services relating to chemistry services for the amount of $342,260 The
Company incurred expenses from a consultant of $104,108 for the evaluation of
immunogenicity of synthetic Ii-Key-SARS-CoV-2 prophylactic peptide vaccines.
Lastly, the Company incurred expenses of $98,636 for the manufacture of GMP
material and perform a stability study.
Our interest expense for the three months ended January 31, 2021 increased by
$40,848 compared to the three months ended January 31, 2020 due to the
additional principal resulting from the compounding of interest accrued on the
payable to Foundation.
Six months ended January 31, 2021 compared to Six months ended January 31, 2020
We reported a net loss of $3,820,296 and $755,631 for the six-month periods,
ended January 31, 2021 and January 31, 2020, respectively. The increase in the
net loss resulted from a $79,912 increase in interest expense, an increase of
$1,976,298 in research and development expense and an increase of $988,445 in
general and administrative expenses.
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We incurred an overall increase of $988,455 in general and administrative
expenses for the six months ended January 31, 2021 versus the prior period due
to professional fees, which accounted for approximately $627,626 of the
increase. Of that $627,625, $500,000 is attributable for consulting services in
connection with obtaining regulatory approval for our Ii-Key-SARS-CoV-2 Peptide
Vaccine in Malaysia. The Company also incurred $167,342 of accounting fees in
relation to regulatory reporting and $204,414 of executive compensation. The
Company has estimated and allocated certain expenses based on resources provided
by Generex Biotechnology to the Company.
We incurred an overall increase of $1,976,298 regarding research and development
expenses for the six months ending January 31, 2021 versus the comparative
period. Considering the total increase, $195,466 is attributable to retain
regulatory experts to provide strategic and operational regulatory input for the
Company's Ii-Key-SARS-CoV-2 peptide vaccine development program, including gap
analysis, pre-IND meeting and IND authoring, publication and FDA submission. The
Company enlisted the assistance of certain consultants for monitoring and data
analysis, which incurred expenses amounting to $1,050,138. The Company also
incurred expenses testing the Ii-Key-SARS-CoV-2 Peptide Vaccine and laboratory
testing and analysis Company engaged a consultant to provide services for
individual studies and projects, which include synthetic process development,
chemical synthesis, analytical method development and analysis of peptides and
any other services relating to chemistry services for the amount of $513,389.
The Company incurred expenses from a consultant of $104,108 for the evaluation
of immunogenicity of synthetic Ii-Key-SARS-CoV-2 prophylactic peptide vaccines.
Lastly, the Company incurred expenses of $109,821 for the manufacture of GMP
material and perform a stability study.
Our interest expense for the six months ended January 31, 2021 increased by
$79,912 compared to the six months ended January 31, 2020 due to the additional
principal resulting from the compounding of interest accrued on the payable to
Foundation.
Financial Condition, Liquidity and Resources
COVID-19
The ongoing coronavirus outbreak which began in China at the beginning of 2020
has impacted various businesses throughout the world, including travel
restrictions and the extended shutdown of certain businesses in impacted
geographic regions. If the coronavirus outbreak situation should continue to
worsen, we may experience disruptions to our business including, but not limited
disruptions of our ongoing clinical trials and the operations of our partners.
While we expect delays in research and development, the extent to which the
coronavirus impacts our operations or those of our third-party partners will
depend on future developments, which are highly uncertain and cannot be
predicted with confidence, including the duration of the outbreak, new
information that may emerge concerning the severity of the coronavirus and the
actions to contain the coronavirus or treat its impact, among others. Any such
disruptions or losses we incur could have a material adverse effect on our
financial results and our ability to conduct business as expected.
Sources of Liquidity
To date, we have financed our activities primarily through capital contributions
from Generex, our majority shareholder. Generex in the past has raised capital
for our operations through private placements of Generex common stock,
securities convertible into Generex common stock, and investor loans. We will
require additional funds to support our working capital requirements and any
development or other activities or will need to curtail its research and
development and other planned activities or suspend operations. The Company will
rely both on financing from third parties and from Generex, which may sell
shares of our common stock, to fund our operations, development, and other
activities.
As a public company, NGIO will begin to incur costs for corporate activities
such as executives, corporate accounting for external reporting, and investor
relations.
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As of March 12, 2021, our cash position is not sufficient for twelve months of
operations. Generex has financed our activities to date. Our cash balances have
been deminimus throughout fiscal 2021.
Management may seek to meet all or some of our operating cash flow requirements
through financing activities, such as public or private placement of our common
stock, preferred stock offerings and offerings of debt and convertible debt
instruments as well as through merger or acquisition opportunities.
In addition, management is actively pursuing financial and strategic
alternatives, including strategic investments and divestitures, industry
collaboration activities, and potential strategic partners.
We will continue to require substantial funds to continue research and
development, including preclinical studies and clinical trials of our product
candidates, further clinical trials for AE37 and to commence sales and marketing
efforts if the FDA or other regulatory approvals are obtained. Currently, the
phase II clinical study using AE37 in combination with pembrolizumab (Keytruda
®) for treatment of metastatic triple negative breast cancer and li-Key research
for vaccines are our only ongoing research and development projects in this
regard, we have committed to provide the NASBP Foundation, Inc. financial
support for clinical research using AE37 in combination with pembrolizumab
(Keytruda ®) up to $2,118,461 upon NASBP achieving certain milestones. As of
January 31, 2021, we have incurred $692,063 against this commitment.
Cash Flows for the Six Months ended January 31, 2021
For the six months ended January 31, 2021, we used $84 in cash from operating
activities. There were no cash flows from financing or investing activities. The
use for operating activities included a net loss of $3,820,296 and an increase
in interest payable to the foundation of $488,424, and an increase in accounts
payable and accrued expenses of $3,331,788, of which $3,049,389 is attributable
to expenses paid by the parent company.
Cash Flows for the Six Months ended January 31, 2020
For the six months ended January 31, 2020, we used $215 in cash from operating
activities. There were no cash flows from financing or investing activities. The
use for operating activities included a net loss of $775,631, an increase in
interest payable to the foundation of $408,512 and an increase in accounts
payable and accrued expenses of $366,904, of which $29,700 was attributable to
expenses paid by the parent company.
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