UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.Washington, DC 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 |
For the quarterly period ended September 30, 2017
OR
☐ |
For the transition period from to |
For the transition period from to
Commission file number 000-52091File Number: 001-39563
GEOVAX LABS,, INC.
(Exact name of Registrantregistrant as specified in its charter)
Delaware |
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(State or other jurisdiction | ( | |
of incorporation or organization) | ||
1900 Lake Park Drive, Suite 380 | ||
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Smyrna, Georgia | 30080 | |
(Address of principal executive offices) | (Zip |
(678) 384-7220
(Registrant’sRegistrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class | Trading Symbol | Name of each Exchange on which Registered |
Common Stock $0.001 par value | GOVX | The Nasdaq Capital Market |
Warrants to Purchase Common Stock | GOVXW | The Nasdaq Capital Market |
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirementsrequirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-acceleratednon‑accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Emerging growth company ☐ Smaller reporting company ☒ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
Yes ☐ No ☒
As ofof November 9, 2017, 83,913,90011, 2021, 6,381,541 shares of the Registrant’s common stock, $.001 par value, were issued and outstanding.
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION | ||
Item 1 | Condensed Consolidated Financial Statements: | |
| Condensed Consolidated Balance Sheets as of September 30, | 1 |
Condensed Consolidated Statements of Operations for the three-month and nine-month periods ended September 30, | 2 | |
| Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficiency) for the three-month and nine-month periods ended September 30, 2021 and 2020 (unaudited) | 3 |
Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, | ||
| Notes to Condensed Consolidated Financial Statements (unaudited) | |
Item 2 | Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3 | Quantitative and Qualitative Disclosures about Market Risk |
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Item 4 | Controls and Procedures |
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PART II – OTHER INFORMATION | ||
Item 1 | Legal Proceedings |
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Item 1A | Risk Factors |
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Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 3 | Defaults Upon Senior Securities |
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Item 4 | Mine Safety Disclosures |
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Item 5 | Other Information |
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Item 6 | Exhibits |
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SIGNATURES |
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Part I -- FINANCIAL INFORMATION
Item 1Financial Statements
GEOVAX LABS, INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS |
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 18,107,019 | $ | 9,883,796 | ||||
Grant funds and other receivables | 0 | 182,663 | ||||||
Prepaid expenses and other current assets | 52,818 | 168,689 | ||||||
Total current assets | 18,159,837 | 10,235,148 | ||||||
Property and equipment, net | 168,653 | 147,741 | ||||||
Deposits | 11,010 | 11,010 | ||||||
Total assets | $ | 18,339,500 | $ | 10,393,899 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 289,438 | $ | 267,702 | ||||
Accrued expenses | 46,212 | 359,281 | ||||||
Current portion of notes payable | 0 | 183,326 | ||||||
Total current liabilities | 335,650 | 810,309 | ||||||
Note payable, net of current portion | 0 | 14,738 | ||||||
Total liabilities | 335,650 | 825,047 | ||||||
Commitments (Note 8) | ||||||||
Stockholders’ equity: | ||||||||
Preferred Stock, $.01 par value: | ||||||||
Authorized shares – 10,000,000 Series B convertible preferred stock, $1,000 stated value; -0- and 100 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 0 | 76,095 | ||||||
Common stock, $.001 par value: | ||||||||
Authorized shares – 600,000,000 Issued and outstanding shares – 6,381,541 and 3,834,095 at September 30, 2021 and December 31, 2020, respectively | 6,382 | 3,834 | ||||||
Additional paid-in capital | 68,630,363 | 55,294,504 | ||||||
Accumulated deficit | (50,632,895 | ) | (45,805,581 | ) | ||||
Total stockholders’ equity | 18,003,850 | 9,568,852 | ||||||
Total liabilities and stockholders’ equity | $ | 18,339,500 | $ | 10,393,899 |
GEOVAX LABS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Grant and collaboration revenue | $ | 247,994 | $ | 440,106 | $ | 895,866 | $ | 653,986 | ||||||||
Operating expenses: | ||||||||||||||||
Research and development | 498,200 | 683,939 | 1,568,093 | 1,519,519 | ||||||||||||
General and administrative | 340,143 | 220,707 | 985,001 | 1,472,030 | ||||||||||||
Total operating expenses | 838,343 | 904,646 | 2,553,094 | 2,991,549 | ||||||||||||
Loss from operations | (590,349 | ) | (464,540 | ) | (1,657,228 | ) | (2,337,563 | ) | ||||||||
Other income: | ||||||||||||||||
Interest income | 1,592 | 340 | 3,249 | 1,249 | ||||||||||||
Total other income | 1,592 | 340 | 3,249 | 1,249 | ||||||||||||
Net loss | $ | (588,757 | ) | $ | (464,200 | ) | $ | (1,653,979 | ) | $ | (2,336,314 | ) | ||||
Basic and diluted: | ||||||||||||||||
Loss per common share | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.06 | ) | ||||
Weighted averages shares outstanding | 67,000,857 | 44,305,161 | 60,757,109 | 38,796,896 |
See accompanying notes to condensed consolidated financial statements.
GEOVAX LABS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSOPERATIONS
(Unaudited)
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (1,653,979 | ) | $ | (2,336,314 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 20,694 | 21,585 | ||||||
Stock-based compensation expense | 43,535 | 525,887 | ||||||
Changes in assets and liabilities: | ||||||||
Grant funds receivable | (61,821 | ) | 111,213 | |||||
Prepaid expenses and other current assets | 49,855 | (25,648 | ) | |||||
Accounts payable and accrued expenses | 361,695 | 125,599 | ||||||
Total adjustments | 413,958 | 758,636 | ||||||
Net cash used in operating activities | (1,240,021 | ) | (1,577,678 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (4,350 | ) | - | |||||
Net cash used in investing activities | (4,350 | ) | - | |||||
Cash flows from financing activities: | ||||||||
Net proceeds from sale of preferred stock | 980,000 | - | ||||||
Net proceeds from sale of common stock | 154,167 | 1,028,426 | ||||||
Net cash provided by financing activities | 1,134,167 | 1,028,426 | ||||||
Net decrease in cash and cash equivalents | (110,204 | ) | (549,252 | ) | ||||
Cash and cash equivalents at beginning of period | 454,030 | 1,060,348 | ||||||
Cash and cash equivalents at end of period | $ | 343,826 | $ | 511,096 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Grant and collaboration revenue | $ | 30,414 | $ | 415,458 | $ | 220,539 | $ | 1,572,037 | ||||||||
Operating expenses: | ||||||||||||||||
Research and development | 1,224,362 | 416,756 | 2,659,980 | 1,687,113 | ||||||||||||
General and administrative | 757,432 | 435,013 | 2,562,641 | 1,364,650 | ||||||||||||
Total operating expenses | 1,981,794 | 851,769 | 5,222,621 | 3,051,763 | ||||||||||||
Loss from operations | (1,951,380 | ) | (436,311 | ) | (5,002,082 | ) | (1,479,726 | ) | ||||||||
Other income (expense): | ||||||||||||||||
Interest income | 877 | 90 | 3,998 | 902 | ||||||||||||
Interest expense | 0 | (134,427 | ) | (1,286 | ) | (142,722 | ) | |||||||||
Gain on debt extinguishment | 0 | 0 | 172,056 | 0 | ||||||||||||
Total other income (expense) | 877 | (134,337 | ) | 174,768 | (141,820 | ) | ||||||||||
Net loss | $ | (1,950,503 | ) | $ | (570,648 | ) | $ | (4,827,314 | ) | $ | (1,621,546 | ) | ||||
Basic and diluted: | ||||||||||||||||
Net loss per common share | $ | (0.31 | ) | $ | (0.73 | ) | $ | (0.80 | ) | $ | (2.85 | ) | ||||
Weighted average shares outstanding | 6,349,297 | 782,978 | 6,005,032 | 569,955 |
See accompanying notes to condensed consolidated financial statements.
GEOVAX LABS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIENCY)
(Unaudited)
Three-Month and Nine-Month Periods Ended September 30, 2021 | ||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional | Accumulated | Stockholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Paid-in Capital | Deficit | Equity | ||||||||||||||||||||||
Balance at December 31, 2020 | 100 | $ | 76,095 | 3,834,095 | $ | 3,834 | $ | 55,294,504 | $ | (45,805,581 | ) | $ | 9,568,852 | |||||||||||||||
Sale of common stock for cash | 0 | 0 | 1,644,000 | 1,644 | 9,407,276 | 0 | 9,408,920 | |||||||||||||||||||||
Issuance of common stock upon warrant exercise | 0 | 0 | 835,900 | 836 | 3,173,320 | 0 | 3,174,156 | |||||||||||||||||||||
Issuance of common stock for services | 0 | 0 | 1,472 | 1 | 5,999 | 0 | 6,000 | |||||||||||||||||||||
Stock option expense | - | - | - | - | 56,190 | - | 56,190 | |||||||||||||||||||||
Net loss for the three months ended March 31, 2021 | - | - | - | - | - | (1,562,778 | ) | (1,562,778 | ) | |||||||||||||||||||
Balance at March 31, 2021 | 100 | 76,095 | 6,315,467 | 6,315 | 67,937,289 | (47,368,359 | ) | 20,651,340 | ||||||||||||||||||||
Repurchase of preferred stock | (100 | ) | (76,095 | ) | 0 | 0 | 75,095 | 0 | (1,000 | ) | ||||||||||||||||||
Issuance of common stock for services | 0 | 0 | 12,235 | 13 | 65,828 | 0 | 65,841 | |||||||||||||||||||||
Stock option expense | - | 0 | - | 0 | 56,190 | 0 | 56,190 | |||||||||||||||||||||
Net loss for the three months ended June 30, 2021 | - | 0 | - | 0 | 0 | (1,314,033 | ) | (1,314,033 | ) | |||||||||||||||||||
Balance at June 30, 2021 | 0 | 0 | 6,327,702 | 6,328 | 68,134,402 | (48,682,392 | ) | 19,458,338 | ||||||||||||||||||||
Issuance of common stock upon warrant exercise | 0 | 0 | 53,839 | 54 | 229,946 | 0 | 230,000 | |||||||||||||||||||||
Stock option expense | - | 0 | - | 0 | 56,190 | 0 | 56,190 | |||||||||||||||||||||
Issuance of warrant for technology license | - | 0 | - | 0 | 209,825 | 0 | 209,825 | |||||||||||||||||||||
Net loss for the three months ended September 30, 2021 | - | 0 | - | 0 | 0 | (1,950,503 | ) | (1,950,503 | ) | |||||||||||||||||||
Balance at September 30, 2021 | 0 | $ | 0 | 6,381,541 | $ | 6,382 | $ | 68,630,363 | $ | (50,632,895 | ) | $ | 18,003,850 |
GEOVAX LABS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIENCY)
(Unaudited)
Three-Month and Nine-Month Periods Ended September 30, 2020 | ||||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional | Accumulated | Stockholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Paid-in Capital | Deficit | Equity (Deficiency) | ||||||||||||||||||||||
Balance at December 31, 2019 | 2,486 | $ | 1,932,433 | 14,992 | $ | 15 | $ | 39,340,509 | $ | (42,847,513 | ) | $ | (1,574,556 | ) | ||||||||||||||
Sale of convertible preferred stock for cash | 300 | 300,000 | - | - | - | - | 300,000 | |||||||||||||||||||||
Conversion of preferred stock to common stock | (2,386 | ) | (1,856,338 | ) | 674,067 | 674 | 1,855,664 | - | - | |||||||||||||||||||
Common stock issued for services | 0 | 0 | 521 | 1 | 5,999 | 0 | 6,000 | |||||||||||||||||||||
Net loss for the three months ended March 31, 2020 | - | - | - | - | - | (595,694 | ) | (595,694 | ) | |||||||||||||||||||
Balance at March 31, 2020 | 400 | 376,095 | 689,580 | 690 | 41,202,172 | (43,443,207 | ) | (1,864,250 | ) | |||||||||||||||||||
Common stock issued for services | 0 | 0 | 2,124 | 2 | 11,998 | 0 | 12,000 | |||||||||||||||||||||
Warrants issued in bridge financing | - | 0 | - | 0 | 457,833 | 0 | 457,833 | |||||||||||||||||||||
Net loss for the three months ended June 30, 2020 | - | 0 | - | 0 | 0 | (455,204 | ) | (455,204 | ) | |||||||||||||||||||
Balance at June 30, 2020 | 400 | 376,095 | 691,704 | 692 | 41,672,003 | (43,898,411 | ) | (1,849,621 | ) | |||||||||||||||||||
Conversion of preferred stock to common stock | (300 | ) | (300,000 | ) | 42,723 | 43 | 299,957 | 0 | 0 | |||||||||||||||||||
Warrants exercised for common stock | 0 | 0 | 36,902 | 37 | (37 | ) | 0 | 0 | ||||||||||||||||||||
Common stock issued upon debenture conversion | 0 | 0 | 177,626 | 177 | 569,340 | 0 | 569,517 | |||||||||||||||||||||
Common stock issued upon cancellation of accrued compensation | 0 | 0 | 300,001 | 300 | 1,499,700 | 0 | 1,500,000 | |||||||||||||||||||||
Sale of common stock for cash | 0 | 0 | 2,310,000 | 2,310 | 11,156,186 | 0 | 11,158,496 | |||||||||||||||||||||
Common stock issued for services | 0 | 0 | 517 | 0 | 6,000 | 0 | 6,000 | |||||||||||||||||||||
Net loss for the three months ended September 30, 2020 | - | 0 | - | 0 | 0 | (570,648 | ) | (570,648 | ) | |||||||||||||||||||
Balance at September 30, 2020 | 100 | $ | 76,095 | 3,559,473 | $ | 3,559 | $ | 55,203,149 | $ | (44,469,059 | ) | $ | 10,813,744 |
See accompanying notes to consolidated financial statements.
GEOVAX LABS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
Nine Months Ended September 30, | ||||||||
2021 | 2020 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (4,827,314 | ) | $ | (1,621,546 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 26,806 | 2,983 | ||||||
Stock-based compensation for employees and directors | 168,570 | 0 | ||||||
Stock-based compensation for consultants | 80,733 | 24,000 | ||||||
Warrant issued for technology license fee | 209,825 | 0 | ||||||
Gain on debt extinguishment | (172,056 | ) | 0 | |||||
Changes in assets and liabilities: | ||||||||
Grant funds and other receivables | 182,663 | (72,551 | ) | |||||
Prepaid expenses and other current assets | 106,979 | 82,274 | ||||||
Amortization of debt discount | 0 | 124,185 | ||||||
Accounts payable and accrued expenses | (289,477 | ) | 252,036 | |||||
Total adjustments | 314,043 | 412,927 | ||||||
Net cash used in operating activities | (4,513,271 | ) | (1,208,619 | ) | ||||
Cash flows from investing activities | ||||||||
Purchase of property and equipment | (47,718 | ) | (2,470 | ) | ||||
Net cash used in investing activities | (47,718 | ) | (2,470 | ) | ||||
Cash flows from financing activities: | ||||||||
Net proceeds from sale of common stock and warrants | 9,408,920 | 11,158,496 | ||||||
Net proceeds from sale of preferred stock | 0 | 300,000 | ||||||
Net proceeds from warrant exercises | 3,404,156 | 0 | ||||||
Net proceeds from bridge financing | 0 | 888,500 | ||||||
Net proceeds from issuance of note payable | 0 | 170,200 | ||||||
Repurchase of preferred stock | (1,000 | ) | 0 | |||||
Principal repayment of note payable | (27,864 | ) | (8,854 | ) | ||||
Net cash provided by financing activities | 12,784,212 | 12,508,342 | ||||||
Net increase in cash and cash equivalents | 8,223,223 | 11,297,253 | ||||||
Cash and cash equivalents at beginning of period | 9,883,796 | 283,341 | ||||||
Cash and cash equivalents at end of period | $ | 18,107,019 | $ | 11,580,594 |
Supplemental disclosure of cash flow information:non-cash financing activities:
During the nine months ended September 30, 2017, 178 shares of Series C Convertible Preferred Stock were converted into 11,862,000 shares of common stock. During the nine months ended September 30, 2016, 132 shares of Series C Convertible Preferred Stock were converted into 1,400,000 shares of common stock (Note 8).2021:
● | 149,705 shares of common stock were issued upon the cashless exercise of stock purchase warrants |
● | $172,056 of principal and accrued interest related to a note payable was extinguished upon the loan’s forgiveness |
During the nine months ended September 30, 2020:
● | 716,790 shares of common stock were issued upon conversion of convertible preferred stock |
● | 36,902 shares of common stock were issued upon the cashless exercise of stock purchase warrants |
● | 300,001 shares of common stock and 300,001 stock purchase warrants were issued in exchange for cancellation of $1,500,000 owed to current and former employees and directors |
● | 177,626 shares of common stock, 126,042 pre-funded stock purchase warrants and 303,668 stock purchase warrants were issued upon conversion of $1,200,000 convertible debentures and $14,667 of related accrued interest |
See accompanying notes to condensed consolidated financial statements.
GEOVAX LABS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30,, 2017 2021
(unaudited)
1.Description of Business |
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GeoVax Labs, Inc. (“GeoVax” or the “Company”), is a clinical-stage biotechnology company developing humanimmunotherapies and vaccines against infectious diseases and cancers using our novel vector vaccine platform. Our currentplatforms. GeoVax’s Modified Vaccinia Ankara-Virus-Like Particle (MVA-VLP) based platform utilizes MVA, a large virus capable of carrying several vaccine antigens, to express proteins that assemble into highly effective virus-like particle (VLP) immunogens in the person receiving the vaccine. The production of VLPs in the person being vaccinated can mimic virus production in a natural infection, stimulating both the humoral and cellular arms of the immune system to recognize, prevent, and control the target infection. The MVA-VLP derived vaccines can elicit durable immune responses in the host similar to a live-attenuated virus, while providing the safety characteristics of a replication-defective vector.
GeoVax’s MVA-VLP development programs are focused primarily on preventive vaccines against Human Immunodeficiency Virus (HIV),the SARS-CoV-2 virus (COVID-19) and immunotherapies for solid tumor cancers. Other development programs include preventive vaccines against Zika Virus, hemorrhagic fever viruses (Ebola, Sudan, Marburg, Lassa), Human Immunodeficiency Virus (HIV), and malaria, as well as therapeutic vaccines for chronic Hepatitis B infections and cancers. We believe our technology and vaccine development expertise are well-suited for a variety of human infectious diseases and we intend to pursue further expansionmalaria. Certain of our product pipeline.
Certain of our vaccine development activities have been, and continue to be, financially supported by the U.S. government.Government. This support has been both in the form of research grants and contracts awarded directly to us, as well as indirect support for the conduct of preclinical animal studies and human clinical trials.
We operateOn September 28, 2021, GeoVax entered into an Assignment and License Agreement with PNP Therapeutics, Inc., whereby GeoVax expanded its immuno-oncology pipeline and added a new technology platform through the acquisition of exclusive rights to Gedeptin®, a novel patented product for the treatment of solid tumors through a gene therapy strategy known as GDEPT (Gene-Directed Enzyme Prodrug Therapy). In GDEPT, a vector is used to selectively transduce tumor cells with a nonhuman gene, which expresses an enzyme that can convert a nontoxic prodrug into a potent antitumor compound. A Phase 1/2 clinical trial is currently enrolling to evaluate the safety and efficacy of repeat cycles of Gedeptin therapy in a highly regulatedpatients with recurrent head and competitive environment.neck squamous cell carcinoma (HNSCC), with tumors accessible for injection and no curable treatment options. The manufacturingFDA has granted Gedeptin Orphan Drug status for the treatment of HNSCC and marketingthe initial stage of pharmaceutical products require approval from, and are subject to,the ongoing oversightclinical trial is being funded by the Food and Drug Administration (FDA) in the United States, by the European Medicines Agency (EMA) in the European Union, and by comparable agencies in other countries. Obtaining approval for a new pharmaceutical product is never certain, may take many years and often involves expenditure of substantial resources. Our goal isFDA pursuant to build a profitable company by generating income from products we develop and commercialize, either alone its Orphan Products Clinical Trials Grants Program. GeoVax’s license to Gedeptin includes rights to expand its use to all human diseases and/or with one or more potential strategic partners.conditions including, but not limited to, cancers.
GeoVax is incorporated under the laws of the State of Delaware and our principal offices are located in Smyrna,the metropolitan Atlanta, Georgia (metropolitan Atlanta area).area.
2.Basis of Presentation |
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The accompanying condensed consolidated financial statements at September 30, 2017 2021 and for the three-monththree-month and nine-monthnine-month periods ended September 30, 2017 2021 and 20162020 are unaudited, but include all adjustments, consisting of normal recurring entries, which we believe to be necessary for a fair presentation of the dates and periods presented. Interim results are not necessarily indicative of results for a full year. The financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K10-K for the year ended December 31, 2016. 2020. We expect our operating results to fluctuate for the foreseeable future; therefore, period-to-period comparisons should not be relied upon as predictive of the results in future periods.
We enacted reverse stock splits of our common stock on September 25, 2020 (1-for-20) and on January 21, 2020 (1-for-2,000). The accompanying financial statements, and all share and per share information contained herein, have been retroactively restated to reflect the reverse stock splits.
Our financial statements have been prepared assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for at least the twelve-monthtwelve-month period following the issue date of thethese consolidated financial statements. We are devoting substantially all of our present efforts to research and development of our vaccine and immunotherapy candidates. We have funded our activities to date from sales of our equity securities, government grants and clinical trial assistance, and from sales of our equity securities.corporate and academic collaborations. We will continueexpect to incur future net losses and require substantial funds toas we continue these activities.
We believe that our existing cash resources and government funding commitments will be sufficient to continue our planned operations into the first quarter of 2018. Due to our history of operating losses and our continuing need for capital to conduct our research and development activities, there is substantial doubt concerningactivities. Our transition to profitability will be dependent upon, among other things, the successful development and commercialization of our abilityproduct candidates. We may never achieve profitability or positive cash flows, and unless and until we do, we will continue to operate as a going concern beyond that date.need to raise additional funding. We are currently exploring sourcesintend to fund future operations through additional private and/or public offerings of debt or equity securities. In addition, we may seek additional capital through additional government grants and contracts. We also intend to seek additional funds through sales of our equity securities, exercise of currently outstanding stock purchase warrants,arrangements with strategic partners or from other means. Management believessources. There can be no assurance that we will be successful in securing theable to raise additional capital required to continue the Company’s planned operations, but that our plans do not fully alleviate the substantial doubt about the Company’s ability to operate as a going concern. Additional funding may not be available on favorable termsfunds or at all. If we fail to obtain additional capital when needed, we will be required to delay, scale back,achieve or eliminate somesustain profitability or all of our research and development programs as well as reduce our general and administrative expenses.positive cash flows from operations.
3.Significant Accounting Policies and Recent Accounting Pronouncements |
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We disclosed in Note 2 to our consolidated financial statements included in our Annual Report on Form 10-K10-K for the year ended December 31, 2016 2020 those accounting policies that we consider significant in determining our results of operations and financial position. ThereDuring the nine months ended September 30, 2021, there have been no material changes to, or in the application of, the accounting policies previously identified and described in the Form 10-K.
In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which amends Accounting Standards Codification Topic 718, Compensation – Stock Compensation. ASU 2016-09 is an attempt to simplify several aspects of the accounting for stock-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities,10-K, and classification on the statement of cash flows. We adopted ASU 2016-09 effective January 1, 2017; such adoption had no material impact on our financial statements.
In May 2017, the FASB issued Accounting Standards Update 2017-09, Scope of Modification Accounting (“ASU 2017-09”), which amends Accounting Standards Codification Topic 718, Compensation – Stock Compensation. ASU 2017-09 is an attempt to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718 Compensation – Stock Compensation, to a change to the terms or conditions of a share-based payment award. ASU 2017-09 is effective for the Company beginning January 1, 2018. We are currently evaluating the impact of the adoption of ASU 2017-09 on our financial statements.
In July 2017, the FASB issued Accounting Standards Update 2017-11, (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”), which amends Accounting Standards Codification Topic 260, Earnings Per Share, Topic 480, Distinguishing Liabilities from Equity, and Topic 815, Derivatives and Hedging. ASU 2017-11 changes the classification of certain equity-linked financial instruments (or embedded features) with down round features, and clarifies existing disclosure requirements for equity-classified instruments. ASU 2017-11 is effective for the Company beginning January 1, 2019. We are currently evaluating the impact of the adoption of ASU 2017-11 on our financial statements.
Therethere have been no other recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2017, as compared to the recent accounting pronouncements described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which we expect to have a material impact on our financial statements.
4.Basic and Diluted Loss Per Common Share |
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Basic netand diluted loss per common share isare computed usingbased on the weighted-averageweighted average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of common shares and potentially dilutive common share equivalents outstanding during the period. Potentially dilutive commonoutstanding. Common share equivalents consist of common shares issuable upon conversion of convertible preferred stock, and upon exercise of stock options and stock purchase warrants. CommonAll common share equivalents which potentially could dilute basic earningsare excluded from the computation of diluted loss per share insince the future, andeffect would be anti-dilutive. The weighted average number of common share equivalents which were excluded from the computation of diluted loss per share astotaled 2,965,451 and 2,550,184 shares for the effect would be anti-dilutive, totaled approximately 277.5 millionthree-month and 73.1 million shares at nine-month periods ended September 30, 20172021, respectively, as compared to 204,553 and 2016, 78,754 shares for the three-month and nine-month periods ended September 30, 2020, respectively.
5.Property and Equipment |
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Property and equipment as shown on the accompanying Condensed Consolidated Balance Sheets is composed of thethe following as of September 30, 2017 2021 and December 31, 2016:2020:
September 30, 2021 | December 31, 2020 | |||||||
Equipment and furnishings | $ | 591,554 | $ | 543,836 | ||||
Leasehold improvements | 115,605 | 115,605 | ||||||
Total property and equipment | 707,159 | 659,441 | ||||||
Accumulated depreciation and amortization | (538,506 | ) | (511,700 | ) | ||||
Property and equipment, net | $ | 168,653 | $ | 147,741 |
September 30, 2017 | December 31, 2016 | |||||||
Laboratory equipment | $ | 530,306 | $ | 525,956 | ||||
Leasehold improvements | 115,605 | 115,605 | ||||||
Other furniture, fixtures & equipment | 28,685 | 28,685 | ||||||
Total property and equipment | 674,596 | 670,246 | ||||||
Accumulated depreciation and amortization | (636,112 | ) | (615,418 | ) | ||||
Property and equipment, net | $ | 38,484 | $ | 54,828 |
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Accrued expenses as shown on the accompanying Condensed Consolidated Balance Sheets isare composed of the following as of September 30, 2017 2021 and December 31, 2016:2020:
September 30, 2021 | December 31, 2020 | |||||||
Accrued salaries | $ | 11,212 | $ | 279,696 | ||||
Other accrued expenses | 35,000 | 79,585 | ||||||
Total accrued expenses | $ | 46,212 | $ | 359,281 |
7.Notes Payable
September 30, 2017 | December 31, 2016 | |||||||
Accrued management salaries | $ | 441,942 | $ | 201,170 | ||||
Accrued directors’ fees | 156,469 | 78,070 | ||||||
Other accrued expenses | 15,000 | 15,000 | ||||||
Total accrued expenses | $ | 613,411 | $ | 294,240 |
GRA Note – On February 28, 2018, we entered into a Senior Note Purchase Agreement with Georgia Research Alliance, Inc. (GRA) pursuant to which we issued a five-year Senior Promissory Note (the “GRA Note”) to GRA in exchange for $50,000. The GRA Note bore an annual interest rate of five percent. Interest expense related to the GRA Note for the three-month and nine-month periods ended September 30, 2021 was $-0- and $633, respectively, as compared to $411 and $1,344, respectively, for the same periods of 2020. During May 2021, we repaid the remaining principal balance of $22,737 and retired the GRA Note.
CARES Act Paycheck Protection Program Loan –On April 17, 2020, we received a $170,200 bank loan backed by the United States Small Business Administration (SBA) pursuant to the Paycheck Protection Program (PPP) provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The loan bore an annual interest rate of one percent. We recorded accrued interest expense related to the PPP Loan of $-0- and $653 for the three-month and nine-month periods ended September 30, 2021, respectively, as compared to $429 and $774, respectively, for the same periods of 2020. During May 2021, upon receiving payment from the SBA, the lender forgave the full principal balance of $170,200 together with $1,856 of accrued interest and extinguished the PPP Loan.
8.Commitments |
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Lease Agreement
We lease approximately 8,4008,400 square feet of office and laboratory space pursuant to an operating lease which expires on December 31, 2018, with an additional 12-month renewal option. As of 2022. Rent expense for the three-month and nine-month periods ended September 30, 2017, our future2021 was $42,803 and $128,410, respectively, as compared to $41,539 and $124,617, respectively, for the same periods of 2020. Future minimum lease payments total $194,543, $37,998$42,803 for the remainder of which will 2021 and $176,356 in 2022, although the lease may be payable during 2017 and $156,545 in 2018.terminated at any time by either party with ninety days’ written notice.
Other Commitments
In the normal course of business, we may enter into various firm purchase commitments related to production and testing of our vaccine, products, conduct of our clinical trials,research studies, and other research-related activities. As of September 30, 2017, we had2021, there are approximately $79,000$607,000 of unrecorded outstanding purchase commitments to our vendors and subcontractors, all of which we expect will be paid during 2017. We expect this entire amount to be reimbursable to us pursuant to currently outstanding government grants (See Note 10).due in 2021.
9.Stockholders’ Equity |
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Series B Convertible Preferred Stock
As of September 30, 2017, there arePreferred Stock –On June 7, 2021, we repurchased the remaining 100 shares of our Series B Convertible Preferred Stock (“Series B Preferred Stock”)for a total price of $1,000. As of September 30, 2021, there are 0 shares of our preferred stock outstanding. The Series B Preferred Stock may be converted at any time at
Public Offering –On February 11, 2021, we closed an underwritten public offering of 1,644,000 shares of our common stock, including 204,000 shares sold pursuant to the optionfull exercise of the holder intounderwriter’s option to purchase additional shares, at a price to the public of $6.25 per share. Net proceeds after deducting underwriting discounts and commissions and other offering expenses were approximately $9.4 million. Additionally, we issued to the underwriter, as a portion of the underwriting compensation, warrants to purchase 72,000 shares of our common stock at a conversionan exercise price of $0.35$6.875 per share, or 285,714 shares. During the nine months ended September 30, 2017, there were no conversions or other transactions involving our Series B Preferred Stock.share.
Series C Convertible Preferred Stock
As Options –We have a stock-based incentive plan (the “2020 Plan”) pursuant to which our Board of September 30, 2017, there are 2,690Directors may grant stock options and other stock-based awards to our employees, directors and consultants. A total of 1,500,000 shares of our Series C Convertible Preferred common stock are reserved for issuance pursuant to the 2020 Plan. During the nine months ended September 30, 2021, there were no stock option transactions related to the 2020 Plan. As of September 30, 2021, there were 602,000 stock options outstanding, with a weighted-average exercise price of $2.79 per share and a weighted-average remaining term of 9.2 years.
Stock (“Series C Preferred Stock”) outstanding. The Series C Preferred Stock may be converted at any time atPurchase Warrants –During January and February 2021, 188,688 stock purchase warrants were exercised on a cashless basis, resulting in the optionissuance of 145,866 shares of our common stock, and 690,034 stock purchase warrants were exercised for cash, resulting in the holderissuance of 690,034 shares of our common stock for net proceeds to us of $3,174,156.
During August 2021, 27,004 stock purchase warrants were exercised on a cashless basis, resulting in the issuance of 3,839 shares of our common stock, and 50,000 stock purchase warrants were exercised for cash, resulting in the issuance of 50,000 shares of our common stock for net proceeds to us of $230,000.
On September 28, 2021, in connection with our entering into an Assignment and License Agreement with PNP Therapeutics, Inc. (PNP) we issued a five-year stock purchase warrant to PNP for 100,000 shares of our common stock at a conversionan exercise price of $0.015$13.00 per share, or 179,349,733 shares. In May 2017, in connection with the issuance of our Series D Convertible Preferred Stock discussed below, the conversion price of our Series C Preferred Stock was automatically reduced from $0.05 per share to $0.015 per share. During the nine months ended September 30, 2017, we issued an aggregate of 11,862,000 shares of our common stock related to conversion of 178 shares our Series C Preferred Stock.
Series D Convertible Preferred Stock
In May 2017, we issued 1,000 shares of our Series D Convertible Preferred Stock, $1,000 stated value (“Series D Preferred Stock”), for gross proceeds of $1.0 million. Net proceeds, after deduction of certain expenses, were $980,000.
Each share of Series D Preferred Stock is entitled to a liquidation preference equal to the initial purchase price, has no voting rights, and is not entitled to a dividend. The Series D Preferred Stock is convertible at any time at the option of the holders into shares of our common stock, with an initial conversion price of $0.015 per share. The Series D Preferred Shares contains price adjustment provisions, which may, under certain circumstances, reduce the conversion price on future dates according to a formula based on the then-current market price for our common stock.
We assessed the Series D Preferred Stock under ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”), ASC Topic 815, “Derivatives and Hedging” (“ASC 815”), and ASC Topic 470, “Debt” (“ASC 470”). The preferred stock contains an embedded feature allowing an optional conversion by the holder into common stock which meets the definition of a derivative. However, we determined that the preferred stock is an “equity host” (as described by ASC 815) for purposes of assessing the embedded derivative for potential bifurcation and that the optional conversion feature is clearly and closely associated to the preferred stock host; therefore, the embedded derivative does not require bifurcation and separate recognition under ASC 815. We determined there to be a beneficial conversion feature (“BCF”) requiring recognition at its intrinsic value. Since the conversion option of the preferred stock was immediately exercisable, the amount allocated to the BCF was immediately accreted to preferred dividends, resulting in an increase in the carrying value of the preferred stock.
Increase in Authorized Shares of Common Stock
At a special meeting of our stockholders held on August 4, 2017, our stockholders approved an amendment to our certificate of incorporation to increase our authorized shares of common stock from 300,000,000 to 600,000,000 shares. The amendment to our certificate of incorporation was filed with the Delaware Secretary of State on August 4, 2017.
Common Stock Transactions
As discussed above, duringof September 30, 2021, there are 2,816,631 stock purchase warrants outstanding, with a weighted-average exercise price of $5.35 per share and a weighted-average remaining term of 3.9 years.
Other Common Stock Transactions – During the nine months ended September 30, 2017, 2021, we issued 11,862,00013,707 shares of our common stock pursuant to the conversion of 178 shares of our Series C Preferred Stock. During the nine months ended September 30, 2017, we also issued 3,816,667 shares of our common stock related to the exercise of stock purchase warrants, resulting in net proceeds to us of $154,167.consulting agreements.
Stock Options
The following table presents a summary of our stock option transactions during the nine months ended September 30, 2017:
Number of Shares | Weighted Average Exercise Price | |||||||
Outstanding at December 31, 2016 | 3,499,475 | $ | 1.21 | |||||
Granted | -- | -- | ||||||
Exercised | -- | -- | ||||||
Forfeited or expired | (115,200 | ) | 17.75 | |||||
Outstanding at September 30, 2017 | 3,384,275 | $ | 0.64 | |||||
Exercisable at September 30, 2017 | 1,140,494 | $ | 1.76 |
Stock Purchase Warrants
The following table presents a summary of stock purchase warrant transactions during the nine months ended September 30, 2017:
Number of Shares | Weighted Average Exercise Price | |||||||
Outstanding at December 31, 2016 | 32,751,578 | $ | 0.07 | |||||
Granted | -- | -- | ||||||
Exercised | (3,816,667 | ) | 0.04 | |||||
Forfeited or expired | (1,112,001 | ) | 0.57 | |||||
Outstanding at September 30, 2017 | 27,822,910 | $ | 0.02 | |||||
Exercisable at September 30, 2017 | 27,822,910 | $ | 0.02 |
10.Stock-Based Compensation Expense
Stock-based compensation expense related to ouremployee and director stock option plansoptions was $14,433$56,190 and $43,535 for$168,570 during the three-monththree-month and nine-monthnine-month periods ended September 30, 2017, respectively, as compared to $13,686 and $41,058 for the three-month and nine-month periods ended September 30, 2016, respectively. Additionally, during the three-month and nine-month periods ended September 30, 2016, we recorded $15,030 and $484,829, respectively, of2021, respectively; there was 0 stock-based compensation expense related to modifications toemployee stock purchase warrants.
options during the comparable periods of 2020.Stock-based compensation expense forrelated to stock options is recognized on a straight-line basis over the requisite service period for the award and is allocated to research and development expense or general and administrative expense based upon the related employee classification. As of September 30, 2017,2021, there was $88,449is $486,940 of unrecognized compensation expense related to stock options, whichthat we expect to recognize over a weighted averageweighted-average period of 1.92.2 years.
During the three-month and nine-month periods ended September 30, 2021, we recorded stock-based compensation expense of $29,560 and $80,733, respectively, associated with common stock issued for consulting services, as compared to $6,000 and $24,000, respectively, during the comparable periods of 2020. As of September 30, 2021, there is $39,773 recorded as a prepaid expense for these arrangements, which will be recognized as expense over the remaining terms of the related agreements. During September 2021, we recorded $209,825 of expense associated with the issuance of a stock purchase warrant to PNP in connection with our entering into a technology licensing agreement; such amount was recorded as research and development expense. 11.Income Taxes |
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Because of our historically significant net operating losses, we have not paid income taxes since inception. We maintain deferred tax assets that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. These deferred tax assets are comprised primarily of net operating loss carryforwards and also include amounts relating to nonqualified stock options and research and development credits. The net deferred tax asset has been fully offset by a valuation allowance because of the uncertainty of our future profitability and our ability to utilize the deferred tax assets. Utilization of operating losses and credits will be subject to substantial annual limitations due to ownership change provisions of Section 382 of the Internal Revenue Code. The annual limitation will may result in the expiration of net operating losses and credits before utilization.
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Government Grants and ContractsCollaboration Revenue
We receive payments from government entities under our grants and contracts withfrom the National Institute of Allergy and Infectious Diseases (NIAID) and from the U.S. Department of Defense in support of certain of our vaccine research and development efforts. We record revenue associated with government grants and contracts as the reimbursable costs are incurred. During the three-monththree-month and nine-monthnine-month periods ended September 30, 2017, 2021, we recorded $247,994$30,414 and $800,866,$220,539, respectively, of revenues associated with these grants, and contracts, as compared to $440,106$231,330 and $653,986,$1,186,844, respectively, for the comparable periods of 2016.2020. During the three-month and nine-month periods ended September 30, 2020, we also recorded $184,128 and $385,193, respectively, of revenues associated with research collaboration agreements with third parties. As of September 30, 2017, 2021, there is an aggregate of $744,769$244,888 in approved grant and contract funds available for use.use through mid-2022.
13.Subsequent Event
On November 9, 2021, we entered into an Exclusive License Agreement the (“License Agreement”) with City of Hope (“COH”) under which we obtained exclusive worldwide rights to key patents, know-how, regulatory filings and clinical materials related to COH’s COVID-19 vaccine program, currently undergoing human clinical trials. We will pay an upfront fee to COH of $5,000,000 within 30 days of the effective date of the License Agreement and are obligated to pay additional fees of $3,000,000 and $2,000,000 on the first and second anniversaries, respectively, of the effective date of the License Agreement. We will also pay COH milestone fees based on achievement of success-based development and regulatory milestones, and annual royalties on net sales of products covered by the License Agreement.
Collaboration Revenue
In March 2017, we entered into a clinical trial collaboration agreement with American Gene Technologies International, Inc. (“AGT”) whereby AGT intends to conduct a phase 1 human clinical trial investigating our combined technologies as a functional cure for HIV infection. In connection with the agreement, during the second quarterItem 2Management’s Discussion and Analysis of 2017 AGT paid to us a non-refundable feeFinancial Condition and Results of $95,000, which we recorded as collaboration revenue during the nine-month period ended September 30, 2017.
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During October 2017, we issued 8,000,000 shares of our common stock pursuant to the conversion of 120 shares of our Series C Preferred Stock. During October and November 2017 we issued 5,000,000 shares of our common stock pursuant to the exercise of stock purchase warrants for net proceeds of $75,000.
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FORWARD LOOKING STATEMENTS
In additionThe following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to historical information,help the informationreader understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying notes thereto and other disclosures included in this Quarterly Report on Form 10-Q contains forward-looking statements. Forward-looking(this “Report”), and our audited financial statements involve numerous risks and uncertainties, including but not limited to the risk factors set forth under the heading “Risk Factors”accompanying notes thereto included in theour Annual Report on Form 10-K for the year ended December 31, 2016,2020, which was filed with the Securities and should not be relied upon as predictions of future events. Certain suchExchange Commission on March 23, 2021.
Forward-Looking Statements
Information included in this Report contains forward-looking statements canwithin the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are not statements of historical facts, but rather reflect our current expectations concerning future events and results. We generally use the words “believes,” “expects,” “intends,” “plans,” “anticipates,” “likely,” “will” and similar expressions to identify forward-looking statements. All statements in this Report, other than statements of historical facts, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans, intentions, expectations and objectives could be identified by the use of forward-looking terminology such as ‘‘believes,’’ ‘‘expects,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘seeks,’’ ‘‘approximately,” ‘‘intends,’’ ‘‘plans,’’ ‘‘pro forma,’’ ‘‘estimates,’’ or ‘‘anticipates’’ or other variations thereof or comparable terminology, or by discussions of strategy, plans, or intentions.statements. Such forward-looking statements, including those concerning our expectations, involve risks, uncertainties and other factors, some of which are necessarily dependent on assumptions, data, or methods thatbeyond our control, which may be incorrect or imprecise and may be incapable of being realized. The following factors, among others, could cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and future eventsfactors include, but are not limited to, differ materially from those factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. We operate in a highly competitive, highly regulated and rapidly changing environment and our business is constantly evolving. Therefore, it is likely that new risks will emerge, and that the nature and elements of existing risks will change, over time. It is not possible for management to predict all such risk factors or contemplated inchanges therein, or to assess either the forward-looking statements:
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Readers are cautioned not to place undue relianceimpact of all such risk factors on forward-looking statements, which reflect our management’s analysis only.business. We assume no obligation to publicly update or revise any forward-looking statements.statements, whether as a result of new information, future events or otherwise. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this Report.
Overview
GeoVax is a clinical-stage biotechnology company developing humanimmunotherapies and vaccines against infectious diseases and cancercancers using a novel patentedvector vaccine platforms. GeoVax’s Modified Vaccinia Ankara-Virus LikeAnkara-Virus-Like Particle (MVA-VLP) vector vaccine platform. In thisbased platform utilizes MVA, a large virus capable of carrying several vaccine antigens, expressesto express proteins that assemble into highly effective VLPvirus-like particle (VLP) immunogens in the person receiving the vaccine. The production of VLPs in the person being vaccinated.vaccinated can mimic virus production in a natural infection, stimulating both the humoral and cellular arms of the immune system to recognize, prevent, and control the target infection. The platform elicitsMVA-VLP derived vaccines can elicit durable immune responses in the host similar to a live-attenuated virus, while providing the safety characteristics of a replication-defective vector.
Our currentGeoVax’s MVA-VLP development programs are focused primarily on preventive vaccines against HIV,the SARS-CoV-2 virus (COVID-19) and immunotherapies for solid tumor cancers. Other development programs include preventive vaccines against Zika Virus, hemorrhagichemorrhagic fever viruses (Ebola, Sudan, Marburg, Lassa), Human Immunodeficiency Virus (HIV), and malaria,malaria. Certain of our vaccine development activities have been, and continue to be, financially supported by the U.S. Government. This support has been both in the form of research grants and contracts awarded directly to us, as well as therapeutic vaccinesindirect support for chronic Hepatitis B infectionsthe conduct of preclinical animal studies and cancers. Allhuman clinical trials.
On September 28, 2021, we entered into an Assignment and License Agreement with PNP Therapeutics, Inc., whereby we expanded our immuno-oncology pipeline and added a new technology platform through the acquisition of exclusive worldwide rights to Gedeptin®, a novel patented product for the treatment of solid tumors through a gene therapy strategy known as GDEPT (Gene-Directed Enzyme Prodrug Therapy). In GDEPT, a vector is used to selectively transduce tumor cells with a nonhuman gene, which expresses an enzyme that can convert a nontoxic prodrug into a potent antitumor compound. GeoVax’s license to Gedeptin includes rights to expand its use to all human diseases and/or conditions including, but not limited to, cancers.
On November 9, 2021, we entered into an Exclusive License Agreement with City of Hope, whereby we obtained exclusive worldwide rights to develop and commercialize COH04S1, a multi-antigenic COVID-19 vaccine currently undergoing Phase 2 human clinical trials. This program is supplemental to, and synergistic with, our potential productsexisting pan coronavirus vaccine (GEO-CM02), currently in preclinical testing.
Our programs are in preclinical research and development phases, with the exceptionvarious stages of our preventive HIV vaccine, which is currently in human clinical trials.development:
● | COH04S1 is currently undergoing a Phase 2 clinical trial, evaluating its safety and efficacy as a preventive COVID-19 vaccine in blood cancer patients who have receive a bone marrow transplant or chimeric antigen receptor therapy (CAR T). The trial is also the first to compare an investigational COVID-19 vaccine to the current FDA-approved vaccine from Pfizer in people who are immunocompromised and receiving immunosuppressive therapy. |
● | Gedeptin® is currently undergoing a Phase 1/2 clinical trial for treatment of patients with advanced head and neck cancer, which is being conducted with funding support from the U.S. Food & Drug Administration (FDA) pursuant to its Orphan Products Grants Program. |
● | Our preventive HIV vaccine is focused on prevention of the subtype of HIV prevalent in the regions of the Americas, Western Europe, Japan and Australia, and which we expect will be included in an upcoming clinical trial (HVTN 132) managed by the HIV Vaccine Clinical Trials Network (HVTN) with support from the National Institute of Allergy and Infectious Diseases (NIAID) of the National Institutes of Health (NIH). |
● | A consortium led by researchers at the University of California, San Francisco (UCSF) is conducting a clinical trial using our HIV vaccine as part of a combinational therapy to induce remission in HIV-positive individuals. |
● | Our pan coronavirus vaccine (GEO-CM02) is progressing in preclinical studies with support from a Small Business Innovative Research (SBIR) grant from NIAID. |
● | Our Lassa Fever vaccine program is undergoing preclinical studies with grant support from the U.S. Department of Defense. |
● | Development of our Sudan ebolavirus and Marburg virus vaccine candidates is being supported, in part, through a collaboration with researchers at the University of Texas Medical Branch (UTMB) and Battelle Memorial Institute utilizing the suite of preclinical services from NIAID. |
Our corporate strategy is to advance, protect and protectexploit our vaccinedifferentiated vaccine/immunotherapy platform leading to the successful development of preventive and use its capabilities totherapeutic vaccines against infectious diseases and various cancers. With our design and developdevelopment capabilities, we are progressing and validating an array of products. We aimcancer and infectious disease immunotherapy and vaccine product candidates. Our goal is to advance products successfully through to human clinical testing and to seekregistration, while considering partnership or licensing arrangements for achieving regulatory approval and commercialization. We will also leverage third partythird-party resources through collaborations and partnerships for preclinical and clinical testing. Our current collaborators include National Institute of Allergytesting, and Infectious Diseases (NIAID), HIV Vaccines Trial Network (HVTN), Centers for Disease Controlmanufacturing with multiple government, academic and Prevention (CDC), United States Army Research Institute of Infectious Disease (USAMRIID), University of Pittsburgh, Georgia State University Research Foundation, University of Maryland, Peking University, Burnet Institute, American Gene Technologies International, Inc., and ViaMune, Inc.corporate entities.
We have not generated any revenues from the sale of any of ourthe products we are developing, and we do not expect to generate any such revenues for at least the next several years. Our product candidates will require significant additional research and development efforts, including extensive preclinical and clinical testing. All product candidates that we advance to clinical testing will require regulatory approval prior to commercial use and will require significant costs for commercialization. We may not be successful in our research and development efforts, and we may never generate sufficient product revenue to be profitable.
Results of Operations
The following tables summarize our results of operations for the three-month and nine-month periods ended September 30, 2021 and 2020:
Three Months Ended September 30, | ||||||||||||
2021 | 2020 | Change | ||||||||||
Grant and collaboration revenue | $ | 30,414 | $ | 415,458 | $ | (385,044 | ) | |||||
Operating expenses: | ||||||||||||
Research and development | 1,224,362 | 416,756 | 807,606 | |||||||||
General and administrative | 757,432 | 435,013 | 322,419 | |||||||||
Total operating expenses | 1,981,794 | 851,769 | 1,130,025 | |||||||||
Loss from operations | (1,951,380 | ) | (436,311 | ) | (1,515,069 | ) | ||||||
Total other income (expense) | 877 | (134,337 | ) | 135,214 | ||||||||
Net loss | $ | (1,950,503 | ) | $ | (570,648 | ) | $ | (1,379,855 | ) |
Nine Months Ended September 30, | ||||||||||||
2021 | 2020 | Change | ||||||||||
Grant and collaboration revenue | $ | 220,539 | $ | 1,572,037 | $ | (1,351,498 | ) | |||||
Operating expenses: | ||||||||||||
Research and development | 2,659,980 | 1,687,113 | 972,867 | |||||||||
General and administrative | 2,562,641 | 1,364,650 | 1,197,991 | |||||||||
Total operating expenses | 5,222,621 | 3,051,763 | 2,170,858 | |||||||||
Loss from operations | (5,002,082 | ) | (1,479,726 | ) | (3,522,356 | ) | ||||||
Total other income (expense) | 174,768 | (141,820 | ) | 316,588 | ||||||||
Net loss | $ | (4,827,314 | ) | $ | (1,621,546 | ) | $ | (3,205,768 | ) |
Grant and Collaboration Revenues
Our grant and collaboration revenues relate to grants and contracts from agencies of the U.S. government and collaborative arrangements with other third parties in support of our vaccine development activities. Detail concerning our grant and collaboration revenues and the remaining funds available for use as of September 30, 2021 is presented in the table below.
Revenues Recorded During the Periods: | Unused Funds | |||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | Available at September 30, | ||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2021 | ||||||||||||||||
Lassa Fever – U.S. Army Grant | $ | - | $ | 231,330 | $ | - | $ | 1,186,844 | $ | 165,500 | ||||||||||
Covid-19 – NIH SBIR Grant | 30,414 | - | 220,539 | - | 79,388 | |||||||||||||||
Malaria – Collaboration Revenue | - | 184,128 | - | 385,193 | - | |||||||||||||||
Total | $ | 30,414 | $ | 415,458 | $ | 220,539 | $ | 1,572,037 | $ | 244,888 |
Grant and collaboration revenues decreased by $385,044 (93%) for the three-month period ended September 30, 2021 compared to the three-month period ended September 30, 2020, and by $1,351,498 (86%) for the nine-month period ended September 30, 2021 compared to the nine-month period ended September 30, 2020, attributable to the differing mix of active grants and collaborations as shown in the table above, as well as the timing of expenditures related to such grants and collaborations.
Research and Development Expenses
Our research and development expenses can fluctuate considerably on a period-to-period basis, depending on the timing of expenditures related to our government grants and other research projects, and other factors. We do not disclose our research and development expenses by project, since our employees’ time is spread across multiple programs and our laboratory facility is used for multiple vaccine candidates. We track the direct cost of research and development expenses related to government grant revenue by the percentage of assigned employees’ time spent on each grant and other direct costs associated with each grant. Indirect costs associated with grants are not tracked separately but are applied based on a contracted overhead rate negotiated with the NIH. Therefore, the recorded revenues associated with government grants approximate the costs incurred.
For the three-month and nine-month periods ended September 30, 2021, research and development expenses increased by $807,606 (194%) and $972,867 (58%), respectively, versus the 2020 periods. Of these increases, $459,825 during each period relates to upfront license fees (inclusive of $209,825 of stock-based expense) associated with our in-license of Gedeptin in September 2021. Research and development expense for the three-month and nine-month periods ended September 30, 2021 includes stock-based compensation expense of $21,468 and $64,404, respectively associated with employee stock options; no stock-based compensation expense was allocated to research and development expense for the comparable periods of 2020 (see discussion under “Stock-Based Compensation Expense” below). The remaining increases of $326,313 and $448,638 for the three-month and nine-month periods ended September 30, 2021, respectively, relate primarily due to expenditures related to our COVID-19 vaccine program, manufacturing process development, and a generally higher level of activity, offset in part by lower external expenditures related to our government grants.
General and Administrative Expenses
For the three-month and nine-month periods ended September 30, 2021, general and administrative expenses increased by $322,419 (74%) and $1,197,991 (88%), respectively. General and administrative expense for the three-month and nine-month periods ended September 30, 2021 included stock-based compensation expense of $64,282 and $184,899, respectively; as compared to $6,000 and $24,000, respectively, for the comparable periods of 2020 (see discussion under “Stock-Based Compensation Expense” below). A significant portion of the increase during each period is attributable to higher Delaware franchise taxes, with the remainder primarily due to higher legal, accounting and patent costs; insurance costs; consulting fees; Nasdaq listing fees; investor relations costs; and personnel costs.
Stock-Based Compensation Expense
The table below shows the components of stock-based compensation expense for the three-month and nine-month periods ended September 30, 2021 and 2020. In general, stock-based compensation expense is allocated to research and development expense or general and administrative expense according to the classification of cash compensation paid to the employee, consultant or director to whom the stock compensation was granted.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Stock option expense | $ | 56,190 | $ | - | $ | 168,570 | $ | - | ||||||||
Stock issued for consulting services | 29,560 | 6,000 | 80,733 | 24,000 | ||||||||||||
Total stock-based compensation expense | $ | 85,750 | $ | 6,000 | $ | 249,303 | $ | 24,000 |
As a result of the reverse stock splits enacted in April 2019 and in January 2020, we made adjustments and retroactive restatements to all of our outstanding stock options such that the balances in January 2020 were negligible. We therefore recorded no stock-based compensation expense related to our stock option plan for the majority of 2020. We re-initiated employee stock option grants in December 2020.
Other Income (Expense)
Interest income for the three-month and nine-month periods ended September 30, 2021 was $877 and $3,998, respectively, as compared to $90 and $902, respectively, for comparable periods of 2020. The variances between periods are primarily attributable to cash available for investment and interest rate fluctuations.
Interest expense for the three-month and nine-month periods ended September 30, 2021 was $-0- and $1,286, respectively, as compared to $134,427 and $142,772, respectively, for comparable periods of 2020. Interest expense for the 2021 periods relates to the GRA Note and PPP Loan, and for the 2020 periods relates to the GRA Note, PPP loan, financing costs associated with insurance premiums, and convertible debentures which were retired during 2020.
During the nine-month period ended September 30, 2021, we recorded a $172,056 gain on debt extinguishment associated with the forgiveness of the PPP loan principal and accrued interest.
Critical Accounting Policies and Estimates
This discussion and analysis of our financial condition and results of operations is based on the accompanying unaudited condensedour consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates and adjusts the estimates as necessary. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.
Our significant
For a description of critical accounting policies are summarizedthat affect our significant judgments and estimates used in the preparation of our financial statements, refer to Item 7 in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 2 to our consolidated financial statements includedConsolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016. We believe the following2020. There have been no significant changes to our critical accounting policies affectfrom those disclosed in our more significant judgments and estimates used in the preparation of our financial statements:2020 Annual Report.
Revenue RecognitionRecent Accounting Pronouncements
We recognize revenue–Information regarding recent accounting pronouncements is contained in accordance with the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, as amended by Staff Accounting Bulletin No. 104, Revenue Recognition, (“SAB 104”). SAB 104 provides guidance in applying U.S. generally accepted accounting principles (“GAAP”) to revenue recognition issues, and specifically addresses revenue recognition for upfront, nonrefundable fees received in connection with research collaboration agreements. Historically, our revenue has consisted primarily of grant and contract funding received from NIAID. Revenue from these arrangements is approximately equalNote 3 to the costs incurred and is recorded as income as the related costs are incurred.
In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which creates a new Topic, Accounting Standards Codification Topic 606. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that an entity should recognize revenue when it transfers promised goods or services to customerscondensed consolidated financial statements, included in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 is effective for the Company beginning in 2018 and allows for either full retrospective adoption or modified retrospective adoption. We are currently evaluating the impact of the adoption of ASU 2014-09 on our financial statements.
Stock-Based Compensation
We account for stock-based transactions in which the Company receives services from employees, directors or others in exchange for equity instruments based on the fair value of the award at the grant date. Compensation cost for awards of common stock is estimated based on the price of the underlying common stock on the date of issuance. Compensation cost for stock options or warrants is estimated at the grant date based on each instrument’s fair value as calculated by the Black-Scholes option pricing model. We recognize stock-based compensation cost as expense ratably on a straight-line basis over the requisite service period for the award.this Quarterly Report.
Liquidity and Capital Resources
Historically, our primary uses of cash have been to finance our research and development activities. SinceFrom inception through September 30, 2021, we have accumulated net losses of approximately $50.6 million and we expect to incur operating losses and generate negative cash flows from operations for the foreseeable future. We have funded these activitiesour operations to date primarily from sales of our equity securities and from government grants and clinical trial assistance,assistance.
The following tables summarize our liquidity and from salescapital resources as of our equity securities. At September 30, 2017, we had cash2021 and cash equivalents of $343,826 and total assets of $495,635, as compared to $454,030 and $610,217, respectively, at December 31, 2016. At September 30, 2017, we had a working capital deficit of $285,401, compared to positive working capital of $174,532 at December 31, 2016. Our current liabilities at September 30, 2017 include $598,411 of accrued management salaries2020, and director fees, payment of which is continuing to be deferred.
Netour cash used in operating activities was $1,240,021 and $1,577,678flows for the nine-month periods ended September 30, 20172021 and 2016, respectively. Generally,2020:
Liquidity and Capital Resources | September 30, 2021 | December 31, 2020 | ||||||
Cash and cash equivalents | $ | 18,107,019 | $ | 9,883,796 | ||||
Working capital | 17,824,187 | 9,424,839 |
Nine Months Ended September 30, | ||||||||
Cash Flow Data | 2021 | 2020 | ||||||
Net cash provided by (used in): | ||||||||
Operating activities | $ | (4,513,271 | ) | $ | (1,208,619 | ) | ||
Investing activities | (47,718 | ) | (2,470 | ) | ||||
Financing activities | 12,784,212 | 12,508,342 | ||||||
Net increase in cash and cash equivalents | $ | 8,223,223 | $ | 11,297,253 |
Operating Activities – Net cash used in operating activities of $4,513,271 for the variances between periods arenine months ended September 30, 2021, was primarily due to fluctuationsour net loss of $4,827,314, offset by non-cash items such as depreciation expense, stock-based compensation expense and the gain recognized on extinguishment of our PPP loan, and by changes in our working capital accounts. Net cash used in operating activities of $1,208,619 for the nine months ended September 30, 2020, was primarily due to our net losses,loss of $1,621,546, offset by non-cash charges such as depreciation and stock-based compensation expense, and by net changes in our assets and liabilities. Our net losses generally fluctuate based on expenditures for our research activities, partially offset by government grant revenues. As of September 30, 2017, there is $744,769 in approved grant funds available for use during the remainder of 2017 and through June 30, 2018. See the table with further details under “Results of Operations – Grant and Collaboration Revenues” below.working capital accounts.
NIAID has funded the costs of conducting all of our human clinical trials (Phase 1 and Phase 2a) to date for our preventive HIV vaccines, with GeoVax incurring certain costs associated with manufacturing the clinical vaccine supplies and other study support. NIAID is also currently funding the cost of an ongoing Phase 1 trial (HVTN 114), which is investigating the effect of adding a “protein boost” component to our vaccine. Concurrently, a preclinical study in non-human primates (funded by a NIAID grant) is evaluating two additional proteins specifically chosen as boosting agents for GOVX-B11, and planning is underway for a Phase 1 trial to evaluate the safety and immunogenicity of these proteins in humans. Based on the results from these studies, we expect NIAID may then be ready to support a large phase 2b efficacy trial. In July 2016, NIAID awarded us a contract of up to $7.8 million for the production of the DNA vaccine component of GOVX-B11, which is intended for use in advanced clinical trials.
Investing Activities – Net cash used in investing activities was $4,350$47,718 and $-0-$2,470 for the nine-month periods ended September 30, 20172021 and 2016, respectively. Our investing2020, respectively, and relates to purchases of property and equipment.
Financing Activities – Net cash provided by financing activities have consisted predominantlywas $12,784,212 for the nine-month period ended September 30, 2021, consisting primarily of capital expenditures.(i) net proceeds of $9,408,920 from a public offering of our common stock, (ii) $3,404,156 of net proceeds from the exercise of warrants, (iii) $1,000 expended for the repurchase of outstanding convertible preferred stock, and (iv) $27,864 in principal repayments toward a note payable to the Georgia Research Alliance, Inc. (the “GRA Note”); the GRA Note has now been fully repaid. Additionally, during May 2021, our PPP loan of $170,200, together with $1,856 of accrued interest, was forgiven by the lender and extinguished.
Net cash provided by financing activities was $1,134,167 and $1,028,426 $12,508,342 for the nine-month periods ended September 30, 2017 and 2016, respectively. During the nine-month period ended September 30, 2017, warrants to purchase shares2020, consisting of (i) net proceeds of $11,158,496 from a public offering of our common stock were exercised for aggregateand warrants, (ii) net proceeds of $154,167. During May 2017, we sold shares$300,000 from the sale of our Series D convertible preferred stock, to certain institutional investors for(iii) $170,200 of PPP loan proceeds, (iv) $888,500 of net proceeds from issuance of $980,000.a note payable, and (v) $8,854 in principal repayments toward the GRA Note.
AsFunding Requirements and Sources of September 30, 2017, we had an accumulated deficitCapital
Our primary uses of $37.4 million.capital are for salaries and related expenses for personnel, manufacturing costs for preclinical and clinical materials, third-party research services, laboratory and related supplies, legal and other regulatory expenses, and general overhead costs. We expect for the foreseeable future wethese costs will continue to operate at a loss. The amount ofbe the accumulated deficit will continue to increase, as it will be expensive to continue research and development efforts. We will continue to require substantial funds to continue our activities and cannot predictprimary operating capital requirements for the outcome of our efforts. near future.
We believe that our existing cash resources, combined with funding from existing NIH grants and clinical trial supportcash equivalents will be sufficient to fundmeet our plannedanticipated cash requirements through mid-2022. However, our forecast of the period of time through which our financial resources will be adequate to support our operations into the first quarter of 2018.is a forward-looking statement that involves risks and uncertainties and is based on assumptions that may prove to be wrong; actual results could vary materially. We will require additional funds to continue our planned operations beyond that date. We are currently seeking sources of capital through additional government grant programs and clinical trial support, and we may also conduct additional offerings of our equity securities. However, additional funding may not be available on favorable terms or at all and if we failneed to obtain additional capital when needed,funds sooner than planned or in greater amounts than we currently anticipate. The actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control. These factors include the progress of our research activities; the number and scope of our research programs; the progress and success of our pre-clinical and clinical development activities; the progress of the development efforts of parties with whom we have entered into research and development agreements; the costs of manufacturing our product candidates, and the progress of efforts with parties with whom we may enter into commercial manufacturing agreements; our ability to maintain current research and development programs and to establish new research and development and licensing arrangements; the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; the impact of any natural disasters or public health crises, such as the COVID-19 pandemic; the costs associated with any products or technologies that we may in-license or acquire; and the costs and timing of regulatory approvals.
We will need to continue to raise additional capital to support our future operating activities, including progression of our development programs, preparation for commercialization, and other operating costs. Financing strategies we may pursue include, but are not limited to, the public or private sale of equity, debt financings or funds from other capital sources, such as government funding, collaborations, strategic alliances or licensing arrangements with third parties. There can be requiredno assurances additional capital will be available to secure additional financing, or if available, that it will be sufficient to meet our needs on favorable terms. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or eliminate somediscontinue the development of one or allmore of our product candidates.
We expect our research and development costs to increase as we continue development of our various programs and as wellwe move toward later stages of development, especially with regard to clinical trials. Our expenditures during 2022 and beyond will increase significantly as reduce our general and administrative expenses.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that are likely or reasonably likely to have a material effect on our financial condition or results of operations.
Contractual Obligations
As of September 30, 2017, we had noncancelable lease obligations and other firm purchase obligations totaling approximately $274,000, as compared to approximately $457,000 at December 31, 2016. Approximately $79,000result of the purchase commitments at September 30, 2017 relate to subcontracts associated with our government grants, which we expect will be fully reimbursed to us pursuant to those grants. We have no committed lines of credit and no other committed funding or long-term debt. We have employment agreements with our senior management team, each of which may be terminated with 30 days advance notice. There have been no other material changes to the table presented in our Annual Report on Form 10-K for the year ended December 31, 2016.
Results of Operations
Net Loss
We recorded a net loss of $588,757 for the three months ended September 30, 2017, as compared to $464,200 for the three months ended September 30, 2016. For the nine months ended September 30, 2017, we recorded a net loss of $1,653,979, as compared to $2,336,314 for the nine months ended September 30, 2016. Our net losses will typically fluctuate due to the timing of activities and related costs associated with our vaccine research and development activities and our general and administrative costs, as described in more detail below.
Grant and Collaboration Revenues
During the three-month and nine-month periods ended September 30, 2017, we recorded grant and collaboration revenues of $247,994 and $895,866, respectively, as compared to $440,106 and $653,986, respectively, during the comparable periods of 2016.
Our grant revenues relate to grants and contracts from NIAID in support of our vaccine development activities. We record revenue associated with these grants as the related costs and expenses are incurred. The difference in our grant revenues from period to period is dependent upon our expenditures for activities supported by the grants, and fluctuates based on the timing of the expenditures. Additional detail concerning our grant revenues and the remaining funds available for use as of September 30, 2017 is presented in the table below.
Grant Revenues Recorded During the Periods | Unused Funds | |||||||||||||||||||
Three Months Ended Sep 30, | Nine Months Ended Sep 30, | Available at | ||||||||||||||||||
2017 | 2016 | 2017 | 2016 | Sep 30, 2017 | ||||||||||||||||
HIV - SBIR Grant | $ | - | $ | 79,805 | $ | 158,972 | $ | 180,274 | $ | -0- | ||||||||||
HIV - SBIR Grant | 185,909 | 344,528 | 493,132 | 457,939 | 449,609 | |||||||||||||||
HIV - Vaccine Development Contract | 23,935 | 15,773 | 110,612 | 15,773 | 33,310 | |||||||||||||||
Zika - SBIR Grant | 38,150 | - | 38,150 | - | 261,850 | |||||||||||||||
Total Grants | $ | 247,994 | $ | 440,106 | $ | 800,866 | $ | 653,986 | $ | 744,769 |
In March 2017, we entered into a collaboration with American Gene Technologies International, Inc. (AGT) whereby AGT intends to conduct a Phase 1 human clinical trial with our combined technologies, with the goal of developing a functional cure for HIV infection. The cost of the clinical trial will be borne by AGT. The primary objectives of the trial will be to assess the safety and efficacy of the therapy, with secondary objectives to assess the immune responses as a measure of efficacy. In exchange for use of our vaccine product in the clinical trial, AGT paid us a fee of $95,000 which we received during the second quarter of 2017 and which is recorded as revenue in the nine-month period ended September 30, 2017. No commercial rights or licenses have yet been granted to AGT.
Research and Development Expenses
During the three-month and nine-month periods ended September 30, 2017, we recorded research and development expense of $498,200 and $1,568,093, respectively, as compared to $683,939 and $1,519,519, respectively, during the comparable periods of 2016. Research and development expense for the three-month and nine-month periods of 2017 includes stock-based compensation expense of $6,513 and $19,775 respectively, as compared to $5,894 and $17,681, respectively, for the comparable periods of 2016 (see discussion under “Stock-Based Compensation Expense” below).
Our research and development expenses can fluctuate considerably on a period-to-period basis, depending on our need for vaccine manufacturing by third parties, the timing of expenditures related to our grants from NIAID, the timing of costs associated with clinical trials being funding directly by us, and other factors. The overall variance in research and development expense from the 2016 periods to 2017 is primarily attributable to the timing and amount of costs associated with research subcontracts supported by our grants from NIAID. Our researchlicense fees and development costs do not include costs incurred by the HVTN in conducting clinical trials of our preventive HIV vaccines; those costs are funded directlywe assumed related to the HVTN by NIAID.
We do not disclose our researchGedeptin and development expenses by project, since our employees’ time is spread across multiple programs and our laboratory facility is used for multiple vaccine candidates. We track the direct cost of research and development expenses related to government grant revenue by the percentage of assigned employees’ time spent on each grant and other direct costs associated with each grant. Indirect costs associated with grants are not tracked separately, but are applied based on a contracted overhead rate negotiated with the NIH. Therefore, the recorded revenues associated with government grants approximates the costs incurred. We believe that additional project-by-project information would not form a reasonable basis for disclosure to our investors.
COH04S1 clinical programs. We do not provide forward-looking estimates of costs and time to complete our research programs due to the many uncertainties associated with vaccinebiotechnology research and development. Due to these uncertainties, our future expenditures are likely to be highly volatile in future periods depending on the outcomes of the trials and studies. As we obtain data from pre-clinical studies and clinical trials, we may elect to discontinue or delay vaccinecertain development programs to focus our resources on more promising vaccineproduct candidates. Completion of preclinical studies and human clinical trials may take several years or more, but the length of time can vary substantially depending upon several factors. The duration and the cost of future clinical trials may vary significantly over the life of the project because of differences arising during development of the human clinical trial protocols, including the length of time required to enroll suitable patient subjects, the number of patients that ultimately participate in the clinical trial;trial, the duration of patient follow-up, that seems appropriate in view of the results;and the number of clinical sites included in the clinical trials; and the length of time required to enroll suitable patient subjects.
General and Administrative Expensestrials.
During the three-month and nine-month periods ended September 30, 2017, we recorded general and administrative expense of $340,143 and $985,001, respectively, as compared to $220,707 and $1,472,030, respectively, during the comparable periods of 2016. General and administrative costs include officers’ salaries, legal and accounting costs, patent costs, and other general corporate expenses. General and administrative expenseWe expect, for the three-month and nine-month periodsremainder of 2017 include stock-based compensation expense of $7,920 and $23,760, respectively; as compared to $22,822 and $508,206, respectively, for the comparable periods of 2016 (see discussion under “Stock-Based Compensation Expense” below). Excluding stock-based compensation expense,2021, our general and administrative expenses were $332,223 and $961,241 duringto remain reasonably consistent with that of the three-month and nine-month periods ended September 30, 2017, respectively, as compared to $197,885 and $963,824, respectively during the comparable periodsthird quarter of 2016. The overall variance in general and administrative expense from the 2016 periods to 2017 is partially attributable in part to the timing of patent costs. Also, during the three months ended September 30, 2017, we incurred additional costs associated with the conduct of a special meeting of stockholders, which contributed to the increase as compared to the same period of 2016.2021. We expect that our general and administrative costs maywill increase in the futureduring 2022 in support of expanded research and development activities and other general corporate activities.
Stock-Based Compensation ExpenseGrant Funding – We have ongoing government support for our COVID-19 vaccine program through a Small Business Innovative Research (SBIR) grant from NIAID and for our Lassa Fever vaccine program via a grant from the U.S. Department of Defense. As of September 30, 2021, there is $244,888 in approved grant funds remaining and available for use through mid-2022. Additionally, our Sudan ebolavirus and Marburg virus vaccine candidates are being developed in collaboration with researchers at the University of Texas Medical Branch (UTMB) and Battelle Memorial Institute utilizing the suite of preclinical services from NIAID. We are currently seeking sources of capital through additional government and quasi-government grant programs and clinical trial support, although there can be no assurance any such funds will be obtained.
ForClinical Trial Support – NIAID has funded the three-monthcosts of conducting all of our human clinical trials (Phase 1 and nine-month periods endedPhase 2a) to date for our preventive HIV vaccines, with GeoVax incurring certain costs associated with manufacturing the clinical vaccine supplies and other study support. We expect that NIAID will also fund the cost of the planned Phase 1 trial (HVTN 132) to further evaluate the safety and immunogenicity of adding “protein boost” components to our vaccine, GOVX-B11. The start of HVTN 132 has been delayed due to COVID-19, and we await further information from NIAID and HVTN on when the trial may commence. Additionally, we are party to a collaboration with a consortium led by researchers at the University of California, San Francisco (UCSF), using our vaccine as part of a combinational therapy to induce remission in HIV-positive individuals; this program is currently undergoing clinical trials. Similar to HVTN 132, this trial has been affected by the pandemic, so we await further information regarding the status of patient enrollment and trial results. Our prior collaboration with American Gene Technologies International, Inc. (AGT) was recently discontinued due to AGT’s remodeling of their clinical trial plans. Gedeptin is in a Phase 1/2 trial, being conducted at Stanford University in collaboration with Emory University; the initial stage of the study (10 patients) is being funded by the FDA pursuant to its Orphan Products Clinical Trials Grants Program.
Equity Funding – During February 2021, we closed an underwritten public offering of our common stock for net proceeds of $9,408,920. During January, February and August 2021, certain of our outstanding stock purchase warrants were exercised, resulting in net proceeds to us of $3,404,156. As of September 30, 20172021, there are 2,816,631 stock purchase warrants outstanding, including 1,819,966 publicly-traded warrants (Nasdaq: GOVXW) exercisable for cash at $5.00 per share and 2016, the components of stock-based compensation expense were as follows:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2016 | 2016 | |||||||||||||
Stock option expense | $ | 14,433 | $ | 13,686 | $ | 43,535 | $ | 41,058 | ||||||||
Warrant modification expense | - | 15,030 | - | 484,829 | ||||||||||||
Total stock-based compensation expense | $ | 14,433 | $ | 28,716 | $ | 43,535 | $ | 525,887 |
In general, stock-based compensation expense is allocated to research and development expense or general and administrative expense according to the classification of cash compensation paid to the employee, consultant or director to whom the stock compensation was granted. For the three month and nine month periods endedexpiring on September 30, 2017 and 2016, stock-based compensation expense was allocated as follows:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
Expense Allocated to: | 2017 | 2016 | 2017 | 2016 | ||||||||||||
General and administrative expense | $ | 7,920 | $ | 22,822 | $ | 23,760 | $ | 508,206 | ||||||||
Research and development expense | 6,513 | 5,894 | 19,775 | 17,681 | ||||||||||||
Total stock-based compensation expense | $ | 14,433 | $ | 28,716 | $ | 43,535 | $ | 525,887 |
Other Income29, 2025. Should these warrants be exercised in full, we would receive approximately $9.1 million in gross proceeds.
Interest income for the three-month and nine-month periods ended September 30, 2017 was $1,592 and $3,249, respectively, as compared to $340 and $1,249, respectively, for comparable periods of 2016. The variances between periods are primarily attributable to cash available for investment and interest rate fluctuations.Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that are likely or reasonably likely to have a material effect on our financial condition or results of operations.
Item 3Quantitative and Qualitative Disclosures About Market Risk |
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Not applicable.applicable to smaller reporting companies.
Item 4Controls and Procedures |
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Evaluation of disclosure controls and procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that the information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (Exchange Act), is (1) recorded, processed, summarized,, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to management, including the Chief Executive Officer and Principal Financial and Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.
Our management has carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and our Principal Financial and Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15 as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
Changes in internal control over financial reporting
There wasAlthough we have modified certain of our internal control procedures as a result of the COVID-19 pandemic, there were no changesignificant changes in our internal control over financial reporting that occurred during the three months ended September 30, 20172021 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.
Limitations on controls
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
PART II -- OTHER INFORMATION
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None.Item 1Legal Proceedings
None.
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Item 1ARisk Factors |
For information regarding factors that could affect our results of operations, financial condition or liquidity, see the risk factors discussed under “Risk“Risk Factors” in Item 1A of our most recent Annual Report on Form 10-K. See also “Forward-Looking Statements,” included in Item 2 of this Quarterly Report on Form 10-Q. There have been no material changes from the risk factors previously disclosed in our most recent Annual Report on Form 10-K.
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Item 2Unregistered Sales of Equity Securities and Use of Proceeds |
NoneThere were no sales of unregistered securities during the period covered by this report that have not previously disclosedbeen reported on Form 8-K.
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Item 3Defaults Upon Senior Securities |
None.None.
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Item 4Mine Safety Disclosures |
Not applicable
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Item 5Other Information |
During the period covered by this report, there was no information required to be disclosed by us in a Current Report on Form 8-K that was not so reported, nor were there any material changes to the procedures by which our security holders may recommend nominees to our board of directors.
Item 6Exhibits
The exhibits filed with this report are set forth on the exhibit index following the signature page and are incorporated by reference in their entirety into this item.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this quarterly report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
Exhibit
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EXHIBIT INDEX
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4.1 |
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10.1 |
10.2 |
10.3*,** | GeoVax Labs, Inc. 2020 Stock Incentive Plan, as amended and restated August 11, 2021 |
31.1* | Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934 |
31.2* | Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934 |
32.1* |
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101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (1) |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document (1) |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document (1) |
104 | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q |
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* | Filed herewith |
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| Incorporated by reference from the |
| Incorporated by reference from the |
15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this quarterly report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
GEOVAX LABS, INC. (Registrant) | |||
Date: November 12, 2021 | By: | /s/ Mark W. Reynolds | |
Mark W. Reynolds | |||
Chief Financial Officer (duly authorized officer and principal |