10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission File Number: 001-39488

 

Apexigen, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

85-1260244

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

75 Shoreway Road, Suite C

San Carlos, CA

94070

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (650) 931-6236

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

 

APGN

 

The Nasdaq Stock Market LLC

Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share

 

APGNW

 

The Nasdaq Stock Market LLC

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 requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-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

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

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 of November 10, 2022, the registrant had 22,565,347 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

3

 

 

 

Item 1.

Unaudited Condensed Consolidated Financial Statements

3

 

Condensed Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021

3

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021

4

 

Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2022 and 2021

5

 

Condensed Consolidated Statements of Cash Flows for Nine Months Ended September 30, 2022 and 2021

8

 

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

38

Item 4.

Controls and Procedures

38

 

 

 

PART II.

OTHER INFORMATION

39

 

 

 

Item 1.

Legal Proceedings

39

Item 1A.

Risk Factors

39

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

88

Item 3.

Defaults Upon Senior Securities

88

Item 4.

Mine Safety Disclosures

88

Item 5.

Other Information

88

Item 6.

Exhibits

89

Signatures

90

 

i


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, business strategy, product candidates, planned preclinical studies and clinical trials, results of clinical trials, research and development costs, regulatory approvals, timing, and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that are in some cases beyond our control and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this report include, but are not limited to, statements about:

our success in retaining or recruiting, or changes required in, our officers, key employees or directors;
our public securities’ potential liquidity and trading;
the lack of a market for our securities;
our financial performance;
failure to realize the anticipated benefits of the Business Combination (as defined in Part I, Item 1, Note 3, “Business Combination,” in our notes to unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q);
the outcome of any legal proceedings that may be instituted against us related to the Business Combination;
the timing and focus of our current and future clinical trials, and the reporting of data from those trials;
our ability to obtain and maintain regulatory approval of our product candidates;
our estimates of the number of patients in the United States who suffer from the diseases we are targeting and the number of patients that will enroll in clinical trials;
the timing or likelihood of regulatory filings and approvals for our product candidates for various diseases;
our plans relating to commercializing our product candidates, if approved, including which indications will be pursued;
the ability of our clinical trials to demonstrate safety and efficacy, and other positive results, of our product candidates;
the beneficial characteristics, safety, efficacy, and therapeutic effects of our product candidates;
the development of competitors’ product candidates;
existing regulations and regulatory developments in the United States and other jurisdictions;
the need to hire additional personnel and our ability to attract and retain such personnel;
our plans and ability to obtain, maintain, enforce, or protect intellectual property rights;
our continued reliance on third parties to conduct additional clinical trials of our product candidates, and for the manufacture of our product candidates for preclinical studies and clinical trials; and
the success of our licensing agreements.

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations, and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this report and are subject to a number of risks, uncertainties, and assumptions described in the section titled “Risk Factors” and elsewhere in this report. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. We do not plan to publicly update or revise any forward-looking statements contained herein whether as a result of any new information, future events, or otherwise.

1


 

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

2


 

PART I—FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements.

APEXIGEN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

 

 

September 30,
2022

 

 

December 31,
2021

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

12,708

 

 

$

23,443

 

Short-term investments

 

7,965

 

 

 

12,917

 

Prepaid expenses and other current assets

 

2,544

 

 

 

1,681

 

Deferred financing costs, current

 

1,776

 

 

 

-

 

Total current assets

 

24,993

 

 

 

38,041

 

Property and equipment, net

 

176

 

 

 

245

 

Right-of-use assets

 

198

 

 

 

483

 

Deferred financing costs, non-current

 

1,480

 

 

 

-

 

Other assets

 

727

 

 

 

327

 

Total assets

$

27,574

 

 

$

39,096

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

3,340

 

 

$

4,487

 

Accrued liabilities

 

7,096

 

 

 

8,488

 

Liability for common stock to be issued

 

1,350

 

 

 

-

 

Deferred revenue

 

5,137

 

 

 

3,610

 

Lease liabilities, current portion

 

210

 

 

 

369

 

Total current liabilities

 

17,133

 

 

 

16,954

 

Derivative warrant liabilities

 

28

 

 

 

-

 

Lease liabilities, less current portion

 

-

 

 

 

141

 

Total liabilities

 

17,161

 

 

 

17,095

 

Commitment and contingencies (Note 11)

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.001 par value; 1,000,000,000 and 23,563,040 shares authorized as of September 30, 2022 (unaudited) and December 31, 2021, respectively; 22,065,347 and 18,051,470 shares issued and outstanding as of September 30, 2022 (unaudited) and December 31, 2021, respectively(1)

 

2

 

 

 

2

 

Additional paid-in capital

 

180,778

 

 

 

166,727

 

Accumulated deficit

 

(170,362

)

 

 

(144,724

)

Accumulated other comprehensive loss

 

(5

)

 

 

(4

)

Total stockholders’ equity

 

10,413

 

 

 

22,001

 

Total liabilities and stockholders’ equity

$

27,574

 

 

$

39,096

 

(1) The condensed balance sheet as of December 31, 2021 presented above reflects the retrospective application of recapitalization as if the Transaction had occurred on January 1, 2021. See Note 1, 3, and 7.

 

See accompanying notes to unaudited condensed consolidated financial statements.

3


 

APEXIGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

5,683

 

 

$

5,501

 

 

$

18,796

 

 

$

15,122

 

General and administrative

 

 

3,116

 

 

 

1,807

 

 

 

7,240

 

 

 

5,735

 

Total operating expenses

 

 

8,799

 

 

 

7,308

 

 

 

26,036

 

 

 

20,857

 

Loss from operations

 

 

(8,799

)

 

 

(7,308

)

 

 

(26,036

)

 

 

(20,857

)

Other income, net

 

 

307

 

 

 

7

 

 

 

398

 

 

 

34

 

Net loss

 

$

(8,492

)

 

$

(7,301

)

 

$

(25,638

)

 

$

(20,823

)

Net loss per share

 

$

(0.41

)

 

$

(0.40

)

 

$

(1.36

)

 

$

(1.16

)

Weighted-average common shares used to compute net loss
   per share, basic and diluted

 

 

20,484,136

 

 

 

18,040,783

 

 

 

18,895,417

 

 

 

18,028,234

 

Comprehensive Loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(8,492

)

 

$

(7,301

)

 

$

(25,638

)

 

$

(20,823

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on marketable securities

 

 

(1

)

 

 

(2

)

 

 

12

 

 

 

(4

)

Comprehensive loss

 

$

(8,493

)

 

$

(7,303

)

 

$

(25,626

)

 

$

(20,827

)

 

See accompanying notes to unaudited condensed consolidated financial statements.

4


 

APEXIGEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)

 

 

 

Three Months Ended September 30, 2022

 

 

 

Convertible
Preferred Stock

 

 

Common
Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amounts

 

 

Shares

 

 

Amounts

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity (Deficit)

 

Balance at June 30, 2022, as previously reported

 

 

145,130,628

 

 

$

158,707

 

 

 

31,461,489

 

 

$

31

 

 

$

8,853

 

 

$

(161,870

)

 

$

(17

)

 

$

(153,003

)

Retroactive application of recapitalization

 

 

(145,130,628

)

 

 

(158,707

)

 

 

(13,369,861

)

 

 

(29

)

 

 

158,736

 

 

 

-

 

 

 

-

 

 

 

158,707

 

Balance at June 30, 2022, as adjusted

 

 

-

 

 

 

-

 

 

 

18,091,628

 

 

 

2

 

 

 

167,589

 

 

 

(161,870

)

 

 

(17

)

 

 

5,704

 

Business combination and private offering, net of transaction costs of $9,232

 

 

-

 

 

 

-

 

 

 

3,143,464

 

 

 

-

 

 

 

8,468

 

 

 

-

 

 

 

-

 

 

 

8,468

 

Common stock issuance to Lincoln Park

 

 

-

 

 

 

-

 

 

 

766,684

 

 

 

-

 

 

 

4,115

 

 

 

-

 

 

 

-

 

 

 

4,115

 

Exercise of stock options

 

 

-

 

 

 

-

 

 

 

35,514

 

 

 

-

 

 

 

37

 

 

 

-

 

 

 

-

 

 

 

37

 

Exercise of restricted stock awards

 

 

-

 

 

 

-

 

 

 

23,518

 

 

 

-

 

 

 

242

 

 

 

-

 

 

 

-

 

 

 

242

 

Exercise of common stock warrant

 

 

-

 

 

 

-

 

 

 

4,539

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Reclassification of preferred stock warrant

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2

 

 

 

-

 

 

 

-

 

 

 

2

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

325

 

 

 

-

 

 

 

-

 

 

 

325

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(8,492

)

 

 

-

 

 

 

(8,492

)

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

12

 

 

 

12

 

Balance at September 30, 2022

 

 

-

 

 

$

-

 

 

 

22,065,347

 

 

$

2

 

 

$

180,778

 

 

$

(170,362

)

 

$

(5

)

 

$

10,413

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

5


 

 

 

Nine Months Ended September 30, 2022

 

 

 

Convertible
Preferred Stock

 

 

Common
Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amounts

 

 

Shares

 

 

Amounts

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity (Deficit)

 

Balance at January 1, 2022, as previously reported

 

 

145,130,628

 

 

$

158,707

 

 

 

31,070,665

 

 

$

31

 

 

$

7,991

 

 

$

(144,724

)

 

$

(4

)

 

$

(136,706

)

Retroactive application of recapitalization

 

 

(145,130,628

)

 

 

(158,707

)

 

 

(13,019,073

)

 

 

(29

)

 

 

158,736

 

 

 

-

 

 

 

-

 

 

 

158,707

 

Balance at January 1, 2022, as adjusted

 

 

-

 

 

 

-

 

 

 

18,051,592

 

 

 

2

 

 

 

166,727

 

 

 

(144,724

)

 

 

(4

)

 

 

22,001

 

Business combination and private offering, net of transaction costs of $9,232

 

 

-

 

 

 

-

 

 

 

3,143,464

 

 

 

-

 

 

 

8,468

 

 

 

-

 

 

 

-

 

 

 

8,468

 

Common stock issuance to Lincoln Park

 

 

-

 

 

 

-

 

 

 

766,684

 

 

 

-

 

 

 

4,115

 

 

 

-

 

 

 

-

 

 

 

4,115

 

Exercise of stock options

 

 

-

 

 

 

-

 

 

 

75,550

 

 

 

-

 

 

 

110

 

 

 

-

 

 

 

-

 

 

 

110

 

Exercise of restricted stock awards

 

 

-

 

 

 

-

 

 

 

23,518

 

 

 

-

 

 

 

242

 

 

 

-

 

 

 

-

 

 

 

242

 

Exercise of common stock warrant

 

 

-

 

 

 

-

 

 

 

4,539

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Reclassification of preferred stock warrant

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2

 

 

 

-

 

 

 

-

 

 

 

2

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,114

 

 

 

-

 

 

 

-

 

 

 

1,114

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(25,638

)

 

 

-

 

 

 

(25,638

)

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1

)

 

 

(1

)

Balance at September 30, 2022

 

 

-

 

 

$

-

 

 

 

22,065,347

 

 

$

2

 

 

$

180,778

 

 

$

(170,362

)

 

$

(5

)

 

$

10,413

 

 

 

 

Three Months Ended September 30, 2021

 

 

 

Convertible
Preferred Stock

 

 

Common
Stock

 

 

Additional
Paid-In

 

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amounts

 

 

Shares

 

 

Amounts

 

 

Capital

 

 

 

Deficit

 

 

Loss

 

 

Equity (Deficit)

 

Balance at June 30, 2021, as previously reported

 

 

145,130,628

 

 

$

158,707

 

 

 

30,910,665

 

 

$

31

 

 

$

7,396

 

 

 

$

(129,330