10-Q: Processa Pharmaceuticals Reports Q1 2025 Results, Highlights NGC-Cap Clinical Trial Progress and Recent Public Offering

Processa Pharmaceuticals' Q1 2025 results show a net loss of $2.83 million, with ongoing progress in clinical trials for NGC-Cap and a recent public offering providing $4.4 million in net proceeds.

Summary

• Processa Pharmaceuticals reported a net loss of $2.83 million for the three months ended March 31, 2025, compared to a net loss of $2.73 million for the same period in 2024.
• Research and development expenses increased slightly to $1.59 million from $1.54 million year-over-year, primarily due to increased clinical trial costs for NGC-Cap.
• General and administrative expenses decreased slightly to $1.26 million from $1.27 million year-over-year.
• The company completed a public offering on January 27, 2025, raising net proceeds of $4.4 million.
• As of March 31, 2025, Processa had cash and cash equivalents of $2.9 million, which is expected to fund operations into mid-2025.
• The company believes additional funding will be required to continue operations beyond mid-2025.
• The company is actively adding more U.S. clinical study sites while screening and enrolling more patients in the NGC-Cap Phase 2 advanced or metastatic breast cancer trial.
• The company is re-evaluating the potential clinical safety and efficacy of PCS499 in primary glomerular diseases (PGDs).

Sentiment

Score: 4

Explanation: The sentiment is neutral to slightly negative. While the company has made progress in its clinical trials and secured funding through a public offering, it continues to operate at a loss and faces significant financial challenges, including the need for additional funding and ongoing legal proceedings.

Positives

• The company successfully completed a public offering, raising $4.4 million to support ongoing research and development.
• The company is actively progressing its NGC-Cap Phase 2 clinical trial, with plans to obtain preliminary safety-efficacy data.
• The company is exploring the potential of PCS499 in treating primary glomerular diseases (PGDs), which could open up a new market opportunity.
• The company's risk-mitigated strategy focuses on improving existing cancer therapies to enhance efficacy and reduce toxicity.

Negatives

• The company reported a net loss of $2.83 million for Q1 2025.
• The company has an accumulated deficit of $90.1 million as of March 31, 2025.
• The company expects to continue to incur losses and negative cash flows from operations in the foreseeable future.
• The company's current cash and cash equivalents are only expected to fund operations into mid-2025, requiring additional financing.
• The company is involved in legal proceedings, including a lawsuit filed by Elion Oncology and a lawsuit filed by investors, which could have a material adverse impact.

Risks

• The company's ability to continue as a going concern is dependent on obtaining additional funding.
• Failure to obtain adequate financing could lead to delays, reductions, or suspension of clinical trials and research programs.
• The company may have to relinquish valuable rights to product candidates or grant licenses on unfavorable terms to secure funding.
• Clinical trials may not be successful, and regulatory approvals may not be obtained.
• The company faces competition from other pharmaceutical companies.
• The company is subject to risks associated with intellectual property protection and potential third-party claims.
• The company is involved in legal proceedings, the outcomes of which are uncertain and could be materially adverse.
• The company's securities may be delisted from Nasdaq if it fails to maintain the minimum bid price requirement.

Future Outlook

The company plans to use the net proceeds from the recent financing for continued research and development for NCG-Cap, and for working capital and general corporate purposes; the company anticipates its clinical trial costs will increase when compared to prior periods since activities in 2024 were primarily related to the completion of our Phase 1B trial and setup of our Phase 2 trial for NGC-Cap; the company plans to raise additional funds in the future through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements, but will only do so if the terms are acceptable to us.

Management Comments

• The company plans to obtain preliminary safety-efficacy data in these breast cancer patients in order to provide insight into the benefit of this treatment over existing treatments.
• This preliminary data should provide information that could also help to adaptively modify the protocol to increase the efficiency and/or improve the information obtained from the study.
• The data suggests that PCS499 may not only be safer, but also more efficacious in more patients than PTX or other drugs presently used onand off-label for PGDs.
• We have been designing a drug development strategy and program to obtain approval of PCS499 in rare PGDs while demonstrating the benefit of PCS499 over all other treatments.

Industry Context

Processa Pharmaceuticals is operating in the competitive biopharmaceutical industry, focusing on developing next-generation cancer therapies. Their strategy of modifying existing FDA-approved drugs to improve safety and efficacy is a common approach to mitigate risk and accelerate development. The company's focus on regulatory science and surrogate endpoints aligns with current trends in drug development and regulatory pathways.

Comparison to Industry Standards

• Processa's approach of modifying existing FDA-approved oncology drugs is similar to that of companies like Sage Therapeutics, which focuses on developing improved versions of existing therapies.
• The company's reliance on public offerings for funding is common among small-cap biopharmaceutical companies, such as Agenus Inc. and Celldex Therapeutics, which often depend on equity financing to fund their research and development activities.
• The company's focus on clinical trials and regulatory approvals aligns with the industry's standard development pathway, as seen in companies like BioNTech and Moderna, which have successfully navigated the clinical trial process to bring novel therapies to market.
• The company's exploration of PCS499 for primary glomerular diseases (PGDs) is similar to the approach of companies like Vertex Pharmaceuticals, which are expanding the use of existing drugs to treat rare diseases.

Legal Proceedings

• The Company received notification from Elion purporting to terminate the license agreement by and between the Company and Elion as a result of the Companys alleged breach thereof.
• Jason Assad and Marc Gyimesi, two of the investors in our February 2021 private offering, filed a lawsuit that has been assigned to the Commercial Division of the Supreme Court of the State of New York, New York County alleging fraud and negligent misrepresentation in connection therewith regarding alleged company communication and statements and are seeking monetary damages.

Related Party Transactions

• CorLyst, LLC (CorLyst) reimburses us for shared costs related to payroll, health insurance and rent based on actual costs incurred, which are recognized as a reduction of our general and administrative operating expenses being reimbursed in our condensed consolidated statement of operations.

Stakeholder Impact

• Shareholders face potential dilution from future equity offerings.
• Employees' job security is dependent on the company's ability to secure additional funding.
• Patients may benefit from the development of new and improved cancer therapies.
• Suppliers and CROs are subject to the risk of contract termination if the company faces financial difficulties.
• Creditors face the risk of non-payment if the company is unable to continue as a going concern.

Next Steps

• Continue research and development for NCG-Cap.
• Obtain preliminary safety-efficacy data in breast cancer patients in the NGC-Cap Phase 2 trial.
• Adaptively modify the protocol to increase the efficiency and/or improve the information obtained from the study.
• Design a drug development strategy and program to obtain approval of PCS499 in rare PGDs.
• Raise additional funds through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements.

Key Dates

Keywords

clinical trials, NGC-Cap, PCS499, public offering, biopharmaceutical, cancer therapy, research and development, net loss, financing, warrants, stock, liquidity