10-K/A: Protagenic Therapeutics Files Amended 10-K to Correct Omission, Reports on Clinical Trial Progress

Protagenic Therapeutics files an amendment to its annual report to include an omitted certification, while also providing updates on its clinical trial progress and financial status.

Summary

• Protagenic Therapeutics has filed an amendment to its annual report on Form 10-K to include an omitted certification, with no other changes to the original filing.
• The company is focused on developing PT00114, a novel peptide for stress-related neuropsychiatric disorders, and has commenced its first human trial in September 2023.
• The Phase I trial has passed its safety milestone, with complete enrollment of the first cohort, and results are expected in the second quarter of 2024.
• Protagenic is also developing additional product candidates from the TCAP family and exploring efficacy in other stress-related disorders.
• The company anticipates re-submitting an IND application to potentially conduct the Phase IIa portion of the study in the United States.
• The clinical program is led by Dr. Maurizio Fava, a world-leader in psychiatric disorders, and will use a basket trial design to evaluate safety and efficacy across multiple indications.
• The company is targeting major depressive disorder, generalized anxiety disorder, opioid use disorder, and post-traumatic stress disorder.
• Preclinical studies of PT00114 have shown promising results in animal models of depression, anxiety, substance abuse, and PTSD.
• The company has completed non-GLP toxicology studies with no dose-limiting toxicities observed at doses at least 50-fold higher than anticipated clinical exposures.
• Protagenic relies on third-party contract manufacturers for synthesis of PT00114 and has sufficient material for GLP toxicology studies and Phase 1 human clinical trials.
• The company has an exclusive worldwide license to PT00114 through a license agreement with the University of Toronto.
• As of December 31, 2023, the company had cash of $1,287,893 and working capital of $3,544,785.
• The company anticipates that its cash resources will be sufficient to fund its operations until approximately the end of the third quarter of 2024.
• The company has incurred net losses of $5,000,497 and $3,555,505 for the years ended December 31, 2023 and 2022, respectively, and has an accumulated deficit of $30,777,872.
• The company has identified material weaknesses in its internal controls over financial reporting.

Sentiment

Score: 5

Explanation: The document presents a mixed picture. While there is positive progress in clinical trials and preclinical data, the company's financial situation and internal control weaknesses raise concerns. The need for additional capital and the lack of revenue generation are significant risks.

Positives

• The company's lead product candidate, PT00114, has shown efficacy in preclinical models for multiple neuropsychiatric disorders.
• The company has completed preclinical experiments required to begin a clinical trial.
• The Phase I trial has passed its safety milestone, indicating a positive start to human testing.
• The company has a strong intellectual property position with exclusive worldwide rights to PT00114.
• The company has a well-known expert, Dr. Maurizio Fava, leading the clinical development program.
• The company has sufficient PT00114 synthesized under cGMP conditions to complete GLP toxicology studies and Phase 1 human clinical trials.

Negatives

• The company has incurred significant operating losses and has an accumulated deficit of $30,777,872.
• The company's cash resources are only sufficient to fund operations until approximately the end of the third quarter of 2024.
• The company has identified material weaknesses in its internal controls over financial reporting.
• The company has a limited operating history and has not yet commercialized any products.
• The company is dependent on third parties for manufacturing and clinical trials.
• The company has no experience in sales, marketing, and distribution.

Risks

• The company's financial statements have been prepared on a going concern basis, and do not include adjustments that might be necessary if the Company is unable to continue as a going concern.
• The company may not be able to obtain the capital necessary to fund its operations, which could force it to reduce or cease operations.
• The company's product candidates may not be safe or effective, or receive regulatory approval.
• The company may experience delays or difficulties in the enrollment of subjects to its clinical trials.
• The company may not be able to gain market acceptance of its product candidates.
• The company may not be able to manufacture its product candidates in clinical or commercial quantities.
• The company may not be able to maintain its exclusive worldwide license to use and develop PT00114.
• The company's common stock is a Penny Stock subject to specific rules governing its sale to investors that could impact its liquidity.
• The market price of the company's common stock may be volatile.

Future Outlook

The company aims to rapidly advance PT00114 through clinical trials, develop additional product candidates from the TCAP family, explore efficacy in additional stress-related disorders, build a strong team, and assess strategic partnership opportunities.

Management Comments

• Management believes that the company's cash resources will be sufficient to fund its operations until approximately the end of the third quarter of 2024.
• Management has concluded that, during the year-ended December 31, 2023, the company's internal controls and procedures were not effective to detect the inappropriate application of U.S. GAAP.

Industry Context

The document highlights the significant unmet need in the treatment of stress-related neuropsychiatric disorders, including depression, anxiety, addiction, and PTSD, which are major contributors to disability and mortality worldwide. The company's approach with TCAP represents a novel mechanism of action that could potentially address the limitations of current therapies.

Comparison to Industry Standards

• The document notes that current treatments for TRD, GAD, PTSD and SUDs have limited efficacy, significant side effects, and high treatment burden, which creates a market opportunity for novel therapies like PT00114.
• The document compares PT00114 to existing drug classes such as opioid receptor modulators, atypical antipsychotics, ketamine, and GABA receptor modulators, highlighting the potential advantages of PT00114's mechanism of action and safety profile.
• The document mentions that the worldwide market for GAD therapies was expected to reach $1.8 billion in 2023 and with an anticipated forecasted value of $4.3 billion by 2033.
• The document mentions that the worldwide market for OUD therapies was valued at $3.5 billion in 2023 and projected to reach $8.4 billion by 2033.
• The document mentions that Vivitrol sales will increase to $410 430 million in 2024.

Related Party Transactions

• The company is provided free office space consisting of a conference room by the Company Executive Chairman, Dr. Armen.
• The company incurred $ 149,509 and $ 105,928 in expenses related to research and development services with Agenus Inc. during the years ended December 31, 2023 and 2022, respectively.
• The company incurred $ 106,754 and $ 105,801 in expenses related to research and development services with CTC North, GmbH during the years ended December 31, 2023 and 2022, respectively.

Stakeholder Impact

• Shareholders face the risk of dilution and potential loss of investment due to the company's need for additional capital.
• Employees and consultants may be affected by the company's financial instability and potential need to reduce operations.
• Customers (potential patients) may benefit from the development of new therapies for stress-related disorders, but the timeline for commercialization is uncertain.
• Suppliers and creditors may face risks due to the company's financial situation and potential inability to meet obligations.

Next Steps

• The company anticipates re-submitting an IND application to potentially conduct the Phase IIa portion of the study in the United States.
• The company expects to announce the complete results of the single-dose portion of the Phase I trial in the second quarter of 2024.
• The company plans to commence the multiple dose portion of the Phase I study for PT00114 in the second quarter of 2024.
• The company plans to initiate the Phase IIa study for PT00114 in the third quarter of 2024.

Key Dates

Keywords

PT00114, TCAP, neuropsychiatric disorders, clinical trials, depression, anxiety, substance abuse, PTSD, biopharmaceutical, drug development, regulatory approval, intellectual property, University of Toronto, Phase I trial, Phase IIa trial