8-K/A: Tevogen Bio Holdings Inc. Files Amended Report Including Full Year 2023 Financials After Merger

Tevogen Bio Holdings Inc. has filed an amendment to its previous report to include the audited financial statements of Tevogen Bio Inc. for the years ended December 31, 2023 and 2022, along with pro forma financial information following its recent merger.

Summary

• Tevogen Bio Holdings Inc. filed an amendment to its original report to include the audited financial statements of Tevogen Bio Inc. for the years ended December 31, 2023 and 2022.
• The amendment also includes management's discussion and analysis of Tevogen Bio's financial condition and results of operations for the same periods.
• Pro forma condensed combined financial information of Tevogen Holdings and Tevogen Bio as of and for the year ended December 31, 2023, is also provided.
• Tevogen Bio has incurred significant losses since inception, with an accumulated deficit of $99.7 million as of December 31, 2023.
• The company's net loss for 2023 was $60.5 million, compared to a net loss of $22.0 million in 2022.
• As of December 31, 2023, Tevogen Bio had cash of $1.1 million.
• The company has raised $24.0 million from the sale of convertible promissory notes since January 2021.
• The company has concluded that it does not have sufficient cash to fund operations for 12 months from the issuance date of the financial statements, raising substantial doubt about its ability to continue as a going concern.
• The company is evaluating strategies to obtain additional funding, including private placements, licensing arrangements, and public offerings.
• Tevogen Bio's research and development expenses were $4.4 million in 2023, down from $5.8 million in 2022.
• General and administrative expenses were $4.4 million in 2023, compared to $7.9 million in 2022.
• The company recognized a $50.4 million non-cash charge for the change in fair value of convertible promissory notes in 2023.
• The company's convertible promissory notes were converted into 10,337,419 shares of common stock of Tevogen Holdings on February 14, 2024, in connection with the merger.
• The company has federal net operating loss carryforwards of $13.9 million and state net operating loss carryforwards of $16.4 million as of December 31, 2023.
• The company has provided a full valuation allowance against its net deferred tax assets.
• The company completed a Phase 1 proof-of-concept clinical trial for TVGN 489, its lead product candidate, in January 2023.
• The company hopes to launch a pivotal trial of TVGN 489 in COVID-19 patients with B cell malignancies as soon as late 2024.

Sentiment

Score: 3

Explanation: The document reveals significant financial challenges, including substantial losses, a low cash balance, and doubts about the company's ability to continue as a going concern. While there are positive aspects such as the successful Phase 1 trial and the potential of the technology, the financial risks overshadow these positives, resulting in a low sentiment score.

Positives

• The company successfully completed a Phase 1 clinical trial for TVGN 489 with no dose-limiting toxicities or significant treatment-related adverse events.
• Secondary endpoints in the Phase 1 trial showed a rapid reduction of viral load and did not prevent the development of the patients' own immunity.
• The company's technology platform, ExacTcell, is considered a significant scientific breakthrough with potential applications in virology, oncology, and neurology.
• The company has a pipeline of product candidates beyond TVGN 489.
• The company has secured intellectual property rights to its inventions related to its product candidates and ExacTcell.
• The company has raised $24.0 million from the sale of convertible promissory notes since January 2021.
• The company has plans to launch a pivotal trial of TVGN 489 in COVID-19 patients with B cell malignancies in late 2024.

Negatives

• The company has incurred significant losses and negative cash flows since inception.
• The company has an accumulated deficit of $99.7 million as of December 31, 2023.
• The company's net loss increased significantly from $22.0 million in 2022 to $60.5 million in 2023.
• The company has a limited cash balance of $1.1 million as of December 31, 2023.
• The company has substantial doubt about its ability to continue as a going concern due to insufficient cash to fund operations for the next 12 months.
• The company is dependent on raising additional capital to fund its operations.
• The company has not generated any revenue to date and does not expect to generate revenue until it obtains marketing approval for its product candidates.
• The company recognized a $50.4 million non-cash charge for the change in fair value of convertible promissory notes in 2023.

Risks

• The company's ability to continue as a going concern is uncertain due to insufficient cash to fund operations for the next 12 months.
• The company is dependent on raising additional capital, which may not be available on acceptable terms or at all.
• The company's research and development projects may not be successful, and products developed may not obtain necessary regulatory approval.
• The company operates in an environment of rapid technological change and is dependent on its employees and consultants.
• The company may not be able to enter into strategic alliances or other arrangements on favorable terms.
• The terms of any financing may adversely affect the holdings or the rights of the company's stockholders.
• The company could be required to delay, reduce, or eliminate research and development programs if it is unable to obtain funding.
• The company's utilization of net operating loss carryforwards may be subject to limitations in the event of certain ownership changes.
• The company's product candidates may not achieve commercial success even if approved.
• The company may face competition from other therapeutic alternatives in its target disease areas.

Future Outlook

The company expects to incur significant expenses related to expanding its research and development capability, building its manufacturing infrastructure, and developing its commercialization organization. The company plans to launch a pivotal trial of TVGN 489 in COVID-19 patients with B cell malignancies as soon as late 2024.

Management Comments

• Management believes that cash of $1,052,397 as of December 31, 2023 as well as $2,000,000 to Tevogen Holdings from a Series A Preferred Stock financing in February 2024 and $1,200,000 in connection with the Series A-1 Preferred Stock financing thereafter is not sufficient to sustain planned operations for 12 months from the issuance date of these financial statements.
• Management is currently evaluating different strategies to obtain the additional funding for future operations for subsequent years.
• Management has concluded that we do not have sufficient cash to fund our operations for 12 months from the date of our financial statements included as Exhibit 99.1 to this Current Report without additional financing, and as a result, under applicable accounting requirements and disclosure rules, there is substantial doubt about our ability to continue as a going concern.

Industry Context

Tevogen Bio is operating in the competitive biotechnology industry, focusing on developing off-the-shelf, precision T cell therapies. The company's approach with ExacTcell is differentiated from genetically engineered T cell therapies, aiming for greater specificity and reduced adverse effects. The company is targeting large patient populations with unmet needs in infectious diseases, cancers, and neurological disorders, which are areas of significant interest and investment in the biotechnology sector.

Comparison to Industry Standards

• Tevogen Bio's approach to T-cell therapy using naturally occurring CTLs is distinct from companies like Kite Pharma (acquired by Gilead) and Novartis, which focus on CAR T-cell therapies that involve genetic modification of T-cells.
• The company's focus on off-the-shelf allogeneic therapies contrasts with autologous therapies, which are patient-specific and more complex to manufacture, as seen in the products of companies like Legend Biotech.
• The company's reported net loss of $60.5 million in 2023 is significant for a clinical-stage company, but not uncommon in the biotech sector, where high R&D costs are typical. Companies like Adaptimmune and bluebird bio have also reported substantial losses during their development phases.
• The company's cash balance of $1.1 million as of December 31, 2023, is low compared to industry standards for companies in clinical development, which typically require substantial funding to support clinical trials and manufacturing scale-up. Companies like CRISPR Therapeutics and Editas Medicine often maintain larger cash reserves.
• The company's plan to launch a pivotal trial for TVGN 489 in late 2024 is a typical timeline for a biotech company advancing a lead product candidate, but the success of the trial and subsequent regulatory approvals are not guaranteed.

Related Party Transactions

• In January 2023, the Company issued 40,000 Performance-Based RSUs to the wife of the Company's chairman and chief executive officer for advisory services provided to the Company, and 20,000 Performance-Based RSUs to Mehtaphoric Consulting Inc., a company controlled by the daughter of the Company's chief financial officer, for information technology services provided to the Company.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and dependence on future capital raises.
• Employees may be impacted by potential delays or reductions in research and development programs if funding is not secured.
• Customers (potential patients) may be impacted by delays in the development and commercialization of the company's product candidates.
• Suppliers and creditors face the risk of non-payment if the company's financial situation does not improve.

Next Steps

• The company plans to launch a pivotal trial of TVGN 489 in COVID-19 patients with B cell malignancies as soon as late 2024.
• The company will continue to evaluate strategies to obtain additional funding for future operations.
• The company will continue to develop its other product candidates.

Key Dates

Keywords

Tevogen Bio, Financial Statements, Merger, Biotechnology, Immunotherapy, Clinical Trials, TVGN 489, Going Concern, Convertible Notes, Research and Development, COVID-19, ExacTcell, Capital Raise