UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
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:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) | |
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 | ☐ | |
| ☒ | 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 ☐
Number of shares of common stock outstanding as of November 9, 2023 was .
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may be identified by such forward-looking terminology as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and involve substantial risks and uncertainty. We may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in these forward-looking statements. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our statements regarding:
| ● | our projected financial position and estimated cash burn rate; | |
| ● | our estimates regarding expenses, future revenues and capital requirements; | |
| ● | our ability to continue as a going concern; | |
| ● | our need to raise substantial additional capital to fund our operations, the availability and terms of such funding, and dilution caused thereby; | |
| ● | the success, cost and timing of our clinical trials; | |
| ● | our dependence on third parties in the conduct of our clinical trials; | |
| ● | our ability to obtain the necessary regulatory approvals to market and commercialize our product candidates; | |
| ● | the ultimate impact of a health epidemic, on our business, our clinical trials, our research programs, healthcare systems or the global economy as a whole; | |
| ● | the potential that results of pre-clinical and clinical trials indicate our current product candidates or any future product candidates we may seek to develop are unsafe or ineffective; | |
| ● | the results of market research conducted by us or others; | |
| ● | our ability to obtain and maintain intellectual property protection for our current and future product candidates; | |
| ● | our ability to protect our intellectual property rights and the potential for us to incur substantial costs from lawsuits to enforce or protect our intellectual property rights; | |
| ● | the possibility that a third party may claim we or our third-party licensors have infringed, misappropriated or otherwise violated their intellectual property rights and that we may incur substantial costs and be required to devote substantial time defending against claims against us; | |
| ● | our reliance on third-party suppliers and manufacturers; |
| 3 |
| ● | the success of competing therapies and products that are or become available; | |
| ● | our ability to expand our organization to accommodate potential growth and our ability to retain and attract key personnel; | |
| ● | the potential for us to incur substantial costs resulting from product liability lawsuits against us and the potential for these product liability lawsuits to cause us to limit our commercialization of our product candidates; | |
| ● | market acceptance of our product candidates, the size and growth of the potential markets for our current product candidates and any future product candidates we may seek to develop, and our ability to serve those markets; and | |
| ● | the successful development of our commercialization capabilities, including sales and marketing capabilities. |
All of our forward-looking statements are as of the date of this Quarterly Report on Form 10-Q only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report on Form 10-Q or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”) could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report on Form 10-Q, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Quarterly Report on Form 10-Q that modify or impact any of the forward-looking statements contained in this Quarterly Report on Form 10-Q will be deemed to modify or supersede such statements in this Quarterly Report on Form 10-Q.
This Quarterly Report on Form 10-Q may include market data and certain industry data and forecasts, which we may obtain from internal company surveys, market research, consultant surveys, publicly available information, reports of governmental agencies and industry publications, articles and surveys. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. While we believe that such studies and publications are reliable, we have not independently verified market and industry data from third-party sources, and we have not commissioned any such information.
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Immix Biopharma, Inc.
Condensed Consolidated Balance Sheets
| September 30, 2023 | December 31, 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Tax receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Other assets | ||||||||
| Equipment, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Total current liabilities | ||||||||
| Funds held for subsidiary private offering | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $ par value; shares authorized; shares issued and outstanding | ||||||||
| Common stock, $ par value; shares authorized; shares issued and shares outstanding at September 30, 2023 and shares issued and shares outstanding at December 31, 2022 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Treasury stock at cost, shares as of September 30, 2023 and December 31, 2022 | ( | ) | ( | ) | ||||
| Total Immix Biopharma, Inc. stockholders’ equity | ||||||||
| Non-controlling interests | ( | ) | ||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
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Immix Biopharma, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | $ | $ | $ | $ | ||||||||||||
| Research and development | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ||||||||||||||
| Total other income (expense), net | ( | ) | ||||||||||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to non-controlling interests | ||||||||||||||||
| Net loss attributable to Immix Biopharma, Inc. common stockholders | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: comprehensive loss attributable to non-controlling interests | ||||||||||||||||
| Comprehensive loss attributable to Immix Biopharma, Inc. common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per common share - basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average shares outstanding - basic and diluted | ||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
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Immix Biopharma, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
For the Three and Nine Months Ended September 30, 2023 and 2022
(Unaudited)
| Common | Additional | Accumulated Other | Treasury | Non- | Total | |||||||||||||||||||||||||||||||
| Common | Stock | Paid-in | Comprehensive | Accumulated | Treasury | Stock | Controlling | Stockholders’ | ||||||||||||||||||||||||||||
| Shares | Amount | Capital | Income | Deficit | Shares | Amount | Interests | Equity | ||||||||||||||||||||||||||||
| Balance December 31, 2022 | $ | $ | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||
| Shares issued under ATM facility for cash proceeds, net of offering costs | - | |||||||||||||||||||||||||||||||||||
| Nexcella shares issued for cash proceeds | - | - | ||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||||||||||
| Non-controlling interests in subsidiary | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||
| Balance March 31, 2023 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Shares issued under ATM facility for cash proceeds, net of offering costs | - | |||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||||||||||
| Non-controlling interests in subsidiary | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||
| Balance June 30, 2023 | $ | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Shares issued under ATM facility for cash proceeds, net of offering costs | - | |||||||||||||||||||||||||||||||||||
| Shares and warrants issued under private placement for cash proceeds, net of offering costs | - | |||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Non-controlling interests in subsidiary | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||
| Balance September 30, 2023 | $ | $ | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||
| Balance December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||
| Shares issued for cash proceeds, net of offering costs | - | |||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| Balance March 31, 2022 | ( | ) | ||||||||||||||||||||||||||||||||||
| Shares issued for cashless exercise of option | ( | ) | - | |||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Shares issued for services | - | |||||||||||||||||||||||||||||||||||
| Repurchase of common shares | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Net loss | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||
| Balance June 30, 2022 | $ | $ | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||
| Shares issued for services | - | |||||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||
| Balance September 30, 2022 | $ | $ | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| 7 |
Immix Biopharma, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| For the Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2023 | 2022 | |||||||
| Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Depreciation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Tax receivable | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Accrued interest | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing Activities: | ||||||||
| Purchase of equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Financing Activities: | ||||||||
| Payments of deferred offering costs | ( | ) | ||||||
| Proceeds from sale of common stock, net of offering costs | ||||||||
| Proceeds from sale of Nexcella common stock | ||||||||
| Payments on note payable | ( | ) | ||||||
| Repurchase of common stock | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Effect of foreign currency on cash | ( | ) | ||||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents – beginning of period | ||||||||
| Cash and cash equivalents – end of period | $ | $ | ||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Supplemental Disclosures of Noncash Financing Information: | ||||||||
| Nexcella shares issued for funds previously received | $ | $ | ||||||
| Deferred offering costs charged against proceeds from sale of common stock | $ | $ | ||||||
| Common stock issued for cashless exercise of stock options | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| 8 |
Immix Biopharma, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 1 – Nature of Business
Immix Biopharma, Inc. (the “Company”) is a clinical-stage biopharmaceutical pharmaceutical company organized as a Delaware corporation on January 7, 2014 which is focused on developing a novel class of Tissue-Specific Therapeutics in oncology and immune-dysregulated diseases. In August 2016, the Company established a wholly-owned Australian subsidiary, Immix Biopharma Australia Pty Ltd. (“IBAPL”), in order to conduct various preclinical and clinical activities for its development candidates. In November 2022, the Company established a majority-owned subsidiary, Nexcella, Inc. (“Nexcella”), which is a clinical-stage biopharmaceutical company engaged in the discovery and development of novel cell therapies for hematologic malignancies (blood cancers), oncology and other indications.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation - The accompanying condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). The Company’s fiscal year end is December 31.
The condensed consolidated financial statements and related disclosures as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 are unaudited, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the Company’s opinion, these unaudited condensed consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for the fair statement of the results for the interim periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company for the years ended December 31, 2022 and 2021 which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2023. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year ending December 31, 2023.
Risk and Uncertainties - The Company operates in a dynamic and highly competitive industry and is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, contract manufacturers and contract research organizations, compliance with government regulations and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical studies and clinical trials and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting. The Company believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial position, results of operations, or cash flows; ability to obtain future financing; advances and trends in new technologies and industry standards; results of clinical trials; regulatory approval and market acceptance of the Company’s products; development of sales channels; certain strategic relationships; litigation or claims against the Company based on intellectual property, patent, product, regulatory, or other factors; and the Company’s ability to attract and retain employees necessary to support its growth.
Products developed by the Company require approvals from the U.S. Food and Drug Administration (“FDA”) or other international regulatory agencies prior to commercial sales. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained or maintained, that the products will receive the necessary approvals, or that any approved products will be commercially viable. If the Company is denied approval, approval is delayed, or the Company is unable to maintain approval, it could have a material adverse impact on the Company. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from other pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, consultants and other third parties.
| 9 |
The Company has expended and plans to continue to expend substantial funds to complete the research, development and clinical testing of product candidates. The Company also will be required to expend additional funds to establish commercial-scale manufacturing arrangements and to provide for the marketing and distribution of products that receive regulatory approval. The Company may require additional funds to commercialize its products. The Company is unable to entirely fund these efforts with its current financial resources and will need to raise additional funding in the future. If adequate funds are unavailable on a timely basis from operations or additional sources of financing, the Company may have to delay, reduce the scope of or eliminate one or more of its research or development programs which may materially and adversely affect its business, financial condition and operations.
Use of Estimates – The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company uses significant judgments when making estimates related to the valuation of deferred tax assets and related valuation allowances, accrual and prepayment of research and development expenses, and the valuation of stock-based compensation. Actual results could differ from those estimates.
Principles
of Consolidation – The accompanying condensed consolidated financial statements include the accounts of Immix Biopharma, Inc.,
the accounts of its
Liquidity
and Going Concern – These condensed consolidated financial statements have been prepared on a going concern basis, which assumes
the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the
Company as a going concern is dependent upon the ability of the Company to obtain financing to continue operations. In December 2021,
the Company received $
In August 2023, the Company sold (i) shares of the Company’s common stock, par value $,
and (ii) Pre-Funded warrants to purchase
As
of November 9, 2023, the Company has sold common shares pursuant to the July ATM Facility for net proceeds of $
| 10 |
The Company has a history of, and expects to continue to report, negative cash flows from operations and a net loss. While the Company’s estimates of its operating expenses and working capital requirements could be incorrect and the Company may use its cash resources faster than it anticipates, management believes that its cash and cash equivalents on hand at September 30, 2023, and funds that may be raised from the July ATM Facility, will be sufficient to meet the Company’s working capital requirements through at least November 9, 2024.
Concentration
of Credit Risk – Periodically, the Company may carry cash and cash equivalents balances at financial institutions in excess
of the federally insured limit of $
Cash and Cash Equivalents – The Company’s cash equivalents include short-term highly liquid investments with an original maturity of 90 days or less when purchased and are carried at fair value.
Fair Value of Financial Instruments – The carrying value of short-term instruments, including cash and cash equivalents, tax receivable, accounts payable and accrued expenses, approximate fair value due to the relatively short period to maturity for these instruments.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a three-level valuation hierarchy for disclosures of fair value measurements, defined as follows:
Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value.
The following fair value hierarchy table presents information about the Company’s asset measured at fair value on a recurring basis:
| Fair Value Measurements at September 30, 2023 | ||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets: | ||||||||||||
| Cash equivalents (money market funds) | $ | $ | $ | |||||||||
As of September 30, 2023, the Company had no liabilities required to be measured at fair value on a recurring basis.
As of December 31, 2022, the Company had no assets or liabilities required to be measured at fair value on a recurring basis.
Australian
Tax Incentive – IBAPL is eligible to receive a cash refund from the Australian Taxation Office for eligible research and development
(“R&D”) expenditures under the Australian R&D Tax Incentive Program (the “Australian Tax Incentive”).
The Australian Tax Incentive is recognized as a reduction to R&D expense when there is reasonable assurance that the relevant expenditure
has been incurred, the amount can be reliably measured and that the Australian Tax Incentive will be received. The Company recognized
reductions to R&D expense of $
| 11 |
Deferred
Offering Costs – The Company has capitalized qualified legal, accounting and other direct costs related to its
efforts to raise capital through the sale of its common stock under the July ATM Facility. Deferred offering costs will be deferred
and amortized ratably upon sales under the July ATM Facility, and upon completion, they will be reclassified to additional paid-in
capital as a reduction of the July ATM proceeds. If the Company terminates the July ATM Facility or there is a significant delay,
all of the deferred offering costs will be immediately written off to operating expenses. As of September 30, 2023, $
Stock-Based Compensation – Stock-based compensation expense represents the estimated grant date fair value of the Company’s equity awards, consisting of stock options issued under the Company’s stock option plan and restricted common stock (see Note 6). The fair value of equity awards is recognized over the requisite service period of such awards (usually the vesting period) on a straight-line basis. The Company estimates the fair value of stock options using the Black-Scholes option pricing model on the date of grant and recognizes forfeitures as they occur. For stock awards for which vesting is subject to performance-based milestones, the expense is recorded over the remaining service period after the point when the achievement of the milestone is probable, or the performance condition has been achieved.
Research and Development Costs – R&D costs are expensed as incurred. R&D costs consist primarily of clinical research fees paid to consultants and outside service providers, other expenses relating to design, development and testing of the Company’s therapy candidates, and for license and milestone costs related to in-licensed products and technology. Costs incurred in obtaining technology licenses are charged to R&D expense if the technology licensed has not reached commercial feasibility and has no alternative future use. Such licenses purchased by the Company require substantial completion of research and development, regulatory and marketing approval efforts in order to reach commercial feasibility and have no alternative future use.
Clinical trial costs are a component of R&D expenses. The Company estimates expenses incurred for clinical trials that are in process based on services performed under contractual agreements with clinical research organizations and actual clinical investigators. Included in the estimates are (1) the fee per patient enrolled as specified in the clinical trial contract with each institution participating in the clinical trial and (2) progressive data on patient enrollments obtained from participating clinical trial sites and the actual services performed. Changes in clinical trial assumptions, such as the length of time estimated to enroll all patients, rate of screening failures, patient drop-out rates, number and nature of adverse event reports, and the total number of patients enrolled can impact the average and expected cost per patient and the overall cost of the clinical trial. The Company monitors the progress of the trials and their related activities and adjusts expense accruals, when applicable. Adjustments to accruals are charged to expense in the period in which the facts give rise to the adjustments become known.
Other Comprehensive Income (Loss) – Other comprehensive income (loss) includes foreign currency translation gains and losses. The cumulative amount of translation gains and losses are reflected as a separate component of stockholders’ equity in the condensed consolidated balance sheets, as accumulated other comprehensive income.
Foreign
Currency Translation and Transaction Gains (Losses) – The Company, and its majority-owned
subsidiary Nexcella, maintain their accounting records in U.S. Dollars. The Company’s operating subsidiary, IBAPL, is located
in Australia and maintains its accounting records in Australian Dollars, which is its functional currency. Assets and liabilities of
the subsidiary are translated into U.S. dollars at exchange rates at the balance sheet date, equity accounts are translated at historical
exchange rate and revenues and expenses are translated by using the average exchange rates for the period. Translation adjustments are
reported as a separate component of other comprehensive income (loss) in the consolidated statements of operations and comprehensive
loss. Foreign currency denominated transactions are translated at exchange rates approximating those in effect at the transaction dates.
Gains (losses) resulting from foreign currency transactions are included in general and administrative expenses in the accompanying condensed
consolidated statements of operations and comprehensive loss and were $
| 12 |
Reclassifications
Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation. These reclassifications had no effect on our previously reported results of operations or accumulated deficit.
Recent Accounting Pronouncements
The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying condensed consolidated financial statements.
Note 3 – Agreements with Nexcella Subsidiary
Founders Agreement
Effective December 8, 2022, the Company entered into a Founders Agreement with Nexcella (the “Nexcella Founders Agreement”).
The
Nexcella Founders Agreement provides that prior to a Qualified IPO (as defined in Nexcella’s Amended and Restated Certificate of
Incorporation, as amended (the “Nexcella COI”)) or Qualified Change in Control (as defined in the Nexcella COI), the Company
shall provide funds to Nexcella as requested by Nexcella, in good faith, to be evidenced by a senior unsecured promissory note. In exchange
for the time and capital expended in the formation of Nexcella and the identification of specific assets, the acquisition of which benefit
Nexcella, on December 21, 2022, the Company loaned Nexcella approximately $
Each
share of Class A Preferred Stock is convertible, at the Company’s option, into one fully paid and nonassessable share of
Nexcella’s common stock, subject to certain adjustments. As a holder of Nexcella’s Class A Preferred Stock, the Company
will receive on each March 13 (each a “PIK Dividend Payment Date”) until the date all outstanding Class A Preferred
Stock is converted into Nexcella’s common stock or redeemed (and the purchase price is paid in full), pro rata per share
dividends paid in additional fully paid and nonassessable shares of Nexcella common stock (“PIK Dividends”) such that
the aggregate number of shares of common stock issued pursuant to such PIK Dividend is equal to
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In addition to the foregoing, the Company is entitled to one vote for each share of Nexcella common stock held by it. Except as provided by law or by the Nexcella COI, holders of Nexcella Class A Common Stock and Class A Preferred Stock shall vote together with the holders of Nexcella common stock, as a single class.
As
additional consideration under the Nexcella Founders Agreement, Nexcella will also:
Management Services Agreement
Effective
as of December 8, 2022, the Company entered into a Management Services Agreement (the “Nexcella MSA”) with Nexcella. Pursuant
to the terms of the Nexcella MSA, the Company will render management, advisory and consulting services to Nexcella. Services provided
under the Nexcella MSA may include, without limitation, (i) advice and assistance concerning any and all aspects of Nexcella’s
operations, clinical trials, financial planning and strategic transactions and financings and (ii) conducting relations on behalf of
Nexcella with accountants, attorneys, financial advisors and other professionals (collectively, the “Services”). At the request
of the Company, Nexcella will utilize clinical research services, medical education, communication and marketing services and investor
relations/public relation services of companies or individuals designated by the Company, provided those services are offered at market
prices. In consideration for the Services, Nexcella will pay the Company an annual base management and consulting fee of $
| 14 |
Note 4 – Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following as of September 30, 2023 and December 31, 2022:
| September 30, 2023 | December 31, 2022 | |||||||
| Prepaid research and development expenses | $ | $ | ||||||
| Prepaid insurance expense | ||||||||
| Prepaid public company compliance expense | ||||||||
| Prepaid investor relations expense | ||||||||
| Other current assets | ||||||||
| Total prepaid expenses and other current assets | $ | $ | ||||||
Note 5 – Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of the following as of September 30, 2023 and December 31, 2022:
| September 30, 2023 | December 31, 2022 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued research and development expenses | ||||||||
| Accrued professional services | ||||||||
| Accrued compensation and related expenses | ||||||||
| Other accrued expenses | ||||||||
| Total accounts payable and accrued expenses | $ | $ | ||||||
Note 6 – Stockholders’ Equity
The Company has authorized shares of common stock and shares of preferred stock each with a par value of $ per share.
March ATM Sales Agreement
On
March 22, 2023, the Company entered into the March Sales Agreement with the Sales Agent pursuant to which the Company could offer and
sell, from time to time, through the Sales Agent, shares (the “March Shares”) of the Company’s common stock, par value
$ per share, having an aggregate offering price of up to $
Under the March Sales Agreement, the Sales Agent sold the March Shares in sales deemed to be “at-the-market offerings” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly on or through The Nasdaq Capital Market, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or any other method permitted by law. The Company could instruct the Sales Agent not to sell any March Shares if the sales could not be effected at or above the price designated by the Company from time to time.
The
Company paid the Sales Agent a fixed commission rate of
During
the nine months ended September 30, 2023, the Company sold March Shares pursuant to the March ATM Facility for net cash proceeds
of $
July ATM Sales Agreement
On
July 14, 2023, the Company entered into the July Sales Agreement with the Sales Agent pursuant to which the Company may offer and sell,
from time to time, through the Sales Agent, shares (the “July Shares”) of the Company’s common stock, par value $
per share, subject to the terms and conditions set forth in the Sales Agreement. Initially, the Company is eligible to sell up to $
| 15 |
Under the July Sales Agreement, the Sales Agent may sell the July Shares in sales deemed to be “at-the-market offerings” as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on or through The Nasdaq Capital Market or any other existing trading market for the Company’s common stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or any other method permitted by law. The Company may instruct the Sales Agent not to sell any July Shares if the sales cannot be effected at or above the price designated by the Company from time to time.
The
Company will pay the Sales Agent a fixed commission rate of
During
the nine months ended September 30, 2023, the Company sold July Shares pursuant to the July ATM Facility for net cash proceeds
of $
August 2023 Private Placement
On August 21, 2023, the Company entered into a Securities
Purchase Agreement (the “Securities Purchase Agreement”) with a certain accredited investor (the “Purchaser”),
pursuant to which the Company sold and issued to the Purchaser in a private placement transaction (the “Private Placement”)
(i) shares (the “Shares”) of the Company’s common stock, par value $, and (ii) Pre-Funded warrants to
purchase
The Pre-Funded Warrants have a per share exercise
price of $
The Shares and Pre-Funded Warrants, and the common stock issuable upon the exercise of the Pre-Funded Warrants, have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and were offered pursuant to the exemption from registration provided in Section 4(a)(2) under the Securities Act.
Pursuant to the Securities Purchase Agreement, the Company filed with the SEC a Registration Statement on Form S-3 (File No. 333-274684) on September 25, 2023 and declared effective by the SEC on September 28, 2023, to register the resale of the Shares and Pre-Funded Warrants.
None of the Pre-Funded Warrants have been exercised to date.
Other Common Stock Issuances
On
March 9, 2023, the Company entered into a marketing services agreement, whereby the Company agreed to issue shares of its common stock, valued at $
On
April 23, 2023, the Company entered into a marketing services agreement, whereby the Company issued
shares of its common stock valued at $
Stock Options
In 2016, the Board of Directors of the Company approved the Immix Biopharma, Inc. 2016 Equity Incentive Plan (the “2016 Plan”). The 2016 Plan allows for the Board of Directors to grant various forms of incentive awards covering up to shares of common stock. During the year ended December 31, 2021, the Board of Directors amended the 2016 Plan to increase the aggregate number of shares available for issuance under the 2016 Plan to shares of common stock. On September 10, 2021, the Board of Directors approved the 2021 Equity Incentive Plan (as amended and restated, the “2021 Plan”) pursuant to which it initially reserved and made available for future issuance under the 2021 Plan (i) shares of common stock, plus (ii) the number of shares of common stock reserved, but unissued under the 2016 Plan, and (iii) the number of shares of common stock underlying forfeited awards under the 2016 Plan, provided that shares of common stock issued under the 2021 Plan with respect to an Exempt Award (as defined in the 2021 Plan) would not count against such share limit. Subsequent to September 10, 2021, no further awards are to be issued under the 2016 Plan, but all awards under the 2016 Plan which were outstanding as of September 10, 2021 (including any Grandfathered Arrangement (as defined in the 2021 Plan)) shall continue to be governed by the terms, conditions and procedures set forth in the 2016 Plan and any applicable award agreement.
On April 24, 2023, the Company’s Board of Directors adopted the Immix Biopharma, Inc. Amended and Restated 2021 Omnibus Equity Incentive Plan (the “Amended 2021 Plan”) which, among other things, increased the number of shares of common stock that may be issued under such plan by shares, subject to stockholder approval. On June 7, 2023, stockholders of the Company approved the Amended 2021 Plan. As of September 30, 2023, there were shares of the Company’s common stock remaining to be issued under the Amended 2021 Plan.
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During the nine months ended September 30, 2023, the Compensation Committee of the Board of Directors approved the issuance of options to purchase shares of the Company’s common stock to non-employee members of the Board of Directors of the Company and shares of the Company’s common stock to management of the Company. The options have a term of years, exercise prices ranging from $ to $ per share and vest over periods of 12 to 48 equal monthly installments.
During
the nine months ended September 30, 2023, the Board of Directors approved the issuance of options to purchase shares of the Company’s
common stock to a consultant of the Company with a term of years and an exercise price of $
The Company recognized stock-based compensation of $ and $ related to stock options for the three months ended September 30, 2023 and 2022, respectively, and $ and $ related to stock options for the nine months ended September 30, 2023 and 2022, respectively, which is included in general and administrative expenses. As of September 30, 2023, the Company had unrecognized stock-based compensation expense of $, related to unvested stock options, which is expected to be recognized over the weighted-average vesting period of years.
| Options | Weighted- Average Exercise Price Per Share | |||||||
| Outstanding, January 1, 2023 | $ | |||||||
| Granted | $ | |||||||
| Exercised | $ | |||||||
| Forfeited | $ | |||||||
| Expired | $ | |||||||
| Outstanding and expected to vest, September 30, 2023 | $ | |||||||
| Outstanding | Exercisable | |||||||||||||||||||||
| Exercise Price | Number of Option Shares | Weighted Average Exercise Price | Weighted Average Remaining Life (Years) | Number of Option Shares | Weighted Average Exercise Price | |||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | |||||||||||||||||||||
Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option and the fair value of the Company’s common stock for stock options that were in-the-money at period end. As of September 30, 2023, the aggregate intrinsic value for the options vested and outstanding was $ and $, respectively.
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Stock Warrants
The following table summarizes the stock warrant activity for the nine months ended September 30, 2023:
| Warrants | Weighted-Average
Exercise Price Per Share | |||||||
| Outstanding and exercisable, January 1, 2023 | $ | |||||||
| Granted | $ | |||||||
| Exercised | $ | |||||||
| Forfeited | $ | |||||||
| Expired | $ | |||||||
| Outstanding and exercisable, September 30, 2023 | $ | |||||||
| Outstanding | Exercisable | |||||||||||||||||||||
| Exercise Price | Number of Option Shares | Weighted Average Exercise Price | Weighted Average Remaining Life (Years) | Number of Option Shares | Weighted Average Exercise Price | |||||||||||||||||
| $ | $ | - | $ | |||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | |||||||||||||||||||||
Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock warrant and the fair value of the Company’s common stock for stock warrants that were in-the-money at period end. As of September 30, 2023, the intrinsic value for the warrants vested and outstanding was $.
Nexcella Equity Transactions
As
of September 30, 2023, the Company’s controlling interest, on a fully dilutive basis, of Nexcella represents
The Nexcella 2022 Equity Incentive Plan (the “2022 Plan”) allows for Nexcella’s Board of Directors to grant various forms of incentive awards initially covering up to shares of common stock. On May 29, 2023, Nexcella’s Board of Directors approved the Second Amended and Restated Nexcella 2022 Equity Incentive Plan, which submitted an increase to the number of shares of Nexcella common stock issuable under the plan from shares to shares. On August 11, 2023, Nexcella’s Board of Directors requested the Third Amended and Restated 2022 Equity Incentive Plan, which increased the number of shares of Nexcella common stock issuable under the plan from to shares. The Nexcella shareholders subsequently approved the increase in Nexcella common stock issuable under the plan to . As of September 30, 2023, there were shares of common stock available for issuance under the Nexcella 2022 Plan.
Common stock
During
the nine months ended September 30, 2023, Nexcella closed on its private offering for the sale of common shares of Nexcella at
a purchase price of $ per share for total proceeds of $
| 18 |
On March 13, 2023, pursuant to the terms of the Founders Agreement, Nexcella issued shares of common stock to the Company as a PIK Dividend based on the total dilutive shares of Nexcella outstanding as of March 12, 2023.
Restricted Stock Awards
On
December 8, 2022, Nexcella issued shares of Nexcella restricted common stock to the officers of the Company for services to be
performed, which vest in 48 equal monthly installments. The stock was valued at a share price of $ on the date of issuance, which
represents the most recent cash sales price of Nexcella’s common stock, for a total value of $
During
the nine months ended September 30, 2023, the Board of Directors of Nexcella, granted shares of restricted common stock to the
non-employee members of the Board of Directors for services to be performed, which vest in 24 equal monthly installments. The stock was
valued at a share price of $ on the date of issuance, which represents the most recent cash sales price of Nexcella’s common
stock, for a total value of $
During the three and nine months ended September 30, 2023, the Company recorded stock-based compensation expense of $ and $, respectively, related to the total value, which was included in general and administrative expenses. The unrecognized stock-based compensation expense of $ related to unvested restricted common stock is expected to be recognized over the remaining vesting period of years. As of September 30, 2023, shares of restricted common stock have vested with the remaining restricted shares to vest over the vesting period of years.
Stock Options
During the nine months ended September 30, 2023, the Board of Directors of Nexcella, granted options to purchase shares of common stock to the non-employee members of the Board of Directors for services to be performed, with a term of years and an exercise price of $ per share, which options vest in 24 equal monthly installments.
During the nine months ended September 30, 2023, the Board of Directors of Nexcella granted options to purchase shares of common stock to two consultants for services to be performed, with a term of years and an exercise price of $ per share, which options vest in 48 equal monthly installments.
The Company recognized stock-based compensation of $ related to stock options for the three and nine months ended September 30, 2023, which is included in general and administrative expenses. As of September 30, 2023, Nexcella had unrecognized stock-based compensation expense of $, related to unvested stock options, which is expected to be recognized over the weighted-average vesting period of years.
| Options | Weighted- Average Exercise Price Per Share | |||||||
| Outstanding and exercisable, January 1, 2023 | $ | |||||||
| Granted | $ | |||||||
| Exercised | $ | |||||||
| Forfeited | $ | |||||||
| Expired | $ | |||||||
| Outstanding and expected to vest, September 30, 2023 | $ | |||||||
| 19 |
| Outstanding | Exercisable | |||||||||||||||||||||
| Exercise Price | Number of Option Shares | Weighted Average Exercise Price | Weighted Average Remaining Life (Years) | Number of Option Shares | Weighted Average Exercise Price | |||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| $ | $ | |||||||||||||||||||||
Note 7 – Licenses Acquired
On
December 8, 2022, Nexcella entered into a Research and License agreement with HADASIT and BIRAD (collectively, the “Licensors”)
to acquire intellectual property rights pertaining to CAR-T (the “H&B License”). Pursuant to the H&B License, Nexcella
paid the Licensors an upfront license fee of $
During
the nine months ended September 30, 2023, the Company recorded R&D expenses of $
Note 8 – Commitments and Contingencies
Indemnifications
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and may provide for indemnification of the counterparty. The Company’s exposure under these agreements is unknown because it involves claims that may be made against it in the future but have not yet been made. To date, the Company has not been subject to any claims or been required to defend any action related to its indemnification obligations.
The Company indemnifies each of its directors and officers for certain events or occurrences, subject to certain limits, while the director is or was serving at the Company’s request in such capacity, as permitted under Delaware law and in accordance with its certificate of incorporation and bylaws. The term of the indemnification period lasts as long as the director or officer may be subject to any proceeding arising out of acts or omissions of such individual in such capacity. The maximum amount of potential future indemnification is unlimited. The Company believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations as of September 30, 2023.
| 20 |
Royalty Agreement
On
December 22, 2014, the Company entered into a Master Service Agreement (“MSA”) with AxioMx, Inc. (“AxioMx”).
AxioMx is in the business of developing and supplying custom affinity reagents. AxioMx and the Company entered into the MSA to serve
as a master agreement governing multiple sets of projects as may be agreed upon by them from time to time. Pursuant to the MSA, AxioMx
is entitled to royalties on the sale of any Deliverable (as defined in the MSA) that is used for diagnostic, prognostic or therapeutic
purposes, in humans or animals, or for microbiology testing, including food safety testing or environmental monitoring. Specifically,
Legal Proceedings
From time to time the Company may be involved in claims that arise during the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company does not currently have any pending litigation to which it is a party or to which its property is subject that it believes to be material. Regardless of the outcome, litigation can be costly and time consuming, and it can divert management’s attention from important business matters and initiatives, negatively impacting the Company’s overall operations.
Employment Agreements
On
June 18, 2021, the Company entered into an Employment Agreement with Ilya Rachman (as amended, the “Rachman Employment Agreement”),
effective for a three-year term. Pursuant to the Rachman Employment Agreement, the Company employs Dr. Rachman as Chief Executive Officer
and Dr. Rachman was entitled to a base salary of $
| 21 |
On
March 18, 2021, the Company entered into a Management Services Agreement with Alwaysraise LLC, an entity which Gabriel Morris, the Company’s
Chief Financial Officer and a member of the Board, is sole member, effective for a three-year term, which was amended effective June
18, 2021 (as amended, the “Morris MSA”). Pursuant to the Morris MSA, the Company employs Mr. Morris as Chief Financial Officer
and Mr. Morris was entitled to a base salary of $
On June 24, 2021, the Company issued an offer letter to Graham Ross Oncology Consulting Services Ltd., a United Kingdom company, of which Graham Ross, the Company’s Acting Chief Medical Officer and Head of Clinical Development is the sole member, regarding Dr. Ross’ provision of consultative services to the Company (the “Offer Letter”). Pursuant to the Offer Letter (signed by Dr. Ross on June 24, 2021), Dr. Ross is entitled to an hourly rate for his consulting services and an option grant. On June 24, 2021, the Company also signed a mutual confidentiality and non-disclosure agreement with Graham Ross Oncology Consulting Services Ltd.
Collaboration Agreement
In August 2021, the Company entered into a Clinical Collaboration and Supply Agreement with BeiGene Ltd. (“BeiGene”) for a combination Phase 1b clinical trial in solid tumors of IMX-110 and anti-PD-1 Tislelizumab (the subject of a collaboration and license agreement among BeiGene and Novartis). Under the terms of the agreement, the Company will conduct the combination trial. The cost of Tislelizumab manufacture and supply (including shipping, taxes and duty if applicable and any third-party license payments that may be due) will be solely borne by BeiGene. To date, no amounts have been paid to BeiGene.
Note 9 – Subsequent Events
Subsequent events have been evaluated subsequent to the consolidated balance sheet date of September 30, 2023 through the filing date of this Quarterly Report. Based on management’s evaluation, there are no other events that required recognition or disclosure, other than those discussed below and elsewhere in the notes hereto.
On October 2, 2023, the Company issued shares of restricted common stock valued at $ for investor relations services based on the average closing price for the prior 10 trading days pursuant to a marketing services agreement entered into on July 25, 2023.
On
October 6, 2023, the Company issued
shares of restricted common stock pursuant to a marketing services agreement entered into on September 19, 2023, in exchange for 12
months of services. The shares of common stock were valued at $
for investor relations services based on the closing price on the effective date. In addition, the Company paid $
On October 10, 2023, the Company issued shares of restricted common stock pursuant to an extension of a previous marketing services agreement entered into on October 4, 2023, in exchange for an additional four months of services. The shares of common stock were valued at $ based on the average closing price for the prior 30 trading days for investor relations services.
On November 2, 2023, the Company issued shares of restricted common stock valued at $ for investor relations services based on the average closing price for the prior 10 trading days pursuant to a marketing services agreement entered into on July 25, 2023.
Subsequent
to September 30, 2023, the Company sold a total of
shares of its common stock under the July ATM Facility for aggregate net proceeds of $
| 22 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited interim condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as may be amended, supplemented or superseded from time to time by other reports we file with the SEC. All amounts in this report are in U.S. dollars, unless otherwise noted.
Throughout this Quarterly Report on Form 10-Q, references to “we,” “our,” “us,” the “Company,” “Immix,” or “Immix Biopharma” refer to Immix Biopharma, Inc., individually, or as the context requires, collectively with its subsidiaries.
Our logo and some of our trademarks and tradenames are used in this Report. This Report also includes trademarks, tradenames and service marks that are the property of others. Solely for convenience, trademarks, tradenames and service marks referred to in this Report may appear without the ®, ™ and SM symbols. References to our trademarks, tradenames and service marks are not intended to indicate in any way that we will not assert to the fullest extent under applicable law our rights or the rights of the applicable licensors if any, nor that respective owners to other intellectual property rights will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited consolidated financial statements included above under “Part I – Financial Information” – “Item 1. Financial Statements”.
Unless the context otherwise requires and for the purposes of this Report only:
● “Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
● “SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and
● “Securities Act” refers to the Securities Act of 1933, as amended.
Available Information
We file annual, quarterly, and current reports, proxy statements and other information with the Securities and Exchange Commission. Our SEC filings (reports, proxy information statements, and other information) are available to the public over the Internet at the SEC’s website at www.sec.gov and are available for download, free of charge, soon after such reports are filed with or furnished to the SEC, on the “Investor & News,” “SEC Filings” page of our website at www.immixbio.com. Copies of documents filed by us with the SEC are also available from us without charge, upon oral or written request to our Secretary, who can be contacted at the address and telephone number set forth on the cover page of this Report. The information contained on the websites referenced in this Report is not incorporated by reference into this filing. Further, the Company’s references to website URLs are intended to be inactive textual references only.
Overview
Immix Biopharma, Inc. (“ImmixBio”) is a clinical-stage biopharmaceutical company pioneering personalized therapies for oncology and immunology with more than 100 patients dosed to-date in clinical trials. Our lead cell therapy asset, NXC-201, is currently in Phase 1b/2a clinical trials for relapsed or refractory (“r/r”) AL amyloidosis (“ALA”) and r/r multiple myeloma (“MM”). NXC-201 is a next generation autologous CAR-T targeting B-cell maturation antigen (“BCMA”). BCMA has been shown to be over-expressed on MM, large B-Cell lymphoma, chronic lymphocytic leukemia, ALA and other plasma cell dyscrasia diseased cells. In addition, we expect our N-GENIUS cell therapy platform, which has produced NXC-201, to have broad potential utility in hematologic and autoimmune disease and which we believe enables our CAR-Ts to have distinct advantages including: preliminary clinical data — high overall response rate and durable responses; a differentiated tolerability profile including reduced neurotoxicity, resulting in a potential market first “Outpatient CAR-T”; and opportunity to treat a broader group of cancer patients.
Our lead Tissue Specific Therapeutic (“TSTx”) asset, IMX-110, is a TSTx with TME NormalizationTM, a technology that ImmixBio is developing initially for r/r proficient mismatch-repair (“pMMr”), microsatellite stable (“MSS”) colorectal cancer, and r/r soft tissue sarcoma. In addition, we are developing TSTx IMX-111, a Tissue-Specific BiologicTM built on ImmixBio’s TME NormalizationTM Technology for the treatment of r/r colorectal cancer, including all colorectal cancer diagnosed with regional, distant, and other staging. We also intend to pursue IMX-120, a Tissue-Specific BiologicTM built on ImmixBio’s Immune Normalization TechnologyTM, for ulcerative colitis and Crohn’s disease, which are both forms of inflammatory bowel disease.
Since inception, we have devoted substantially all of our resources to developing product and technology rights, conducting research and development, organizing and staffing our Company, business planning and raising capital. We operate as one business segment and have incurred recurring losses, the majority of which are attributable to research and development activities and negative cash flows from operations. We have funded our operations primarily through the sale of convertible debt and equity securities. Currently, our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through all stages of development and clinical trials and, ultimately, seek regulatory approval. In addition, if we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. Furthermore, we incur costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenses on other research and development activities.
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Research and License Agreement with Hadasit and BIRAD
On December 8, 2022, Nexcella entered into a Research and License Agreement (the “Agreement”) with Hadasit Medical Research Services & Development, Ltd. and BIRAD – Research and Development Company Ltd. (collectively, the “Licensors”) pursuant to which the Licensors granted to Nexcella an exclusive, worldwide, royalty-bearing license throughout the world, except Israel, Cyprus and other countries in the Middle East (the “Territory”) to an invention entitled “Anti-BCMA CAR-T cells to target plasma cell” to develop, manufacture, have manufactured, use, market, offer for sale, sell, have sold, export and import Licensed Product (as defined in the Agreement). Pursuant to the Agreement, Nexcella paid the Licensors an upfront fee of $1,500,000 in December 2022. Additional quarterly payments totaling approximately $13.0 million are due through September 2026 along with an annual license fee of $50,000. Nexcella has agreed to pay royalties to the Licensors equal to 5% of Net Sales (as defined in the Agreement) during the Royalty Period. “Royalty Period” means for each Licensed Product, on a country-to-country basis, the period commencing on December 8, 2022 and ending on the later of (a) the expiration of the last to expire Valid Claim (as defined in the Agreement) under a Licensed Patent (as defined in the Agreement), if any, in such country, (b) the date of expiration of any other Exclusivity Right (as defined in the Agreement) or data protection period granted by a regulatory or other governmental authority with respect to a Licensed Product or (c) 15 years from the date of First Commercial Sale (as defined in the Agreement) of a Licensed Product in such country.
In addition, Nexcella is required to pay sales milestone payments of up to $20 million for Net Sales exceeding $700 million and Nexcella has committed to funding NXC-201 clinical trials in Israel over four years for an estimated total cost of approximately $13 million, spread on a quarterly basis over that period, which Nexcella believes will generate clinical trial data owned by Nexcella. The term of the Agreement commenced on December 8, 2022 and, unless earlier terminated pursuant to the terms thereof, will continue in full force and effect until the later of the expiration of the last Valid Claim under a Licensed Patent or a Joint Patent (as defined in the Agreement) or Exclusivity Right covering a Licensed Product or the expiration of a continuous period of 15 years during which there shall not have been a First Commercial Sale of any Licensed Product in any country in the world. Licensors may terminate the Agreement immediately if Nexcella or its affiliates or sublicensees commences an action in which it challenges the validity, enforceability or scope of any of the Licensed Patents or Joint Patents. In addition, either party may terminate the Agreement if the other party materially breaches the Agreement and fails to cure such breach within 30 days. Additionally, Licensors may terminate the Agreement if Nexcella becomes insolvent or files for bankruptcy.
ATM Offerings
March ATM Offering
On March 22, 2023, we entered into an ATM Sales Agreement (the “Sales Agreement”) with ThinkEquity LLC (the “Sales Agent”) pursuant to which we sold, through the Sales Agent, shares of our common stock having an aggregate offering price of up to $5,000,000, subject to the terms and conditions set forth in the Sales Agreement. We paid the Sales Agent a commission rate of 3.75% of the aggregate gross proceeds from the sale of the shares of our common stock pursuant to the Sales Agreement. In addition, we paid an expense deposit of $15,000 to the Sales Agent, which was applied against the actual out-of-pocket accountable expenses. We also reimbursed the Sales Agent for all expenses related to the offering including, without limitation, the fees and expenses of the Sales Agent’s legal counsel up to $50,000, and costs, fees and expenses in an amount not to exceed $7,500 on a quarterly basis for the first three fiscal quarters of each year and $10,000 for the fiscal fourth quarter of each year.
As of June 15, 2023, we completed the offering and sold an aggregate of 2,263,868 shares of our common stock for aggregate net proceeds of $4,668,076 after deducting commissions and aggregate offering expenses paid by us in connection with the Sales Agreement.
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July ATM Offering
On July 14, 2023, we entered into an ATM Sales Agreement (the “July Sales Agreement”) with the Sales Agent pursuant to which we may offer and sell, from time to time, through the Sales Agent, shares of our common stock, subject to the terms and conditions set forth in the July Sales Agreement. Initially, we are eligible to sell up to $4,200,000 worth of shares of our common stock as the aggregate market value of our shares of common stock eligible for sale under the July Sales Agreement is subject to the limitations of General Instruction I.B.6 of Form S-3 until such time that our public float equals or exceeds $75.0 million. In the event the aggregate market value of our outstanding common stock held by non-affiliates equals or exceeds $75.0 million, then the one-third limitation on sales set forth in General Instruction I.B.6 of Form S-3 will not apply to additional sales made pursuant to the July Sales Agreement. We agreed to pay the Sales Agent a commission rate of 3.75% of the aggregate gross proceeds from the sale of the shares of our common stock pursuant to the July Sales Agreement and have paid an expense deposit of $15,000 to the Sales Agent, which will be applied against the actual out-of-pocket accountable expenses. In addition, we have agreed to reimburse the Sales Agent for all expenses related to the offering including, without limitation, the fees and expenses of the Sales Agent’s legal counsel up to $50,000, and to reimburse the Sales Agent, upon request, for such costs, fees and expenses in an amount not to exceed $7,500 on a quarterly basis for the first three fiscal quarters of each year and $10,000 for the fiscal fourth quarter of each year. The offering pursuant to the July Sales Agreement will terminate upon the earlier of (i) the sale of all of the shares of common stock subject to the July Sales Agreement and (ii) termination of the July Sales Agreement as permitted therein. We may terminate the July Sales Agreement in our sole discretion at any time by giving ten days’ prior notice to the Sales Agent. The Sales Agent may terminate the July Sales Agreement under the circumstances specified in the July Sales Agreement and in its sole discretion at any time by giving ten days’ prior notice to us. In addition, the July Sales Agreement may be terminated upon mutual agreement by us and the Sales Agent.
As of November 9, 2023, we have sold an aggregate of 210,834 shares of our common stock pursuant to the July Sales Agreement for aggregate net proceeds of $586,193 after deducting commissions and estimated aggregate offering expenses payable by us.
August 2023 Private Placement
On August 21, 2023, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with a certain accredited investor (the “Purchaser”), pursuant to which the Company sold and issued to the Purchaser in a private placement transaction (the “Private Placement”) (i) 3,241,076 shares (the “Shares”) of the Company’s common stock, par value $0.0001, and (ii) Pre-Funded warrants to purchase 1,913,661 shares of common stock (the “Pre-Funded Warrants”). The purchase price per share of common stock was $1.94 per share (the “Purchase Price”) and the purchase price for the Pre-Funded Warrants was the Purchase Price minus $0.0001 per Pre-Funded Warrant. The Company received gross proceeds of $10 million from the Private Placement and net proceeds of $9,934,153, after deducting fees and expenses paid by the Company. The Company intends to use the proceeds of the Private Placement for working capital and general corporate purposes.
The Pre-Funded Warrants have a per share exercise price of $0.0001, subject to proportional adjustments in the event of stock splits or combinations or similar events. The Pre-Funded Warrants will not expire until exercised in full. The Pre-Funded Warrants contain a “blocker” provision providing that a holder (together with its affiliates) may not exercise any portion of a warrant to the extent that the holder would own more than 19.99% of the outstanding shares of common stock of the Company. The Securities Purchase Agreement contains customary representations and warranties and agreements of the Company and the Purchaser and customary indemnification rights and obligations of the parties.
The Shares and Pre-Funded Warrants, and the common stock issuable upon the exercise of the Pre-Funded Warrants, have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and were offered pursuant to the exemption from registration provided in Section 4(a)(2) under the Securities Act.
Pursuant to the Securities Purchase Agreement, the Company filed with the SEC a Registration Statement on Form S-3 (File No. 333-274684) on September 25, 2023 and declared effective by the SEC on September 28, 2023, to register the resale of the Shares and Pre-Funded Warrants.
None of the Pre-Funded Warrants have been exercised to date.
Results of Operations
Three Months Ended September 30, 2023 compared to the Three Months Ended September 30, 2022
General and Administrative Expense
General and administrative expense was $2,417,776 for the three months ended September 30, 2023, compared to $837,441 for the three months ended September 30, 2022.
The increase in general and administrative expense was related to increased compensation expenses of $68,410, increased professional services of $787,771, increased investor relations expense of $362,812, increased stock-based compensation of $534,706, and a decrease in other general and administrative expenses of $173,364.
Research and Development Expense
Research and development expense was $2,106,020 for the three months ended September 30, 2023, compared to $695,937 for the three months ended September 30, 2022.
The increased research and development expenses during the three months ended September 30, 2023, as compared to the three months ended September 30, 2022, were related to our ongoing Phase 1b/2a clinical trial and our CAR-T clinical trial, including, but not limited to, contract research organization (“CRO”) and related costs for maintaining and treating patients in the clinical trial.
Interest Income
Interest income was $186,691 for the three months ended September 30, 2023, compared to $0 for the three months ended September 30, 2022. Interest income in the current period was related to interest earned on investments in a money market fund.
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Provision for Income Taxes
Provision for income taxes for the three months ended September 30, 2023 was $6,807 compared to $1,672 for the three months ended September 30, 2022, due to withholding taxes relating to our Australian subsidiary.
Net Loss
Net loss for the three months ended September 30, 2023 was $4,343,912 compared to $1,535,050 for the three months ended September 30, 2022, which increase was due primarily to the increase in general and administrative expenses and research and development expenses.
Nine Months Ended September 30, 2023 compared to the Nine Months Ended September 30, 2022
General and Administrative Expense
General and administrative expense was $5,130,977 for the nine months ended September 30, 2023, compared to $2,491,151 for the nine months ended September 30, 2022.
The increase in general and administrative expense was related to increased compensation expenses of $145,946, increased professional services of $817,404, increased investor relations of $691,394, increased stock-based compensation of $1,023,426, and a decrease in other general and administrative expenses of $44,716.
Research and Development Expense
Research and development expense was $5,634,284 for the nine months ended September 30, 2023, compared to $1,933,219 for the nine months ended September 30, 2022.
The increased research and development expenses during the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, were related to our ongoing Phase 1b/2a clinical trial and our CAR-T clinical trial, including, but not limited to, CRO and related costs for maintaining and treating patients in the clinical trial.
Interest Income
Interest income was $343,431 for the nine months ended September 30, 2023, compared to $0 for the nine months ended September 30, 2022. Interest income in the current period was related to interest earned on investments in a money market fund.
Interest Expense
Interest expense was $0 for the nine months ended September 30, 2023, compared to $497 for the nine months ended September 30, 2022. Interest expense in the prior period was related to interest accrued on a note payable which bore interest at 2.5% per annum, and has since been repaid.
Provision for Income Taxes
Provision for income taxes for the nine months ended September 30, 2023 was $18,326 compared to $5,009 for the nine months ended September 30, 2022, due to withholding taxes relating to our Australian subsidiary.
Net Loss
Net loss for the nine months ended September 30, 2023 was $10,440,156 compared to $4,429,876 for the nine months ended September 30, 2022, which increase was due primarily to the increase in general and administrative expenses and research and development expenses.
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Liquidity and Capital Resources
Our primary use of cash is to fund operating expenses, which consist of research and development expenditures and various general and administrative expenses. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses.
Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:
| ● | the scope, timing, progress and results of discovery, pre-clinical development, laboratory testing and clinical trials for our product candidates; | |
| ● | the costs of manufacturing our product candidates for clinical trials and in preparation for regulatory approval and commercialization; | |
| ● | the extent to which we enter into collaborations or other arrangements with additional third parties in order to further develop our product candidates; | |
| ● | the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; | |
| ● | the costs and fees associated with the discovery, acquisition or in-license of additional product candidates or technologies; | |
| ● | expenses needed to attract and retain skilled personnel; | |
| ● | the costs associated with being a public company; | |
| ● | the costs required to scale up our clinical, regulatory and manufacturing capabilities; | |
| ● | the costs of future commercialization activities, if any, including establishing sales, marketing, manufacturing and distribution capabilities, for any of our product candidates for which we receive regulatory approval; and | |
| ● | revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive regulatory approval. |
Subsequent to September 30, 2023, the Company sold a total of 105,000 shares of its common stock under the July ATM Facility for aggregate net proceeds of $586,193.
As of September 30, 2023, we had $19.5 million of total working capital.
We will need additional funds to meet our operational needs and capital requirements for clinical trials, other research and development expenditures, and general and administrative expenses. We currently have no credit facility or committed sources of capital, however, we do have approximately $3.6 million of additional sales available under the July Sales Agreement, discussed above.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, government or other third-party funding, commercialization, marketing and distribution arrangements, other collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, which dilution may be significant, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
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Cash used in operating activities
Net cash used in operating activities was $8,694,001 for the nine months ended September 30, 2023 and $3,504,377 for the nine months ended September 30, 2022 and primarily included general and administrative, CRO, clinical site costs and related logistics expenses.
Cash used in investing activities
Net cash used in investing activities was $38,912 for the nine months ended September 30, 2023 and $0 for the nine months ended September 30, 2022. Net cash used in investing activities for the nine months ended September 30, 2023 was related to purchases of furniture and equipment.
Cash provided by financing activities
Net cash provided by financing activities was $14,876,820 for the nine months ended September 30, 2023 and $2,807,787 for the nine months ended September 30, 2022. Net cash provided by financing activities in 2023 was related to proceeds of $5,002,284 from the sale of common shares through the at-the-market offerings, proceeds of $9,934,153 from the sale of common shares and Pre-Funded warrants in a private placement offering, and proceeds of $175,000 from the sale of common shares of our majority-owned subsidiary, Nexcella, offset by payments of deferred offering costs of $234,617. Net cash provided by financing activities in 2022 was primarily related to $2,913,750 in net proceeds from the issuance of shares of our common stock pursuant to the exercise of the underwriter’s overallotment option to purchase additional shares of our common stock in connection with our initial public offering completed in December 2021.
Our continuation as a going concern is dependent upon our ability to obtain necessary financing to continue operations and the attainment of profitable operations. As of September 30, 2023, we have incurred an accumulated deficit of $48,321,791 and have not yet generated any revenue from operations. Management anticipates that our cash and cash equivalents on hand and funds that may be raised pursuant to the July Sales Agreement will be sufficient to fund planned operations for at least 12 months from the filing date of this Quarterly Report on Form 10-Q.
We will have additional capital requirements going forward and may need to seek additional financing, which may or may not be available to us on acceptable terms, if at all.
JOBS Act
On April 5, 2012, the Jumpstart Our Business Startups Act (the “JOBS Act”) was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We have chosen to take advantage of the extended transition periods available to emerging growth companies under the JOBS Act for complying with new or revised accounting standards until those standards would otherwise apply to private companies provided under the JOBS Act. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates for complying with new or revised accounting standards.
Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions, including, without limitation, (i) providing an auditor’s attestation report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, and (ii) complying with the requirement adopted by the Public Company Accounting Oversight Board regarding the communication of critical audit matters in the auditor’s report on financial statements. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering (December 31, 2026); (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
Critical Accounting Policies and Use of Estimates
Our financial statements are prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Management regularly evaluates its estimates and judgments, including those related to revenue recognition, intangible assets, long-lived assets valuation, variable interest entities, and legal matters. Actual results may differ from these estimates which may be material. “Note 2 – Summary of Significant Accounting Policies” in Part I, Item 1 of this Quarterly Report on Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”), and “Critical Accounting Policies and Estimates” in Part II, Item 7 of the 2022 Form 10-K describe the significant accounting policies and methods used in the preparation of the Company’s financial statements. There have been no material changes to the Company’s critical accounting policies and estimates since the 2022 Form 10-K.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are not required to provide the information required by this Item as we are a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2023, the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is accumulated and communicated to a company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Based on the evaluation of our disclosure controls and procedures as of September 30, 2023, our management, with the participation of our principal executive officer and principal financial officer has concluded that, based on such evaluation, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective due to the material weakness described below.
Material Weakness in Internal Controls Over Financial Reporting
We identified a material weakness in our internal control over financial reporting that exists as of September 30, 2023. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We determined that we had a material weakness because, due to our small size, and our limited number of personnel, we did not have in place an effective internal control environment with formal processes and procedures, including journal entry processing and review, to allow for a detailed review of accounting transactions that would identify errors in a timely manner.
Notwithstanding the material weaknesses in our internal control over financial reporting, we have concluded that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America.
Management’s Plan to Remediate the Material Weakness
With the oversight of senior management, we continue to work to remediate our material weaknesses, including the addition of accounting consultants. We will continue to evaluate and implement procedures that will strengthen our internal controls. We are committed to continuing to improve our internal control processes and will continue to diligently review our financial reporting controls and procedures.
Changes in Internal Control
There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.
ITEM 1A. RISK FACTORS.
Risk factors that affect our business and financial results are discussed in Part I, Item 1A “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2022 (“Annual Report”) as filed with the SEC on March 27, 2023 and below. There have been no material changes in our risk factors from those previously disclosed in our Annual Report, except as set forth below. You should carefully consider the risks described in our Annual Report and below, which could materially affect our business, financial condition or future results. The risks described in our Annual Report and below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.
Economic uncertainty may affect our access to capital and/or increase the costs of such capital.
Global economic conditions continue to be volatile and uncertain due to, among other things, consumer confidence in future economic conditions, fears of recession and trade wars, the price of energy, fluctuating interest rates, the availability and cost of consumer credit, the availability and timing of government stimulus programs, levels of unemployment, increased inflation, tax rates, and the war between Ukraine and Russia which began in February 2022, and Israel and Hamas, which began in October 2023 and which threatens to spread to other Middle Eastern countries. These conditions remain unpredictable and create uncertainties about our ability to raise capital in the future. In the event required capital becomes unavailable in the future, or more costly, it could have a material adverse effect on our business, future results of operations, and financial condition.
Our outstanding options and warrants may adversely affect the trading price of our securities.
As of September 30, 2023, we had (i) outstanding stock options to purchase an aggregate of 2,513,912 shares of common stock at a weighted average exercise price of $1.91 per share; (ii) outstanding Pre-Funded warrants to purchase 1,913,661 shares of common stock with an exercise price of $0.0001; and (iii) outstanding warrants to purchase 397,500 shares of common stock with a weighted average exercise price of $4.11 per share (when not including the Pre-Funded warrants). For the life of the options and warrants, the holders have the opportunity to profit from a rise in the market price of our common stock without assuming the risk of ownership. The issuance of shares upon the exercise of outstanding securities will also dilute the ownership interests of our existing stockholders.
The availability of these shares for public resale, as well as any actual resales of these shares, could adversely affect the trading price of our common stock. We cannot predict the size of future issuances of our common stock pursuant to the exercise of outstanding options or warrants or conversion of other securities, or the effect, if any, that future issuances and sales of shares of our common stock may have on the market price of our common stock. Sales or distributions of substantial amounts of our common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may cause the market price of our common stock to decline.
In addition, the common stock issuable upon exercise/conversion of outstanding convertible securities may represent overhang that may also adversely affect the market price of our common stock. Overhang occurs when there is a greater supply of a company’s stock in the market than there is demand for that stock. When this happens the price of our stock will decrease, and any additional shares which stockholders attempt to sell in the market will only further decrease the share price. If the share volume of our common stock cannot absorb shares sold by holders of our outstanding convertible securities, then the value of our common stock will likely decrease.
A significant number of our shares are eligible for sale and their sale or potential sale may depress the market price of our common stock.
Sales of a significant number of shares of our common stock in the public market could harm the market price of our common stock. Most of our common stock is available for resale in the public market, including (a) outstanding stock options to purchase an aggregate of 2,513,912 shares of common stock at a weighted average exercise price of $1.91 per share; (b) Pre-Funded warrants to purchase 1,913,661 shares of common stock with an exercise price of $0.0001; and (c) 3,241,076 shares of common stock, the resale of which has been registered under the Securities Act. If a significant number of shares were sold, such sales would increase the supply of our common stock, thereby potentially causing a decrease in its price. Some or all of our shares of common stock, including those discussed above, may be offered from time to time in the open market pursuant to effective registration statements and/or compliance with Company insider trading policy, Exchange Act Section 16 and/or Rule 144, which sales could have a depressive effect on the market for our shares of common stock. Subject to certain restrictions, a person who has held restricted shares for a period of six months may generally sell common stock into the market. The sale of a significant portion of such shares when such shares are eligible for public sale may cause the value of our common stock to decline in value.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Unregistered Sales of Equity Securities
There have been no sales of unregistered securities during the quarter ended September 30, 2023, and from the period from September 1, 2023, to the filing date of this report that have not previously been disclosed in a Current Report on Form 8-K, except as follows:
On October 2, 2023, the Company issued 6,938 shares of its restricted common stock for investor relations services.
On October 6, 2023, the Company issued 67,568 shares of its restricted common stock for investor relations services.
On October 10, 2023, the Company issued 72,300 shares of its restricted common stock for investor relations services.
On November 2, 2023, the Company issued 6,690 shares of its restricted common stock for investor relations services.
The issuances described above were exempt from registration pursuant to Section 4(a)(2) of Regulation D of the Securities Act, since the foregoing issuances did not involve a public offering, the recipients took the securities for investment and not resale, we took appropriate measures to restrict transfer, and the recipients were (a) “accredited investors”; and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Securities Act. The securities are subject to transfer restrictions, and the certificates/book-entry notations evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
Clawback Policy. On November 6, 2023, the Board of Directors of the Company approved the adoption of a Policy for the Recovery of Erroneously Awarded Incentive Based Compensation (the “Clawback Policy”), with an effective date of October 2, 2023, in order to comply with the final clawback rules adopted by the Securities and Exchange Commission under Section 10D and Rule 10D-1 of the Securities Exchange Act of 1934, as amended (“Rule 10D-1”), and the listing standards, as set forth in the Nasdaq Listing Rule 5608 (the “Final Clawback Rules”).
The Clawback Policy provides for the mandatory recovery of erroneously awarded incentive-based compensation from current and former executive officers as defined in Rule 10D-1 (“Covered Officers”) of the Company in the event that the Company is required to prepare an accounting restatement, in accordance with the Final Clawback Rules. The recovery of such compensation applies regardless of whether a Covered Officer engaged in misconduct or otherwise caused or contributed to the requirement of an accounting restatement. Under the Clawback Policy, the Board of Directors may recoup from the Covered Officers erroneously awarded incentive compensation received within a lookback period of the three completed fiscal years preceding the date on which the Company is required to prepare an accounting restatement.
The foregoing summary of the Clawback Policy does not purport to be complete and is qualified in its entirety by reference to the full text of the Clawback Policy, a copy of which is attached hereto as Exhibit 10.2, to this Quarterly Report on Form 10-Q and incorporated herein by reference.
Officer Option Grants. On August 14, 2023, the Board of Directors and the Compensation Committee of the Board of Directors of the Company approved the grant of 293,000 options to purchase shares of the Company’s common stock, to each of Ilya Rachman and Gabriel Morris, the Chief Executive Officer and Chairman, and Chief Financial Officer and Director of the Company, respectively, for services to be rendered as officers of the Company through August 2027. The options had an exercise price of $1.86 per share, and vest at the rate of 1/48th of such options, per month, on each month following the grant date, subject to the applicable officer’s continued service with the Company on such vesting dates. The options were granted under, and subject to the terms of, the Company’s Amended and Restated 2021 Omnibus Equity Incentive Plan.
The foregoing summary of the grants does not purport to be complete and is qualified in its entirety by reference to the full text of the Immix Biopharma, Inc., Form of Stock Option Grant Notice and Option Agreement (Executive Officers – August 2023), a copy of which is attached hereto as Exhibit 10.3, to this Quarterly Report on Form 10-Q and incorporated herein by reference.
Unregistered Sales. The information and disclosures which are set forth above under “Item 2. Unregistered Sales of Equity Securities and Use of Proceeds”, under the heading “Unregistered Sales of Equity Securities”, are incorporated by reference into this “Item 5. Other Information”, in their entirety, and shall serve as disclosure of such information pursuant to Item 3.02 of Form 8-K.
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ITEM 6. EXHIBITS.
| * | Filed herewith. |
| ** | Furnished herewith. |
| + | Management contract or compensatory plan or arrangement. |
| ^ | Certain schedules to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Copies of the omitted schedules will be furnished to the SEC upon request. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| IMMIX BIOPHARMA, INC. | ||
| Date: November 9, 2023 | By: | /s/ Ilya Rachman |
Ilya Rachman | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: November 9, 2023 | By: | /s/ Gabriel Morris |
Gabriel Morris, | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
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