The following management discussion and analysis should be read in conjunction with the unaudited consolidated financial statements contained elsewhere in this quarterly report and our historical consolidated financial statements and related notes (included in our annual report on Form 10-K for the year) As of December 31, 2020 ("2020 Annual Report"). Management’s discussion and analysis included forward-looking statements within the meaning of Section 27A of the revised Securities Act of 1933 and Section 21E of the revised Securities Exchange Act of 1934 ("Exchange Act"). ). These statements include statements about our commercialization strategy, future operations, cash requirements and liquidity, capital requirements, and other statements about our business plans and strategies, financial conditions, and market trends. In some cases, you can identify forward-looking through terms such as "may", "may", "will", "should", "believe", "plan", "intend", "expect", "target" and other terms statement. ""Estimates", "expectations" and other similar expressions. These forward-looking statements are subject to risks and uncertainties, which may cause actual results or events to differ from those expressed or implied by the forward-looking statements in this quarterly report. The incident has made major differences, including factors such as our ability to raise substantial additional funds. Our planned operations and continuing operations; our ability to execute strategies and business plans; our ability to obtain regulatory approvals for our products (including Neuro-Spinal Scaffold™) ; Our ability to successfully commercialize current and future candidate products (including neurospinal stents); the progress and timing of our development plan; the market acceptance of our products; our ability to retain management and other key personnel; we The ability to promote, manufacture and sell our products directly or through cooperation with third parties and other arrangements; the impact of the COVID-19 pandemic and our response measures; and the second part of this quarterly report, item 1A "risk factors" Other factors detailed in. These forward-looking statements are only effective as of the date of publication. Unless required by law, we do not undertake any obligation to update forward-looking statements to reflect events or circumstances that occur after the date of this quarterly report.
The discussion and analysis of our financial condition and operating results are based on our consolidated financial statements prepared in accordance with US generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make estimates and assumptions. These estimates and assumptions will affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the income and expenses during the reporting period. Reporting period. We will continue to evaluate such estimates and judgments, including those described in more detail below. Our estimates are based on historical experience and various other factors that we believe are reasonable in this situation. The results form the basis for making judgments on the book value of assets and liabilities that are not obvious from other sources. Under different assumptions or conditions, actual results may differ from these estimates.
We are a research and clinical stage biomaterials and biotechnology company, focusing on the treatment of spinal cord injury or SCI. Our approach to treating acute SCI is based on our Neuro-Spinal Scaffold™ implant, which is a bioabsorbable polymer scaffold designed to be implanted into the spinal cord injury site, aimed at treating acute SCI. The Neuro-Spinal Scaffold implant contains intellectual property licensed under an exclusive global license from Boston Children's Hospital (BCH) and Massachusetts Institute of Technology (MIT). We also plan to evaluate other technologies and treatments that may complement the development of our neurospine stent implants, such as stem cells, treatments or electrical stimulation, including incorporating knowledge from our neurospine stent implants or technologies Provides the potential to bring us closer to the goal of redefining the lives of SCI patients.
The current standard of care for acute management of spinal cord injury focuses on preventing further spinal cord injury. However, the current standard of care does not involve repair of the spinal cord.
We currently have a clinical development plan for the treatment of acute SCI.
Neurospinal Stent Implant for Acute SCI
Our Neurospinal Stent Implant is a research bioabsorbable polymer scaffold designed to be implanted into the spinal cord injury site. Neurospine stent implants are designed to promote alignment or side-by-side healing by supporting surrounding tissues after injury, minimizing the expansion of necrotic areas, and providing the body with a biomaterial matrix for the healing/repair process after injury. We believe This form of isotopic healing can avoid white matter, increase nerve sprouting, and reduce the formation of post-traumatic cysts.
Neurospine stent implants are composed of two biocompatible and bioabsorbable polymers, which are cast to form highly porous research products:
Polylactic acid-glycolic acid copolymer, a polymer widely used in absorbable materials
? Suture and provide biocompatibility support for the nerve spinal stent
? Poly-L-lysine, a positively charged polymer, usually used to coat surfaces
To promote cell attachment.
Due to the complexity of SCI, it is likely that multimodal therapy will be required to maximize the positive outcome of patients with SCI. In the future, we may try to further improve the performance of our nerve spinal cord stent implants through a variety of combination strategies, including electrical stimulation devices, other biological materials, US Food and Drug Administration or FDA approved drugs or growth factors. We expect that the neurospinal cord stent implant will be regulated by the FDA as a Class III medical device.
Our neurospine stent implants have been approved to be studied in the INSPIRE 2.0 study under our approved research device exemption or IDE, which is titled "Randomized, controlled, single-blind study of the possible benefits of neurospine stents™ and Compared with standard care, it is used for the safety and neurological recovery of subjects with complete thoracic spine AIS A spinal cord injury." The purpose of the INSPIRE 2.0 study is to evaluate the overall safety and possibility of neurospine stents in the treatment of neurocomplete thoracic traumatic acute SCI The benefits of. The INSPIRE 2.0 study aims to include 10 subjects in each of the two study groups, which we call the stent group and the comparator group. Patients with the comparator arm will receive standard care, which is to stabilize the spine without opening the dura mater or myelotomy. The INSPIRE 2.0 study is a single-blind study, which means that patients and evaluators are unaware of treatment allocation. The FDA approved the recruitment of up to 35 patients in this study, so that at least 20 evaluable patients (10 in each study group) in the primary endpoint analysis, considering that screening failures or deaths will prevent the occurrence of events from patients Arrived at the main terminal to visit. As of November 2, 2021, 16 patients have participated in the INSPIRE 2.0 study, and 17 sites are open for registration, which is the total number of sites currently activated for registration. We found that the enrollment rate of the INSPIRE 2.0 study is variable and inconsistent. Given these continuous and unpredictable registration patterns, we cannot currently estimate when the registration for this study will be completed. Our goal is to continue to provide quarterly updates on the number of patients participating in the study.
The primary endpoint was defined as the proportion of patients who achieved at least one American Spinal Injury Association Injury Scale ("AIS") grade improvement six months after implantation. The assessment of the AIS level is carried out at the time of discharge, three months, six months, 12 months, and 24 months. The definition of INSPIRE 2.0 study success is that the difference in the proportion of subjects whose AIS assessment between the stent arm and the comparison arm is improved by at least one grade during the 6-month primary endpoint follow-up must be equal to or greater than 20%. In one example, if 50% of the subjects in the stent group had an improvement in the AIS grade at the 6-month primary endpoint, and 30% of the subjects in the comparison group had an improvement, then subjects who showed an AIS grade The percentage difference improvement is equal to 20% (50% minus 30% equals 20%) and meets the definition of learning success. In another example, if 40% of the subjects in the stent group had an improvement in the AIS grade at the 6-month primary endpoint, and 30% of the subjects in the comparison group had an improvement, then the subjects exhibited an AIS grade The improvement of the difference in the proportion of participants is equal to 10% (40% minus 30% equals 10%) and does not meet the definition of learning success. Other endpoints include
Measure changes in nerve damage level, sensory level and motor score, bladder, bowel and sexual function, pain, spinal cord independence measurement and quality of life.
Our neurospinal stent has been previously studied in the INSPIRE study: According to the IDE treatment application, "In vivo study of the safety of the neurospinal stent in subjects with complete thoracic spine AIS A spinal cord injury and the possible benefits of neurological function recovery" Neurology Acute SCI on complete traumatic chest. Although the structure of the INSPIRE study is an objective performance standard, or OPC as the main component that demonstrates possible benefits, OPC is not the only variable that the FDA evaluates when reviewing future human device exemptions or HDE applications. Similarly, although the structure of our INSPIRE 2.0 study is the definition of research success and requires the smallest difference in the proportion of subjects who achieve improvement between the study groups, the definition of success is not the only factor that the FDA will evaluate in future HDE applications. If the INSPIRE study meets the OPC or INSPIRE 2.0 study meets the definition of research success, approval cannot be guaranteed. Even if it does not meet the definition of OPC or research success, the FDA may approve the medical device to support a comprehensive review of all clinical endpoints and preclinical results. , As evidenced by the sponsor’s body of evidence.
In 2016, the FDA accepted our HDE modular housing submission and review process for neurospine stent implants. The HDE modular housing consists of three modules: preclinical module, manufacturing module and clinical data module. As part of its review process, the FDA will review each module on a rolling basis, which are parts of the HDE submission. After submitting each module, the FDA usually reviews and provides feedback within 90 days, so that the applicant can receive feedback and possibly resolve any deficiencies in the review process. After receiving all three modules that constitute a complete HDE submission, the FDA will make a filing decision, which may trigger the review clock for the approval decision. We submitted the first module (preclinical module) in March 2017 and have received feedback since then and provided other updates to the FDA, including the latest update we submitted to the FDA in April 2021. In July 2021, the FDA notified us that our preclinical module was accepted. The HDE submission will not be completed until the manufacturing and clinical modules are submitted at the same time.
Due to the COVID-19 pandemic, a large number of the company's clinical sites suspended the registration of its institution's INSPIRE 2.0 study in 2020. Therefore, the COVID-19 pandemic affects and may continue to affect the potential for registration in our INSPIRE 2.0 study, in case our clinical site may suspend the study again in the future to control the pandemic. In addition to the impact on the enrollment rate of the INSPIRE 2.0 study, in the three and nine months ended September 30, we were not affected by the COVID-19 pandemic on our financial condition, liquidity, other operations, and suppliers. , Industry, and labor force, 2021. As of November 2, 2021, we have 17 clinical sites open to recruit INSPIRE 2.0 studies, which is the total number of sites that we have activated for INSPIRE 2.0 studies. Although all our sites have resumed registration, as of the date of submission of this quarterly report on Form 10-Q, the full impact of the COVID-19 pandemic is still evolving, and we are unable to determine the future impact of the COVID-19 pandemic. Our clinical site and our respective ability to recruit patients. As the pandemic continues, there may be more government actions or interruptions that may cause our clinical sites to suspend or change operations, thereby affecting the registration of INSPIRE 2.0 studies. We are actively monitoring the impact of the global situation on our financial condition, liquidity, operations, suppliers, industry and workforce, as there are still major uncertainties related to the COVID-19 pandemic around the world. Given the daily evolution of the COVID-19 pandemic and the global response to contain its spread, we cannot estimate the ultimate impact of the COVID-19 pandemic on our future business performance, financial condition or liquidity. However, as the COVID-19 pandemic continues, it may continue to adversely affect the enrollment rate of our INSPIRE 2.0 study, and it may also adversely affect our future operational results, financial conditions and liquidity, even in COVID- After the 19-19 pandemic has subsided, we may continue to adversely affect our business due to any economic recession or depression that has occurred or may occur in the future.
Key accounting policies and estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires
The management makes estimates and assumptions and adopts certain accounting policies in this regard. These accounting policies will affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amount of income and expenses during the reporting period. Period.
We will continue to evaluate our estimates and judgments on the fair value of all assets and liabilities, stock-based compensation expenses, and the fair value of stock purchase warrants classified as derivative liabilities. Our estimates and judgments are based on historical experience, current economic and industry conditions, and various other factors that we believe are reasonable under such circumstances. These factors form the basis for judging the book value of assets and liabilities, and the book value of these assets and liabilities is not obvious from other sources. Under different assumptions or conditions, actual results may differ from these estimates. Our key accounting policies and estimates remain unchanged from the disclosures provided in our 2020 annual report.
We believe that the consolidated financial statements accurately reflect our best estimate of operating performance, financial condition and cash flow during the period presented.
Comparison of the three months ending September 30, 2021 and 2020
R&D expenses mainly include expenses related to contract research organizations and clinical sites, professional services, and salaries. Research and development expenses for the three months ended September 30, 2021 were US$1.1 million, an increase of US$78,000 from the three months ended September 30, 2020. The overall increase in R&D expenses for the three months ended September 30, 2021 was mainly due to the increase in compensation related expenses.
General and administrative expenses mainly include salary, rent and professional services. General and administrative expenses for the three months ended September 30, 2021 were US$1.3 million, an increase of US$92,000 from the three months ended September 30, 2020. The increase in general and administrative expenses for the three months ended September 30, 2021 was mainly due to the increase in compensation related expenses.
Other income for the three months ending September 30, 2021 and 2020, including interest income and other income, is USD 1,000 and USD 2,000, respectively.
Comparison of the nine months ending September 30, 2021 and 2020
R&D expenses mainly include expenses related to contract research organizations and clinical sites, professional services, and salaries. Research and development expenses for the nine months ended September 30, 2021 were US$3.1 million, an increase of US$27,000 over the nine months ended September 30, 2020. The variable cost time associated with our site launch and patient registration program this year partially offset the cost.
General and administrative expenses mainly include salary, rent and professional services. General and administrative expenses for the nine months ended September 30, 2021 were US$3.9 million, an increase of US$54,000 from the nine months ended September 30, 2020. The increase in general and administrative expenses for the nine months ended September 30, 2021 was mainly due to the increase in compensation related expenses
This was partially offset by the lack of business development and related legal expenses related to the one-off strategic plan carried out during the nine months ended September 30, 2020.
As of September 30, 2021 and September 2020, other income (mainly including interest income) was US$3,000 and US$20,000, respectively. The decrease in interest income for the nine months ended September 30, 2021 can be attributed to the lower interest rates of our money market funds during the year.
Since our establishment, we have devoted most of our energy to business planning, research and development, recruiting management and technical personnel, acquiring operating assets and raising funds. As of September 30, 2021, our cumulative deficit was $235.2 million.
As of September 30, 2021, our total assets were US$23.6 million, total liabilities were US$2.6 million, and total shareholder equity was US$20.9 million. In the nine months ending September 30, 2021, we recorded a net loss of US$7 million. We have not yet achieved profitability and may not be able to achieve sufficient revenue to achieve or maintain profitability in the future. We do not expect to be profitable in the next few years, but expect additional operating losses. We believe that as of September 30, 2021, our cash and cash equivalents will provide the necessary funds for operations through the second quarter of 2023. This estimate is based on assumptions that may prove to be wrong; costs may increase significantly, leading to faster consumption of our existing resources. Our liquidity and capital resources are limited, and a large amount of additional capital resources must be obtained to facilitate our operation and maintenance of our product development work, acquisition of technology and intellectual property rights, preclinical and clinical testing of our anticipated products, and seeking regulatory approvals, Purchase capital equipment, laboratories, and office facilities to establish production capacity for sales, general and administrative expenses, and other working capital needs. We also anticipate that we will need to raise additional funds through a combination of equity issuance, debt financing, other third-party financing, marketing and distribution arrangements, and other cooperation, strategic alliances, and licensing arrangements. In addition, the COVID-19 pandemic may have a continuing adverse impact on the economy and market conditions and prolong the period of the global economic slowdown, which will weaken our ability to raise the necessary funds.
We may seek various other dilutive and non-dilutable funding alternatives, depending on our clinical path and the extent to which we need additional funding to continue to develop some or all of our candidate products within the expected timeline. The source, timing and availability of any future financing will mainly depend on market conditions and the state of our clinical development plans, both of which may be negatively affected by the COVID-19 pandemic. When needed, it may not be possible to provide funds at all, or it may not be possible to provide funds on terms acceptable to us. The lack of necessary funds may require us (among other things) to delay, reduce or cancel some or all of our research and product development plans, planned clinical trials and capital expenditures, or license our potential products or technologies to third parties. Or, we may take cost-cutting measures to extend our cash resources as much as possible. If we are unable to raise additional funds, we may be forced to cease operations altogether.
In October 2020, we completed the registered public offering ("October 2020 Offer"), in which we sold a total of (i) 11,785,000 ordinary shares ("October 2020 Shares") and exerciseable Series A options A total of 11,785,000 shares of our common stock ("October 2020 A-series Warrants"), with a combined public offering price of US$0.80 per share and related warrants, and (ii) exercisable advances for a total of 6,965,000 common shares To raise funds for Series B warrants ("October 2020 Series B pre-financing warrants") and Series A warrants, a total of 6,965,000 shares of our common stock (also known as "October 2020 Series A "Share Certificates"), the combined public offering price is US$0.80 per share-subsidized warrants and related warrants. The exercise price of each October 2020 A-series warrants is US$0.80 per share, which can be exercised immediately and expires in October 2025. The exercise price of each B-series pre-financing warrants in October 2020 is US$0.00001 per share, which can be exercised immediately and fully meets certain conditions when they expire. With regard to the October 2020 issuance, we issued warrants (the "October 2020 Placing Agent Certification" to the designated personnel of HC Wainwright & Co., LLC ("Wainwright") (the placing agent issued in October 2020) Stock certificates”) to purchase a total of 1,218,750 shares of our
Ordinary shares, representing ordinary shares equivalent to 6.5% of the total number of ordinary shares and the October 2020 B-series pre-funding warrants sold in the October 2020 issuance. The exercise price of the placement agent warrants in October 2020 is US$1.00 per share, which can be exercised immediately and expires in October 2025. After deducting Wainwright's placement agency fees and other issuance fees payable by us, our net income was approximately $13.5 million. As of September 30, 2021, there are no outstanding October 2020 Series B pre-funding warrants. We did not issue any shares for the month ended September 30, 2021 due to the exercise of the October 2020 A-series Warrants or the October 2020 Placing Agent Warrants during the three periods. During the nine-month period ending September 30, 2021, we issued a total of 10,620,682 and 12,188 ordinary shares after the exercise of certain October 2020 Series A warrants and October 2020 placement proxy warrants, respectively , The total revenue is 8.5 million U.S. dollars.
In April 2020, we signed a securities purchase agreement ("April 2020 purchase agreement") with certain institutional investors ("April 2020 purchasers"). According to this agreement, we agreed to register for direct sale China sold and issued a total of 1,715,240 shares of our common stock at a purchase price of US$1.75 per share ("April 2020 Shares"). The shares in April 2020 were issued by us in accordance with the shelf registration statement on the S-3 form, which was declared effective by the US Securities and Exchange Commission on November 14, 2019 (document number 333-234353) and the prospectus under it add. Pursuant to the April 2020 purchase agreement, in the concurrent private placement, we will also issue warrants ("April 2020 C Series Warrants") to buyers in April 2020 to purchase up to 1,715,240 shares of our Ordinary shares ("Private Placement" and together with the April 2020 Registered Issuance, "April 2020 Issuance"). The April 2020 C-series warrants can be exercised immediately at an exercise price of US$1.62 per common share, subject to adjustments under certain circumstances, and expire on October 17, 2025. In terms of the April 2020 issuance, we also issued warrants to Wainwright to purchase a total of 111,491 shares of our common stock ("April 2020 Placing Proxy Warrants"), which is equivalent to the sale in the April 2020 registered offering The common stock of 6.5% of the total shares in April 2020 has an exercise price of US$2.1875 per share, and the term expires on April 15, 2025. After deducting Wainwright’s placement agency fees and other issuance fees payable by us, our net income was approximately US$2.6 million. During the three and nine months ending September 30, 2021, we did not issue any shares due to the exercise of Series C warrants in April 2020.
In March 2020, we completed a registered public offering ("March 2020 Offer"), in which we sold a total of (i) 955,613 ordinary shares ("March 2020 Shares") and exerciseable Series A options A total of 955,613 shares of our common stock ("March 2020 Series A Warrants"), with a combined public offering price of US$2.75 per share and related warrants, and (ii) exercisable pre-financing Series B warrants A total of 1,589,842 common shares of our common stock (“March 2020 B Series Warrants”) and A series of warrants can be exercised, and a total of 1,589,842 shares of our common “Month A-series Warrants”), the combined public offering price is US$2.75 per share of pre-financing warrants and related warrants. The exercise price of each Series A warrant in March 2020 is US$2.75 per share, which can be exercised immediately and expires in March 2025. The exercise price of each B-series warrant in March 2020 is US$0.00001 per share, which can be exercised immediately and expire after full exercise, subject to certain conditions. In terms of the March 2020 issuance, we issued warrants ("March 2020 Placing Agent Warrants") to the placing agent Wainwright issued in March 2020 to purchase a total of 165,455 common shares of ours, which represents The number of ordinary shares equals 6.5% of the total number of ordinary shares sold in the March 2020 offering and the March 2020 Series B warrants. The exercise price of the placement agent warrants in March 2020 is US$3.4375 per share, which can be exercised immediately and expires in March 2025. After deducting Wainwright's placement agency fees and other issuance fees payable by us, our net income was approximately US$6 million. In the three months and nine months ended September 30, 2021, we did not have any results due to the March 2020 Series A Warrants, the March 2020 Series B Warrants or the March 2020 Placing Agent Warrants. Issue any stock.
The net cash used in operating activities includes our net loss (adjusted for non-cash expenses) and working capital requirements. Net cash used in operating activities for the nine months ended September 30, 2021 was US$6.8 million, compared with US$7.6 million for the nine months ended September 30, 2020. Net cash used in operating activities for the nine months ended September 30 decreased by US$800,000 in 2021, compared with the same period of the previous year, mainly due to the increase in our net loss by US$100,000, accrued expenses and other liabilities Changes have been reduced by USD 400,000, and changes in accounts payable have been reduced by USD 400,000.
Net cash used in investment activities for the nine months ended September 30, 2021 was US$18,000, which was related to the purchase of manufacturing and laboratory equipment. For the nine months ended September 30, 2020, net cash used in investment activities was US$28,000, which was related to the purchase of computer equipment.
The net cash generated from financing activities for the nine months ended September 30, 2021 was US$8.5 million, which was related to the proceeds from the exercise of warrants. In comparison, net cash generated from financing activities was US$8.9 million, which mainly included US$8.6 million from the issuance of ordinary shares related to the March 2020 issuance and US$300,000 from the exercise of warrants.
We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a significant current or future impact on our financial condition, changes in financial condition, income or expenditure, operating performance, liquidity, capital expenditure or capital resources.
© Edgar Online, a glimpse of the source