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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2024

 

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: 001-41159

 

IMMIX BIOPHARMA, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   45-4869378

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

   
11400 West Olympic Blvd., Suite 200, Los Angeles, CA   90064
(Address of principal executive offices)   (Zip Code)

 

(310) 651-8041

(Registrant’s telephone number, including area code)

 

Not applicable

(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
Common stock, $0.0001 par value   IMMX   The Nasdaq Stock Market LLC

 

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. Yes ☒ No ☐

 

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). Yes ☒ No ☐

 

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
       
Non-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 ☐ No

 

Number of shares of common stock outstanding as of August 12, 2024 was 27,450,479.

 

 

 

 
 

 

   

Page

No.

PART I. FINANCIAL INFORMATION  
     
Item 1. Financial Statements 4
     
  Condensed Consolidated Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023 4
     
  Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months ended June 30, 2024 and 2023 (Unaudited) 5
     
  Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months ended June 30, 2024 and 2023 (Unaudited) 6
     
  Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2024 and 2023 (Unaudited) 7
     
  Notes to the Condensed Consolidated Financial Statements (Unaudited) 8
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 33
     
Item 4. Controls and Procedures 33
     
PART II. OTHER INFORMATION  
     
Item 1. Legal Proceedings 34
     
Item 1A. Risk Factors 34
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35
     
Item 5. Other Information 35
     
Item 6. Exhibits 36
     
Signatures 37

 

2

 

 

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;
     
  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 our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 29, 2024, 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.

 

3

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

Immix Biopharma, Inc.

Condensed Consolidated Balance Sheets

 

   June 30, 2024   December 31, 2023 
   (Unaudited)     
ASSETS          
Current assets:          
Cash and cash equivalents  $23,975,098   $17,509,791 
Tax receivable   1,980,276    1,172,183 
Prepaid expenses and other current assets   1,375,461    1,105,776 
           
Total current assets   27,330,835    19,787,750 
           
Other assets   20,418    - 
Deferred offering cost   -    87,229 
Right-of-use asset, net   1,030,662    - 
Property and equipment, net   454,029    50,181 
           
Total assets  $28,835,944   $19,925,160 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable and accrued expenses  $3,853,561   $3,721,783 
Operating lease liability - current   48,359    - 
           
Total current liabilities   3,901,920    3,721,783 
           
Operating lease liability – long term   1,042,803    - 
Total liabilities   4,944,723    3,721,783 
           
Commitments and contingencies   -     -  
           
Stockholders’ equity:          
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding   -    - 
Common stock, $0.0001 par value; 200,000,000 shares authorized; 27,501,560 shares issued and 27,429,197 shares outstanding at June 30, 2024 and 19,994,719 shares issued and 19,922,356 shares outstanding at December 31, 2023   2,752    2,000 
Additional paid-in capital   86,934,682    69,779,706 
Accumulated other comprehensive income   116,972    134,666 
Accumulated deficit   (63,063,222)   (53,411,295)
Treasury stock at cost, 72,363 shares as of June 30, 2024 and December 31, 2023   (99,963)   (99,963)
Total Immix Biopharma, Inc. stockholders’ equity   23,891,221    16,405,114 
Non-controlling interests   -    (201,737)
Total stockholders’ equity   23,891,221    16,203,377 
           
Total liabilities and stockholders’ equity  $28,835,944   $19,925,160 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

4

 

 

Immix Biopharma, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

 

   2024   2023  

 2024

   2023 
   For the Three Months Ended   For the Six Months Ended 
   June 30,   June 30, 
   2024   2023   2024   2023 
Operating expenses:                    
General and administrative expenses  $2,478,357   $1,511,467   $4,819,821   $2,713,201 
Research and development   2,224,139    2,209,244    5,472,808    3,528,264 
                     
Total operating expenses   4,702,496    3,720,711    10,292,629    6,241,465 
                     
Loss from operations   (4,702,496)   (3,720,711)   (10,292,629)   (6,241,465)
                     
Other income (expense):                    
Interest income   306,915    128,848    574,823    156,740 
Total other expense, net   306,915    128,848    574,823    156,740 
                     
Loss before provision for income taxes   (4,395,581)   (3,591,863)   (9,717,806)   (6,084,725)
                     
Provision for income taxes   10,269    6,349    19,108    11,519 
                     
Net loss   (4,405,850)   (3,598,212)   (9,736,914)   (6,096,244)
Net loss attributable to non-controlling interests   12,914    21,996    84,987    40,364 
Net loss attributable to Immix Biopharma, Inc. common stockholders   (4,392,936)   (3,576,216)   (9,651,927)   (6,055,880)
                     
Other comprehensive income (loss):                    
Foreign currency translation   27,358    (1,665)   (17,694)   (6,139)
Total other comprehensive loss   27,358    (1,665)   (17,694)   (6,139)
                     
Comprehensive loss   (4,365,578)   (3,577,881)   (9,669,621)   (6,062,019)
Less: comprehensive loss attributable to non-controlling interests   -    -    -    - 
Comprehensive loss attributable to Immix Biopharma, Inc. common stockholders  $(4,365,578)  $(3,577,881)  $(9,669,621)  $(6,062,019)
                     
Loss per common share - basic and diluted  $(0.15)  $(0.24)  $(0.36)  $(0.42)
                     
Weighted average shares outstanding - basic and diluted   28,785,223    15,038,989    27,068,513    14,468,373 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

5

 

 

Immix Biopharma, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

For the Three and Six Months Ended June 30, 2024 and 2023

(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, 2023   19,994,719   $2,000   $69,779,706   $134,666   $(53,411,295)   (72,363)  $(99,963)  $(201,737)  $16,203,377 
                                              
Shares issued under ATM facility for cash proceeds, net of offering costs   68,302    7    338,488    -    -    -    -    -    338,495 
                                              
Shares issued under public offering for cash proceeds, net of offering costs   6,319,025    632    15,519,722    -    -    -    -    -    15,520,354 
                                              
Shares issued for exercise of stock options   1,251    -    2,489    -    -    -    -    -    2,489 
                                              
Shares issued for services   85,486    9    327,367    -    -    -    -    -    327,376 
                                              
Stock-based compensation   -    -    615,888    -    -    -    -    -    615,888 
                                              
Non-controlling interests in subsidiary   -    -    9,472    -    -    -    -    (9,472)   - 
                                              
Net loss   -    -    -    -    (5,258,991)   -    -    (72,073)   (5,331,064)
                                              
Foreign currency translation adjustment   -    -    -    (45,052)   -    -    -    -    (45,052)
                                              
Balance March 31, 2024   26,468,783    2,648    86,593,132    89,614   $(58,670,286)   (72,363)   (99,963)   (283,282)   27,631,863 
                                              
Shares issued for services   42,901    5    102,495    -    -    -    -    -    102,500 
                                              
Stock-based compensation   -    -    535,350    -    -    -    -    -    535,350 
                                              
Non-controlling interests in subsidiary   -    -    20,200    -    -    -    -    (20,200)   - 
                                              
Buyout of non-controlling interests in subsidiary   989,876    99    (316,495)   -    -    -    -    316,396    - 
                                              
Net loss   -    -    -    -    (4,392,936)   -    -    (12,914)   (4,405,850)
                                              
Foreign currency translation adjustment   -    -    -    27,358    -    -    -    -    27,358 
                                              
Balance June 30, 2024   27,501,560   $2,752   $86,934,682   $116,972   $(63,063,222)   (72,363)  $(99,963)  $-   $23,891,221 
                                              
Balance December 31, 2022   13,964,485   $1,397   $51,156,597   $87,021   $(37,985,247)   (72,363)  $(99,963)  $-   $13,159,805 
                                              
Shares issued under ATM facility for cash proceeds, net of offering costs   50,000    5    101,318    -    -    -    -    -    101,323 
                                              
Nexcella shares issued for cash proceeds   -    -    650,000    -    -    -    -    -    650,000 
                                              
Stock-based compensation   6,700    1    329,918    -    -    -    -    -    329,919 
                                              
Non-controlling interests in subsidiary   -    -    13,990    -    -    -    -    (13,990)   - 
                                              
Net loss   -    -    -    -    (2,479,664)   -    -    (18,368)   (2,498,032)
                                              
Foreign currency translation adjustment   -    -    -    (4,474)   -    -    -    -    (4,474)
                                              
Balance March 31, 2023   14,021,185    1,403    52,251,823    82,547    (40,464,911)   (72,363)   (99,963)   (32,358)   11,738,541 
                                              
Shares issued under ATM facility for cash proceeds, net of offering costs   2,213,868    221    4,584,032    -    -    -    -    -    4,584,253 
                                              
Stock-based compensation   99,128    10    447,646    -    -    -    -    -    447,656 
                                              
Non-controlling interests in subsidiary   -    -    2,416    -    -    -    -    (2,416)   - 
                                              
Net loss   -    -    -    -    (3,576,216)   -    -    (21,996)   (3,598,212)
                                              
Foreign currency translation adjustment   -    -    -    (1,665)   -    -    -    -    (1,665)
                                              
Balance June 30, 2023   16,334,181   $1,634   $57,285,917   $80,882   $(44,041,127)   (72,363)  $(99,963)  $(56,770)  $13,170,573 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

6

 

 

Immix Biopharma, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

   2024   2023 
   For the Six Months Ended 
   June 30, 
   2024   2023 
Operating Activities:          
Net loss  $(9,736,914)  $(6,096,244)
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock-based compensation   1,581,114    777,575 
Depreciation   6,889    1,011 
Amortization of right of use asset   41,256    - 
Changes in operating assets and liabilities:          
Tax receivable   (815,290)   (47,239)
Prepaid expenses and other current assets   (278,480)   (1,370,736)
Other assets   (20,418)   - 
Accounts payable and accrued expenses   119,782    1,128,291 
Operating lease liability   19,244    - 
           
Net cash used in operating activities   (9,082,817)   (5,607,342)
           
Investing Activities:          
Purchase of property and equipment   (398,987)   - 
           
Net cash used in investing activities   (398,987)   - 
           
Financing Activities:          
Payments of deferred offering costs   -    (175,817)
Proceeds from sale of common stock, net of offering costs   15,946,078    4,811,393 
Proceeds from exercise of stock options   2,489    - 
Funds received for subsidiary private offering   -    175,000 
           
Net cash provided by financing activities   15,948,567    4,810,576 
           
Effect of foreign currency on cash   (1,456)   13,575 
           
Net change in cash and cash equivalents   6,465,307    (783,191)
Cash and cash equivalents – beginning of period   17,509,791    13,436,714 
Cash and cash equivalents – end of period  $23,975,098   $12,653,523 
           
Supplemental Disclosures of Cash Flow Information:          
Income taxes paid  $19,108   $11,519 
           
Supplemental Disclosures of Noncash Financing Information:          
Establishment of right of use asset and liabilities  $1,071,918   $- 
Deferred offering costs charged against proceeds from sale of common stock  $87,229   $125,817 
Shares issued in subsidiary absorption  $99   $- 
Nexcella shares issued for funds previously received  $-   $475,000 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

7

 

 

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 cell therapies in AL Amyloidosis and autoimmune disease. 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”), its cell therapy division, which subsequently merged into the Company in May 2024, with the Company continuing as the surviving entity. To ensure continuity of operations, the Company re-established Nexcella in 2024 as a wholly-owned subsidiary.

 

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 June 30, 2024, and for the three and six months ended June 30, 2024 and 2023 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, 2023 and 2022 which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2024. The results of operations for the three and six months ended June 30, 2024, are not necessarily indicative of the results to be expected for the full year ending December 31, 2024.

 

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.

 

8

 

 

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.

 

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 ConsolidationThe accompanying condensed consolidated financial statements include the accounts of Immix Biopharma, Inc. and the accounts of its 100% owned subsidiaries, IBAPL and Nexcella. All intercompany transactions and balances have been eliminated in consolidation. For previously consolidated entities where the Company owned less than 100% of the subsidiary, the Company recorded net loss attributable to non-controlling interests in its condensed consolidated statements of operations and comprehensive loss equal to the percentage of the economic or ownership interest retained in such entities by the respective non-controlling parties.

 

Segment Reporting - The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer. The CODM allocates resources and evaluates the performance of the Company at the consolidated level using information about its revenues, gross profit, income from operations, and other key financial data. All significant operating decisions are based upon an analysis of the Company as one operating segment, which is the same as its reporting segment.

 

Liquidity and Going Concern These 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. Since the initial public offering of its common stock in December 2021, the Company has financed its operations through various equity financing. On July 14, 2023, the Company entered into an additional ATM Sales Agreement (the “July Sales Agreement”) with the Sales Agent, pursuant to which the Company, may, from time to time, issue and sell through the Sales Agent shares of the Company’s common stock 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 “July ATM Facility”) (see Note 7). Initially, the Company is eligible to sell up to $4,200,000 worth of shares of its common stock as the aggregate market value of the Company’s 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 the Company’s public float equals or exceeds $75.0 million. In the event the aggregate market value of the Company’s 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 shall not apply to additional sales made pursuant to the July Sales Agreement.

 

9

 

 

From July 14, 2023 through February 5, 2024, the Company has sold 328,136 common shares pursuant to the July ATM Facility for net proceeds of $1,091,887, after offering expenses. On February 5, 2024, the Company suspended, and is not offering any shares of its common stock pursuant to, the prospectus supplement dated July 14, 2023, relating to the July Sales Agreement by and between the Company and ThinkEquity LLC. The Company will not make any sales of common stock pursuant to the July Sales Agreement unless and until a new prospectus supplement is filed with the SEC; however, the Sales Agreement remains in full force and effect.

 

In February 2024, the Company conducted an underwritten public offering of 5,535,055 shares of its common stock at the public offering price of $2.71 per share, for net proceeds of $13,565,760, after underwriter discounts and offering expenses (the “Offering”). Pursuant to the underwriting agreement, the Company granted the underwriter a 30-day over-allotment option to purchase up to an additional 783,970 shares of the Company’s common stock, which was exercised in full on March 1, 2024, for net proceeds of $1,954,594, after underwriting discounts and offering expenses (see Note 7).

 

On July 25, 2024, the Company was awarded an $8 million grant from the California Institute for Regenerative Medicine to support the clinical development of chimeric antigen receptor T-cell therapy NXC-201 for the treatment of relapsed/refractory AL Amyloidosis. The award is payable to the Company upon achievement of milestones that are primarily based on patient enrollment in the Company’s clinical trials. Additionally, if CIRM determines, in its sole discretion, that the Company has not complied with the terms and conditions of the grant, CIRM may suspend or permanently cease disbursements. Funds received under this grant may only be used for allowable project costs specifically identified with the CIRM-funded project. Such costs can include, but are not limited to, salary for personnel, itemized supplies, consultants, and itemized clinical study costs. Under the terms of the grant, both CIRM and the Company will co-fund the research project and the amount of the Company’s co-funding requirement is predetermined as a part of the award. The Company expects to begin receiving funds from the grant beginning in September of 2024. 

 

The Company has a history of, and expects to continue to report, negative cash flows from operations and net losses. While the Company’s estimates of its operating expenses and working capital requirements could change significantly based on feedback from the FDA, test results, changes to the nature or timing of future studies or other research and development activities and the Company may use its cash resources faster than it anticipates, management believes that its cash and cash equivalents on hand at June 30, 2024 will be sufficient to meet the Company’s working capital requirements through at least August 12, 2025.

 

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 $250,000, or the Australian insured limit of AUD 250,000. At times, deposits held with financial institutions may exceed the amount of insurance provided. The Company has not experienced losses on these accounts and management believes that the credit risk with regard to these deposits is not significant.

 

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 InstrumentsThe 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.

 

10

 

 

The following fair value hierarchy table presents information about the Company’s asset measured at fair value on a recurring basis:

  

   Level 1   Level 2   Level 3 
   Fair Value Measurements at June 30, 2024 
   Level 1   Level 2   Level 3 
Assets:               
Cash equivalents (money market funds)  $22,400,473   $-   $- 

 

As of June 30, 2024, the Company had no liabilities required to be measured at fair value on a recurring basis.

 

   Level 1   Level 2   Level 3 
   Fair Value Measurements at December 31, 2023 
   Level 1   Level 2   Level 3 
Assets:               
Cash equivalents (money market funds)  $16,113,006   $-   $- 

 

As of December 31, 2023, the Company had no liabilities required to be measured at fair value on a recurring basis.

 

Australian Tax IncentiveIBAPL 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 $231,247 and $149,349 for the three months ended June 30, 2024 and 2023, respectively. The Company recognized reductions to R&D expense of $1,142,787 and $221,537 for the six months ended June 30, 2024 and 2023, respectively.

 

Deferred Offering Costs – The Company had 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 were deferred and being amortized ratably upon sales under the July ATM Facility to additional paid-in capital as a reduction of the July ATM proceeds. As a result of the Company pausing the July ATM Facility, all of the remaining deferred offering costs were immediately amortized to additional paid-in capital as a reduction to the proceeds received in the six months ended June 30, 2024. As of June 30, 2024, no remaining amounts of deferred offering costs were capitalized related to the July ATM Facility.

 

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 7). 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.

 

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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 wholly-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 $18,705 and $(1,449) for the three months ended June 30, 2024 and 2023, respectively, and $(19,477) and $(1,723) for the six months ended June 30, 2024 and 2023, respectively.

 

Loss Per Common Share - Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. Basic weighted average shares outstanding for the three and six months ended June 30, 2024 include 1,913,661 shares underlying Pre-Funded warrants to purchase common shares (See Note 7). As the shares underlying these Pre-Funded warrants can be issued for nominal consideration (an exercise price per share equal to $0.0001 per share), these shares are deemed to be issued for purposes of basic loss per common share. For the three and six months ended June 30, 2024 and 2023, the Company’s potentially dilutive shares, which were not included in the calculation of net loss per share, included stock options and warrants exercisable for 4,397,488 and 2,168,742 shares of common stock, respectively.

 

Property and Equipment - Included in property and equipment is construction-in-progress which consists of manufacturing space improvements and includes the costs of construction, machinery and equipment, and any interest charges arising from borrowings used to finance these assets during the period of construction or installation of the assets. No provision for depreciation is made on construction-in-progress until such time as the relevant assets are completed and ready for their intended use.

 

Estimated useful lives of the Company’s assets are as follows:

  

   Useful Life
Operating equipment  3-10 years
Electronic equipment  3-5 years
Office equipment  3-5 years

 

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts, and any gain or loss are included in the Company’s results of operations. The costs of maintenance and repairs are recognized to expenses as incurred; significant renewals and betterments are capitalized.

 

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Leases - At the inception of a contract the Company determines if the arrangement is, or contains a lease. Operating lease right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of the lease payments over the lease term. Lease expense is recognized on a straight-line basis over the lease term.

 

The Company has made certain accounting policy elections whereby it (i) does not recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12-months or less) and (ii) separates lease and non-lease elements of its operating leases as separate lease components. As of June 30, 2024 and December 31, 2023, the Company did not have any finance leases.

 

Recent Accounting Pronouncements

 

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis. The Company has implemented this ASU effective January 1, 2024, and determined no retrospective changes were necessary.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the disclosures required for income taxes. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.

 

Note 3 – Prior Agreements with Nexcella Subsidiary

 

Nexcella Absorption

 

On May 20, 2024, Nexcella, was merged (the “Merger”) with and into the Company, with the Company as the surviving corporation (the “Nexcella Absorption”). The Merger was effected pursuant to Section 253 of the Delaware General Corporation Law (“DGCL”) when the Company filed a Certificate of Ownership and Merger (“Certificate of Merger”) with the Secretary of State of the State of Delaware. Immediately prior to the Merger, the Company owned greater than 95% of outstanding common stock on a fully diluted basis of Nexcella, par value $0.0001 per share (the “Nexcella Shares”), and 100% of the outstanding shares of each other class of capital stock of Nexcella. Under the DGCL, the only approval required was that of the Company’s Board of Directors for the Merger to become effective. As a result of the Merger, Nexcella ceased to exist and all assets, operations and other property and rights of Nexcella have been succeeded to by the Company. Pursuant to the terms of the Certificate of Merger, as a result of the Merger, each of the outstanding Nexcella Shares (other than Nexcella Shares held by the Company) were converted, into common stock of the Company (“Company Merger Shares”). In connection with the Merger, the Company issued 989,876 shares of its common stock to the former stockholders of Nexcella (other than shares held by the Company) (including Company common stock issued to third-party cash investors in Nexcella) (the “Merger Shares”). The shares were issued on a pro-rata basis and as such resulted in no change in fair value. In addition, the Company issued to the former participants in the Nexcella 2022 Equity Incentive Plan, 275,759 restricted stock awards to receive common stock in the Company and options to purchase up to 595,676 shares of Company common stock at an exercise price of $2.47 per share (the closing price on May 17, 2024), under the Company’s Amended and Restated 2021 Omnibus Equity Incentive Plan. As such, as of May 20, 2024, the Founders Agreement and Management Services Agreement agreements listed below with Nexcella are no longer in effect.

 

Founders Agreement

 

Effective December 8, 2022, the Company entered into a Founders Agreement with Nexcella (the “Nexcella Founders Agreement”).

 

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The Nexcella Founders Agreement provided 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 $2.1 million, evidenced by a senior unsecured promissory note, representing the up-front fee required to acquire Nexcella’s license agreement with Hadasit Medical Research Services & Development, Ltd. (“HADASIT”) and BIRAD Research and Development Company Ltd. (“BIRAD”), and for use as working capital for its research and development activities. The note, which had a maturity date of January 31, 2030, accrued interest at a rate of 7.875% per annum and was convertible into shares of common stock of Nexcella at a conversion price of $2.00 per share, subject to adjustment; provided, however, that such note shall automatically convert into shares of Nexcella common stock immediately prior to certain conversion triggers set forth in the note. Nexcella may not prepay the note without the Company’s prior written consent. The note and accrued interest were converted in full prior to the Nexcella Absorption The Nexcella Founders Agreement had a term of 15 years, which, upon expiration, would automatically renew for successive one-year periods unless terminated by the Company upon notice at least six months prior to the end of the term or upon the occurrence of a Change of Control (as defined in the Nexcella Founders Agreement). In connection with the Nexcella Founders Agreement, the Company was issued 250,000 shares of Nexcella’s Class A Preferred Stock, 1,000,000 shares of Nexcella’s Class A Common Stock, and 5,000,000 shares of Nexcella’s common stock. The Class A Preferred Stock was identical to the common stock other than as to conversion rights, the PIK Dividend right (as defined below) and voting rights.

 

Each share of Class A Preferred Stock was 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 received on each March 13 (each a “PIK Dividend Payment Date”) until the date all outstanding Class A Preferred Stock was 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 was equal to 2.5% of Nexcella’s fully-diluted outstanding capitalization on the date that was one business day prior to any PIK Dividend Payment Date. In addition, as a holder of Class A Preferred Stock, the Company was entitled to cast for each share of Class A Preferred Stock held as of the record date for determining stockholders entitled to vote on matters presented to the stockholders of Nexcella, the number of votes that was equal to 1.1 times a fraction, the numerator of which was the sum of (A) the shares of outstanding Nexcella common stock and (B) the whole shares of Nexcella common stock into which the shares of outstanding Nexcella Class A Common Stock and the Class A Preferred Stock were convertible and the denominator of which was the number of shares of outstanding Nexcella Class A Preferred Stock.

 

Each share of Class A Common Stock was convertible, at the Company’s option, into one fully paid and nonassessable share of Nexcella’s common stock, subject to certain adjustments. In addition, upon a Qualified IPO (as defined in the Nexcella COI) or Qualified Change in Control (as defined in the Nexcella COI), each share of Class A Common Stock would automatically convert into one fully paid and nonassessable share of Nexcella’s common stock; provided however, if at that time, the Class A Common Stock was not then convertible into a number of shares of Nexcella common stock (or such other capital stock or securities at the time issuable upon the conversion of the Class A Common Stock) that have a value of: (a) in the case of a Qualified IPO, at least $5,000,000 based on the initial offering price in such initial public offering, or (b) in the case of a Qualified Change in Control, at least $5,000,000 in cash or at least $5,000,000 of equity based on the implied value of a share of Nexcella common stock resulting from the price paid upon the consummation of such Qualified Change of Control, the Class A Common Stock would automatically convert into such number of shares of Nexcella common stock (or such other capital stock or securities at the time issuable upon the conversion of the Class A Common Stock) that have a value of $5,000,000 based on the initial offering price in such initial public offering or the implied value of a share of Nexcella common stock resulting from the price paid upon the consummation of such Qualified Change of Control (or if such Qualified Change of Control results in the Class A Shares being exchanged solely for cash, then $5,000,000 in cash). The Company was entitled to cast such number of votes equal to the number of whole shares of Nexcella common stock into which the Company’s Class A Common Stock was convertible as of the record date for determining stockholders entitled to vote on matters presented to the stockholders of Nexcella.

 

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In addition to the foregoing, the Company was 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 would also: (i) pay an equity fee in shares of common stock, payable within five business days of the closing of any equity or debt financing for Nexcella or any of its respective subsidiaries that occurs after the effective date of the Nexcella Founders Agreement and ending on the date when the Company no longer has majority voting control in Nexcella’s voting equity, equal to 2.5% of the gross amount of any such equity or debt financing; and (ii) pay a cash fee equal to 4.5% of Nexcella’s annual Net Sales (as defined in the Nexcella Founders Agreement), payable on an annual basis, within 90 days of the end of each calendar year. In the event of a Change of Control, Nexcella would pay a one-time change in control fee equal to five times the product of (A) Net Sales for the 12 months immediately preceding the Change of Control and (B) 4.5%.

 

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 rendered 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 utilized 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 paid the Company an annual base management and consulting fee of $500,000 (the “Annual Consulting Fee”). Notwithstanding the foregoing, the first Annual Consulting Fee payment was not due until first business day of the calendar quarter immediately following the completion of the first equity financing for Nexcella that was in excess of $10 million in gross proceeds, which did not occur. Actual and direct out-of-pocket expenses reasonably incurred by the Company in performing the Services were reimbursed to the Company by Nexcella.

 

The Nexcella MSA was terminated on May 20, 2024 in connection with the Nexcella Absorption. In addition, as a result of the Nexcella Absorption, the Class A Preferred Stock, Class A Common Stock, and the Founders Agreement ceased to exist.

 

Note 4 – Prepaid Expenses and Other Current Assets

 

Prepaid expenses and other current assets consist of the following as of June 30, 2024 and December 31, 2023:

  

   June 30, 2024   December 31, 2023 
Prepaid research and development expenses  $495,219   $412,773 
Prepaid insurance expense   149,835    263,927 
Prepaid investor relations expense   624,629    384,494 
Other current assets   105,778    44,582 
Total prepaid expenses and other current assets  $1,375,461   $1,105,776 

 

15

 

 

Note 5 – Accounts Payable and Accrued Expenses

 

Accounts payable and accrued expenses consist of the following as of June 30, 2024 and December 31, 2023:

  

   June 30, 2024   December 31, 2023 
Accounts payable  $2,346,649   $1,433,022 
Accrued research and development expenses   1,170,049    1,571,261 
Accrued professional services   98,425    38,639 
Accrued compensation and related expenses   170,632    577,854 
Other accrued expenses   67,806    101,007 
Total accounts payable and accrued expenses  $3,853,561   $3,721,783 

 

Note 6 – Property and Equipment

 

Property and equipment at June 30, 2024 and December 31, 2023 consisted of:

  

    June 30, 2024     December 31, 2023  
Operating equipment   $ 112,729     $ 60,599  
Office equipment     3,896       3,896  
Total property and equipment, gross     116,625       64,495  
Less: Accumulated depreciation     (21,203 )     (14,314 )
Property and equipment excluding construction in progress     95,422       50,181  
Construction in progress     358,607       -  
Total property and equipment   $ 454,029     $ 50,181  

 

For the six months ended June 30, 2024 and 2023, depreciation expense amounted to $6,889 and $1,011, respectively. Depreciation is not taken during the period of construction or equipment installation. Upon completion of the installation of manufacturing equipment or any construction in progress, balances will be classified to their respective property and equipment category.

 

The construction in progress of $358,607 as of June 30, 2024, represents the investment in building a biopharmaceutical processing facility inside the leased property. The Company expects to complete the processing facility by the end of 2024.

 

Note 7 – Stockholders’ Equity

 

The Company has authorized 200,000,000 shares of common stock and 10,000,000 shares of preferred stock each with a par value of $0.0001 per share.

 

July 2023 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 $0.0001 per share, subject to the terms and conditions set forth in the Sales Agreement. Initially, the Company is eligible to sell up to $4,200,000 worth of shares of its common stock as the aggregate market value of the Company’s 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 the Company’s public float equals or exceeds $75.0 million. In the event the aggregate market value of the Company’s 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 shall not apply to additional sales made pursuant to the July Sales Agreement. The July Shares will be offered and sold pursuant to the Company’s prospectus supplement, dated July 14, 2023, filed by the Company with the SEC on July 14, 2023, including the accompanying base prospectus forming a part of the Company’s Registration Statement on Form S-3 (File No. 333-269100) filed by the Company with the SEC on January 3, 2023 and declared effective by the SEC on January 11, 2023.

 

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.

 

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The Company will pay the Sales Agent a fixed commission rate of 3.75% of the aggregate gross proceeds from the sale of the July Shares pursuant to the Sales Agreement. The Company has paid an expense deposit of $15,000 to the Sales Agent, which will be applied against the actual out-of-pocket accountable expenses that will be paid by the Company to the Sales Agent in connection with the offering. The Company has 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 shall 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 Company has also agreed to provide indemnification and contribution to the Sales Agent with respect to certain liabilities, including liabilities under the Securities Act.

 

During the six months ended June 30, 2024, the Company sold a total of 68,302 shares of its common stock under the July ATM Facility for aggregate net proceeds of $338,495 after deducting commissions and SEC fees, and charging $87,229 of deferred offering costs against the proceeds. On February 5, 2024, the Company suspended, and is not offering any shares of its common stock pursuant to, the prospectus supplement dated July 14, 2023, relating to the July Sales Agreement by and between the Company and ThinkEquity LLC. The Company will not make any sales of common stock pursuant to the July Sales Agreement unless and until a new prospectus supplement is filed with the SEC; however, the Sales Agreement remains in full force and effect.

 

Common Stock Issuance – Public Offering

 

On February 5, 2024, the Company entered into an Underwriting Agreement (the “Agreement”) with Titan Partners Group LLC, a division of American Capital Partners, LLC (the “Underwriter”), relating to an underwritten offering (the “Offering”) of 5,535,055 shares of common stock of the Company. The public offering price was $2.71 per share of Common Stock and the Underwriter agreed to purchase the Common Stock pursuant to the Underwriting Agreement at a price of $2.5203 per share. On February 8, 2024, the Company closed the offering and received net proceeds of $13,565,760, after deducting underwriting discounts and commissions and estimated offering expenses. Pursuant to the Agreement, the Company granted the Underwriter a 30-day over-allotment option to purchase up to an additional 783,970 shares of Common Stock which was exercised in full on March 1, 2024, for net proceeds of $1,954,594, after deducting underwriting discounts and offering expenses.

 

Other Common Stock Issuances

 

During the six months ended June 30, 2024, the Company issued 43,366 shares of restricted common stock valued at $135,000 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.

 

During the six months ended June 30, 2024, the Company issued 85,021 shares of restricted common stock valued at $280,000 for investor relations services based on the closing price pursuant to the extensions of marketing services agreements.

 

During the six months ended June 30, 2024, the Company issued 1,251 shares of common stock upon the exercise of certain common stock options for cash proceeds of $2,489.

 

During the year ended December 31, 2023, the Company entered into various marketing services agreements, whereby the Company agreed to issue 122,300 shares of its common stock, valued at $247,500, in exchange for future services. As of December 31, 2023, the Company has issued 122,300 shares of the Company’s common stock pursuant to the marketing services agreements. During the year ended December 31, 2023, the Company recorded stock-based compensation expense of $232,624 related to the fair value of the shares of common stock. During the six months ended June 30, 2024, the Company recorded stock-based compensation expense of $14,876 related to the amortization of the fair value of the 122,300 shares of common stock issued in 2023. As of June 30, 2024, the Company has $0 of unamortized stock-based compensation remaining to be amortized over the remaining service period.

 

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Restricted Stock Awards

 

Pursuant to the Merger, the Company issued to the former participants in the Nexcella 2022 Equity Incentive Plan, 275,759 restricted stock awards to receive common stock in the Company. The shares were issued on a pro-rata basis and resulted in no change in fair value.

 

During the six months ended June 30, 2024, the Company recorded stock-based compensation expense of $85,455 related to the total fair value of the previously issued restricted stock awards, which was included in general and administrative expenses. The unrecognized stock-based compensation expense of $591,871 related to unvested restricted common stock is expected to be recognized over the remaining vesting period of 0.86 years. As of June 30, 2024, 23,472 shares of restricted common stock have vested with the remaining 252,287 restricted shares to vest over the vesting period of 0.86 years.

 

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 417,120 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 1,761,120 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) 900,000 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 1,034,561 shares, subject to stockholder approval. On June 7, 2023, stockholders of the Company approved the Amended 2021 Plan. On April 18, 2024, our Board of Directors approved amendments to the 2021 Plan (the “2nd Amended 2021 Plan”) to (i) increase the number of shares of common stock available for issuance under the 2021 Plan by 3,000,000 to a total share reserve of 4,934,561 and (ii) the adoption of an evergreen provision to the 2021 Plan to provide for an automatic annual increase in the shares of common stock available for issuance under the 2021 Plan over the next ten years (the “2021 Plan Amendments”). Pursuant to the evergreen provision, the number of shares available for issuance under the 2021 Plan shall automatically increase on January 1st of each year for a period of ten years, commencing on January 1, 2025 and ending on (and including) January 1, 2034, in an amount equal to five percent (5%) of the total number of shares of Common Stock outstanding on December 31st of the preceding calendar year. On June 11, 2024, stockholders of the Company approved the 2nd Amended 2021 Plan. As of June 30, 2024, there were 2,276,757 shares of the Company’s common stock remaining to be issued under the Amended 2021 Plan.

 

In addition, the Company issued to the former participants in the Nexcella 2022 Equity Incentive Plan, options to purchase up to 595,676 shares of Company common stock at an exercise price of $2.47 per share (the closing price on May 17, 2024), under the Company’s Amended and Restated 2021 Omnibus Equity Incentive Plan. The options were issued on a pro-rata basis and resulted in no change in fair value.

 

During the six months ended June 30, 2024, the Compensation Committee of the Board of Directors approved the issuance of options to purchase 198,000 shares of the Company’s common stock to non-employee members of the Board of Directors of the Company and 680,000 shares of the Company’s common stock to management of the Company. The options have a term of 10 years, an exercise price of $2.04 per share and vest over periods of 12 to 48 equal monthly installments.

 

During the six months ended June 30, 2024, the Board of Directors approved the issuance of options to purchase 32,500 shares of the Company’s common stock to employees of the Company with a term of 10 years and exercise prices ranging from $2.11 - $2.17 per share, which options vest in 48 equal monthly installments.

 

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The Company recognized stock-based compensation of $293,802 and $157,202 related to stock options for the three months ended June 30, 2024 and 2023 and $515,301 and $335,562 related to stock options for the six months ended June 30, 2024 and 2023, respectively, which is included in general and administrative expenses.

 

As of June 30, 2024, the Company had unrecognized stock-based compensation expense of $3,584,358, related to unvested stock options, which is expected to be recognized over the weighted-average vesting period of 2.75 years.

 

The following table summarizes the stock option activity for the three months ended June 30, 2024:

 

   Options  

Weighted-

Average Exercise

Price Per Share

 
Outstanding, January 1, 2024   2,512,561   $1.92 
Granted   1,506,176   $2.21 
Exercised   (1,251)  $1.95 
Forfeited   (17,498)  $1.95 
Expired   -   $- 
Outstanding and expected to vest, June 30, 2024   3,999,988   $2.03 

 

The following table discloses information regarding outstanding and exercisable options at June 30, 2024:

 

    Outstanding   Exercisable 
Exercise Price Range  

Number of

Option

Shares

  

Weighted

Average

Exercise Price

  

Weighted

Average

Remaining

Life (Years)

  

Number of

Option

Shares

  

Weighted

Average

Exercise Price

 
$ 0.00-1.00    256,500   $0.80    6.70    256,500   $0.80 
$