10-Q 1 vaxx-20230930.htm FORM 10-Q vaxx-20230930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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
September 30, 2023
-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
 
001-41058
Vaxxinity, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
86-2083865
(State or other jurisdiction of
 
incorporation or organization)
(I.R.S. Employer
Identification No.)
505 Odyssey Way
Merritt Island
,
FL
32953
(Address of principal executive offices)
(Zip Code)
(
254
)
244-5739
(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
Class A Common Stock, par value
$0.0001 per share
VAXX
The
Nasdaq
 
Global Market
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, smaller reporting
 
company, or an emerging growth
company. See 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
As of November 6, 2023, the registrant had
112,871,792
shares of $0.0001 par value Class A common stock outstanding and
13,874,132
 
shares of $0.0001 par value
Class B common stock outstanding.
 
 
 
 
 
 
 
 
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report
 
on Form 10-Q
 
contains forward-looking statements.
 
Forward-looking statements are
 
neither historical facts
 
nor
assurances of future performance. Instead, they
 
are based on our current
 
beliefs, expectations and assumptions regarding the future
 
of
our business,
 
future
 
plans
 
and strategies
 
and other
 
future conditions.
 
In some
 
cases,
 
you
 
can identify
 
forward-looking
 
statements
because
 
they
 
contain
 
words
 
such
 
as
 
“anticipate,”
 
“believe,”
 
“estimate,”
 
“expect,”
 
“intend,”
 
“may,”
 
“predict,”
 
“project,”
 
“target,”
“potential,” “seek,” “will,” “would,”
 
“could,” “should,” “continue,” “contemplate,”
 
“plan,” other words and
 
terms of similar meaning
and the negative of these words or similar terms.
Forward-looking statements are
 
subject to known and
 
unknown risks and uncertainties,
 
many of which may
 
be beyond our control.
We
 
caution you that forward-looking
 
statements are not guarantees
 
of future performance or
 
outcomes and that actual
 
performance
and outcomes may differ
 
materially from those made
 
in or suggested by the
 
forward-looking statements contained in this
 
Quarterly
Report. In addition, even
 
if our results of
 
operations, financial condition and
 
cash flows, and the
 
development of the markets
 
in which
we operate, are consistent with
 
the forward-looking statements contained in
 
this Quarterly Report, those results
 
or developments may
not be indicative of
 
results or developments
 
in subsequent periods.
 
New factors emerge from
 
time to time
 
that may cause
 
our business
not to develop as we
 
expect, and it is not
 
possible for us to predict
 
all of them. Factors that
 
could cause actual results and outcomes
to differ materially from those reflected in forward-looking statements include, among others, the following:
 
the prospects
 
of our
 
product candidates,
 
including the progress,
 
number,
 
scope, cost,
 
results and
 
timing of
 
data from
our development activities,
 
preclinical trials and
 
clinical trials for
 
our product candidates
 
or programs, such as the target
indication(s) for
 
development
 
or
 
approval,
 
the size,
 
design, population,
 
conduct,
 
cost, objective
 
or
 
endpoints of
 
any
clinical trial, or the
 
timing for initiation or
 
completion of or availability
 
of results from any
 
clinical trial, for submission,
review or approval of any regulatory filing, or for meeting with regulatory authorities;
 
the potential benefits that may be derived from any of our product candidates;
 
the timing of and
 
our ability to obtain
 
and maintain regulatory approval
 
for our existing product
 
candidates, any product
candidates
 
that
 
we
 
may
 
develop,
 
and
 
any
 
related
 
restrictions,
 
limitations,
 
or
 
warnings
 
in
 
the
 
label
 
of
 
any
 
approved
product candidates;
 
our ability to develop and commercialize new products and product candidates;
 
our ability to leverage our Vaxxine
 
Platform;
 
the rate and degree of market acceptance of our products and product candidates;
 
estimates of our addressable market and market growth, and expectations about market trends;
 
our future operations,
 
financial position,
 
revenues, costs,
 
expenses, uses of
 
cash, capital
 
requirements, our
 
needs
for additional financing or the period for which our existing cash resources will be sufficient to meet our operating
requirements;
 
our ability
 
to comply
 
with legal
 
and regulatory
 
requirements relating
 
to privacy,
 
tax, anti-corruption
 
and
other applicable laws;
 
our ability to hire and retain key personnel and to manage our future growth effectively;
 
our ability to access capital on acceptable terms in a rising interest rate and tighter credit environment;
 
expectations regarding our ability to continue as a going concern;
 
competitive companies and technologies within our industry and our ability to compete;
 
our and our collaborators’,
 
including United Biomedical’s
 
(“UBI”), ability and willingness
 
to obtain, maintain, defend
and enforce our intellectual property protection
 
for our proprietary and collaborative
 
product candidates, and the scope
of such protection;
 
the
 
performance
 
of
 
third-party
 
suppliers
 
and
 
manufacturers
 
and
 
our
 
ability
 
to
 
find
 
additional
 
suppliers
 
and
manufacturers and obtain alternative sources of raw materials;
 
 
our ability
 
and the potential
 
to successfully manufacture
 
our product
 
candidates for
 
pre-clinical use,
 
for clinical
 
trials
and, if approved, on a larger scale for commercial use;
 
the
 
ability
 
and
 
willingness
 
of
 
our
 
third-party
 
collaborators,
 
including
 
UBI,
 
to
 
continue
 
research
 
and
 
development
activities
 
relating
 
to
 
our
 
product
 
candidates
 
and
 
our
 
ability
 
to
 
attract
 
additional
 
collaborators
 
with
 
development,
regulatory and commercialization expertise;
 
general economic, political, demographic and business
 
conditions in the United States, Taiwan
 
and other jurisdictions
where we conduct business or clinical trials;
 
the potential effects of government regulation, including regulatory developments in the United
States and other jurisdictions;
 
ability to obtain additional financing in future offerings or otherwise;
 
the
 
effects
 
of
 
global
 
conflicts,
 
including
 
Russia-Ukraine
 
and
 
Israel-Hamas,
 
and
 
the
 
COVID-19
 
pandemic
 
on
business operations and
 
the initiation, development
 
and operation of
 
our clinical trials,
 
including patient enrollment
of our clinical trials; and
 
our strategies, prospects, plans, expectations, forecasts or objectives.
We discuss many of these and
 
other factors in greater detail under Item 1A. “Risk Factors” in our Annual Report on Form 10-K
for the year ended
 
December 31, 2022 filed with
 
the Securities and Exchange
 
Commission on March 27,
 
2023. These risk factors
are not exhaustive.
 
Other sections of
 
this report may
 
include additional factors
 
which could adversely
 
impact our business
 
and
financial performance. New risk factors
 
emerge from time to
 
time, and it is not
 
possible to predict all
 
such risk factors, nor can
we assess the impact
 
of all such risk
 
factors on our
 
business or the extent
 
to which any
 
factor or combination
 
of factors may cause
actual results
 
to differ
 
materially from
 
those contained in
 
any forward-looking statements.
 
Forward-looking statements are
 
not
guarantees of performance. Given these uncertainties, you should not place undue reliance on these forward-looking statements,
which speak only as of the date hereof
.
You
 
should read this
 
Quarterly Report and
 
the documents that
 
we reference in
 
this Quarterly Report
 
and have filed
 
as exhibits
completely and with the
 
understanding that our
 
actual future results may
 
be materially different from
 
what we expect.
 
We qualify
all of
 
the forward-looking
 
statements
 
in this
 
Quarterly Report
 
by these
 
cautionary statements.
 
Except as
 
required by
 
law,
 
we
undertake no obligation to publicly
 
update any forward-looking statements, whether as
 
a result of new information,
 
future events
or otherwise.
As used
 
in this
 
Quarterly Report
 
on Form
 
10-Q, unless
 
otherwise specified
 
or the
 
context otherwise
 
requires, the
 
terms “we,”
“our,” “us,” the
 
“Company” refer
 
to Vaxxinity, Inc. and its
 
subsidiaries. All
 
brand names
 
or trademarks
 
appearing in
 
this Quarterly
Report are the property of their respective owners.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5
PART
 
I – FINANCIAL INFORMATION
Item 1. Financial Statements.
VAXXINITY,
 
INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(Unaudited)
September 30,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
17,395
$
33,475
Short-term investments
25,124
53,352
Restricted cash
206
1,095
Amounts due from related parties
407
414
Prepaid expenses and other current assets
3,224
5,551
Total current assets
46,356
93,887
Property and equipment, net
11,123
12,512
Total assets
$
57,479
$
106,399
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
2,974
$
5,295
Amounts due to related parties
12,512
12,772
Accrued expenses and other current liabilities
4,744
11,370
Note payable, net of debt issuance cost
402
391
Note payable to related party
929
1,113
Total current liabilities
21,561
30,941
Other liabilities:
Note payable, net of debt issuance cost, net of current portion
9,630
9,933
Note payable to related party, net of current portion
2,347
3,112
Other long-term liabilities
236
236
Total liabilities
33,774
44,222
Commitments and contingencies (Note 14)
(nil)
(nil)
Stockholders’ equity:
Class A common stock, $
0.0001
 
par value;
1,000,000,000
 
shares authorized,
112,871,792
 
and
112,182,750
 
shares issued and
outstanding at September 30, 2023 and December 31, 2022, respectively
278
278
Class B common stock, $
0.0001
 
par value;
100,000,000
 
shares authorized,
13,874,132
 
shares issued and outstanding at
September 30, 2023 and December 31, 2022
1
1
Additional paid-in capital
373,678
366,798
Accumulated other comprehensive loss
(7)
(197)
Accumulated deficit
(350,245)
(304,703)
Total stockholders’ equity
23,705
62,177
Total liabilities and stockholders’ equity
$
57,479
$
106,399
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
VAXXINITY,
 
INC.
CONDENSED CONSOLIDATED STATEMENTS
 
OF OPERATIONS AND
OTHER COMPREHENSIVE LOSS (INCOME)
(in thousands, except share and per share amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Operating expenses:
Research and development
$
7,910
$
12,468
$
27,679
$
34,609
General and administrative
5,535
7,300
18,956
20,546
Total operating expenses
13,445
19,768
46,635
55,155
Loss from operations
(13,445)
(19,768)
(46,635)
(55,155)
Other (income) expense:
Interest and other expense
176
54
514
264
Interest and other income
(512)
(545)
(1,657)
(625)
(Gain) loss on foreign currency transactions, net
36
(25)
50
(28)
Total other (income), net
(300)
(516)
(1,093)
(389)
Net loss
$
(13,145)
$
(19,252)
$
(45,542)
$
(54,766)
Net loss per share, basic and diluted
$
(0.10)
$
(0.15)
$
(0.36)
$
(0.43)
Weighted average common shares outstanding, basic and
diluted
126,736,784
126,036,865
126,272,546
125,899,557
Other comprehensive (income) loss:
 
Unrealized (gain) loss on investments
(11)
215
(190)
215
 
Other comprehensive (income) loss
(11)
215
(190)
215
Comprehensive loss
$
(13,134)
$
(19,467)
$
(45,352)
$
(54,981)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
VAXXINITY,
 
INC.
CONDENSED CONSOLIDATED STATEMENTS
 
OF STOCKHOLDERS’ EQUITY
(in thousands, except share amounts)
(Unaudited)
Common Stock-Class A
Common Stock-Class B
Shares
Amount
Shares
Amount
Additional Paid-
in Capital
Accumulated
Other
Comprehensive
(Loss)
Accumulated
Deficit
Stockholders’
Equity
Balance at December 31, 2022
112,182,750
$
278
13,874,132
$
1
$
366,798
$
(197)
$
(304,703)
$
62,177
Issuance of common stock upon exercise of stock options
6,161
4
4
Stock-based compensation expense
2,225
2,225
Unrealized gain on investments
148
148
Net loss
(18,421)
(18,421)
Balance at March 31, 2023
112,188,911
$
278
13,874,132
$
1
$
369,026
$
(49)
$
(323,124)
$
46,133
Issuance of common stock upon exercise of stock options
635,001
0
393
393
Stock-based compensation expense
2,433
2,433
Unrealized gain on investments
31
31
Net loss
(13,977)
(13,977)
Balance at June 30, 2023
112,823,912
$
278
13,874,132
$
1
$
371,852
$
(18)
$
(337,101)
$
35,012
Issuance of common stock upon exercise of stock options
47,880
57
57
Stock-based compensation expense
1,769
1,769
Unrealized loss on investments
11
11
Net loss
(13,145)
(13,145)
Balance at September 30, 2023
112,871,792
$
278
13,874,132
$
1
$
373,678
$
(7)
$
(350,245)
$
23,705
Common Stock-Class A
Common Stock-Class B
Shares
Amount
Shares
Amount
Additional Paid-
in Capital
Accumulated
Other
Comprehensive
(Loss)
Accumulated
Deficit
Stockholders’
Equity
Balance at December 31, 2021
111,518,094
$
278
13,874,132
$
1
$
357,821
$
$
(229,481)
$
128,619
Issuance of common stock upon exercise of stock options
448,998
121
121
Stock-based compensation expense
2,178
2,178
Net loss
(18,263)
(18,263)
Balance at March 31, 2022
111,967,092
$
278
13,874,132
$
1
$
360,120
$
$
(247,744)
$
112,655
Issuance of common stock upon exercise of stock options
162,613
112
112
Stock-based compensation expense
1,826
1,826
Net loss
(17,252)
(17,252)
Balance at June 30, 2022
112,129,705
$
278
13,874,132
$
1
$
362,058
$
$
(264,996)
$
97,341
Issuance of common stock upon exercise of stock options
52,165
-
-
-
29
-
-
29
Stock-based compensation expense
-
-
-
-
2,357
-
-
2,357
Net loss
-
-
-
-
-
(215)
(19,251)
(19,466)
Balance at September 30, 2022
112,181,870
$
278
13,874,132
$
1
$
364,444
$
(215)
$
(284,247)
$
80,261
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
VAXXINITY,
 
INC.
CONDENSED CONSOLIDATED STATEMENTS
 
OF CASH FLOWS
(in thousands)
(Unaudited)
Nine Months Ended September 30,
2023
2022
Cash flows from operating activities:
Net loss
$
(45,542)
$
(54,766)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense
1,778
1,144
Amortization of debt issuance costs
39
40
Amortization of discount on short-term investments
(1,222)
(422)
Stock-based compensation expense
6,427
6,361
Changes in operating assets and liabilities:
Amounts due from related parties
7
(7)
Prepaid expenses and other current assets
2,327
3,349
Long-term deposits
(2,076)
Accounts payable
(2,321)
127
Amounts due to related parties
(260)
(2,731)
Accrued expenses and other current liabilities
(6,626)
7,530
Net cash used in operating activities
(45,393)
(41,451)
Cash flows from investing activities:
Purchase of short-term investments
(43,587)
(107,526)
Proceeds from maturity of short-term investments
73,227
27,500
Purchases of property and equipment
(389)
(1,574)
Net cash provided by (used in) investing activities
29,251
(81,600)
Cash flows from financing activities:
Repayments of note payable
(331)
(320)
Repayments of note payable with related party
(949)
Proceeds from exercise of stock options
453
262
Net cash used in financing activities
(827)
(58)
Change in cash, cash equivalents and restricted cash
(16,969)
(123,109)
Cash, cash equivalents and restricted cash at beginning of period
34,570
145,057
Cash, cash equivalents and restricted cash at end of period
$
17,601
$
21,948
Reconciliation of cash, cash equivalents and restricted cash:
Cash, cash equivalents and restricted cash at end of period
$
17,601
$
21,948
Less restricted cash
(206)
(3,073)
Cash and cash equivalents end of period
$
17,395
$
18,875
Supplemental Disclosure
Cash paid for interest
$
592
$
277
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
VAXXINITY,
 
INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
9
1. Nature of the Business
Vaxxinity,
 
Inc.,
 
a
 
Delaware corporation
 
(“Vaxxinity
 
,”
 
and
 
together
 
with
 
its
 
subsidiaries,
 
the
 
“Company”), was
 
formed
 
through
 
the
combination of two
 
separate businesses that
 
originated from United
 
Biomedical, Inc. (“UBI”)
 
in two separate
 
transactions: a spin-out
from UBI
 
in 2014
 
of operations
 
focused on
 
developing chronic
 
disease product
 
candidates that
 
resulted in
 
United Neuroscience
 
(“UNS”),
and a second spin-out from UBI in
 
2020 of operations focused on the development
 
of a COVID-19 vaccine that resulted in
 
C19 Corp.
(“COVAXX”).
 
On February 2, 2021, Vaxxinity
 
was incorporated for the purpose of reorganizing
 
and combining UNS and COVAXX
and on March 2, 2021, did so by acquiring all of the outstanding equity interests of UNS and COVAXX
 
pursuant to a contribution and
exchange
 
agreement
 
(the
 
“Contribution
 
and
 
Exchange
 
Agreement”)
 
whereby
 
the
 
existing
 
equity
 
holders
 
of
 
UNS
 
and
 
COVAXX
contributed
 
their
 
equity
 
interests
 
in
 
each
 
of
 
UNS
 
and
 
COVAXX
 
in
 
exchange
 
for
 
equity
 
in
 
Vaxxinity
 
(the
 
“Reorganization”).
 
On
December 31, 2022, COVAXX
 
merged with and into Vaxxinity.
The Company is
 
a biotechnology company
 
currently focused on
 
developing product candidates
 
for human use
 
in the fields
 
of neurology,
pain, cardiovascular
 
diseases and
 
coronaviruses utilizing
 
its “Vaxxine Platform”—a synthetic
 
peptide vaccine
 
technology first
 
developed
by
 
UBI
 
and
 
subsequently
 
refined
 
over
 
the
 
last
 
two
 
decades.
 
The
 
Company
 
is
 
engaged
 
in
 
the
 
development
 
of
 
rationally
 
designed
prophylactic and therapeutic vaccines to combat common chronic diseases with large global unmet
 
medical need. The Company is also
developing a heterologous
 
booster vaccine for
 
SARS-Cov-2. UBI is
 
a significant shareholder
 
of the Company
 
and, therefore, considered
a related party.
The Company is
 
subject to risks
 
and uncertainties common
 
to early-stage companies
 
in the biotechnology
 
industry including, but
 
not
limited
 
to,
 
uncertainty
 
of
 
product
 
development
 
and
 
commercialization,
 
lack
 
of
 
marketing
 
and
 
sales
 
history,
 
development
 
by
 
its
competitors of
 
new technological
 
innovations, dependence
 
on key
 
personnel, market
 
acceptance of
 
products, product
 
liability, protection
of proprietary
 
technology,
 
ability to
 
raise additional
 
financing, and
 
compliance with
 
global government
 
regulations. If
 
the Company
does not successfully commercialize
 
or out-license any of its
 
product candidates, it will be
 
unable to generate recurring product
 
revenue
or achieve profitability.
The
 
Company’s
 
product
 
candidates
 
are
 
in
 
development
 
and
 
will
 
require
 
significant
 
additional
 
research
 
and
 
development
 
efforts,
including extensive pre-clinical
 
and clinical testing and
 
regulatory approval prior to
 
commercialization. These efforts require
 
significant
amounts of additional capital,
 
adequate personnel and infrastructure
 
and extensive compliance-reporting capabilities.
 
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, that
 
any products
 
developed will
 
obtain necessary
 
government regulatory
 
approval or
 
that any
approved products will
 
be commercially viable.
 
Even if the
 
Company’s product development efforts are
 
successful, it is
 
uncertain when,
if ever, the Company will generate significant revenue
 
from product sales. The Company
 
operates in an environment of rapid
 
change in
technology and is dependent upon the services of its employees and consultants.
Liquidity and Going Concern Assessment
As of September 30, 2023, the Company had $
17.4
 
million of cash and cash equivalents and
 
$
25.1
 
million of short-term investments to
fund operations. To date, the
 
Company has primarily
 
financed its operations
 
through the sale
 
of convertible preferred
 
stock and common
stock, borrowings under promissory notes (including convertible notes), a
 
portion of which has been raised from related
 
party entities,
and grants from
 
foundations such as
 
the Coalition for
 
Epidemic Preparedness Innovations
 
(CEPI) and the
 
Michael J. Fox
 
Foundation
(MJFF). The Company has
 
experienced significant negative
 
cash flows from operations
 
since inception, and incurred
 
a net loss of
 
$
45.5
million for the nine months
 
ended September 30, 2023. Net cash used
 
in operating activities for the nine
 
months ended September 30,
2023 was
 
$
45.4
 
million. In
 
addition, as
 
of September 30,
 
2023, the
 
Company has
 
an accumulated
 
deficit of
 
$
350.2
 
million. The
 
Company
expects to incur substantial operating losses and negative cash flows from operations for the foreseeable future.
 
In accordance
 
with ASC
 
205-40, Presentation
 
of Financial
 
Statements-Going Concern,
 
management is
 
required to
 
evaluate whether
there are
 
conditions or
 
events, considered
 
in the
 
aggregate, that
 
raise substantial
 
doubt about
 
the Company's
 
ability to
 
continue as
 
a
going concern within one year after the date that the financial statements are issued. When management
 
identifies conditions or events,
considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern, management must
consider whether its plans to mitigate those relevant conditions or events will alleviate the substantial doubt.
 
 
Given that the Company has incurred substantial operating losses and negative cash flows from operations since inception and expects
to continue
 
to incur
 
substantial operating
 
losses and
 
negative cash
 
flows from
 
operations for
 
the foreseeable
 
future, management
 
assessed
that there are conditions or events, considered
 
in the aggregate, as of the issue
 
date of these financial statements, which
 
raise substantial
doubt about the Company's ability to continue as a going concern.
 
 
Management considered whether its plans
 
to mitigate those relevant conditions
 
or events will alleviate
 
the substantial doubt about
 
the
Company's ability to
 
continue as a
 
going concern. These
 
plans include raising
 
new capital through
 
public or private
 
equity offerings,
VAXXINITY,
 
INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
10
strategic collaborations, debt
 
financing and other
 
capital sources or
 
combinations thereof, and
 
as needed cost
 
reduction through attrition,
organization restructuring, and curtailment of certain research and development activities.
 
 
However, there are significant risks and uncertainties as to whether these plans will be achieved or additional funding will be available
on terms acceptable to the Company, or at all.
 
Due to
 
the risks
 
and uncertainties,
 
management cannot
 
conclude that
 
substantial doubt
 
about the
 
Company's ability
 
to continue
 
as a
going concern has
 
been alleviated.
 
As such, there
 
is substantial doubt
 
about the entity's
 
ability to continue
 
as a going
 
concern within
one year after the
 
date that the
 
financial statements are
 
issued.
 
However, since liquidation is
 
not imminent, the accompanying
 
unaudited
condensed consolidated financial statements
 
have been prepared
 
assuming that the
 
Company will continue as
 
a going concern,
 
which
contemplates
 
the
 
realization
 
of
 
assets
 
and
 
satisfaction
 
of
 
liabilities
 
in
 
the
 
ordinary
 
course
 
of
 
business.
 
The
 
unaudited
 
condensed
consolidated
 
financial
 
statements
 
do
 
not
 
include
 
any
 
adjustments
 
relating
 
to
 
the
 
recoverability
 
and
 
classification
 
of
 
recorded
 
asset
amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described
 
above.
2. Summary of Significant Accounting Policies
Basis of presentation
The
 
accompanying
 
interim
 
unaudited
 
condensed
 
consolidated
 
financial
 
statements
 
have
 
been
 
prepared
 
using
 
generally
 
accepted
accounting principles in
 
the United States
 
of America (“GAAP”)
 
and pursuant
 
to the rules
 
and regulations of
 
the United States
 
Securities
and Exchange Commission (“SEC”) for interim financial reporting.
 
These interim
 
condensed consolidated
 
financial statements
 
are unaudited
 
and, in
 
the opinion
 
of management,
 
include all
 
normal and
recurring
 
adjustments
 
necessary
 
to
 
fairly
 
present
 
the
 
results
 
of
 
the
 
interim
 
periods.
 
The
 
condensed
 
consolidated
 
balance
 
sheet
 
at
December 31, 2022, has been derived from the audited financial statements
 
at that date. Operating results for the three and nine months
ended September 30, 2023
 
and cash flows
 
for the nine
 
months ended September 30,
 
2023 are not
 
necessarily indicative of
 
the results
that may be expected for the fiscal year ending December 31, 2023 or any other future
 
period. Certain information and note disclosures
normally included in
 
annual consolidated financial
 
statements prepared in
 
accordance with GAAP
 
have been omitted
 
in accordance with
the rules
 
and regulations
 
for interim reporting
 
of the
 
SEC. These
 
interim unaudited condensed
 
financial statements should
 
be read
 
in
conjunction with the
 
consolidated financial statements
 
and notes thereto
 
included in our
 
Annual Report on
 
Form 10-K for
 
the year ended
December 31, 2022 filed with the SEC on March 27, 2023 (the “Annual Report”).
Significant accounting policies
 
The significant accounting policies used in preparation of these unaudited condensed consolidated financial statements are disclosed in
our annual consolidated financial statements for the year ended December 31, 2022 included in the Annual Report.
 
There have been no
changes to the Company’s significant accounting policies during the three and nine months ended September 30, 2023.
Recently adopted accounting pronouncements
 
From time
 
to time,
 
new accounting
 
pronouncements are
 
issued by
 
the Financial
 
Accounting Standards
 
Board (“FASB”) or
 
other standard
setting bodies and are adopted by the Company as of the specified effective date.
 
In June 2016, the
 
Financial Accounting Standards Board (“FASB”)
 
issued Accounting Standards Update (“ASU”) 2016-13,
 
Financial
Instruments -
 
Credit Losses
 
(Topic
 
326): Measurement
 
of
 
Credit Losses
 
on Financial
 
Instruments (“ASU
 
2016-13”). ASU
 
2016-13
significantly
 
changes
 
the
 
impairment
 
model
 
for
 
most
 
financial
 
assets
 
and
 
certain
 
other
 
instruments
 
as
 
it
 
will
 
require
 
immediate
recognition of estimated credit losses expected to occur over
 
the remaining life of many financial assets, which will generally
 
result in
earlier recognition of allowances for credit losses on loans and other financial instruments.
 
On January 1, 2023, the Company adopted
ASU 2016-13. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.
Recently issued accounting pronouncements not yet adopted
In August 2020,
 
the FASB
 
issued ASU 2020-06,
 
Debt - Debt
 
with Conversion and
 
Other Options (Subtopic
 
470-20) and Derivatives
and Hedging -
 
Contracts in Entity's
 
Own Equity (Subtopic
 
815-40): Accounting for
 
Convertible Instruments and
 
Contracts in an
 
Entity's
Own Equity, which is intended to simplify the accounting for certain financial instruments with characteristics of liabilities and equity,
including convertible instruments and contracts on an entity's own equity. The guidance allows for either full
 
retrospective adoption or
modified retrospective adoption. The guidance is effective for the Company in the first quarter of fiscal
 
year 2024 and early adoption is
permitted. The Company is in the process of evaluating the effect the amendment will have on the consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VAXXINITY,
 
INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
11
3. Fair Value Measurements
The Company's money market accounts
 
and short-term investments are shown
 
at fair value based on
 
unadjusted quoted market prices
in active markets for identical assets.
The following
 
table presents
 
information about
 
the Company’s
 
financial instruments
 
measured at
 
fair value
 
on a
 
recurring basis
 
and
indicate the level of the fair value hierarchy used to determine such fair values (in thousands):
September 30, 2023
Level 1
Level 2
Level 3
Total
Assets:
Short-term investments
$
25,124
$
$
$
25,124
Money market accounts
10,925
10,925
Total assets
$
36,049
$
$
$
36,049
December 31, 2022
Level 1
Level 2
Level 3
Total
Assets:
Short-term investments
$
53,352
$
$
$
53,352
Money market account
27,724
27,724
Total assets
$
81,076
$
$
$
81,076
During the three and
 
nine months ended September 30, 2023
 
and the year ended
 
December 31, 2022, there were
no
 
transfers between
Level 1, Level 2 and Level 3.
4. Short-Term Investments
The Company’s short-term investments consist of the following (in thousands):
As of September 30, 2023
Amortized Cost
Unrealized
Gains (Losses),
Net
Recorded Basis
U.S. Treasury Securities
$
25,130
$
(6)
$
25,124
Total
$
25,130
$
(6)
$
25,124
As of December 31, 2022
Amortized Cost
Unrealized
Gains (Losses),
Net
Recorded Basis
U.S. Treasury Securities
$
53,549
$
(197)
$
53,352
Total
$
53,549
$
(197)
$
53,352
These securities mature in less than 1 year.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VAXXINITY,
 
INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
12
5. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
September 30,
December 31,
2023
2022
Clinical prepayments
$
1,762
$
2,679
Prepaid insurance
280
1,870
Prepaid materials and supplies
248
Deposits
240
232
Other
942
522
$
3,224
$
5,551
Clinical prepayments consist
 
of amounts paid
 
in advance to clinical
 
research organizations (“CROs”) for
 
expenses related to
 
our clinical
trials, primarily UB-612, and included $
1.5
 
million on deposit as of September 30, 2023 that will be credited against final UB-612 trial
expenses. The remaining clinical prepayment amounts are amortized to expense as earned by the CRO and clinical trial sites.
 
Prepaid
 
insurance
 
consists
 
primarily
 
of
 
$
0.3
 
million
 
and
 
$
1.6
 
million
 
for
 
the
 
unamortized
 
portion
 
of
 
the
 
Company’s
 
annual
 
D&O
insurance fee as of September 30, 2023 and December 31, 2022, respectively.
 
Prepaid materials and supplies consist of amounts paid in
 
advance related to the procurement and/or production of materials for
 
use in
the Company’s clinical trials, primarily UB-612. There
 
were
no
 
amounts held by related parties
 
at September 30, 2023 and $
0.2
 
million
at December 31, 2022.
6. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
September 30,
December 31,
2023
2022
Airplane
$
11,983
$
11,983
Laboratory and computer equipment
3,310
3,146
Software
426
415
Leasehold improvements
534
403
Facilities, furniture and fixtures
98
37
Vehicles
87
87
Construction in progress
86
65
Total property and equipment
16,524
16,136
Less: accumulated depreciation and amortization
(5,401)
(3,624)
Property and equipment, net
$
11,123
$
12,512
Depreciation
 
expense
 
for
 
the
 
three
 
and
 
nine
 
months
 
ended
 
September 30,
 
2023
 
was
 
$
0.7
 
million
 
and
 
$
1.8
 
million,
 
respectively.
Depreciation expense for the three and nine months ended September 30, 2022 was $
0.4
 
million and $
1.1
 
million, respectively.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VAXXINITY,
 
INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
13
7. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
September 30,
December 31,
2023
2022
Accrued external research and development
$
1,720
$
6,904
Accrued compensation
2,689
2,568
Accrued professional fees and other
334
1,722
Accrued interest
176
$
4,744
$
11,370
 
8. Other Long-Term Liabilities
Other long-term liabilities consisted of the following (in thousands):
September 30,
December 31,
2023
2022
Accrued taxes
236
236
$
236
$
236
As of
 
September 30, 2023
 
and December 31,
 
2022, approximately
 
$
0.2
 
million of
 
accrued taxes
 
related to
 
penalties and
 
interest the
Company may be
 
subject to paying
 
for late filing
 
fees related to
 
a foreign subsidiary. The
 
Company expects
 
these amounts to
 
be forgiven
but has accrued for them until the statute of limitations expires and it is appropriate to write them off.
9. Notes Payable
Note Payable—Airplane
In connection with the acquisition
 
of an airplane, the Company entered
 
into a note payable agreement (the
 
“2025 Note”) in June 2020
for $
11.5
 
million, with an annual interest rate of
3.4
% and a maturity date of
June 9, 2025
. Principal and interest payments are payable
monthly in the amount of
 
$
0.1
 
million with a final payment
 
of $
9.4
 
million at maturity. The 2025 Note is guaranteed
 
by the co-founders
of the Company. In addition, the Company incurred debt issuance costs of $
0.3
 
million, which are being amortized over the term of the
loan. There are no financial covenants associated with the 2025 Note.
 
The carrying value of the 2025 Note is as follows (in thousands):
 
September 30,
December 31,
2023
2022
Principal
$
10,124
$
 
10,455
Unamortized debt issuance cost
(92)
(131)
Carrying amount
10,032
10,324
Less: current portion
(402)
(391)
Note payable, net of current portion and debt issuance cost
$
9,630
$
9,933
As of September 30, 2023, the remaining principal payments for the 2025 Note are as follows (in thousands):
 
Amount
2023 (remaining 3 months)
$
113
2024
458
2025
9,553
$
10,124
Interest expense associated
 
with the 2025
 
Note was $
0.1
 
million and $
0.3
 
million for the
 
three and nine
 
months ended September 30,
2023, respectively.
 
Interest expense
 
associated with
 
the 2025
 
Note was
 
$
0.1
 
million and
 
$
0.3
 
million for
 
the three
 
and nine
 
months
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VAXXINITY,
 
INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
14
ended September 30, 2022, respectively.
 
Accrued interest of less than $
0.1
 
million was included in accrued expenses and other current
liabilities in the accompanying condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022.
Promissory Note with Related Party
In October 2022, the Company entered into a related party unsecured promissory note (the “2022
 
Promissory Note”) with UBI for $
4.2
million. The
 
2022 Promissory
 
Note accrues
 
interest at
7.0
% per
 
annum and
 
is due
October 1, 2026
. The
 
2022 Promissory
 
Note was
issued to satisfy accounts payable to UBI totaling $
4.2
 
million.
The carrying value of the 2022 Promissory Note is as follows (in thousands):
September 30,
December 31,
2023
2022
Principal
$
3,276
$
 
4,225
Less: current portion
(929)
(1,113)
Note payable with related party, net of current portion
$
2,347
$
3,112
As of September 30, 2023, the remaining principal payments for the 2022 Promissory Note are as follows (in thousands):
 
Amount
2023 (remaining 3 months)
$
165
2024
1,029
2025
1,103
2026
979
$
3,276
Interest expense
 
associated with
 
the 2022
 
Promissory Note
 
was $
0.1
 
million and
 
$
0.2
 
million for
 
the three
 
and nine
 
months ended
September 30, 2023, respectively.
 
10. Common Stock
The Company has reserved shares of Class A common stock for issuance for the following purposes:
 
September 30,
December 31,
2023
2022
Options and RSUs issued and outstanding
22,000,273
20,716,760
Options available for future grants
6,648,567
6,064,003
Warrants issued and outstanding
1,928,020
1,928,020
30,576,860
28,708,783
 
11. Stock-Based Compensation
2021 Omnibus Incentive Compensation Plan
In November
 
2021, the
 
Company established
 
the 2021
 
Omnibus Incentive
 
Compensation Plan
 
(the “Plan”),
 
which provides
 
for the
Company to
 
grant nonqualified
 
stock options,
 
incentive (qualified)
 
stock options,
 
stock appreciation
 
rights, restricted
 
share
 
awards,
restricted stock units, performance awards, cash incentive awards and other equity-based awards (including fully vested shares).
 
At inception
 
in November
 
2021, the
 
maximum number
 
of shares
 
of Class
 
A common
 
stock that
 
could be
 
issued under
 
the Plan
 
was
8,700,000
 
shares of Class
 
A common stock.
 
This number increases
 
automatically on January
 
1 of
 
each year,
 
commencing January 1,
2023, by the number of shares equal to the lesser of (i)
4
% of the outstanding shares of our Class A common stock on the immediately
preceding December
 
31, (ii)
 
the number
 
of shares
 
determined by
 
the compensation
 
committee of
 
the board
 
of directors,
 
if any
 
such
determination is
 
made, and
 
(iii) the
 
number of
 
shares underlying
 
any awards
 
granted during
 
the preceding
 
calendar year,
 
net of
 
the
shares
 
underlying
 
awards
 
canceled
 
or
 
forfeited
 
under
 
the
 
Plan.
 
On
 
January
 
1,
 
2023,
 
in
 
accordance
 
with
 
the
 
automatic
 
“evergreen”
provision of the Plan, the maximum number of shares that can be issued under the plan was increased to
11,886,306
.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VAXXINITY,
 
INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
15
Stock Options
As of
 
September 30, 2023,
 
there were
 
options to
 
purchase
15,437,818
 
shares of
 
Class A
 
stock outstanding
 
and options
 
to purchase
6,362,455
 
shares of Class B stock
 
outstanding, of which options to
 
purchase
10,948,474
 
shares of Class A common
 
stock and options
to purchase
5,039,459
 
shares of Class
 
B common stock
 
were exercisable, respectively. As
 
of September 30, 2023,
 
the maximum number
of stock options awards available for future issuance under the Company’s plan is
6,648,567
.
The following table summarizes stock option activity during the nine months ended September 30, 2023:
 
Number of Stock
Options
Outstanding
Weighted
Average
Exercise Price
Per Share
Weighted
Average
Remaining
Contractual
Term (years)
Aggregate
Intrinsic Value
(in thousands)
Balance at December 31, 2022
20,416,760
$
5.07
6.8
$
7,166
Granted
3,466,782
2.28
Exercised
(689,042)
0.66
Forfeited
(1,394,227)
7.44
Balance at September 30, 2023
21,800,273
$
4.62
6.2
$
6,421
Options vested and exercisable at September 30, 2023
15,987,933
$
4.50
5.9
$
6,338
The aggregate intrinsic value of options
 
is calculated as the difference between
 
the exercise price of the
 
options and the fair value of
 
the
common stock for those options that had exercise prices lower than the fair value of the common stock as of September 30, 2023.
The intrinsic value of options exercised during the nine months ended September 30, 2023 was $
0.5
 
million.
The weighted-average grant-date fair value per share of options granted during the nine months ended September 30, 2023 was $
1.88
.
Restricted Stock Units
The following table summarizes the Company’s restricted stock unit activity for the nine months ended September 30, 2023:
 
Number of
Shares
Weighted
Average
Grant Date
Fair Value
Per Share
Unvested at December 31, 2022
300,000
$
3.76
Forfeited
(100,000)
$
3.76
Unvested at September 30, 2023
200,000
$
3.76
Stock-Based Compensation Expense
The
 
Company
 
recorded
 
stock-based
 
compensation
 
expense
 
in
 
the
 
following
 
expense
 
categories
 
in
 
the
 
accompanying
 
unaudited
condensed consolidated statements of operations and other comprehensive (income) loss (in thousands):
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
General and administrative
$
1,278
$
1,509
$
4,287
$
3,888
Research and development
491
848
2,140
2,473
Total stock-based compensation expense
$
1,769
$
2,357
$
6,427
$
6,361
As of September 30, 2023, total unrecognized compensation cost related to the unvested stock-based
 
awards was $
11.4
 
million, which
is expected to be recognized over a weighted average period of
2.0
 
years.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VAXXINITY,
 
INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
16
12. Income Taxes
The Company
 
computes its
 
expected annual
 
effective income
 
tax rate
 
in accordance
 
with FASB
 
Accounting Standards
 
Codification
(“ASC”) 740
 
, “Income
 
Taxes”
 
and makes
 
changes on
 
a quarterly
 
basis, as
 
necessary,
 
based on
 
certain factors
 
such as
 
changes in
forecasted annual pre-tax
 
income; changes to
 
actual or forecasted
 
permanent book to
 
tax differences; impacts
 
from tax audits
 
with state,
federal or foreign tax
 
authorities; impacts from
 
tax law changes; or
 
change in judgment as
 
to the realizability of
 
deferred tax assets. The
Company identifies items which are
 
unusual and non-recurring in nature and
 
treats these as discrete events.
 
The tax effect of
 
discrete
items is recorded in the quarter in which the discrete events occur.
 
The Company’s
 
effective tax rate
 
for the three
 
months ended September 30, 2023
 
and September 30, 2022
 
was
0
%, due primarily
 
to
its uncertainty of realizing a benefit from net operating losses incurred during the period.
In assessing
 
the realizability
 
of deferred
 
tax assets,
 
management considers
 
whether it
 
is more-likely-than-not that
 
some or
 
all of
 
the
recorded deferred
 
tax assets
 
will be
 
realized. The
 
ultimate realization of
 
deferred tax
 
assets is
 
dependent on
 
the generation
 
of future
taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversal
of deferred tax liabilities, projected future taxable income, and tax planning strategies
 
in making this assessment. Based on these items
and the
 
consecutive years
 
of pretax
 
losses, management
 
determined that
 
enough uncertainty
 
exists relative
 
to the
 
realization of
 
the
deferred income tax asset balances to warrant the application of a full valuation allowance for all taxing jurisdictions.
The Company files income
 
tax returns in the
 
U.S. federal and various
 
state and local jurisdictions. The
 
Company also files returns
 
in
numerous foreign jurisdictions that have varied
 
years remaining open for examination, but
 
generally the statute of limitations
 
is three
to four years from when the return is filed. As of September 30, 2023, the Company has no ongoing audits.
The
 
Company
 
has
 
US
 
net
 
operating
 
loss
 
(“NOL”)
 
carryforwards
 
for
 
federal
 
and
 
state
 
income
 
tax
 
purposes.
 
Use
 
of
 
the
 
NOL
carryforwards is
 
limited under
 
Section 382
 
of the
 
Internal Revenue
 
Code, as
 
the Company
 
had a
 
change in
 
ownership of
 
more than
50
% of its capital
 
stock over a
three-year
 
period as measured under
 
Section 382 of the
 
Internal Revenue Code of
 
1986, as amended (the
“Code”). These complex changes of ownership rules generally focus on ownership changes involving stockholders owning directly or
indirectly
5
% or
 
more
 
of
 
our
 
stock,
 
including certain
 
public
 
“groups”
 
of
 
stockholders
 
as
 
set
 
forth
 
under
 
Section
 
382
 
of
 
the
 
Code,
including those arising from new stock issuances and other
 
equity transactions.
 
Some of these NOL carryforwards will expire if
 
they
are not used within certain periods. At
 
this time, the Company considers
 
it more likely than not that it
 
will not have sufficient taxable
income in the future that will allow us to realize these NOL carryforwards.
13. Net Loss Per Share
The Company’s potentially dilutive securities, which include warrants, options and restricted stock units,
 
have been excluded from the
computation of diluted net
 
loss per share as
 
the effect would be
 
to reduce the net
 
loss per share. Therefore,
 
the weighted average number
of
 
common
 
shares
 
outstanding
 
used
 
to
 
calculate
 
both
 
basic
 
and
 
diluted
 
net
 
loss
 
per
 
share
 
is
 
the
 
same.
 
The
 
Company
 
excluded
 
the
following potential common
 
shares, presented based
 
on amounts outstanding
 
at each period
 
end, from the
 
computation of diluted
 
net
loss per share for the three months ended September 30, 2023 and 2022 because including them would have had an
 
anti-dilutive effect:
 
September 30,
2023
2022
Options issued and outstanding
21,800,273
20,293,681
Warrants issued and outstanding
1,928,020
1,928,020
Restricted stock units issued and outstanding
200,000
300,000
23,928,293
22,521,701
 
14. Commitments and Contingencies
Contractual Obligations
 
The Company enters
 
into agreements with CROs
 
to conduct clinical
 
trials and preclinical
 
studies and CMOs
 
to produce vaccines
 
and
other potential product candidates. Contracts with CROs and CMOs are generally cancellable, with notice, at the Company’s option.
 
As of September 30, 2023, the Company had
 
remaining prepayments to CROs of $
1.5
 
million and
no
 
remaining prepayments to CMOs
for
 
activities
 
associated
 
with
 
the
 
conduct of
 
its
 
clinical
 
trials
 
and
 
for
 
the
 
production
 
of
 
the
 
Company’s
 
anticipated
 
vaccine
 
product
candidate.
 
VAXXINITY,
 
INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
17
Michael J. Fox Foundation Grant
 
On November 3, 2021, the
 
Company was awarded a grant from
 
the Michael J. Fox Foundation
 
for Parkinson’s Research
 
(“MJFF”) in
the amount of $
0.8
 
million to be used in a
 
project for the exploration of markers
 
for target engagement in individuals immunized
 
with
UB-312, an
 
active
a
-Synuclein (“aSyn”)
 
immunotherapy.
 
The Company
 
will oversee
 
sample management,
 
sample preparation
 
(IgG
fractions) and
 
distribution, as
 
well as
 
characterize the
 
binding properties
 
of the
 
antibodies against
 
pathological forms
 
of aSyn.
 
As funding
is expected to
 
be received in
 
tranches over a
 
two-year period, and
 
the amounts received
 
in each tranche
 
are expected to
 
be utilized within
12 months,
 
the funds
 
received are
 
recognized as
 
a short-term
 
accrued liability.
 
The Company
 
recognizes payments
 
from MJFF
 
as a
reduction of research and development
 
expenses, in the same
 
period as the expenses that
 
the grant is intended to
 
reimburse are incurred.
As of
 
September 30, 2023,
 
there was
no
 
balance remaining
 
in the
 
accrued liability
 
related to
 
this grant.
 
For the
 
nine months
 
ended
September 30,
 
2023
 
and
 
2022,
 
the
 
Company
 
did
no
t
 
recognize
 
any
 
reduction
 
of
 
research
 
and
 
development
 
expenses
 
for
 
amounts
reimbursed through the grant.
Coalition for Epidemic Preparedness Innovations (“CEPI”) Grant
In April
 
2022, the
 
Company entered
 
into an
 
agreement with
 
the Coalition for
 
Epidemic Preparedness Innovations
 
(“CEPI”) whereby
CEPI agreed
 
to provide
 
funding of
 
up to
 
$
9.3
 
million to
 
co-fund a
 
Phase 3
 
clinical trial
 
of the
 
Company’s
 
next generation
 
UB-612
COVID-19 vaccine candidate as a heterologous
 
– or ‘mix-and-match’ – booster dose.
 
The Phase 3 trial, which
 
began in early 2022, is
evaluating the
 
ability of
 
UB-612 to
 
boost COVID-19
 
immunity against
 
the original
 
strain and
 
multiple variants
 
of concern
 
including
Omicron - in people aged 16 years or older, who have been previously immunized with an authorized COVID-19 vaccine.
The Company will also be performing further manufacturing scale-up work to enable readiness for potential commercialization. Under
the terms of the agreement with
 
CEPI, if successful, a portion of the
 
released doses of the commercial product will
 
be delivered to the
COVID-19 Vaccines
 
Global Access (“COVAX”)
 
consortium for distribution to developing countries at low cost.
Cash payments received in advance
 
under the CEPI Funding Agreement are
 
restricted as to their use until
 
expenditures contemplated in
the funding
 
agreement are
 
incurred. As
 
funding is
 
expected to
 
be received
 
in tranches
 
over an
 
18-month period,
 
and the
 
amounts received
in each tranche are
 
expected to be utilized
 
within 12 months, the
 
funds received are
 
reflected within restricted
 
cash with a corresponding
short-term accrued
 
liability.
 
As of
 
September 30, 2023,
 
the Company
 
had
no
 
remaining restricted
 
cash or
 
accrued liability
 
related to
CEPI funding. The Company recognizes
 
payments from CEPI as a reduction of
 
research and development expenses, in
 
the same period
as
 
the
 
expenses that
 
the grant
 
is
 
intended
 
to reimburse
 
are incurred.
 
For the
 
nine
 
months ended
 
September 30, 2023,
 
the Company
reduced research and development expenses by $
1.8
 
million for amounts reimbursed through the grant.
Lease Agreements
 
The Company has
two
 
operating lease
 
agreements for
 
office and laboratory
 
space. The Company
 
is also
 
required to pay
 
certain operating
costs under its leases.
In August 2023, the Company entered into a lease for
9,839
 
square feet of lab and office space with Space Florida in Exploration Park,
Florida commencing August
 
12, 2023. The lease
 
has an initial
one-year
 
term with an annual
 
lease obligation of $
0.5
 
million, after lessee
credits. Additionally, the lease requires the Company to provide a security deposit in the amount of less than $
0.1
 
million.
 
In April 2022, the Company entered into a
 
facility lease agreement for
4,419
 
square feet of office space in New
 
York,
 
New York.
 
The
lease commenced in April
 
2022 and will expire
 
in March 2029 with no
 
option to renew.
 
This lease and its
 
terms were reviewed using
the guidance
 
found in
 
ASC 842,
 
“Leases”.
 
Since the
 
lease has
 
a non-cancellable period
 
of
one year
, and
 
after the first
 
year both
 
the
Company and the landlord have
 
the option to early terminate
 
the lease for any or
 
no reason, the Company
 
has elected to apply the
 
short-
term expedient, which does not subject the New York lease to capitalization.
 
Rent expense for
 
the three and
 
nine months ended
 
September 30, 2023 was $
0.1
 
million and $
0.5
 
million, respectively.
 
Rent expense
for the three and nine months ended September 30, 2022 was $
0.2
 
million and $
0.4
 
million, respectively.
License Agreements
In August 2021,
 
the Company entered
 
into a license
 
agreement (the “Platform
 
License Agreement”) with
 
UBI and certain
 
of its affiliates
that
 
expanded intellectual
 
property rights
 
held
 
under
 
previously issued
 
license agreements
 
with
 
UBI. As
 
part of
 
the
 
agreement,
 
the
Company obtained a worldwide, sublicensable (subject to certain conditions), perpetual, fully paid-up, royalty-free license to research,
develop, make, have made, utilize, import, export, market, distribute, offer for sale, sell, have sold, commercialize or otherwise exploit
peptide-based
 
vaccines
 
in
 
the
 
field
 
of
 
all
 
human
 
prophylactic
 
and
 
therapeutic
 
uses,
 
except
 
for
 
such
 
vaccines
 
related
 
to
 
human
immunodeficiency virus (HIV), herpes simplex virus (HSE) and Immunoglobulin E (IgE).
 
The patents and patent applications licensed
under the
 
Platform License Agreement
 
include claims directed
 
to a
 
CpG delivery
 
system, artificial T
 
helper cell
 
epitopes and
 
certain
VAXXINITY,
 
INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
18
designer peptides and proteins utilized in UB-612. In consideration for the Platform License Agreement, the Company issued to UBI a
warrant to purchase Class A common stock (the “UBI Warrant”).
 
The Company considered ASC 805, “Business Combinations” (“ASC 805”) and ASC 730, “Research and Development” (“ASC 730”)
in determining
 
how to
 
account for
 
the license
 
agreement acquired
 
and the
 
issuance of
 
the UBI
 
Warrant.
 
The majority
 
of the
 
voting
interests in UBI and in the Company were held by a group
 
of immediate family members, at the time of the transaction, and as such
 
the
transaction constitutes a common control
 
transaction, which requires the license to
 
be accounted for at the
 
carrying value in the books
of the transferor and the excess of consideration paid over the carrying value as a capital transaction.
 
Indemnification Agreements
 
In the ordinary
 
course of business,
 
the Company may
 
provide indemnification of
 
varying scope and
 
terms to employees,
 
consultants,
vendors, lessors,
 
business partners and
 
other parties
 
with respect
 
to certain
 
matters including, but
 
not limited
 
to, losses
 
arising out
 
of
breach of such
 
agreements or from
 
intellectual property infringement
 
claims made by
 
third parties. In
 
addition, the Company
 
has entered
into indemnification agreements with members of its board of directors and executive officers that will require the Company to, among
other things,
 
indemnify them
 
against certain
 
liabilities that
 
may arise
 
by reason
 
of their
 
status or
 
service as
 
directors or
 
officers. The
maximum potential amount of future payments
 
the Company could be required to
 
make under these indemnification agreements is,
 
in
many cases, unlimited.
 
To
 
date, the Company has
 
not incurred any
 
material costs as
 
a result of
 
such indemnification obligations. The
Company
 
is
 
not
 
aware
 
of
 
any
 
indemnification
 
arrangements
 
that
 
could
 
have
 
a
 
material
 
effect
 
on
 
its
 
financial
 
position,
 
results
 
of
operations, or cash flows, and it has
no
t accrued any liabilities related to such obligations as
 
of September 30, 2023 and December 31,
2022.
 
Legal Proceedings
 
From
 
time
 
to
 
time,
 
the
 
Company
 
may
 
become
 
involved
 
in
 
legal
 
proceedings
 
arising
 
in
 
the
 
ordinary
 
course
 
of
 
business.
 
As
 
of
September 30, 2023 and December 31, 2022, the Company was not a party to any material legal matters or claims.
Loss Contingency
In April
 
2021, the
 
Company engaged
 
United Biopharma,
 
Inc. (“UBP”)
 
to begin
 
acquiring raw
 
materials for
 
use in
 
the production
 
of
GMP grade recombinant protein for
 
UB-612, the Company’s COVID-19 vaccine candidate under
 
an Authorization to Proceed
 
(“ATP”)
agreement for $
3
 
million of materials. Through August 2021, $
7.2
 
million of materials were ordered by UBP, $
3.0
 
million of materials
were received by UBP
 
and paid for with
 
an advance payment
 
from the Company.
 
The Company has
 
recognized $
3.0
 
million in expense
for these materials purchases authorized under the ATP.
 
When the Company asked
 
to pause further manufacture
 
of protein upon rejection
 
of the Emergency
 
Use Authorization application by
Taiwan in August
 
2021, UBP
 
requested that
 
its suppliers
 
cancel the
 
remaining $
4.2
 
million in
 
orders for
 
which it
 
had not
 
taken possession
of the
 
materials. In the
 
fourth quarter of
 
2022, the
 
Company learned that
 
most of
 
the suppliers refused
 
to cancel
 
the orders, although
some agreed to seek other buyers for the materials. For these orders, management has not yet concluded that a loss for
 
the Company is
probable, or that
 
one amount of
 
loss is a
 
better estimate than
 
any other amount,
 
since they were
 
not originally authorized by
 
the ATP
and UBP’s suppliers may be able to dispose of some amount to other buyers. Hence, an expense has
no
t been recognized for them.
As of November 8, 2023, there is
 
no claim against the Company by
 
UBP related to these orders, no
 
settlement or other agreement has
been reached between the Company and UBP or, to the Company’s knowledge, between UBP and its suppliers. Therefore, the range of
the potential loss is still $
0
 
to $
4.2
 
million.
 
15. Benefit Plans
In
 
March
 
2018,
 
the
 
Company
 
established
 
a
 
defined
 
contribution
 
savings
 
plan
 
under
 
Section
 
401(k)
 
of
 
the
 
Code.
 
This
 
plan
 
covers
substantially all
 
U.S. employees
 
who meet
 
minimum age
 
and service
 
requirements and
 
allows participants
 
to defer
 
a portion
 
of their
annual compensation on a
 
pre-tax basis. The Company
 
matches employee contributions to
 
the Plan at
100
% up to
4
% of the employee’s
base salary.
The Company offers its Ireland-based employees
 
a Personal Retirement Savings Account (“PRSA”) that allows participants
 
to defer a
portion of their annual compensation. The Company provides contributions equal to
5
% of each participant’s annual salary. During the
three and nine months ended September 30, 2023 and 2022, the Company contributed less than $
0.1
 
million to PRSA accounts.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VAXXINITY,
 
INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
19
16. Related Party Transactions
The Company has related party arrangements with
 
UBI and a number of its affiliated companies namely, United Biomedical, Inc., Asia
(“UBIA”), UBI Pharma, Inc. (“UBI-P”), United BioPharma, Inc (“UBP”) and UBI IP Holding (“UBI-IP”).
As of September 30, 2023, UBI
 
owned
44
% of the Company’s stock. The majority
 
of the voting interests in
 
both UBI and the Company
were held by a group of immediate family members, and as such the entities are under common control.
These related parties are governed by various Master Services Agreements (“MSA”) detailed below.
 
UBI MSA - UBI provides research, development and clinical functions to the Company. There is also a purchase arrangement
with UBI for the production and shipment of the Company’s diagnostic test kits.
UBIA MSA - UBI-Asia for manufacturing, quality control, testing, validation, and supply services.
UBP MSA - UBP provides the Company with manufacturing, testing and validation services.
COVID MSA (“COVID MSA”) - COVID
 
MSA provides that UBI acts as
 
COVAXX’s
 
agent with respect to matters relating
the
 
Company’s
 
COVID-19
 
program
 
and
 
provides
 
research,
 
development,
 
manufacturing
 
and
 
back
 
office
 
administrative
services to the Company.
COVID-19 Relief
 
MSA -
 
A four-company
 
MSA with
 
UBI, UBI-Asia
 
and UBP.
 
The Company
 
is an
 
exclusive licensee
 
of
technologies related to diagnostics, vaccines, and therapies for COVID-19. The MSA established the terms under which UBI-
Asia
 
provides
 
research,
 
development,
 
testing
 
and
 
manufacturing
 
services
 
to
 
the
 
Company
 
and
 
UBP
 
provides
 
contract
development and manufacturing services to the Company.
In August
 
2021, Vaxxinity
 
entered into
 
a license
 
agreement with
 
UBI and
 
certain of
 
its affiliates
 
(collectively,
 
the “Licensors”)
 
that
expanded
 
intellectual
 
property
 
rights
 
previously
 
licensed
 
under
 
the
 
Original
 
UBI
 
Licenses
 
in
 
exchange
 
for
 
a
 
warrant
 
to
 
purchase
1,928,020
 
shares of Vaxxinity Class A common stock. The UBI Warrant
 
is exercisable at an exercise price of $
12.45
 
per share (subject
to adjustment
 
pursuant thereto),is
 
not subject
 
to vesting,
 
and has
 
a term
 
of
five years
.
 
See note
 
14 to the
 
condensed consolidated
 
financial
statements.
The Company also considers
 
Destination Systems, its travel and
 
logistics firm, a related
 
party since its Chief Executive
 
Officer, Landon
Ogilvie, is on the Company’s board of directors.
Total related party operating activity is as follows (in thousands):
September 30,
December 31,
2023
2022
Consolidated balance sheet
Assets
Prepaid expenses and other current assets
$
$
237
Amounts due from related parties
407
414
Liabilities
Amounts due to related parties
12,512
12,772
Current portion of note payable
929
1,113
Note payable
2,347
3,112
Accrued interest payable
73
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VAXXINITY,
 
INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
20
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Operating expenses
Research and development
Services provided by related parties
 
$
67
 
$
 
$
424
 
$
1,139
General and administrative
Services provided by related parties
 
$
1,076
 
$
 
$
2,133
 
$
Other income/expense
Related party interest expense
 
$
60
 
$
 
$
193
 
$
 
 
 
 
 
21
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our
 
financial condition and results
 
of operations should be read
 
together with our unaudited
condensed consolidated financial statements
 
and related notes
 
and other financial information
 
appearing elsewhere in
 
this Quarterly
Report on Form 10-Q. We intend for this
 
discussion to provide you with information
 
that will assist you
 
in understanding our unaudited
condensed consolidated financial statements, the changes in key items in those unaudited condensed consolidated financial statements
from period
 
to period and the
 
primary factors that accounted
 
for those changes.
Some of the
 
information contained in this
 
discussion
and analysis
 
or set
 
forth elsewhere in
 
this Quarterly
 
Report, including
 
information with
 
respect to our
 
plans and
 
strategy for
 
our business
and related
 
financing, includes
 
forward-looking
 
statements that
 
involve risks,
 
uncertainties and
 
assumptions. See
 
the section
 
of this
Quarterly Report titled
 
“Special Note Regarding
 
Forward-Looking Statements”
 
for a discussion
 
of forward-looking
 
statements. As a
result of many factors, including those factors set forth under
“Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K
for the year ended
 
December 31, 2022, in
 
Item 1A of
 
Part II of this
 
Quarterly Report on
 
Form 10-Q, or
 
in other filings
 
that we make
with the SEC
, our actual results could differ materially from management’s
 
expectations and the results described in or implied by the
forward-looking statements contained in the
 
following discussion and analysis. Investors and others
 
should note that we routinely
 
use
the Investors section of our
 
website to announce material information
 
to investors and the marketplace.
 
While not all of the
 
information
that
 
we
 
post
 
on
 
the
 
Investors
 
section
 
of
 
our
 
website
 
is
 
of
 
a
 
material
 
nature,
 
some
 
information
 
could
 
be
 
deemed
 
to
 
be
 
material.
Accordingly,
 
we encourage investors,
 
the media, and
 
others interested
 
in us to
 
review the
 
information that we
 
share on
 
the Investors
section of our website, https://vaxxinity.com/.
Overview
We
 
are engaged in
 
the development of
 
rationally designed prophylactic
 
and therapeutic vaccines
 
for chronic disorders
 
and infectious
diseases with
 
large patient
 
populations and
 
unmet medical
 
needs. While
 
vaccines have
 
traditionally been
 
unable to
 
combat such
 
disorders
effectively and
 
safely, we believe
 
our platform
 
could overcome
 
the traditional
 
hurdles facing
 
vaccines in
 
this area.
 
Our Vaxxine Platform
relies on a synthetic peptide vaccine technology first developed
 
by UBI and subsequently refined over the last two decades.
 
We believe
our vaccines have
 
the potential to
 
combat conditions that
 
have not yet
 
been successfully treated,
 
or which have
 
primarily been addressed
with monoclonal antibodies
 
(“mAbs”) which, while
 
generally effective,
 
are extremely costly
 
and cumbersome, and
 
thus have limited
accessibility.
 
Our pipeline
 
primarily
 
consists of
 
five programs
 
focused on
 
chronic disease,
 
spanning neurodegenerative
 
disorders
 
in
addition to other neurology and cardiovascular indications. Given the ongoing need for booster vaccines to address COVID-19 and our
Vaxxine Platform’s applicability to infectious
 
disease, we
 
are also
 
opportunistically advancing
 
a product
 
candidate that
 
addresses SARS-
CoV-2.
Our current pipeline consists
 
of six programs from
 
early to late-stage development, which
 
fall into 3 major
 
areas: Neurodegeneration,
Next Wave Chronic, and Infectious Disease.
 
Our Neurodegeneration pipeline consists of
 
UB-311, our leading
 
neurology product candidate, which targets
 
the primary pathological
process of
 
Alzheimer’s disease
 
(“AD”); UB-312,
 
which targets
 
the pathological
 
process of
 
Parkinson’s
 
disease (“PD”)
 
and other
 
so-
called
 
synucleinopathies;
 
and
 
VXX-301,
 
an
 
anti-tau
 
protein
 
product
 
candidate
 
which
 
has
 
the
 
potential
 
to
 
address
 
multiple
neurodegenerative conditions,
 
including AD.
 
Our Next
 
Wave
 
Chronic pipeline
 
consists of
 
UB-313, which
 
targets
 
Calcitonin Gene-
Related
 
Peptide
 
(“CGRP”)
 
to
 
prevent
 
migraines;
 
and
 
VXX-401,
 
which
 
targets
 
proprotein
 
convertase
 
subtilisin/kexin
 
type
 
9
 
serine
protease (“PCSK9”) to reduce low-density lipoprotein (“LDL”) cholesterol, a risk factor for atherosclerotic heart disease. Through our
Vaxxine
 
Platform, we believe
 
we may
 
be able to
 
address a wide
 
range of other
 
chronic diseases, including
 
diseases that
 
are or
 
could
potentially be successfully treated by mAbs, which increasingly dominate the treatment paradigm but remain accessible only to a small
proportion of patients who could potentially benefit from them.
In addition to
 
our Neurodegeneration and
 
Next Wave Chronic disease
 
pipelines, given our
 
Vaxxine Platform’s applicability to infectious
disease and the ongoing need for booster vaccines to address SARS-CoV-2, we are advancing an
 
Infectious Disease product candidate,
UB-612,
 
as
 
a
 
heterologous
 
booster
 
against
 
COVID-19.
 
We
 
have
 
reported
 
topline
 
results
 
of
 
a
 
pivotal
 
Phase
 
3
 
trial
 
of
 
UB-612
 
and
completed rolling
 
submissions for
 
conditional/provisional authorization
 
with regulatory authorities
 
in the United
 
Kingdom and
 
Australia
in March 2023.
Our ability to
 
generate revenue sufficient
 
to achieve profitability
 
will depend on
 
the eventual regulatory
 
approval and commercialization
of one or more of
 
our product candidates. We
 
have not yet obtained any
 
regulatory approvals for our product candidates
 
or conducted
sales and marketing activities for our product candidates.
We have principally funded our operations through
 
financing transactions. Through September 30,
 
2023, we received gross proceeds
 
of
$306.8 million
 
in connection
 
with various
 
financing transactions,
 
including the
 
sale of
 
preferred and
 
common stock,
 
the issuance
 
of
promissory notes (including
 
convertible promissory notes
 
(“Convertible Notes”)), and
 
the entry into
 
simple agreements for
 
future equity
(“SAFEs”).
 
22
Costs associated with research and development are the most significant
 
component of our expenses. These costs can vary greatly from
period to
 
period depending
 
on the
 
number,
 
timing, size,
 
scope and
 
nature of
 
various trials
 
for our
 
product candidates.
 
We
 
anticipate
incurring greater selling and marketing expenses if
 
we commercialize any of our product candidates
 
in the future and prepare for
 
such
commercialization.
 
Our product candidates are in
 
clinical stage or pre-clinical stage
 
development. We
 
have generated limited revenue
to date
 
and have
 
incurred significant
 
operating losses
 
since inception.
 
Net losses
 
were $13.1
 
million and
 
$19.3 million
 
for the
 
three
months ended September 30, 2023 and 2022,
 
respectively. Net losses
 
were $45.5 million and $54.8 million for
 
the nine months ended
September 30, 2023 and 2022, respectively. As of September 30, 2023, we had an accumulated deficit of $350.2 million.
We have taken several steps to reduce our rate of cash burn for our research and development and general and administrative activities,
including
 
reducing
 
headcount
 
through
 
attrition
 
and
 
organizational
 
restructuring,
 
limiting
 
use
 
of
 
external
 
consultants
 
and
 
other
professional services,
 
and prioritizing
 
research and
 
development activities
 
for certain
 
programs while
 
deferring other
 
activities. As
 
a
result of these efforts, as of the
 
date of this report we expect our existing cash
 
and cash equivalents and short-term investments will be
sufficient to
 
fund our
 
operating expenses
 
and capital
 
expenditure requirements
 
through early
 
Q4 2024.
 
See Note
 
1 to
 
the condensed
consolidated financial statements.
Thereafter, our
 
viability will depend
 
on our ability
 
to raise additional
 
capital to finance
 
operations, to successfully
 
commercialize our
product candidates, if approved, or to enter into collaborations with third parties for the development and / or commercialization of our
product candidates.
 
If we
 
are unable
 
to do
 
any of
 
the foregoing,
 
we would
 
be forced
 
to delay,
 
limit, reduce
 
or terminate
 
our product
candidate development or future
 
commercialization efforts. Our
 
estimates are based on
 
a variety of
 
assumptions that may
 
prove to be
wrong, and we could exhaust our available capital resources sooner than expected. See “— Liquidity and Capital
 
Resources.”
 
Recent Developments
In August
 
2023, results from
 
the Phase 2a
 
trial of UB-311
 
in patients with
 
mild Alzheimer’s
 
disease were
 
published in The
 
Lancet’s
eBioMedicine.
In October
 
2023, Peter
 
Powchik, MD
 
assumed his
 
role as
 
Vaxxinity’s
 
Executive Vice
 
President, Global
 
Scientific Director,
 
with the
departure of Ulo Palm
 
and Sumita Ray, JD, assumed her
 
role as Vaxxinity’s Chief Legal, Compliance, and Administrative Officer,
 
with
the departure of René Paula.
Also in October 2023,
 
we have expanded the
 
Phase 1 trial of
 
VXX-401 to test higher
 
dose levels, due to
 
VXX-401’s favorable
 
safety
and tolerability profile to date.
Through the second half
 
of 2023, exploratory target
 
engagement and biomarker assays from
 
the Phase 1 clinical
 
trial of UB-312 have
continued
 
to
 
yield
 
encouraging
 
results.
 
UB-312-induced
 
antibodies
 
slowed
 
alpha-synuclein
 
(“aSyn”)
 
aggregation
 
in
 
PD
 
patient
cerebrospinal fluid (“CSF”), demonstrating
 
BBB crossing and clear
 
target engagement
in vivo
.
 
UB-312 reduced aggregated aSyn
 
in PD
patients over time, as compared to placebo, as measured by fluorescence max
 
in a seed amplification assay. A
 
reduction of aggregated
aSyn over time in the CSF of PD patients immunized with UB-312 was also observed, as compared to those on placebo.
Components of Our Unaudited Condensed Consolidated Results of Operations
Revenue
 
We recorded no revenue for the three months ended September 30, 2023 and 2022 and the nine months ended September 30, 2023 and
2022. We
 
do not
 
expect to
 
generate any
 
meaningful revenue unless
 
and until we
 
obtain regulatory
 
approval of and
 
commercialize or
out-license at least
 
one of our
 
product candidates, and
 
we do not
 
know when, or
 
if, this will
 
occur. If
 
our development efforts
 
for our
product candidates are successful
 
and result in commercialization,
 
we may generate additional
 
revenue in the future
 
from a combination
of product sales or
 
payments from collaboration or
 
license agreements that we
 
have entered into or
 
may enter into with
 
third parties. We
have
 
incurred significant
 
losses since
 
our inception.
 
We
 
expect to
 
incur losses
 
for the
 
foreseeable future
 
and may
 
never achieve
 
or
maintain profitability.
Cost of Revenue
 
We
 
recorded no
 
cost of revenue
 
for the
 
three months ended
 
September 30, 2023 and
 
2022 and the
 
nine months
 
ended September 30,
2023 and 2022. If
 
our development efforts in
 
respect of our current
 
pipeline of product candidates
 
are successful and result
 
in regulatory
approval, we
 
expect our
 
cost of
 
revenue will
 
increase in
 
relative proportion
 
to the
 
level of
 
our revenue
 
as we
 
commercialize the
 
applicable
product candidate. We
 
expect that the cost of
 
revenue will increase in absolute dollars
 
as and if our revenue
 
grows and will vary from
period to period as a percentage of revenue.
 
 
23
Research and Development Expenses
 
The design, initiation and execution of
 
candidate discovery and development programs
 
of our potential future product candidates
 
is key
to our
 
success and
 
involves significant
 
expenses. Prior
 
to initiating
 
these programs,
 
project teams
 
incorporating individuals
 
from the
essential disciplines within the Company scope
 
out the activities, timing, requirements, inclusion
 
and exclusion criteria and the primary
and
 
secondary
 
endpoints.
 
Once
 
we
 
have
 
decided
 
to
 
proceed,
 
our
 
Vaxxine
 
Platform
 
enables
 
the
 
iteration
 
of
 
drug
 
candidates
 
in
 
the
discovery
 
phase
 
through
 
rapid,
 
rational
 
design
 
and
 
formulation.
 
After
 
we
 
have
 
identified
 
drug
 
candidates,
 
the
 
costs
 
of
 
scaling
 
the
formulation from
 
research grade
 
to clinical
 
grade, then
 
to commercial
 
grade, typically
 
consumes significant
 
resources. In
 
addition to
internal research
 
and development,
 
we utilize
 
service providers,
 
including related
 
parties, to
 
complete activities
 
we lack
 
the internal
resources to handle.
Research and development expenses consist primarily of costs incurred for research activities, including drug discovery efforts and the
development of our product candidates. We expense research and development costs as incurred, which include:
expenses incurred to conduct the necessary preclinical studies and clinical trials required to obtain regulatory approval;
expenses incurred under agreements with CROs
 
that are primarily engaged in the
 
oversight and conduct of our
 
clinical trials,
preclinical studies and drug discovery efforts and contract manufacturers that are primarily engaged to provide preclinical
 
and
clinical drug substance and product for our research and development programs;
other costs related to acquiring and manufacturing materials in connection with our drug discovery efforts and preclinical
studies and clinical trial materials, including manufacturing validation batches;
 
costs
 
related
 
to
 
investigative
 
sites
 
and
 
consultants
 
that
 
conduct
 
our
 
clinical
 
trials,
 
preclinical
 
studies
 
and
 
other
 
scientific
development services;
employee-related
 
expenses,
 
including
 
salaries
 
and
 
benefits,
 
travel
 
and
 
stock-based
 
compensation
 
expense
 
for
 
employees
engaged in research and development functions;
costs related to compliance with regulatory requirements; and
facilities-related costs, depreciation and other expenses, which include rent and utilities.
We
 
recognize external
 
development
 
costs based
 
on
 
an evaluation
 
of
 
the progress
 
to
 
completion of
 
specific
 
tasks using
 
information
provided to us
 
by service providers.
 
This process involves
 
reviewing open contracts
 
and purchase orders,
 
communicating with personnel
to identify services
 
that have been
 
performed on
 
our behalf and
 
estimating the
 
level of service
 
performed and the
 
associated cost incurred
for the service when we have not yet been invoiced or otherwise notified of actual costs. Any
 
nonrefundable advance payments that we
make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses.
Such amounts are expensed as the
 
related goods are delivered or the
 
related services are performed, or until
 
it is no longer expected that
the goods will be delivered, or the services rendered, at which point the net remainder is expensed.
We continue to work with related parties for the advancement of our research and development programs,
 
including for manufacturing,
quality control,
 
testing, validation,
 
and supply
 
services. While
 
this related party
 
work has
 
significantly diminished over
 
the last
 
year,
and we expect this trend to continue, we are still reliant on UBIA to provide certain manufacturing-related
 
and prior-conducted clinical
data that will be needed
 
for inclusion in our regulatory
 
applications for UB-612. During the
 
nine months ended September 30, 2023
 
and
2022, related party expenses were approximately 1.5% and 11.8% of our research and development expenses, respectively.
 
Where appropriate,
 
we allocate
 
certain external
 
research and
 
development expenses
 
on a
 
program-by-program basis. These
 
expenses
primarily relate
 
to third-party
 
clinical development
 
services (such
 
as those
 
provided by
 
clinical research
 
organizations
 
and research
laboratories), manufacturing expenses, and consulting and other professional services expenses. The Company's major programs are in
the
 
areas
 
of
 
Neurodegenerative
 
Disease,
 
Chronic
 
Disease
 
and
 
Infectious
 
Disease.
 
Other
 
programs
 
include
 
Platform
 
development
activities and preclinical research. We do not allocate our internal research
 
and development expenses and certain external
 
research and
development expenses,
 
such as
 
personnel expenses,
 
facility costs,
 
laboratory materials
 
and equipment
 
costs, and
 
travel and
 
entertainment
expenses
 
related
 
to
 
research
 
and
 
development
 
activities,
 
to
 
specific
 
programs
 
because,
 
for
 
example,
 
our
 
research
 
and
 
development
personnel work across programs, and
 
programs share common facilities, laboratory materials,
 
and equipment, and any such
 
allocation
would necessarily involve significant
 
estimates and judgments and,
 
accordingly, would be imprecise. When
 
we refer to the
 
research and
development expenses associated with a specific program, these refer exclusively to
 
the allocated third-party expenses associated with
that product candidate. All other research and development costs are referred to as unallocated costs.
Product candidates in
 
later stages of
 
clinical development generally
 
have higher development
 
costs than those
 
in earlier stages
 
of clinical
development,
 
primarily
 
due
 
to
 
the
 
increased
 
size
 
and
 
duration
 
of
 
later-stage
 
clinical
 
trials.
 
Additionally,
 
greater
 
research
 
and
development overhead is
 
required to support
 
broader and more
 
rapid development of
 
our Vaxxine Platform and new product
 
candidates.
 
24
As a result, we expect that our research and
 
development expenses could increase if we continue
 
our existing and planned clinical trials
and conduct
 
increased pre-clinical and
 
clinical development activities,
 
including submitting regulatory
 
filings for product
 
candidates,
and focus more generally on the development of our chronic disease product candidates.
At this time,
 
we cannot reasonably
 
estimate or know
 
the nature, timing
 
and costs of
 
the efforts that
 
will be necessary
 
to complete the
pre-clinical and clinical development of any of our product candidates or when, if ever, material net cash inflows may commence from
any of our product candidates.
General and Administrative Expenses
 
General
 
and
 
administrative
 
expenses
 
consist
 
primarily
 
of
 
salaries
 
and
 
benefits,
 
travel
 
and
 
stock-based
 
compensation
 
expense
 
for
personnel
 
in
 
executive,
 
business
 
development,
 
finance,
 
human
 
resources,
 
legal,
 
information
 
technology,
 
public
 
relations,
communications and administrative functions. General
 
and administrative expenses also
 
include insurance costs and
 
professional fees
for
 
legal,
 
patent,
 
consulting,
 
investor
 
and
 
public
 
relations,
 
accounting
 
and
 
audit
 
services
 
and
 
other
 
general
 
operating
 
expenses
 
not
otherwise classified as research and development expenses.
 
In the event UB-612 obtains regulatory approval and we subsequently commence commercialization of
 
this product, we expect general
and administrative expenses
 
will increase. We have incurred
 
and expect to
 
continue to incur
 
public company-related expenses,
 
including
services associated with maintaining compliance with Nasdaq listing and
 
SEC requirements, director and officer liability insurance and
investor and public relations costs.
Other Expense (Income)
 
Interest Expense
 
Interest expense consists of interest incurred on (i)
 
the note entered into during June 2020 for
 
the acquisition of an airplane (the “2025
Note”) and (ii) the related party promissory note (the “2022 Promissory Note”) entered into during 2022.
 
Interest Income
Interest income consists of income earned on our cash and cash equivalents, money market holdings, and short-term investments.
 
(Gain) Loss on Foreign Currency Translation, Net
 
Our foreign subsidiaries,
 
which are wholly-owned
 
by the Company, use
 
the U.S. dollar
 
as their functional
 
currency and maintain
 
records
in
 
the
 
local
 
currency.
 
Nonmonetary
 
assets
 
and
 
liabilities
 
are
 
remeasured
 
at
 
historical
 
rates
 
and
 
monetary
 
assets
 
and
 
liabilities
 
are
remeasured at exchange
 
rates in effect at
 
the end of
 
the reporting period.
 
Income statement accounts
 
are remeasured at
 
average exchange
rates for the reporting period.
 
The resulting gains or
 
losses are included in
 
foreign currency losses (gains) in
 
the condensed consolidated
financial statements.
Provision for Income Taxes
 
We have not recorded any significant amounts related
 
to income tax but have
 
reserved $0.7 million of unrecognized
 
tax benefits against
NOLs. We have not recorded any income tax benefits for the majority of our net losses we incurred to date.
 
We
 
account for income
 
taxes using the
 
asset and liability
 
method, which requires
 
the recognition of
 
deferred tax assets
 
and liabilities
for the expected future tax consequences of events that have been included in the consolidated financial statements or our tax returns.
 
Deferred tax assets
 
and liabilities are
 
determined based on the
 
difference between the financial
 
statement carrying amounts
 
and tax basis
of existing assets and liabilities and for loss and credit carryforwards, which are measured
 
using the enacted tax rates and laws in effect
in the years in which the differences are expected
 
to reverse. The realization of our deferred
 
tax assets is dependent upon the generation
of future taxable income, the
 
amount and timing of which
 
are uncertain. Valuation allowances are provided if, based upon
 
the weight of
available evidence, it is more likely than
 
not that some or all of
 
the deferred tax assets will not be
 
realized. As of September 30, 2023,
we continue to maintain
 
a full valuation allowance
 
against all of our
 
deferred tax assets based
 
on evaluation of all
 
available evidence.
We
 
file income tax returns
 
in the U.S. federal
 
and state jurisdictions and
 
may become subject to
 
income tax audit and
 
adjustments by
related tax authorities. Our tax
 
return periods (for entities then
 
in existence) for U.S. federal income
 
taxes for the tax years
 
since 2017
remain open to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions. We record reserves
for potential tax
 
payments to various
 
tax authorities related
 
to uncertain
 
tax positions, if
 
any.
 
The nature of
 
uncertain tax positions
 
is
subject
 
to
 
significant
 
judgment
 
by
 
management
 
and
 
subject
 
to
 
change,
 
which
 
may
 
be
 
substantial.
 
These
 
reserves
 
are
 
based
 
on
 
a
determination of whether
 
and how much
 
a tax benefit
 
taken by us
 
in our tax
 
filings or positions
 
is more likely
 
than not to
 
be realized
following the resolution of any potential contingencies related to the tax benefit. We develop our assessment of uncertain tax positions,
and the associated cumulative probabilities, using internal
 
expertise and assistance from third-party experts. As
 
additional information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25
becomes
 
available,
 
estimates
 
are
 
revised
 
and
 
refined.
 
Differences
 
between
 
estimates
 
and
 
final
 
settlement
 
may
 
occur
 
resulting
 
in
additional tax expense. Potential interest and penalties associated with such uncertain tax positions are recorded as a component of our
provision for income taxes.
 
Condensed Consolidated Results of Operations
The following is a summary of our unaudited condensed consolidated results of operations:
 
Three Months Ended September 30,
Nine Months Ended September 30,
(In thousands)
2023
2022
Change $
2023
2022
Change $
Operating expenses:
Research and development
$
7,910
$
12,468
 
$
 
(4,558)
$
27,679
$
34,609
$
(6,930)
General and administrative
5,535
7,300
(1,765)
18,956
20,546
(1,590)
Total operating expenses
13,445
19,768
(6,323)
46,635
55,155
(8,520)
Loss from operations
(13,445)
(19,768)
6,323
(46,635)
(55,155)
8,520
Other (income) expense:
Interest expense
176
54
122
514
264
250
Interest income
(512)
(545)
33
(1,657)
(625)
(1,032)
(Gain) loss on foreign currency translation, net
36
(25)
61
50
(28)
78
Total other (income) expense, net
(300)
(516)
216
(1,093)
(389)
(704)
Net loss
$
(13,145)
$
(19,252)
$
6,107
$
(45,542)
$
(54,766)
$
9,224
Research and Development Expenses
 
Comparison of the Three Months Ended September 30, 2023 and 2022
Allocated external research and development expenses decreased from $6.1 million for the three months ended September 30, 2022 to
$4.0 million for the three months ended September 30, 2023.
Neurodegenerative
 
Disease
 
Program
 
expenses
 
increased
 
from
 
$0.3
 
million
 
for
 
the
 
three
 
months
 
ended
 
September 30,
 
2022
 
to
 
$0.5
million for the
 
three months ended
 
September 30, 2023. This
 
increase primarily resulted
 
from a $0.3
 
million increase in
 
expenses for
UB-312 primarily attributable to our Phase 1 trial entering the completion phase.
 
Next Wave
 
Chronic Disease
 
Program expenses
 
increased from
 
$1.6 million
 
for the
 
three months
 
ended September 30,
 
2022 to
 
$1.8
million for the
 
three months ended
 
September 30, 2023. This
 
increase primarily resulted
 
from a $0.2
 
million increase in
 
expenses for
VXX-401 primarily attributable to active patient enrollment in the Phase 1 trial during the quarter.
Infectious Disease Program
 
expenses decreased from $4.0
 
million for the
 
three months ended
 
September 30, 2022 to
 
$1.6 million for
the three
 
months ended
 
September 30, 2023.
 
This decrease
 
primarily resulted
 
from a
 
$2.4 million
 
decrease in
 
expenses for
 
UB-612
primarily attributable to the Phase 3 trial entering the completion phase as all patient visits were completed in Q3 2023.
Unallocated research and
 
development expenses decreased
 
from $6.4 million
 
for the three
 
months ended September 30,
 
2022 to $3.9
million for
 
the three
 
months ended
 
September 30, 2023.
 
This decrease
 
primarily resulted
 
from a
 
$1.7 million
 
decrease in
 
personnel-
related expenses (including $0.4 million in stock-based compensation) primarily
 
attributable to attrition and internal restructuring,
 
and
a $0.6 million decrease in external consulting services.
Comparison of the Nine Months Ended September 30, 2023 and 2022
Allocated external research and development expenses decreased from $16.7 million for the nine months ended September 30, 2022 to
$12.4 million for the nine months ended September 30, 2023.
 
Neurodegenerative
 
Disease
 
Program
 
expenses
 
decreased
 
from
 
$2.2
 
million
 
for
 
the
 
nine
 
months
 
ended
 
September 30,
 
2022
 
to
 
$1.3
million for the
 
nine months ended
 
September 30, 2023. This
 
decrease primarily resulted
 
from a $0.6
 
million decrease in
 
expenses for
UB-312 primarily attributable to our Phase 1 trial entering the completion phase and a $0.2 million decrease in expenses for VXX-301
primarily attributable to reduced pre-clinical activity.
 
Next Wave
 
Chronic Disease
 
Program expenses
 
increased from
 
$5.0 million
 
for the
 
nine months
 
ended September 30,
 
2022 to
 
$5.8
million for the
 
nine months ended
 
September 30, 2023.
 
This increase primarily
 
resulted from a
 
$0.9 million increase
 
in expenses for
VXX-401 primarily attributable to active patient enrollment in the Phase 1 trial.
 
 
26
Infectious Disease Program expenses
 
decreased from $9.2 million
 
for the nine months
 
ended September 30, 2022 to
 
$5.0 million for the
nine
 
months
 
ended
 
September 30,
 
2023.
 
This
 
decrease
 
resulted
 
from
 
a
 
$4.2
 
million
 
decrease
 
in
 
expenses
 
for
 
UB-612
 
primarily
attributable to the Phase 3 trial entering the completion phase as all patient visits were completed in Q3 2023.
Unallocated research and development expenses decreased from $17.9 million for the nine months ended September 30, 2022 to $15.3
million for
 
the nine
 
months ended
 
September 30, 2023.
 
This decrease
 
primarily resulted
 
from a
 
$2.8 million
 
decrease in
 
personnel-
related expenses (including $0.3 million in stock-based compensation) primarily
 
attributable to attrition and internal restructuring, and
a $1.1 million
 
decrease in external
 
consulting services, partially offset
 
by a $0.8
 
million increase in facility
 
and laboratory equipment
costs attributable to rental
 
of additional laboratory and
 
office space and increased
 
lab supplies and
 
maintenance costs, and
 
a $0.4 million
increase in other indirect expenses primarily attributable to increased travel and IT services.
General and Administrative Expenses
 
Comparison of the Three Months Ended September 30, 2023 and 2022
General and
 
administrative expenses decreased
 
from $7.3 million
 
for the
 
three months ended
 
September 30, 2022 to
 
$5.5 million for
the three months ended September 30, 2023.
The
 
decrease
 
was
 
primarily
 
due
 
to
 
a
 
decrease
 
of
 
$0.7
 
million
 
in
 
personnel-related
 
expenses
 
(including
 
$0.2
 
million
 
in
 
stock-based
compensation) primarily attributable to attrition and internal restructuring,
 
a decrease in director and officer insurance expense of
 
$0.5
million, and a $0.3 million decrease in external consulting and professional services.
 
Comparison of the Nine Months Ended September 30, 2023 and 2022
General and administrative expenses decreased from $20.5 million for the nine months ended
 
September 30, 2022 to $19.0 million for
the nine months ended September 30, 2023.
The decrease was
 
due to decreases
 
of $1.5 million
 
in director and
 
officer insurance
 
expense, $0.6 million
 
in payroll-related expenses
primarily attributable to
 
attrition and internal
 
restructuring, and $0.3
 
million in external
 
consulting services, partially
 
offset by
 
a $0.5
million increase in external professional services and a $0.4
 
million increase in stock-based compensation due to the
 
increase in board
size in early 2023.
 
Liquidity and Capital Resources
Sources of Liquidity
 
We have not yet obtained regulatory approval for or commercialized any of our product candidates, which are in various phases of pre-
clinical and clinical development. We have financed operations primarily through the issuance of common stock, convertible preferred
stock, borrowings under promissory notes
 
(including the Convertible Notes) and
 
the execution of Simple Agreements
 
for Future Equity
(“SAFEs”).
 
Through
 
September 30,
 
2023,
 
we
 
received
 
gross
 
proceeds
 
of
 
$306.8
 
million
 
in
 
connection
 
with
 
various
 
financing
transactions, including the sale of
 
preferred and common stock, the
 
issuance of promissory notes
 
(including Convertible Notes), and
 
the
execution of SAFEs. As of
 
September 30, 2023, we had $42.5
 
million of cash, cash equivalents
 
and short-term investments compared
to $86.8 million as of December 31, 2022. The decrease in cash, cash equivalents and short-term securities for the periods reported are
primarily due to the factors described under “Cash Flows” below.
In August 2023, we
 
entered into an at-the-market
 
offering program pursuant to
 
which we may issue
 
and sell, from time
 
to time, up to
$100,000,000 of
 
our Class
 
A common
 
stock. For
 
the three
 
months ended
 
September 30, 2023,
 
we did
 
not sell
 
any shares
 
under this
program.