On May 12, 2023 Citius Pharmaceuticals, Inc. ("Citius" or the "Company") (Nasdaq: CTXR), a late-stage biopharmaceutical company dedicated to the development and commercialization of first-in-class critical care products reported its business and financial results for the fiscal second quarter ended March 31, 2023 (Press release, Citius Pharmaceuticals, MAY 12, 2023, View Source [SID1234631605]).
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Fiscal Q2 2023 Business Highlights and Subsequent Developments
Achieved 85 of 92 required events in the Mino-Lok Phase 3 trial as of April 24, 2023, with 16 patients in active treatment or pending study completion data review;
Completed Phase 2b trial of Halo-Lido for the treatment of hemorrhoids with data analysis under way; topline results anticipated by the end of calendar Q2 2023;
Continued efforts to spin off oncology asset, I/ONTAK, into a standalone public company; the biologics license application (BLA) for I/ONTAK is under review by the FDA, with a targeted decision date (PDUFA) set for July 28, 2023; and,
Raised $15 million in capital through a registered direct offering of common stock and warrants at a purchase price of $1.20 per share on May 8, 2023.
Financial Highlights
Cash and cash equivalents of $29.1 million as of March 31, 2023; $15 million in gross proceeds from equity financing as of May 8, 2023;
R&D expenses were $4.7 million and $8.2 million for the three and six months ended March 31, 2023, respectively, compared to $3.5 million and $8.9 million for the three and six months ended March 31, 2022, respectively;
G&A expenses were $4.8 million and $7.4 million for the three and six months ended March 31, 2023, respectively, compared to $3.1 million and $6.0 million for the three and six months ended March 31, 2022, respectively;
Stock-based compensation expense was $1.2 million and $2.4 million for the three and six months ended March 31, 2023, respectively, compared to $1.0 million and $1.9 million for the three and six months ended March 31, 2022, respectively; and,
Net loss was $10.5 million and $14.1 million, or ($0.07) and ($0.10) per share for the three and six months ended March 31, 2023, respectively, compared to a net loss of $7.6 million and $16.8 million, or ($0.05) and ($0.11) per share for the three and six months ended March 31, 2022, respectively.
"The Citius team continues to focus on execution as we move through 2023. With the Halo-Lido Phase 2b trial now complete, we are on track to have topline results available by the end of this quarter, ahead of plan. Additionally, as we recently reported, we have achieved 85 of 92 required events in the Mino-Lok Phase 3 trial, with additional patients in treatment, and sites in the U.S. and India continuing to enroll patients. We remain encouraged that the momentum in enrollment will enable us to complete the trial this year, achieving another key value-creating milestone for Citius. And, importantly, we continue to advance our I/ONTAK (E7777) program on multiple fronts. As the targeted July 28, 2023 BLA decision date (PDUFA) approaches, we remain actively engaged in the regulatory review process and continue to lay the commercial and manufacturing foundation for a successful product launch, if approved. Moreover, we believe that at this time, a spinoff of I/ONTAK into a separate publicly traded company would be in the best interest of Citius shareholders and allow us to maximize the value of this asset. To that end, we have worked diligently with financial advisors to advance those efforts and look forward to sharing additional details, as appropriate, in the coming months," stated Leonard Mazur, Chairman and CEO of Citius.
"Given the challenging financial environment for small biopharmaceutical companies, we took the opportunity earlier this month to raise $15 million from two institutional funds. With this additional capital, we believe that, as of March 31, 2023, our cash runway extends through May 2024. Our priority remains to advance our leading programs and deliver on the multiple value-driving catalysts we outlined for 2023," concluded Mazur.
SECOND quarter 2023 Financial Results:
Liquidity
As of March 31, 2023, the Company had $29.1 million in cash and cash equivalents.
As of March 31, 2023, the Company had 146,357,797 common shares outstanding.
On May 4, 2023, the Company entered into definitive agreements with certain healthcare-focused and institutional investors for the purchase of an aggregate of 12,500,001 shares of its common stock and accompanying warrants to purchase up to an aggregate of 12,500,001 shares of its common stock, at a purchase price of $1.20 per share and accompanying warrant in a registered direct offering. The warrants have an exercise price of $1.50 per share, will be exercisable six months from the date of issuance, and will expire five years from the date of issuance.
The closing of the offering occurred on May 8, 2023, in which the aggregate gross proceeds were $15.0 million before deducting the placement agent fees and other offering expenses payable by the Company.
The Company also issued 875,000 warrants to the placement agent as part of the transaction.
The Company estimates that its available cash resources will be sufficient to fund its operations through May 2024. We anticipate the need to raise additional capital in the future to support our operations beyond May 2024.
Research and Development (R&D) Expenses
R&D expenses were $3.5 million and $8.9 million for the three and six months ended March 31, 2023, respectively, compared to $1.6 million and $7.7 million for the comparable periods ended March 31, 2022. The increase primarily reflects incremental Mino-Lok trial costs related to the expansion of the trial to include sites outside of the U.S. and higher Halo-Lido Phase 2b study costs as the trial approached completion in April 2023, offset by lower I/ONTAK expenses due to the completion and filing of the BLA with the FDA in September 2022.
We expect that research and development expenses will stabilize in fiscal 2023 as we focus on the commercialization of I/ONTAK and complete our Phase 3 trial for Mino-Lok and our Phase 2b trial for Halo-Lido.
General and Administrative (G&A) Expenses
G&A expenses were $4.8 million and $7.4 million for the three and six months ended March 31, 2023, respectively, compared to $3.1 million and $6.0 million for the comparable periods ended March 31, 2022. The increase was primarily due to pre-launch and market research activities associated with I/ONTAK. General and administrative expenses consist primarily of compensation costs, professional fees for legal, regulatory, accounting, and corporate development services, and investor relations expenses.
Stock-based Compensation Expense
For the fiscal quarter ended March 31, 2023, stock-based compensation expense was $1.2 million as compared to $1.0 million for the prior year period. For the six months ended March 31, 2023, stock-based compensation expense was $2.4 million as compared to $1.9 million for the six months ended March 31, 2022. The increase reflects expenses related to new grants made under the Citius and NoveCite equity incentive plans and new grants made to employees (including new hires), directors and consultants.
Net loss
Net loss was $10.5 million, or ($0.07) per share for the three months ended March 31, 2023, compared to a net loss of $7.6 million, or ($0.05) per share for the three months ended March 31, 2022.
The increase in the net loss was primarily due to an increase in research and development and general and administrative expenses.
Net loss was $14.1 million, or ($0.10) per share for the six months ended March 31, 2023, compared to a net loss of $16.8 million, or ($0.11) for the six months ended March 31, 2022.
The decrease in net loss for the six months ended March 31, 2023 primarily reflects an increase in other income from the $3.6 million gain recognized in connection with the sale of certain New Jersey income tax net operating losses to a third party under the New Jersey Technology Business Tax Certificate Transfer Program offset by increased operating expenses during the period.