On May 15, 2025 HCW Biologics Inc. (the "Company" or "HCW Biologics") (NASDAQ: HCWB), a clinical-stage biopharmaceutical company focused on discovering and developing novel immunotherapies to lengthen health span by disrupting the link between inflammation and age-related diseases, reported financial results and recent business highlights for its first quarter ended March 31, 2025 (Press release, HCW Biologics, MAY 15, 2025, View Source [SID1234653168]).
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On May 15, 2025, the Company closed an equity offering with gross proceeds of $5.0 million with a single institutional investor. Dr. Hing Wong, Founder and CEO, stated, "We are pleased to have completed a successful $5.0 million equity offering in a difficult market without using a highly structured deal. This funding will be used to open clinical sites for our Phase 1 clinical trial to evaluate HCW9302 in an autoimmune disorder." Dr. Wong continued, "Our new round of financing will provide funding for critical studies to complete the research package for our business development campaign to identify a licensing partner to commercialize our Immune-Cell Engagers, including T-Cell Engagers, which we created using our TRBC drug discovery and development platform."
Dr. Wong explained the Company’s financing strategy, stating, "We have over 50 compounds that we have created and own. We are continually assessing our portfolio of molecules to identify strong candidates to develop and commercialize through licensing or other business development transactions. We plan to ramp up our business development efforts in the second half of 2025. One of our compounds that is ready to commercialize is HCW9206, a clinical-stage molecule. It is a promising revolutionary reagent to replace anti-CD3/anti-CD28/IL-2-based approaches to streamline and lower the costs of CAR-T manufacturing. Equally important, we believe that HCW9206 can improve the functional activities and persistence of CAR-Ts following adoptive transfer, a goal that has not been achieved for the last decade."
Business Highlights
Business Development Transactions
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On May 13, 2025, the Company delivered its technology report to WY Biotech in accordance with the terms of the WY Biotech exclusive worldwide licensing agreement to use and apply HCW11-006 for in vivo applications. HCW11-006 is a preclinical drug built with our second-generation discovery and development platform — the TRBC platform. WY Biotech has 30-days due diligence to study this report, after which the Company expects to recognize revenue for a $7.0 million upfront licensing fee.
Financing Transactions
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On May 15, 2025, the Company completed a $5.0 million offering of an aggregate of 671,140 units at a purchase price of $7.45 per unit priced at-the-market under Nasdaq rules. Each unit consisted of one share of Common Stock or one Pre-Funded Warrants to purchase one share of Common Stock, with two warrants, each of which can be exercised for one share of Common Stock for $7.45 per share. In addition, the Company entered into a privately negotiated agreement with the holder of certain existing outstanding warrants to purchase up to 167,925 shares of common stock (the "Existing Warrants") to reduce the exercise price of such Existing Warrants from $41.20 per share to $7.45 per share.
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On May 13, 2025, the Company received a compliance letter from the Nasdaq Panel to confirm that the Company has regained compliance with the bid price requirement in Listing Rule 5550(a)(2), the public float requirement in Listing Rule 5550(a)(4), and the market value of publicly held shares requirement in Listing Rule 5550(a)(5), as required by the Nasdaq Panel decision of April 8, 2025, as amended. The Company remains subject to the remaining terms of the Panel’s April 8, 2025, decision to provide an extension to the compliance period for other Listing Rules. The Company must be in compliance with all Listing Rules by June 16, 2025.
Clinical Development Results
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On January 28, 2025, the Company received clearance of its IND from the FDA to initiate a first-in-human Phase 1 dose escalation clinical trial to evaluate one of its lead drug candidates, HCW9302, in patients with moderate-to-severe alopecia areata, a common autoimmune disease in humans that currently has no curative FDA approved treatments. This will be a multi-site, Company-sponsored trial that is expected to be initiated in the third quarter of 2025.
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The Company is launching the commercialization its clinical-stage molecule, HCW9206. Positive results of studies presented by the Company’s research collaborator Dr. Harris Goldstein’s laboratory at the Albert Einstein College of Medicine, Bronx, New York, at the 2025 Annual Meeting of American Association of Immunologists (AAI 2025), Honolulu, HI. The results of these studies represent an alternative novel strategy for CAR-T cell production with the advantage of generating a large population of CAR-Ts with a stem cell-like memory T cell phenotype, which should enhance the persistence of CAR-Ts in patients. We believe that this strategy will likely improve long-term survival of disease-specific CAR-Ts following adoptive transfer and enable sustained suppression of malignancies, chronic infections and autoimmune diseases, and lower the cost of CAR-T manufacturing. Also, we believe that it provides the Company with an in-road opportunity to participate in the development of "in-vivo CAR-T manufacturing technology," a highly promising emergent field.
First Quarter 2025 Financial Results
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Revenues: Revenues for the first quarters ended March 31, 2024 and 2025 were $1.1 million and $5,065, respectively. Revenues in both periods were derived exclusively from the sale of licensed molecules to the Company’s licensee, Wugen. The licensed molecules are one of the components used by Wugen in manufacturing their immunotherapeutic products.
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Research and development (R&D) expenses: R&D expenses for the first quarters ended March 31, 2024 and 2025 were $2.1 million and $1.5 million, respectively, a decrease of $644,573, or 30%. R&D expenses were comparatively lower in the reporting period of the first quarter of 2025 primarily due to a decline in manufacturing and material and preclinical expenses, but all expense categories were comparatively lower in the first quarter of 2025 when compared to the first quarter of 2024.
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General and administrative (G&A) expenses: G&A expenses for the first quarters ended March 31, 2024 and 2025 were $1.6 million and $2.2 million, respectively, an increase of $661,505, or 42%. The increase was primarily due to the waiver of performance bonuses of $293,159 in the aggregate in the first quarter of 2024, which were earned by officers of the Company in prior periods. Expenses increased by $273,059 as a result of accretion of a fixed bonus that will be due if the Secured Notes are repaid on the Maturity Date. Subsequent to the end of the first quarter of 2025, $6.6 million of the outstanding principal for these Secured Notes elected to convert to equity and a portion of the Company’s shares in Wugen common stock. Other increases in expenses were related to insurance costs and professional services, such as auditing services as well as tax and accounting advisors.
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Legal expenses: Legal expenses, net represent the legal fees that the Company incurred for an Arbitration. On July 13, 2024, the parties entered into a Settlement Agreement and General Release, and the Arbitration and related Complaint were dismissed on December 24, 2024. In the first quarter of 2024, while the Company was preparing for the hearings which took place in May 2024, the Company incurred $4.4 million of legal fees. In January 2025, the Company received a $2.0 million insurance reimbursement that was paid directly to the law firm involved in representing Dr. Hing C. Wong, the Company’s Founder and Chief Executive Officer, in the Arbitration. The Company is engaged in discussions with the law firms involved with this matter to arrange a reasonable payment plan with respect to those legal fees.
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Net loss: Net loss for the first quarters ended March 31, 2024 and 2025 was $7.5 million and $2.2 million, respectively.
Financial Guidance
As of March 31, 2025, the Company believes that substantial doubt exists regarding its ability to continue as a going concern for at least 12 months from the issuance date of the audited financial statements, without additional funding or financial support. We considered future elements of our financing plan that were probable and likely to be implemented within the next year to determine if financing activities currently underway are sufficient to mitigate the substantial doubt in our going concern analysis. We have had some early success in completing key elements of our multi-step financing plan, however, we cannot be assured that we will continue to have success with all of the elements of our plan.