On May 9, 2023 HCW Biologics Inc. (the "Company" or "HCW Biologics") (NASDAQ: HCWB), a clinical-stage biopharmaceutical company focused on discovering and developing novel immunotherapies to lengthen healthspan by disrupting the link between inflammation and age-related diseases, reported financial results and recent business highlights for its first quarter ended March 31, 2023 (Press release, HCW Biologics, MAY 9, 2023, View Source [SID1234631245]).

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"We measure our progress over the past year by the achievement of significant milestones: Initiating multiple clinical trials. Realizing the dream of establishing our own manufacturing facility. Publishing ground-breaking scientific papers," stated Dr. Hing C. Wong, Founder and CEO of HCW Biologics.

Dr. Wong continued, "Our primary premise is our belief that rejuvenating the immune system creates a systemic change that reduces senescent cells and the proinflammatory factors they secrete. We have seen that HCW9218 can do both in relevant animal models. As we progress in our investigation of the underlying mechanism of HCW9218, we are also gaining a deeper understanding of how this drug works against solid tumors and how it augments anti-tumor activities of immune-checkpoint inhibitors."

He added, "Our focus is to develop a treatment based on HCW9218 for some of the most difficult-to-treat cancers. But through our research, we believe we are seeing signs that point to its potential to treat other aging-associated diseases beyond cancer by reducing senescent cells. We believe this opens the door for using an immunotherapeutic approach to enhance healthspan."

Business Highlights:

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On April 21, 2023, the Company entered into a $26.25 million development line of credit to refinance an existing $6.5 million mortgage and provide financing for the buildout of the Company’s new headquarters and manufacturing facility. The five-year loan bears a fixed interest of 7.0% per annum with interest only payments for the full term.

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On March 26, 2023, the Company published a pivotal scientific paper in Aging Cell entitled, "Immunotherapeutic Approach to Reduce Senescent Cells and Alleviate Senescence-Associated Secretary Phenotype in Mice," with Dr. Hing C. Wong as lead and corresponding author.

First Quarter 2023 Financial Results:

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Revenues: Revenues for the first quarter ended March 31, 2022 and 2023 were $3.1 million and $41,883, respectively. In the first quarter of 2022, deferred revenues related to historic transactions were recognized as revenue upon meeting all requirements for revenue recognition. Revenues were derived exclusively from the sale of licensed molecules to the Company’s licensee, Wugen.

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Research and development (R&D) expenses: R&D expenses for the first quarter ended March 31, 2022 and 2023 were $1.8 million and $2.3 million, respectively. The $466,135 increase, or 26%, resulted primarily from increased preclinical and clinical trial expenses.

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General and administrative (G&A) expenses: G&A expenses for the first quarter ended March 31, 2022 and 2023 were $1.9 million and $3.1 million, respectively. The $1.2 million increase, or 66%, was primarily attributable to increases in professional fees, which includes legal fees associated with legal proceedings brought against the Company by Altor BioScience, LLC and NantCell, Inc., or Altor/NantCell.

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Net loss: Net loss for the first quarter ended March 31, 2022 and 2023 was $2.1 million and $5.1 million, respectively.

Financial Guidance

As disclosed above, the Company entered into a development line of credit agreement for the buildout of the Company’s new headquarters and manufacturing facility. Funds formerly earmarked for this purpose will be redeployed for clinical development. The Company estimates that the cash and cash equivalents, short-term investments and the proceeds of the development line of credit extends the Company’s cash runway into 2025.

On April 27, 2023, in connection with the Altor/NantCell matter, the U.S. District Court for the Southern District of Florida (the "Court") approved the parties’ stipulation and ordered the parties to arbitration. On May 1, 2023, Altor/NantCell filed a demand against the Company before JAMS. On May 3, 2023, Altor/NantCell dismissed the federal court action without prejudice and the Court ordered the case dismissed without prejudice and closed the case. Altor/NantCell’s proceeding against the Company will now proceed in arbitration before JAMS. Although adverse decisions (or settlements) may occur in arbitration, it is not possible to reasonably estimate the possible loss or range of loss, if any, associated therewith at this time. As such, no accrual for these matters has been recorded within the Company’s financial statements. In the year ahead, the Company expect to continue to incur legal expenses on its own behalf in connection with the legal proceedings brought against it by Altor/NantCell. However, legal expenses incurred by Dr. Wong in connection with the arbitration against him that was initiated by Altor/NantCell, will be covered through advancement of expenses from Altor/NantCell.