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HCW Biologics Reports Second Quarter 2024 Financial Results and Business Highlights

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HCW Biologics (NASDAQ: HCWB) reported Q2 2024 financial results and business highlights. Key points include:

1. Settlement of a two-year arbitration, retaining ownership of the TOBI™ platform and molecules.
2. Launch of a multi-faceted financing plan, including an equity offering and out-licensing program.
3. Q2 2024 revenues of $618,854, slightly down from $622,807 in Q2 2023.
4. R&D expenses increased 26% to $2.0 million in Q2 2024.
5. Net loss widened to $15.3 million in Q2 2024, up from $4.3 million in Q2 2023.
6. Legal expenses surged to $10.4 million in Q2 2024 due to the Altor/NantCell matter.
7. The company faces Nasdaq compliance issues and substantial doubt about its ability to continue as a going concern without additional funding.

HCW Biologics (NASDAQ: HCWB) ha riportato i risultati finanziari e i punti salienti aziendali del secondo trimestre del 2024. I punti chiave includono:

1. Risoluzione di una controversia di due anni, mantenendo la proprietà della piattaforma e delle molecole TOBI™.
2. Lancio di un piano di finanziamento multifacetato, che include un'offerta di capitale e un programma di licensing.
3. Ricavi del secondo trimestre 2024 pari a 618.854 dollari, leggermente in calo rispetto a 622.807 dollari nel secondo trimestre 2023.
4. Le spese per ricerca e sviluppo sono aumentate del 26% a 2,0 milioni di dollari nel secondo trimestre 2024.
5. La perdita netta è aumentata a 15,3 milioni di dollari nel secondo trimestre 2024, rispetto a 4,3 milioni di dollari nel secondo trimestre 2023.
6. Le spese legali sono aumentate a 10,4 milioni di dollari nel secondo trimestre 2024 a causa della questione Altor/NantCell.
7. L'azienda affronta problemi di conformità con il Nasdaq e dubbi sostanziali sulla sua capacità di continuare come azienda operativa senza un ulteriore finanziamento.

HCW Biologics (NASDAQ: HCWB) informó sobre los resultados financieros y los puntos destacados del segundo trimestre de 2024. Los puntos clave incluyen:

1. Resolución de un arbitraje de dos años, manteniendo la propiedad de la plataforma y las moléculas TOBI™.
2. Lanzamiento de un plan de financiamiento multifacético, que incluye una oferta de capital y un programa de licencias.
3. Ingresos del segundo trimestre de 2024 de 618,854 dólares, ligeramente por debajo de 622,807 dólares en el segundo trimestre de 2023.
4. Los gastos en investigación y desarrollo aumentaron un 26% a 2.0 millones de dólares en el segundo trimestre de 2024.
5. La pérdida neta se amplió a 15.3 millones de dólares en el segundo trimestre de 2024, en comparación con 4.3 millones de dólares en el segundo trimestre de 2023.
6. Los gastos legales se dispararon a 10.4 millones de dólares en el segundo trimestre de 2024 debido al asunto Altor/NantCell.
7. La compañía enfrenta problemas de cumplimiento con Nasdaq y dudas sustanciales sobre su capacidad para continuar como una empresa en funcionamiento sin financiamiento adicional.

HCW Biologics (NASDAQ: HCWB)는 2024년 2분기 재무 결과 및 비즈니스 하이라이트를 발표했습니다. 주요 사항은 다음과 같습니다:

1. 2년간의 중재를 해결하고 TOBI™ 플랫폼 및 분자의 소유권을 유지하였습니다.
2. 자본 증가 및 라이센스 프로그램을 포함하는 다각적인 자금 조달 계획을 시작했습니다.
3. 2024년 2분기 수익은 618,854달러로, 2023년 2분기의 622,807달러에서 소폭 감소했습니다.
4. 연구개발 비용은 2024년 2분기에 2.0백만 달러로 26% 증가했습니다.
5. 순손실은 2024년 2분기에 15.3백만 달러로 확대되어, 2023년 2분기의 4.3백만 달러에서 증가했습니다.
6. 법률 비용이 Altor/NantCell 문제로 인해 2024년 2분기에 10.4백만 달러로 급증했습니다.
7. 이 회사는 나스닥의 규정 준수 문제와 추가 자금 없이 운영을 지속할 수 있을지에 대한 상당한 의문에 직면하고 있습니다.

HCW Biologics (NASDAQ: HCWB) a annoncé ses résultats financiers et les points saillants de l'entreprise pour le deuxième trimestre de 2024. Les points clés incluent :

1. Règlement d'un arbitrage de deux ans, maintenant la propriété de la plateforme et des molécules TOBI™.
2. Lancement d'un plan de financement multifacette, incluant une offre d'actions et un programme de licence.
3. Revenus du deuxième trimestre 2024 s'élevant à 618 854 dollars, légèrement inférieurs aux 622 807 dollars du deuxième trimestre 2023.
4. Les dépenses de R&D ont augmenté de 26 % pour atteindre 2,0 millions de dollars au deuxième trimestre 2024.
5. La perte nette s'est creusée à 15,3 millions de dollars au deuxième trimestre 2024, contre 4,3 millions de dollars au deuxième trimestre 2023.
6. Les frais juridiques ont explosé à 10,4 millions de dollars au deuxième trimestre 2024 en raison de l'affaire Altor/NantCell.
7. L'entreprise fait face à des problèmes de conformité avec le Nasdaq et à des doutes considérables sur sa capacité à continuer à exister sans financement supplémentaire.

HCW Biologics (NASDAQ: HCWB) hat die finanziellen Ergebnisse und Unternehmenshighlights für das zweite Quartal 2024 veröffentlicht. Die wichtigsten Punkte sind:

1. Beilegung eines zweijährigen Schiedsverfahrens, wobei das Eigentum an der TOBI™-Plattform und den Molekülen erhalten bleibt.
2. Einführung eines vielschichtigen Finanzierungsplans, der ein Aktienangebot und ein Lizenzierungsprogramm umfasst.
3. Die Einnahmen für das zweite Quartal 2024 betrugen 618.854 US-Dollar, leicht unter den 622.807 US-Dollar im zweiten Quartal 2023.
4. Die F&E-Ausgaben stiegen im zweiten Quartal 2024 um 26% auf 2,0 Millionen US-Dollar.
5. Der Nettoverlust weitete sich im zweiten Quartal 2024 auf 15,3 Millionen US-Dollar aus, verglichen mit 4,3 Millionen US-Dollar im zweiten Quartal 2023.
6. Die Rechtskosten stiegen im zweiten Quartal 2024 aufgrund der Altor/NantCell-Angelegenheit auf 10,4 Millionen US-Dollar.
7. Das Unternehmen sieht sich Problemen mit der Nasdaq-Konformität und erheblichen Zweifeln über seine Fähigkeit gegenüber, ohne zusätzliche Finanzierung als fortführendes Unternehmen tätig zu bleiben.

Positive
  • Settlement of arbitration, retaining ownership of TOBI™ platform and molecules
  • Launch of multi-faceted financing plan including equity offering and out-licensing program
  • $1.7 million in revenues for the first six months of 2024, up from $664,690 in the same period of 2023
  • Raised $8.0 million in 2024 through private placement and Secured Notes
Negative
  • Net loss increased to $15.3 million in Q2 2024, up 255% from Q2 2023
  • Legal expenses surged to $10.4 million in Q2 2024, a 629% increase
  • Substantial doubt about ability to continue as a going concern without additional funding
  • Non-compliance with Nasdaq listing requirements for market value, minimum bid price, and market value of publicly held shares
  • Q2 2024 revenues slightly decreased to $618,854 from $622,807 in Q2 2023

Insights

HCW Biologics' Q2 2024 results reveal significant challenges. Despite stable revenues of $618,854, the company's net loss ballooned to $15.3 million, a 255% increase year-over-year. This surge is primarily due to a $9 million spike in legal expenses related to the Altor/NantCell arbitration. The recent settlement agreement, while resolving the arbitration without monetary damages, leaves HCW with substantial unpaid legal fees of $14.8 million.

The company's financial position is precarious, with management expressing substantial doubt about its ability to continue as a going concern. HCW is pursuing a multi-faceted financing plan, including an equity offering and out-licensing non-core assets. However, with Nasdaq compliance issues looming, the company faces significant hurdles in maintaining its listing and securing necessary funding.

HCW Biologics' focus on immunotherapies targeting senescent cells positions it in a promising niche within the aging-related diseases market. The retention of the TOBI™ platform and associated molecules post-settlement is important for the company's future. The planned clinical trial for HCW9302 in autoimmune diseases represents a potential diversification of their pipeline.

However, the company's financial constraints may significantly impede its R&D progress. The 26% increase in R&D expenses to $2 million in Q2 2024 indicates ongoing investment in core programs, but this could be unsustainable given the current financial situation. The ability to advance clinical programs, particularly HCW9302, will likely depend on successful fundraising or partnerships in the near term.

The settlement of the Altor/NantCell arbitration removes a significant legal overhang for HCW Biologics. While avoiding monetary damages is positive, the $14.8 million in unpaid legal fees presents a substantial financial burden. The company's ability to negotiate a manageable payment plan with law firms will be critical for its near-term operations.

The settlement terms allow HCW to retain key assets, including the TOBI™ platform and Wugen license, which are vital for future development and potential partnerships. However, the Nasdaq compliance issues introduce new legal and regulatory challenges. The company's ability to regain compliance within the 180-day window will be important for maintaining investor confidence and access to capital markets.

MIRAMAR, Fla., Aug. 14, 2024 (GLOBE NEWSWIRE) -- 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, today reported financial results and recent business highlights for its second quarter ended June 30, 2024. 

Dr. Hing C. Wong, Founder and CEO of HCW Biologics, stated, “We reached a critical milestone recently that has profound implications for the future of our Company -- we successfully reached a settlement agreement for an arbitration that created an overhang that hampered our progress for nearly two years. We wasted no time in launching our multi-faceted financing plan, including a significant equity offering and a reinvigorated out-licensing program. We have a bright future ahead, as we have emerged with the TOBI™ platform and a strong portfolio of TOBI™-based molecules, as well as several development-stage ideas that we consider “next generation” immunotherapeutics which leverage what we learned from the human data readouts from the initial phases of our clinical trials. We remain committed to developing immunotherapeutic drugs that target the reduction of senescent cells and the proinflammatory factors they secrete. Our focus continues to be on senescence-associated disorders, most typical in age-related diseases, including cancer. We are also excited to bring HCW9302 to the clinic in the very near future to evaluate this drug in the treatment of autoimmune diseases by expanding regulatory T cells.”

Business Highlights

  • On July 13, 2024, the Company entered into a confidential Settlement Agreement and Release (“Settlement Agreement”) to resolve arbitration brought against the Company and Dr. Hing C. Wong, the Company’s Founder and Chief Executive Officer. The Settlement Agreement includes mutual general releases by and among all the parties. There were no monetary payments or damages paid by any party under the Settlement Agreement. See “Financial Guidance.”
  • Going forward, the Company retains ownership and control of the TOBI™ platform and TOBI™-based molecules, with no restrictions under the Settlement Agreement on its ability to use the TOBI™ platform for protein-fusion molecules for non-oncology indications. The Company may pursue the clinical development of treatments for cancer indications based on HCW9302, HCW9206 and HCW9201. Further, HCW Biologics retains ownership of the Wugen license and shares of Wugen common stock transferred to the Company as the upfront licensing fee from Wugen for granting the Wugen license.
  • A new financing plan was launched including an equity offering, which the Company intends to close before the end of 2024. Financing plans also include out-licensing non-core assets, and there are several discussions underway with potential licensing partners. 

Second Quarter 2024 Financial Results

  • Revenues: Revenues for the quarter ended June 30, 2023 and 2024 were $622,807 and $618,854, respectively. Revenues for the six months ended June 30, 2023 and 2024 were $664,690 and $1.7 million, 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 inputs for manufacturing Wugen’s products.
  • Research and development (R&D) expenses: R&D expenses for the quarter ended June 30, 2023 and 2024 were $1.6 million and $2.0 million, respectively, an increase of $412,520, or 26%. R&D expenses for the six months ended June 30, 2023 and 2024 were $3.9 million and $4.2 million, respectively, an increase of $279,991, or 7%. Manufacturing costs increased in three- and six-month periods ended June 30, 2024 because the Company was replenishing its supply of a high-expressing cell line of HCW9101. Preclinical expenses declined in the three- and six-month periods ended June 30, 2024 due to a change in the types of activities being performed in connection with IND-enabling activities to prepare an IND application to obtain permission from the FDA to evaluate HCW9302 in an autoimmune indication. In the three- and six-month periods ended June 30, 2023, preclinical costs were incurred for setup costs for toxicology studies and other IND-enabling studies. In the three- and six-month periods ended June 30, 2024, costs were incurred for supplemental research studies. Clinical trial expenses were incurred in the three- and six-month period ended June 30, 2023 related to two clinical studies to evaluate HCW9218 in chemo-refractory / chemo-resistant solid tumors. Clinical trial expenses declined in the three- and six-month periods ended June 30, 2024 because these trials were fully enrolled in the first quarter of 2024.
  • General and administrative (G&A) expenses: G&A expenses for the quarter ended June 30, 2023 and 2024 were $1.6 million and $1.6 million, respectively, an increase of $6,332, or 0%. The increase was primarily attributable to an increase in fees for auditing and tax advisory services, offset by a reduction in salaries and benefits arising from the Company’s cost-cutting measures. G&A expenses for the six months ended June 30, 2023 and 2024 were $3.6 million and $3.2 million, a decrease of $436,454, or 12%. The decrease was a result of cost-cutting measures and a decrease in legal fees incurred in procuring patents and insurance-related costs, partially offset by an increase in financing costs.
  • Legal Expenses: Legal expenses for the quarter ended June 30, 2023 and 2024 were $1.4 million and $10.4 million, respectively, an increase of $9.0 million, or 629%. Legal expenses for the six months ended June 30, 2023 and 2024 were $2.5 million and $14.8 million, an increase of $12.3 million, or 484%. The increase in legal expenses is related to the Altor/NantCell matter. See further discussion of the Altor/NantCell arbitration in “Financial Guidance.”
  • Net loss: Net loss for the quarter ended June 30, 2023 and 2024 was $4.3 million and $15.3 million, respectively, an increase of $11.0 million, or 255%. Net loss for the six months ended June 30, 2023 and 2024 was $9.4 million and $22.7 million, respectively, an increase of $13.4 million, or 143%.

Financial Guidance

The Company has raised $8.0 million to date in 2024, through a $2.5 million private placement of common stock to officers and directors and $5.5 million issuance of Secured Notes secured by the Company’s Wugen shares. The Company is authorized to raise up to $10.0 million in Secured Notes and intends to have the Secured Notes offering fully subscribed.

As of June 30, 2024, 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 condensed interim financial statements, without additional funding or financial support. After considering the elements of the Company’s financing plan that were probable to occur within a year of the date of issuance, the Company concluded that substantial doubt was not alleviated in its going concern analysis.

As reported in the Company’s Form 8-K filed on July 18, 2024, as of July 13, 2024, the Company and Dr. Hing C. Wong, the Company’s Founder and Chief Executive Officer, entered into the Settlement Agreement, with Altor BioScience, LLC (“Altor”), NantCell, Inc. (“NantCell”), and ImmunityBio, Inc. (the parent of Altor and NantCell, together with Altor and NantCell, “ImmunityBio”), to resolve the previously disclosed arbitration before JAMS brought by Altor and NantCell (the “Arbitration”) as well as a complaint Altor filed against the Company in the Chancery Court of the State of Delaware for the contribution of legal fees and expenses advanced to Dr. Wong (“Complaint”). The parties entered into the Settlement Agreement to avoid the costs, disruption and distraction of further litigation. Under the terms of the Settlement Agreement, no party will make monetary payments to any other party or person and each party will bear its own expenses. The Company is completing procedures required to be in compliance with the terms of the Settlement Agreement. The Settlement Agreement provides that, upon completion of these procedures, the parties will stipulate that the Arbitration and Complaint should be dismissed. The Company retains rights to develop immunotherapeutic treatments based on TOBI™-based molecules as well as the TOBI™ platform, in addition to the Wugen license and Wugen equity interest. The Company reported a balance of $10.0 million for legal fees incurred but not yet paid that were included within Accounts payable and an accrual of $4.8 million for accrued legal fees within Accrued liabilities and other current liabilities in the accompany condensed balance sheet as of June 30, 2024. In order not to overwhelm the Company’s resources, a reasonable payment plan will be required. The Company is engaged in discussions with the law firms involved with this matter.

As reported on the Company’s Form 8-K filed on August 12, 2024, the Company received written notices from the Listing Qualifications Staff (“Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it is not in compliance with Nasdaq Listing Rules. The notifications from Nasdaq do not impact the listing of the Company’s common stock at this time. The Company received a notice that it was not in compliance with Nasdaq Listing Rules for the $50.0 million market value listed securities requirement as of June 17, 2024; the minimum bid price as of August 6, 2024; and the $15.0 million market value of publicly held shares requirement as of August 8, 2024. The Company has 180 days from the respective date of notice to address each deficiency. While the Company is exercising diligent efforts to maintain the listing of its common stock on Nasdaq, there can be no assurance that the Company will be able to regain or maintain compliance with the applicable continued listing standards set forth in the Nasdaq Listing Rules.

About HCW Biologics:

HCW Biologics is a clinical-stage biopharmaceutical company focused on discovering and developing novel immunotherapies to lengthen healthspan by disrupting the link between chronic, low-grade inflammation, and age-related diseases, such as cancer, cardiovascular diseases, diabetes, neurodegenerative diseases, autoimmune diseases, as well as other conditions such as long-haul COVID-19. The Company has combined a deep understanding of disease-related immunology with its expertise in advanced protein engineering to develop the TOBI™ (Tissue factOr-Based fusIon) discovery platform. The Company uses its TOBI™ discovery platform to generate designer, novel multi-functional fusion molecules with immunotherapeutic properties. The invention of HCW Biologics’ lead molecules, HCW9218, HCW9302, HCW9206 and HCW9201, was made via the proprietary TOBI™ discovery platform. The University of Pittsburgh Medical Center has agreed to include HCW9218 in an Investigator-sponsored Phase 2 clinical trial to evaluate HCW9218 in patients with metastatic, advanced stage ovarian cancer in combination with neoadjuvant chemotherapy (NCT05145569).

Forward Looking Statements:

Statements in this press release contain “forward-looking statements” that are subject to substantial risks and uncertainties. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements contained in this press release may be identified by the use of words such as “anticipate,” “expect,” “believe,” “will,” “may,” “should,” “estimate,” “project,” “outlook,” “forecast” or other similar words and include, the Company’s ability to develop new immunotherapeutic treatments for non-oncology or oncology indications; timing of initiation of studies for age-related diseases; the Company’s ability to continue as a going concern; the Company’s cash runway; the Company’s expectations regarding future purchases of licensed molecules by Wugen; the Company’s future capital-raising plans and ability to continue with clinical development efforts until they are achieved, if at all; and Company’s ability to pay legal fees incurred in connection with the Altor/NantCell arbitration. Forward-looking statements are based on the Company’s current expectations and are subject to inherent uncertainties, risks and assumptions that are difficult to predict. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Factors that could cause actual results to differ include, but are not limited to, the risks and uncertainties that are described in the section titled “Risk Factors” in the annual report on Form 10-K/A filed with the United States Securities and Exchange Commission (the “SEC”) on May 15, 2024, and in other filings filed from time to time with the SEC. Forward-looking statements contained in this press release are made as of this date, and the Company undertakes no duty to update such information except as required under applicable law.

Company Contact:
Rebecca Byam
CFO
HCW Biologics Inc.
rebeccabyam@hcwbiologics.com

HCW Biologics Inc.
Unaudited Statements of Operations
(Unaudited)
 Three Months Ended
June 30,
 Six Months Ended
June 30,
  2023   2024   2023   2024 
Revenues:   
Revenues$622,807  $618,854  $664,690  $1,745,566 
Cost of revenues (502,402)  (438,443)  (531,752)  (950,408)
Total revenues 120,405   180,411   132,938   795,158 
Operating expenses:       
Research and development 1,616,666   2,029,186   3,872,479   4,152,470 
General and administrative 1,587,861   1,594,193   3,596,739   3,160,285 
Legal expenses 1,426,399   10,393,042   2,534,811   14,812,076 
Nonoperating loss    1,300,000      1,300,000 
Total operating expenses 4,630,926   15,316,421   10,004,029   23,424,831 
Loss from operations (4,510,521)  (15,136,010)  (9,871,091)  (22,629,673)
Interest expense (95,514)  (159,666)  (188,951)  (159,666)
Other (expense) income, net 301,615   15,485   684,936   41,086 
Net loss$(4,304,420) $(15,280,191) $(9,375,106) $(22,748,253)
                


HCW Biologics Inc.
Condensed Balance Sheets
 December 31, June 30,
  2023   2024 
   Unaudited
ASSETS   
Current assets:   
Cash and cash equivalents$95,101  $1,161,314 
Accounts receivable, net 1,535,757   654,973 
Prepaid expenses 1,042,413   404,918 
Other current assets 230,916   164,607 
Total current assets 6,404,187   2,385,812 
Investments 1,599,751   1,599,751 
Property, plant and equipment, net 20,453,184   22,806,052 
Other assets 56,538   28,476 
Total assets$28,513,660  $26,820,091 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
   
Liabilities   
Current liabilities:   
Accounts payable$6,167,223  $16,877,463 
Accrued liabilities and other current liabilities 2,580,402   6,341,676 
Total current liabilities 8,747,625   23,219,139 
Debt, net 6,304,318   9,900,721 
Total liabilities 15,051,943   33,119,860 
Commitments and contingencies (Note 8)   
Stockholders’ equity (deficit):   
Common stock:   
Common, $0.0001 par value; 250,000,000 shares authorized
   and 36,025,104 shares issued at December 31, 2023; 250,000,000 shares
   authorized and 37,823,394 shares issued at June 30, 2024
 3,603   3,782 
Additional paid-in capital 83,990,437   86,977,024 
Accumulated deficit (70,532,323)  (93,280,575)
Total stockholders’ equity (deficit) 13,461,717   (6,299,769)
Total liabilities and stockholders’ equity (deficit)$28,513,660  $26,820,091 

FAQ

What were HCW Biologics' (HCWB) Q2 2024 financial results?

HCW Biologics reported Q2 2024 revenues of $618,854, R&D expenses of $2.0 million, and a net loss of $15.3 million. Legal expenses were $10.4 million due to the Altor/NantCell matter.

How did HCW Biologics' (HCWB) Q2 2024 performance compare to Q2 2023?

Compared to Q2 2023, HCW Biologics' Q2 2024 revenues slightly decreased, R&D expenses increased by 26%, and net loss widened by 255%. Legal expenses surged by 629%.

What major business development did HCW Biologics (HCWB) report in July 2024?

On July 13, 2024, HCW Biologics entered into a Settlement Agreement to resolve a two-year arbitration, retaining ownership of the TOBI™ platform and molecules without monetary payments.

What financial challenges does HCW Biologics (HCWB) face as of Q2 2024?

HCW Biologics faces substantial doubt about its ability to continue as a going concern without additional funding. The company also received notices of non-compliance with Nasdaq listing requirements.

HCW Biologics Inc.

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Biotechnology
Pharmaceutical Preparations
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United States of America
MIRAMAR