OCUGEN: Discussion and analysis by management of the financial situation and operating results. (form 10-Q)

You should read the following discussion and analysis of our financial condition
and results of operations in conjunction with the financial statements and the
notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with
our audited financial statements for the year ended December 31, 2020, included
in our 2020 Annual Report. Some of the information contained in this discussion
and analysis, including information with respect to our plans and strategy for
our business and related financing, include forward-looking statements that
involve risks, uncertainties, and assumptions. These statements are based on our
beliefs and expectations about future outcomes and are subject to risks and
uncertainties that could cause our actual results to differ materially from
anticipated results. We undertake no obligation to publicly update these
forward-looking statements, whether as a result of new information, future
events, or otherwise. You should read the "Risk Factors" section included in our
2020 Annual Report and the "Risk Factors" and "Disclosure Regarding
Forward-Looking Statements" sections of this Quarterly Report on Form 10-Q for a
discussion of important factors that could cause actual results to differ
materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis.
Overview
We are a biopharmaceutical company focused on developing gene therapies to cure
blindness diseases and developing a vaccine to save lives from COVID-19.
Our cutting-edge technology pipeline includes:
•COVID-19 Vaccine - COVAXIN is a whole-virion inactivated COVID-19 vaccine
candidate being developed to prevent COVID-19 infection in humans. We are
co-developing COVAXIN with Bharat Biotech for the U.S. and Canadian markets.
•Modifier Gene Therapy Platform - Based on NHRs, we believe our gene therapy
platform has the potential to address many retinal diseases, including RP, LCA,
and dry AMD.
•Novel Biologic Therapy for Retinal Diseases - We are developing OCU200, a novel
biologic product candidate, to treat DME, DR, and wet AMD.
COVID-19 Vaccine
In February 2021, we entered into the Covaxin Agreement with Bharat Biotech,
pursuant to which we obtained an exclusive right and license under certain of
Bharat Biotech's intellectual property rights, with the right to grant
sublicenses to develop, manufacture, and commercialize COVAXIN for the
prevention of COVID-19 in humans in the United States, its territories, and
possessions. The Covaxin Agreement was subsequently amended in June 2021 by
which we and Bharat Biotech agreed to expand our rights to develop, manufacture,
and commercialize COVAXIN to include Canada in addition to the United States,
its territories, and possessions.
COVAXIN is a whole-virion inactivated COVID-19 vaccine candidate and is
formulated with the inactivated SARS-CoV-2 virus, an antigen, and an adjuvant.
COVAXIN requires a two-dose vaccination regimen given 28 days apart and is
stored in standard vaccine storage conditions (2-8°C). COVAXIN has been granted
approval for emergency use in India and over 45.0 million doses globally have
been administered to date.
In July 2021, we announced that COVAXIN demonstrated an overall vaccine efficacy
against COVID-19 disease of 77.8%, with efficacy against severe COVID-19 disease
of 93.4%, and efficacy against asymptomatic COVID-19 disease of 63.6% in the
Phase 3 clinical trial conducted by Bharat Biotech in India. The aforementioned
efficacy results represent point estimates of vaccine efficacy with a 95%
confidence interval of 65.2% to 86.4% against COVID-19 disease, 57.1% to 99.8%
against severe COVID-19 disease, and 29.0% to 82.4% against asymptomatic
COVID-19 disease. The Phase 3 clinical trial enrolled 25,798 participants over
the age of 18 in India, including 10.7% of participants over the age of 60 and
27.5% of participants with at least one pre-existing condition. Adverse events
in the COVAXIN and control arms of the Phase 3 clinical trial were observed in
12.4% of subjects, with less than 0.5% of subjects experiencing serious adverse
side effects. The majority of the symptomatic cases identified in aggregate in
the COVAXIN and controls arms in the Phase 3 clinical trial were COVID-19
variants, the majority of which were identified to be the Delta variant,
B.1.617.2. Subjects vaccinated with COVAXIN in the Phase 3 clinical trial showed
protection against the emerging Delta variant, B.1.617.2, showing a vaccine
efficacy of 65.2%, which represents a point estimate of vaccine efficacy with a
95% confidence interval of 33.1% to 83.0%. Additionally, in in-vitro studies
conducted by the ICMR - National Institute of Virology, COVAXIN demonstrated
potential effectiveness against the Zeta variant, B.1.1.28.2, which contains the
E484K mutation found in New York, as well as potential effectiveness against the
Alpha variant, B.1.1.7, and the Beta variant, B.1.351.
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We are currently evaluating the clinical and regulatory pathway to market for
COVAXIN in the United States. In June 2021, the FDA provided feedback to us
regarding the data and information contained in a "Master File" that was
previously submitted to the FDA and recommended that we pursue a BLA submission
instead of an EUA application for COVAXIN in the United States. As part of the
feedback provided by the FDA regarding the "Master File", the FDA also requested
additional information and data. We are currently in discussions with the FDA
regarding the appropriate regulatory pathway for COVAXIN in the United States.
We are additionally in discussions with the FDA regarding the data requirements
for COVAXIN under a BLA submission and anticipate that data from an additional
clinical trial will be required to support a BLA submission.
We are pursuing authorization for COVAXIN in Canada and have had discussions
with Health Canada regarding the regulatory pathway for COVAXIN under the
Interim Order. In July 2021, we announced that we had completed our rolling
submission to Health Canada for COVAXIN. The rolling submission process, which
permits companies to submit safety and efficacy data and information as they
become available, was recommended and accepted under the Interim Order and
transitioned to a New Drug Submission for COVID-19. The submission was conducted
through our Canadian affiliate, Vaccigen.
We are evaluating our commercialization strategy for COVAXIN in the United
States and Canada, if authorized or approved in either jurisdiction. In June
2021, we selected Jubilant HollisterStier as our manufacturing partner for
COVAXIN to prepare for the potential commercial manufacturing for the Ocugen
Covaxin Territory. We expect to enter into a master services agreement with
Jubilant HollisterStier for the manufacture of COVAXIN and the technology
transfer process to Jubilant HollisterStier has been initiated.
Modifier Gene Therapy Platform
We are developing a breakthrough modifier gene therapy platform to generate
therapies designed to fulfill unmet medical needs in the area of retinal
diseases, including IRDs and dry AMD. Our modifier gene therapy platform is
based on NHRs, which have the potential to restore homeostasis, the basic
biological processes in the retina. Unlike single-gene replacement therapies,
which only target one genetic mutation, we believe that our gene therapy
platform, through its use of NHRs, represents a novel approach in that it may
address multiple retinal diseases with one product. IRDs such as RP, a group of
rare genetic disorders that involve a breakdown and loss of cells in the retina
and can lead to visual impairment and blindness, affect over 2.0 million people
worldwide. Over 150 gene mutations have been associated with RP and this number
represents only 60% of the RP population. The remaining 40% of RP patients
cannot be genetically diagnosed, making it difficult to develop individual
treatments.
We believe that OCU400, our first product candidate being developed with our
modifier gene therapy platform, has the potential to be broadly effective in
restoring retinal integrity and function across a range of genetically diverse
IRDs, including RP and LCA. For example, we believe OCU400 has the potential to
eliminate the need for developing more than 150 individual products and provide
one treatment option for all RP patients. OCU400 has received four ODDs from the
FDA for the treatment of certain disease genotypes: NR2E3, CEP290, RHO, and
PDE6ß mutation-associated inherited retinal degenerations. We are planning to
initiate two parallel Phase 1/2a clinical trials for OCU400 in the United States
later this year. OCU400 additionally has received OMPD from the EC, based on the
recommendation of the EMA, for RP and LCA, which we believe further supports the
potential broad spectrum application of OCU400 to treat many IRDs. We are
currently evaluating options to commence OCU400 clinical trials in Europe in
2022. Our second gene therapy candidate, OCU410, is being developed to utilize
the nuclear receptor genes RORA for the treatment of dry AMD. This candidate is
currently in preclinical development. We are planning to initiate a Phase 1/2a
clinical trial for OCU410 in 2022.
Novel Biologic Therapy for Retinal Diseases
We are also conducting preclinical development for our biologic product
candidate, OCU200. OCU200 is a novel fusion protein designed to treat DME, DR,
and wet AMD. We had a pre-IND meeting with the FDA in November 2020 and received
guidance on IND-enabling preclinical studies to support the Phase 1/2a study. We
have completed the technology transfer of manufacturing processes to our CDMO
for the manufacture of OCU200. We expect to initiate a Phase 1/2a clinical trial
in 2022. Our CDMO will manufacture the clinical supplies for the Phase 1/2a
clinical trial.
Product Candidate for the Treatment of Ocular Graft-Versus-Host Disease
We were developing OCU300, a small molecule therapeutic for the treatment of
symptoms associated with ocular graft-versus-host disease. The Phase 3 clinical
trial for OCU300 was discontinued in 2020 based on results of a pre-planned
interim sample size analysis conducted by an independent Data Monitoring
Committee, which indicated the trial was unlikely to meet its co-primary
endpoints upon completion.
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Impact of COVID-19 on our Business
The COVID-19 pandemic is continually evolving and we are closely monitoring the
situation. Impacts from the COVID-19 pandemic remain highly uncertain and
subject to change and, as such, we cannot predict the specific duration or
impact that the COVID-19 pandemic may have on our operations including our
preclinical activities, future clinical trials, and potential commercialization.
The extent to which the COVID-19 pandemic may impact our operations is dependent
on future developments, including but not limited to: (i) the duration of the
spread of the SARS-CoV-2 virus, including the spread of variants, (ii) the
future actions taken by governmental authorities and regulators with respect to
the COVID-19 pandemic, and (iii) the impact on our partners, collaborators, and
suppliers. We will continue to monitor the situation closely as these effects
could have a material impact on our operations.
Financial Operations Overview
We have no products approved for commercial sale and have not generated
significant revenue to date. We have never been profitable and have incurred net
losses in each year since inception. We incurred net losses of approximately
$33.0 million and $7.6 million for the six months ended June 30, 2021 and 2020,
respectively. As of June 30, 2021, we had an accumulated deficit of
$106.3 million and a cash, cash equivalents, and restricted cash balance of
$115.8 million.
Research and development expense
Research and development costs are expensed as incurred. These costs consist of
internal and external expenses, as well as depreciation on assets used within
our research and development activities. Internal expenses include the cost of
salaries, benefits, severance, and other related costs, including stock-based
compensation, for personnel serving in our research and development functions,
as well as allocated rent and utilities expenses. External expenses include
development, clinical trials, patent costs, and regulatory compliance costs
incurred with research organizations, contract manufacturers, and other
third-party vendors. License fees paid to acquire access to proprietary
technology are expensed to research and development unless it is determined that
the technology is expected to have an alternative future use. All patent-related
costs incurred in connection with filing and prosecuting patent applications are
expensed as incurred to research and development expense due to the uncertainty
about the recovery of the expenditure. We record costs for certain development
activities, such as preclinical studies and clinical trials, based on our
evaluation of the progress to completion of specific tasks. Payments for these
activities are based on the terms of the individual arrangements, which may
differ from the pattern of costs incurred, and are reflected in the condensed
consolidated financial statements as prepaid or accrued research and development
expense, as applicable. Our recording of costs for certain development
activities requires us to use estimates. We believe our estimates and
assumptions are reasonable under the current conditions; however, actual results
may differ from these estimates.
Research and development expenses account for a significant portion of our
operating expenses. We plan to incur research and development expenses for the
foreseeable future as we expect to continue the development of our product
candidates. We anticipate that our research and development expenses will be
higher in 2021 and subsequent periods as compared to prior periods as we
evaluate the regulatory and commercialization path for COVAXIN in the United
States and Canada as well as conduct preclinical and clinical activities with
respect to our other product candidates.
Our research and development expenses are not currently tracked on a
program-by-program basis for indirect and overhead costs. We use our personnel
and infrastructure resources across multiple research and development programs
directed toward identifying, developing, and commercializing product candidates.
At this time, due to the inherently unpredictable nature of preclinical and
clinical development as well as regulatory approval and commercialization, we
are unable to estimate with any certainty the costs we will incur and the
timelines we will require in our continued development and commercialization
efforts. As a result of these uncertainties, successful development and
completion of clinical trials as well as regulatory approval and
commercialization are uncertain and may not result in approved products.
Completion dates and completion costs can vary significantly for each product
candidate and are difficult to predict. We will continue to make determinations
as to which product candidates to pursue and how much funding to direct to each
product candidate on an ongoing basis in response to our ability to enter into
collaborations with respect to each product candidate, the scientific and
clinical success of each product candidate as well as ongoing assessments as to
the commercial potential of each product candidate.
General and administrative expense
General and administrative expense consists primarily of personnel expenses,
including salaries, benefits, severance, insurance, and stock-based compensation
expense, for employees in executive, accounting, and other administrative
functions. General
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and administrative expense also includes corporate facility costs, including
allocated rent and utilities, insurance premiums, legal fees related to
corporate matters, and fees for auditing, accounting, and other consulting
services.
We anticipate that our general and administrative expenses will be higher in
2021 as compared to prior periods as a result of higher corporate infrastructure
costs including, but not limited to, accounting, legal, human resources,
consulting, and investor relations fees. Additionally, if and when we believe a
regulatory approval of a product candidate appears likely, we anticipate an
increase in payroll and expense as a result of our preparation for commercial
operations, especially as it relates to the sales and marketing of our product
candidates.
Severance-related expense
In June 2020, we communicated notice to five employees of the termination of
their employment as a result of the discontinuation of a product candidate. This
reduction represented one-third of our workforce at the time of communication.
All terminations were "without cause" and each employee received termination
benefits upon departure. The termination dates varied for each employee and
ranged from June 30, 2020 to December 31, 2020. As a result of the workforce
reduction, we expect to pay severance benefits of $0.2 million throughout the
remainder of 2021. We made severance payments of $0.2 million and $0.5 million
during the three and six months ended June 30, 2021, respectively. We made a de
minimis amount of severance payments during the three and six months ended
June 30, 2020.
Critical Accounting Policies and Significant Judgments and Estimates
The preparation of financial statements in conformity with GAAP requires us to
make judgments, estimates, and assumptions in the preparation of our condensed
consolidated financial statements. Actual results could differ from those
estimates. There were no material changes to our critical accounting policies
and estimates as reported in our 2020 Annual Report.
Results of Operations
Comparison of the Three Months Ended June 30, 2021 and 2020
The following table summarizes the results of our operations for the three
months ended June 30, 2021 and 2020 (in thousands):
                                      Three months ended June 30,
                                          2021                   2020         Change
Revenues
Collaboration revenue          $             -                $     43      $     (43)
Total revenues                               -                      43            (43)
Operating expenses
Research and development                18,853                   1,630         17,223

General and administrative               6,757                   1,779          4,978
Total operating expenses                25,610                   3,409         22,201
Loss from operations                   (25,610)                 (3,366)       (22,244)
Other income (expense)
Interest income                             10                       -             10
Interest expense                           (20)                   (248)           228
Other income (expense)                    (332)                      -           (332)
Total other income (expense)              (342)                   (248)           (94)
Net loss                       $       (25,952)               $ (3,614)     $ (22,338)

Research and development costs Research and development costs increase by $ 17.2 million for the three months ended June 30, 2021 compared to the three months ended June 30, 2020. The increase is mainly due to the $ 15.0 million upfront payment to Bharat Biotech as part of the amendment to the Covaxin agreement to add rights to the Canadian market by June 2021 as well as increases in $ 0.8 million in the preclinical activities of the OCU400, $ 0.6 million in OCU200 preclinical activities,
$ 0.4 million in

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COVAXIN development and regulatory activities, $0.5 million in stock-based
compensation expense, and $0.4 million in employee-related expenses offset by a
$0.5 million decrease for the discontinuation of OCU300 clinical trial
activities in 2020.
General and administrative expense
General and administrative expense increased by $5.0 million for the three
months ended June 30, 2021 compared to the three months ended June 30, 2020. The
increase was primarily due to $2.0 million of expenses for stockholder meetings
and proxy solicitation as well as increases of $1.5 million in stock-based
compensation expense, $1.0 million in professional fees, and $0.4 million in
employee-related expenses.
Interest expense
Interest expense decreased by $0.2 million for the three months ended June 30,
2021 compared to the three months ended June 30, 2020. Interest expense for the
three months ended June 30, 2021 primarily includes debt coupon interest and
amortization of debt issuance costs. Interest expense for the three months ended
June 30, 2020 primarily related to the accretion of the debt discount on the
Warrant Exchange Promissory Notes.
Other income (expense)
Other income (expense) increased by $0.3 million for the three months ended June
30, 2021 compared to the three months ended June 30, 2020. The increase was
primarily due to $0.8 million related to a loss on the write-off of the
Promissory Note deemed uncollectible, partially offset by a gain on loan
extinguishment of $0.4 million for PPP Note forgiveness obtained in May 2021.
Comparison of the Six Months Ended June 30, 2021 and 2020
The following table summarizes the results of our operations for the six months
ended June 30, 2021 and 2020 (in thousands):
                                     Six months ended June 30,
                                         2021                 2020         Change
Revenues
Collaboration revenue          $            -              $     43      $     (43)
Total revenues                              -                    43            (43)
Operating expenses
Research and development               21,725                 3,282         18,443

General and administrative             10,942                 4,056          6,886
Total operating expenses               32,667                 7,338         25,329
Loss from operations                  (32,667)               (7,295)       (25,372)
Other income (expense)
Interest income                            10                     -             10
Interest expense                          (40)                 (263)           223
Other income (expense)                   (332)                    -           (332)
Total other income (expense)             (362)                 (263)           (99)
Net loss                       $      (33,029)             $ (7,558)     $ (25,471)

Research and development costs Research and development costs increase by $ 18.4 million for the six months ended June 30, 2021 compared to the closed semester June 30, 2020. The increase is mainly due to $ 15.0 million upfront payment to Bharat Biotech as part of the amendment to the Covaxin agreement to add rights to the Canadian market by June 2021 as well as increases in $ 1.5 million in the preclinical activities of the OCU400, $ 0.9 million in OCU200 preclinical activities,
$ 0.8 million in the development and regulatory activities of COVAXIN, $ 0.6 million in stock-based compensation expense, and $ 0.3 million personnel costs, partially offset by a $ 1.0 million decrease for the cessation of clinical trial activities of OCU300 in 2020.

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General and administrative expense
General and administrative expense increased by $6.9 million for the six months
ended June 30, 2021 compared to the six months ended June 30, 2020. The increase
was primarily due to an increase of $3.2 million in expenses for stockholder
meetings and proxy solicitation, $2.0 million in stock-based compensation
expense, $0.5 million in employee-related expenses, and $0.8 million in
professional fees.
Interest expense
Interest expense decreased by $0.2 million for the six months ended June 30,
2021 compared to the six months ended June 30, 2020. Interest expense for the
six months ended June 30, 2021 primarily includes debt coupon interest and
amortization of debt issuance costs. Interest expense for the six months ended
June 30, 2020 primarily related to the accretion of the debt discount on the
Warrant Exchange Promissory Notes.
Other income (expense)
Other income (expense) increased by $0.3 million for the six months ended June
30, 2021 compared to the six months ended June 30, 2020. The increase was
primarily due to $0.8 million related to a loss on the write-off of the
Promissory Note deemed uncollectible, partially offset by a gain on loan
extinguishment of $0.4 million for PPP Note forgiveness obtained in May 2021.
Liquidity and Capital Resources
As of June 30, 2021, we had $115.8 million in cash, cash equivalents, and
restricted cash. We have not generated significant revenue to date and have
primarily funded our operations to date through the sale of common stock,
warrants to purchase common stock, the issuance of convertible notes, debt, and
grant proceeds. Specifically, since our inception and through June 30, 2021, we
have raised an aggregate of $218.7 million to fund our operations, of which
$206.1 million was from gross proceeds from the sale of our common stock and
warrants, $10.3 million was from the issuance of convertible notes, $2.1 million
was from debt, and $0.2 million was from grant proceeds.
In February 2021, we issued and sold 3.0 million shares of our common stock at
an offering price of $7.65 per share in the February 2021 Registered Direct
Offering pursuant to a securities purchase agreement entered into with certain
institutional investors. We received net proceeds of $21.2 million. In April
2021, we issued and sold 10.0 million shares of our common stock at an offering
price of $10.00 per share in the April 2021 Registered Direct Offering pursuant
to a securities purchase agreement with certain institutional investors. We
received net proceeds of $93.4 million. For additional information about the
February 2021 Registered Direct Offering and the April 2021 Registered Direct
Offering, see Note 9 in the notes to the condensed consolidated financial
statements included in this report.
Additionally, during the six months ended June 30, 2021, we sold 1.0 million
shares of our common stock under the August 2020 ATM and received net proceeds
of $4.8 million. The offering was made pursuant to our effective "shelf"
registration statement on Form S-3 filed with the SEC on March 27, 2020, the
base prospectus contained therein dated May 5, 2020, and the prospectus
supplement related to the offering dated August 17, 2020.
Since our inception, we have devoted substantial resources to research and
development and have incurred significant net losses and may continue to incur
net losses in the future. We incurred net losses of approximately $33.0 million
and $7.6 million for the six months ended June 30, 2021 and 2020, respectively.
As of June 30, 2021, we had an accumulated deficit of $106.3 million.
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Table of Contents The following table presents a summary of our cash flows for the six months ended.
June 30, 2021 and 2020 (in thousands):

                                                                     Six months ended June 30,
                                                                     2021                   2020
Net cash used in operating activities                          $      (27,084)         $    (7,773)
Net cash used in investing activities                                  (1,274)                 (34)
Net cash provided by financing activities                             119,961               15,331

Net increase in cash, cash equivalents and restricted cash $ 91,603 $ 7,524

Operating activities
Cash used in operating activities was $27.1 million for the six months ended
June 30, 2021 compared to $7.8 million for the six months ended June 30, 2020.
The increase in cash used in operating activities was primarily driven by the
$15.0 million up-front payment to Bharat Biotech in connection with the
amendment to the Covaxin Agreement to add rights to the Canadian market in June
2021, an increase in our research and development expenses for product
candidates, including COVAXIN, and expenses for stockholder meetings and proxy
solicitation during the six months ended June 30, 2021 compared to the six
months ended June 30, 2020.
Investing activities
Cash used in investing activities was $1.3 million for the six months ended June
30, 2021 compared to $34.5 thousand for the six months ended June 30, 2020. The
increase in cash used in investing activities was primarily driven by the
receipt of the Promissory Note of $0.8 million in April 2021 and a $0.5 million
increase in purchases of property and equipment during the six months ended June
30, 2021 compared to the six months ended June 30, 2020.
Financing activities
Cash provided by financing activities was $120.0 million for the six months
ended June 30, 2021 compared to $15.3 million for the six months ended June 30,
2020. During the six months ended June 30, 2021, cash provided by financing
activities primarily consisted of gross proceeds of $100.0 million and
$22.9 million received from the April 2021 Registered Direct Offering and the
February 2021 Registered Direct Offering, respectively. During the six months
ended June 30, 2020, cash provided by financing activities primarily consisted
of gross proceeds of $16.2 million received under May 2020 and June 2020 ATMs.
Indebtedness
In April 2020, we were granted a loan from SVB in the aggregate amount of
$0.4 million, pursuant to the PPP of the CARES Act. The PPP Note was in the form
of a promissory note dated April 30, 2020 in favor of SVB, bore interest at a
rate of 1.0% per annum, and had a maturity date of April 30, 2022. In May 2021,
we received notice from the SBA that the PPP Note was forgiven in its entirety,
including both principal and accrued interest.
In September 2016, pursuant to the EB-5 program, we entered into the EB-5 Loan
Agreement to borrow up to $10.0 million from EB-5 Life Sciences in $0.5 million
increments. Borrowings are at a fixed interest rate of 4.0% and are to be
utilized in the clinical development, manufacturing, and commercialization of
our product candidates and for our general working capital needs. Outstanding
borrowings pursuant to the EB-5 Program become due upon the seventh anniversary
of the final disbursement. Amounts repaid cannot be re-borrowed. As of June 30,
2021, there was $1.5 million of principal outstanding under the EB-5 Loan
Agreement.
Funding requirements
We expect to continue to incur significant expenses in connection with our
ongoing activities, particularly as we continue research and development,
including preclinical and clinical development of our product candidates,
contract to manufacture our product candidates, prepare for potential
commercialization of our product candidates, add operational, financial, and
information systems to execute our business plan, maintain, expand, and protect
our patent portfolio, and operate as a public company.
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For additional information regarding our commitments and contingencies, see Note
13 in the notes to the condensed consolidated financial statements included in
this Quarterly Report. Factors impacting our future funding requirements
include, without limitation, the following:
•the initiation, progress, timing, costs, and results of clinical trials for our
product candidates, including the additional clinical trial in support of a BLA
submission for COVAXIN;
•the outcome, timing, and cost of the regulatory approval process for our
product candidates; including with respect to COVAXIN in the United States and
Canada;
•future costs of manufacturing and commercialization, including with respect to
COVAXIN, if authorized or approved;
•costs related to doing business internationally with respect to our proposed
development and commercialization of COVAXIN in Canada;
•the cost of filing, prosecuting, defending, and enforcing our patent claims and
other intellectual property rights;
•the cost of defending intellectual property disputes, including patent
infringement actions brought by third parties against us;
•the costs of expanding infrastructure, as well as the higher corporate
infrastructure costs associated with operating as a public company;
•the expenses needed to attract and retain skilled personnel;
•the extent to which we in-license or acquire other products, product
candidates, or technologies; and
•the impact of the COVID-19 pandemic.
As of June 30, 2021, we had $115.8 million in cash, cash equivalents, and
restricted cash. This amount will not meet our capital requirements over the
next 12 months. Our management is currently evaluating different strategies to
obtain the required funding for future operations. These strategies may include,
but are not limited to: public and private placements of equity and/or debt,
payments from potential strategic research and development arrangements, sale of
assets, government grants, licensing and/or collaboration arrangements with
pharmaceutical companies or other institutions, or other funding from the
government or other third parties. There can be no assurance that these funding
efforts will be successful. If we cannot obtain the necessary funding, we will
need to delay, scale back, or eliminate some or all of our research and
development programs? consider other various strategic alternatives, including a
merger or sale? or cease operations. If we cannot expand our operations or
otherwise capitalize on our business opportunities because we lack sufficient
capital, our business, financial condition, and results of operations could be
materially adversely affected.
As a result of these factors, together with the anticipated increase in spending
that will be necessary to continue to develop and commercialize our product
candidates, there is substantial doubt about our ability to continue as a going
concern within one year after the date that the condensed consolidated financial
statements included in this report are issued. See Note 1 to our condensed
consolidated financial statements included in this report for additional
information.
Off-Balance Sheet Arrangements
We do not have off-balance sheet arrangements during the periods presented, and
we do not currently have any off-balance sheet arrangements as defined in the
rules and regulations of the SEC.
Recently Adopted Accounting Pronouncements
For a discussion of recently adopted accounting pronouncements, see Note 2 in
the notes to the condensed consolidated financial statements included in this
Quarterly Report.
Other Company Information
None.
Item 3.  Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
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