Annual report pursuant to Section 13 and 15(d)

Liquidity, Going Concern and Other Uncertainties

v3.21.1
Liquidity, Going Concern and Other Uncertainties
12 Months Ended
Dec. 31, 2020
Liquidity Going Concern and Other Uncertainties [Abstract]  
LIQUIDITY, GOING CONCERN AND OTHER UNCERTAINTIES

2 — LIQUIDITY, GOING CONCERN AND OTHER UNCERTAINTIES

 

These financial statements have been prepared in conformity with generally accepted accounting principles in the United States ("GAAP"), which contemplate continuation of the Company as a going concern. The Company is in a development stage and has incurred losses and negative cash flows from operations each year since inception and has an accumulated deficit of approximately $31.5 million as of December 31, 2020. Based on the current development plans for AD04 and other operating requirements, existing cash and equivalents are not sufficient to fund operations for the next twelve months following the financial statement filing date. These factors raise substantial doubt about the Company's ability to continue as a going concern.

 

Due to the COVID-19 pandemic, during the first three quarters of 2020, the Company experienced delays in certain countries in obtaining regulatory approval required to commence the trial in such countries, resulting in significantly slowed trial enrollment (see Other Uncertainties below). Enrollment has since improved, though enrollment in higher cost sites in Scandinavia have recovered more quickly than in lower cost sites in Central and Eastern Europe. The Company presently projects completion of its phase three trial during the first quarter of 2022 with available cash currently projected into the fourth quarter of 2021. As such, cash on hand is not projected to be sufficient to reach database lock.

  

The Company's plans include raising additional capital from various potential sources, including equity and/or debt financings, grant funding, and strategic relationships. In addition, the Company has an active equity purchase agreement (See Notes 7 and 10) with Keystone Capital, LLC, which allows the sale of up to $15 million, which amount, if fully accessible, would be sufficient to fund the Company's operations beyond one year from the filing date of these statements. However, there can be no guarantee that the Company will meet the conditions to use the equity line and without access to this credit line and/or additional funding, which may not be available on acceptable terms or at all, the Company would be required to delay, scale back or eliminate some or all of its research and development programs, which would likely have a material adverse effect on the Company and its financial statements.

 

The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

 

Other Uncertainties 

 

Generally, the industry in which the Company operates subjects the Company to a number of other risks and uncertainties that can affect its operating results and financial condition. Such factors include, but are not limited to: the timing, costs and results of clinical trials and other development activities versus expectations; the ability to obtain regulatory approval to market product candidates; the ability to manufacture products successfully; competition from products sold or being developed by other companies; the price of, and demand for, Company products once approved; the ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products.

 

The Company also faces the ongoing risk that the coronavirus pandemic may further slow, for an unforeseeable period, the conduct of the Company's trial. The effects of the ongoing coronavirus pandemic may also increase non-trial costs such as insurance premiums, increase the demand for and cost of capital, increase loss of work time from key personnel, and negatively impact our key clinical trial vendors and supplier of our active pharmaceutical ingredient. The full extent to which the COVID-19 pandemic further impacts the clinical development of AD04, the Company's suppliers and other commercial partners, will depend on future developments that cannot be predicted.