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HCW Biologics Reports Second Quarter 2024 Financial Results and Business Highlights

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

Second Quarter 2024 Financial Results

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  


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