Virpax's Journey: From Inception to Present Day
Virpax Pharmaceuticals, Inc. is a preclinical-stage pharmaceutical company focused on developing novel and proprietary drug delivery systems for various pain indications. The company's mission is to enhance patients' quality of life by advancing non-opioid and non-addictive pain management treatments and therapies for central nervous system (CNS) disorders.
Virpax Pharmaceuticals, Inc. was incorporated on May 12, 2017 in the state of Delaware. The company's primary focus has been on developing proprietary drug-delivery systems and drug-releasing technologies for non-opioid and non-addictive pain management treatments and therapies for CNS disorders.
In its early stages, Virpax entered into several key agreements to build its product pipeline. In 2017, the company established a research and option agreement with MedPharm Limited, which led to the development of Epoladerm, a topical diclofenac epolamine spray film formulation for pain management. Virpax secured exclusive global rights to discover, develop, and commercialize this product.
The following year, in 2018, Virpax expanded its portfolio through two significant agreements. First, the company entered into a license and sublicense agreement with LipocureRx, Ltd., obtaining exclusive global rights to develop and commercialize Probudur, a bupivacaine liposome injectable gel or suspension for post-operative pain management. Additionally, Virpax established an exclusive collaboration and license agreement with Nanomerics Ltd. for the worldwide license to develop and commercialize Envelta, a hydrophilic neuropeptide product targeting severe pain and post-traumatic stress disorder (PTSD).
These early partnerships and licensing agreements have formed the foundation of Virpax's current product pipeline, which includes Probudur, Envelta, AnQlar, Epoladerm, and NobrXiol.
Product Pipeline Overview
Probudur, the company's lead product candidate, utilizes a unique liposomal delivery platform to encapsulate high doses of bupivacaine, a local anesthetic. Early preclinical animal studies have demonstrated that Probudur provided significantly improved onset and duration of analgesic effect compared to a similar product on the market. Virpax plans to market Probudur to general surgeons, anesthesiologists, and orthopedic surgeons within the $35 billion postoperative pain management market.
Probudur uses a unique liposomal delivery platform that incorporates large multi-lamellar vesicles (LMLVs) to encapsulate high doses of bupivacaine. The animal studies were conducted by infiltrating the surgical wound site with Probudur. Probudur's prolonged effectiveness is due to the formulation's ability to keep the local anesthetic at the surgical wound site for an extended period of time, at least 96 hours. Four nonclinical trials were conducted using three animal models. Based on head-to-head preclinical studies compared to an approved liposomal bupivacaine formulation, if used appropriately, Virpax believes Probudur has the potential to eliminate or significantly reduce the need to prescribe opioids for postoperative pain relief. The development of the Probudur formulation was successfully completed in the third quarter of 2023. On July 29, 2024, a U.S. provisional application was filed under the application number 63/676,540 for "Liposomal Analgesic Formulation, Method of Preparation and uses thereof". IND enabling studies are in process, and Virpax anticipates commencing clinical trials in the first quarter of 2025.
Envelta, another key product candidate, is being developed to provide non-addictive treatment options for severe pain, including post-cancer pain, and potentially manage symptoms related to post-traumatic stress disorder (PTSD). Virpax believes Envelta may offer prescribers, regulators, and patients an alternative to opioid-based treatments. Four planned in vitro studies were successfully completed as well as the in vivo acute efficacy studies. In February 2022, Virpax completed a 14-day intranasal dose range finding toxicity study of Envelta in rats with a 14-day recovery period which showed no adverse related findings. A 14-day intranasal dose range finding toxicity study of Envelta in dogs with a 14-day recovery period was also conducted and showed no adverse toxicologic findings. The preclinical studies under the CRADA are expected to continue over the next nine months, and Virpax anticipates commencing clinical trials in the first half of 2025.
Virpax's pipeline also includes AnQlar, a high-density molecular masking spray the company plans to develop as a viral barrier to potentially reduce the risk or intensity of respiratory viral infections. AnQlar is being developed as a 24-hour prophylactic viral barrier to inhibit viral infection by influenza or SARS-CoV-2. Virpax intends for this formulation to be delivered using a metered dose nasal spray to propel the high-density molecular formulation into the nose and potentially prevent viral binding to epithelial cells in the nasal cavity and the upper respiratory tract, potentially reducing respiratory related infections. Virpax submitted and received a written pre-investigational new drug (pre-IND) meeting response from the FDA for AnQlar, in which the FDA provided guidance on Virpax's pathway to pursue prophylactic treatment against SARS-CoV-2 and influenza for daily use as an Over the Counter (OTC) product.
Epoladerm, a topical diclofenac epolamine metered-dosed spray film formulation, is being developed to manage pain associated with osteoarthritis. Virpax believes the Topical Spray Film Delivery Technology, which it refers to as Epoladerm, could provide a pathway for additional proprietary spray formulations with strong adhesion and accessibility properties upon application, especially around active joints and contoured body surfaces to manage pain associated with osteoarthritis. A recent large meta-analysis on pharmacologic treatments for knee and hip osteoarthritis indicated that topical diclofenac had the largest effect on pain and physical function with a better safety profile than oral diclofenac. Based on this meta-analysis, it was recommended that topical diclofenac should be considered as a first-line pharmacological treatment for knee osteoarthritis. Virpax made the determination to delay its First-in-Human study investigating Epoladerm for pain associated with chronic osteoarthritis due to i) a delay in procuring the active pharmaceutical ingredient necessary for the drug product candidate, ii) delays related to supply chain disruptions, and iii) an extensive review of the formulation and potential degradants resulting in MedPharm exploring alternatives to mitigate the formation of the potential degradant. This additional formulation work and permeation testing may enable the patent coverage of this asset to be extended until at least 2044 and provide an Over the Counter (OTC) pathway.
Additionally, the company has exclusive global rights to NobrXiol, an investigational formulation delivered via the nasal route that uses Molecular Envelope Technology (MET) to enhance cannabidiol (CBD) transport to the brain, potentially for the treatment of seizures associated with Lennox-Gastaut syndrome and Dravet syndrome in patients two years of age and older. NobrXiol is being developed by Nanomerics Ltd. CBD acts on CB1 receptors of the endocannabinoid system in the brain, which regulates neuronal excitability response relevant to the pathophysiology of epilepsy. NobrXiol uses a proprietary preassembled delivery device that holds single use cartridges that are sealed in inert gas and pressurized for easy activation that can be self-administered. Virpax plans to target its marketing and selling efforts to healthcare practitioners specializing in epilepsy within the $16.5 billion market for managing epilepsy in pediatrics and adults.
Financial Snapshot and Liquidity Concerns
Financials
Virpax has incurred net losses since its inception, reporting net losses of $15.2 million and $21.7 million for the years ended December 31, 2023 and 2022, respectively. As of September 30, 2024, the company had an accumulated deficit of $68.2 million. Virpax's primary source of capital has been the issuance of debt and equity securities, and the company's future operations are dependent on the success of its efforts to raise substantial additional capital.
In the most recent quarter, Virpax reported no revenue, a net loss of $2,006,456, operating cash flow of -$4,469,274, and free cash flow of -$4,469,271. The company does not have historical financial data to compare against for year-over-year growth calculations.
Liquidity
As of November 14, 2024, Virpax's cash position totaled approximately $2.5 million, which the company has stated is not sufficient to sustain operations through the first quarter of 2025. The company has paid a total of $6.0 million to Sorrento Therapeutics, Inc. and Scilex Pharmaceuticals Inc. as part of a settlement agreement related to a previously disclosed lawsuit. Additionally, the company may be required to make indemnification or contribution payments related to this litigation, which could further reduce its cash position.
As of the most recent financial data, Virpax had a cash balance of $17,230. The company's current ratio is 0.1291, and its quick ratio is also 0.1291, indicating potential liquidity challenges. The debt-to-equity ratio and available credit line information are not available for the company.
Virpax's Nasdaq Compliance Challenges
Virpax has faced challenges in maintaining compliance with the Nasdaq Stock Market's listing requirements. In April 2024, the company received a notification from Nasdaq that its stockholders' equity did not meet the minimum requirement of $2.5 million for continued listing on the Nasdaq Capital Market. Virpax was granted an extension through September 30, 2024 to regain compliance, but ultimately did not meet the terms of the extension. As a result, the company requested a hearing before Nasdaq's Hearings Panel, which is expected to stay any delisting action at least until the hearing process concludes.
Additionally, in June 2024, Virpax received notice from Nasdaq that its common stock did not maintain the required minimum closing bid price of $1.00 per share for the preceding 30 consecutive business days. The company was given 180 calendar days, or until April 2, 2025, to regain compliance with the minimum bid price requirement. If Virpax is unable to regain compliance with Nasdaq's listing requirements, it could result in the delisting of its common stock, which could adversely affect the company's ability to attract new investors, decrease the liquidity of its shares, and impact the price at which its shares trade.
Ongoing Litigation and Settlement
In March 2021, Virpax and its former Chief Executive Officer, Anthony P. Mack, were named as defendants in a lawsuit filed by Sorrento Therapeutics, Inc. and Scilex Pharmaceuticals Inc. (the "Plaintiffs"). The Plaintiffs alleged various claims, including that Mr. Mack breached a restrictive covenants agreement and that Virpax tortiously interfered with that agreement, as well as with Scilex's relationship with Mr. Mack.
On September 1, 2023, the Court of Chancery of the State of Delaware issued a memorandum opinion finding in favor of the Plaintiffs on most of the claims. The Court found that Mr. Mack breached the restrictive covenants agreement and that Virpax was liable for tortious interference with the agreement. The Court also found that Mr. Mack breached his fiduciary duty of loyalty to Scilex and that Virpax aided and abetted this breach.
On February 29, 2024, Virpax entered into a settlement agreement with the Plaintiffs to fully resolve all claims related to the litigation. As part of the settlement, Virpax agreed to pay the Plaintiffs a total of $6.0 million, with $3.5 million paid upfront and the remaining $2.5 million paid in July 2024. Additionally, Virpax agreed to pay the Plaintiffs royalties of 6% of annual net sales of products developed from certain drug candidates, including Epoladerm, Probudur, and Envelta.
The settlement has allowed Virpax to move forward and focus on the development of its product candidates, but the company may still face potential indemnification or contribution claims from Mr. Mack related to the litigation, which could further strain its financial resources.
On November 15, 2023, the company accepted the resignation of Anthony P. Mack as Chief Executive Officer and Chair of the Board of Directors. The resignation was not related to any disagreement with the company on any matter relating to its operations, policies or practices.
Navigating the Road Ahead
Virpax's future success will depend on its ability to successfully navigate the challenges of being a preclinical-stage pharmaceutical company. The company will need to continue its research and development efforts, secure regulatory approvals, and ultimately commercialize its product candidates to generate revenue and achieve profitability.
The company's immediate focus is on advancing its lead product candidate, Probudur, through the necessary preclinical and clinical trials to support an Investigational New Drug (IND) filing with the U.S. Food and Drug Administration (FDA). Virpax is also working to progress its other pipeline candidates, including Envelta, AnQlar, Epoladerm, and NobrXiol, through various stages of development.
Virpax's ability to raise additional capital will be crucial in funding these development efforts, as well as addressing any potential indemnification or contribution claims related to the previous litigation. The company's recent $5.0 million public offering, along with the $2.5 million secured loan financing, have provided near-term funding, but Virpax will likely need to seek additional financing in the future to sustain its operations and advance its product pipeline.
Navigating the regulatory landscape and maintaining Nasdaq compliance will also be key challenges for Virpax. The company's recent efforts to regain compliance with Nasdaq's minimum stockholders' equity and bid price requirements demonstrate the ongoing scrutiny it faces as a public company. Failure to maintain Nasdaq listing could further impact the company's ability to raise capital and attract investors.
Despite the challenges, Virpax remains focused on its mission to develop non-addictive pain management treatments and therapies for CNS disorders. The company's proprietary drug delivery technologies and diverse pipeline of product candidates offer the potential for innovative solutions in addressing unmet medical needs. As Virpax continues to navigate the complexities of the preclinical pharmaceutical landscape, its ability to secure necessary funding, achieve regulatory milestones, and maintain a strong public market presence will be crucial factors in determining its long-term success.