Scopus BioPharma Inc. (SCPS) is a biopharmaceutical company developing transformational therapeutics for serious diseases with significant unmet medical need. The company's focus has primarily been on its immuno-oncology programs, which are conducted through its majority-owned subsidiary, Duet BioTherapeutics Inc. (Duet).
Business Overview and History
Scopus BioPharma was founded in 2017 with the goal of developing innovative drug candidates to address critical medical conditions. The company is headquartered in New York, New York, with additional subsidiaries located in Los Angeles, California, and Jerusalem, Israel. Since its inception, Scopus has faced significant challenges in developing its drug candidates and securing necessary funding. In 2020, the company incurred a net loss of $10.9 million as it continued to invest in research and development activities. This trend continued in 2021, with Scopus reporting a net loss of $26.9 million.
The company's early efforts centered around non-immuno-oncology programs, but in 2021, it made a strategic acquisition of Duet (formerly known as Olimmune Inc.), which provided Scopus access to a broader technology platform and the company's lead immuno-oncology asset, DUET-201.00. This acquisition marked a significant milestone for Scopus, as it gained access to the CpG-STAT3 inhibitor portfolio, which became the focus of the company's immuno-oncology development efforts.
Despite ongoing challenges, Scopus has continued to make progress in advancing its immuno-oncology pipeline. The company has conducted dose-range finding studies, good laboratory practice toxicology studies, and good manufacturing process manufacturing of the drug substance and product for its lead candidate, DUET-101.00. Scopus is also exploring the development of additional drug candidates, such as DUET-202.00 and DUET-102.00, as part of its ongoing research and development efforts.
Duet's novel approach to immuno-oncology focuses on a suite of bifunctional oligonucleotides that activate antigen-presenting cells within the tumor microenvironment while alleviating tumor immunosuppression. This unique mechanism-of-action targets two intracellular immune pathways: signal transducer and activator of transcription 3 (STAT3), a master immune checkpoint inhibitor, and toll-like receptor 9 (TLR9). The targeted inhibition of STAT3 reawakens immune cells and allows for the full potential of TLR9-driven innate and adaptive immune responses.
Duet's immuno-oncology pipeline includes three distinctive, complementary CpG-STAT3 inhibitors, collectively referred to as the Duet Platform:
1. DUET-101.00 (Antisense CpG-STAT3ASO): A STAT3 inhibitor using an antisense RNA molecule that binds directly to the STAT3 mRNA, recruiting ribonuclease H1 (RNase H1) to degrade the STAT3 mRNA. 2. DUET-201.00 (RNA silencing CpG-STAT3siRNA): A STAT3 inhibitor using a small interfering RNA (siRNA) molecule, delivered intratumorally. 3. DUET-301.00 (DNA-binding inhibitor CpG-STAT3decoy): An alternative approach to silencing STAT3 activity by targeting the actual STAT3 transcription factor protein.
Scopus' initial efforts in immuno-oncology have been focused on DUET-201.00 as a monotherapy targeting B-cell non-Hodgkin lymphoma (NHL). However, the company has faced development delays, including those related to clinical enrollment, due to the COVID-19 pandemic. The design of the investigator-sponsored clinical protocol for DUET-201.00, including the number of study visits and constraints on mobility and travel, resulted in development delays, including relating to clinical enrollment. As a result, Scopus has shifted its focus to advancing DUET-101.00, which is being developed for systemic delivery to target harder-to-reach solid tumors.
Financials and Liquidity
Scopus BioPharma is an early-stage company and has not generated any revenue to date. The company has incurred significant losses since its inception, reporting a net loss of $11.61 million for the year ended December 31, 2022, and a net loss of $5.61 million for the six months ended June 30, 2023. As of June 30, 2023, the company had an accumulated deficit of $58.13 million.
Scopus' cash position as of June 30, 2023, was $362,100, down from $124,580 as of December 31, 2022. The company's net cash used in operating activities was $1.77 million for the six months ended June 30, 2023, and it had a working capital deficit of $10.51 million as of the same date. These factors, coupled with the company's history of losses, have led management to conclude that there is substantial doubt about Scopus' ability to continue as a going concern.
To address its liquidity concerns, Scopus has been actively raising capital through equity offerings. Since the commencement of their respective private placements and as of August 11, 2023, Scopus and Duet have raised aggregate gross proceeds of approximately $2.4 million on a consolidated basis. However, the company's ability to raise additional capital continues to be impeded by the limited availability of authorized common stock and the current price of its common stock.
For the most recent fiscal year ended December 31, 2022, Scopus reported no revenue, a net loss of $11.61 million, operating cash flow of -$8.13 million, and free cash flow of -$8.13 million. For the quarter ended June 30, 2023, the company reported no revenue and a net loss of $2.62 million. No data was available for quarterly operating cash flow or free cash flow.
The company's research and development expenses have increased significantly, from $1.02 million in the six months ended June 30, 2022, to $3.60 million in the six months ended June 30, 2023, primarily due to the increased costs associated with the preclinical studies for DUET-101. Meanwhile, the company's general and administrative expenses have decreased from $6.96 million in the six months ended June 30, 2022, to $2.01 million in the six months ended June 30, 2023, mainly due to a reduction in legal and accounting fees related to the previous proxy contest and litigation.
Scopus does not have any debt and therefore has a debt-to-equity ratio of 0. As of June 30, 2023, the company had no available credit lines disclosed. The current ratio and quick ratio were both 0.052, indicating very poor liquidity.
Challenges and Risks
Scopus BioPharma faces several significant challenges and risks that could impede its ability to successfully develop and commercialize its drug candidates:
1. Ongoing Litigation: The company continues to be a party in several litigation matters initiated by or against certain adverse parties, including some former officers and directors. The outcome of these legal proceedings is highly unpredictable, and the associated costs could have a material adverse effect on Scopus.
2. Capital Constraints: Scopus' existing capital resources are not sufficient to fully implement its business plan, including the development of its drug candidates. The company's ability to raise additional capital is limited by the availability of authorized common stock and the current price of its shares.
3. Development Delays: The company has faced delays in the development of its lead immuno-oncology asset, DUET-201.00, due to the impact of the COVID-19 pandemic on clinical enrollment. These delays have led Scopus to shift its focus to advancing DUET-101.00, which may face its own development challenges.
4. Reliance on Duet: As a majority-owned subsidiary, Scopus' success is heavily dependent on the performance and development progress of Duet's pipeline, which may be subject to its own set of risks and challenges.
5. Regulatory Hurdles: Scopus will need to obtain regulatory approvals for its drug candidates, which is a time-consuming and costly process with uncertain outcomes.
6. Competitive Landscape: The biopharmaceutical industry is highly competitive, and Scopus' drug candidates may face significant competition from other therapies, both current and those in development.
Outlook and Guidance
Scopus BioPharma has not provided any formal financial guidance or outlook for the future. The company's ability to achieve its strategic objectives and advance its drug candidates is heavily dependent on its ability to secure additional financing, resolve ongoing litigation, and overcome the various challenges it faces.
Given the company's limited financial resources, the successful development and potential commercialization of its drug candidates, particularly DUET-101.00, will be critical to Scopus' long-term success. Investors should closely monitor the company's progress in these areas, as well as its efforts to raise additional capital, in order to assess the viability of Scopus BioPharma as a long-term investment opportunity.
Conclusion
Scopus BioPharma is a biopharmaceutical company facing significant challenges as it seeks to develop innovative therapies for serious medical conditions. The company's focus on immuno-oncology through its Duet subsidiary holds promise, but it must overcome a range of obstacles, including ongoing litigation, capital constraints, and development delays, to unlock the full potential of its pipeline. Investors should closely monitor Scopus' progress and its ability to secure the necessary financing to advance its strategic initiatives. The road ahead for Scopus BioPharma is likely to be arduous, but the potential rewards for successful drug development could be substantial.
The company's immuno-oncology pipeline, consisting of DUET-101, DUET-201, and DUET-301, represents a novel approach to targeting both STAT3 and TLR9 pathways. While initial efforts focused on DUET-201 for B-cell NHL, developmental delays have shifted attention to DUET-101 for solid tumors. This strategic pivot underscores the company's adaptability in the face of challenges but also highlights the uncertainties inherent in drug development.
Scopus' financial position remains precarious, with limited cash reserves and ongoing losses. The company's ability to continue as a going concern is heavily dependent on securing additional financing, which has been hampered by various factors, including legal disputes and market conditions. The significant increase in research and development expenses, coupled with a decrease in general and administrative expenses, reflects the company's efforts to prioritize its drug development programs while managing costs.
As Scopus BioPharma navigates through these challenges, its success will largely depend on the clinical progress of its lead candidates, particularly DUET-101, and its ability to resolve ongoing legal issues. The company's future hinges on overcoming these hurdles and advancing its innovative immuno-oncology platform towards potential commercialization. Investors and stakeholders should remain vigilant in monitoring Scopus' progress, as the coming months and years will be crucial in determining the company's long-term viability and potential in the competitive biopharmaceutical landscape.