Business Overview and History
Statera Biopharma, Inc. (STAB) is a clinical-stage biopharmaceutical company developing novel immunotherapies to target autoimmune, inflammatory, infectious diseases, and cancers. The company's proprietary platform of toll-like receptor (TLR) agonists and antagonists aims to rebalance the body's immune system and restore homeostasis. With a focus on harnessing the power of the immune system, Statera is poised to make a significant impact in the rapidly evolving field of immunotherapy.
Statera Biopharma was incorporated in Delaware in June 2003 and was previously known as Cleveland BioLabs, Inc. Prior to the transformative merger with Cytocom in July 2021, the company's primary focus was on developing novel approaches to activate the immune system, with a particular emphasis on its lead product candidate, entolimod, an immune-stimulatory agent being developed as a radiation countermeasure and for other indications in radiation oncology.
The company conducted business in the United States directly and in Russia through two subsidiaries. BioLab 612, LLC, a wholly owned subsidiary, began operations in 2012 and was dissolved in November 2020. Panacela Labs, Inc. was formed by the company and Joint Stock Company RUSNANO, its financial partner in the venture, in 2011.
In June 2021, prior to the merger, Cytocom Inc. completed the acquisition of ImQuest Life Sciences, Inc. and its subsidiaries. This acquisition allowed Statera Biopharma to expand its business and develop novel immunotherapies targeting autoimmune, inflammatory, infectious diseases and cancers based on a proprietary, multi-receptor platform designed to rebalance the body's immune system and restore homeostasis.
The merger between Cleveland BioLabs, Inc. and Cytocom Inc. was completed on July 27, 2021. As a result of the integration of Cytocom's business, Statera Biopharma significantly expanded its pipeline and technological capabilities. Cytocom had developed a proprietary multi-receptor platform, known as the AIMS (Activating Immune Modulation System) platform, designed to elicit a robust and durable response of antigen-specific killer T-cells and antibodies, thereby activating essential immune defenses against a wide range of diseases.
Following the merger, Statera now has a diversified pipeline of clinical and preclinical programs targeting autoimmune, inflammatory, infectious diseases, and cancers. The company's lead candidates include STAT-201 for Crohn's disease, STAT-205 for COVID-19, STAT-401 for pancreatic cancer, and the TLR5 agonist entolimod for hematological indications.
Statera's research and development efforts are bolstered by its extensive platform of TLR agonists and antagonists, which the company believes can meaningfully leverage the human immune system for prophylactic and therapeutic purposes. The company's technologies are designed to restore the balance between the cellular Th1 and the humoral Th2 immune systems, a critical component in the fight against various diseases.
Product Segments
Statera Biopharma operates through two main product segments: Immunotherapy and Clinical Research Organization (CRO) services.
Immunotherapy Segment: The immunotherapy segment is the core focus of Statera's business, developing novel immunotherapies targeting a wide range of diseases. The company's proprietary AIMS platform is designed to rebalance the body's immune system and restore homeostasis. These therapies are intended to elicit a robust and durable response of antigen-specific killer T-cells and antibodies, thereby activating essential immune defenses.
Key product candidates in the immunotherapy segment include:
1. STAT-201: Being developed for the treatment of Crohn's disease, with plans to initiate a pivotal Phase 3 trial in the next 12 months. 2. STAT-205: Targeting long-haul COVID-19, with a study planned to begin in the next 12 months. 3. STAT-401: In development for pancreatic cancer, with a study expected to commence in the next year. 4. Entolimod: A TLR5 agonist being developed as a treatment for anemia and neutropenia in cancer patients, with a study planned to start in the next 12 months.
CRO Services Segment: Statera's CRO services segment operates through its ImQuest subsidiary. ImQuest offers preclinical research services to evaluate the potential of new and novel pharmaceutical products for the treatment and prevention of viruses, bacteria, cancer, and inflammatory diseases. These services include:
1. Compound screening 2. Efficacy analysis 3. Drug target validations 4. Mechanism of action research 5. Toxicity studies
The CRO services segment has been a significant contributor to Statera's recent revenue growth, with the segment generating the majority of the company's reported revenue in the most recent financial period.
Financial Highlights
For the nine months ended September 30, 2022, Statera reported total revenue of $2.44 million, a substantial increase from $0.24 million in the prior year period. This growth was entirely attributable to revenues generated from the CRO services provided by ImQuest. Cost of revenues also increased to $0.72 million from $0.12 million in the prior year.
In the most recent quarter, Statera reported revenue of $670,473, representing a 183.5% increase compared to the same quarter last year. This growth was primarily driven by increased revenues from its CRO services.
Research and development expenses decreased to $4.45 million for the nine months ended September 30, 2022, down from $6.27 million in the prior year period. This decrease was primarily due to reduced spending on specific R&D programs. General and administrative expenses also decreased to $8.21 million from $14.98 million in the prior year, mainly due to reductions in payroll, stock listing, and professional fees.
The company incurred a net loss of $14.61 million for the nine months ended September 30, 2022, an improvement from the $24.63 million net loss in the prior year period. In the most recent quarter, the net loss was $5.16 million.
Liquidity
As of September 30, 2022, Statera had cash and cash equivalents of $506,100, a significant decrease from $1.84 million at the end of 2021. The company's ability to continue as a going concern is dependent on its ability to raise additional capital, as its existing cash resources are not expected to be sufficient to fund operations beyond the fourth quarter of 2022.
Key liquidity metrics as of September 30, 2022:
1. Debt/Equity ratio: -10.37 2. Current ratio: 0.37 3. Quick ratio: 0.37
The company's credit facility with Avenue Venture Opportunities Fund, L.P. was accelerated, and the remaining balance of $6.2 million was reclassified to short-term debt.
Recent Developments and Challenges
In 2022, Statera faced several significant challenges that have impacted the company's operations and financial position. In March 2022, the company received a default notice from its lender, Avenue Venture Opportunities Fund, L.P., alleging certain events of default under their loan agreement. This led to Avenue foreclosing on approximately $4.8 million of Statera's cash and accelerating the outstanding debt balance.
Additionally, on August 16, 2022, certain former employees and vendors of Statera filed an involuntary bankruptcy petition against the company in the United States Bankruptcy Court for the District of Colorado. Statera believes the petition is improper and is seeking its dismissal, but the outcome of this legal proceeding remains uncertain.
Furthermore, on October 11, 2022, Statera was notified by the Nasdaq Stock Market that its common stock would be subject to delisting due to the company's non-compliance with certain listing requirements, including the minimum stockholders' equity requirement. Statera presented its plan to regain compliance to the Nasdaq Hearings Panel, which subsequently granted the company's request for continued listing, subject to the satisfaction of certain interim milestones and the company's compliance with all applicable listing criteria by January 31, 2023.
Despite these challenges, Statera continues to make progress in advancing its clinical pipeline. In the next 12 months, the company expects to initiate several clinical trials, including a pivotal Phase 3 trial for its lead drug candidate, STAT-201, in pediatric Crohn's disease, as well as studies of STAT-205 in long-haul COVID-19, STAT-401 in pancreatic cancer, and the TLR5 agonist entolimod as a treatment for anemia and neutropenia in cancer patients.
Risks and Uncertainties
Statera Biopharma faces several significant risks and uncertainties that investors should carefully consider:
1. Substantial Doubt about Going Concern: The company's limited cash resources and recurring losses raise substantial doubt about its ability to continue as a going concern, which could significantly impact its ability to execute on its business plan and develop its product candidates.
2. Nasdaq Listing Compliance: Statera's non-compliance with Nasdaq's listing requirements and the uncertainty surrounding its continued listing on the exchange pose a significant risk to the company and its shareholders.
3. Ongoing Legal Proceedings: The involuntary bankruptcy petition filed against the company and the potential for additional legal challenges could have a material adverse effect on Statera's financial condition and operations.
4. Dependence on Securing Additional Financing: The company's ability to continue its operations and advance its pipeline is heavily dependent on its success in securing additional capital through public or private equity and debt offerings, collaborations, or other strategic transactions.
5. Clinical Development Risks: As a clinical-stage biopharmaceutical company, Statera faces the inherent risks and uncertainties associated with the development of its drug candidates, including the potential for failed clinical trials, regulatory setbacks, and inability to obtain marketing approvals.
6. Competitive Landscape: Statera operates in a highly competitive industry, and its success will depend on its ability to differentiate its product candidates and technological platform from those of its competitors.
Conclusion
Statera Biopharma is a clinical-stage biopharmaceutical company with a promising pipeline of immunotherapies targeting a wide range of diseases. The company's merger with Cytocom has significantly expanded its technological capabilities and diversified its portfolio of drug candidates. The company operates through two main segments: Immunotherapy and CRO services, with the latter contributing significantly to recent revenue growth.
However, Statera faces significant challenges, including substantial doubt about its ability to continue as a going concern, non-compliance with Nasdaq's listing requirements, and ongoing legal proceedings that could have a material impact on its operations and financial condition. The company's financial position remains precarious, with limited cash resources and a high debt-to-equity ratio.
Despite these obstacles, Statera remains committed to advancing its clinical programs and leveraging its proprietary TLR agonist and antagonist platform to develop innovative therapies that can meaningfully improve patient outcomes. The company's plans to initiate several clinical trials in the next 12 months demonstrate its continued focus on progressing its pipeline.
Investors should carefully consider the risks and uncertainties associated with Statera Biopharma and monitor the company's progress in navigating the current challenges and executing on its strategic objectives. The company's ability to secure additional financing and successfully advance its clinical programs will be critical factors in determining its future prospects and potential for long-term value creation.