10-Q

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission file number

001-36577

ContraFect Corporation

(Exact name of registrant as specified in its charter)


Delaware		39-2072586
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

28 Wells Avenue, 3rd Floor, Yonkers, NY		10701
(Address of principal executive offices)		(Zip Code)

(914)

207-2300

(Registrant’s telephone number, including area code)

N/A

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	CFRX	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s Common Stock outstanding as of November 10, 2021 was 39,332,721.

Table of Contents

CONTRAFECT CORPORATION

INDEX


		Page No.
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements		1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		26
Item 4.	Controls and Procedures		27

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings		27
Item 1A	Risk Factors		27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		57
Item 3.	Defaults Upon Senior Securities		57
Item 4.	Mine Safety Disclosures		57
Item 5.	Other Information		57
Item 6.	Exhibits		58

SIGNATURES			59

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FORWARD LOOKING STATEMENTS

The information in this Quarterly Report on Form

10-Q

contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, the sufficiency of our cash and cash equivalents and marketable securities, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates”, “believes”, “estimates”, “expects”, “intends”, “targets”, “may”, “plans”, “projects”, “potential”, “will”, “would”, “could” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. All such forward-looking statements involve significant risks and uncertainties, including, but not limited to, statements regarding:

•

the success, cost, timing and potential indications of our product development activities and clinical trials;

•

our ability to advance into and through clinical development and ultimately obtain FDA approval for our product candidates;

•

our research and development plans and ability to bring forward additional product candidates into preclinical and clinical development;

•

our expectations regarding the impact of

COVID-19

on our business, operations and financial performance and position;

•

our contract with the Biomedical Advanced Research and Development Authority (“BARDA”) (the “BARDA Contract”) and any exercise of BARDA’s options to extend the BARDA Contract;

•

our grant awards from the Combating Antibiotic-Resistant Bacteria Biopharmaceutical Accelerator

(“CARB-X”)

and the Military Infectious Diseases Research Program, United States Army Medical Research and Development Command (“USAMRDC”) and the respective options in each award for continued funding;

•

the rate and degree of market acceptance of our product candidates and our expectations regarding the size of the commercial markets for our product candidates;

•

our future marketing and sales programs;

•

the effect of competition and proprietary rights of third parties;

•

the availability of and our ability to obtain additional financing;

•

the effects of existing and future federal, state and foreign regulations;

•

the seeking of joint development, licensing or distribution and collaboration and marketing arrangements with third parties; and

•

the period of time for which our existing cash and cash equivalents will enable us to fund our operations.

As more fully described under the heading “Risk Factors” contained elsewhere in this Quarterly Report on Form

10-Q,

many important factors affect our ability to achieve our stated objectives and to develop and commercialize any product candidates. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks and uncertainties set forth in our filings with the SEC. You should read this Quarterly Report on Form

10-Q

with the understanding that our actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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RISK FACTOR SUMMARY

We are providing the following summary of the numerous risks and uncertainties that affect our business, including those fully described in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form

10-Q.

You should carefully review and consider these risks and uncertainties when investing in our common stock. The principal risks and uncertainties affecting our business include, but are not limited to, the following:

•

We have incurred significant losses since our inception. We expect to incur losses for at least the next several years and may never achieve or maintain profitability.

•

We currently have no source of product revenue and have not yet generated any revenues from product sales.

•

We have a need for substantial additional funding. If we are unable to raise capital when needed or if we are unable to receive the maximum potential funding from BARDA,

CARB-X

or USAMRDC, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

•

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

•

The timing of the milestone and royalty payments we are required to make to The Rockefeller University (“Rockefeller”) under certain agreements is uncertain and could adversely affect our cash flows and results of operations.

•

Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.

•

The

COVID-19

pandemic or another pandemic, epidemic or outbreak of an infectious disease may materially and adversely impact our business, including our preclinical studies and clinical trials.

•

We are heavily dependent on the success of our leading product candidate, exebacase. If we are ultimately unable to obtain regulatory approval for exebacase or any other product candidate our business will be substantially harmed.

•

If clinical trials of exebacase or any other product candidate that we develop fail to demonstrate safety and efficacy to the satisfaction of the Food and Drug Administration (“FDA”) or similar international regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete the development and commercialization of exebacase or any other product candidate.

•

We may be required to suspend or discontinue clinical trials due to adverse side effects or other safety risks that could preclude approval of exebacase or any other product candidates.

•

Delays in clinical trials are common and have many causes, and any such delays could result in increased costs to us and jeopardize, delay or prevent our ability to obtain regulatory approval and commence product sales as currently contemplated.

•

We are significantly dependent on our license agreements with Rockefeller that relate to exebacase.

•

We rely on Contract Research Organizations (“CROs”) to conduct our preclinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be delayed in obtaining, or may ultimately not be able to obtain, regulatory approval for commercialization of exebacase or any other product candidates.

•

Even if the FDA approves exebacase or any other product candidates, adverse effects discovered after approval could adversely affect our markets.

•

Any Breakthrough Therapy designation that we may receive from the FDA for our product candidates may not lead to a faster development or regulatory review or approval process, and it does not increase the likelihood that our product candidates will receive marketing approval.

•

Risks associated with the manufacture of our product candidates could include cost overruns, new impurities, difficulties in process or formulation development, scaling up or reproducing manufacturing processes, equipment failures, and lack of timely availability of raw materials.

•

Developments by competitors may render our products or technologies obsolete or

non-competitive.

•

The level of commercial success of exebacase or any other product candidates that we develop will depend upon significant market acceptance of these products among physicians and payors.

•

Coverage and reimbursement may not be available for exebacase or any other product candidates that we develop.

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•

If we are unable to establish our own marketing and sales capabilities, or enter into agreements with third parties, to market and sell our products after they are approved, we may not be able to generate revenues.

•

Interim, “topline” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

•

Risks related to regulatory approval of our product candidates and other legal and compliance matters.

•

Risks related to employee matters and managing growth.

•

Risks related to our intellectual property.

•

Risks related to our securities and organizational documents.

•

Security breaches, cybersecurity attacks, failure of our data and personal information protections and other disruptions could compromise our information and technology systems and expose us to liability, which would cause our business and reputation to suffer.

•

Our collection, control, processing, sharing, disclosure and otherwise use of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements, and evolving laws concerning data privacy in the European Union (“EU”) and European Economic Area (“E.E.A”).

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CONTRAFECT CORPORATION PART

I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONTRAFECT CORPORATION

Consolidated Balance Sheets

(in thousands, except share and

per-share

data)


	September 30, 2021			December 31, 2020
	(unaudited)			(audited)
Assets
Current assets:
Cash and cash equivalents	$	20,225		$	15,485
Marketable securities		43,092			27,005
Prepaid expenses and other current assets		10,556			4,165

Total current assets		73,873			46,655
Property and equipment, net		784			910
Operating lease right-of-use assets		2,614			2,811
Other assets		571			740

Total assets	$	77,842		$	51,116

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,964		$	1,806
Accrued liabilities		6,252			3,610
Current portion of lease liabilities		654			644

Total current liabilities		9,870			6,060
Warrant liabilities		12,194			29,404
Long-term portion of lease liabilities		2,700			2,959
Other liabilities		73			73

Total liabilities		24,837			38,496
Commitments and contingencies		—			—
Stockholders’ equity:
Preferred stock, $0.0001 par value, 25,000,000 shares authorized and none outstanding at September 30, 2021 and December 31, 2020		—			—
Common stock, $0.0001 par value, 125,000,000 shares authorized, 39,332,721 shares and 27,810,161 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		4			3
Additional paid-in capital		309,197			252,908
Accumulated other comprehensive loss		(43	)		(21	)
Accumulated deficit		(256,153	)		(240,270	)

Total stockholders’ equity		53,005			12,620

Total liabilities and stockholders’ equity	$	77,842		$	51,116

See accompanying notes.

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CONTRAFECT CORPORATION

Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Operating expenses
Research and development	$	8,664	$	4,706	$	24,462	$	15,354
General and administrative		3,022		2,607		8,722		8,186

Total operating expenses		11,686		7,313		33,184		23,540

Loss from operations		(

SEC Form 10-Q filed by ContraFect Corporation