Procel, and Isocel product candidates. We believe this SRA will generate sufficient in-vivo pre-clinical data to enhance our GDT product platform, supporting three new IND submissions: (1) Deltacel in combination with low-dose radiation (“IND #1”); (2) Procel in combination with a low-dose radiation (“IND #2”); and (3) Isocel in combination with a low-dose radiation (“IND #3”). The first IND submitted to the FDA and that received FDA authorization was IND#1, as explained in further detail below. For all of our Phase 1 INDs, the beginning of the clinical trial activation process will begin after the following two events: (1) the IND receives FDA authorization to begin the clinical trial (which would take place 30 days after receipt by the FDA, unless the FDA raises concerns or questions regarding the proposed clinical trials and places the trial on a clinical hold within that 30-day time period); and (2) commencing the review and approval process by an independent institutional review board (“IRB”) or ethics committee at the selected clinical trial site(s).
IND #1 will evaluate Deltacel GDTs in combination with low-dose radiation. We submitted the IND for the Deltacel trial on March 31, 2023. On April 28, 2023, the FDA authorized the Deltacel-01 IND application. We expect to begin the activation of clinical trial process in Q2 2023. IND #2 combines a low-dose radiation and our genetically engineered product candidate targeting PD-L1, which is the target associated with the ALEXIS-PRO-1 clinical trial candidate on the Procel product candidate platform. IND #3 combines a low-dose radiation and our genetically engineered product candidate targeting Iso-Meso, the target associated with the ALEXIS-ISO-1 clinical trial candidate on the Isocel product candidate platform. Since the Company has aligned its operations with the Deltacel product candidate and IND #1, we are planning to submit INDs for IND #2 and IND #3 when we obtain sufficient financing to support the progression of the development of those additional clinical trial candidates.
We have not generated any revenue from sales to date, and we continue to incur significant research and development and other expenses related to our ongoing operations. As a result, we are not and have never been profitable and have incurred losses in each period since we began principal business operations in 2012. As discussed in more detail below, we are currently in discussions with financing sources in an attempt to secure short-term financing to continue operations and fund other liquidity needs through the end of the year. In the absence of such financing, management anticipates that existing cash resources will not be sufficient to meet operating and liquidity needs beyond the beginning of October, 2023.
YA Purchase Agreement
On October 13, 2022, we entered into a standby equity purchase agreement (the “YA Purchase Agreement”) with YA II PN, Ltd., a Cayman Islands exempt limited partnership (“YA II”), pursuant to which we will have the right, but not the obligation, to sell to YA II up to $5,000,000 of our common stock, subject to increase by an additional $3,000,000 of common stock at our election Upon the satisfaction of the conditions to YA II’s purchase obligations set forth in the YA Purchase Agreement, we will have the right, but not the obligation, from time to time at our discretion until November 1, 2024, to direct YA II to purchase a specified amount of shares of common stock (each such sale, a “YA Advance”) by delivering written notice to YA II (each, a “YA Advance Notice”).
While there is no mandatory minimum amount for any YA Advance, a YA Advance may be for a number of shares of common stock not to exceed the greater of (i) 100% of the average of the daily trading volume of the common stock on the Nasdaq Capital Market during regular trading hours as reported by Bloomberg L.P. during the five trading days immediately preceding the date of the YA Advance Notice or (ii) $1,000,000 worth of shares. The shares of common stock, if any, that we elect to sell to YA II pursuant to a YA Advance will be purchased at a price equal to 95% of the lowest daily VWAP (as defined below) during the three consecutive trading days commencing on the date of delivery of a YA Advance Notice. “VWAP” means, for any trading day, the daily volume weighted average price of the common stock for such trading day on the Nasdaq Capital Market as reported by Bloomberg L.P. during regular trading hours. As of June 9, 2023, we have sold 197,000 shares of common stock pursuant to the YA Purchase Agreement.
Senior Convertible Promissory Notes
On May 24, 2023, we issued a 25% Senior Secured Convertible Promissory Note (the “May 2024 Note”) to an accredited investor. The May 2024 Note has a principal amount of $2,000,000, bears interest at a rate of 25% per annum (the “Stated Rate”) and matures on May 24, 2024 (the “May 2024 Maturity Date”), on which the principal balance and accrued but unpaid interest under the May 24, 2024 Note shall be due and payable. The Stated Rate will increase to 27% per annum or the highest rate then allowed under applicable law (whichever is lower) upon occurrence of an event of default, including the failure by us to make payment of principal or interest due under the May 2024 Note on the May 2024 Maturity Date, and any commencement by us of a case under any applicable bankruptcy or insolvency laws.