Provectus Biopharmaceuticals, Inc.: Form 10-Q for the period ended Mar 31, 2025

The following discussion is intended to assist in the understanding and assessment of significant changes and trends related to our results of operations and our financial condition together with our consolidated subsidiaries. This discussion and analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 28, 2025 (“2024 Form 10-K”), which includes additional information about our critical accounting policies and practices and risk factors. Historical results and percentage relationships set forth in the consolidated statement of operations, including trends which might appear, are not necessarily indicative of future operations.

Clinical Development and Drug Discovery

The Company’s small molecule platform, which comprises different drug candidates and non-clinical formulations made from pharmaceutical-grade RBS using different concentrations and delivered by different routes of administration specific to each disease and/or disease indication, includes:

Clinical Development Programs

• Oncology: Intratumoral PV-10 has undergone and is undergoing multiple, monotherapy and combination therapy, early-to-late-stage clinical trials, expanded access programs (“EAPs”) for groups of and individual patients, and/or quality of life (“QOL”) study at multiple clinical sites in Australia, Europe, and the U.S. for the treatments of Stage III and IV melanoma, different types of liver cancers, and breast cancer. PV-10 has undergone clinical monotherapy and combination therapy study of mechanisms of action and immune response for melanoma, metastatic uveal melanoma, and metastatic neuroendocrine tumors at Moffitt Cancer Center (“Moffitt”) in Tampa, Florida, The Queen Elizabeth Hospital in Adelaide, Australia, and MD Anderson Cancer Center in Houston, Texas. The lead indication for intratumoral PV-10 is FOLRINOX-refractory pancreatic ductal adenocarcinoma (“PDAC”) metastatic to the liver (“mPDAC”), where patients would receive the combination therapy of PV-10 and systemically administered gemcitabine and nab-paclitaxel at a single-site early-stage clinical trial at Moffitt. The Company may pursue a secondary indication of pre-operative penile squamous cell carcinoma (“penile SCC”), where patients would receive monotherapy PV-10 at a single-site early-stage clinical trial at Moffitt.
• Dermatology: Topical PH-10, a formulation of PV-10, has undergone multiple mid-stage, monotherapy clinical trials for the treatments of psoriasis and atopic dermatitis at different clinical sites in the U.S. PH-10 has undergone clinical monotherapy mechanism of action and mechanism of immune response study for psoriasis at The Rockefeller University in New York, New York (“TRU”). Different PV-10 formulations have undergone non-clinical combination therapy study for psoriasis and are undergoing non-clinical monotherapy study for skin inflammation and skin aging at TRU.
• Ophthalmology: The Company believes that clinical proof-of-concept (“POC”) of topical administration of non-pharmaceutical grade rose bengal in combination with a light source medical device for the treatment of infectious keratitis has been shown by clinicians and researchers at the University of Miami’s (“UM’s”) Bascom Palmer Eye Institute (“BPEI”) in Miami, Florida, who are now collaborating with the Company to evaluate the potential use of our pharmaceutical-grade RBS. Topical formulation PV-305, a formulation of PV-10, has undergone non-clinical combination therapy study (i.e., drug and device) for diseases and disorders of the eye, such as infectious keratitis, at BPEI. The Company launched a clinical-stage start-up biotechnology company named VisiRose, Inc. (“VisiRose”), a collaboration between the Company and UM to commercialize BPEI’s ocular research using PV-305.

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Proof-of-Concept Programs

Early Drug Discovery Programs

• Immune vaccine adjuvant: Different formulations of PV-10 have undergone non-clinical study as a vaccine adjuvant to enhance T cell responses for anti-viral and anti-cancer vaccines.
• Infectious Diseases: PO and intranasal (“IN”) formulations of PV-10 have undergone non-clinical monotherapy study for the treatment of SARS-CoV-2 at UCal, another Canadian academic research center, the University of Tennessee Health Science Center (“UTHSC”) in Memphis, Tennessee, and a U.S. contract research organization. Different formulations of PV-10 have undergone non-clinical monotherapy and combination therapy study for the treatment of gram-positive and gram-negative bacterial infections (including multi-drug-resistant strains) and have undergone non-clinical monotherapy study for the treatment of oral bacterial infections at UTHSC. Different formulations of PV-10 have undergone non-clinical monotherapy study for the treatment of fungal infections at UTHSC.
• Tissue Regeneration and Repair: Different formulations of PV-10 have undergone non-clinical monotherapy study for vertebrate development, wound healing, and tissue regrowth at the University of Nevada, Las Vegas in Las Vegas, Nevada.
• Proprietary: Different formulations of PV-10 are undergoing non-clinical study for proprietary diseases at an academic medical center.

Computer Modeling Programs

• Computer-based molecular docking of RBS has been done and is being done for amyotrophic lateral sclerosis and other disease targets.

Business Strategy

The Company is selectively continuing ongoing and planning to initiate new monotherapy and combination therapy ITU PV-10 clinical trials in melanoma and liver cancer indications to generate more and/or new clinical data and appropriately utilizing clinical data from historical ITU PV-10 trials, EAPs, and/or QOL study of these oncology indications. Our goals are to pursue drug approval pathways and/or co-development relationships with commercial pharmaceutical companies for ITU PV-10 based on these indications and data.

The Company is developing a systemically administered formulation of pharmaceutical-grade RBS for the treatment of cancer. Our goals, when this work is complete, are to file an investigational new drug application (“IND”) with the U.S. Food and Drug Administration (“FDA”), take an initial systemic drug candidate into an early-stage clinic trial for an initial oncology or hematology indication, and/or pursue a co-development collaboration or out-license arrangement for this route of administration and disease area.

The Company is developing different formulations of pharmaceutical-grade RBS using different concentrations and different routes of administration for other disease areas by endeavoring to show non-clinical activity and lack of toxicity. Our goals, when each task of this work is completed, are to file an IND with the FDA, take an initial drug candidate into an early-stage clinic trial for an initial indication, and/or pursue a co-development collaboration or out-license arrangement for the respective disease area and route of administration.

The Company is endeavoring to fully elucidate the traits and characteristics of the RBS molecule using different academic medical centers under sponsored research and testing agreements. Our goal is to gain and communicate additional knowledge of the RBS molecule’s targeting, mechanism, signaling, immune response, and other features that are common to and/or different from each disease area and indication under research.

The Company is doing rigorous chemical analytical comparisons of non-pharmaceutical grades of rose bengal from specialty chemical suppliers against the Company’s pharmaceutical-grade RBS. Our goal is to demonstrate the proprietary nature of the Company’s pharmaceutical-grade RBS and that our pharmaceutical-grade RBS meets the necessary uniformity and purity requirements for commercial pharmaceutical use.

RBS API and Drug Candidate Manufacturing

Our pharmaceutical-grade RBS resulted from the Company’s innovation of a proprietary, patented, commercial-scale process to synthesize and utilize the RBS molecule into a viable active pharmaceutical ingredient (“API”) for commercial pharmaceutical use; the development of unique chemistry, manufacturing, and control (“CMC”) specifications for API and drug candidate manufacturing processes; the production and multi-year stability testing of multiple API and drug candidate lots; the comprehensive documentation of lot composition and reproducibility; and the review and acceptance of CMC data from these lots by seven different national drug regulatory agencies for use in a prior, multi-country, multi-center Phase 3 randomized control trial of the Company.

The Company’s API and drug candidate manufacturing processes employ Quality-by-Design principles, current good manufacturing practice (“cGMP”) regulations, and the guidelines of The International Council for Harmonization (ICH) of Technical Requirements for Pharmaceuticals for Human Use. These processes utilize controls that eliminate the formation of historical impurities and avoid the introduction of potentially hazardous impurities that the Company believes may have been and could be present in uncontrolled and unreported amounts in non-pharmaceutical grades of rose bengal.

The Company’s processes of synthesizing the RBS molecule into pharmaceutical-grade RBS and manufacturing RBS API and ITU PV-10 drug candidate, the processes’ CMC specifications, and the CMC data from the production of stability lots of API and drug candidate have been reviewed by multiple national drug regulatory agencies prior to granting clinical trial authorizations for the Company to commence a historical Phase 3 study of ITU PV-10 for the treatment of the Company’s former lead indication of locally advanced cutaneous melanoma, including the U.S. FDA, Germany’s Bundesinstitut für Arzneimittel und Medizinprodukte (BfArM), Australia’s Therapeutic Goods Administration (TGA) under a clinical trial notification, France’s Agence Nationale de Sécurité du Médicament et des Produits de Santé (ANSM), Italy’s Agenzia Italiana del Farmaco (AIFA), Mexico’s Comisión Federal para la Protección contra Riesgos Sanitarios (COFEPRIS), and Argentina’s Administración Nacional de Medicamentos, Alimentos y Tecnología Médica (ANMAT).

RBS Non-proprietary Name

The RBS name for the Company’s pharmaceutical-grade API was selected by and passed the review of the World Health Organization (“WHO”) Expert Advisory Panel on the International Pharmacopoeia and Pharmaceutical Preparations after the Company applied for a non-proprietary name in the third quarter of 2020 and reached the status of recommended International Non-proprietary Names (“INN”). INN Recommended List 88, which includes the RBS name, was published with the No. 3 issue of the WHO Drug Information, Volume 36 in the fourth quarter of 2022.

Non-Pharmaceutical Grades of Rose Bengal

Commercial Grade

Commercial grade rose bengal can be purchased from specialty chemical suppliers in the U.S. and in other parts of the world that manufacture it under non-cGMP conditions. Commercial grade rose bengal appears to have reported purities that may vary between 80% and 95% and may contain substantial amounts of unreported impurities and/or gross contaminants. Commercial grade rose bengal is typically used by researchers unaffiliated with the Company for non-clinical study of the rose bengal molecule for potential biomedical therapeutic applications.

We believe that commercial grade rose bengal is still manufactured using the original historical process, or a variant thereof, developed by the molecule’s original Swiss creator Rudolph Gnehm in 1881. Some chemical manufacturers may, however, apply purification techniques that the Company believes still result in commercial grade rose bengal possessing questionable purity and contaminants and substantial lot-to-lot manufacturing variability.

Diagnostic Grade

Diagnostic grade rose bengal describes non-approved rose bengal that is used as an ingredient in historical or current ophthalmic solutions, strips, and devices, has been historically or is presently compounded by pharmacists for ophthalmic use, and has been or is in other non-ophthalmic diagnostic tests such as the rose bengal test for human brucellosis.

We presume, but have not yet confirmed, that diagnostic grade rose bengal is derived from commercial grade rose bengal that may have undergone a form of purification under cGMP regulations and/or may have been compounded by a pharmacist, academic medical researcher, or commercial entity under cGMP regulations. Here too, the Company believes that purification may not sufficiently improve the amounts and accuracy of diagnostic grade rose bengal purity and lot contents and may not adequately reduce or eliminate lot-to-lot manufacturing variability.

Chemical Analytical Comparison

In the first quarter of 2022, the Company began work with a U.S. contract development and manufacturing organization to assess rigorously and methodically three lots of commercial grade rose bengal, one each from three different specialty chemical suppliers, and compare these non-pharmaceutical grade materials with the Company’s pharmaceutical-grade RBS. This chemical analytical work was substantially completed by the end of the third quarter of 2022. The Company believes that the preliminary results of these analyses indicate that all three lots of commercial grade rose bengal had rose bengal purity that was drastically different from what was represented on their respective certificates of analysis (“CofAs”), and that one of the three lots contained gross contaminants that were not represented on its CofA.

Potential Barriers to Entry

The Company believes that the Company’s proprietary, patented, pharmaceutical-grade RBS possesses several competitive advantages over non-pharmaceutical-grade rose bengal (i.e., commercial and diagnostic grades) that researchers, clinicians, and academic, business, and/or governmental competitors have used, are using, and/or may attempt to use for potential biomedical applications. The Company believes that non-pharmaceutical-grade rose bengal may suffer from the uncontrolled presence of substance-related impurities and/or gross contaminants, substantial lot-to-lot manufacturing variability, inaccurately reported and/or misrepresented purity and contents, and the lack of reproducible, consistent, and fulsome CMC specifications and documentation. The Company believes that historical and potentially hazardous impurities and other manufacturing and handling issues facing non-pharmaceutical grade rose bengal may pose significant scientific, technological, and economic challenges to overcome and validate for compliance with modern drug regulatory standards.

Components of Operating Results

Grant Revenue

Grant revenue is recognized when qualifying costs are incurred and there is reasonable assurance that the conditions of the grant have been met. Cash received from grants in advance of incurring qualifying costs is recorded as unearned grant revenue and recognized as grant revenue when qualifying costs are incurred.

Research and Development Expenses

A large component of our total operating expenses is the Company’s investment in research and development activities, including the clinical development of our product candidates. Research and development expenses represent costs incurred to conduct research and undertake clinical trials to develop our drug candidates. These expenses consist primarily of:

• Costs of conducting clinical trials, including amounts paid to clinical centers, clinical research organizations and consultants, among others;
• Salaries and related expenses for personnel;
• Other outside service costs including cost of contract manufacturing;
• The costs of supplies and reagents; and,
• Occupancy and depreciation charges.

We expense research and development costs as incurred.

Research and development activities are central to our business model. We expect our research and development expenses to increase in the future as we advance our existing product candidates through clinical trials and pursue their regulatory approval. Undertaking clinical development and pursuing regulatory approval are both costly and time-consuming activities. As a result of known and unknown uncertainties, we are unable to determine the duration and completion costs of our research and development activities, or if, when, and to what extent we will generate revenue from any subsequent commercialization and sale of our drug candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries, stock-based compensation expense and other related costs for personnel in executive, finance, accounting, business development, legal, information technology and corporate communication functions. Other costs include facility costs not otherwise included in research and development expense, insurance, and professional fees for legal, patent and accounting services.

Results of Operations

Comparison of the Three Months Ended March 31, 2025 and March 31, 2024

Overview

Grant revenue was $278,628 for the three months ended March 31, 2025, an increase of $40,556 or 17.0% compared to the three months ended March 31, 2024. Total operating expenses were $1,376,569 for the three months ended March 31, 2025, an increase of $691,232 or 100.9% compared to the three months ended March 31, 2024, primarily as the result of increases in general and administrative expenses, as described below.

Grant Revenue

For the three months ended March 31, 2025 and 2024, there was $278,628 and $238,072, respectively, of grant revenue recognized related to qualifying expenses that were incurred and included within research and development expenses on the condensed consolidated statements of operations.

Research and Development Expenses

Research and development expenses were $388,810 for the three months ended March 31, 2025, a decrease of $166,725 or 30.0% compared to $555,535 for the three months ended March 31, 2024. The decrease was primarily due to (i) lower clinical trial costs associated with study closure, (ii) lower insurance costs reflected by change in insurance carrier, and (iii) decrease in depreciation expense as a result of certain assets reaching the end of their useful lives and becoming fully depreciated, partially offset by (iv) increase in payroll and related taxes related to reclassification of employee from general and administrative.

The following table summarizes research and development expenses for the three months ended March 31, 2025 and 2024.

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General and Administrative Expenses

General and administrative expenses were $987,759 for the three months ended March 31, 2025, an increase of $857,957 or 661.0% compared to $129,802 for the three months ended March 31, 2024. The increase was primarily due to (i) increase in directors’ fees as the result of the reversal of previously accrued director fees for Mr. Horowitz, our former COO, following his resignation on March 25, 2024, (ii) increase in payroll expenses and associated taxes primarily due to the addition of two officers hired in April 2024, (iii) increase in donations as the result of a contribution made to the University of Miami through the majority owned subsidiary, VisiRose and (iv) increase in stock based compensation, partially offset by (v) lower insurance costs reflected by change in insurance carrier, (vi) reduced legal cost related to patents, and (vii) decrease in professional fees resulting from the resignation of Mr. Horowitz, our former Chief Operating Officer, effective March 25, 2024.

The following table summarizes general and administrative expenses for the three months ended March 31, 2025 and 2024.

Other Expense, Net

Interest expense increased by $6,884 or 12.1% from $56,777 for the three months ended March 31, 2024 to $63,661 for the three months ended March 31, 2025. The increase was mainly due to the interest expense costs incurred in connection with notes payable balances.

Liquidity and Going Concern

The Company’s cash and restricted cash were $469,454 at March 31, 2025, which includes $79,019 of restricted cash resulting from a grant received from the State of Tennessee, compared to $489,726 at December 31, 2024, which included $182,284 of restricted cash. The Company’s working capital deficit was $5,085,769 and $5,998,712 as of March 31, 2025 and December 31, 2024, respectively. We have continuing net losses and negative cash flows from operating activities. In addition, we have an accumulated deficit of $258,563,069 as of March 31, 2025. These conditions raise substantial doubt about our ability to continue as a going concern for a period within one year from the date that the financial statements included elsewhere in this Quarterly Report on Form 10-Q are issued. The condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q have been prepared on a basis that contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. Our ability to continue as a going concern depends on our ability to obtain additional financing as may be required to fund current operations.

As of March 31, 2025, cash requirements for our current liabilities include approximately $2,961,035 for accounts payable and other accrued expenses (including lease liabilities) and $124,578 note payable related to our short-term financing of our commercial insurance policies. Also, if not converted prior to maturity, convertible debt in the amount of $2,440,000 plus $152,145 of accrued interest will mature one year from the date of the notes. The 2021, 2022, and 2024 Notes are only subject to repayment in the event of a change of control or event of default. The Company intends to meet these cash requirements from its current cash balance and from future financing.

Management’s plans include selling our equity securities and obtaining other financing, including the issuance of 2025 unsecured convertible notes (the “2025 Financing”), to fund our capital requirements and on-going operations; however, there can be no assurance that the Company will be successful in these efforts. Significant funds will be needed to continue and complete our ongoing and planned clinical trials.

Access to Capital

Management plans to access capital resources through possible public or private equity offerings, including the 2025 Financing, exchange offers, debt financings, corporate collaborations, or other means. If we are unable to raise sufficient capital through the 2025 Financing or otherwise, we will not be able to pay our obligations as they become due.

The primary business objective of management is to build the Company into a commercial-stage biotechnology company; however, we cannot assure you that management will be successful in implementing the Company’s business plan of developing, licensing, and/or commercializing our prescription drug candidates. Moreover, even if we are successful in improving our current cash flow position, we nonetheless plan to seek additional funds to meet our current and long-term requirements in 2025 and beyond. We anticipate that these funds will otherwise come from the proceeds of private placement transactions, including the 2025 Financing, exercise of outstanding stock options, or public offerings of debt or equity securities. While we believe that we have a reasonable basis for our expectation that we will be able to raise additional funds, we cannot assure you that we will be able to complete additional financing in a timely manner. In addition, any such financing may result in significant dilution to stockholders.

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with U.S. GAAP, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statements that require estimation but are not deemed critical, as defined above.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as special purpose entities (“SPEs”).

Available Information

Our website is located at www.provectusbio.com (http://www.provectusbio.com). We make available free of charge through this website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Reference to our website does not constitute incorporation by reference of the information contained on the site and should not be considered part of this document.

The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC as we do. The website is http://www.sec.gov.

The Company also intends to use press releases, the Company’s website and certain social media accounts as a means of disclosing information and observations about the Company and its business, and for complying with the Company’s disclosure obligations under Regulation FD: the Provectus Substack account (provectus.substack.com), the @ProvectusBio X account (twitter.com/provectusbio), and the Company’s LinkedIn account (linkedin.com/company/provectus-biopharmaceuticals). The information and observations that the Company posts through these social media channels may be deemed material. Accordingly, investors should monitor these social media channels in addition to following the Company’s press releases, SEC filings, and website. The social media channels that the Company intends to use as a means of disclosing the information described above may be updated from time to time.

The contents of the websites provided above are not intended to be incorporated by reference into this Quarterly Report on Form 10-Q or our Annual Report on Form 10-K or in any other report or document we file with the SEC. Further, our references to the URLs for these websites are intended to be inactive textual references only.

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our principal executive officer and principal financial officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Inherent Limitations on Effectiveness of Controls

Even assuming the effectiveness of our controls and procedures, our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error or all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. In general, our controls and procedures are designed to provide reasonable assurance that our control system’s objective will be met, and our principal executive officer and principal financial officer has concluded that our disclosure controls and procedures are effective at the reasonable assurance level. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls in future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Except as noted below, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

The following risk factor is provided as an update to our previously disclosed risk factors:

Changes in U.S. Trade Policies Could Adversely Affect Our Operations

Ongoing uncertainty around U.S. trade policies, tariffs, and international agreements may impact the cost and availability of materials, supplies, and equipment used in our operations or those of our partners. Any disruptions or increased costs resulting from these changes could negatively affect our business, financial condition, results of operations, and the market price of our common stock.