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OFFON

REVIVA PHARMACEUTICALS HOLDINGS, INC.

(RVPH)
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REVIVA PHARMACEUTICALS : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

05/17/2021 | 09:31am EDT
As a result of the completion of the Business Combination, the financial
statements of Reviva Pharmaceuticals, Inc are now the financial statements of
the Company. Prior to the Business Combination, the Company had no operating
assets but, upon consummation of the Business Combination, the business and
operating assets of Reviva Pharmaceuticals, Inc. acquired by the Company became
the sole business and operating assets of the Company. Accordingly, the
financial statements of Reviva Pharmaceuticals, Inc. and its respective
subsidiary as they existed prior to the Business Combination and reflecting the
sole business and operating assets of the Company going forward, are now the
financial statements of the Company.



All statements other than statements of historical fact included in this section
regarding our financial position, business strategy and the plans and objectives
of management for future operations, are forward- looking statements. When used
in this section, words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to our management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of management, as well as assumptions made by, and information currently
available to, our management. Actual results could differ materially from those
contemplated by the forward- looking statements as a result of certain factors
detailed herein. All subsequent written or oral forward-looking statements
attributable to us or persons acting on our behalf are qualified in their
entirety by this paragraph.



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS




This report on Form 10-Q contains forward-looking statements made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995 under Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements include statements with respect to our beliefs, plans, objectives,
goals, expectations, anticipations, assumptions, estimates, intentions and
future performance, and involve known and unknown risks, uncertainties and other
factors, which may be beyond our control, and which may cause our actual
results, performance or achievements to be materially different from future
results, performance or achievements expressed or implied by such
forward-looking statements. All statements other than statements of historical
fact are statements that could be forward-looking statements. You can identify
these forward-looking statements through our use of words such as "may," "can,"
"anticipate," "assume," "should," "indicate," "would," "believe," "contemplate,"
"expect," "seek," "estimate," "continue," "plan," "point to," "project,"
"predict," "could," "intend," "target," "potential" and other similar words and
expressions of the future.



There are a number of important factors that could cause the actual results to
differ materially from those expressed in any forward-looking statement made by
us. These factors include, but are not limited to:





  ? our ability to maintain the listing of the Common Stock and Warrants on
    Nasdaq;




  ? our ability to grow and manage growth economically;




  ? our ability to retain key executives and medical and science personnel;



? the impact of the COVID-19 pandemic, and related responses of businesses and

governments to the pandemic, on our operations and personnel, on commercial

activity in the markets in which we operate and on our results of operations;

? the possibility that our products in development succeed in or fail clinical

trials or are not approved by the U.S. Food and Drug Administration or other

    applicable authorities;



? the possibility that we could be forced to delay, reduce or eliminate its

    planned clinical trials or development programs;




  ? our ability to obtain approval from regulatory agents in different
    jurisdictions for our current or future product candidates;




  ? changes in applicable laws or regulations;




  ? changes to our relationships within the pharmaceutical ecosystem;



? our current and future capital requirements to support our development and

    commercialization efforts and our ability to satisfy our capital needs;



? the accuracy of our estimates regarding expenses and capital requirements,

    including estimated costs of our clinical studies.




  ? our limited operating history;




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? our history of operating losses in each year since inception and expectation

that we will continue to incur operating losses for the foreseeable future;

? the valuation of our Private Warrants could increase the volatility in our net

    income (loss);




  ? changes in the markets that we target;



? our ability to maintain or protect the validity of our patents and other

    intellectual property;




  ? our exposure to any liability, protracted and costly litigation or
    reputational damage relating to data security;




  ? our ability to develop and maintain effective internal controls; and



? the possibility that we may be adversely affected by other economic, business,

    and/or competitive factors.




The foregoing does not represent an exhaustive list of matters that may be
covered by the forward-looking statements contained herein or risk factors that
we are faced with that may cause our actual results to differ from those
anticipated in such forward-looking statements. Please see "Risk Factors" for
additional risks which could adversely impact our business and financial
performance.



All forward-looking statements are expressly qualified in their entirety by this
cautionary notice. You are cautioned not to place undue reliance on any
forward-looking statements, which speak only as of the date of this report or
the date of the document incorporated by reference into this report. We have no
obligation, and expressly disclaims any obligation, to update, revise or correct
any of the forward-looking statements, whether as a result of new information,
future events or otherwise. We have expressed our expectations, beliefs and
projections in good faith and believe they have a reasonable basis. However, we
cannot assure you that our expectations, beliefs or projections will result or
be achieved or accomplished.



Company Overview



We are a clinical-stage biopharmaceutical company that discovers, develops and
seeks to commercialize next-generation therapeutics for diseases representing
significant unmet medical needs and burden to society, patients, and their
families. Our current pipeline focuses on the central nervous system,
respiratory, and metabolic diseases. We use a chemical genomics driven
technology platform and proprietary chemistry to develop new medicines. Our
pipeline currently has two drug candidates, RP5063 (Brilaroxazine) and RP1208.
Both are new chemical entities discovered in-house. We have been granted
composition of matter patents for both RP5063 and R1208 in the United States
(U.S.), Europe, and several other countries.



Our lead drug candidate, RP5063, is ready for continued clinical development for
multiple neuropsychiatric indications. These include schizophrenia, bipolar
disorder (BD), major depressive disorder (MDD), behavioral and psychotic
symptoms, dementia or Alzheimer's disease (BPSD), Parkinson's disease psychosis
(PDP), and attention deficit hyperactivity disorder (ADHD). Furthermore, RP5063
is also ready for clinical development for two respiratory
indications - pulmonary arterial hypertension (PAH) and idiopathic pulmonary
fibrosis (IPF). The U.S. Food and Drug Administration (FDA) has granted Orphan
Drug designation to RP5063 for the treatment of PAH in November 2016 and IPF in
April 2018.


Our primary focus is to complete the clinical development of RP5063 for the treatment of acute and maintenance schizophrenia.




Subject to the receipt of additional financing, we may also continue the
clinical development of RP5063 for the treatment of BD, MDD, BPSD, PDP, ADHD,
PAH and IPF. Moreover, subject to the receipt of additional financing, we may
also advance the development of our second drug candidate, RP1208, for the
treatment of depression and obesity.



Impact of COVID-19



In response to the spread of COVID-19, we have taken temporary precautionary
measures intended to help minimize the risk of the virus to our employees and
community, including temporarily requiring employees to work remotely and
suspending all non-essential travel for our employees.



As a result of the COVID-19 pandemic, we may experience disruptions that could
adversely impact our business. The COVID-19 pandemic may negatively affect
clinical site initiation, patient recruitment and enrollment, patient dosing,
distribution of drug to clinical sites and clinical trial monitoring for our
clinical trials. The COVID-19 pandemic may also negatively affect the operations
of the third-party contract research organizations that we intend to rely upon
to assist us in conducting our clinical trials and the contract manufacturers
who manufacture our drug candidates.



                                       3
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We are continuing to assess the potential impact of the COVID-19 pandemic on our
business and operations. For additional information on the various risks posed
by the COVID-19 pandemic, refer to Part I-Item 1A-Risk Factors of our Annual
Report on Form 10-K/A, as filed with the Securities and Exchange Commission (the
"SEC") on May 7, 2021.


Business Combination and Domestication




On December 14, 2020, Reviva Pharmaceuticals Holdings, Inc. (the "Company"), a
Delaware corporation and the successor by re-domiciliation to Tenzing
Acquisition Corp. ("Tenzing"), a British Virgin Islands exempted company,
Tenzing Merger Subsidiary Inc., a Delaware corporation and wholly-owned
subsidiary of Tenzing ("Merger Sub"), and Reviva Pharmaceuticals, Inc., a
Delaware corporation (together with its consolidated subsidiary), consummated a
business combination (the "Business Combination") through the merger of Merger
Sub with and into Reviva Pharmaceuticals, Inc., contemplated by the previously
announced Agreement and Plan of Merger, dated as of July 20, 2020 (the "Merger
Agreement"), by and among Tenzing, Merger Sub, Reviva Pharmaceuticals, Inc., and
the other parties thereto. Pursuant to the Merger Agreement, at the effective
time of the Merger (the "Effective Time"), Merger Sub merged with and into
Reviva Pharmaceuticals, Inc., with Reviva Pharmaceuticals, Inc. as the surviving
company in the Merger and, after giving effect to such Merger, Reviva
Pharmaceuticals, Inc. becoming a wholly-owned subsidiary of Reviva
Pharmaceuticals Holdings, Inc. (together with its consolidated subsidiary).



Old Reviva was incorporated in the state of Delaware on May 1, 2006 and its subsidiary, Reviva Pharmaceuticals India Pvt. Ltd., was incorporated on December 23, 2014. Tenzing was formed pursuant to the laws of the British Virgin Islands on March 20, 2018.




The Business Combination was accounted for as a reverse merger in accordance
with GAAP. Under this method of accounting, Tenzing was treated as the
"acquired" company for financial reporting purposes. This determination was
primarily based on the holders of Old Reviva expecting to have a majority of the
voting power of the post-combination company, Old Reviva senior management
comprising substantially all of the senior management of the post-combination
company, the relative size of Old Reviva compared to Tenzing, and Old Reviva
operations comprising the ongoing operations of the post-combination company.
Accordingly, for accounting purposes, the Business Combination is treated as the
equivalent of Old Reviva issuing stock for the net assets of Tenzing,
accompanied by a recapitalization. The net assets of Tenzing were stated at
historical cost, with no goodwill or other intangible assets recorded.
Operations prior to the Business Combination are those of Old Reviva.



Financial Overview



We are a clinical-stage biopharmaceutical company and have not generated any
revenues from the sale of products. We have never been profitable, and our
accumulated deficit as of March 31, 2021 was $59.3 million. Our net loss for the
three months ended March 31, 2021 was approximately $949,000. We expect to incur
significant expenses and increased operating losses for the next several years.
We expect our expenses to increase in connection with our ongoing activities to
research, develop and commercialize our product candidates. Furthermore, we
expect to incur additional costs associated with operating as a public company.
We will need to generate significant revenues to achieve profitability, and we
may never do so.


We expect our expenses will increase substantially in connection with our ongoing activities, as we:

? invest significantly to further research and develop, through clinical trials

for RP5063 (Brilaroxazine) and pre-clinical research for RP1208, and seek

regulatory approval for our product candidates RP5063 (Brilaroxazine) and

    RP1208;

  ? identify and develop additional product candidates;




  ?  hire additional clinical, scientific and management personnel;

? seek regulatory and marketing approvals for any product candidates that we

may develop;

? ultimately establish a sales, marketing and distribution infrastructure to

     commercialize any drugs for which we may obtain marketing approval;

  ?  maintain, expand and protect our intellectual property portfolio;

  ?  acquire or in-license other drugs and technologies; and

? add operational, financial and management information systems and personnel,

including personnel to support our product candidate development, any future

     commercialization efforts and our transition to a public company.




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We have funded our operations to date primarily from the issuance and sale of
our equity and convertible equity securities. As of March 31, 2021, we had cash
of approximately $5.6 million. To fund our current operating plans, we will need
to raise additional capital. Our existing cash will not be sufficient for us to
complete development of our product candidates and, if applicable, to prepare
for commercializing any product candidate that may receive approval.
Accordingly, we will continue to require substantial additional capital beyond
our existing cash to continue our clinical development and potential
commercialization activities; however, we believe that our existing cash, will
be sufficient to fund our current operating plans through at least December
2021. The amount and timing of our future funding requirements will depend on
many factors, including the pace and results of our clinical development
efforts. We will seek to fund our operations through public or private equity or
debt financings or other sources, which may include collaborations with third
parties. Adequate additional financing may not be available to us on acceptable
terms, or at all. Our failure to raise capital as and when needed would have a
negative impact on our financial condition and our ability to pursue our
business strategy. We cannot assure you that we will ever be profitable or
generate positive cash flow from operating activities.



Research and Development Expenses




We focus our resources on research and development activities, including the
conduct of preclinical and clinical studies and product development and expense
such costs as they are incurred. We have not historically tracked or recorded
research and development expenses on a project-by-project basis, primarily
because we use our employee and infrastructure resources across multiple
research and development projects, and it is not practical for us to allocate
such costs on a project-by-project basis. Our research and development expenses
primarily consist of employee-related expenses, including deferred salaries,
salaries, benefits and taxes for personnel in research and development
functions.



The largest recurring component of our total operating expenses has historically
been research and development activities. we expect our research and development
expenses will increase for the next several years as we advance our development
programs, pursues regulatory approval of our product candidates in the U.S. and
other jurisdictions and prepare for potential commercialization, which would
require a significant investment in costs related to contract manufacturing,
inventory buildup and sales and marketing activities.



Our primary product candidates and their current status is as follows:




Drug Candidate       Indication            Status

    RP5063          Schizophrenia         Phase 2
                                        complete. We
                                       are currently
                                        focusing our
                                         efforts on
                                        initiating a
                                       pivotal Phase
                                         3 study in
                                           acute
                                       schizophrenia.
    RP5063        Bipolar Disorder        Phase 1
                                         complete**
    RP5063         Depression-MDD         Phase 1
                                         complete**
    RP5063           Alzheimer's          Phase 1
               (AD-Psychosis/Behavior)   complete**
    RP5063           Parkinson's          Phase 1
                                         complete**
    RP5063            ADHD/ADD            Phase 1
                                         complete**
    RP5063               PAH              Phase 1
                                         complete**
    RP5063               IPF              Phase 1
                                         complete**
    RP1208           Depression          Completed
                                        pre-clinical
                                        development
                                          studies,
                                        including in
                                       vitro receptor
                                          binding
                                          studies,
                                           animal
                                          efficacy
                                        studies, and
                                        PK studies.
                                       Compound ready
                                          for IND
                                          enabling
                                          studies.
    RP1208             Obesity           Completed
                                        pre-clinical
                                        development
                                          studies,
                                        including in
                                       vitro receptor
                                          binding
                                       studies and PK
                                          studies.
                                       Compound ready
                                         for animal
                                          efficacy
                                          studies.




                                       5
--------------------------------------------------------------------------------




** We completed the Phase 1 clinical study for RP5063 (Brilaroxazine) prior to
starting the Phase 2 study in schizophrenia and schizoaffective disorder. We
collected safety data for RP5063 (Brilaroxazine) in over 200 patients, including
healthy subjects and patients with stable schizophrenia, acute schizophrenia and
schizoaffective disorder. Generally, no separate Phase 1 study is required for
conducting a Phase 2 study for an additional indication, provided the treatment
doses in the Phase 2 study for an additional indication are within the range of
doses tested in the previously completed Phase 1 study.



The successful development of our platform and product candidates is highly
uncertain, and we may never succeed in achieving marketing approval for our
product candidates RP5063 (Brilaroxazine), RP1208, or any future product
candidates. We estimate that initial costs to conduct our Phase 3 clinical study
for RP5063 could total approximately $21.0 million, with approximately $7.0
million payable over the course of calendar 2021, and approximately $10.0
million payable during calendar 2022, and approximately $4.0 million payable
during calendar 2023. At this time, other than our estimates for conducting our
Phase 3 clinical study for RP5063, we cannot reasonably estimate the nature,
timing, or costs of the efforts necessary to finish developing any of our
product candidates or the period in which material net cash, if any, from these
product candidates may commence. This is due to the numerous risks and
uncertainties associated with developing therapeutics, including the uncertainty
of:



  ? the scope, rate of progress, expense, and results of clinical trials;

  ? the scope, rate of progress, and expense of process development and
    manufacturing;

  ? preclinical and other research activities; and

  ? the timing of regulatory approvals.





General Administrative Expenses




General and administrative expenses primarily consist of payroll and related
costs for employees in executive, business development, finance, and
administrative functions. Other significant general and administrative expenses
include professional fees for accounting and legal services.



We expect general and administrative expenses to increase as we expand
infrastructure and continue the development of our clinical programs. Other
increases could potentially include increased costs for director and officer
liability insurance, costs related to the hiring of additional personnel, and
increased fees for directors, outside consultants, lawyers, and accountants. We
expect to incur significant costs to comply with corporate governance, internal
controls, and similar requirements applicable to public companies.



                                       6
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Critical Accounting Policies and Use of Estimates




Our critical accounting policies are disclosed in our Annual Report on Form
10-K/A for the year ended December 31, 2020, as filed with the SEC on May 7,
2021. Since the date of the Annual Report, there have been no material changes
in our critical accounting policies.



Results of Operations


Comparison of the three months ended March 31, 2021 and 2020:

The following table summarizes our results of operations for the three months ended March 31, 2021 and 2020:



                                                   Three Months Ended
                                                        March 31,                Change          Change
                                                   2021            2020             $              %
Operating expenses
Research and development                       $    391,161$  271,246         119,915             44
General and administrative                        1,480,967        347,031       1,133,936            327
Loss from operations                             (1,872,128 )     (618,277 )
Gain on remeasurement of warrant liabilities        923,480              -         923,480            100
Interest expense                                          -       (129,885 )      (129,885 )          100
Interest and other income                               148              -             148            100
Total other income (expense)                        923,628       (129,885 )
Net loss                                       $   (949,300 )$ (748,962 )

Research & Development expenses




We incurred approximately $391,000 and $271,000 in research and development
expenses for the three months ended March 31, 2021 and 2020, respectively. The
increase of approximately $120,000, or 44%, was primarily attributable to higher
salary expenditures and increased consulting and drug development costs. Our
research and development expenses are expected to increase for the foreseeable
future as we continue to advance our platform and product candidates.



General Administrative Expenses




We incurred approximately $1.5 million and $347,000 in general and
administrative expenses for the three months ended March 31, 2021 and 2020,
respectively. The increase of approximately $1.1 million, or 327%, was primarily
attributable to $630,000 related to the increased use of consultants in
connection with accounting and legal activities, $345,000 increased insurance
costs, a result of increased premiums as we are now a public company and $60,000
increase in salary and related expenses for new personnel.



Interest Expense


Interest expense for the three months ended March 31, 2021 and 2020 was approximately $0 and $130,000, respectively. The decrease of $130,000 was due to all investor notes being converted immediately prior to the Business Combination.

Gain on Remeasurement of Warrant Liabilities




The gain on remeasurement of warrant liabilities of approximately $923,000 for
the three months ended March 31, 2021 resulted from the decrease in calculated
fair value principally as a result of the decline in stock price from Decemeber
31, 2020.


Liquidity and Capital Resources




As of March 31, 2021, we had cash of approximately $5.6 million. We expect to
continue to incur significant expenses and operating losses for the foreseeable
future as we continue our research and preclinical and clinical development of
our product candidates; expand the scope of our current studies for our product
candidates; initiate additional preclinical, clinical or other studies for our
product candidates; change or add additional manufacturers or suppliers; seek
regulatory and marketing approvals for any of our product candidates that
successfully complete clinical studies; seek to identify, evaluate and validate
additional product candidates; acquire or in-license other product candidates
and technologies; maintain, protect and expand our intellectual property
portfolio; attract and retain skilled personnel; and experience any delays or
encounter issues with any of the above.



                                       7
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Until such time as we can generate substantial product revenue, if ever, we expect to finance our cash needs through a combination of equity or debt financings and collaboration agreements. We do not currently have any committed external sources of capital.




To the extent that we raise additional capital through the future sale of equity
or debt, the ownership interest of our stockholders will be diluted, and the
terms of these securities may include liquidation or other preferences that
adversely affect the rights of our existing stockholders.



If we raise additional funds through collaboration agreements in the future, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us.




If we are unable to raise additional funds through equity or debt financings
when needed, we may be required to delay, limit, reduce or terminate our product
development or future commercialization efforts or grant rights to develop and
market product candidates that we would otherwise prefer to develop and market
ourselves.



The table below sets forth selected cash flow data for the periods presented:



                                      Three Months Ended
                                          March 31,                 Change         Change
                                      2021           2020             $              %
Net cash from:
Operating activities              $ (3,116,243 )$ (60,662 )     (3,055,581 )     (5,037 )
Financing activities              $          -     $ 230,000         (230,000 )        100
Net increase (decrease) in cash   $ (3,116,243 )$ 169,338

Net Cash Used in Operating Activities




Net cash used in operating activities for the three months ended March 31, 2021
was approximately $3.1 million, consisting primarily of a net loss of
approximately $949,000, a noncash gain related to the remeasurement of warrant
liabilities of approximately $923,000 and an increase in net operating assets of
approximately $1.2 million. The increase in net operating assets was primarily
due to increases in prepaid expenses and accrued expenses and other liabilities,
offset by decreases in accounts payable.



Net cash used in operating activities for the three months ended March 31, 2020
was approximately $61,000, consisting primarily of a net loss of approximately
$749,000, offset by expense recorded of approximately $453,000 related to common
stock to be issued in lieu of deferred compensation and a decrease in net
operating assets of approximately $236,000. The decrease in net operating assets
was due to increases in accounts payable, accrued interest and accrued expenses
and other liabilities, offset by a reduction in prepaid expenses.



Net Cash Provided by Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2020 of approximately $230,000 related to proceeds from the issuance of convertible promissory notes.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

JOBS Act Accounting Election




As an emerging growth company under the JOBS Act, we are eligible to take
advantage of certain exemptions from various reporting requirements that are
applicable to other public companies that are not emerging growth companies. We
have elected not to opt out of such extended transition period. Accordingly,
when a standard is issued or revised and it has different application dates for
public or private companies, we, as an emerging growth company, will adopt the
new or revised standard at the time private companies adopt the new or revised
standard, unless early adoption is permitted by the standard, and we elect early
adoption. This may make comparison of our financial statements with another
public company which is neither an emerging growth company nor an emerging
growth company which has opted out of using the extended transition period
difficult or impossible because of the potential differences in accounting
standards used.

© Edgar Online, source Glimpses

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