美國
證券交易委員會
華盛頓特區20549
表格
根據1934年證券交易所法第13或15(d)條週期性報告 |
截至2024年6月30日季度結束
根據1933年證券法第13或第15(d)條,進行過渡報告 |
到 至
委員會檔案編號:
(依憑章程所載的完整登記名稱)
(依據所在地或其他管轄區) 的註冊地或組織地點) | (I.R.S. Employer or 識別號碼) |
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(總部辦公地址) | (郵政編碼) |
(
(註冊人電話號碼,包括區號)
不適用
(如果自上次報告以來更改,請提供公司的前名、前地址和前財政年度)
根據法案第12(b)條註冊的證券:
每個課程的標題 |
| 交易 |
| 每個交易所的名稱 |
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無 |
請勾選是否 (1) 依據《1934年證券交易法》第13或15(d)條的規定,在過去12個月(或登記人所必須提交此等報表的較短期間)中已提交必須提交的所有報告,並且 (2) 在過去90天中已受到此等提交要求的約束。
標記是否表示在過去12個月內(或對於要求提交此類文件的較短期間)每一個根據Regulation S-t(本章節第232.405條)第405條規定應提交的互動式數據文件已經以電子方式提交?
請載明檢查標記,公司是否為大型加速披露人、加速披露人、非加速披露人、小型報告公司或新興成長公司。請於「交易所法案」第1202條中查閱「大型加速披露人」、「加速披露人」、「小型報告公司」和「新興成長公司」的定義。
大型高速申報者 | ☐ | 快速文件提交者 | ☐ |
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☒ | 小型報告公司 | ||
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| 新興增長型企業 |
如果一家新興成長型企業,請勾選“是”表示註冊人選擇不使用根據證券交易所法第13(a)條所提供的任何新的或修改後的財務會計準則的延長過渡期來遵守。 ☐
標示勾選是否本登記機構是一間殼公司(按照交易所法案第120億2條所定義):是
截至2024年9月30日,本登記機構$0.001面值普通股的發行股數共有所有板塊股,共有
第一部分。財務資訊
項目1。合併財務報表
CytoDyn Inc.
合併資產負債表
(未經審核,以千為單位,除每股價值外)
2024年8月31日 |
| (IRS Employer | ||||
資產 |
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流動資產: |
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現金 | $ | | $ | | ||
限制性現金 |
| — |
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預付款項 |
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預付服務費 |
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其他應收帳款(附註9) | | — | ||||
全部流動資產 |
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其他非流動資產 |
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資產總額 | $ | | $ | | ||
負債及股東權益不足 |
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流動負債: |
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應付賬款 | $ | | $ | | ||
應計負債及補償 |
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可轉換票據上的應計利息 |
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可轉換優先股應計分紅派息 |
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應付可轉換票據,淨額 |
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流動負債合計 |
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營運租賃 |
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其他負債(註9) | | | ||||
總負債 |
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承諾和條款(註9) |
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股東資本赤字: |
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優先股,面額$0.01,授權股數為5,000,000股,發行且流通股數為截至2024年6月30日和2023年12月31日之184,668,188股和181,364,180股。 |
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B系可轉換優先股,$ |
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C系列可換股優先股,已授權; |
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D系列可轉換優先股,$ |
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0.01 |
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庫藏股,$ | ||||||
資本公積額額外增資 |
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累積虧損 |
| ( |
| ( | ||
股東權益的赤字為 |
| ( |
| ( | ||
負債總額和股東權益總赤字 | $ | | $ | |
請參閱附註以獲取公司的基本報表。
3
CytoDyn Inc.
綜合損益表
(未經審核,以千位單位計算,每股數據除外)
截至8月31日止三個月, | ||||||
| 2024 |
| 2023 | |||
營業費用: |
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總務與行政 | $ | | $ | | ||
研發費用 |
| ( |
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折舊 |
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營業費用總計 |
| ( |
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營運獲利(虧損) |
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利息收入及其他收入(費用): | ||||||
利息收入 | | — | ||||
可轉換票據利息 |
| ( |
| ( | ||
可轉換票據折價攤銷 | ( | ( | ||||
債務發行成本攤銷 |
| — |
| ( | ||
歷史轉換損失 | ( | ( | ||||
財務費用 |
| ( |
| ( | ||
清償債券的虧損 |
| — |
| ( | ||
(虧損)衍生工具之利益 | ( | | ||||
利息總額及其他費用 |
| ( |
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稅前收益(虧損) |
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所得稅補充 |
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凈利潤(損失) | $ | | $ | ( | ||
每股盈餘(損失): | ||||||
基礎 | $ | | $ | ( | ||
稀釋 | $ | | $ | ( | ||
在計算每股收益(損失)時使用的加權平均普通股數: | ||||||
基礎 | | | ||||
稀釋 | | |
請參閱附註以獲取公司的基本報表。
4
CytoDyn Inc.
股東赤字變動合併報表
(未經審計,以千為單位)
優先股 | 普通股 | 庫藏股 |
| 額外的 |
| 累計 |
| 股東總數 | ||||||||||||||||
| 股份 |
| 金額 |
| 股份 |
| 金額 |
| 股份 |
| 金額 | 實收資本 | 赤字 | 赤字 | ||||||||||
2024年5月31日結存 | | $ | — | | $ | | | $ | — | $ | | $ | ( | $ | ( | |||||||||
發行股票以償還可轉換票據 | — | — | | | — | — |
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歷史轉換損失 | — | — | — | — | — | — |
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股票發行用於要約收購 | — | — | | | — | — |
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股票發行與招標要約相關的發行成本 | — | — | — | — | — | — |
| ( |
| — |
| ( | ||||||||||||
在C和D轉換優先股上所累積的分紅派息 | — | — | — | — | — | — |
| ( |
| — |
| ( | ||||||||||||
股票酬勞 | — | — | — | — | — | — |
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凈利潤 | — | — | — | — | — | — |
| — |
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2024年8月31日結餘 | | $ | — | | $ | | | $ | — | $ | | $ | ( | $ | ( |
優先股 | 普通股 | 庫藏股 |
| 額外的 |
| 累計 |
| 股東總人數' | ||||||||||||||||
| 股份 |
| 金額 |
| 股份 |
| 金額 |
| 股份 |
| 金額 | 實收資本 | 赤字 | 赤字 | ||||||||||
2023年5月31日結餘 | | $ | — | | $ | | | $ | — | $ | | $ | ( | $ | ( | |||||||||
發行股份作為可轉換票據償還 | — | — | | | — | — |
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歷史轉換損失 | — | — | — | — | — | — |
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附股票的票據發行 | — | — | — | — | — | — |
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向聯屬公司分派 | — | — | | | — | — |
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認股權行使 | — | — | | | — | — |
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在C和D系列可轉換優先股上賺取的分紅派息 | — | — | — | — | — | — |
| ( |
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將warrants由負債重新分類為權益分類 | — | — | — | — | — | — |
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股票酬勞 | — | — | — | — | — | — | | — | | |||||||||||||||
淨損失 | — | — | — | — | — | — |
| — |
| ( |
| ( | ||||||||||||
2023年8月31日結餘 | | $ | — | | $ | | | $ | — | $ | | $ | ( | $ | ( |
請參閱附註以獲取公司的基本報表。
5
CytoDyn Inc.
綜合現金流量表
(未經審計,以千為單位)
截至8月31日止三個月, | ||||||
| 2024 |
| 2023 | |||
經營活動現金流量: |
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凈利潤(損失) | $ | | $ | ( | ||
調整使淨利潤(損失)與經營活動中使用的現金相符: |
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攤提與折舊 |
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債務發行成本攤銷 |
| — |
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可轉換票據折價攤銷 |
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衍生工具損益 | | ( | ||||
歷史轉換損失 | | | ||||
清償債券的虧損 |
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股份報酬 |
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營運資產和負債的變化: |
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預付費用及其他資產 | ( | ( | ||||
应付账款、应计费用及其他负债 |
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營運活動之淨現金提供(使用)量 |
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投資活動之現金流量: |
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投資活動提供的淨現金 |
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來自籌資活動的現金流量: |
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認股證交易的收益,扣除發行成本 | | — | ||||
普通股和warrants出售所得款項,扣除發行成本後淨額 |
| — |
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warrants行使所得款項 |
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(支付現金) 由應付票據所得款項 | ( | | ||||
籌資活動提供的淨現金 |
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現金及限制性現金淨變動 |
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期初現金和受限現金 |
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期末現金和受限現金 | $ | | $ | | ||
現金和受限制現金分別如下: | ||||||
現金 | $ | | $ | | ||
限制性現金 | — | | ||||
總現金和受限現金資產 | $ | | $ | | ||
補充披露: | ||||||
支付利息的現金 | $ | | $ | | ||
非現金投資和融資交易: |
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與warrants相關的衍生負債 | $ | — | $ | | ||
為可換股票本金發行普通股 | $ | | $ | | ||
C和D系列可換股優先股累積股息 | $ | | $ | | ||
發行給配售代理的認股權證 | $ | — | $ | | ||
注意轉換為普通股和認股權證 | $ | — | $ | |
請參閱附註以獲取公司的基本報表。
6
CYTODYN INC.
基本報表附註
截至2024年8月31日
(未經查核)
附註1. 組織
CytoDyn公司(以及其全資子公司,以下簡稱"公司")原先於2002年5月2日根據科羅拉多州法律成立,名為RexRay Corporation,並於2015年8月27日起根據特拉華州法律重新註冊。公司是一家以臨床為主的生物技術公司,專注於基於其產品候選藥物leronlimab開發創新治療方案,leronlimab是一種針對C-C趨化因子受体類5(“CCR5”)的新型人源化單克隆抗體。
該公司目前正努力通過對慢性炎症、腫瘤學等的臨床開發,進一步鞏固leronlimab的地位,以及對一些其他潛在探索性適應症的影響。從歷史上看,該公司一直將leronlimab作為治療人類免疫缺陷病毒(“HIV”)的病毒進入抑製劑進行研究,被認為具有競爭性結合CCR5受體的N-端和第二細胞外環。對於免疫學而言,CCR5受體被認為涉及免疫介導疾病,例如代謝功能失調相關脂肪肝炎(“MASH”),替代詞為非酒精性脂肪肝炎(“NASH”)。leronlimab正在或曾經在MASH、腫瘤學的實體腫瘤、COVID-19、長期COVID和HIV適應症的研究中,其中CCR5被認為在疾病發病機制中起著至關重要的作用。
Note 2. 主要會計政策摘要
呈現基礎
未經審計的合並財務報表包括CytoDyn Inc.和其全資子公司CytoDyn Operations Inc.的賬戶。 所有公司內部交易和餘額在合併中被消除。 合併財務報表反映了管理層認為對中期財務報表的營運結果進行公正表述所必要的所有正常循環調整。根據美國通用會計準則(“U.S. GAAP”或“GAAP”)準則和法規的規定,一些通常包含在按照會計原則編制的財務報表中的信息和附註披露已被省略。 (“U.S. GAAP”或“GAAP”) 已根據美國通用接受的會計原則(“U.S. GAAP”或“GAAP”)的規則和法規省略了財務報表準則中通常包含的某些信息和附註披露。 美國證券交易委員會(“SEC”)應閱讀截至2024年5月31日的公司最新年度報告10-K表,並受第1號10-K/A表所修改(“2024年10-K表”),以配合其中的暫編財務資訊和附註。. 所呈現期間的營運結果不一定代表整個財政年度或任何未來年度或中期期間的預期結果。
持續經營
附帶的合併財務報表已按照持續經營基礎編製,此基礎包括在正常業務進行過程中實現資產和滿足債務的假設。依據附帶的合併財務報表,公司在所有呈現期間均出現虧損,除了本期之外。截至2024年8月31日,公司累積虧損約為$百萬。這些因素等,包括附註9中討論的各種事項,
公司作為持續營業的能力取決於其能否獲得額外的營運資金,完成其產品候選藥物leronlimab的開發,獲得監管機構批准商業化leronlimab,繼續外包leronlimab的製造,在最終賺取收入並實現盈利。公司計畫繼續從事與leronlimab相關的研究和開發活動,以及為多個適應症開發新型或修改型的長效治療方法,並預計將承擔重大研究和
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未來開發費用主要與其監管遵循相關,包括在各種指標中進行額外的臨床前期和臨床研究,以及尋求其產品候選品獲得商業化的監管批准。這些研究和開發活動面臨著重大風險和不確定性。公司打算主要通過出售股權和債券型證券,以及從其他來源獲得的額外資金,來籌措未來的開發活動和營運資金需求。但無法保證公司將在這些努力中取得成功。
估計的使用
未經審計的合併財務報表是根據GAAP編製的,要求管理層進行估算和判斷,影響合併財務報表日期的資產、負債的報告金額以及條件性資產和負債的披露,以及財務報表期間的營業收入和費用的報告金額。每個期間都會評估估計並更新以反映當前資訊,例如我們對臨床試驗結果的分析狀態和/或與美國食品藥品監督管理局(“FDA”)的討論,這可能對公司的重要會計估計和假設產生影響。公司的估計基於歷史經驗和各種其他認為在當時是合理的假設。重要估計包括但不限於與基於股權報酬、用於估值認股權證和認股權證修改的假設有關。實際結果可能與這些估計有所不同。
限制性現金
截至2024年8月31日,公司有
金融工具的公允價值
根據規定的會計指引,公司使用包括公平價值階梯在內的衍生工具的公平價值進行測量。
一級。 在活躍市場上對相同資產或負債的報價價格。
二級。 | 除了一級價格外,觀察到的輸入,例如相似資產或負債的報價價格,在交易量不足或不常見的市場中的報價價格(較不活躍市場),或者是從觀察到的市場數據中主要可觀察到的或者可以主要推導自或者可以主要經由觀察到的市場數據為基本的模型衍生估值,用於資產或負債的整個有效期內的所有重要輸入。二級輸入還包括無約束力的市場共識價格,可以與觀察到的市場數據印證,以及已根據特定安全限制進行調整的報價價格。 |
三級。 | 對估值方法的非觀察得到的價格對於資產或負債的公平價值的測量至關重要。這些三級輸入還包括無約束力的市場共識價格或公司無法透過觀察到的市場數據印證的無約束力經紀人報價。 |
最近會計宣告
2023年10月,財務會計準則委員會(“FASB”)發布了《會計標準更新》(“ASU”)2023-06。揭露改進– 編碼修訂以回應SEC的披露更新和簡化計劃。修訂澄清或改進了各種披露領域的披露和陳述要求,包括現金流量表、每股收益、債務、權益和衍生工具。這些修訂將使FASB會計標準編碼(“ASC”)中的要求與SEC的規定保持一致。此《ASU》中的修訂將在相關披露被刪除的日期生效。
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Regulation S-X或Regulation S-K由證交會制定,若到2027年6月30日時,證交會未撤除相關披露要求,則將不生效。禁止提前採用。公司目前正在評估這些修訂對其財務報表披露的影響。
2023年11月,FASb發布了ASU 2023-07,旨在改善可報告的部門披露,以及增強有關顯著可報告的部門費用的披露。此指引將於我們的年度報告開始生效,即2024年12月31日結束的財政年度及其後的中期期間,并要求對所有已呈報的前期期間進行追溯應用。由於這些修訂不改變營運部門的識別方法,營運部門的匯總或定量門檻的應用以確定可報告的部門,我們不認為此指引對我們的財務狀況或經營業績產生實質影響。 分節報告(TOPIC 280):改進報告的分節披露 (ASU 2023-07)。此標準旨在改善年度和中期報告的可報告部門披露要求,而不論報告單位的數量,主要通過加強重要支出的披露。修訂要求上市實體披露定期提供給CODm的重要部門支出,並將其包括在每份部門利潤和損失的報告指標中。該標準自2023年12月15日後的年度期間生效。可提前採用,並應回顧性地應用本更新中的修訂到所有呈現的期間。 公司目前正在評估此更新對其財務報表披露的影響,但並不認為這將對財務報表產生實質影響。
2023年12月14日,FASB發佈了ASU No. 2023-09。 所得稅揭露的改進該標準要求披露分解的所得稅支付,為有效稅率調解的元件指定標準類別,並修改其他與所得稅相關的披露。該ASU自2024年12月15日後開始生效,允許採用前瞻性基礎,並提供回顧性選項。公司目前正在評估此更新對其合併基本報表及相關披露的影響。
附註3. 應計負債與薪酬
應計負債和薪酬的元件如下(以千為單位):
2024年8月31日 | (IRS Employer | |||||
補償和相關費用 | $ | | $ | | ||
法律費用和和解金 | | | ||||
臨床費用 | | | ||||
執照費用 | | | ||||
租賃應付款 | | | ||||
投資者收益被存放在託管中 | — | | ||||
其他負債 | | | ||||
總應計負債 | $ | | $ | |
附錄4. 可轉換工具及應計利息
可轉換優先股
以下表格顯示普通股可能發行的份數,假如優先股及未宣告及應計的優先股分紅轉換為普通股。
2024年8月31日 | (IRS Employer | |||||||||||||||||
(以千為單位,除匯率) |
| 協議 |
| Series C |
| D系列 |
| 協議 |
| Series C |
| D系列 | ||||||
優先股份總量 | | | | | | | ||||||||||||
普通股轉換率 | ||||||||||||||||||
如轉換,普通股的總份額 | | | | | | | ||||||||||||
未宣布的分紅派息 | $ | | $ | — | $ | — | $ | | $ | — | $ | — | ||||||
應計分紅派息 | $ | — | $ | | $ | | $ | — | $ | | $ | | ||||||
如果分紅派息轉換,普通股的總份額 | | | | | | |
根據公司修訂後的公司組織章程(以下簡稱“公司組織章程”),對其優先b系列可轉換優先股(以下簡稱“b系列優先股”)的股息可以按公司的選擇以現金或公司普通股支付。分紅派息於
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Series C可轉換優先股(“C系列優先股”)和Series D可轉換優先股(“D系列優先股”)可由持有人選擇以現金或普通股支付。只有在公司董事會宣佈時,優先股股東才有權享有股息。根據德拉瓦州《公司法》第170條,公司僅可在資本盈餘或者如無資本盈餘則可在當年度宣佈的純利潤或前一年度淨利潤中派發股息。
B系列優先股享有優先償還權,優先於普通股,每股$
可轉換債券和應計利息
以下表格顯示截至2024年8月31日和2024年5月31日的可轉換債券和應計利息:
2024年8月31日 | (IRS Employer | |||||||||||||||||
(以千為單位) |
| 2021年4月2日備註 |
| 2021年4月23日備註 |
| 總計 |
| 2021年4月2日備註 |
| 2021年4月23日備註 | 總計 | |||||||
可轉換票據應付未清償本金 | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
減:未攤銷債務折扣及發行成本 | ( | ( | ( | ( | ( | ( | ||||||||||||
應付可轉換票據,淨額 | | | | | | | ||||||||||||
可轉換票據上的應計利息 | | | | | | | ||||||||||||
擁有未清償的可轉換票據負債,淨額及應計利息 | $ | | $ | | $ | | $ | | $ | | $ | |
可轉換票據未償餘額變動調解,包括應計利息,情況如下:
(以千為單位) | 2021年4月2日備忘錄 | 2021年4月23日備忘錄 | 總計 | ||||||
2024年5月31日的未清餘額 | $ | | $ | | $ | | |||
已收到的代價 | — | — | — | ||||||
發行折扣和成本攤銷 | | | | ||||||
利息費用 | | | | ||||||
股票和warrants交換的公平市值以償還 | — | ( | ( | ||||||
市值與股本減少的差異 | — | | | ||||||
2024年8月31日的未清餘額 | $ | | $ | | $ | |
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2021年4月2日和2021年4月23日筆記
優先可換股票據的關鍵條款如下:
2024年8月31日 | ||||||||
| 2021年4月2日備忘錄 |
| 2021年4月23日備忘錄 | |||||
年息率 | | % | | % | ||||
轉換價格每股 交易日前通知 | $ | | $ | | ||||
掌控轉換權利的一方 | 投資者 | 投資者 | ||||||
到期日 | 2025年4月5日 | 2025年4月23日 | ||||||
安防利益 | 所有公司資產(除了智慧財產) |
In addition to standard anti-dilution adjustments, the conversion price of the April 2, 2021 Note and April 23, 2021 Note is subject to full-ratchet anti-dilution protection, pursuant to which the conversion price will be automatically reduced to equal the effective price per share in any new offering by the Company of equity securities that have registration rights, are registered, or become registered under the Securities Act of 1933, as amended (the “Securities Act”). The April 2, 2021 Note and April 23, 2021 Note provide for liquidated damages upon failure to deliver common stock within specified timeframes and require the Company to maintain a share reservation of
During the three months ended August 31, 2024, in satisfaction of redemptions, the Company and April 23, 2021 Noteholder entered into exchange agreements, pursuant to which the April 23, 2021 Note was partitioned into new notes (the “Partitioned Notes”) with an aggregate principal amount of $
截至2024年9月30日,根據發生在該日期之前的各種事件,2021年4月2日和2021年4月23日的持有人放棄了可轉換票據中的所有條款,該條款可能會引發預設利率的徵收、轉換價格的下調或指定與預設、違約或處以懲罰相關的其他條款。因此,該公司在2024年9月30日的票據下並未違約。
定向增發代理票據
在2023年4月至6月期間,公司根據證券購買協議發行了帶著抵押權訴求的應計利息率制定的保證票據,並將其發售給經認證的投資者通過一個放置代理人(“定向增發代理票據”),總本金約為
有關票據發行,公司向投資者發行了購買約
2023年6月期間,就Placement Agent Notes的投資人與擬議修訂條款,規定票據的本金金額及應計但未支付的利息將在首次私下配售普通股和認股權證中轉換為普通股和認股權證。每單位的視為購買價格為
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增發,而認股權證的行使價設定為$
在2023年7月,通過增發代理的次要普通股和認股權證的首次收盤發生。因此,增發代理註記被轉換為與Note 6中描述的定向增發相同定價的單位, 普通股和認股權證的私募 - 通過增發代理 在公司2024年度10-k表中。
由於2024年7月與Amarex的和解,公司約欠款約$
請參考第5項附註, 可換股憑證和應計利息,在公司2024年第10-k表格中提供更多資訊。
第5項附註 定向增發普通股和認股權證
要約收購
2024年7月19日,公司完成了一次要約收購,包括購買約
認股證
下表顯示認股權證的相關活動:
期權 | ||||||||||
平均 | ||||||||||
期權 | 剩餘的 | 總計 | ||||||||
購回的股票數目 | 平均 | 合約的 | 內在 | |||||||
(以千為單位,股份資料和年份除外) |
| 股份 |
| 行使價格 |
| 壽命(年) |
| 價值 | ||
截至2024年5月31日,未行使的認股權證 |
| | $ | |
| $ | | |||
已授予股份 |
| — | $ | — |
|
| ||||
行使 |
| ( | $ | |
|
| — | |||
被沒收、過期和取消 |
| ( | $ | |
|
| ||||
截至2024年8月31日,未行使的認股權證。 |
| | $ | |
| $ | | |||
截至2024年8月31日,持有並可行使的認股權證。 |
| | $ | |
| $ | |
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第6條權益激勵計畫
權益激勵計畫(EIP)
截至2024年8月31日,公司有
EIP提供了股票期權為了購買普通股,受限和無限制的普通股,受限制股票單位(“RSUs”)和績效股份單位(“PSUs”)。
公司根據授予日估計公平價值對員工和董事提供的股權獎勵的服務的補償成本。基於員工或董事需要提供服務以換取獎勵的期間,認列股份基本薪酬成本,並且隨著喪失的情況發生,到目前為止認列的相關補償成本將被撤銷。對於具有基於績效的支付條件的獎勵,公司根據實現績效條件的概率認列補償成本,並將對期望變化的變化認列為調整,認識到當期收益。如果最終未滿足條件,則已認列的補償成本將被撤銷。
加權平均行使價
期權交易活動呈現在下表中:
期權 | ||||||||||
平均 | ||||||||||
期權 | 剩餘的 | 總計 | ||||||||
購回的股票數目 | 平均 | 合約的 | 內在 | |||||||
(以千計,除每股數據和年份外) |
| 股份 |
| 行使價格 |
| 年齡(年) |
| 價值 | ||
2024年5月31日留存的期權 |
| | $ | |
| $ | — | |||
已授予股份 |
| — | $ | — |
|
| ||||
行使 |
| — | $ | — |
|
| ||||
屈服、過期和取消 |
| ( | $ | |
|
| ||||
2024年8月31日未解期權 |
| | $ | |
| $ | — | |||
2024年8月31日的期權未履行及可履行 |
| | $ | |
| $ | — |
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7. 每股收益(損失)備註
基本每股收益(損失)是通過將修正後的凈利潤(損失)除以期間內流通普通股的加權平均數得出的。稀釋每股收益(損失)包括加權平均數普通股以及可能具有稀釋效果的普通股等同物。基本和稀釋凈利潤(損失)每股計算的分子和分母調和情況如下:
截至8月31日止三個月, | |||||
(以千為單位,除每股金額外) | 2024 | 2023 | |||
每股基本凈利潤(虧損): | |||||
凈利潤(損失) | $ | | $ | ( | |
減:應計優先股股利 | ( | ( | |||
適用於普通股東的凈利潤(虧損) | $ | | $ | ( | |
基本每份收益: | |||||
加權平均流通在外的普通股股數 | | | |||
每股盈利(虧損) | $ | | $ | ( | |
每股稀釋後凈利潤(損失): | |||||
凈利潤(損失) | $ | | $ | ( | |
未分配盈餘重新分配,因優先股轉換而產生 | | — | |||
適用於普通股東的凈利潤(損失) | $ | | $ | ( | |
基本計算中使用的股份數量 | | | |||
攤薄證券的加權平均影響 | |||||
認股權行使 | | — | |||
優先股轉換 | | — | |||
摊薄加权平均普通股股数 | | | |||
每股稀釋收益(損失) | $ | | $ | ( |
下表顯示了關於未計算在已發行普通股公開調配、授予或轉換的期權、認股權證、可轉換票據和可轉換優先股(包括未宣布的分紅派息)的近似股份數,這些股份在所報告期間並未計算在考慮已發行普通股公開調配的稀釋加權平均股份數之內:
截至8月31日止三個月, | ||||
(以千為單位) | 2024 |
| 2023 | |
股票期權和warrants | | | ||
可換債券 | | | ||
可換股優先股 | — | | ||
預留用於通過配售代理發行普通股 | — | | ||
預留用於與票據轉換相關的普通股發行 | — | |
註8. 所得稅
為了確定公司每季的所得稅提存,公司使用預計年度有效所得稅率,該率基於公司預期年度收入和各司法管轄區的法定稅率。公司在其中營運的各司法管轄區的特定重大非常規或罕見發生的項目將分開報告,分開在發生的季度中予以認可,並且可能成為導致有效所得稅率每季波動的來源。
截至2024年6月29日或2023年12月31日,公司擁有外匯期貨合約、股票掉期合約或普通股投資,均屬於第三層資產。
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maintaining a full valuation allowance on its net deferred tax assets, as the Company does not consider it more likely than not that the benefits from the net deferred tax assets will be realized.
Note 9. Commitments and Contingencies
Commitments with Samsung BioLogics Co., Ltd. (“Samsung”)
On April 3, 2024, the Company and Samsung executed a side letter agreement (the “Side Letter”), wherein the parties reached an agreement for an orderly process for winding down services and a restructuring of the amount payable by the Company to Samsung (the “Total Balance”). The Total Balance due to Samsung, as restructured under the Side Letter, is approximately $
“…the gross revenue generated by Client and its Affiliates, less the following items (if not previously deducted from the amount invoiced): (a) reasonable and customary trade, quantity, and cash discounts actually granted and legally permitted wholesaler chargebacks actually paid or credited by Client and its Affiliates to wholesalers of products; (b) reasonable, customary, and legally permitted rebates and retroactive price reductions actually granted; (c) freight charges for the delivery of products; (d) the portion of the administrative fees paid during the relevant time period to group purchasing organizations, pharmaceutical benefit managers and/or government-mandated Medicare or Medicaid Prescription Drug Plans relating specifically to the product; and (e) sales, use or excise taxes imposed and actually paid in connection with the sale of products (but excluding any value added taxes or taxes based on income or gross receipts).”
The $
Operating lease commitments
We lease our principal office location in Vancouver, Washington (the “Vancouver Lease”). The Vancouver Lease expires on April 30, 2026. Consistent with the guidance in ASC 842, Leases, we have recorded this lease in our consolidated balance sheet as an operating lease. For the purpose of determining the right of use asset and associated lease liability, we determined that the renewal of the Vancouver lease was not reasonably probable. The lease does not include any restrictions or covenants requiring special treatment under ASC 842, Leases. Operating lease costs for the three months ended August 31, 2024 and 2023 were approximately $
(in thousands) | August 31, 2024 | May 31, 2024 | |||||
Assets | |||||||
$ | | $ | | ||||
Liabilities | |||||||
$ | | $ | | ||||
Non-current operating lease liability |
| |
| | |||
Total operating lease liability | $ | $ |
15
The minimum (base rental) lease payments are expected to be as follows as of August 31, 2024 (in thousands):
Fiscal Year | Amount | ||
2025 - 9 months remaining | $ | | |
2026 | | ||
Thereafter | — | ||
Total operating lease payments | | ||
Less: imputed interest | ( | ||
Present value of operating lease liabilities | $ | |
Supplemental information related to operating leases was as follows:
August 31, 2024 | |||
Weighted average remaining lease term | years | ||
Weighted average discount rate | % |
Distribution and licensing commitments
Refer to Note 10, Commitments and Contingencies, in the 2024 Form 10-K for additional information.
Legal proceedings
As of August 31, 2024, the Company did not record any accruals related to the outcomes of the legal matters described below. It is not possible to determine the outcome of these proceedings, including the defense and other litigation-related costs and expenses that may be incurred by the Company, as the outcomes of legal proceedings are inherently uncertain. Therefore, it is possible that the ultimate outcome of any proceeding, if in excess of a recognized accrual, if any, could be material to the Company’s consolidated financial statements.
Securities Class Action Lawsuits
On March 17, 2021, a stockholder filed a putative class-action lawsuit (the “March 17, 2021 lawsuit”) in the U.S. District Court for the Western District of Washington against the Company and certain former officers. The complaint generally alleges the defendants made false and misleading statements regarding the viability of leronlimab as a potential treatment for COVID-19. On April 9, 2021, a second stockholder filed a similar putative class action lawsuit in the same court, which the plaintiff voluntarily dismissed without prejudice on July 23, 2021. On August 9, 2021, the court appointed lead plaintiffs for the March 17, 2021 lawsuit. On December 21, 2021, lead plaintiffs filed an amended complaint, which is brought on behalf of an alleged class of those who purchased the Company’s common stock between March 27, 2020 and May 17, 2021. The amended complaint generally alleges that the defendants violated Sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder by making purportedly false or misleading statements concerning, among other things, the safety and efficacy of leronlimab as a potential treatment for COVID-19, the Company’s CD10 and CD12 clinical trials, and its HIV Biologic License Application (“BLA”). The amended complaint also alleges that the individual defendants violated Section 20A of the Exchange Act by selling shares of the Company’s common stock purportedly while in possession of material nonpublic information. The amended complaint seeks, among other relief, a ruling that the case may proceed as a class action and unspecified damages and attorneys’ fees and costs. On February 25, 2022, the defendants filed a motion to dismiss the amended complaint. On June 24, 2022, lead plaintiffs filed a second amended complaint. The second amended complaint is brought on behalf of an alleged class of those who purchased the Company’s common stock between March 27, 2020 and March 30, 2022, makes similar allegations, names the same defendants, asserts the same claims as the prior complaint, adds a claim for alleged violation of Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) promulgated thereunder, and seeks the same relief as the prior complaint. All defendants have filed motions to dismiss the second amended complaint in whole or in part. The Company and the individual defendants deny all allegations of wrongdoing in the complaint and intend to vigorously defend the matter. Since this case is in an early stage where the number of plaintiffs is not known, and the claims do not specify an amount of damages, the Company is unable to predict the ultimate outcome of the lawsuit and cannot reasonably estimate the potential loss or range of loss the Company may incur.
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Shareholder Derivative Lawsuits
On June 4, 2021, a stockholder filed a purported derivative lawsuit against certain of the Company’s former officers and directors, and the Company as a nominal defendant, in the U.S. District Court for the Western District of Washington. Two additional shareholder derivative lawsuits were filed against the same defendants in the same court on June 25, 2021 and August 18, 2021, respectively. The court has consolidated these three lawsuits for all purposes (“Consolidated Derivative Suit”). On January 20, 2022, the plaintiffs filed a consolidated complaint. The consolidated complaint generally alleges that the director defendants breached their fiduciary duties by allowing the Company to make false and misleading statements regarding, among other things, the safety and efficacy of leronlimab as a potential treatment for COVID-19, the Company’s CD10 and CD12 clinical trials and its HIV BLA, and by failing to maintain an adequate system of oversight and controls. The consolidated complaint also asserts claims against one or more individual defendants for waste of corporate assets, unjust enrichment, contribution for alleged violations of the federal securities laws, and for breach of fiduciary duty arising from alleged insider trading. The consolidated complaint seeks declaratory and equitable relief, an unspecified amount of damages, and attorneys’ fees and costs.
On January 29, 2024, two purported stockholders filed a purported derivative lawsuit against certain of the Company’s former officers, certain current and former directors, and the Company as a nominal defendant, in the Delaware Court of Chancery. The complaint generally makes allegations similar to those set forth in the Consolidated Derivative Suit and asserts that the individual defendants breached their fiduciary duties by allowing the Company to make false and misleading statements and by failing to maintain an adequate system of oversight and controls. The complaint also asserts claims against certain individual defendants for breach of fiduciary duty arising from alleged insider trading.
The Company and the individual defendants deny all allegations of wrongdoing in the complaints and intend to vigorously defend the litigation. In light of the fact that the suit(s) is/are in an early stage and the claims do not specify an amount of damages, the Company cannot predict the ultimate outcome of the matter(s) and cannot reasonably estimate the potential loss or range of loss the Company may incur.
Securities and Exchange Commission and Department of Justice Investigations
The Company has received subpoenas from the SEC and the United States Department of Justice (“DOJ”) requesting documents and information concerning, among other matters, leronlimab, the Company’s public statements regarding the use of leronlimab as a potential treatment for COVID-19, HIV, and triple-negative breast cancer, related communications with the FDA, investors, and others, litigation involving former employees, the Company’s retention of investor relations consultants, and trading in the Company’s securities. Certain former Company executives and directors have received subpoenas concerning similar issues and have been interviewed by the DOJ and SEC, including the Company’s former CEO, Nader Z. Pourhassan.
On January 24, 2022, Mr. Pourhassan was terminated and removed from the Board of Directors and has had no role at the Company since. On December 20, 2022, the DOJ announced the unsealing of a criminal indictment charging both Mr. Pourhassan, and Kazem Kazempour, CEO of Amarex, a subsidiary of NSF International, Inc., and which had formerly served as the Company’s contract research organization (“CRO”). Mr. Pourhassan was charged with one count of conspiracy, four counts of securities fraud, three counts of wire fraud, and three counts of insider trading. Mr. Kazempour was charged with one count of conspiracy, three counts of securities fraud, two counts of wire fraud, and one count of making a false statement. That same day, the SEC announced charges against both Mr. Pourhassan and Mr. Kazempour for alleged violations of federal securities laws.
The Company is committed to cooperating fully with the DOJ and SEC and will continue to comply with the requests of each agency. The Company cannot predict the ultimate outcome of the DOJ or SEC investigations or the cases against Mr. Pourhassan, nor can it predict whether any other governmental authorities will initiate separate investigations or litigation. The investigations and any related legal and administrative proceedings could include a wide variety of outcomes, including the institution of administrative, civil injunctive or criminal proceedings involving the Company and/or former executives and/or former directors in addition to Mr. Pourhassan, the imposition of fines and other penalties, remedies and/or sanctions, modifications to business practices and compliance programs and/or referral
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to other governmental agencies for other appropriate actions. It is not possible to accurately predict at this time when matters relating to the investigations will be completed, the final outcome of the investigations, what additional actions, if any, may be taken by the DOJ or SEC or by other governmental agencies, or the effect that such actions may have on our business, prospects, operating results and financial condition, which could be material.
The DOJ and SEC investigations, including any matters identified in the investigations and indictments, could also result in (1) third-party claims against the Company, which may include the assertion of claims for monetary damages, including but not limited to interest, fees, and expenses, (2) damage to the Company's business or reputation, (3) loss of, or adverse effect on, cash flow, assets, results of operations, business, prospects, profits, or business value, including the possibility of certain of the Company's existing contracts being cancelled, (4) adverse consequences on the Company's ability to obtain or continue financing for current or future projects, and/or (5) claims by directors, officers, employees, affiliates, advisors, attorneys, agents, debt holders or other interest holders, or constituents of the Company or its subsidiaries, any of which could have a material adverse effect on the Company's business, prospects, operating results, and financial condition. Further, to the extent that these investigations and any resulting third-party claims yield adverse results over time, such results could jeopardize the Company's operations, exhaust its cash reserves, and could cause stockholders to lose their entire investment.
Settlement of Amarex Dispute
On July 2, 2024, the Company and Amarex, the Company’s former CRO, entered into an agreement settling a lawsuit filed by the Company in October 2021 (the “Settlement Agreement”).
The terms of the Settlement Agreement include: (i) the payment by Amarex of $
Note 10. Subsequent Events
The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the consolidated financial statements as of and for the three months ended August 31, 2024.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Certain information included in this quarterly report on Form 10Q contains, or incorporates by reference, forward-looking statements that involve risks, uncertainties, and assumptions that are difficult to predict. Words and expressions reflecting optimism, satisfaction or disappointment with current prospects, as well as words such as “believes,” “intends,” “estimates,” “expects,” “projects,” “plans,” “anticipates” and variations thereof, or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking.
Our forward-looking statements are not guarantees of performance, and actual results could vary materially from those contained in or expressed by such statements. In evaluating all such statements, we urge you to specifically consider various risks identified in Part II, Item 1A and elsewhere in this quarterly report, and those set forth in Item 1A. Risk Factors in the 2024 Form 10-K, any of which could cause actual results to differ materially from those indicated by our forward-looking statements.
Our forward-looking statements reflect our current views with respect to future events and are based on currently available financial, economic, scientific, and competitive data and information about current business plans.
Forward-looking statements include, among others, statements about leronlimab, its ability to have positive health outcomes, the Company’s ability to implement a successful operating strategy for the development of leronlimab and thereby create shareholder value, the ability to obtain regulatory approval of the Company’s drug products for commercials sales, and the strength of the Company’s leadership team. The Company’s forward-looking statements are not guarantees of performance, and actual results could vary materially from those contained in or expressed by such statements due to risks and uncertainties, including: (i) the regulatory determinations of leronlimab’s safety and effectiveness to treat the disease and conditions for which we are studying the product by the FDA and, potentially, drug regulatory agencies in other countries; (ii) the Company’s ability to raise additional capital to fund its operations; (iii) the Company’s ability to meet its debt and other payment obligations; (iv) the Company’s ability to enter into or maintain partnership or licensing arrangements with third parties; (v) the Company’s ability to recruit and retain key employees; (vi) the timely and sufficient development, through internal resources or third-party consultants, of analyses of the data generated from the Company’s clinical trials required by the FDA or other regulatory agencies in connection with applications for approval of the Company’s drug product; (vii) the Company’s ability to achieve approval of a marketable product; (viii) the design, implementation and conduct of clinical trials; (ix) the results of any such clinical trials, including the possibility of unfavorable clinical trial results; (x) the market for, and marketability of, any product that is approved; (xi) the existence or development of vaccines, drugs, or other treatments that are viewed by medical professionals or patients as superior to the Company’s products; (xii) regulatory initiatives, compliance with governmental regulations and the regulatory approval process; (xiii) legal proceedings, investigations or inquiries affecting the Company or its products; (xiv) stockholder actions or proposals with regard to the Company, its management, or its Board of Directors; (xv) general economic and business conditions; (xvi) changes in foreign, political, and social conditions; (xvii) and various other matters, many of which are beyond the Company’s control.
We intend that all forward-looking statements made in this quarterly report will be subject to the safe harbor protection of the federal securities laws pursuant to Section 27A of the Securities Act and Section 21E of the Exchange Act, to the extent applicable. Except as required by law, we do not undertake any responsibility to update these forward-looking statements to address events or circumstances that occur after the date of this quarterly report. Additionally, we do not undertake any responsibility to update you on the occurrence of any unanticipated events that may cause actual results to differ from those expressed or implied by these forward-looking statements.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our 2024 Form 10-K, and the other sections of this Form 10-Q, including our consolidated financial statements and related notes set forth in Part I, Item 1. This discussion and analysis contain forward-looking statements, including information about possible or assumed results of our financial condition, operations, plans, objectives and performance that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated and set forth in such forward-looking statements.
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Overview
The Company is a clinical stage biotechnology company focused on the clinical development and potential commercialization of its product candidate, leronlimab, which is being studied for oncology and inflammation, as well as other potential indications, including HIV and MASH.
Our current business strategy is the clinical development of leronlimab, which may include the following:
1. | Conducting a Phase II study of leronlimab in patients with relapsed/refractory microsatellite stable colorectal cancer; |
2. | Conducting a Phase II study exploring leronlimab and its effects on inflammation; and |
3. | Continuing our work researching and developing a new or modified long-acting version of leronlimab. |
Other programs that may be pursued include steatosis and liver fibrosis associated with MASH, either alone or as a combination therapy; and for metastatic triple-negative breast cancer with current standard of care, and/or exploring other trials with current standard of care and other cancer and immunologic indications.
We will need significant additional funding to execute the business strategy described above, including conducting additional pre-clinical studies and clinical trials, in furtherance of our efforts to obtain FDA approval to commercialize leronlimab. In addition to traditional fundraising the Company will pursue non-dilutive financing opportunities, such as license agreements and co-development or strategic partnerships, to help implement its strategy.
Corporate developments
During the quarter ended August 31, 2024, the Company completed a tender offer resulting in net proceeds of approximately $10.4 million.
On July 2, 2024, the Company and Amarex, the Company’s former CRO, entered into an agreement settling a lawsuit filed by the Company in October 2021 (the “Settlement Agreement”).The terms of the Settlement Agreement include: (i) the payment by Amarex of $12,000,000 to the Company, of which $10,000,000 was paid on execution of the Settlement Agreement and the balance will be paid on or before July 2, 2025; (ii) the release of the Company’s surety bond posted in the lawsuit and the return of the Company’s cash collateral in the amount of $6,500,000 provided as security to the surety; (iii) the crediting of all amounts claimed by Amarex as due and payable for its CRO services, totaling approximately $14,000,000, against the Company’s outstanding balance, reducing the balance to zero, with no funds required to be paid by the Company; and (iv) a mutual release of claims, resolving all legal claims between the parties.
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Results of Operations
Fluctuations in operating results
The Company’s operating results may fluctuate significantly depending on the outcomes, number and timing of pre-clinical and clinical studies, patient enrollment and/or completion rates in the studies, and their related effect on research and development expenses, regulatory and compliance activities, activities related to seeking FDA approval of our drug product, general and administrative expenses, professional fees, and legal and regulatory proceedings and related consequences. We require a significant amount of capital to continue to operate; therefore, we regularly conduct financing offerings to raise capital, which may result in various forms of non-cash interest expense or other expenses. Additionally, we periodically seek to negotiate settlement of debt payment obligations in exchange for equity securities of the Company and enter into warrant exchanges or modifications that may result in non-cash charges. Our ability to continue to fund operations will depend on our ability to raise additional funds. See the Liquidity and Capital Resources and Going Concern sections in this Item 2 of Part I and Part II, Item 1A Risk Factors included in this quarterly report and Item 1A. Risk Factors in our 2024 Form 10-K.
The results of operations were as follows for the periods presented:
Three months ended August 31, | Change | |||||||||||
(in thousands, except for per share data) |
| 2024 |
| 2023 |
| $ |
| % | ||||
Operating expenses: |
|
| ||||||||||
General and administrative | $ | 1,604 |
| $ | 2,688 | $ | (1,084) | (40) | % | |||
Research and development |
| (24,046) |
|
| 1,914 |
| (25,960) | (1,356) | ||||
Depreciation |
| 5 |
|
| 10 |
| (5) | (50) | ||||
Total operating expenses |
| (22,437) |
|
| 4,612 |
| (27,049) | (586) | ||||
Operating gain (loss) |
| 22,437 |
|
| (4,612) |
| 27,049 | 586 | ||||
Interest and other income (expense): | ||||||||||||
Interest income | 126 | — | 126 | 100 | ||||||||
Interest on convertible notes | (1,165) | (1,197) | 32 | 3 | ||||||||
Amortization of discount on convertible notes |
| (125) |
|
| (400) |
| 275 | 69 | ||||
Amortization of debt issuance costs | — | (366) | 366 | 100 | ||||||||
Loss on induced conversion | (1,180) | (2,004) | 824 | 41 | ||||||||
Finance charges |
| (14) |
|
| (912) |
| 898 | 98 | ||||
Loss on note extinguishment |
| — |
|
| (2,084) |
| 2,084 | 100 | ||||
(Loss) gain on derivatives | (852) | 4 | (856) | (21,400) | ||||||||
Total interest and other expenses |
| (3,210) |
|
| (6,959) |
| 3,749 | 54 | ||||
Gain (loss) before income taxes |
| 19,227 |
|
| (11,571) |
| 30,798 | 266 | ||||
Income tax benefit |
| — |
|
| — |
| — | — | ||||
Net income (loss) | $ | 19,227 | $ | (11,571) | $ | 30,798 | 266 | % | ||||
Income (Loss) per share: |
| |||||||||||
Basic | $ | 0.02 | $ | (0.01) | $ | 0.03 | 300 | |||||
Diluted | $ | 0.02 |
| $ | (0.01) | $ | 0.03 | 300 | % | |||
Weighted average common shares used in calculation of income (loss) per share: | ||||||||||||
Basic | 1,135,043 | 923,587 | 211,456 | 23 | ||||||||
Diluted | 1,198,287 | 923,587 | 274,700 | 30 | % |
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General and administrative (“G&A”) expenses
G&A expenses consisted of the following:
Three months ended August 31, | Change | ||||||||||
(in thousands) | 2024 |
| 2023 |
| $ |
| % | ||||
Salaries, benefits, and other compensation | $ | 425 | $ | 642 | $ | (217) | (34) | % | |||
Stock-based compensation |
| 136 |
| 503 | (367) | (73) | |||||
Legal fees | 376 | 317 | 59 | 19 | |||||||
Insurance | 323 | 416 | (93) | (22) | |||||||
Other |
| 344 |
| 810 | (466) | (58) | |||||
Total general and administrative | $ | 1,604 | $ | 2,688 | $ | (1,084) | (40) | % |
The decrease in G&A expenses for the three-month period ended August 31, 2024, compared to the same period in the prior year, was primarily due to a reduction in Stock-based compensation and Salaries, benefits and other compensation based upon a classification of clinical employees’ compensation split between expense categories.
Research and development (“R&D”) expenses
R&D expenses consisted of the following:
Three months ended August 31, | Change | ||||||||||
(in thousands) | 2024 |
| 2023 |
| $ |
| % | ||||
Clinical | $ | 737 | $ | 1,250 | $ | (513) | (41) | % | |||
Non-clinical |
| (14) |
| 250 | (264) | (106) | |||||
CMC |
| (30) |
| 169 | (199) | (118) |
| ||||
License and patent fees |
| 246 |
| 245 | 1 | 0 |
| ||||
Return of clinical expenses | (24,985) | — | (24,985) | 100 | |||||||
Total research and development | $ | (24,046) | $ | 1,914 | $ | (25,960) | (1,356) | % |
The decrease in R&D expense in the three-month period ended August 31, 2024, compared to the same period in the prior year, was primarily due to a return of clinical expenses related to the settlement of the Company’s litigation with Amarex in July 2024.
The future trend of our R&D expenses is dependent on the costs of any future clinical trials, our decision-making and timing of which indications on which to focus our future efforts toward the development and study of leronlimab, which may include pre-clinical and clinical studies for oncology, MASH and HIV related indications, as well as efforts to develop a long-acting new or modified therapeutic, the timing and outcomes of such efforts, and the timing of the final close-out of closed studies.
Interest and other income (expense)
Interest and other income (expense) consisted of the following:
Three months ended August 31, | Change | ||||||||||
(in thousands) | 2024 |
| 2023 |
| $ |
| % | ||||
Interest income | $ | 126 | — | $ | 126 | 100 | % | ||||
Interest on convertible notes payable | (1,165) | $ | (1,197) | 32 | (3) | ||||||
Amortization of discount on convertible notes |
| (125) |
| (400) | 275 | (69) | |||||
Amortization of debt issuance costs | — | (366) | 366 | (100) | |||||||
Loss on induced conversion |
| (1,180) |
| (2,004) | 824 | (41) |
| ||||
Finance charges |
| (14) |
| (912) | 898 | (98) |
| ||||
Loss on note extinguishment | — | (2,084) | 2,084 | 100 | |||||||
(Loss) gain on derivatives | (852) | 4 | (856) | (21,400) | |||||||
Total interest and other expenses | $ | (3,210) | $ | (6,959) | $ | 3,749 | (54) | % |
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The decrease in interest and other expenses for the three-month period ended August 31, 2024, compared with the same period in the prior year, was primarily due to the decrease in loss on note extinguishment and finance charges. The decrease in loss on note extinguishment is due to note extinguishments occurring in the prior period. The decrease in finance charges is due to restructuring the balance due to Samsung, which removed any future interest. The decrease in interest and other expenses was offset by an increase in loss on derivatives due to the value of the interest in the Amarex settlement received by investors in the Placement Agent Notes.
Liquidity and Capital Resources
As of August 31, 2024, we had a total of approximately $24.9 million in cash and approximately $69.6 million in short-term liabilities. We expect to continue to incur operating losses and require a significant amount of capital in the future as we continue to seek approval to commercialize leronlimab. There can be no assurance that future funding will be available to us when needed on terms that are acceptable to us, or at all. We sell securities and incur debt when the terms of such arrangements are deemed acceptable to both parties under then current circumstances and as necessary to fund our current and projected cash needs. As of September 30, 2024, we have approximately 199.3 million shares of common stock available for issuance in new financing transactions.
Since inception, the Company has financed its activities principally from the public and private sale of equity securities as well as with proceeds from issuance of convertible notes and related party notes payable. The Company intends to finance its future operating activities and its working capital needs largely from the sale of equity and debt securities. The sale of equity and convertible debt securities to raise additional capital is likely to result in dilution to stockholders and those securities may have rights senior to those of common shares. If the Company raises funds through the issuance of additional preferred stock, convertible debt securities or other debt or equity financing, the related transaction documents may contain covenants restricting its operations.
During the 2021 fiscal year, the Company entered into long-term convertible notes that are secured by all of our assets (excluding our intellectual property), and include certain restrictive provisions, including limitations on incurring additional indebtedness and future dilutive issuances of securities, any of which could impair our ability to raise additional capital on acceptable terms.
Future third-party funding arrangements may also require the Company to relinquish valuable rights. Additional capital, if available, may not be available on reasonable or non-dilutive terms.
Cash
The Company’s cash position of approximately $24.9 million and no restricted cash, as of August 31, 2024, increased by approximately $21.8 million and decreased by approximately $6.7 million, respectively, when compared to the balance of $3.1 million and $6.7 million, respectively, as of May 31, 2024. This increase was primarily the result of approximately $10.0 million cash received for a legal settlement, the release of the $6.7 million surety bond, and approximately $9.7 million in cash provided by financing activities during the three months ended August 31, 2024. Refer to Item 1, Note 2, Summary of Significant Accounting Policies – Going Concern, and the Going Concern discussion below for information regarding concerns about the Company’s ability to continue to fund its operations and satisfy its payment obligations and commitments. A summary of cash flows and changes between the periods presented is as follows:
Three months ended August 31, | Change | |||||||||
(in thousands) | 2024 |
| 2023 |
| $ | |||||
Net cash provided by (used in): | ||||||||||
Net cash provided by (used in) operating activities | $ | 5,440 | $ | (4,495) | $ | 9,935 | ||||
Net cash provided by/ used in investing activities | $ | — | $ | — | $ | — | ||||
Net cash provided by financing activities | $ | 9,667 | $ | 4,019 | $ | 5,648 |
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Cash provided by operating activities
Net cash provided by operating activities totaled approximately $5.4 million during the three months ended August 31, 2024, representing an improvement of approximately $9.9 million compared to the three months ended August 31, 2023. The increase in the net amount of cash provided by operating activities was due primarily to a legal settlement of approximately $10.0 million. Refer to Note 9, Commitments and Contingencies – Legal Proceedings – Settlement of Amarex Dispute for further discussion.
Cash provided by financing activities
Net cash provided by financing activities totaled approximately $9.7 million during the three months ended August 31, 2024, an increase of approximately $5.6 million compared to the three months ended August 31, 2023. The increase in net cash provided was primarily the result of raising funds through a warrant exchange tender offer during the current period compared a lower amount raised through private placements of common stock and warrants in the prior period.
Pre-launch inventories
The Company previously capitalized pre-launch inventories which were subsequently charged-off in October 2022 for GAAP accounting purposes due to no longer qualifying for pre-launch inventory capitalization resulting from the withdrawal of the Company’s biologic license application submission. Work-in-progress and finished drug product inventories continue to be physically maintained, can be used for clinical trials, and can be sold commercially upon regulatory approval if the shelf-lives can be extended as a result of the performance of on-going stability tests. Raw materials continue to be maintained to that they can be used in the future if needed.
Convertible debt
April 2, 2021 Convertible Note
On April 2, 2021, we issued a convertible note with a principal amount of $28.5 million resulting in net cash proceeds of $25.0 million, after $3.4 million of debt discount and $0.1 million of offering costs. The note accrues interest daily at a rate of 10% per annum, contains a stated conversion price of $10.00 per share, and matures in April 2025. The April 2, 2021 Note required monthly debt reduction payments of $7.5 million for the six months beginning in May 2021, which could also be satisfied by payments on other notes held by the noteholder or its affiliates. Beginning six months after the issuance date, the noteholder may request monthly redemptions of up to $3.5 million. As of August 31, 2024, the outstanding balance of the April 2, 2021 Note, including accrued interest, was approximately $7.7 million.
April 23, 2021 Convertible Note
On April 23, 2021, we issued a convertible note with a principal amount of $28.5 million resulting in net cash proceeds of $25.0 million, after $3.4 million of debt discount and $0.1 million of offering costs. The note accrues interest daily at a rate of 10% per annum, contains a stated conversion price of $10.00 per share, and matures in April 2025. Beginning six months after the issuance date, the noteholder may request monthly redemptions of up to $7.0 million. As of August 31, 2024, the outstanding balance of the April 23, 2021 Note, including accrued interest, was approximately $37.9 million.
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Common stock
We have 1,750.0 million authorized shares of common stock. The table below summarizes intended uses of common stock.
As of | |
(in millions) | August 31, 2024 |
Issuable upon: | |
Warrant exercises | 232.2 |
Convertible preferred stock and undeclared dividends conversion | 37.8 |
Outstanding stock option exercises | 25.8 |
Reserved for issuance pursuant to future stock-based awards under equity incentive plan | 23.1 |
Reserved and issuable upon conversion of outstanding convertible notes | 12.0 |
Total shares reserved for future uses | 330.9 |
Common stock outstanding | 1,219.8 |
As of August 31, 2024, we had approximately 199.3 million unreserved authorized shares of common stock available for issuance. Our ability to continue to fund our operations depends on our ability to raise capital. The funding necessary for our operations may not be available on acceptable terms, or at all. If we deplete our cash reserves, we may have to discontinue our operations and liquidate our assets. In extreme cases, we could be forced to file for bankruptcy protection.
Off-Balance Sheet Arrangements
As of August 31, 2024, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our current or future financial condition, results of operations, liquidity, capital expenditures or capital resources.
Contractual Obligations
Refer to Note 3, Accrued Liabilities and Compensation, Note 4, Convertible Instruments and Accrued Interest, and Note 9, Commitments and Contingencies included in Part I, Item 1 of this Form 10-Q, and Notes 5 and 10 in Part II, Item 8 in the 2024 Form 10-K.
Legal Proceedings
The Company is a party to various legal proceedings described in Part I, Item 1, Note 9, Commitments and Contingencies – Legal Proceedings of this Form 10-Q. The Company recognizes accruals for such proceedings to the extent a loss is determined to be both probable and reasonably estimable. The best estimate of a loss within a possible range is accrued; however, if no estimate in the range is more probable than another, then the minimum amount in the range is accrued. If it is determined that a material loss is not probable but reasonably possible and the loss or range of loss can be estimated, the possible loss is disclosed.
It is not possible to predict the outcome of these proceedings, including the defense and other litigation-related costs and expenses that may be incurred by the Company, as the outcomes of legal proceedings are inherently uncertain, and the outcomes could differ significantly from recognized accruals. Therefore, it is possible that the ultimate outcome of any proceeding, if in excess of a recognized accrual, if any, could be material to the Company’s consolidated financial statements. As of August 31, 2024, the Company had not recorded any accruals related to the outcomes of the legal matters discussed in this Form 10-Q.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As presented in
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the accompanying consolidated financial statements, the Company had losses for all periods presented, except for the current quarter. Net income of $19.2 million in the current quarter resulted from the recovery of approximately $25.0 million in clinical expenses due to the settlement of the Company’s litigation with Amarex, which is a non-recurring event. The Company has an accumulated deficit of approximately $872.3 million as of August 31, 2024. These factors, among several others, raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company’s continuance as a going concern is dependent upon its ability to obtain additional operating capital, complete the development of its product candidate, leronlimab, obtain approval to commercialize leronlimab from regulatory agencies, continue to outsource manufacturing of leronlimab, and ultimately achieve revenues and attain profitability. The Company plans to continue to engage in research and development activities related to leronlimab and a new or modified longer-acting therapeutic for multiple indications and expects to incur significant research and development expenses in the future, primarily related to its regulatory compliance, including performing additional clinical trials and seeking regulatory approval of its product candidate for commercialization. These research and development activities are subject to significant risks and uncertainties. The Company intends to finance its future development activities and its working capital needs primarily from the sale of equity and debt securities, combined with additional funding from other sources. However, there can be no assurance that the Company will be successful in these endeavors. See also Liquidity and Capital Resources above.
New Accounting Pronouncements
Refer to Part I, Item 1, Note 2, Summary of Significant Accounting Policies – Recent Accounting Pronouncements in this Form 10-Q for the discussion.
Critical Accounting Estimates
This discussion and analysis of the Company’s financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our financial statements and related disclosures requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company’s critical accounting estimates are described under the heading Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates in our 2024 Form 10-K.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes from the information previously reported in Part II, Item 7A of the 2024 Form 10-K.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Our management, with the participation of our Chief Executive Officer and Interim Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of August 31, 2024 (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our
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Chief Executive Officer and Interim Chief Financial Officer concluded, based upon the evaluation described above, that as of August 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level.
During the quarter ended August 31, 2024, there have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – Other Information
Item 1. Legal Proceedings
For a description of pending material legal proceedings, please see Note 9, Commitments and Contingencies–Legal Proceedings, of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Item 1A. Risk Factors
There have been no material changes in the risk factors that were included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024, which was filed with the SEC on August 15, 2024. You should carefully consider those risk factors in addition to other information in this Form 10-Q.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuances of Shares in Convertible Note Exchange Transactions
In August 2024, the Company and the holder of its April 23, 2021 Note, in partial satisfaction of the holder’s redemption rights, entered into an exchange agreement pursuant to which a portion of the original note was partitioned into a new note with an aggregate principal amount of $0.5 million. The new note was exchanged concurrently with issuance of a total of approximately 4.9 million shares of common stock. The Company relied on the exemption provided by Section 3(a)(9) of the Securities Act in connection with the exchange transaction.
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Item 6. Exhibits
Incorporated by Reference | ||||||||
Exhibit |
| Description | Filed | Form | Exhibit No. | Filing Date | ||
31.1 | Rule 13a-14(a) Certification by Principal Executive Officer of the Registrant. | X | ||||||
31.2 | Rule 13a-14(a) Certification by Principal Financial Officer of the Registrant. | X | ||||||
32 | X | |||||||
101.INS | Inline XBRL Instance Document. | X | ||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | X | ||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | X | ||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | X | ||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | X | ||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | X | ||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | X |
*Furnished, not filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| CYTODYN INC. | |
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| (Registrant) | |
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Dated: October 15, 2024 |
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| /s/ Jacob Lalezari |
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| Jacob Lalezari |
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| Chief Executive Officer |
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| (Principal Executive Officer) |
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Dated: October 15, 2024 |
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| /s/ Mitchell Cohen |
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| Mitchell Cohen |
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| Interim Chief Financial Officer |
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| (Principal Financial and Accounting Officer) |
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