美國
證券交易委員會
華盛頓特區20549
表格
| | 根據1934年證券交易法第13或15(d)條款的季度報告。 |
截至2024年6月30日季度結束
或
| | 根據1934年證券交易法第13或15(d)條款的過渡報告 |
從過渡期間 _____ 至 _____
委員會 檔案編號:
windtree therapeutics, 公司。
（依憑章程所載的完整登記名稱）
| (成立地或組織其他管轄區) | (國稅局雇主 |
| (總部辦公地址) | (郵遞區號) |
註冊人的電話號碼，包括區號：(
根據法案第12(b)條規定註冊的證券：
| 每種類別的名稱 | 交易標的 | 每個註冊交易所的名稱 |
| | | The |
請勾選標記，指示登記人 (1) 是否在過去 12 個月內（或登記人被要求提交此類報告的較短期間內）已按照 1934 年證券交易法第 13 節或第 15(d) 節提交所有必需的報告，及 (2) 是否在過去 90 天內受此類提交要求的約束。
請在此以勾選符號表示，得證券登記人是否在過去12個月內（或要求登記人提交該等文件的縮短期間）按照S-t規則405條（本章節第232.405條）要求提交了每個交互式數據文件。
勾選表示登記人是大型加速申報人、加速申報人、非加速申報人、較小型申報公司或新興成長公司。詳細定義請參閱《交易所法》第1202條中“大型加速申報人”、“加速申報人”、“較小型申報公司”和“新興成長公司”的定義。
| 大型加速報告人 ☐ | 加速報告人 ☐ |
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| | 小型報告公司 |
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| 新興成長公司 |
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如果是新興成長型企業，在符合任何依據證券交易法第13(a)條所提供的任何新的或修改的財務會計準則的遵循的延伸過渡期方面，是否選擇不使用核准記號進行指示。☐
請以核選符號表示，公司是否為空殼公司（如交易法令第120億2條所定義）。 是
截至 2024年11月22日，有
第I部分 - 財務資訊
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| 項目 1。 |
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| 項目2。 |
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| 項目3。 |
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| 項目4。 |
第二部分 - 其他信息
| 項目 1。 |
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| 项目1A。 |
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| 項目2。 |
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| 項目3。 |
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| 項目4。 |
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| 项目5。 |
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| 第6項。 |
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除非上下文另有要求，所有對“我們”、“我們的”、“本公司”及“公司”的引用均包括windtree therapeutics, inc.及其合併子公司。
前瞻性陳述
這份第10-Q表格的季度報告包含根據1933年證券法修正案第27A條以及1934年證券交易法修正案第21E條的“前瞻性聲明”。這些前瞻性聲明是我們對未來事件和財務表現的當前期望或預測，可能通過使用前瞻性術語來辨識，包括“相信”、“估計”、“預期”、“期望”、“計劃”、“打算”、“可能”、“將”、“應該”、“能夠”、“目標”、“項目”、“考慮”、“預測”、“潛力”或“持續”等術語，其中每一種情況下，它們的否定或其他變體或可比術語，但缺乏這些字眼不一定意味著一項聲明並非前瞻性。
我們打算讓所有前瞻性陳述受1995年《私人證券訴訟改革法》的安全港條款的約束。前瞻性陳述面臨許多風險和不確定性，這些風險和不確定性可能導致實際結果與前瞻性陳述所表達或暗示的任何未來結果存在重大差異。因此，我們警告您不要依賴這些前瞻性陳述。它們既不是歷史事實的陳述，也不是對未來表現的保證或保證。這些風險和不確定性的例子，可能會對我們的開發計畫、業務和/或運作產生重大不利影響，包括但不限於以下幾點：
| ● |
我們對未來經營業績、財務狀況、研發成本、資本需求和額外融資的估計; |
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我們可以用現金及現金等價物，繼續資助我們的運營多久？ |
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| ● | 市場環境、一般經濟狀況和銀行板塊的變化，以及在需要有利條款時或需要時可能受到的資本或信貸方面的潛在限制，如果有的話。 |
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| ● | 我們的無形資產可能對我們的簡明合併資產負債表產生損耗，這可能會導致未來出現重大的損耗費用； | |
| ● | 我們償還債務的能力； | |
| ● |
我們預期時間表和里程碑可能會延遲和存在不確定性，同時由以色列和加沙地區事件對我們臨床試驗運營的影響而產生的額外成本也可能增加； |
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我們的預臨床研究和臨床試驗的費用、時間和結果，以及獲得監管批准所需的試驗次數和試驗成功的標準。 |
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美國和其他國家（包括任何可能影響臨床試驗的設計、啟動、時機、進度或結果，或導致需要進行額外臨床試驗的行動或建議）的法律和監管發展。 |
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與獲得和維持我們產品候選藥物的監管批准和該批准下的適應症和標籤相關的困難和費用; |
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與製造活性藥品成分、藥品產品和其他所需材料相關的風險； |
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| ● | 生產及供應我們產品候選品可能出現延誤、中斷或失敗； | |
| ● | 我們的被許可方李氏藥業（香港）有限公司及其關聯公司中科制藥（合肥）有限公司的計劃，以及他們能否及時成功地獲取材料，執行必要的臨床和監管活動，從而支持被許可產品候選藥品的開發和商業化，如果有的話。 | |
| ● | 我們所依賴的第三方表現，包括國內外的醫藥外包概念、製造業外包概念、實驗室外包概念和獨立承包商； | |
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我們產品候選項目的潛在市場規模和增長、這些市場的監管要求、市場對我們產品候選項目的接受程度和速度，以及我們在這些市場的服務能力。 |
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競爭療法和產品的成功以及現有或可能提供的產品； |
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我們有能力限制在產品責任訴訟中的風險。 |
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我們獲得和保持產品候選者的知識產權保護的能力; |
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最近實施和未來的立法，包括但不限於2022年通貨膨脹減少法案，關於美國的醫療系統或外國司法管轄區的醫療系統。 |
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我們招聘或留住關鍵的科學、商業或管理人員，或者留住我們的高管的能力； |
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我們有能力確保電子儲存的工作產物，包括臨床數據、分析、研究、通信和其他材料，以獲得對我們產品候選者的監管批准所必需的資料，包括從第三方取得的資料，並確保內部計算機和信息系統的完整性、正常功能和安全性，避免或防止網絡攻擊、惡意侵入、故障、破壞、安全事件、數據隱私違規或其他重大干擾。 |
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| ● | 通脹和利率波動引起的經濟不確定性，包括涉及金融機構的流動性、違約或其他不良表現的擔憂； | |
| ● | 關於我們對我們股本信用額度銷售所得使用的預期，如果有的話；和 | |
| ● | 由地緣政治不穩定引起的經濟不確定性，包括俄羅斯和烏克蘭之間的持續衝突，中華人民共和國與****（台灣）之間的衝突，以及中東地區的任何升級或擴張。 |
藥品、生物技術和醫療科技公司在進行臨床試驗時遭遇了重大挫折，即使在獲得了早期有希望的前期實驗和臨床數據之後。此外，從臨床試驗中獲得的數據容易受到不同解讀的影響，這可能會延遲、限制或阻止法規的批准。在獲得藥品批准後，藥品和生物技術公司在產品的營銷和分銷方面面臨相當大的挑戰，並且可能永遠無法實現盈利。
本季度10-Q表格中的前瞻性聲明或本報告中引述的文件僅在其各自日期時有效。可能會不時出現導致我們實際結果與預期結果不同的因素或事件，而我們無法預測所有這些因素或事件。除非法律、規則或法規要求，否則我們不承擔任何公開更新任何前瞻性聲明的義務，也不會公開宣布對任何前瞻性聲明的修訂，無論是由於新資訊、未來事件還是其他原因。
您還應詳細閱讀在本季度報告10-Q的第二部分，第1A項中所描述的“風險因素”，並結合我們的年度報告10-K的第一部分，第1A項進行參考，以了解截至某個財政年度的情況。 2023年12月31日, 並根據我們截至2024年3月31日和2024年6月30日的季度報告10-Q進行補充，以更清楚地 了解我們業務中固有的重大風險和不確定性，以及任何前瞻性陳述背後的風險。
商標通知
AEROSURF®, AFECTAIR®, SURFAXIN®, SURFAXIN LS™, windtree therapeutics® (標誌),
windtree therapeutics™，以及 windtree™ 是windtree therapeutics, Inc. (Warrington, PA)的註冊商標和普通法商標。
windtree therapeutics，INC. 及其子公司
簡明合併資產負債表
| (以千為單位，每股數據除外) |
| 2024年9月30日 | 2023年12月31日 | |||||||
| (未經審計) | ||||||||
| 資產 | ||||||||
| 流動資產： | ||||||||
| 現金及現金等價物 | $ | $ | ||||||
| 預付費用及其他流動資產 | ||||||||
| 流動資產總額 | ||||||||
| 不動產及設備，淨額 | ||||||||
| 受限現金 | ||||||||
| 營運租賃使用權資產 | ||||||||
| 無形資產 | ||||||||
| 總資產 | $ | $ | ||||||
| 負債、次級股權及股東權益 | ||||||||
| 當前負債： | ||||||||
| 應付賬款 | $ | $ | ||||||
| 應計費用 | ||||||||
| 租賃負債-流動部分 | ||||||||
| ELOC承諾票據應付 | ||||||||
| 衍生負債 - ELOC承諾票據 | ||||||||
| 普通股權證負債 | ||||||||
| 應付貸款 | ||||||||
| 其他流動負債 | ||||||||
| 流動負債總額 | ||||||||
| 營業租賃負債-非流動部分 | ||||||||
| 重組的債務負債 - 有條件的里程碑支付 | ||||||||
| 其他負債 | ||||||||
| 遞延所得稅負債 | ||||||||
| 總負債 | ||||||||
| 中間資本股權： | ||||||||
| C系列可贖回優先股，$ 面值； 和 授權的股份； 和 截至2024年9月30日和2023年12月31日分別發行和流通的股份數 | ||||||||
| B系列可贖回優先股，$ 面值； 和 授權的股份； 截至2024年9月30日和2023年12月31日分別發行和流通的股份數 | ||||||||
| 總樓中樓權益 | ||||||||
| 股東權益： | ||||||||
| 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。 面值； 和 授權的股份； 截至2024年9月30日和2023年12月31日分別發行和流通的股份數 | ||||||||
| 0.01 面值； 授權的股份； 和 截至2024年9月30日及2023年12月31日發出的分享； 和 截至2024年9月30日和2023年12月31日的流通股份數分別為 | ||||||||
| 資本公積額額外增資 | ||||||||
| 累積虧損 | ( | ) | ( | ) | ||||
| 庫存股票（按成本計算）； 普通股， | ( | ) | ( | ) | ||||
| 股東權益總額 | ||||||||
| 總負債、臨時股本及股東權益 | $ | $ | ||||||
| 參閱總括財務報表的附註 |
windtree therapeutics, inc. 及其附屬公司
損益綜合表簡明合併報表
(未經審計)
| （單位：千，每股資料除外） |
| 截至三個月 | 九個月結束 | |||||||||||||||
| 九月三十日， | 九月三十日， | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 費用： | ||||||||||||||||
| 研發 | $ | $ | $ | $ | ||||||||||||
| 一般及行政費用 | ||||||||||||||||
| 商譽減損損失 | ||||||||||||||||
| 營業費用總額 | ||||||||||||||||
| 營運虧損 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他收益（支出）： | ||||||||||||||||
| 償債利益 | ||||||||||||||||
| 普通股認股權負債公允價值變動 | ||||||||||||||||
| 利息收入 | ||||||||||||||||
| 利息支出 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他（費用）收入，淨 | ( | ) | ( | ) | ||||||||||||
| 其他收入合計，淨額 | ||||||||||||||||
| 稅前損失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 所得稅效益（費用） | ( | ) | ||||||||||||||
| 淨虧損 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 撲滅B系列優先股 | ||||||||||||||||
| C系列優先股視為股息 | ( | ) | ( | ) | ||||||||||||
| 歸屬於普通股股東的淨虧損 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 歸屬於普通股東的每股淨損失 | ||||||||||||||||
| 基本與稀釋 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 加權平均股本收益數量 | ||||||||||||||||
| 基本與稀釋 | ||||||||||||||||
| 參閱總括財務報表的附註 |
windtree therapeutics, inc. 及其附屬公司
綜合縮減的擬發行權益和股東權益變動表
(未經審計)
| （以千為單位) |
| 夾層股權 | 股東權益 | |||||||||||||||||||||||||||||||||||
| A系列優先股 | 普通股 | 庫藏股 | ||||||||||||||||||||||||||||||||||
| 股份 | 金額 | 股份 | 金額 | 額外認購資本 | 累積虧損 | 股份 | 金額 | 總計 | ||||||||||||||||||||||||||||
| 2022年12月31日的資產負債表 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| 淨虧損 | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||
| 贖回A系列優先股 | ( | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| 行使普通股warrants，扣除$的費用 | ||||||||||||||||||||||||||||||||||||
| 反向拆分調整 - 零碎股份四捨五入 | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| 股份報酬支出 | - | - | - | |||||||||||||||||||||||||||||||||
| Balance - March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| 淨虧損 | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||
| 發行普通股及普通股warrants，扣除$的發行費用 | ||||||||||||||||||||||||||||||||||||
| 股份報酬支出 | - | - | - | |||||||||||||||||||||||||||||||||
| Balance - June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| 淨虧損 | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||
| 股份報酬支出 | - | - | - | |||||||||||||||||||||||||||||||||
| 餘額 - 2023年9月30日 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| 夾層股權 | 股東權益 | |||||||||||||||||||||||||||||||||||||||||||
| B系列優先股 | C級優先股 | 普通股 | 庫藏股 | |||||||||||||||||||||||||||||||||||||||||
| 股份 | 金額 | 股份 | 金額 | 股份 | 金額 | 額外認購資本 | 累積虧損 | 股份 | 金額 | 總計 | ||||||||||||||||||||||||||||||||||
| 餘額-2023年12月31日 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||
| 凈利潤 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| 普通股發行，ATm計劃，扣除發行成本後的凈利潤為$ | ||||||||||||||||||||||||||||||||||||||||||||
| 普通股發行，股權轉換債務撲滅中的股權酬勞 | ||||||||||||||||||||||||||||||||||||||||||||
| 股份報酬支出 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||
| 淨虧損 | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| 發行優先股，已考慮發行成本$ | ||||||||||||||||||||||||||||||||||||||||||||
| 逆分割調整 - 分數股份進位 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||
| 股份報酬支出 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| 2024年6月30日的賬目 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||
| 淨虧損 | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| ELOC銷售，已考慮發行成本$ | ||||||||||||||||||||||||||||||||||||||||||||
| 交易所b系列優先股 | ( | ) | ( | ) | 9 | |||||||||||||||||||||||||||||||||||||||
| 發行C系列優先股，現金收益，已考慮發行成本$ | ||||||||||||||||||||||||||||||||||||||||||||
| 發行C系列優先股以清償債務 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| 發行C系列優先股作為對服務的報酬 | ||||||||||||||||||||||||||||||||||||||||||||
| C系列優先股轉換 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| 贖回C系列優先股 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| C系列優先股的擬分紅派息 | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| C系列優先股的擬現金分紅派息 | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| 股份報酬支出 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| 截至2024年9月30日的結餘 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||
| 參閱總括財務報表的附註 |
windtree therapeutics，INC. 及其子公司
綜合現金流量表
(未經審計)
| （以千為單位) |
| 九個月結束 | ||||||||
| 九月三十日， | ||||||||
| 2024 | 2023 | |||||||
| 經營活動現金流量： | ||||||||
| 淨虧損 | $ | ( | ) | $ | ( | ) | ||
| 調整為使淨虧損轉化為經營活動所使用現金： | ||||||||
| 與Varian資產收購相關的在研究和發展費用 | ||||||||
| 折舊及攤銷 | ||||||||
| 租賃權資產攤銷 | ||||||||
| 債務折價及債券發行費之攤銷 | ||||||||
| 基於股票的薪酬 | ||||||||
| 與股權考慮有關的非現金開支，用於支付服務 | ||||||||
| ELOC承諾備忘錄和衍生負債虧損 | ||||||||
| 商譽減損損失 | ||||||||
| 財產和設備出售及處置虧損 | ||||||||
| 償債利益 | ( | ) | ||||||
| 外匯匯率變動未實現收益 | ( | ) | ( | ) | ||||
| 普通股認股權負債公允價值變動 | ( | ) | ||||||
| 衍生負債的公允價值變動 | ( | ) | ||||||
| 高級保證票擔保票據公允價值變動 | ||||||||
| 資產及負債的變動： | ||||||||
| 預付費用及其他流動資產 | ( | ) | ||||||
| 應付賬款 | ||||||||
| 應計費用 | ||||||||
| 租賃負債 | ( | ) | ( | ) | ||||
| 其他流動負債 | ( | ) | ||||||
| 經營活動所用的淨現金 | ( | ) | ( | ) | ||||
| 投資活動之現金流量: | ||||||||
| 購買不動產和設備 | ( | ) | ( | ) | ||||
| 投資活動中使用的淨現金 | ( | ) | ( | ) | ||||
| 來自籌資活動的現金流量: | ||||||||
| 從ELOC購買協議獲得的款項，扣除發行成本淨額 | ||||||||
| 從定向增發獲得的款項，扣除發行成本淨額 | ||||||||
| 贖回C系列優先股 | ( | ) | ||||||
| C系列優先股的現金分紅 | ( | ) | ||||||
| 普通股和warrants發行款項，扣除發行成本後的淨額 | ||||||||
| ATm計劃的款項，扣除發行成本後的淨額 | ||||||||
| 償還後的高級可轉換票據應付款項款項，扣除發行成本後的淨額 | ||||||||
| 高級可轉換票據應付款項的本金支付 | ( | ) | ||||||
| 高級抵押和無抵押票據的款項，扣除發行成本後的淨額 | ||||||||
| 貸款應付款項的本金支付 | ( | ) | ( | ) | ||||
| 發行與B系列優先股相關的發行成本 | ( | ) | ||||||
| 償還債務的支付 | ( | ) | ||||||
| 行使普通股認股權憑證所得款項（扣除費用净額） | ||||||||
| 籌資活動提供的淨現金 | ||||||||
| 現金、現金等價物和限制性現金的淨（減少）增加 | ( | ) | ||||||
| 現金、現金等價物和受限制現金 - 期初 | ||||||||
| 現金、現金等價物及受限現金 - 期末 | $ | $ | ||||||
| 非現金活動的補充披露: | ||||||||
| 普通股認股權權益發行時的公平價值 | $ | $ | ||||||
| 定向增發所得款項分配給普通股認股權權益 | ||||||||
| 非現金發行成本分配給C系列優先股 | ||||||||
| Varian資產收購相關發行的B系列優先股的公平價值 | ||||||||
| 與高級可轉債付息票據相關之衍生負債發行時的公平價值 | ||||||||
| 與ELOC承諾票據相關之衍生負債發行時的公平價值 | ||||||||
| 與債務抹滅相關的普通股代價的公平價值 | ||||||||
| 2023年1月認股權修改的公平價值，與2023年1月認股權行使誘因相關 | ||||||||
| 2023年2月份權證修改的公平價值與2023年2月份權證行使誘因有關 | ||||||||
| 透過第三方融資預付保險費用 | ||||||||
| 參閱總括財務報表的附註 |
注1 – 公司及業務描述
我們是一家專注於發展早期和後期創新治療方案，針對關鍵疾病的生物技術公司。我們的產品候選組合包括istaroxime，這是一個第2期的候選人，它可以抑制鈉-鉀ATP酶，同時也可以激活肌肉內質網Ca2+ -ATP酶2a，或者稱為SERCA2a，用於急性心力衰竭和/或相關的心源性休克；為心力衰竭證實能激活SERCA2a的前臨床活化劑；用於具有特定遺傳特徵高血壓患者的rostafuroxin；以及用於罕見和廣泛腫瘤領域潛在應用正在開發的一種前臨床非典型蛋白激酶C埃歐塔，或稱為aPKCi，抑制劑（局部和口服制劑）。我們還擁有授權業務模式，目前已經建立了合作授權的伙伴關係。
我們的首選產品候選藥istaroxime是一種首創的雙作用藥物，旨在增加心臟性休克患者的血壓並改善心臟功能，以及改善急性心衰患者的心臟功能，或稱急性心力衰竭（AHF），並逆轉導致心臟性休克的心臟衰竭帶來的低血壓和低灌注。istaroxime在四個2期臨床試驗中顯示出心臟功能的收縮和舒張方面的顯著改善，並且在整體上耐受性良好。istaroxime已獲得美國食品和藥物管理局（FDA）對治療AHF的快速通道指定。根據我們在AHF的2期臨床研究中觀察到的個人資料，istaroxime在急性失代償性心力衰竭患者中顯著改善了心臟功能和收縮血壓（SBP），並具有良好的腎功能。我們啟動了一項全球2期臨床研究，即SEISMiC研究，以評估istaroxime用於早期心臟性休克（心血管介入學會和介入結合學會，或SCAI，b級休克），一種嚴重的AHF形式，其特徵是非常低的血壓和對重要器官和死亡的瞬間灌注風險。2022年4月，我們宣布了SEISMiC研究中的觀察結果，即istaroxime快速而顯著地提高SBP，同時改善心臟功能並保護腎功能。我們相信istaroxime有潛力滿足早期和可能更嚴重的心臟性休克所需。我們進一步相信，SEISMiC研究的數據支持在心臟性休克和AHF中的持續發展。在2024年9月，我們宣布來自我們第2期20億SEISMiC擴展研究，或SEISMiC擴展的陽性頂線結果，這一結果表明istaroxime靜脈注射明顯改善了心臟功能和血壓，而不增加心率或臨床意義的心臟節律紊亂。此外，我們已經啟動了一項更嚴重SCAI C期心臟性休克的研究，即SEISMiC C研究，該研究評估istaroxime在接受休克標準治療的心臟性休克患者中的安全性和有效性。預計SEISMiC C研究將招募最多100名SCAI C期心臟性休克主題，預計將於2025年底完成招募。計劃在2025年第2季初進行對前20名受試者數據的揭盲審查。 我們完成這項研究並達到預定樣本規模的能力，取決於我們通過籌措資金或業務拓展活動來確保計劃獲得足夠的資源。
我們的心力衰竭心血管組合還包括其他的SERCA2a活化劑。 一類化合物具有雙重作用機制，包括抑制鈉-鉀ATPase以及激活SERCA2a。 另一類化合物被認為是選擇性的SERCA2a活化劑，並且不具有針對鈉-鉀ATPase的活性。 這項研究計劃正在評估這些臨床前產品候選者，包括口服和靜脈注射的SERCA2a活化劑心力衰竭化合物。 這些候選者有可能被開發用於急性失代償和慢性門診心力衰竭。 此外，我們的心血管藥物產品候選者包括rostafuroxin，這是一種新穎的治療高血壓患者具有特定基因檔的產品候選者。 我們正在尋求潛在的授權安排和/或其他策略合作夥伴關係，並且沒有打算在獲得此類安排或夥伴關係之前推進rostafuroxin的開發。
我們的心血管資產和計畫與李氏藥業（香港）有區域型合作授權關係，用於大中華地區的istaroxime產品候選開發和商業化。除了istaroxime外，協議還授權我們的預臨床下一代雙機制SERCA2a激活劑和rostafuroxin。此外，我們支持李氏藥業（香港）在使用istaroxime展開AHF第3期試驗的努力。
2024年4月2日，我們與Varian Biopharmaceuticals，Inc.（以下簡稱Varian）簽署了資產購買協議，即資產購買協議。根據資產購買協議，我們購買了與許可協議有關的Varian業務的所有資產，該許可協議於2019年7月5日簽署，並由Varian與Cancer Research Technology Limited（以下簡稱許可協議）簽署，其中包括該許可協議，根據該許可協議獲得的分子和化合物的所有權利，對於業務的箝制報告及藥物物質投入生產量的了解程度，即轉讓的資產。轉讓的資產包括一種新型的、具有潛在高效性的特異性aPKCi抑制劑，可在腫瘤學和某些罕見惡性疾病中廣泛使用。資產平台包括兩種配方（外用和口服）的aPKCi抑制劑。我們計劃推進新藥候選藥的研究活動，並正在制定平台的預期臨床發展計劃的過程中。
我們推進開發項目的能力，取決於我們能否在短期和長期內通過公開或私人證券發行；可轉換債務融資；以及/或潛在的戰略機遇，包括授權協議、藥品研發、市場合作安排、藥品研究合作安排和/或其他類似的交易，在地理市場上，包括美國，在各種情況下，如果有的話。我們已經與各個市場的潛在交易對手接觸過，並將繼續尋求非稀釋資本來源，以及潛在的私人和公共證券發行。然而，我們無法保證我們能夠在可接受的條款和足夠滿足我們需求的金額下，確定並參與公開或私人證券發行，或在美國政府機構、私人基金會和/或主要學術機構贊助的任何補助計劃下資金不稀釋的機會，或確定並參與將提供我們所需要的額外資本的任何戰略交易。假如這些替代方案都不可行，或者可行但我們無法通過這些交易籌集足夠的資本，我們可能被迫限制或停止我們的開發活動，並且修改或停止我們的業務運作，這兩種情況都將對我們的業務、財務狀況和經營成果產生重大不利影響。
讀者被引導並鼓勵完整閱讀我們截至年度的《項目1 - 業務》，該項目載於我們提交給證券交易委員會（SEC）的10-k表格中， 2023年12月31日 在 ，包括附注99.1，我們的報告在2024年4月16日提交的6-k表格中，該項目包含有關我們的業務和業務計劃的討論，以及有關我們的專有技術及目前和計劃發展項目的信息。
附註2－簡報基礎
中期未經審核簡明合併財務報表根據美國公認的會計原則或美國 GAAP，根據表格 10-Q 的指示編製中期財務資料，並包括 Windtree Therapeutics, Inc. 及其全資附屬公司的帳目。因此，它們不包括美國 GAAP 所需的所有信息和註腳，以供完整合併財務報表所要求。公司間餘額和交易在合併中被消除。所有考慮作公平呈現的調整（包括通常定期性應計）均已包括在內。經營業績 截至二零二四年九月三十日止的三個月和九個月 不一定表明結束年度可能預期的結果 二零四年十二月三十一日。合併資產負債表於 二零三年十二月三十一日 源自本公司經審核的綜合財務報表。自此之後，我們的重要會計政策並沒有任何改變 二零三年十二月三十一日。隨附的中期未經審核簡明綜合財務報表應與截至截至年度及截至截至年度之全年經審核合併財務報表及相關附註一併閱讀 二零三年十二月三十一日 載於截至截止年度的表格 10-k 年報 二零三年十二月三十一日.
隨附的縮表反映了董事會和股東批准並於2024年4月19日生效的普通股1比1的逆向拆股。
Note 3 – Going Concern and Management’s Plans
We are subject to risks common to companies in the biotechnology industry, including but not limited to the need for additional capital, risks of failure of preclinical and clinical studies, the need to obtain marketing approval and reimbursement for any drug product candidate that we may identify and develop, the need to successfully commercialize and gain market acceptance of our product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development of technological innovations by competitors, and risks associated with our international operations in Taiwan and activities abroad, including but not limited to having foreign suppliers, manufacturers, and clinical sites in support of our development activities.
We have incurred net losses since inception. Our net loss was $
In June 2024, we entered into a Common Stock Purchase Agreement, or the ELOC Purchase Agreement, establishing an equity line of credit with the purchaser, or the Purchaser, whereby we have the right, but not the obligation, to sell to the Purchaser, and the Purchaser is obligated to purchase, up to $
As of September 30, 2024, we had cash and cash equivalents of $
To alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, management plans to secure additional capital, potentially through a combination of public or private securities offerings, convertible debt financings, and/or strategic transactions, including potential licensing arrangements, alliances, and drug product collaborations focused on specified geographic markets; however, none of these alternatives are committed at this time. There can be no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all, or identify and enter into any strategic transactions that will provide the capital that we will require. If we fail to raise sufficient capital, we potentially could be forced to limit or cease our development activities, as well as modify or cease our operations, either of which would have a material adverse effect on our business, financial condition, and results of operations. Accordingly, management has concluded that substantial doubt exists with respect to our ability to continue as a going concern for at least 12 months after the issuance of the accompanying financial statements.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Note 4 – Summary of Significant Accounting Policies
Principles of Consolidation
The interim unaudited condensed consolidated financial statements are prepared in accordance with US GAAP and include accounts of Windtree Therapeutics, Inc. and its wholly owned subsidiaries, CVie Investments Limited and its wholly owned subsidiary, CVie Therapeutics Limited; and a presently inactive subsidiary, Discovery Laboratories, Inc. (formerly known as Acute Therapeutics, Inc.).
Intangible Assets and Goodwill
We record acquired intangible assets and goodwill based on estimated fair value. The identifiable intangible assets resulting from the CVie Therapeutics acquisition in December 2018 relate to in-process research and development, or IPR&D, of istaroxime and rostafuroxin. The IPR&D assets are considered indefinite-lived intangible assets until completion or abandonment of the associated research and development efforts. IPR&D is not amortized but reviewed for impairment at least annually, or when events or changes in the business environment indicate the carrying value may be impaired. During the three and nine months ended September 30, 2024, no events or changes in circumstances occurred indicating that our IPR&D intangible assets were more likely than not impaired.
Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in a business combination and is not amortized. It is reviewed for impairment at least annually or when events or changes in the business environment indicate that its carrying value may be impaired.
During each of the first and second quarters of 2023, the continued declining trend in the closing share price of our common stock suggested that the fair value of our reporting unit was more likely than not less than its carrying value. Based on interim goodwill impairment tests, we determined that the fair value of our reporting unit was more likely than not less than its carrying value. As a result, we recorded a loss on impairment of goodwill of $
The following table represents identifiable intangible assets as of September 30, 2024 and December 31, 2023:
| September 30, | December 31, | |||||||
| (in thousands) | 2024 | 2023 | ||||||
| Istaroxime drug candidate | $ | $ | ||||||
| Rostafuroxin drug candidate | ||||||||
| Intangible assets | ||||||||
Acquired In-Process Research and Development Expenses
Acquired IPR&D expenses include consideration for the purchase of IPR&D through asset acquisitions and license agreements as well as payments made in connection with asset acquisitions and license agreements upon the achievement of development milestones.
We evaluate in-licensed agreements for IPR&D projects to determine if it meets the definition of a business and thus should be accounted for as a business combination. If the in-licensed agreement for IPR&D does not meet the definition of a business and the assets have not reached technological feasibility and have no alternative future use, we expense payments made under such license agreements as research and development expense in the consolidated statements of operations. In those cases, payments for milestones achieved and payments for a product license prior to regulatory approval of the product are expensed in the period incurred. Payments made in connection with regulatory and sales-based milestones are capitalized and amortized to cost of revenue.
Convertible Debt and Equity Instruments
We review the terms of convertible debt and equity instruments to determine whether there are conversion features or embedded derivative instruments including embedded conversion options that are required to be bifurcated and accounted for separately as derivative financial instruments under ASC Topic 815, Derivatives and Hedging.
In circumstances where the convertible instrument contains more than one embedded derivative instrument, including conversion options that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single compound instrument. Also, in connection with the sale of convertible debt and equity instruments, we may issue free standing warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. When convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for separately, the total proceeds allocated to the convertible host instruments are first allocated to the fair value of the bifurcated derivative instrument. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, usually resulting in those instruments being recorded at a discount from their face amount. When we issue debt securities, which bear interest at rates that are lower than market rates, we recognize a discount, which is offset against the carrying value of the debt. Such discount from the face value of the debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income.
Derivative Financial Instruments
Derivatives are recorded on the consolidated balance sheet at fair value. The conversion features of the convertible notes are embedded derivatives and are separately valued and accounted for on the consolidated balance sheet with changes in fair value recognized during the period of change as a separate component of other income (expense). Fair values for exchange-traded securities and derivatives are based on quoted market prices. The pricing model we use for determining the fair value of non-exchange traded derivatives is the Monte Carlo Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities.
Foreign Currency Transactions
The functional currency for our foreign subsidiary is U.S. Dollars. We remeasure monetary assets and liabilities that are not denominated in the functional currency at exchange rates in effect at the end of each period. Gains and losses from the remeasurement of foreign currency transactions are recognized in other (expense) income, net. Foreign currency transactions resulted in a net loss of approximately $
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including intangible assets and goodwill, at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents are held at domestic and foreign financial institutions and consist of liquid investments and money market funds that are readily convertible into cash.
Concentration of Credit Risk
Financial instruments, which potentially subject us to credit risk, consist principally of cash and cash equivalents. All cash and cash equivalents are held in U.S. financial institutions and money market funds. At times, we may maintain cash balances in excess of the federally insured amount of $250,000 per depositor, per insured bank, for each account ownership category. Although we currently believe that the financial institutions with whom we do business will be able to fulfill their commitments to us, there is no assurance that those institutions will be able to continue to do so. We have not experienced any credit losses associated with our balances in such accounts.
Severance
In July 2023, we entered into a separation agreement with an executive, which provided that the former employee would be entitled to receive (i) a severance amount equal to the sum of the employee’s base salary then in effect and (ii) subject to certain exceptions, a pro rata bonus commensurate with the bonus awarded to other contract executives for 2023, prorated for the number of days of the employee’s employment during 2023, and payable at the time that other contract executives are paid bonuses with respect to 2023. The severance amount related to the departure of this executive was approximately $
In June 2023, we implemented certain reductions in headcount. The total severance cost for impacted employees was approximately $
Property and Equipment
Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets (generally to years). Leasehold improvements are amortized over the shorter of the estimated useful lives or the remaining term of the lease. Repairs and maintenance costs are charged to expense as incurred.
Restructured Debt Liability – Contingent Milestone Payment
In conjunction with the November 2017 restructuring and retirement of long-term debt, we established a $
On January 24, 2024, we and Deerfield entered into an Exchange and Termination Agreement, or the Exchange and Termination Agreement, wherein Deerfield agreed to terminate its rights to receive certain milestone payments in exchange for (i) cash in the aggregate amount of $
Research and Development
We account for research and development expense by the following categories: (a) direct clinical and preclinical development programs, (b) product development and manufacturing, and (c) clinical, medical, and regulatory operations. Research and development expense includes personnel, facilities, manufacturing and quality, pharmaceutical development, research, clinical, regulatory, and other preclinical and clinical activities. Research and development costs are charged to operations as incurred in accordance with Accounting Standards Codification, or ASC, Topic 730, Research and Development.
Income Taxes
We account for income taxes in accordance with ASC Topic 740, Accounting for Income Taxes, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities.
We use a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Because we have never realized a profit, management has fully reserved the net deferred tax asset as there can be no assurance of realization.
Net Loss per Share Attributable to Common Stockholders
Net loss is adjusted for any deemed dividends to preferred stockholders to compute net loss attributable to common stockholders. Net loss is also adjusted for any impact to retained earnings related to the extinguishment of equity securities. The Series C preferred stock and the ELOC commitment note payable are participating securities. Accordingly, in any period in which we report net income attributable to common stockholders, basic earnings per share is computed using the “two-class” method. Under this method, net income is reduced by any dividends earned and the remaining earnings (undistributed earnings) are allocated to common stock and each series of participating securities to the extent that each participating security may share in earnings as if all of the earnings for the period had been distributed. The total earnings allocated to common stock is then divided by the number of outstanding shares to which the earnings are allocated to determine the earnings per share. The two-class method is not applicable during periods with a net loss, as the holders of the participating securities have no obligation to fund losses. Diluted net income per common share is computed under the two-class method by using the weighted-average number of shares of common stock outstanding, plus the effect of any other potentially dilutive securities outstanding for the period. In addition, the Company analyzes the potential dilutive effect of the outstanding participating securities under the “if-converted” method when calculating diluted earnings per share, in which it assumes that the outstanding participating securities convert into common stock at the beginning of the period, or when issued if later. The Company reports the more dilutive of the approaches (two class or “if-converted”) as their diluted net income per share during the period.
For periods in which a net loss exists, basic net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share attributable to common stockholders is computed by giving effect to all potentially dilutive securities outstanding for the period.
As of September 30, 2024 and 2023, the number of shares of common stock potentially issuable upon the exercise of certain stock options and warrants, the vesting of restricted stock units, and the conversion of Series C preferred stock and the ELOC commitment note payable was
We do not have any components of other comprehensive (loss) income.
Note 5 – Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:
| ● | Level 1 – Quoted prices in active markets for identical assets and liabilities. | |
| ● | Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |
| ● | Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Fair Value on a Recurring Basis
The tables below categorize assets and liabilities measured at fair value on a recurring basis for the periods presented:
| Fair Value | Fair value measurement using | |||||||||||||||
| September 30, | ||||||||||||||||
| (in thousands) | 2024 | Level 1 | Level 2 | Level 3 | ||||||||||||
| Assets: | ||||||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Common stock warrant liability | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||
| Derivative liability - ELOC commitment note | ( | ) | ( | ) | ||||||||||||
| Total Liabilities | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||
| Fair Value | Fair value measurement using | |||||||||||||||
| December 31, | ||||||||||||||||
| (in thousands) | 2023 | Level 1 | Level 2 | Level 3 | ||||||||||||
| Assets: | ||||||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
The money market funds were classified as cash and cash equivalents on the consolidated balance sheets and were within Level 1 of the fair value hierarchy. The aggregate fair value of the Company’s money market funds approximated amortized cost.
The fair value of the common stock warrant liability is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. The following table provides a summary of the change in the estimated fair value of the common stock warrant liability:
| Three and Nine Months Ended September 30, 2024 | ||||
| Issuance of common stock warrants | $ | |||
| Change in fair value | ( | ) | ||
| Balance at September 30, 2024 | $ | |||
In determining the initial fair value of the common stock warrants at their respective issuance dates, we used a Black Scholes pricing model. For the subsequent measurement at September 30, 2024, we used a Monte Carlo simulation. The following table provides a summary of the significant inputs used in these valuations:
| July 22, 2024 Issuance Date | July 29, 2024 Issuance Date | September 30, 2024 | ||||||||||
| Fair value of underlying equity | $ | $ | $ | |||||||||
| Exercise price | $ | $ | $ | |||||||||
| Volatility | % | % | n/a | |||||||||
| Risk-free interest rate | % | % | ||||||||||
| Expected term (in years) | ||||||||||||
| Discounting factor | n/a | n/a | ||||||||||
The fair value of the derivative liability-ELOC commitment note is also based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. The following table provides a summary of the change in the estimated fair value of the derivative liability:
| Three and Nine Months Ended September 30, 2024 | ||||
| Initial recognition of derivative liability | $ | |||
| Change in fair value | ||||
| Balance at September 30, 2024 | $ | |||
In determining the initial fair value of the derivative liability and for the subsequent measurement at September 30, 2024, we used a Monte Carlo simulation. The following table provides a summary of the significant inputs used in these valuations:
| June 26, 2024 Issuance Date | September 30, 2024 | |||||||
| Fair value of underlying equity | $ | | ||||||
| Volatility | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Conversion price discount | % | % | ||||||
| Discounting period (in years) | ||||||||
| Discount rate | % | % | ||||||
| Discounting factor | ||||||||
Certain of our assets were measured at fair value on a non-recurring basis during the nine months ended September 30, 2024 and the year ended December 31, 2023. Our goodwill was recorded at its estimated fair value as a result of the impairment tests performed in 2023, which resulted in the goodwill being written down to as of June 30, 2023 (See the section titled, “Note 4 – Summary of Significant Accounting Policies – Intangible Assets and Goodwill”).
In order to perform the goodwill impairment test, we compared the estimated fair value of our reporting unit to its carrying value. Significant factors considered in estimating the fair value of our reporting unit included the use of the quoted market price and related market capitalization of our common stock, adjusted for an estimated control premium based on transactions completed by comparable companies. Quantitative information about the significant unobservable inputs used in the fair value measurement of the reporting unit included an estimated control premium of 50% for both periods.
Note 6 – Senior Convertible Notes Payable
On April 2, 2024, we entered into the April Purchase Agreement pursuant to which we agreed to sell the Senior Convertible Notes for $
The Senior Convertible Notes were senior obligations and accrued interest at a rate of
The Senior Convertible Notes contained certain conversion and redemption features requiring bifurcation as separate derivative liabilities. We initially recorded the fair value of the embedded features in the amount of $
In connection with the issuance of the Senior Convertible Notes, we incurred $
Note 7 – ELOC Commitment Note Payable
In June 2024, we entered into the ELOC Purchase Agreement establishing an equity line of credit for the right to sell shares of our common stock to the Purchaser. As consideration for the Purchaser’s irrevocable commitment to purchase shares of our common stock upon the terms of and subject to satisfaction of the conditions set forth in the ELOC Purchase Agreement, concurrently with the execution and delivery of the ELOC Purchase Agreement, we issued a convertible promissory note, or the ELOC Commitment Note, to the Purchaser in the amount of $
The ELOC Commitment Note in its entirety had an estimated fair value of $
The derivative is adjusted to fair value at each reporting period, with the change in the fair value recorded in change in fair value of derivatives that is a component of other income (expense) in our condensed consolidated statement of operations. For the and nine months ended September 30, 2024, the change in fair value of the derivative was $
As of September 30, 2024,
Note 8 – Common Stock Warrant Liability
We account for common stock warrants in accordance with applicable accounting guidance provided in ASC Topic 480 - Distinguishing Liabilities from Equity, depending on the specific terms of the warrant agreement.
In July 2024, we completed two private placements of Series C Preferred Stock and July 2024 Warrants (Refer to Note 13, “Mezzanine Equity and Stockholders' Equity - Accounting for the First and Second Private Placements” for additional details). The July 2024 Warrants are exercisable upon the six month and one day anniversary of the issuance date, or the Initial Exercisability Date, and expire on the anniversary of the Initial Exercisability Date and will have an exercise price of $
The July 2024 warrants had an initial fair value of $
Note 9 – Senior Secured and Senior Unsecured Notes Payable
On June 25, 2024, we issued senior secured notes with an aggregate principal amount of $
We collectively refer to such senior secured notes due 2025 as the June Senior Secured Notes. The aggregate gross proceeds from the issuances of the June Senior Secured Notes were $
On July 3, 2024, we agreed to issue and sell to (i) an institutional investor an aggregate principal amount of $
The July Secured Note was secured by first-priority security interests in all of our assets then presently existing, and constitutes a valid, first priority security interest in all of the assets that we later-acquire, as further defined in the July 2024 Secured Note.
Certain conversion and redemption features of the June Senior Secured Notes and the July 2024 Notes would typically be considered derivatives that would require bifurcation. In lieu of bifurcating various features in the agreement, we elected the fair value option for the June Senior Secured Notes and the July 2024 Notes and recorded the changes in the fair value within the accompanying condensed consolidated statements of operations at the end of each reporting period. The excess of the initial fair value of $
Note 10 – Loans Payable
In August 2024, we entered into an insurance premium financing and security agreement with IPFS Corporation. Under the agreement, we financed $
In June 2023, we entered into an insurance premium financing and security agreement with IPFS Corporation. Under the agreement, we financed $
Note 11 - Other Current Liabilities
In 2008, we entered into an Amended and Restated License Agreement with Philip Morris USA, Inc., or PMUSA, with respect to the U.S., or the U.S. License Agreement, and, as PMUSA had assigned its ex-U.S. rights to Philip Morris Products S.A., or PMPSA, effective on the same date and on substantially the same terms and conditions, we entered into a license agreement with PMPSA with respect to rights outside of the U.S., which we refer to, together with the U.S. License Agreement, as the PM License Agreements.
Amendment No. 1 to the Amended and Restated License Agreement with Philip Morris USA for Aerosolization Technology
On January 16, 2024, we entered into Amendment No. 1 to the U.S. License Agreement, effective as of January 17, 2024, or the U.S. License Agreement Amendment, which amended the U.S. License Agreement. The U.S. License Agreement licenses U.S. intellectual property rights to us in respect of our former acute pulmonary care platform that was globally outlicensed to the Licensee in August 2022. Pursuant to the U.S. License Agreement Amendment, we agreed to pay PMUSA (i) $
Amendment No. 2 to the Amended and Restated License Agreement with Philip Morris USA for Aerosolization Technology
As a result of us not paying the $
We did not pay $
Amendment No. 1 to the License Agreement with Philip Morris Products for Aerosolization Technology
On January 16, 2024, we also entered into Amendment No. 1 to the License Agreement with PMPSA, effective as of January 17, 2024, or the PMPSA License Amendment, which amended the License Agreement, dated March 28, 2008, between us and PMPSA, or the PMPSA License Agreement. The PMPSA License Agreement licenses ex-U.S. intellectual property to us in respect of our former acute pulmonary care platform that was globally outlicensed to the Licensee in August 2022. Pursuant to the PMPSA License Amendment, we agreed to pay PMPSA (i) $
Amendment No. 2 to the License Agreement with Philip Morris Products for Aerosolization Technology
We did not pay $
Accounting for the PMUSA and PMPSA Payments
We accounted for these payments as a recognized subsequent event for 2023 in accordance with applicable accounting guidance provided in ASC Topic 855, Subsequent Events. For the year ended December 31, 2023, we accrued $
Note 12 – Restructured Debt Liability
On October 27, 2017, we and Deerfield entered into the Milestone Agreement pursuant to which (i) promissory notes evidencing a loan with affiliates of Deerfield in the aggregate principal amount of $
On January 24, 2024, we and Deerfield entered into an Exchange and Termination Agreement wherein Deerfield agreed to terminate its rights to receive the Milestone Payments.
Pursuant to the Exchange and Termination Agreement, Deerfield agreed to terminate its rights to receive the Milestone Payments and all related rights and obligations in respect of such Milestone Payments in exchange for (i) cash in the aggregate amount of $
Contemporaneously with the execution of the Exchange and Termination Agreement, we and Deerfield entered into a Registration Rights Agreement pursuant to which we have agreed to, among other matters, register for resale with the SEC the shares of the common stock issued to Deerfield pursuant to the Exchange and Termination Agreement. On February 14, 2024, we filed a resale registration statement on Form S-3 (File No. 333-277073) with respect to
The Exchange and Termination Agreement was accounted for as an extinguishment of debt in accordance with ASC Topic 470, Debt – Modifications and Extinguishments, and, as a result, we recognized a $
Note 13 – Mezzanine Equity and Stockholders’ Equity
First Private Placement
On July 18, 2024, we entered into a Securities Purchase Agreement, or the First Purchase Agreement, with the buyers named therein, pursuant to which we agreed to the private placement, or the First PIPE, of (i)
Additionally, we issued
We agreed to seek stockholder approval for the issuance of all of the shares of our common stock issuable upon conversion of the Preferred Shares and exercise of the July 2024 Warrants in connection with the First PIPE in accordance with the rules and regulations of the Nasdaq Stock Market, which approval was obtained on September 24, 2024.
Series C Preferred Stock
The terms of the Series C Preferred Stock are as set forth in the Series C Certificate of Designation of Series C Preferred Stock, as filed with the Delaware Secretary of State and effective on July 19, 2024. The Series C Certificate of Designation authorizes a total of
From and after July 19, 2024, each holder of a share of Series C Preferred Stock is entitled to receive dividends, which are computed on the basis of a 360-day year and twelve 30-day months and will increase the stated value of the Series C Preferred Stock on each dividend date (as defined in the Series C Certificate of Designation).
Dividends on the Series C Preferred Stock will accrue at
The Preferred Conversion Price is subject to adjustment upon the occurrence of specified events and subject to price-based adjustment in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction involving our common stock at a price below the then-applicable Preferred Conversion Price, as described in further detail in the Series C Certificate of Designation.
July 2024 Warrants
The July 2024 Warrants are exercisable upon the six month and one day anniversary of the issuance date, or the Initial Exercisability Date, and expire on the fifth anniversary of the Initial Exercisability Date and will have an exercise price of $
Cancellation and Extinguishment of Certain Securities
In connection with the First PIPE, $
Related Party Participation
Our CEO and CMO each participated in the First PIPE, with Mr. Fraser making a $
Second Private Placement
On July 26, 2024, we entered into a Securities Purchase Agreement, or the Second Purchase Agreement, with the buyer named therein, pursuant to which we agreed to a second tranche of the private placement, or the Second PIPE, of (i)
Additionally, we issued
We agreed to seek stockholder approval for the issuance of all of the shares of our common stock issuable upon conversion of the Preferred Shares and exercise of the July 2024 Warrants in connection with the Second PIPE in accordance with the rules and regulations of the Nasdaq Stock Market.
The rights and preferences of the Series C Preferred Stock issued in connection with the Second PIPE, including the terms pursuant to which they are convertible into our common stock, are consistent with the rights and preferences of the Series C Preferred Stock issued in connection with the First PIPE. Similarly, the terms of the warrants issued in connection with the Second PIPE are consistent with the terms of the warrants issued in connection with the First PIPE.
Accounting for the First and Second Private Placements
The July 2024 Warrants are considered a freestanding financial instrument as they are separable and legally detachable from the Series C Preferred Stock. The July 2024 Warrants have been classified as a liability in the Company’s condensed consolidated balance sheet because they include a put option election available to the holders that is contingently exercisable if the Company enters into a change of control transaction, or the Change of Control Put. If the Change of Control Put is exercised by the holder of a July 2024 Warrant, they may elect to receive cash as determined by the Black Scholes pricing model, based on terms and timing specified in the July 2024 Warrants. The potential for a cash settlement for the July 2024 Warrants is outside the control of the Company, and in accordance with U.S. GAAP, requires the July 2024 Warrants to be treated as financial liabilities measured at fair value through profit or loss.
Net cash proceeds from the issuance of
Upon issuance of the Series C Preferred Stock, the Company was not solely in control of the redemption of the shares of Series C Preferred Stock as the Series C Preferred Stock has multiple redemption features that are outside of our control, including time-based maturity redemption and change of control redemption. Since the redemption of the Series C Preferred Stock was not solely in the control of the Company, the shares of Series C Preferred Stock are classified within mezzanine equity.
In connection with the First PIPE, we issued
In addition, we issued
Also in connection with the First PIPE, we issued
We incurred approximately $
Conversions and Redemptions of Series C Preferred Stock
During the three months ended September 30, 2024,
During the three months ended September 30, 2024,
Common Stock Purchase Agreement
In June 2024, we entered into the ELOC Purchase Agreement establishing an equity line of credit with the Purchaser, whereby we have the right, but not the obligation, to sell to the Purchaser, and the Purchaser is obligated to purchase, up to $
Over the 36-month period from and after the Commencement Date, we will control the timing and amount of any sales of Common Stock to the Purchaser. Actual sales of shares of our common stock to the Purchaser under the ELOC Purchase Agreement will depend on a variety of factors to be determined by us from time to time, including, among others, market conditions, the trading price of our common stock and determinations by us as to the appropriate sources of funding and our operations. For the three months ended September 30, 2024, we sold
We have determined that the put option in the ELOC Purchase Agreement is a derivative within the scope of ASC Topic 815, Derivatives and Hedging, to be initially measured and recorded at fair value with subsequent changes in fair value to be recorded in earnings. However, as the exercise price is floating and is a discounted price to the exercise date fair value of the common stock, we have determined that the put option has a de minimis value (effectively zero value) and will not be recorded.
Asset Purchase Agreement with Varian Biopharmaceuticals
On April 2, 2024, we entered into the Asset Purchase Agreement with Varian. Pursuant to the Asset Purchase Agreement, we purchased all of the assets of Varian’s business associated with the Licence Agreement, which includes the Licence Agreement, all rights in molecules and compounds subject to the Licence Agreement, know-how and inventory of drug substance, or the Transferred Assets. We also assumed all liabilities arising on or after April 2, 2024, relating to the research, development, manufacturing, registration, commercialization, use, handling, supply, storage, import, export or other disposition or exploitation of any and all products associated with the Transferred Assets.
In consideration of the purchase of the Transferred Assets, (i) on April 2, 2024, we issued a total of
The Asset Purchase Agreement contains customary representations and warranties, covenants, closing conditions and indemnification provisions for a transaction of this nature, including, without limitation, confidentiality and non-compete undertakings by Varian.
The fair value of the consideration transferred for the
As of September 30, 2024, we have not recorded a liability or expense related to contingent consideration for future milestone payments to Varian, as the achievement of such milestones has not occurred and was not deemed probable.
Series B Preferred Stock
The terms of the Series B Preferred Stock are as set forth in the Series B Certificate of Designation of Series B Preferred Stock, as filed with the Delaware Secretary of State and effective on April 3, 2024. The Series B Certificate of Designation authorizes a total of
Upon issuance of the Series B Preferred Stock, the Company was not solely in control of the redemption of the shares of Series B Preferred Stock as the Series B Preferred Stock has multiple redemption features that are outside of our control, including time-based maturity redemption and change of control redemption. Since the redemption of the Series B Preferred Stock was not solely in the control of the Company, the shares of Series B Preferred Stock are classified within mezzanine equity. The shares of Series B Preferred Stock were recorded at fair value of $
As of September 30, 2024, there are
April 2023 Public Offering
On April 20, 2023, we entered into an underwriting agreement with Ladenburg Thalmann & Co. Inc., or Ladenburg, as the sole underwriter relating to a public offering, or the April 2023 Offering, of an aggregate of
In addition, Ladenburg exercised in full a 45-day option, or the Overallotment Option, to purchase up to
The closing of the April 2023 Offering occurred on April 24, 2023, inclusive of the Overallotment Option. The offering price to the public was $
We have determined that the appropriate accounting treatment under ASC 480, Distinguishing Liabilities from Equity, is to classify the shares of common stock and the April 2023 Warrants issued in the April 2023 Offering as equity. We have also determined that the April 2023 Warrants are not in their entirety a derivative under the scope of ASC 815, Derivatives and Hedging, due to the scope exception under ASC 815-10-15-74, nor are there any material embedded derivatives that require separate accounting. We allocated the net proceeds from the April 2023 Offering based on the relative fair value of the common stock and the April 2023 Warrants.
January 2023 Warrant Exercise Inducement Offer Letters
On January 20, 2023, we entered into warrant exercise inducement offer letters with certain holders of certain of our: (i) warrants issued in December 2019 to purchase
Pursuant to the terms of the inducement letters, we agreed to amend the January 2023 Existing Warrants by lowering the exercise price of the January 2023 Existing Warrants to $
Each January 2023 New Warrant is exercisable into shares of common stock at a price per share of $
February 2023 Warrant Exercise Inducement Offer Letter
On February 21, 2023, we entered into a warrant exercise inducement offer letter with Panacea Venture Healthcare Fund I, L.P., a holder of certain of our: (i) warrants issued in July 2018 to purchase
Pursuant to the terms of the inducement letter, we agreed to amend the February 2023 Existing Warrants by lowering the exercise price of the February 2023 Existing Warrants to $
Each February 2023 New Warrant is exercisable into shares of common stock at a price per share of $
Accounting for the January 2023 and February 2023 Warrant Exercise Inducement Offer Letters
The amendment of the January 2023 Existing Warrants and the February 2023 Existing Warrants by lowering the exercise prices and issuing the January 2023 New Warrants and the February 2023 New Warrants is considered a modification of the January 2023 Existing Warrants and the February 2023 Existing Warrants under the guidance of ASU 2021-04. The modification is consistent with the “Equity Issuance” classification under that guidance as the reason for the modification was to induce the holders to cash exercise their warrants, resulting in the imminent exercise of the January 2023 Existing Warrants and the February 2023 Existing Warrants, which raised equity capital and generated net proceeds for us of approximately $
At-The-Market Program
On November 9, 2023, we entered into the 2023 ATM Program with Ladenburg. We are not obligated to make any sales under the 2023 ATM Program. When we issue sale notices to Ladenburg, we designate the maximum amount of shares to be sold by Ladenburg daily and the minimum price per share at which shares may be sold. Ladenburg may sell shares by any method permitted by law deemed to be an “at-the-market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended, or in privately negotiated transactions.
Sales under the 2023 ATM Program will be made pursuant to our “shelf” registration statement on Form S-3 (No. 333-261878) filed with the SEC on December 23, 2021, and declared effective on January 3, 2022, and a prospectus supplement related thereto.
Either party may suspend the offering under the 2023 ATM Program by notice to the other party. The 2023 ATM Program will terminate upon the earlier of (i) the sale of all shares subject to the 2023 ATM Program or (ii) termination of the 2023 ATM Program in accordance with its terms. Either party may terminate the 2023 ATM Program at any time upon five business days' prior written notification to the other party in accordance with the related agreement.
We agreed to pay Ladenburg a commission of
During the nine months ended September 30, 2024, we sold
Note 14 – Stock-Based Compensation
We recognize expense in our interim unaudited condensed consolidated financial statements related to all stock-based awards granted to employees and non-employee directors based on their fair value on the date of grant. Compensation expense related to stock options is calculated using the Black-Scholes option-pricing model and is recognized ratably over the vesting period, which is typically years. Compensation expense related to restricted stock unit, or RSU, awards is also recognized ratably over the vesting period, which is typically between to years.
A summary of activity under our long-term incentive plans is presented below:
| (in whole numbers) | ||||||||||||
| Stock Options | Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (In Yrs) | |||||||||
| Outstanding at January 1, 2024 | $ | |||||||||||
| Reverse split adjustments - fractional share round ups | ( | ) | ||||||||||
| Forfeited or expired | ( | ) | ||||||||||
| Outstanding at September 30, 2024 | $ | |||||||||||
| Vested and exercisable at September 30, 2024 | $ | |||||||||||
| Vested and expected to vest at September 30, 2024 | $ | |||||||||||
| (in whole numbers) | ||||||||
| Restricted Stock Units | Shares | Weighted- Average Grant Date Fair Value | ||||||
| Outstanding at January 1, 2024 | $ | |||||||
| Reverse split adjustments - fractional share round ups | ( | ) | ||||||
| Vested | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Outstanding at September 30, 2024 | $ | |||||||
The table below summarizes the total stock-based compensation expense included in the interim unaudited condensed consolidated statements of operations for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| (in thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing formula that uses assumptions noted in the following table. Expected volatilities are based upon the historical volatility of our common stock and other factors. We also use historical data and other factors to estimate option exercises and forfeiture rates. The risk-free interest rates are based upon the U.S. Treasury yield curve in effect at the time of the grant.
Note 15 – Licensing and Research Funding Agreements
Asset Purchase Agreement with Varian Biopharmaceuticals
On April 2, 2024, we entered into the Asset Purchase Agreement with Varian. Pursuant to the Asset Purchase Agreement, we purchased all of the assets of Varian’s business associated with the Licence Agreement, which includes the Licence Agreement, all rights in molecules and compounds subject to the Licence Agreement, know-how and inventory of drug substance, or the Transferred Assets. We also assumed all liabilities arising on or after April 2, 2024, relating to the research, development, manufacturing, registration, commercialization, use, handling, supply, storage, import, export or other disposition or exploitation of any and all products associated with the Transferred Assets.
In consideration of the purchase of the Transferred Assets, (i) on April 2, 2024, we issued a total of
The Asset Purchase Agreement contains customary representations and warranties, covenants, closing conditions and indemnification provisions for a transaction of this nature, including, without limitation, confidentiality and non-compete undertakings by Varian.
The fair value of the consideration transferred for the
As of September 30, 2024, we have not recorded a liability or expense related to contingent consideration for future milestone payments to Varian, as the achievement of such milestones has not occurred and was not deemed probable.
Entry into a Material Definitive Agreement
In order to reduce expected costs with our contract research organization, Momentum Research, Inc., or MRI, on May 9, 2024, or the Effective Date, we entered into Amendment No. 1 to the Master Services Agreement and Work Order Nos. 11 and 12, or the Amendment, with MRI. The Amendment amends the Master Services Agreement we entered into with MRI on February 13, 2020, or the Original MSA, and the original Work Order Nos. 11 and 12 we entered into with MRI on June 1, 2023, collectively, the Original Work Orders.
Under the Original MSA, we agreed to, among other things, engage MRI to provide non-exclusive research and development services, by executing individual work orders to be negotiated and specified in writing on terms agreed to by both parties on a later date.
Under the terms of the Amendment, we agreed to, among other things, be responsible for certain management, regulatory strategy, and reporting obligations in connection with our SEISMiC Extension study and MRI agreed to fully perform its obligations under the Original Work Orders with respect to the SEISMiC Extension study, including performance of all services and delivery of all deliverables required by the Original Work Orders. Additionally, with respect to the SEISMiC C Study, MRI agreed to be responsible for certain regulatory submissions, as provided in the Amendment.
Additionally, in consideration of and conditioned upon the payments described below, we and MRI each agreed to cancel and extinguish any and all amounts owed to MRI or us, respectively, each subject to the terms of the Amendment. The parties agreed that such cancellation and extinguishment shall not be construed as a waiver of claims by each party for breach of the Original MSA or either or both of the Original Work Orders other than for non-payment, nor a waiver of each party’s respective indemnification rights under the Original MSA.
In consideration of MRI’s full performance of the Original Work Orders and cancellation of accrued expenses as described above, we agreed to, among other things, pay MRI $
Additionally, we agreed that, for a transaction consummated by December 31, 2027, we shall pay MRI an amount equal to
Further, in connection with the first to occur of either a Change of Control (as defined in the Amendment) or the sale of all or substantially all of our rights in istaroxime not in the context of a Change of Control, we agree to pay MRI an amount equal to
After December 1, 2025, we have the right to buy out the amounts due under certain provisions of the Amendment.
The foregoing descriptions of the Original MSA and Amendment are general descriptions only, do not purport to be complete descriptions of the rights and obligations of the parties thereunder, and are qualified in their entirety by reference to the terms of such agreements, which are filed as Exhibit 10.1 and 10.2, respectively, to this Quarterly Report on Form 10-Q.
Term Sheet and Project Financing Agreement with Lee’s (HK)
In March 2020, we entered into a Term Sheet with Lee’s (HK), pursuant to which Lee’s (HK) provided financing for the development of AEROSURF. In August 2020, we entered into a Project Financing Agreement with Lee’s (HK), or the PF Agreement, formalizing the terms of the Term Sheet, and under which we received payments totaling $
Since the 2018 acquisition of CVie Investments Limited and CVie Therapeutics, istaroxime has become our primary focus for investment and execution due to what we believe represents a greater potential value opportunity for us and our stockholders. Since completing our Phase 2 study of lucinactant (KL4 surfactant) for patients with severe COVID-19 associated ARDS and lung injury in January 2022, in order to preserve resources for the highest priority programs, we have begun to reduce costs not already being performed by our licensee, Lee’s (HK) and Zhaoke, under the terms of our Original License Agreement. These costs include certain reductions in headcount dedicated to KL4 surfactant and the decommissioning of both our analytical and technical support laboratory, which previously conducted release testing of APIs and supportive research for our lyophilized and aerosolized KL4 surfactant, and our medical device development laboratory, which was previously used to conduct development activities and testing for our ADS technologies. To support the future development of our KL4 surfactant platform in markets outside of Asia, including the U.S., we are pursuing one or more licensing transactions.
To repay the funds provided under the terms of the PF Agreement, until such time as we have repaid
As of September 30, 2024, the liability balance related to the payments under the PF Agreement was $
A&R License Agreement with Lee’s (HK)
Previously, we were developing a KL4 surfactant platform, including AEROSURF (lucinactant for inhalation), to address a range of serious respiratory conditions in children and adults. In order to focus our resources on the development of our istaroxime pipeline, we suspended all internal AEROSURF clinical activities in November 2020, and, in January 2022 we began to reduce all other costs related to the KL4 surfactant platform that were not already being performed by our licensee, Lee’s (HK) and Zhaoke, under the terms of the Original License Agreement.
On August 17, 2022, we entered into an Amended and Restated License, Development and Commercialization Agreement, or the A&R License Agreement, with Lee’s (HK) and Zhaoke effective as of August 9, 2022. We refer to Zhaoke and Lee’s (HK) together as the “Licensee.” The A&R License Agreement amends, restates, and supersedes the Original License Agreement.
Under the A&R License Agreement, we granted to Licensee an exclusive license, with a right to sublicense, to develop, register, make, use, sell, offer for sale, import, distribute, and otherwise commercialize our KL4 surfactant products, including SURFAXIN®, the lyophilized dosage form of SURFAXIN, and aerosolized KL4 surfactant, in each case for the prevention, mitigation and/or treatment of any respiratory disease, disorder, or condition in humans worldwide, except for Andorra, Greece, and Italy (including the Republic of San Marino and Vatican City), Portugal, and Spain, or the Licensed Territory, which countries are currently exclusively licensed to Laboratorios Del Dr. Esteve, S.A., or Esteve. If and when the exclusive license granted to Esteve terminates as to any country, such country automatically becomes part of the Licensed Territory of Licensee.
Under the Original License Agreement, Lee’s (HK) previously made an upfront payment to us of $1.0 million. Pursuant to the terms of the A&R License Agreement, we may also receive up to $
The A&R License Agreement is considered to be a contract modification in accordance with ASC Topic 606, Revenue from Contracts with Customers. No additional performance obligations were identified in the contract modification, and no future material performance obligations are due.
All revenue related to the $
License, Development and Commercialization Agreement with Lee’s (HK)
On January 12, 2024, we entered into a License, Development and Commercialization Agreement with Lee’s (HK) effective as of January 7, 2024, or the Lee’s (HK) License Agreement. Under the Lee’s (HK) License Agreement, we granted an exclusive license, with a right to sublicense, to develop, register, make, use, sell, offer for sale, import, distribute and otherwise commercialize products that incorporate istaroxime for intravenous administration, rostafuroxin for oral administration, and our proprietary dual-mechanism SERCA2a activators for intravenous or oral administration (collectively, the Products and each, a Product), in each case for the prevention, mitigation and/or treatment of any disease, disorder or condition in humans including acute decompensated heart failure, cardiogenic shock, and chronic use following discharge of an individual hospitalized for acute decompensated heart failure, or Field, in the People’s Republic of China, Hong Kong, Macau, Taiwan, Singapore, South Korea, Thailand, Vietnam, Brunei, Myanmar, Cambodia, East Timor, Indonesia, Laos, Malaysia, and the Philippines, or the New Licensed Territory.
Under the Lee’s (HK) License Agreement, we may receive up to $
We are eligible to receive tiered royalties based on a percentage of Net Sales (as defined in the Lee’s (HK) License Agreement) that ranges from low single-digit to low double-digit percentages, depending on the Product. Royalties are payable on a product-by-product and country-by-country basis until the latest of (i) the expiration of the last valid patent claim covering the Product in the country of sale, (ii) the expiration or revocation of any applicable regulatory exclusivity in the country of sale, and (iii) years after the first commercial sale of the Product in the country of sale. Thereafter, in consideration of licensed rights other than patent rights, royalties shall continue for the commercial life of each Product but at substantially reduced rates. In addition, the royalty rates are subject to reduction by as much as
Under the Lee’s (HK) License Agreement, Lee’s (HK) will be solely and exclusively responsible for all costs and activities related to the development, manufacturing, regulatory approval and commercialization of Products in the New Licensed Territory, with the exception of certain costs in connection with filing fees payable to regulatory authorities in the New Licensed Territory relative to a Product for which we hold the applicable marketing authorization. Lee’s (HK) may sublicense its rights to its affiliates and may grant sublicenses to third-party subcontractors to perform certain activities under the Lee’s (HK) License Agreement on behalf of Lee’s (HK) or its affiliates but may not otherwise grant sublicenses to unaffiliated third parties without our prior consent. A sublicensee and a subcontractor may not be a competitor identified by us. Sublicenses granted under the Lee’s (HK) License Agreement may not include the right to further sublicense. The Lee’s (HK) License Agreement establishes a joint steering committee and a joint development committee to oversee the regional development (with us retaining final decision rights over clinical protocols) and a joint commercialization committee.
During the term of the Lee’s (HK) License Agreement, we receive an exclusive (even as to Lee’s (HK)), sublicensable license under any Lee’s (HK) and its affiliate’s intellectual property that covers a Product (including its manufacture and use) and any improvements to the licensed technology developed solely by or on behalf of Lee’s (HK) or jointly with us, to (i) develop Product in the Field to obtain or maintain regulatory approval outside of the New Licensed Territory, and (ii) use, sell, offer for sale, import, export, make, have made, distribute, warehouse, market, promote, apply for and submit applications for drug approval and reimbursement approval and otherwise commercialize Product in the Field outside of the New Licensed Territory. After the term of the Lee’s (HK) License Agreement, or in the event that we wish to obtain an exclusive license under certain patent rights during or after the term, we have the option to negotiate an exclusive royalty-bearing license under any such intellectual property, provided that such royalties shall not exceed specified low single-digit caps.
Under the Lee’s (HK) License Agreement, each party is responsible for prosecution and maintenance of its respective solely-owned patents, and the parties shall decide on a case-by-case basis the appropriate allocation of costs and control concerning matters regarding the prosecution, maintenance, defense and infringement of any jointly-owned patents. The Lee’s (HK) License Agreement provides for cooperation between the parties with respect to enforcement of patent rights. As between the parties, we have the first right to enforce patent rights against third parties at our own expense. If we decline to enforce such rights, Lee’s (HK) has the right to enforce such rights at its own expense. In the event that a third party claims that a Product used or sold by Lee’s (HK) (or its affiliate or sublicensee) is infringing on a patent in the New Licensed Territory, Lee’s (HK) is responsible for defending against such third party claim at its cost and expense, with the exception of certain counterclaims that we may bring.
The term of the Lee’s (HK) License Agreement will continue on a country-by-country basis for the commercial life of the Products. Either party may terminate the Lee’s (HK) License Agreement in the event of bankruptcy or a material breach of the Lee’s (HK) License Agreement by the other party that remains uncured for a period of sixty days (or within 30 days after delivery of a Default Notice (as defined in the Lee’s (HK) License Agreement) if such material breach is solely based on the breaching party’s failure to pay amount due under the Lee’s (HK) License Agreement). In addition, either party may terminate the Lee’s (HK) License Agreement with respect to any individual Product in a country if a regulatory authority in such country terminates, suspends or discontinues development of such Product and such termination, suspension or discontinuance persists for a period in excess of 18 months. Upon termination of the Lee’s (HK) License Agreement in its entirety or with respect to a particular Product or country, generally all related rights and licenses granted to Lee’s (HK) will terminate, all rights under our technology will revert to us, and Lee’s (HK) will cease all use of our technology, in each case in relation to the terminated Product(s) and country(ies), as applicable.
The Lee’s (HK) License Agreement constitutes a contract with a customer accounted for in accordance with ASC Topic 606. The promise of the istaroxime product, dual mechanism SERCA2a activator products, and rostafuroxin product license is the sole performance obligation provided in the Lee’s (HK) License Agreement. The performance obligation was fully satisfied as of the effective date of the Lee’s (HK) License Agreement, and no future material performance obligations are due.
No revenue has been recognized under the Lee’s (HK) License Agreement. Clinical, regulatory and commercialization milestones under the Lee’s (HK) License Agreement were excluded from the transaction price, as all milestone amounts were fully constrained under the guidance. Consideration related to sales-based milestones and royalties under the Lee’s (HK) License Agreement will be recognized when the related sales occur, provided that the reported sales are reliably measurable and that we have no remaining performance obligations, as such sales were determined to relate predominantly to the license granted to Lee’s (HK) and therefore have also been excluded from the transaction price. We will re-evaluate the transaction price in each future reporting period and as uncertain events are resolved or other changes in circumstances occur.
Note 16 – Income Taxes
During the three and nine months ended September 30, 2024, we recorded an income tax benefit of million and income tax expense of million, respectively, related to tax on our estimated taxable income for the year, primarily due to the gain on debt extinguishment (See the section titled, “Note 12 – Restructured Debt Liability”).
We have evaluated the positive and negative evidence bearing upon our ability to realize our deferred tax assets, which primarily consist of net operating losses, or NOLs. We considered the history of cumulative net losses, estimated future taxable income and prudent and feasible tax planning strategies, and have concluded that it is more likely than not that we will not realize the benefits of our deferred tax assets within United States jurisdiction. As such, we recorded a full valuation allowance against net deferred tax assets as of September 30, 2024 and December 31, 2023, for deferred taxes in the United States. We still have a net deferred tax liability related to our foreign operations.
Utilization of NOL and R&D credit carryforwards will be subject to a substantial annual limitation under Internal Revenue Code of 1986, or IRC, Section 382, due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes will limit the amount of NOL and R&D credit carryforwards that can be utilized annually to offset future taxable income and income tax liabilities, respectively. As a result of having undergone an ownership change under IRC 382, our ability to utilize our historical NOL carryovers will be limited. We will continue to monitor any limitations on our ability to use NOLs and R&D credits in the future for all jurisdictions.
Note 17 – Subsequent Events
ELOC Purchase Agreement and Redemption of Series C Preferred Stock
Subsequent to September 30, 2024 and through November 21, 2024, we sold an additional
Conversions of Series C Preferred Stock
Subsequent to September 30, 2024 and through November 21, 2024,
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing activities, includes forward-looking statements that involve risks, uncertainties and assumptions. These statements are based on our beliefs and expectations about future outcomes and are subject to risks and uncertainties that could cause our actual results to differ materially from anticipated results. We undertake no obligation to publicly update these forward-looking statements, whether as a result of new information, future events or otherwise. The reader should review the section titled “Forward-Looking Statements” and any risk factors discussed elsewhere in this Quarterly Report on Form 10-Q, which are in addition to and supplement the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2023 that we filed with the Securities and Exchange Commission, or SEC, on April 16, 2024, as supplemented by our Quarterly Reports on Form 10-Q for the three months ended March 31, 2024 and the three and six months ended June 30, 2024 filed thereafter, and our other filings with the SEC, and any amendments thereto, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis or elsewhere in this Quarterly Report on Form 10-Q.
This Management’s Discussion and Analysis, or MD&A, is provided as a supplement to the accompanying interim unaudited Condensed Consolidated Financial Statements (including the notes thereto) to help provide an understanding of our financial condition and changes in our financial condition and our results of operations. This item should be read in connection with our accompanying interim unaudited Condensed Consolidated Financial Statements (including the notes thereto) and our Annual Report on Form 10-K for the year ended December 31, 2023. Unless otherwise specified, references to Notes in this MD&A refer to the Notes to Condensed Consolidated Financial Statements (unaudited) in this Quarterly Report on Form 10-Q.
OVERVIEW
We are a biotechnology company focused on advancing early and late-stage innovative therapies for critical conditions and diseases. Our portfolio of product candidates includes istaroxime, a Phase 2 candidate that inhibits the sodium-potassium ATPase and also activates sarco endoplasmic reticulum Ca2+ -ATPase 2a, or SERCA2a, for acute heart failure and associated cardiogenic shock; preclinical SERCA2a activators for heart failure; rostafuroxin for the treatment of hypertension in patients with a specific genetic profile; and a preclinical atypical protein kinase C iota, or aPKCi, inhibitor (topical and oral formulations), being developed for potential application in rare and broad oncology indications. We also have a licensing business model with partnership out-licenses currently in place.
Our lead product candidate, istaroxime, is a first-in-class, dual-acting agent being developed to increase blood pressure and improve cardiac function in patients with cardiogenic shock and to improve cardiac function in patients with acute heart failure, or AHF, and reverse the hypotension and hypoperfusion associated with heart failure that deteriorates to cardiogenic shock. Istaroxime demonstrated significant improvement in both systolic and diastolic aspects of cardiac function and was generally well tolerated in three Phase 2 clinical trials. Istaroxime has been granted Fast Track designation for the treatment of AHF by the U.S. Food and Drug Administration, or FDA. Based on the profile observed in our Phase 2 clinical studies in AHF, where istaroxime significantly improved cardiac function and systolic blood pressure, or SBP, in acute decompensated heart failure patients and had a favorable renal profile, we initiated a Phase 2 global clinical study, or the SEISMiC Study, to evaluate istaroxime for the treatment of early cardiogenic shock (Society for Cardiovascular Angiography and Interventions, or SCAI, Stage B shock), a severe form of AHF characterized by very low blood pressure and risk for hypoperfusion to critical organs and mortality. In April 2022, we announced our observations in the SEISMiC Study that istaroxime rapidly and significantly increased SBP while also improving cardiac function and preserving renal function. We believe that istaroxime has the potential to fulfill an unmet need in early and potentially more severe cardiogenic shock. We further believe that the data from the SEISMiC Study supports continued development in both cardiogenic shock and AHF. In September 2024, we announced positive topline results from our Phase 2b SEISMiC Extension Study, or the SEISMiC Extension, which demonstrated that istaroxime infused intravenously significantly improves cardiac function and blood pressure without increasing heart rate or clinically significant cardiac rhythm disturbances. Additionally, we have initiated a study in more severe SCAI Stage C cardiogenic shock, or the SEISMiC C Study, to evaluate the safety and efficacy of istaroxime in cardiogenic shock patients who are also receiving standard of care rescue therapy for shock. The SEISMiC C Study is expected to enroll up to 100 subjects with SCAI Stage C cardiogenic shock with enrollment anticipated to be completed in late 2025. An unblinded review of the data from the first 20 subjects is planned to take place in early Q2 2025. Our ability to complete this study with its intended sample size is dependent upon our ability to secure adequate resourcing for the program through financing efforts or business development activities.
Our heart failure cardiovascular portfolio also includes other SERCA2a activators. One family of compounds has the dual mechanism of action that includes inhibition of the sodium-potassium ATPase as well as activation of SERCA2a. The other family of compounds are considered selective SERCA2a activators and are devoid of activity against the sodium-potassium ATPase. This research program is evaluating these preclinical product candidates, including oral and intravenous SERCA2a activator heart failure compounds. These candidates would potentially be developed for both acute decompensated and chronic out-patient heart failure. In addition, our cardiovascular drug product candidates include rostafuroxin, a novel product candidate for the treatment of hypertension in patients with a specific genetic profile. We are pursuing potential licensing arrangements and/or other strategic partnerships and do not intend to advance the development of rostafuroxin without securing such an arrangement or partnership.
Our cardiovascular assets and programs are associated with a regional licensed partnership with Lee’s Pharmaceutical (HK) Ltd., or Lee’s (HK), for the development and commercialization of our product candidate, istaroxime, in Greater China. In addition to istaroxime, the agreement also licenses our preclinical next-generation dual mechanism SERCA2a activators, and rostafuroxin. In addition, we are supporting the efforts of Lee’s (HK) in starting a Phase 3 trial in AHF with istaroxime.
On April 2, 2024, we entered into an Asset Purchase Agreement, or the Asset Purchase Agreement, with Varian Biopharmaceuticals, Inc., or Varian. Pursuant to the Asset Purchase Agreement, we purchased all of the assets of Varian’s business associated with a license agreement, dated as of July 5, 2019, by and between Varian and Cancer Research Technology Limited, or the Licence Agreement, which includes the Licence Agreement, all rights in molecules and compounds subject to the Licence Agreement, know-how and inventory of drug substance, or the Transferred Assets. The Transferred Assets include a novel, potential high-potency, specific, aPKCi inhibitor with possible broad use in oncology as well as certain rare malignant diseases. The asset platform includes two formulations (topical and oral) of an aPKCi inhibitor. We plan to advance investigational new drug enabling activities and are in the process of determining the expected clinical development plan for the platform.
We have incurred net losses since inception. Our net loss was $2.7 million and $4.6 million, respectively, for the three and nine months ended September 30, 2024. Included in net loss for the nine months ended September 30, 2024 is $7.5 million of non-cash R&D expense related to costs in connection with the Varian asset acquisition and a $14.6 million gain on debt extinguishment. For the three and nine months ended September 30, 2023, our net loss was $4.4 million and $15.1 million, respectively. Included in our net loss for the nine months ended September 30, 2023 is a $3.1 million loss on impairment of goodwill. As of September 30, 2024, we had an accumulated deficit of $848.8 million. To date, we have financed our operations primarily through private placements and public offerings of our common and preferred stock, warrants to purchase common stock, and borrowings from investors and financial institutions.
We expect to continue to incur significant research and clinical development, regulatory, and other expenses as we (i) continue to develop our product candidates; (ii) seek regulatory clearances or approvals for our product candidates; (iii) conduct clinical trials on our product candidates; and (iv) manufacture, market, and sell any product candidates for which we may obtain regulatory approval.
Our ability to advance our development programs is dependent upon our ability to secure additional capital in both the near and long-term, through public or private securities offerings; convertible debt financings; and/or potential strategic opportunities, including licensing agreements, drug product development, marketing collaboration arrangements, pharmaceutical research cooperation arrangements, and/or other similar transactions in geographic markets, including the U.S., and/or through potential grants and other funding commitments from U.S. government agencies, in each case, if available. We have engaged with potential counterparties in various markets and will continue to pursue non-dilutive sources of capital as well as potential private and public securities offerings. There can be no assurance, however, that we will be able to identify and enter into public or private securities offerings on acceptable terms and in amounts sufficient to meet our needs or qualify for non-dilutive funding opportunities under any grant programs sponsored by U.S. government agencies, private foundations, and/or leading academic institutions, or identify and enter into any strategic transactions that will provide the additional capital that we will require. If none of these alternatives is available, or if available and we are unable to raise sufficient capital through such transactions, we potentially could be forced to limit or cease our development activities, as well as modify or cease our operations, either of which would have a material adverse effect on our business, financial condition, and results of operations.
Business and Program Updates
The reader is referred to, and encouraged to read in its entirety, “Item 1 – Business” in our Annual Report on Form 10-K for the year ended December 31, 2023 that we filed with the SEC on April 16, 2024, which contains a discussion of our business and business plans, as well as information concerning our proprietary technologies and our current and planned development programs.
Istaroxime (Cardiogenic Shock)
In September 2020, we initiated a Phase 2 clinical study of istaroxime for the acute treatment of cardiogenic shock in more severe heart failure patients than previously studied to evaluate the potential to improve blood pressure (primary measure) and cardiac function (secondary measure). The study also evaluated the safety and side effect profile of istaroxime in this patient population. In April 2022, we announced positive topline results with istaroxime in rapidly and significantly raising SBP. In May 2022, we presented data from our positive Phase 2 study of istaroxime in early cardiogenic shock in a late-breaker presentation at the European Society of Cardiology Heart Failure Meeting in Madrid, Spain and, in September 2022, the results were published in the European Journal of Heart Failure. There is a significant unmet medical need in the area of early cardiogenic shock and severe heart failure. Istaroxime demonstrated a meaningful increase in blood pressure while simultaneously increasing cardiac output and preserving renal function in clinical trials of this condition.
In September 2024, we announced positive topline results from our SEISMiC Extension study which enrolled 30 patients with SCAI Stage B cardiogenic shock and demonstrated significant improvement in systolic blood pressure and cardiac function as well as improving pulmonary congestion and renal function. This study evaluated lower doses and longer duration of dosing than in previous studies. These data were presented at the Heart Failure Society of America meeting in September 2024. This study contributed to optimizing the istaroxime dosing regimen and extended the favorable safety and tolerability profile for the istaroxime program. Multiple secondary endpoints supported the positive outcome on the primary endpoint of systolic blood pressure AUC over the first 6 hours of study drug infusion. These included assessments from invasive hemodynamics (from a pulmonary artery catheter), echocardiography and Holter monitoring. The most commonly reported adverse events were gastrointestinal (nausea and vomiting) and infusion site discomfort, both known to occur with istaroxime administration from previous clinical trials. Additionally, we have initiated enrollment for the SEISMiC C study, which is expected to enroll up to 100 subjects with SCAI Stage C cardiogenic shock with enrollment anticipated to be completed in late 2025. An unblinded review of data from the first 20 subjects is planned to take place in early Q2 2025. We believe that the SEISMiC Extension and SEISMiC C studies will further characterize the effects associated with SERCA2a activation and will support our clinical and regulatory strategy for istaroxime. We currently do not have sufficient capital to fully complete the SEISMiC C clinical trial and will need to secure adequate resourcing for the study through financing efforts or business development activities.
Istaroxime (AHF)
There is substantial potential synergy between our clinical trial program in early cardiogenic shock and our development program in acute decompensated heart failure. Both programs are focused on treating heart failure patients with acute congestion and low blood pressure requiring hospitalization. We believe that this category of heart failure patients (whether they are in shock or not) could particularly benefit from the unique profile and potential ability of istaroxime to improve cardiac function and increase blood pressure while maintaining or improving renal function. Our strategy is to advance istaroxime in cardiogenic shock as the lead indication and utilize this data and experience, along with the positive Phase 2a and 2b AHF studies, already completed, to potentially enter Phase 3 for acute decompensated heart failure in the normal to low SBP population. We currently do not have sufficient capital to execute our clinical trial in AHF and are seeking partnership opportunities to advance the program. We believe the Phase 3 AHF program being planned by our licensing partner in China may provide supportive data for potential AHF programs initiated in the future.
SERCA2a Activators – Preclinical Oral, Chronic, and Acute Heart Failure Product Candidates
We are pursuing several early exploratory research programs to assess potential product candidates, including oral and intravenous dual mechanism or selective SERCA2a activator heart failure compounds, and believe that we can add value to our cardiovascular portfolio by advancing these SERCA2a activator candidates through preclinical studies. In April 2023, we announced that the European Patent Office has granted Patent No. 3599243, providing patent coverage for the dual mechanism SERCA2a Activator class of drug candidates. This patent provides protection until July 2038 for the family of compounds with a dual mechanism of action. To further advance these product candidates, we are actively exploring potential licensing transactions, research partnership arrangements, or other strategic opportunities. Additionally, the United States Patent and Trademark Office has issued US Patent No. 11,730,746 covering our dual mechanism SERCA2a activators. The new composition of matter patent provides patent protection through late 2039. Further, the European Patent Office has granted Patent No. 3805243, providing composition of matter patent coverage for the pure SERCA2a Activator class of drug candidates. The pure SERCA2a Activators are one of two families of preclinical drug candidates that act on SERCA2a in the Company’s pipeline. The pure SERCA2a Activators are devoid of action on the Na+/K+ pump while activating SERCA2a. The new European patent provides patent protection until October 9, 2039 for the family of compounds with the pure SERCA2a mechanism of action.
Rostafuroxin
Rostafuroxin has demonstrated efficacy in Caucasian patients in treatment naïve hypertension in a Phase 2b trial. During the second quarter of 2021, we concluded an initial process to test the industry’s interest in investing in our product candidate. We currently have not been able to secure a licensing transaction or other strategic opportunity. Based on feedback received from potential licensing partners, we have determined that there is a need for an additional Phase 2 clinical trial to demonstrate efficacy in African American patients in treatment resistant hypertension. We are continuing to pursue licensing arrangements and/or other strategic partnerships for rostafuroxin. We do not intend to conduct the additional Phase 2 clinical trial without securing such an arrangement or partnership.
aPKCi inhibitor (topical formulation previously designated as VAR-101)
The topical (cutaneous) formulation is a small molecule that may have potential for the treatment of basal cell carcinoma, or BCC. The active pharmaceutical ingredient, or API, in aPKCi inhibitor (topical) has demonstrated dose dependent anti-tumor activity in murine and human BCC cell lines, in studies performed at Cancer Research UK, or CRUK, a charity registered in England and Scotland, and based in London, United Kingdom. CRUK collaborators, including Stanford University under a sponsored research agreement with CRUK, completed the preclinical tumor cell line data and the BCC cell line data that formed the basis for additional “method of use” patents that are included in the License Agreement. These types of in vitro studies in tumor cell lines are typical early-stage models of activity or efficacy when testing a new chemical compound, the data from which is used in regulatory filings for first-in-man clinical trials. These mouse models of BCC and lung cancer were performed by CRUK and their collaborators.
aPKCi inhibitor (oral formulation previously designated as VAR-102)
The oral formulation is a small molecule that may have potential for the treatment of solid tumors. The API in the aPKCi inhibitor (oral) is the same as the API in aPKCi inhibitor (topical). In the scientific literature, the presence and activation of aPKCi has been implicated in the growth of multiple human cancers including non-small cell lung cancer, or NSCLC, pancreatic, and ovarian cancer. The API in aPKCi inhibitor (oral) has demonstrated dose dependent anti-tumor activity in a mouse model of NSCLC (squamous cell lung carcinoma), in studies performed at CRUK and with its collaborators. Preclinical experiments of the API in aPKCi inhibitor (oral), appears to show dose dependent anti-tumor activity in a xenograft NSCLC model.
Reverse Stock Split
On April 19, 2024, we filed an amendment to our Amended and Restated Certificate of Incorporation to implement a 1-for-18 reverse stock split of our issued and outstanding common stock. The reverse stock split of our outstanding common stock was effected at a ratio of 1 post-split share for every 18 pre-split shares as of 11:59 p.m. Eastern Time on April 19, 2024. The reverse stock split correspondingly adjusted the per share exercise price of all outstanding options and all shares underlying any of our outstanding warrants by reducing the conversion ratio for each outstanding warrant and increasing the applicable exercise price or conversion price in accordance with the terms of each outstanding warrant and based on the reverse stock split ratio. No fractional shares were issued in connection with the reverse stock split. The number of shares of common stock authorized under our Amended and Restated Certificate of Incorporation is unchanged at 120 million shares. The accompanying interim unaudited condensed financial statements reflect the 1-for-18 reverse split of our common stock. All share and per share information data herein that relates to our common stock prior to the effective date has been retroactively restated to reflect the reverse stock split.
Continued Listing on The Nasdaq Capital Market
On January 22, 2024, we received a deficiency letter from the Staff of Nasdaq notifying us that, for the last 31 consecutive business days, the closing bid price for our common stock has been below the minimum $1.00 per share required for continued listing on the Nasdaq Capital Market pursuant to Rule 5550(a)(2). The Nasdaq deficiency letter had no immediate effect on the listing of our common stock, and our common stock continued to trade on the Nasdaq Capital Market under the symbol “WINT”. We were initially given 180 calendar days, or until July 22, 2024, to regain compliance with Rule 5550(a)(2).
As described above, on April 19, 2024, we effected a reverse stock split of our issued and outstanding shares of common stock, par value $0.001 per share, at a ratio of 1 post-split share for every 18 pre-split shares. On May 6, 2024, we received written confirmation from Nasdaq notifying us that we had regained compliance with Rule 5550(a)(2). There can be no assurances that we will maintain compliance with the Nasdaq listing rules, including Rule 5550(a)(2).
CRITICAL ACCOUNTING POLICIES
For a discussion of our accounting policies, see the section titled, “Note 4 – Summary of Significant Accounting Policies” and, in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023, Note 4 – Accounting Policies and Recent Accounting Pronouncements. Readers are encouraged to review those disclosures in conjunction with this Quarterly Report on Form 10-Q.
Intangible Assets and Goodwill
We record acquired intangible assets and goodwill based on estimated fair value. The identifiable intangible assets resulting from the CVie Therapeutics acquisition in December 2018 relate to in-process research and development, or IPR&D, of istaroxime and rostafuroxin. The IPR&D assets are considered indefinite-lived intangible assets until completion or abandonment of the associated research and development efforts. IPR&D is not amortized but reviewed for impairment at least annually, or when events or changes in the business environment indicate the carrying value may be impaired. During the three and nine months ended September 30, 2024, no events or changes in circumstances occurred indicating that our IPR&D intangible assets were more likely than not impaired.
Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in a business combination and is not amortized. It is reviewed for impairment at least annually or when events or changes in the business environment indicate that its carrying value may be impaired.
During each of the first and second quarters of 2023, the continued declining trend in the closing share price of our common stock suggested that the fair value of our reporting unit was more likely than not less than its carrying value. Based on an interim goodwill impairment tests, we determined that the fair value of our reporting unit was more likely than not less than its carrying value. As a result, we recorded a loss on impairment of goodwill of $0.5 million in the first quarter of 2023 and an additional loss of $2.6 million, representing the remaining balance of goodwill, in the second quarter of 2023. For the nine months ended September 30, 2023, the aggregate loss on impairment of goodwill is $3.1 million, recognized within operating expenses in our condensed consolidated statements of operations. As of June 30, 2023, goodwill was written down to zero on our condensed consolidated balances sheet. As of September 30, 2024 and December 31, 2023, goodwill was zero on our condensed consolidated balance sheet.
The following table represents identifiable intangible assets as of September 30, 2024 and December 31, 2023:
| September 30, | December 31, | |||||||
| (in thousands) |
2024 |
2023 |
||||||
| Istaroxime drug candidate |
$ | 22,340 | $ | 22,340 | ||||
| Rostafuroxin drug candidate |
2,910 | 2,910 | ||||||
| Intangible assets |
25,250 | 25,250 | ||||||
Acquired In-Process Research and Development Expenses
IPR&D expenses include consideration for the purchase of IPR&D through asset acquisitions and license agreements as well as payments made in connection with asset acquisitions and license agreements upon the achievement of development milestones.
We evaluate in-licensed agreements for IPR&D projects to determine if it meets the definition of a business and thus should be accounted for as a business combination. If the in-licensed agreement for IPR&D does not meet the definition of a business and the assets have not reached technological feasibility and have no alternative future use, we expense payments made under such license agreements as research and development expense in the consolidated statements of operations. In those cases, payments for milestones achieved and payments for a product license prior to regulatory approval of the product are expensed in the period incurred. Payments made in connection with regulatory and sales-based milestones are capitalized and amortized to cost of revenue.
Convertible Debt and Equity Instruments
We review the terms of convertible debt and equity instruments to determine whether there are conversion features or embedded derivative instruments including embedded conversion options that are required to be bifurcated and accounted for separately as derivative financial instruments under ASC Topic 815, Derivatives and Hedging.
In circumstances where the convertible instrument contains more than one embedded derivative instrument, including conversion options that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single compound instrument. Also, in connection with the sale of convertible debt and equity instruments, we may issue free standing warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. When convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for separately, the total proceeds allocated to the convertible host instruments are first allocated to the fair value of the bifurcated derivative instrument. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, usually resulting in those instruments being recorded at a discount from their face amount. When we issue debt securities, which bear interest at rates that are lower than market rates, we recognize a discount, which is offset against the carrying value of the debt. Such discount from the face value of the debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income.
Derivative Financial Instruments
Derivatives are recorded on the consolidated balance sheet at fair value. The conversion features of the convertible notes are embedded derivatives and are separately valued and accounted for on the consolidated balance sheet with changes in fair value recognized during the period of change as a separate component of other income (expense). Fair values for exchange-traded securities and derivatives are based on quoted market prices. The pricing model we use for determining the fair value of non-exchange traded derivatives is the Monte Carlo model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities.
RESULTS OF OPERATIONS
Comparison of the Three and Nine Months EndedSeptember 30, 2024 and 2023
| Three Months Ended |
Nine Months Ended |
|||||||||||||||||||||||
| September 30, |
September 30, |
|||||||||||||||||||||||
| (in thousands) |
2024 |
2023 |
Change |
2024 |
2023 |
Change |
||||||||||||||||||
| Expenses: |
||||||||||||||||||||||||
| Research and development |
$ | 1,968 | $ | 2,110 | $ | (142 | ) | $ | 14,084 | $ | 5,288 | $ | 8,796 | |||||||||||
| General and administrative |
2,773 | 2,580 | 193 | 6,514 | 7,292 | (778 | ) | |||||||||||||||||
| Loss on impairment of goodwill |
- | - | - | - | 3,058 | (3,058 | ) | |||||||||||||||||
| Total operating expenses |
4,741 | 4,690 | 51 | 20,598 | 15,638 | 4,960 | ||||||||||||||||||
| Operating loss |
(4,741 | ) | (4,690 | ) | (51 | ) | (20,598 | ) | (15,638 | ) | (4,960 | ) | ||||||||||||
| Other income (expense): |
||||||||||||||||||||||||
| Gain on debt extinguishment |
71 | - | 71 | 14,591 | - | 14,591 | ||||||||||||||||||
| Change in fair value of common stock warrant liability |
2,166 | - | 2,166 | 2,166 | - | 2,166 | ||||||||||||||||||
| Interest income |
12 | 112 | (100 | ) | 62 | 264 | (202 | ) | ||||||||||||||||
| Interest expense |
(51 | ) | (13 | ) | (38 | ) | (174 | ) | (38 | ) | (136 | ) | ||||||||||||
| Other (expense) income, net |
(446 | ) | 166 | (612 | ) | (530 | ) | 275 | (805 | ) | ||||||||||||||
| Total other income, net |
1,752 | 265 | 1,487 | 16,115 | 501 | 15,614 | ||||||||||||||||||
| Loss before income taxes |
(2,989 | ) | (4,425 | ) | 1,436 | (4,483 | ) | (15,137 | ) | 10,654 | ||||||||||||||
| Income tax benefit (expense) |
240 | - | 240 | (71 | ) | - | (71 | ) | ||||||||||||||||
| Net loss |
$ | (2,749 | ) | $ | (4,425 | ) | $ | 1,676 | $ | (4,554 | ) | $ | (15,137 | ) | $ | 10,583 | ||||||||
Research and Development Expenses
Our research and development expenses are charged to operations as incurred and we incur both direct and indirect expenses for each of our programs. We track direct research and development expenses by preclinical and clinical programs, which include third-party costs such as contract research organization, contract manufacturing organizations, contract laboratories, consulting, and clinical trial costs. We do not allocate indirect research and development expenses, which include product development and manufacturing expenses and clinical, medical, and regulatory operations expenses, to specific programs. We also account for research and development and report annually by major expense category as follows: (i) contracted services; (ii) salaries and benefits; (iii) rents and utilities; (iv) stock-based compensation; (v) depreciation; and (vi) other. We expect that our research and development expenses related to the istaroxime – cardiogenic shock program will continue to increase to the extent that we continue the SEISMiC C study in patients with more severe SCAI Stage C cardiogenic shock. We currently do not have sufficient capital to fully complete these clinical trials. At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from sales of our product candidates.
Research and development expenses are as follows:
| Three Months Ended September 30, |
Increase |
Nine Months Ended September 30, |
Increase |
|||||||||||||||||||||
| (in thousands) |
2024 |
2023 |
(Decrease) |
2024 |
2023 |
(Decrease) |
||||||||||||||||||
| Acquired IPR&D from Varian asset purchase |
$ | - | $ | - | $ | - | $ | 7,495 | $ | - | $ | 7,495 | ||||||||||||
| Istaroxime – cardiogenic shock program |
1,254 | 1,264 | (10 | ) | 4,413 | 2,305 | 2,108 | |||||||||||||||||
| Istaroxime – AHF |
25 | 17 | 8 | 25 | 9 | 16 | ||||||||||||||||||
| KL4 surfactant |
- | - | - | - | (34 | ) | 34 | |||||||||||||||||
| Total direct clinical and preclinical programs |
1,279 | 1,281 | (2 | ) | 4,438 | 2,280 | 2,158 | |||||||||||||||||
| Product development and manufacturing |
221 | 249 | (28 | ) | 660 | 735 | (75 | ) | ||||||||||||||||
| Clinical, medical, and regulatory operations |
468 | 580 | (112 | ) | 1,491 | 2,273 | (782 | ) | ||||||||||||||||
| Total research and development expenses |
$ | 1,968 | $ | 2,110 | $ | (142 | ) | $ | 14,084 | $ | 5,288 | $ | 8,796 | |||||||||||
For the nine months ended September 30, 2024, research and development expenses include non-cash charges of $7.5 million associated with the acquired IPR&D related to the Asset Purchase Agreement with Varian (See the section titled, “Note 13 - Mezzanine Equity and Stockholders' Equity - Asset Purchase Agreement with Varian Biopharmaceuticals”).
Direct Clinical and Preclinical Programs
Direct clinical and preclinical programs include: (i) activities associated with conducting clinical trials, including contract research organization costs, patient enrollment costs, clinical site costs, clinical drug supply, and related external costs, such as consultant fees and expenses; and (ii) development activities, toxicology studies, and other preclinical studies.
Total direct clinical and preclinical programs expenses were comparable for the three months ended September 30, 2024 and increased $2.2 million for the nine months ended September 30, 2024 compared to the same periods in 2023 primarily due to costs related to the istaroxime – cardiogenic shock program as described below.
Istaroxime – cardiogenic shock program costs were comparable for the three months ended September 30, 2024 and increased $2.1 million for the nine months ended September 30, 2024 compared to the same periods in 2023 due to (i) the timing of the trial execution costs for the SEISMiC Extension study, which began enrollment in the fourth quarter of 2023 and (ii) the start-up procedures for the SEISMiC C study in patients with more severe SCAI Stage C cardiogenic shock.
Istaroxime – AHF costs have been limited as we focus our resources on the execution of the istaroxime – cardiogenic shock program.
Costs related to the KL4 surfactant platform are expected to be minimal as prior KL4 surfactant platform clinical trials have now been closed out.
Product Development and Manufacturing
Product development and manufacturing includes (i) manufacturing operations with our contract manufacturing organization, validation activities, quality assurance; and (ii) pharmaceutical and manufacturing development activities of our drug product candidates, including development of istaroxime. These costs include employee expenses, facility-related costs, depreciation, costs of drug substances (including raw materials), supplies, quality assurance activities, and expert consultants and outside services to support pharmaceutical development activities.
Product development and manufacturing expenses for the three and nine months ended September 30, 2024 are comparable to the same periods in 2023.
Clinical, Medical, and Regulatory Operations
Clinical, medical, and regulatory operations include medical, scientific, preclinical and clinical, regulatory, data management, and biostatistics activities in support of our research and development programs. These costs include personnel, expert consultants, outside services to support regulatory and data management, symposiums at key medical meetings, facilities-related costs, and other costs for the management of clinical trials.
Clinical, medical, and regulatory operations expenses decreased $0.1 million for the three months ended September 30, 2024 compared to the same period in 2023 due to a decrease of $0.1 million in non-cash stock-based compensation expense.
Clinical, medical, and regulatory operations expenses decreased $0.8 million for the nine months ended September 30, 2024 compared to the same period in 2023 due to (i) a decrease of $0.7 million in personnel costs; and (ii) a decrease of $0.1 million in non-cash stock-based compensation expense.
General and Administrative Expenses
General and administrative expenses consist of costs for executive management, business development, intellectual property, finance and accounting, legal, insurance, human resources, information technology, facilities, and other administrative costs.
General and administrative expenses increased $0.2 million for the three months ended September 30, 2024 compared to the same period in 2023 due to (i) an increase of $0.9 million in professional fees, primarily related to costs associated with the First and Second PIPEs that were allocated to the July 2024 Warrants and expensed immediately; partially offset by (ii) a decrease of $0.4 million in severance costs; (iii) a decrease of $0.2 million in non-cash stock-based compensation expense; and (iv) a decrease of $0.1 million in insurance costs.
General and administrative expenses decreased $0.8 million for the nine months ended September 30, 2024 compared to the same period in 2023 due to (i) a decrease of $0.4 million in personnel costs; (ii) a decrease of $0.4 million in severance costs; (iii) a decrease of $0.4 million in non-cash stock-based compensation expense; and (iv) a decrease of $0.3 million in insurance costs; partially offset by (v) an increase of $0.7 million in professional fees, primarily related to costs associated with the First and Second PIPEs that were allocated to the July 2024 Warrants and expensed immediately.
Other (Expense) Income, Net
On January 24, 2024, we and affiliates of Deerfield Management Company L.P., or Deerfield, entered into an Exchange and Termination Agreement, or the Exchange and Termination Agreement, wherein Deerfield agreed to terminate its rights to receive certain milestone payments in exchange for (i) cash in the aggregate amount of $0.2 million and (ii) an aggregate of 33,793 shares of our common stock, par value $0.001 per share (See the section titled, “Note 12 - Restructured Debt Liability”). This transaction was accounted for as an extinguishment of debt in accordance with ASC 470, Debt-Modifications and Extinguishments, and as a result, we recognized a $14.5 million non-cash gain on debt extinguishment.
Change in fair value of common stock warrant liability relates to the change in fair value of the July 2024 Warrants, which are classified as a liability on our condensed consolidated balance sheet and are recorded at fair value at the end of each period. The July 2024 warrants had an initial fair value of $10.8 million upon issuance. As of September 30, 2024, the change in the estimated fair value of the July 2024 warrants was $2.2 million. For further details, refer to "Note 8 - Common Stock Warrant Liability."
Interest income relates to interest on our money market account for the three and nine months ended September 30, 2024 and 2023.
For the three and nine months ended September 30, 2024, interest expense consists primarily of interest expense associated with the amortization of the issuance costs and the debt discount related to our senior convertible notes payable. For the three and nine months ended September 30, 2023, interest expense consists of interest expense associated with our notes payable.
For the three and nine months ended September 30, 2024, Total other income, net primarily consists of initial recognition and remeasurement changes in the fair value of derivative liabilities associated with our senior convertible notes payable and our ELOC commitment note, partially offset by net loss on foreign currency translation. For the three and nine months ended September 30, 2023, other (expense) income, net primarily consists of net loss on foreign currency translation. Foreign currency gains and losses are primarily due to changes in the New Taiwan dollar exchange rate related to activities of our wholly-owned subsidiary, CVie Therapeutics Limited, in Taiwan.
Income Tax Expense
During the three and nine months ended September 30, 2024, we recorded income tax benefit of $0.2 million and income tax expense of $0.1 million, respectively, related to the tax on our estimated taxable income for the year, primarily due to the gain on debt extinguishment (See the section titled, “Note 12 – Restructured Debt Liability”). For the three and nine months ended September 30, 2023, there was no income tax expense due to losses incurred and forecasted for 2023 as well as a full valuation allowance against deferred tax assets.
LIQUIDITY AND CAPITAL RESOURCES
We are subject to risks common to companies in the biotechnology industry, including but not limited to the need for additional capital, risks of failure of preclinical and clinical studies, the need to obtain marketing approval and reimbursement for any drug product candidate that we may identify and develop, the need to successfully commercialize and gain market acceptance of our product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development of technological innovations by competitors, and risks associated with our international operations in Taiwan and activities abroad, including but not limited to having foreign suppliers, manufacturers, and clinical sites in support of our development activities.
We have incurred net losses since inception. Our net loss was $2.7 million and $4.6 million, respectively, for the three and nine months ended September 30, 2024. Included in our net loss for the three and nine months ended September 30, 2024 is $2.2 million related to the change in fair value of our common stock warrant liability. Also included in our net loss for the nine months ended September 30, 2024 is $7.5 million of non-cash R&D expense related to costs in connection with the Varian asset acquisition and a $14.6 million gain on debt extinguishment. For the three and nine months ended September 30, 2023, our net loss was $4.4 million and $15.1 million, respectively. Included in our net loss for the three and nine months ended September 30, 2023 is a $3.1 million loss on impairment of goodwill (See the section titled, “Note 4 – Summary of Significant Accounting Policies”). We expect to continue to incur operating losses for at least the next several years. As of September 30, 2024, we had an accumulated deficit of $848.8 million. Our future success is dependent on our ability to fund and develop our product candidates, and ultimately upon our ability to attain profitable operations. We have devoted substantially all of our financial resources and efforts to research and development expense and general and administrative expense to support such research and development. Net losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital, and accordingly, our ability to execute our future operating plans.
As of September 30, 2024, we had cash and cash equivalents of $2.3 million and current liabilities of $14.4 million,
To alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, management plans to secure additional capital, potentially through a combination of public or private securities offerings, convertible debt financings, and/or strategic transactions, including potential licensing arrangements, alliances, and drug product collaborations focused on specified geographic markets; however, none of these alternatives are committed at this time. There can be no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all, or identify and enter into any strategic transactions that will provide the capital that we will require. If we fail to raise sufficient capital, we potentially could be forced to limit or cease our development activities, as well as modify or cease our operations, either of which would have a material adverse effect on our business, financial condition, and results of operations. Accordingly, management has concluded that substantial doubt exists with respect to our ability to continue as a going concern for at least 12 months after the issuance of the accompanying financial statements.
Cash Flows
Cash flows for the nine months ended September 30, 2024 consists primarily of $11.7 million of net cash used in operating activities and $9.6 million of net cash provided by financing activities. Cash flows for the nine months ended September 30, 2023 consist of $9.9 million of net cash used in operating activities and $11.1 million of net cash provided by financing activities.
Operating Activities
Net cash used in operating activities was $11.7 million for the nine months ended September 30, 2024 and consisted primarily of (i) a net loss of $4.6 million; (ii) a $14.6 million gain on debt extinguishment; (iii) an unrealized gain on foreign exchange rate changes of $0.2 million; (iv) $2.0 million related to changes in fair value; partially offset (v) $7.4 million in non-cash IPR&D costs in connection with the Asset Purchase Agreement with Varian; (vi) changes in operating assets and liabilities of $0.6 million; (vii) $0.6 million non-cash expense related to the fair value of the ELOC commitment note and the related derivative liability; (viii) non-cash stock-based compensation of $0.4 million; (ix) non-cash expense of $0.2 million related to equity consideration for services; and (x) depreciation and non-cash amortization of right-of-use assets, debt discounts, and debt amortization of $0.5 million. Changes in prepaid expenses and other current assets, accounts payable, accrued expenses, and operating lease liabilities result from timing differences between the receipt and payment of cash and when the transactions are recognized in our results of operations.
Net cash used in operating activities was $9.9 million for the nine months ended September 30, 2023 and consisted primarily of (i) a net loss of $15.1 million; and (ii) an unrealized gain on foreign exchange rate changes of $0.3 million; partially offset by (iii) a non-cash loss on impairment of goodwill of $3.1 million; (iv) changes in operating assets and liabilities of $1.1 million; (v) non-cash stock-based compensation of $1.1 million; and (vi) depreciation and non-cash amortization of right-of-use assets of $0.4 million. Changes in prepaid expenses and other current assets, accounts payable, accrued expenses, and operating lease liabilities result from timing differences between the receipt and payment of cash and when the transactions are recognized in our results of operations.
Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2024 was $9.6 million and includes (i) $4.4 million of net proceeds related to the ELOC Purchase Agreement; (ii) $3.9 million in net proceeds from private placements; (iii) $1.4 million in net proceeds from the 2023 ATM Program; (iv) $1.3 million in net proceeds from convertible notes; (v) $0.6 million in net proceeds from senior secured and senior unsecured notes; partially offset by (vi) $0.8 million for redemptions of Series C preferred stock; (vii) $0.3 million for cash dividends on Series C Preferred Stock; (viii) $0.3 million of principal payments on loans payable; (ix) $0.2 million in payments related to the debt extinguishment; (x) $0.2 million in principal payments for senior convertible notes; and (xi) $0.1 million in issuance costs for the Series B Preferred Stock.
Net cash provided by financing activities for the nine months ended September 30, 2023 was $11.1 million and includes (i) $10.8 million in net proceeds from the April 2023 public offering; and (ii) $0.8 million in proceeds from the exercise of common stock warrants, net of expenses; partially offset by (iii) $0.6 million of principal payments on loans payable.
The following sections provide a more detailed discussion of our available financing facilities.
Common Stock Offerings
Historically, we have funded, and expect that we will continue to fund, our business operations through various sources, including financings in the form of common stock offerings.
In June 2024, we entered into the ELOC Purchase Agreement establishing an equity line of credit with the Purchaser, whereby we have the right, but not the obligation, to sell to the Purchaser, and the Purchaser is obligated to purchase, up to $35 million of newly issued shares of our common stock.
Over the 36-month period from and after the Commencement Date, we will control the timing and amount of any sales of Common Stock to the Purchaser. Actual sales of shares of our common stock to the Purchaser under the ELOC Purchase Agreement will depend on a variety of factors to be determined by us from time to time, including, among others, market conditions, the trading price of our common stock and determinations by us as to the appropriate sources of funding and our operations. For the three months ended September 30, 2024, we sold 1.4 million shares of Common Stock under the ELOC Purchase Agreement for gross proceeds of $4.4 million, $0.7 million of which is included in prepaid expenses and other assets as of September 30, 2024 for gross proceeds for sales made during the quarter for which we had not yet received the cash. Pursuant to the Company’s Certificate of Designations of Rights and Preferences of Series C Convertible Preferred Stock, we are required to use 30% of the proceeds from sales pursuant to the ELOC Purchase Agreement to pay outstanding Series C Preferred Stock dividends and to redeem Series C Preferred Stock at a 20% premium to the $1,000 stated price per share. For the three months ended September 30, 2024, we paid an aggregate redemption price of $1.1 million with $0.3 million applied to accrued and unpaid dividends and $0.8 million to redeem 705 Series C Preferred Shares. During October 2024, we paid an additional aggregate redemption price related to ELOC Purchase Agreement sales during the quarter of $0.2 million with approximately $50,000 applied to accrued and unpaid dividends and $0.15 million to redeem 133 Series C Preferred Shares. Inclusive of the additional redemptions paid after quarter end, we received net proceeds from the shares sold under the ELOC Purchase Agreement of $3.1 million.
We have determined that the put option in the ELOC Purchase Agreement is a derivative within the scope of ASC Topic 815, Derivatives and Hedging, to be initially measured and recorded at fair value with subsequent changes in fair value to be recorded in earnings. However, as the exercise price is floating and is a discounted price to the exercise date fair value of the common stock, we have determined that the put option has a de minimis value (effectively zero value) and will not be recorded.
April 2023 Public Offering
On April 20, 2023, we entered into an underwriting agreement with Ladenburg as the sole underwriter relating to a public offering, or the April 2023 Offering, of an aggregate of 204,779 units with each unit consisting of one share of common stock and a warrant, or the April 2023 Warrants. The April 2023 Warrants are immediately exercisable for shares of common stock at a price of $52.74 per share and expire five years from the date of issuance. The shares of common stock and the April 2023 Warrants were immediately separable and were issued separately in the April 2023 Offering.
In addition, Ladenburg exercised in full a 45-day option, or the Overallotment Option, to purchase up to 30,717 additional shares of common stock and/or warrants to purchase up to 30,717 additional shares of common stock.
The closing of the April 2023 Offering occurred on April 24, 2023, inclusive of the Overallotment Option. The offering price to the public was $52.74 per unit resulting in gross proceeds to us of approximately $12.4 million. After deducting underwriting discounts and commissions and other estimated offering expenses payable by us, and excluding the proceeds, if any, from the exercise of the April 2023 Warrants issued pursuant to this April 2023 Offering, the net proceeds to us were approximately $10.8 million.
At-The-Market Program
On November 9, 2023, we entered into the 2023 ATM Program with Ladenburg. We are not obligated to make any sales under the 2023 ATM Program. When we issue sale notices to Ladenburg, we designate the maximum amount of shares to be sold by Ladenburg daily and the minimum price per share at which shares may be sold. Ladenburg may sell shares by any method permitted by law deemed to be an “at-the-market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended, or in privately negotiated transactions.
Sales under the 2023 ATM Program will be made pursuant to our “shelf” registration statement on Form S-3 (No. 333-261878) filed with the SEC on December 23, 2021, and declared effective on January 3, 2022, and a prospectus supplement related thereto.
Either party may suspend the offering under the 2023 ATM Program by notice to the other party. The 2023 ATM Program will terminate upon the earlier of (i) the sale of all shares subject to the 2023 ATM Program or (ii) termination of the 2023 ATM Program in accordance with its terms. Either party may terminate the 2023 ATM Program at any time upon five business days' prior written notification to the other party in accordance with the related agreement.
We agreed to pay Ladenburg a commission of 3% of the gross sales price of any shares sold pursuant to the 2023 ATM Program. The rate of compensation will not apply when Ladenburg acts as principal, in which case such rate shall be separately negotiated. We also agreed to reimburse Ladenburg for the fees and disbursements of its counsel in an amount not to exceed $60,000, in addition to certain ongoing disbursements of its legal counsel up to $3,000 per calendar quarter.
During the nine months ended September 30, 2024, we sold 143,120 shares of our common stock under the 2023 ATM Program resulting in aggregate gross and net proceeds to us of approximately $1.4 million.
Loans Payable
In August 2024, we entered into an insurance premium financing and security agreement with IPFS Corporation. Under the agreement, we financed $0.5 million of certain premiums at a 7.94% fixed annual interest rate. Payments of approximately $56,000 are due monthly from August 2024 through May 2025. As of September 30, 2024, the outstanding principal of the loan was $0.4 million.
In June 2023, we entered into an insurance premium financing and security agreement with IPFS Corporation. Under the agreement, we financed $0.8 million of certain premiums at a 7.24% fixed annual interest rate. Payments of approximately $77,000 were due monthly from July 2023 through April 2024. As of December 31, 2023, the outstanding principal of the loan was $0.2 million. The balance of the loan was repaid during the first quarter of 2024.
Supplementary Disclosure of Non-Cash Activity
During the first quarter of 2024, we and Deerfield entered into the Exchange and Termination Agreement wherein Deerfield agreed to terminate its rights to receive certain milestone payments in exchange for (i) cash in the aggregate amount of $0.2 million and (ii) an aggregate of 33,793 shares of our common stock. The Exchange and Termination Agreement was accounted for as an extinguishment of debt in accordance with ASC Topic 470, Debt – Modifications and Extinguishments, and, as a result, we recognized a $14.5 million non-cash gain on debt extinguishment during the three months ended September 30, 2024 consisting of the difference between the $15.0 million of the extinguished milestone payments and the consideration to Deerfield of $0.2 million in cash and $0.3 million in fair value of common stock issued to Deerfield (See the section titled, “Note 12 - Restructured Debt Liability”).
During the first quarter of 2023, we entered into amendments to the January 2023 Existing Warrants and the February 2023 Existing Warrants which were accounted for as “Equity Issuance” classification modifications under the guidance of ASU 2021-04. The total fair value of the consideration of each of the modifications includes the incremental fair value of the January 2023 Existing Warrants and the February 2023 Existing Warrants, respectively (determined by comparing the fair value immediately prior to and immediately after the modification), and the initial fair value of the January 2023 New Warrants and the February 2023 New Warrants, respectively. The fair values were calculated using the Black-Scholes model. We determined that the total fair value of the consideration related to the modification of the January 2023 Existing Warrants, including the initial fair value of the January 2023 New Warrants, was $1.2 million, and that the total fair value of the consideration related to the modification of the February 2023 Existing Warrants, including the initial fair value of the February 2023 New Warrants, was $0.3 million (See the section titled, “Note 13 - Mezzanine Equity and Stockholders' Equity”).
Off-Balance Sheet Arrangements
We did not have any material off-balance sheet arrangements as of September 30, 2024 or 2023 or during the periods then ended.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures
Our management, including our President and Chief Executive Officer (principal executive officer) and Senior Vice President and Chief Financial Officer (principal financial officer and principal accounting officer), do not expect that our disclosure controls or our internal control over financial reporting will prevent all error and all fraud. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer, to allow for timely decisions regarding required disclosures, and recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.
Changes in internal control
There were no changes in our internal control over financial reporting identified in connection with the evaluation described above that occurred during the quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
We are not aware of any pending legal actions that would, if determined adversely to us, have a material adverse effect on our business and operations.
We have from time to time been involved in disputes and proceedings arising in the ordinary course of business, including in connection with the conduct of our clinical trials. In addition, as a public company, we are also potentially susceptible to litigation, such as claims asserting violations of securities laws. Any such claims, with or without merit, if not resolved, could be time-consuming and result in costly litigation. There can be no assurance that an adverse result in any future proceeding would not have a potentially material adverse effect on our business, results of operations and financial condition.
Investing in our securities involves certain risks. In addition to any risks and uncertainties described elsewhere in this Quarterly Report on Form 10-Q, investors should carefully consider the risks and uncertainties discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023, as supplemented by risk factors included in our Quarterly Reports on Form 10-Q filed thereafter. These risks are not the only risks that could materialize. Other than as set forth below, there have been no material changes in our risk factors from those previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023 or our Quarterly Reports on Form 10-Q filed thereafter. Additional risks and uncertainties not presently known to us or that we currently consider to be immaterial may also impair our business operations and development activities. Should any of the risks and uncertainties described in our Annual Report on Form 10-K for the year ended December 31, 2023, as supplemented by our subsequent filings with the SEC, actually materialize, our business, financial condition, and/or results of operations could be materially adversely affected, the trading price of our common stock could decline, and an investor could lose all or part of his or her investment. In particular, the reader’s attention is drawn to the discussion in Part I, Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.
Our ability to continue as a going concern requires that we obtain sufficient funding to finance our operations in the near term.
We do not have sufficient resources available to fund our business beyond January 2025. To increase our cash runway, management plans to secure additional capital, potentially through a combination of public or private securities offerings, convertible debt financings, and/or strategic transactions, including potential licensing arrangements, alliances, and drug product collaborations focused on specified geographic markets; however, none of these alternatives are committed at this time. There can be no assurance that we will be successful in obtaining sufficient funding, or that such funding will be available on terms acceptable to us, to fund continuing operations, if at all, or identify and enter into any strategic transactions that will provide the capital that we will require.
Further, under the terms of the Purchase Agreements, we are subject to certain restrictive covenants that may make it difficult to procure additional financing. As a result of these covenants, our ability to respond to changes in business and economic conditions and engage in beneficial transactions, including to obtain additional debt or equity financing as needed in the future, on favorable terms or at all, may be limited, which could adversely affect our business, financial condition, and results of operations.
If we fail to raise sufficient capital, we potentially could be forced to limit or cease our development activities, as well as modify or cease our operations, either of which would have a material adverse effect on our business, financial condition, and results of operations. In addition, sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur, including pursuant to our existing equity line of credit, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. These conditions raise substantial doubt regarding our ability to continue as a going concern.
As a result of our failure to timely file this Quarterly Report with the SEC, we are currently ineligible to file new registration statements on Form S-3, which may impair our ability to raise capital in a timely manner or at all.
Because we were unable to file this Quarterly Report with the SEC on a timely basis, we will not be eligible to register the offer and sale of our securities using a registration statement on Form S-3 until no earlier than December 1, 2025. Should we wish to register the offer and sale of our securities to the public prior to the time we are eligible to use Form S-3, including for purposes of raising capital or permitting the resale of privately placed securities, we will be required to file a registration statement on Form S-1 and have it reviewed and declared effective by the SEC. Doing so would likely take longer than filing a registration statement on Form S-3 and increase our transaction costs, making it more difficult to execute any such transaction successfully and potentially harming our liquidity and financial condition. We will also need to file a post-effective amendment on Form S-1 to convert our previous Form S-3 registration statement with respect to resales of securities into a Form S-1, which may be reviewed and will need to be declared effective by the SEC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements
During the three months ended September 30, 2024, of our directors or officers adopted, terminated or modified a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as defined in Item 408(a) of Regulation S-K of the Exchange Act.
Exhibits are listed on the Index to Exhibits at the end of this Quarterly Report on Form 10-Q. The exhibits required by Item 601 of Regulation S-K, listed on such Index in response to this Item, are incorporated herein by reference.
INDEX TO EXHIBITS
The following exhibits are included with this Quarterly Report on Form 10-Q.
| Exhibit No. |
Description |
|
Method of Filing |
| 4.1 |
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Incorporated by reference to Exhibit 3.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on July 22, 2024. | |
| 4.2 |
Form of Common Stock Warrant issued in the Company’s private placement on July 18, 2024. |
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Incorporated by reference to Exhibit 4.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on July 22, 2024. |
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| 4.3 |
Form of Common Stock Warrant issued in the Company’s private placement on July 26, 2024. |
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Incorporated by reference to Exhibit 4.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on July 29, 2024. |
| 10.1 |
Form of Securities Purchase Agreement by and between Windtree and the Buyer named therein. |
|
Incorporated by reference to Exhibit 10.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on July 22, 2024. |
|
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| 10.2 |
Form of Registration Rights Agreement by and between Windtree and the Buyer named therein. |
|
Incorporated by reference to Exhibit 10.2 to Windtree’s Current Report on Form 8-K, as filed with the SEC on July 22, 2024. |
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| 10.3 |
Form of Securities Purchase Agreement, dated July 26, 2024, by and between Windtree and the Buyer named therein. |
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Incorporated by reference to Exhibit 10.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on July 29, 2024. |
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| 10.4 |
Form of Registration Rights Agreement, dated July 29, 2024, by and between Windtree and the Buyer named therein. |
|
Incorporated by reference to Exhibit 10.2 to Windtree’s Current Report on Form 8-K, as filed with the SEC on July 29, 2024. |
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|
| 31.1 |
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act. |
|
Filed herewith. |
|
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|
|
| 31.2 |
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act. |
|
Filed herewith. |
| 32.1 |
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
Furnished herewith. |
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| 101.1 |
The following condensed consolidated financial statements from Windtree Therapeutics, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline Extensive Business Reporting Language (XBRL): (i) Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023, (ii) Statements of Operations (unaudited) for the three and nine months ended September 30, 2024 and September 30, 2023, (iii) Statements of Cash Flows (unaudited) for the nine months ended September 30, 2024 and September 30, 2023, and (iv) Notes to Condensed Consolidated Financial Statements. |
| 101.INS |
Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) (1). |
|
Filed herewith. |
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| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document (1). |
|
Filed herewith. |
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| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document (1). |
|
Filed herewith. |
| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document (1). |
|
Filed herewith. |
| 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document (1). |
|
Filed herewith. |
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| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document (1). |
|
Filed herewith. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and combined in Exhibit 101.1) | Filed herewith. |
* Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.
† Certain confidential portions have been omitted from this exhibit pursuant to Item 601(b)(10)(iv) of Regulation S-K.
(1) These Interactive Data Files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Act of 1934, as amended, or otherwise subject to liability under those sections.
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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Windtree Therapeutics, Inc. |
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(Registrant) |
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| Date: November 26, 2024 |
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By: /s/ Craig E. Fraser |
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Craig E. Fraser |
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President and Chief Executive Officer |
| (Principal Executive Officer) | ||
| Date: November 26, 2024 | By: /s/ Jamie McAndrew | |
| Jamie McAndrew | ||
| Senior Vice President and Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) | ||