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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-14 · 53 added, 31 removed, 185 unchanged (31% of the section changed)

34 unchanged sentences

Recent Developments

Completion of the Phase 2b Segment of our Phase 2 Clinical Trial

On October 2, 2023, we discontinued the Phase 2b segment of our clinical trial of our lead antibiotic candidate, ibezapolstat, targeting the treatment of patients with CDI and we anticipate advancing to Phase 3 clinical trials more expeditiously than originally planned.

We made the decision to discontinue the Phase 2b segment of our clinical trial in consultation with our medical and scientific advisors and statisticians based upon observed aggregate blinded data and other factors, including the cost to maintain clinical trial sites and slow enrollment due to COVID-19.

We determined that the Phase 2b segment of our clinical trial performed as anticipated for each of ibezapolstat, our lead antibiotic candidate, and vancomycin, the control agent and a standard of care to treat patients with CDI, with high rates of clinical cure observed across the trial and no emerging safety concerns reported to date.

Accordingly, the Independent Data Monitoring Committee w as not required to perform an interim analysis of the Phase 2b clinical trial data as originally planned but was supportive of our decision to discontinue the Phase 2b segment of our clinical trial early and will remain involved for our Phase 3 clinical trials.

Prior to discontinuing the Phase 2b clinical trial, we notified FDA of our decision to early discontinue the trial.

The trial was not discontinued due to safety concerns.

Ibezapolstat Phase 2 Clinical Results

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The Company anticipates presenting data from the Phase 2 clinical trial at one or more scientific conferences throughout 2024.

We convened an End-of-Phase 2 Meeting with FDA in April 2024 and expect to report the results of the FDA meeting as soon as the Company receives final meeting minutes from FDA which we anticipate in May 2024.

We convened an End-of-Phase 2 Meeting with the FDA on April 17, 2024 and announced on May 15, 2024 that we had a successful meeting, including confirmation of Phase 3 readiness for ibezapolstat for the treatment of C.

difficile infection.

Agreement with the FDA was reached on key elements to move forward with our international Phase 3 clinical trial program.

Agreement was also reached with the FDA on the complete non-clinical and clinical development plan for filing of a New Drug Application (“NDA”) for marketing approval.

Planning continues to advance ibezapolstat into international Phase 3 clinical trials for treatment of C.

difficile infection (“CDI”).

We are also now preparing to submit requests for guidance to initiate clinical trials in the European Union, the United Kingdom, Japan and Canada, as well as preparing for a manufacturing meeting with the FDA to be scheduled prior to Phase 3 enrollment.

In July 2024, we announced that a new patent has been granted by the United States Patent and Trademark Office (“USPTO”).

This patent relates to ibezapolstat and its use to treat C.

difficile infection while reducing the recurrence of the infection, as well as improving the health of the gut microbiome.

This is the latest in the series of granted patents and pending patent applications that we have filed to protect our proprietary technologies in the field of antimicrobials.

Following our successful End-of-Phase 2 Meeting with the FDA, which confirmed our Phase 3 clinical trial readiness, and per the FDA regulatory requirements, in August 2024, we submitted our request to the FDA for a meeting to review our manufacturing processes and specifications for drug substance and final project and packaging (typically referred to as Chemistry, Manufacturing and Controls (“CMC”)) for our Phase 3 clinical trials.

We anticipate the FDA to grant a meeting in the fourth quarter.

2023 At-the-Market Offering

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Under the Sales Agreement, the sales agent is entitled to compensation of 3 .0% of the gross offering proceeds of all shares of common stock sold through it pursuant to the Sales Agreement.

As of the period ended March 31, 2024, we sold a total of 1,819,914 shares of our common stock under the ATM Program at a weighted-average price of $3.88 per share, raising $7.1 million of gross proceeds and net proceeds of $6.7 million, after deducting commissions to the sales agent and other ATM Program related expenses.

As of the period ended June 30, 2024, we sold a total of 1,952,980 shares of our common stock under the ATM Program at a weighted-average price of $3.78 per share, raising $7.4 million of gross proceeds and net proceeds of $7.0 million, after deducting commissions to the sales agent and other ATM Program related expenses.

As of August 7, 2024, total sales under the ATM Program since it was implemented in November 2023 are approximately $8.0 million out of the total $17 million ATM facility.

There remains approximately $9.0 million available for future sales of shares of common stock under the ATM Program.

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The pre-funded warrants sold to the 2023 Investor have an exercise price of $0.0001 and were immediately exercisable.

As of March 31, 2024, all of the pre-funded warrants were exercised.

As of June 30, 2024, all of the pre-funded warrants were exercised.

The gross proceeds to us from the 2023 Registered Offering were approximately $4.0 million and net proceeds after deducting the placements agent’s fees and other offering expenses payable by us were approximately $3.5 million.

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Results of Operations

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

The following table presents a summary of the changes in our results of operations for the three months ended March 31, 2024 compared with the three months ended March 31, 2023:

Three Months Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023

The following table presents a summary of the changes in our results of operations for the three months ended June 30, 2024 compared with the three months ended June 30, 2023:

Three Months Ended

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Research and Development Expenses

Research and development expenses were $1.6 million for the three months ended March 31, 2024 and $1.0 million for the three months ended March 31, 2023, an increase of $0.6 million primarily due to increase in manufacturing related costs.

Research and development expenses were $1.8 million for the three months ended June 30, 2024 and $1.7 million for the three months ended June 30, 2023, an increase of $0.1 million primarily due to $0.4 million increase in manufacturing related costs offset by $0.3 million decrease in consulting fees.

General and Administrative Expenses

General and administrative expenses were $2.8 million for the three months ended March 31, 2024 and $1.9 million for the three months ended March 31, 2023, an increase of $0.9 million.

The increase was primarily due to $0.7 million increase in professional fees and $0.2 million increase in share-based compensation costs.

Net loss was $4.4 million for the three months ended March 31, 2024, and $2.9 million for the three months ended March 31, 2023, an increase of $1.5 million, due to the reasons stated above.

General and administrative expenses were $2.3 million for the three months ended June 30, 2024 and $1.7 million for the three months ended June 30, 2023, an increase of $0.6 million.

The increase was primarily due to $0.3 million increase in professional fees and $0.2 million increase in share-based compensation related costs.

Net loss was $4.1 million for the three months ended June 30, 2024, and $3.4 million for the three months ended June 30, 2023, an increase of $0.7 million, due to the reasons stated above.

Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

The following table presents a summary of the changes in our results of operations for the six months ended June 30, 2024 compared with the six months ended June 30, 2023:

Six Months Ended

(in thousands)

OPERATING EXPENSES:

Research and Development

General and Administrative

TOTAL OPERATING EXPENSES

Research and Development Expenses

Research and development expenses were $3.4 million for the six months ended June 30, 2024 and $2.8 million for the six months ended June 30, 2023, an increase of $0.6 million primarily due to $0.8 million increase in manufacturing related costs offset by $0.2 million decrease in consulting fees.

General and Administrative Expenses

General and administrative expenses were $5.1 million for the six months ended June 30, 2024 and $3.6 million for the six months ended June 30, 2023, an increase of $1.5 million.

The increase was primarily due to $1.0 million increase in professional fees, $0.4 million increase in share-based compensation costs and $0.1 million increase in legal costs.

Net loss was $8.5 million for the six months ended June 30, 2024, and $6.3 million for the six months ended June 30, 2023, an increase of $2.2 million, due to the reasons stated above.

Liquidity and Capital Resources

Since inception, we have generated no revenue from operations and we have incurred cumulative losses of approximately $57.6 million as of March 31, 2024.

Since inception, we have generated no revenue from operations and we have incurred cumulative losses of approximately $61.7 million as of June 30, 2024.

We have funded our operations primarily from equity issuances.

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Under the ATM Program, we raised net proceeds of approximately $ 7.0 million after deducting sales agent commissions and other related expenses of $0.4 million.

certainty the amounts of increased capital outlays and operating expenditures associated with our anticipated clinical trials and development activities.

As of March 31, 2024, we had working capital of $6.0 million, consisting primarily of $8.9 million of cash and $0.2 million of prepaid expenses, offset by $3.1 million of accounts payable and accrued expenses.

Based upon our lack of revenue expected for the foreseeable future, and because of numerous risks and uncertainties associated with the research, development and future commercialization of our product candidates, we are unable to estimate with certainty the amounts of increased capital outlays and operating expenditures associated with our anticipated clinical trials and development activities.

As of June 30, 2024, we had working capital of $3.4 million, consisting primarily of $6.4 million of cash, $0.2 million of other receivable and prepaid expenses, offset by approximately $3.2 million of accounts payable and accrued expenses.

The following table sets forth selected cash flow information for the periods indicated:

Three Months Ended

Six Months Ended

(in thousands)

4 unchanged sentences

Net Cash Used in Operating Activities

Net cash used in operating activities was $3.1 million for the three months ended March 31, 2024.

The net loss was greater than the net cash used in operating activities by $1.3 million, primarily attributable to share-based compensation and share-based vendor payments of $1.2 million.

Net cash used in operating activities was $1.9 million for the three months ended March 31, 2023.

Net cash used in operating activities was $5.9 million for the six months ended June 30, 2024.

The net loss was greater than the net cash used in operating activities by $2.6 million, primarily attributable to share-based compensation and share-based vendor payments of $2.4 million.

Net cash used in operating activities was $3.5 million for the six months ended June 30, 2023.

The net loss was greater than the net cash used in operating activities by $2.8 million, primarily attributable to share-based compensation and share-based vendor

payments of $1.7 million and increase in accounts payable and accrued expenses of $0.9 million and decrease in prepaid expenses of $0.2 million.

Net Cash Provided by Financing Activities

Net cash provided from financing activities was $4.5 million for the three months ended March 31, 2024, which was primarily attributable to the ATM Program.

There was no cash provided from financing activities for the three months ended March 31, 2023.

Net cash provided from financing activities was $4.8 million for the six months ended June 30, 2024, which was primarily attributable to the ATM Program.

Net cash provided from financing activities was $3.5 million for the six months ended June 30, 2023, which was attributable to the net proceeds from the registered direct offering.

Critical Accounting Policies and Estimates

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Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development expense, as applicable.

The estimates are adjusted to reflect the

best information available at the time of the financial statement issuance.

The estimates are adjusted to reflect the best information available at the time of the financial statement issuance.

Although we do not expect our estimates to be materially different from amounts actually incurred, our estimate of the status and timing of services performed relative to the actual status and timing of services performed may vary.

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These exemptions will apply for a period of five years following the completion of our IPO or until we no longer meet the requirements of being an emerging growth company, whichever is earlier.

Recent Accounting Pronouncements

The Financial Accounting Standards Board has issued certain accounting pronouncements as of March 31, 2024 that will become effective in subsequent periods;

however, we do not believe that any of those pronouncements would have significantly affected our financial accounting measurements or disclosures had they been in effect, or that they will have a significant impact on us at the time they become effective.

Recent Accounting Pronouncements not yet adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which expands the disclosures required for income taxes.

This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendment should be applied on a prospective basis while retrospective application is permitted.

The Company is currently evaluating the effect of this pronouncement on its disclosures.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis