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Item 2. Management’s Discussion and Analysis

2024-11-12 compared with 2024-08-08 · 40 added, 44 removed, 194 unchanged (30% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended December 31, 2023 included in the Annual Report on Form 10-K (the “2023 Annual Report”) and filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2024.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed interim financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended December 31, 2023 included in the Annual Report on Form 10-K (the “2023 Annual Report”) and filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2024.

This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q.

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difficile infections (“CDI”) utilize other mechanisms of action.

We believe ibezapolstat is the first antibiotic candidate to work by blocking the DNA pol IIIC enzyme in C.

We believe ibezapolstat is the first antibiotic candidate in late-stage clinical trials to work by blocking the DNA pol IIIC enzyme in C.

This enzyme is necessary for replication of the DNA of certain Gram-positive bacteria, like C.

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Recent Developments

On September 26, 2024, we announced results from new analyses that extend data on the beneficial effects of ibezapolstat on the gut microbiome.

The data show an increased proportion of actinobacteriota and increased quantity of beneficial bacillota (firmicutes) leading to reversal of dysbiosis and contributing to the CDI anti-recurrence effect of ibezapol stat.

Microbiological testing of certain ACX-375 DNA pol IIIC analogues in independent qualified laboratories, including the University of Florida, demonstrated in vitro activity with minimal inhibitory concentrations of 0.5-2mcg/mL against B.anthracis, a Bioterrorism Category A pathogen including activity against ciprofloxacin resistant B.

These results were presented at the premier International C .difficile Symposium (“ICDS”) held in Bled, Slovenia in September 2024.

On September 24, 2024, we announced results from our pioneering research with ibezapolstat in collaboration with Leiden University Medical Center.

This detailed demonstration of the mode of action of DNA pol IIIC inhibitors in general, and for ibezapolstat specifically, is critically important to support our scientific foundation and our regulatory filings as we advance into this late-stage of ibezapolstat's development.

These results were similarly presented at the ICDS held in September 2024 .

Ibezapolstat Phase 2 Clinical Results

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2023 At-the-Market Offering

On November 15, 2023, we entered into a Sales Agreement and established an “ATM Program”, pursuant to which we may offer and sell, from time to time through A.G.P/Alliance Global Partners, as sales agent, shares of our common stock having an aggregate offering price of up to $17.0 million.

aggregate offering price of up to $17.0 million.

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 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.

As of the period ended September 30, 2024, we sold a total of 2,692,190 shares of our common stock under the ATM Program at a weighted-average price of $3.35 per share, raising $9.0 million of gross proceeds and net proceeds of $8.6 million, after deducting commissions to the sales agent and other ATM Program related expenses.

As of November 11, 2024, total sales under the ATM Program since it was implemented in November 2023 are approximately $9.0 million out of the total $17 million ATM facility.

There remains approximately $8.0 million available for future sales of shares of common stock under the ATM Program.

2023 Registered Direct Offering

On May 16, 2023, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a single healthcare-focused U.S.

institutional investor named therein (the “2023 Investor”), pursuant to which we issued and sold, in a registered direct offering by us directly to the 2023 Investor (the “2023 Registered Offering”), an aggregate of 601,851 shares of common stock at an offering price of $3.00 per share and an aggregate of 731,482 pre-funded warrants exercisable for shares of common stock at an offering price of $2.9999 per pre-funded warrant.

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

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.

The securities were offered by us pursuant to a registration statement on Form S-3 (File No.

333-265956) previously filed with the SEC on July 1, 2022, and which was declared effective by the SEC on July 11, 2022.

In a concurrent private placement (the “2023 Private Placement” and together with the 2023 Registered Offering, the “2023 Offerings”), we issued to the 2023 Investor Series C Warrants exercisable for an aggregate of 1,333,333 shares of common stock at an exercise price of $3.26 per share and Series D Warrants exercisable for an aggregate of 1,333,333 shares of common stock at an exercise price of $3.26 per share.

Each Series C Warrant was exercisable commencing on November 18, 2023 and will expire on November 18, 2025.

Each Series D Warrant was exercisable commencing on November 18, 2023 and will expire on November 19, 2029.

The 2023 Offerings closed on May 18, 2023.

In connection with the 2023 Offerings, we also entered into a Warrant Amendment Agreement with the 2023 Investor.

Under the Warrant Amendment Agreement, we amended our existing Series A Warrants to purchase up to an aggregate of 1,230,769 shares of our common stock and Series B Warrants to purchase up to an aggregate of 1,230,769 shares of our common stock (collectively, the “Existing Warrants”) that were previously issued in July 2022, such that effective upon the closing of the 2023 Offerings, the Existing Warrants were amended to have a termination date of May 18, 2029.

Effects of Coronavirus (COVID-19) on Our Business

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We anticipate that our general and administrative expenses will increase in the future to support our continued research and development activities, pre-commercialization and, if any product candidates receive marketing approval, commercialization activities.

We also anticipate increased expenses related to audit, legal, regulatory and tax-related services

associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs associated with operating as a public company.

We also anticipate increased expenses related to audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums and investor relations costs associated with operating as a public company.

Results of Operations

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

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

Three Months Ended

September 30,

(in thousands)

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Research and Development Expenses

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.

Research and development expenses were $1.2 million for the three months ended September 30, 2024 and $1.3 million for the three months ended September 30, 2023, a decrease of $0.1 million primarily due to $0.1 million increase in manufacturing related costs offset by $0.2 million decrease in consulting fees.

General and Administrative Expenses

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

General and administrative expenses were $1.6 million for the three months ended September 30, 2024 and $1.8 million for the three months ended September 30, 2023, a decrease of $0.2 million.

The decrease was primarily due to $0.2 million increase in professional fees and $0.1 million increase in compensation related costs offset by $0.5 million decrease in share-based compensation related costs.

Net loss was $2.8 million for the three months ended September 30, 2024, and $3.1 million for the three months ended September 30, 2023, a decrease of $0.3 million, due to the reasons stated above.

Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

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

Nine Months Ended

September 30,

(in thousands)

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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.

Research and development expenses were $4.6 million for the nine months ended September 30, 2024 and $4.1 million for the nine months ended September 30, 2023, an increase of $0.5 million primarily due to $0.9 million increase in manufacturing related costs offset by $0.4 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.

General and administrative expenses were $6.7 million for the nine months ended September 30, 2024 and $5.4 million for the nine months ended September 30, 2023, an increase of $1.3 million.

The increase was primarily due to $1.1 million increase in professional fees and $0.2 million increase in legal costs.

Net loss was $11.3 million for the nine months ended September 30, 2024, and $9.5 million for the nine months ended September 30, 2023, an increase of $1.8 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 $61.7 million as of June 30, 2024.

Since inception, we have generated no revenue from operations and we have incurred cumulative losses of approximately $64.5 million as of September 30, 2024.

We have funded our operations primarily from equity issuances.

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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.

As of September 30, 2024, we had working capital of $2.7 million, consisting primarily of $5.8 million of cash, $0.2 million of other receivable and prepaid expenses, offset by approximately $3.3 million of accounts payable and accrued expenses.

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

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Net Cash Used in Operating Activities

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 used in operating activities was $8.1 million for the nine months ended September 30, 2024.

The net loss was greater than the net cash used in operating activities by $3.2 million, primarily attributable to share-based compensation and share-based vendor payments of $2.9 million and increase in accounts payable and accrued expenses of $0.3 million.

Net cash used in operating activities was $5.6 million for the nine months ended September 30, 2023.

The net loss was greater than the net cash used in operating activities by $3.8 million, primarily attributable to share-based compensation and share-

based vendor payments of $2.5 million and an increase in accounts payable and accrued expenses of $1.2 million and decrease in prepaid expenses of $0.1 million.

Net Cash Provided by Financing Activities

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.

Net cash provided from financing activities was $6.4 million for the nine months ended September 30, 2024, which was primarily attributable to the ATM Program.

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

Critical Accounting Policies and Estimates

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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