What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-13 compared with 2024-08-12 · 77 added, 69 removed, 205 unchanged (42% of the section changed)

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In May 2024, we announced the discontinuation of our Phase 2 clinical trials for episodic and chronic migraine in order to implement certain cash preservation measures.

As a result, on July 9, 2024, we announced a strategic reprioritization to pursue a 351(k) biosimilar regulatory pathway for ABP-450, using AbbVie Inc.’s product Botox as a proposed reference product for all of the indications for which Botox is approved, other than the cosmetic uses (for which we do not hold development or commercialization rights).

We also announced our proposed plans to initiate, subject to raising additional capital, a single pivotal clinical study evaluating ABP-450 in patients with cervical dystonia for ABP-450, with the goal of using the biosimilar pathway, which we plan to discuss during a meeting with the FDA that is currently scheduled for the third quarter of 2024.

a successful Phase 3 comparative study in cervical dystonia could provide the necessary clinical data to support submission of a Section 351(k) BLA, and ultimately a determination that ABP-450 is biosimilar to the proposed reference product with respect to certain therapeutic indications.

On July 9, 2024, we announced a strategic reprioritization to pursue a 351(k) biosimilar regulatory pathway for ABP-450, using AbbVie Inc.’s product Botox as a proposed reference product for all of the indications for which Botox is approved, other than the cosmetic uses (for which we do not hold development or commercialization rights).

We held an initial meeting with the FDA in the third quarter of 2024 during which we aligned with the FDA on next steps to develop a Botox biosimilar.

We anticipate commencing comparative analytic studies in the fourth quarter of 2024 and preparing for a potential Biosimilar Biological Product Development (“BPD”) meeting with the FDA in 2025 to review the results from the studies.

Botulinum toxins have proven to be a highly versatile therapeutic biologic, with over 230 potential therapeutic uses documented in published scientific literature and twelve approved therapeutic indications in the United States.

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Topline data from the Phase 2 cervical dystonia study, released in September 2022, showed that ABP-450 met all primary endpoints and a number of other key secondary endpoints, supporting the further development of ABP-450 in reducing signs and symptoms associated with cervical dystonia.

We are in discussions with the FDA regarding the design of a planned Phase 3 study in cervical dystonia, which we expect to commence based on the availability of capital resources.

We have never been profitable from operations and, as of June 30, 2024, we had an accumulated deficit of $427.5 million.

We may commence a Phase 3 study in cervical dystonia pending availability of capital resources, the results of the comparative analytical studies and discussions with the FDA in a Biological Product Development meeting.

We have never been profitable from operations and, as of September 30, 2024, we had an accumulated deficit of $433.7 million.

We have never generated revenue from ABP-450.

Losses from operations, excluding the impact of changes in fair value of the contingent consideration, were $7.8 million, $18.1 million, $14.0 million and $27.0 million for the three and six months ended June 30, 2024 (Successor) and June 30, 2023 (Predecessor), respectively.

Consolidated net income (loss) were income of $164.1 million and $46.1 million for the three and six months ended June 30, 2024 (Successor), respectively, and losses of $15.4 million and $33.0 million for the three and six months ended June 30, 2023 (Predecessor), respectively.

As of June 30, 2024, we had $3.4 million in cash and cash equivalents.

Losses from operations, excluding the impact of changes in fair value of the contingent consideration and write-off of IPR&D, were $4.0 million, $22.2 million, $29.6 million, $2.6 million and $11.7 million for the three and nine months ended September 30, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor), July 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor), respectively.

Consolidated net (loss) income were $(6.2) million, $39.9 million, $(60.7) million, $(27.7) million and $(297.7) million for the three and nine months ended September 30, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor), July 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor), respectively.

As of September 30, 2024, we had $0.5 million in cash and cash equivalents.

We have concluded that we do not have sufficient cash to fund our operations for 12 months from the date of our financial statements without additional financing, and as a result, there is substantial doubt about our ability to continue as a going concern.

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We expect to incur significant expenses related to building our commercialization infrastructure, including marketing, sales and distribution functions, inventory build prior to commercial launch, training and deploying a specialty sales force and implementing a targeted marketing campaign.

Liquidity and Capital Resources and Going Concern

As disclosed further below in the section titled " Liquidity and Capital Resources ", we have incurred operating losses and negative cash flows from operating activities since inception and expect to continue to incur significant operating losses for the foreseeable future and may never become profitable.

As of September 30, 2024 (Successor), we had reported cash and cash equivalents of $0.5 million and an accumulated deficit of $433.7 million.

As a result of these conditions, management has concluded that substantial doubt about our ability to continue as a going concern exists as conditions and events, considered in the aggregate, indicate that it is probable that we will be unable to meet our obligations as they become due within one year after the date that the financial statements included in this Report are issued.

Our ability to continue as a going concern is dependent upon our ability to successfully accomplish our business plans and secure sources of financing and ultimately attain profitable operations.

Description of the Merger, Forward Purchase Agreements and Convertible Note Subscription

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The potential aggregate liquidated damages of up to $3.0 million was accrued as a liability in the first quarter of 2024.

However, since each FPA provider elected to remove its respective shares from the registration statement, the Company released the liability from the condensed consolidated balance sheet as of June 30, 2024.

However, since each FPA provider elected to remove its respective shares from the registration statement, the Company released the liability in the second quarter of 2024.

We did not have access to the Prepayment Amount at any time following the Closing and, pursuant to the FPA Termination Agreements, ACM and Polar will retain the Prepayment Amount in full.

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In connection with the negotiation of the Forward Purchase Agreements (and FPA Termination Agreements) and related subscription agreements, J.V.B.

Financial Group, LLC, acting through its Cohen & Company Capital Markets division (“CCM”), provided certain consulting services, initially to Priveterra and subsequently to AEON, pursuant to an engagement letter, by and between AEON and CCM, dated July 27, 2023 and amended July 1, 2024 (the “CCM Engagement Letter”).

Financial Group, LLC, acting through its Cohen & Company Capital Markets division (“CCM”),

provided certain consulting services, initially to Priveterra and subsequently to AEON, pursuant to an engagement letter, by and between AEON and CCM, dated July 27, 2023 and amended July 1, 2024 (the “CCM Engagement Letter”).

On July 5, 2024, pursuant to the CCM Engagement Letter, we issued 400,000 shares of our common stock to CCM.

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On March 19, 2024, we entered into the Subscription Agreement with Daewoong relating to our sale and issuance of the Convertible Notes in the principal amount of up to $15.0 million, which are convertible into shares of common stock, subject to certain conditions and limitations set forth in each Convertible Note.

Each Convertible Note contains customary events of default, accrues interest at an annual rate of 15.79% and has a maturity date that is three years from the funding date (the “Maturity Date”),

unless earlier repurchased, converted or redeemed in accordance with its terms prior to such date.

Each Convertible Note contains customary events of default, accrues interest at an annual rate of 15.79% and has a maturity date that is three years from the funding date (the “Maturity Date”), unless earlier repurchased, converted or redeemed in accordance with its terms prior to such date.

We will use the net proceeds from each Convertible Note to support the late-stage clinical development of ABP-450 and for general working capital purposes.

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The Company records costs incurred in obtaining technology licenses to research and development expense as acquired in-process research and development (“IPR&D”) if the technology licensed has not reached technological feasibility and has no alternative future use.

The acquired IPR&D recorded at the Closing was written off and is included in the consolidated statement of operations for the Successor period ended December 31, 2023 (see Note 3 Forward Merger to the consolidated financial statements).

The acquired IPR&D recorded at the Closing was written off to the Successor’s consolidated statement of operations for the period ended September 30, 2023.

Change in Fair Value of Contingent Consideration

The Company determined that the Contingent Consideration Shares would be classified as a liability on the Successor’s condensed consolidated balance sheets and remeasured at each reporting period with changes to fair value recorded to the Successor’s condensed consolidated statements of operations and comprehensive income (loss).

Other Income (Loss), Net

Other income (loss), net primarily consists of gains and losses resulting from the remeasurement of the fair value of our convertible notes, forward purchase agreements, warrant liabilities, each described below, at each balance sheet date.

Change in fair value of convertible notes – The Company elected the fair value option to account for its convertible notes, with the subsequent changes in fair value recorded in the condensed consolidated statement of operations and comprehensive income (loss).

Loss on embedded forward purchase agreement and make whole derivative - the Company has determined that each of its forward purchase agreements entered in connection with the Merger is a freestanding hybrid financial instrument comprising a subscription receivable and embedded features, which have been bifurcated and accounted for separately as derivative instruments.

The Company has recorded the derivatives as liabilities and measured them at fair value with the initial value of the derivative recorded as a loss “on the line” in the Successor’s opening accumulated deficit.

Other Loss, Net

Other loss, net primarily consists of gains and losses resulting from the remeasurement of the fair value of our convertible notes, forward purchase agreements, warrant liabilities, each described below, at each balance sheet date.

Loss on embedded forward purchase agreement and make whole derivative - the Company has determined that each of its forward purchase agreements entered in connection with the Merger is a freestanding hybrid financial instrument comprising a subscription receivable and embedded features, which were bifurcated and accounted for separately as derivative instruments.

The Company recorded the derivatives as liabilities and measured them at fair value with the initial value of the derivative recorded as a loss “on the line” in the Successor’s opening accumulated deficit.

On the line describes those transactions triggered by the consummation of the Merger that are not recognized in the consolidated financial statements of the Predecessor or the Successor as they are not directly attributable to either period but instead were contingent on the Merger.

Subsequent changes in the bifurcated derivatives are recorded in the Successor’s condensed consolidated statements of operations and comprehensive income (loss).

Change in fair value of warrants - Changes in the estimated fair value of our warrant liabilities are recognized as a non-cash gain or loss on the Successor’s condensed consolidated statements of operations and comprehensive income (loss).

Income Tax Benefit

Subsequent changes in the bifurcated derivatives are recorded in the Successor’s condensed consolidated statements of operations and comprehensive (loss) income.

Our tax provision is comprised of federal and state income taxes.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating expenses:

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Research and development

Acquired in-process research and development

Change in fair value of contingent consideration

Total operating costs and expenses

Income (loss) from operations

Other income (loss):

(Loss) income from operations

Other (loss) income:

Change in fair value of convertible notes

Change in fair value of warrants

Loss on embedded forward purchase agreements and derivative liabilities, net

Income (loss) on embedded forward purchase agreements and derivative liabilities, net

Other income, net

Total other income (loss), net

Income (loss) before taxes

Net income (loss) and comprehensive income (loss)

Basic and diluted net income (loss) per share

Weighted average shares of common stock outstanding used to compute basic and diluted net income (loss) per share

Comparison of the three and six months ended June 30, 2024 (Successor) and June 30, 2023 (Predecessor)

Total other loss, net

(Loss) income before taxes

Net (loss) income

Basic net (loss) income per share

Diluted net (loss) income per share

Weighted average shares of common stock outstanding used to compute basic net (loss) income per share

Weighted average shares of common stock outstanding used to compute diluted net (loss) income per share

Comparison of the three and nine months ended September 30, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor), July 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor)

Operating Expenses

Selling, General and Administrative (SG&A) Expenses

SG&A expenses were $3.3 million for the three months ended June 30, 2024 (Successor), a decrease of $1.6 million, or 33%, compared to $4.9 million during the three months ended June 30, 2023 (Predecessor).

The decrease in S&GA expenses was primarily attributable to a decrease of $2.1 million in legal expenses and professional fees related to the Merger, offset by an increase of $0.2 million related to public company insurance for director and officers and an increase of $0.2 million related to stock-based compensation expense.

SG&A expenses were $8.0 million for the six months ended June 30, 2024 (Successor), a decrease of $0.8 million, or 9%, compared to $8.8 million during the six months ended June 30, 2023 (Predecessor).

The decrease in SG&A expenses was primarily attributable to a decrease of $1.6 million in legal expenses and professional fees related to the Merger, offset by an increase of $0.5 million related to public company insurance for director and officers and an increase of $0.3 million related to stock-based compensation expense.

SG&A expenses were $3.0 million for the three months ended September 30, 2024 (Successor), a decrease of $3.3 million, or 52%, compared to $1.1 million and $5.3 million for the periods from July 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor), respectively.

The decrease in S&GA expenses was primarily attributable to a decrease of $1.8 million in legal expenses and professional fees related to the Merger in the prior year and a decrease of $1.3 million related to stock-based compensation expense related to the accelerated vesting and replacement award accounting in the prior year.

SG&A expenses were $11.0 million for the nine months ended September 30, 2024 (Successor), a decrease of $4.1 million, or 27%, compared to $9.8 million and $5.3 million for the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor), respectively.

The decrease in SG&A expenses was primarily attributable to a decrease of $3.4 million in legal expenses and professional fees related to the Merger in the prior year and a decrease of $1.0 million related to stock-based compensation expense related to the accelerated vesting and replacement award accounting in the prior year, offset by an increase of $0.5 million related to public company insurance for director and officers in the current year.

Research and Development (R&D) Expenses

R&D expenses were $4.4 million for the three months ended June 30, 2024 (Successor), a decrease of $4.6 million, or 51%, compared to $9.0 million during the three months ended June 30, 2023 (Predecessor).

The decrease was primarily attributable to a $4.7 million decrease in R&D expenses due to wind down of Phase 2 clinical trials related to chronic and episodic migraine and cervical dystonia, and a decrease of $0.2 million related to headcount reduction to preserve cash, offset by an increase of $0.3 million related to stock-based compensation expense.

R&D expenses were $10.2 million for the six months ended June 30, 2024 (Successor), a decrease of $8.1 million, or 44%, compared to $18.2 million during the six months ended June 30, 2023 (Predecessor).

The decrease was primarily attributable to a $8.5 million decrease in R&D expenses due to wind down of Phase 2 clinical trials related to chronic and episodic migraine and cervical dystonia, offset by an increase of $0.5 million related to stock-based compensation expense.

Change in Fair Value of Contingent Consideration

The Company recognized a gain of $161.2 million and $97.5 million related to the change in the fair value of the contingent consideration liability for the three and six months ended June 30, 2024 (Successor), respectively, related to certain contingent provisions, restrictions and forfeiture provisions for Founder Shares and certain Participating Stockholders shares, which was primarily attributable to the change in probabilities of meeting milestones and fluctuations in stock price of the Company.

R&D expenses were $1.0 million for the three months ended September 30, 2024 (Successor), a decrease of $7.0 million, or 88%, compared to $1.6 million and $6.4 million during the periods from July 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor), respectively.

The decrease was primarily attributable to a $6.7 million decrease in R&D expenses due to wind down of Phase 2 clinical trials related to chronic and episodic migraine and cervical dystonia, and a decrease of $0.3 million related to headcount reduction to preserve cash.

R&D expenses were $11.1 million for the nine months ended September 30, 2024 (Successor), a decrease of $15.0 million, or 57%, compared to $19.8 million and $6.4 million during the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor), respectively.

The decrease was primarily attributable to a $15.1 million decrease in R&D expenses due to wind down of Phase 2 clinical trials related to chronic and episodic migraine and cervical dystonia.

Change in Fair Value of Contingent Consideration (Successor)

The Company recognized a gain of $0, $97.5 million and $75.9 million related to the change in the fair value of the contingent consideration for the three and nine months ended September 30, 2024 (Successor) and period from July 22, 2023 to September 30, 2023 (Successor), respectively, related to certain contingent provisions, restrictions and forfeiture provisions for Founder Shares and certain Participating Stockholders shares, which was primarily attributable to the change in probabilities of meeting milestones and fluctuations in stock price of the Company.

See Note 6 Fair Value Measurements to the condensed consolidated financial statements for further discussion.

Other Income (Loss), Net

Other income (loss), net was income of $10.6 million for the three months ended June 30, 2024 (Successor), compared to a loss of $1.4 million for the three months ended June 30, 2023 (Predecessor).

The change was primarily attributable to a gain of $5.9 million for change in fair value of warrants (Successor), mainly due to the decrease in the Company’s stock price and a decrease in the number of warrants outstanding at June 30, 2024 due to the cashless warrant exercises and redemption of all public warrants as of June 30, 2024;

income of $3.0 million related to the release of accrual for potential liquidated damages related to the termination of the forward purchase agreements;

and gain of $1.8 million related to the change in fair value of convertible notes (Successor) compared to a loss of $1.5 million for the same period in the prior year primarily due to change in fair value in convertible notes (Predecessor).

Other income (loss), net was a loss of $33.2 million for the six months ended June 30, 2024 (Successor), compared to a loss of $6.0 million for the six months ended June 30, 2023 (Predecessor).

The change was primarily attributable to a loss on forward purchase agreements and derivative liabilities of $20.0 million (Successor), mainly related to the termination of the forward purchase agreements of $19.9 million;

loss of $15.0 million for change in fair value of warrants (Successor), mainly due to the decrease in the Company’s stock price and a decrease in the number of warrants outstanding at June 30, 2024 due to the cashless warrant exercises and redemption of public warrants as of June 30, 2024;

offset by a gain of $1.7 million related to the change in fair value of convertible notes (Successor) compared to a loss of $6.1 million for the same period in the prior year primarily related to change in fair value of convertible notes (Predecessor).

Other Loss, Net

Other loss, net was $2.2 million for the three months ended September 30, 2024 (Successor), which is mainly attributable to loss on fair value of convertible notes of $1.9 million due to changes in stock price and conversion probabilities of the Daewoong convertible notes, and loss on fair value of warrants of $0.4 million due to changes in stock price, volatility and risk-free rate;

compared to loss of $25.0 million for the period from July 1, 2023 to July 21, 2023 (Predecessor), which is mainly attributed to change in fair value of Predecessor convertible notes of $13.2 million and loss on settlement of derivates of $11.8 million;

and loss of $14.0 million for the period from July 22, 2023 to September 30, 2023 (Successor), which is mainly attributable to a loss of $15.8 million related to changes in fair value of forward purchase agreements and derivative liabilities, offset by a gain of $1.6 million related to changes in fair value of warrants.

Other loss, net was a loss of $35.4 million for the nine months ended September 30, 2024 (Successor), which is mainly attributable to a loss of $19.9 million on forward purchase agreements and derivative liabilities (Successor), mainly related to the termination of the forward purchase agreements of $20 million;

loss of $15.4 million for change in fair value of warrants (Successor), mainly due to the decrease in the Company’s stock price and a decrease in the number of warrants outstanding due to the cashless warrant exercises and redemption of public warrants in the first half of fiscal year 2024;

compared to loss of $31.0 million for the period from January 1, 2023 to July 21, 2023 (Predecessor), which is mainly attributed to change in fair value of Predecessor convertible notes of $19.4 million and loss on settlement of derivates of $11.8 million;

Liquidity and Capital Resources

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We have experienced recurring losses from operations and have a net capital deficiency and negative cash flows from operations since our inception.

As of June 30, 2024 (Successor), we had reported cash and cash equivalents of $3.4 million and an accumulated deficit of $427.5 million.

As of September 30, 2024 (Successor), we had reported cash and cash equivalents of $0.5 million and an accumulated deficit of $433.7 million.

On May 3, 2024, we announced preliminary top-line results from its planned interim analysis of the Phase 2 trial with ABP-450 in the preventative treatment of chronic migraine, which did not meet the primary or secondary endpoints.

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However, in May 2024, we announced the discontinuation of our Phase 2 clinical trials for episodic and chronic migraine in order to implement certain cash preservation measures.

approved, other than the cosmetic uses.

We are continuing to evaluate other cash preservation measures and will review all strategic options.

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The potential aggregate liquidated damages of up to $3.0 million was accrued as a liability in the first quarter of 2024.

However, since each FPA provider elected to remove its respective shares from the registration statement, the Company released the liability in the second quarter of 2024.

The terminated access to the Prepayment Amount may adversely affect our liquidity and capital needs.

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Pursuant to the terms of the Subscription Agreement, on March 24, 2024, we issued and sold to Daewoong one Convertible Note in the principal amount of $5.0 million.

The Subscription Agreement further provides that we will issue and sell to Daewoong a second Convertible Note in the principal amount of $10.0 million no later than thirty (30) days following our compliance with certain conditions set forth in the Subscription Agreement, including our execution of an amendment to the License Agreement with Daewoong.

The Subscription Agreement further provides that we will issue and sell to Daewoong a second Convertible Note in the

principal amount of $10.0 million no later than thirty (30) days following our compliance with certain conditions set forth in the Subscription Agreement, including our execution of an amendment to the License Agreement with Daewoong.

On March 19, 2024, we entered into the License Agreement Amendment with Daewoong, which amends the License Agreement.

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On July 9, 2024, we announced a strategic reprioritization to pursue a Section 351(k) biosimilar regulatory pathway for ABP-450, using AbbVie Inc.’s product Botox as a proposed reference product.

We also announced our proposed plans to initiate, subject to raising additional capital, a single pivotal clinical study evaluating ABP-450 in patients with cervical dystonia, with the goal of using the biosimilar pathway, which we plan to discuss during a meeting with the FDA that is currently scheduled for the third quarter of 2024.

We believe a successful Phase 3 comparative study in cervical dystonia could provide the necessary clinical data to support submission of a Section 351(k) BLA, and ultimately a determination that ABP-450 is biosimilar to the proposed reference product with respect to certain therapeutic indications.

However, the commencement of such study and any further development of ABP-450 would require additional funding in the form of equity financings or debt.

We held an initial meeting with the FDA in the third quarter of 2024 during which we aligned with the FDA on next steps to develop a Botox biosimilar.

However, the commencement of studies, preparation for the potential BPD meeting and any further development of ABP-450 would require additional funding in the form of equity financings or debt.

There can be no assurance that such efforts will be successful or that, in the event that they are successful, the terms and conditions of such financing will be commercially acceptable.

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We have incurred operating losses and negative cash flows from operating activities since inception and expect to continue to incur significant operating losses for the foreseeable future and may never become profitable.

Our primary use of cash is to fund operating expenses, which consist of R&D expenditures, including clinical trials, as well as SG&A expenditures.

Cash used to fund operating expenses is impacted by the timing of when we pay or prepay these expenses.

We expect to continue to incur substantial costs in order to conduct R&D activities necessary to develop and commercialize our product candidates.

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Our ability to continue as a going concern is dependent upon our ability to successfully accomplish these plans and secure sources of financing and ultimately attain profitable operations.

Our primary use of cash is to fund operating expenses, which consist of R&D expenditures, including clinical trials, as well as SG&A expenditures.

Cash used to fund operating expenses is impacted by the timing of when we pay or prepay these expenses.

We may also seek to raise additional capital through the sale of public or private equity or convertible debt securities.

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We may receive additional capital from the cash exercise of the Private Placement Warrants.

However, the exercise price of our Private Placement Warrants is $11.50 per warrant and the last reported sales price of our common stock on July 22, 2024 was $2.35.

However, the exercise price of our Private Placement Warrants is $11.50 per warrant and the last reported sales price of our common stock on November 11, 2024 was

The likelihood that holders of the Private Placement Warrants will exercise their Private Placement Warrants, and therefore the likelihood of any amount of cash proceeds that we may receive, is dependent upon the trading price of our common stock after effectiveness of the registration statement related thereto registering the issuance of common stock underlying the Private Placement Warrants.

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Net Cash Used in Operating Activities

Net cash used in operating activities for the six months ended June 30, 2024 (Successor) was $16.7 million, consisting primarily of a net income of $46.1 million (Successor) and non-cash charges of $60.8 million, consisting primarily of $(1.7) million related to the change in fair value of the convertible notes (Successor), $15.0 million related to change in fair value of warrants (Successor), $20.0 million related to loss on forward purchase agreement and derivative liabilities (Successor), $(917.5) million related to change in fair value of contingent consideration (Successor) and a $3.3 million non-cash expense related to stock-based compensation for our executives and directors (Successor).

Net cash used in operating activities for the six months ended June 30, 2023 (Predecessor) was $21.1 million, consisting primarily of a net loss of $33.0 million and non-cash items of $8.7 million, consisting primarily of $6.1 million related to the change in the fair value of the convertible notes (Predecessor) and a $2.5 million non-cash expense related to stock-based compensation for our executives and directors (Predecessor).

Net cash used in operating activities for the nine months ended September 30, 2024 (Successor) was $19.7 million, consisting primarily of a net income of $39.9 million (Successor) and non-cash charges of $(57.0) million, consisting primarily of $4.9 million non-cash expense related to stock-based compensation for our executives and directors (Successor), $0.2 million related to the change in fair value of the convertible notes (Successor), $15.4 million related to change in fair value of warrants (Successor), $19.9 million related to loss on forward purchase agreement and derivative liabilities (Successor) and $(97.5) million related to change in fair value of contingent consideration (Successor).

Net cash used in operating activities for the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor) were $21.7 million and $15.1 million, respectively, consisting primarily of net losses of $60.7 million and $297.7 million, respectively, and non-cash items of $34.4 million and $288.4 million, respectively, consisting of $3.2 million non-cash expense related to stock-based compensation for our executives and directors (Predecessor), $19.4 million related to the change in fair value of the convertible notes (Predecessor) and $11.8 million related to loss on forward purchase agreement and derivative liabilities (Successor);

and consisting of $2.2 million non-cash expense related to stock-based compensation for our executives and directors (Successor), $348.0 million related to write-off of acquired IPR&D, $(1.6) million related to change in fair value of warrants (Successor), $15.8 million related to loss on forward purchase agreement and derivative liabilities (Successor) and $(75.9) million related to change in fair value of contingent consideration (Successor).

Cash Flows from Investing Activities

There was no cash used in investing activities for the six months ended June 30, 2024 (Successor) and June 30, 2023 (Predecessor).

There was no cash used in investing activities for the nine months ended September 30, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor).

Cash Flows from Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2024 (Successor) and June 30, 2023 (Predecessor) were $15.0 million and $14.0 million, respectively, primarily related to the issuance of convertible notes.

Net cash provided by financing activities for the nine months ended September 30, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor) were $15.1 million, $14.0 million and $0, respectively, primarily related to the issuance of convertible notes.

Critical Accounting Policies and Estimates

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On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience.

As of June 30, 2024, there have been no changes to our critical accounting policies from those reported on our Annual Report Form 10-K.

As of September 30, 2024, there have been no changes to our critical accounting policies from those reported on our Annual Report Form 10-K.

Smaller Reporting Company

We are an emerging growth company, as defined in the Securities Act, as modified by the JOBS Act.

For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory

vote on executive compensation and any golden parachute payments not previously approved.

In particular, in this Report, we have provided only two years of audited financial statements and unaudited financial statements and have not included all of the executive compensation- related information that would be required if we were not an emerging growth company.

13 unchanged sentences

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