What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-10 compared with 2023-05-11 · 72 added, 42 removed, 88 unchanged (56% of the section changed)

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Recent Business Update

On August 1, 2023 we announced that we enrolled the first subject in the Phase 2b IMPACT trial evaluating the safety and efficacy of pemvidutide in subjects with NASH.

The biopsy-driven trial is expected to enroll approximately 190 subjects with and without diabetes randomized 1:2:2 to receive either 1.2 mg, 1.8 mg pemvidutide or placebo weekly for 48 weeks.

The key efficacy endpoints are NASH resolution and fibrosis improvement after 24 weeks of treatment, with subjects followed for an additional 24 weeks to a total of 48 weeks for assessment of safety and additional biomarker responses.

Top-line results from this trial are expected in the first quarter of 2025.

On March 21, 2023 we announced the topline results from a Week 24 interim analysis of 160 subjects in our 48-week MOMENTUM Phase 2 obesity trial of pemvidutide.

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At Week 24, subjects receiving pemvidutide achieved mean weight losses of 7.3%, 9.4% and 10.7% at the 1.2 mg, 1.8 mg, and 2.4 mg doses, respectively, with the placebo group experiencing a mean weight loss of 1.0% (efficacy estimand using a mixed model of repeated measures (“MMRM”) analysis).

Approximately 50% of subjects achieved 10% or more weight loss and approximately 20% of subjects achieved 15% or more weight loss at Week 24 at the 1.8 mg and 2.4 mg doses, respectively.

Robust reductions in waist circumference (a measure of visceral fat) and serum lipids were

also observed, and clinically meaningful reductions in blood pressure were achieved without significant increases in heart rate.

Approximately 50% of subjects achieved 10% or more weight loss and approximately 20% of subjects achieved 15% or more weight loss at Week 24 at the 1.8 mg and 2.4 mg doses.

Robust reductions in waist circumference (a measure of visceral fat) and serum lipids were also observed, and clinically meaningful reductions in blood pressure were achieved without clinically significant increases in heart rate.

On March 21, 2023, we also announced the results of the 12-week Phase 1b safety trial of pemvidutide in subjects with type 2 diabetes.

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Subjects were randomized 1:1 to HepTcell or placebo.

The primary endpoint of the trial is clinical response, defined as a 1-log or greater reduction in HBsAg.

The primary endpoint of the trial is clinical response, defined as a 1-log or greater reduction or clearance in HBsAg.

Secondary endpoints include changes in the levels of hepatitis B virus (“HBV”) DNA, pre-genomic RNA and other markers of virologic response.

Results of Operations

Comparison of the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

(in thousands)

Comparison of the three months ended June 30, 2023 and 2022

The following table summarizes our results of operations for the three months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended

Increase (Decrease)

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We have not generated any revenues from the sale of any products to date.

Our revenue in previous years consisted primarily of government and foundation grants and contracts that support our efforts on specific research projects.

We are closing out one of the remaining such contracts and any revenue reported during the three months ended March 31, 2023 and 2022 were for indirect rate adjustments.

Our revenue in previous years consisted primarily of government and foundation grants and contracts that supported our efforts on specific research projects.

Research and development expenses

Research and development operating expense increased by $2.1 million, or 14%, for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022.

The increase was primarily the result of:

● a net increase of $2.6 million due primarily to costs associated with non-project specific research and development costs including employee compensation, contractors and facility costs;

● an increase of $1.8 million due to change in the three months ended March 31, 2022 of the fair value of contingent consideration liability with respect to the acquisition of pemvidutide, which was fully paid on June 10, 2022;

● a decrease of $2.2 million due to the development activities for pemvidutide primarily due to the NAFLD trials, which were ongoing during the three months ended March 31, 2022 and which substantially completed by December 31, 2022, offset by an increase in the MOMENTUM Phase 2 trial in obesity cost;

● a decrease of $0.3 million due to development activities for HepTcell.

Research and development expense decreased by $2.7 million, or 17%, for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022.

The decrease was primarily the result of:

● a decrease of $3.1 million due to the development activities for pemvidutide primarily due to the NAFLD trials, which were ongoing during the three months ended June 30, 2022 and which substantially completed by March 31, 2023, offset by startup costs related to the IMPACT Phase 2b trial in NASH;

● a decrease of $1.9 million due to change in the three months ended June 30, 2022 of the fair value of contingent consideration liability with respect to the acquisition of pemvidutide, which was fully paid on June 10, 2022;

● an increase of $0.4 million due to development activities for HepTcell;

● a net increase of $1.8 million due primarily to costs associated with non-project specific research and development costs such as employee compensation including stock compensation, contractors and electronic document management system (“EDMS”) implementation and service costs.

General and administrative expenses

General and administrative expense increased by $0.1 million, or 2%, for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022.

The increase is due primarily to a $0.2 million increase in stock compensation and other labor related expense, partially offset by a $0.1 million decrease in professional fees.

General and administrative expense increased by $0.4 million, or 8% for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, primarily due to increase in stock compensation and other labor related expense.

Total other income (expense), net

Total other income (expense), net increased by $1.6 million during the three months ended March 31, 2023, as compared to the three months ended March 31, 2022.

The net increase is primarily due to $1.6 million increase in interest income earned on our cash equivalents and short-term investments.

Total other income (expense), net increased by $1.7 million or 576%, for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, primarily due to increase in interest income earned on our cash equivalents and short-term investments.

Comparison of the six months ended June 30, 2023 and 2022

The following table summarizes our results of operations for the six months ended June 30, 2023 and 2022 (in thousands):

Six Months Ended

Increase (Decrease)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expense):

Interest expense

Interest income

Other income (expense), net

Total other income (expense), net

We have not generated any revenues from the sale of any products to date.

Our revenue in previous years consisted primarily of government and foundation grants and contracts that supported our efforts on specific research projects.

We are closing out one of the remaining such contracts and any revenue reported during the six months ended June 30, 2023 and 2022 were for indirect rate adjustments.

Research and development expenses

Research and development expense decreased by $0.6 million, or 2%, for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022.

The decrease was primarily the result of:

● a decrease of $4.5 million due to the development activities for pemvidutide primarily due to the NAFLD trials, which were ongoing during the six months ended June 30, 2022 and which substantially completed by March 31, 2023, offset by startup costs related to the IMPACT Phase 2b trial in NASH;

● a net increase of $3.6 million due primarily to costs associated with non-project specific research and development costs such as employee compensation including stock compensation, contractors and EDMS implementation and service costs.

General and administrative expenses

General and administrative expense increased by $0.5 million, or 5% for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022, primarily due to a $0.7 million increase in stock compensation and other labor related expense.

Total other income (expense), net

Total other income (expense), net increased by $3.3 million or 917%, for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022, primarily due to increase in interest income earned on our cash equivalents and short-term investments.

Liquidity and Capital Resources

Our primary sources of cash during the three months ended March 31, 2023 were from interest and dividends from our money market funds and short-term investments, and proceeds from maturity of our short-term investments.

Our cash, cash equivalents, restricted cash and short-term investments were $165.8 million as of March 31, 2023.

We believe, based on the operating cash requirements and capital expenditures expected for 2023 and 2024, our cash on hand as of March 31, 2023, together with expected cash receipts from our income tax refunds and R&D incentives, are sufficient to fund operations for at least a twelve-month period from the issuance date of our March 31, 2023 consolidated financial statements.

Our primary sources of cash during the six months ended June 30, 2023 were from equity transactions, interest and dividends from our money market funds and short-term investments, and proceeds from maturity of our short-term investments.

Our cash, cash equivalents, restricted cash and short-term investments were $160.0 million as of June 30, 2023.

We believe, based on the operating cash requirements and capital expenditures expected for 2023 and 2024, our cash on hand as of June 30, 2023, together with expected cash receipts from our income tax refunds and R&D incentives, are sufficient to fund operations for at least a twelve-month period from the issuance date of our June 30, 2023 consolidated financial statements.

We have not generated any revenues from the sale of any products to date, and there is no assurance of any future revenues from product sales.

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We have incurred significant losses since we commenced operations.

As of March 31, 2023, we had an accumulated deficit of $398.0 million.

As of June 30, 2023, we had an accumulated deficit of $414.0 million.

In addition, we have not generated positive cash flows from operations.

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As capital resources are consumed to fund our research and development activities, we may require additional capital beyond our currently anticipated amounts.

In order to address our capital needs, including our planned clinical trials, we must continue to actively pursue additional equity or debt financing, government funding, and monetization of our existing programs through partnership arrangements or sales to third parties.

In order to address our capital

needs, including our planned clinical trials, we must continue to actively pursue additional equity or debt financing, government funding, and monetization of our existing programs through partnership arrangements or sales to third parties.

Sources of Liquidity

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The net proceeds of this offering were approximately $124.0 million, after deducting underwriting discounts and commissions and offering expenses payable by us.

As of March 31, 2023, 760,870 of the Pre-Funded Warrants were exercised, leaving 869,566 remaining Pre-Funded Warrants unexercised.

On January 24, 2022, 760,870 of the Pre-Funded Warrants were exercised, resulting in the issuance of 760,870 shares of common stock.

As of June 30, 2023, there were 869,566 remaining Pre-Funded Warrants unexercised.

Shelf Registrations

On February 28, 2023, we filed a shelf registration statement on Form S-3ASR, which was declared effective immediately.

This shelf registration allows us to offer and sell any amount of our common stock, preferred stock, debt securities, warrants, rights and units (the “2023 Shelf”) for a period of 3 years from effectiveness.

On December 31, 2020, we filed a shelf registration statement on Form S-3, which was declared effective by the SEC on January 11, 2021.

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At-the-Market Offerings

On February 28, 2023, we entered into the 2023 Agreement with Sales Agents with respect to an at-the-market offerings program under which we may offer and sell, from time to time at our sole discretion, the Shares through the Sales Agents from the 2023 Shelf.

During the three months ended March 31, 2023, we did not sell any shares of common stock under the 2023 Agreement, and as of March 31, 2023, $150.0 million remained available to be sold under the 2023 Shelf.

On February 25, 2021, we entered into the 2021 Agreement with the 2021 Sales Agents with respect to an at-the-market offerings program under which we offered and sold the 2021 Shares through the 2021 Sales Agents from the 2021 Shelf.

On February 28, 2023, we entered an Equity Distribution Agreement (“the 2023 Agreement”) with Evercore Group L.L.C., JMP Securities LLC and B.

Riley Securities, Inc., serving as sales agents, with respect to an at-the-market offerings program under which we may offer and sell, from time to time at our sole discretion, shares of our common stock, having an aggregate offering price of up to $150.0 million.

During the six months ended June 30, 2023, we sold 3,364,631 shares of common stock under the 2023 Agreement resulting in approximately $13.4 million in net proceeds, and as of June 30, 2023, $136.2 million remained available to be sold under the 2023 Shelf.

On February 25, 2021, we entered into an Equity Distribution Agreement (the “2021 Agreement”) with Piper Sandler & Co., Evercore Group L.L.C.

Riley Securities, Inc., serving as sales agents, with respect to an at-the-market offerings program under which we offered and sold shares of our common stock, having an aggregate offering price of up to $125.0 million.

Under the 2021 Agreement, we sold 10,004,869 shares of common stock resulting in approximately $121.0 million in proceeds, net of $4.0 million commission and other offering costs.

As of March 31, 2023, there were no remaining 2021 Shares available under the 2021 Agreement.

The following table provides information regarding our cash flows for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

As of June 30, 2023, there were no remaining 2021 Shares available under the 2021 Agreement.

The following table provides information regarding our cash flows for the six months ended June 30, 2023 and 2022:

Six Months Ended

(in thousands)

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Operating Activities

Net cash used in operating activities was $19.4 million for the three months ended March 31, 2023 compared to $13.5 million during the three months ended March 31, 2022.

Net cash used in operating activities was $38.8 million for the six months ended June 30, 2023 compared to $30.2 million during the six months ended June 30, 2022.

The primary uses of cash from our operating activities include payments for labor and labor-related costs, professional fees, research and development costs associated with our clinical trials and other general corporate expenditures.

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Investing Activities

Net cash provided by investing activities was $13.3 million, for the three months ended March 31, 2023 compared to the minimal net cash used during the three months ended March 31, 2022.

The cash provided by investing activities during the three months ended March 31, 2023 was primarily due to $34.6 million proceeds from sale and maturities of short-term investments, partially offset by $21.2 million purchase of short-term investments.

Net cash provided by investing activities was $17.3 million for the six months ended June 30, 2023 compared to $49.0 million net cash used in during the six months ended June 30, 2022.

The net cash provided by investing activities during the six months ended June 30, 2023 was primarily due to $60.6 million proceeds from sale and maturities of short-term investments, partially offset by $43.2 million purchase of short-term investments.

The net cash used in investing activities during the six months ended June 30, 2022 was primarily due to $48.9 million purchase of short-term investments.

Financing Activities

Net cash used in financing activities during the three months ended March 31, 2023 was $0.3 million compared to $3.2 million cash provided during the three months ended March 31, 2022.

The net cash used by financing activities during the three months ended March 31, 2023 was primarily due to $0.4 million net payment for tax withholding obligations related to share-based compensation.

The net cash provided by financing activities during the three months ended March 31, 2022 was primarily the result of the receipt of $3.0 million in proceeds from the issuance of common stock from our at-the-market offerings program.

Net cash provided by financing activities during the six months ended June 30, 2023 was $12.8 million compared to $24.8 million for the six months ended June 30, 2022.

The net cash provided by financing activities during the six months ended June 30, 2023 was primarily the result of the receipt of $13.2 million in net proceeds from the issuance of common stock from our at-the-market offerings program, partially offset by $0.5 million payment for tax withholding obligations related to share-based compensation.

The net cash provided by financing activities during the six months ended June 30, 2022 was primarily the result of the receipt of $24.3 million in proceeds from the issuance of common stock from our at-the-market offerings program and $0.6 million in proceeds from exercise of stock options, partially offset by $0.3 million payment for tax withholding obligations related to share-based compensation.

Current Resources

We have financed our operations to date principally through our equity offerings and proceeds from issuances of our preferred stock, common stock and warrants.

As of March 31, 2023, we had $104.7 million of cash, cash equivalents and restricted cash and $61.0 million of short-term investments.

Accordingly, management believes that we have sufficient capital to fund our plan of operations for at least a twelve-month period from the issuance date of our March 31, 2023 financial statements.

As of June 30, 2023, we had $102.4 million of cash, cash equivalents and restricted cash and $57.6 million of short-term investments.

Accordingly, management believes that we have sufficient capital to fund our plan of operations for at least a twelve-month period from the issuance date of our June 30, 2023 financial statements.

However, in order to address our capital needs in the long-term, including our planned clinical trials, we must continue to actively pursue additional equity or debt financing, government funding, and monetization of our existing programs through partnership arrangements or sales to third parties.

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GAAP and the rules and regulations of the SEC for interim financial reporting.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and the disclosure of

contingent liabilities in our consolidated financial statements.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and the disclosure of contingent liabilities in our consolidated financial statements.

We base our estimates and judgments on historical experience, knowledge of current conditions, and expectations of what could occur in the future given available information.

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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