What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-07 compared with 2023-08-10 · 66 added, 44 removed, 116 unchanged (49% of the section changed)

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Recent Business Update

On October 24, 2023, the U.S.

Food and Drug Administration (“FDA”) granted Fast Track designation to the investigation of pemvidutide for the treatment of NASH.

Pemvidutide - IMPACT trial

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.

Pemvidutide is a novel, investigational GLP-1/glucagon dual receptor agonist under development for the treatment of obesity and 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.

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

Pemvidutide - MOMENTUM trial

On September 12, 2023, we announced the completion of dosing (last subject last dose) in our 48-week Phase 2 MOMENTUM trial evaluating the efficacy and safety of pemvidutide in subjects with obesity or overweight.

Topline results from this trial are expected in the fourth quarter of 2023.

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.

The MOMENTUM Phase 2 obesity trial is being conducted at 30 sites across the U.S., designed to enroll approximately 320 subjects with subjects randomized 1:1:1:1 to 1.2 mg, 1.8 mg, 2.4 mg pemvidutide or placebo administered weekly for 48 weeks in conjunction with diet and exercise.

A pre-specified interim analysis was conducted after 160 subjects completed 24 weeks of treatment.

The MOMENTUM Phase 2 obesity trial is being conducted at 30 sites across the U.S.

and enrolled 391 subjects with subjects randomized 1:1:1:1 to 1.2 mg, 1.8 mg, 2.4 mg pemvidutide or placebo administered weekly for 48 weeks in conjunction with diet and exercise.

A pre-specified interim analysis was conducted after the first 160 subjects received up to 24 weeks of treatment.

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).

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Results of Operations

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):

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

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

Three Months Ended

September 30,

Increase (Decrease)

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Total other income (expense), net

Net loss before income taxes

Income tax expense (benefit)

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.

Our revenue has historically consisted primarily of government and foundation grants and contracts that supported our efforts on specific research projects.

We are closing out one such contract and any revenue reported during the three months ended September 30, 2023 and 2022 were for indirect rate adjustments.

Research and development expenses

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.

Research and development expenses decreased by $1.9 million, or 9%, for the three months ended September 30, 2023, as compared to the three months ended September 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.

● a decrease of $3.5 million due to the development activities for pemvidutide primarily due to $5.5 million in expenses associated with the NAFLD trials and $1.3 million in expenses associated with Phase 1 safety trials, which were ongoing during the three months ended September 30, 2022, being substantially completed by March 31, 2023, and a $1.8 million reduction due to winding down of MOMENTUM Phase 2 trial , partially offset by $2.3 million in startup costs related to the IMPACT Phase 2b trial in NASH and a $2.8 million increase in net manufacturing expenses for production of Good Manufacturing Practice (“GMP”) drug substance materials;

● a decrease of $0.2 million due to development activities for HepTcell;

● a net increase of $1.9 million due primarily to costs associated with non-project specific research and development costs such as $1.2 million for employee compensation including stock compensation, $0.2 million for contractors and $0.3 million for electronic document management system (“EDMS”) implementation and service costs.

General and administrative expenses

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.

General and administrative expenses were consistent period-over-period at $4.5 million for the three months ended September 30, 2023 and 2022.

Total other income (expense), net

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

Total other income (expense), net increased by $0.8 million or 80%, for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022, primarily due to increase in interest income earned on our cash equivalents and short-term investments.

Income tax benefit

Income tax benefit of $0.2 million related to interest received and receivable on income tax refunds was recorded during the three months ended September 30, 2022.

Other than the income tax benefit related to interest, we did not record an income tax expense (benefit) for the three months ended September 30, 2023 and 2022 due to a full valuation allowance.

Comparison of the nine months ended September 30, 2023 and 2022

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

Nine Months Ended

September 30,

Increase (Decrease)

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Total other income (expense), net

Net loss before income taxes

Income tax expense (benefit)

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.

Our revenue has historically consisted primarily of government and foundation grants and contracts that supported our efforts on specific research projects.

We are closing out one such contract and any revenue reported during the nine months ended September 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.

Research and development expenses decreased by $2.5 million, or 5%, for the nine months ended September 30, 2023, as compared to the nine months ended September 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.

● a decrease of $8.0 million due to the development activities for pemvidutide primarily due to $11.5 million in expenses associated with the NAFLD trials and $5.5 million in expenses associated with Phase 1 safety trials, which were ongoing during the nine months ended September 30, 2022, being substantially completed by March 31, 2023, partially offset by $4.1 million in startup costs related to the IMPACT Phase 2b trial in NASH, a $1.9 million increase in net manufacturing expenses for production of GMP drug substance materials and $3.0 million for the MOMENTUM Phase 2 trial, which began in September 2022 and completed dosing in September 2023;

● a net increase of $5.5 million due primarily to costs associated with non-project specific research and development costs such as $4.2 million for employee compensation including stock compensation, $0.6 million for contractors and $0.8 million for 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.

General and administrative expenses increased by $0.5 million, or 4% for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, primarily due to a $0.4 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.

Total other income (expense), net increased by $4.1 million or 294%, for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, primarily due to increase in interest income earned on our cash equivalents and short-term investments.

Income tax benefit

Income tax benefit of $0.2 million related to interest received and receivable on income tax refunds was recorded during the nine months ended September 30, 2022.

Other than the income tax benefit related to interest, we did not record an income tax expense (benefit) for the nine months ended September 30, 2023 and 2022 due to a full valuation allowance.

Liquidity and Capital Resources

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.

Our primary sources of cash during the nine months ended September 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 $140.8 million as of September 30, 2023.

We believe, based on the operating cash requirements and capital expenditures expected for 2023 and 2024, our cash on hand as of September 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 September 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 June 30, 2023, we had an accumulated deficit of $414.0 million.

As of September 30, 2023, we had an accumulated deficit of $434.7 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

Public Offering

On July 16, 2020, we offered and sold (i) 3,369,564 shares of our common stock, at a price to the public of $23.00 per share, and (ii) Pre-Funded Warrants, at a price to the public of $22.9999 per share of common stock underlying the Pre-Funded Warrants (equal to the public offering price per share of common stock, minus the exercise price of each Pre-Funded Warrant).

Funded Warrant).

The Pre-Funded Warrants are exercisable at any time, provided that each Pre-Funded Warrant holder will be prohibited from exercising such Pre-Funded Warrants into shares of our common stock if, as a result of such exercise, the holder, together with its affiliates, would own more than 4.99% of the total number of shares of our common stock then issued and outstanding, which percentage may change at the holders’ election to any other number less than or equal to 19.99% upon 61 days’ notice to us.

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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.

The remaining 869,566 Pre-Funded Warrants were net cashless exercised on October 18, 2023, resulting in the issuance of 869,530 shares of common stock (see Note 11 Subsequent Events).

Shelf Registrations

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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.

During the nine months ended September 30, 2023, we sold 3,536,284 shares of common stock under the 2023 Agreement resulting in approximately $13.9 million in net proceeds, and as of September 30, 2023, $135.7 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.

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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 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

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

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

Nine Months Ended

September 30,

(in thousands)

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Operating Activities

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.

Net cash used in operating activities was $59.3 million for the nine months ended September 30, 2023 compared to $45.3 million during the nine months ended September 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 $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.

Net cash provided by investing activities was $21.7 million for the nine months ended September 30, 2023 compared to $74.4 million net cash used in during the nine months ended September 30, 2022.

The net cash provided by investing activities during the nine months ended September 30, 2023 was primarily due to $76.5 million proceeds from sale and maturities of short-term investments, partially offset by $54.8 million purchase of short-term investments.

The net cash used in investing activities during the nine months ended September 30, 2022 was primarily due to $74.3 million purchase of short-term investments.

Financing Activities

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.

Net cash provided by financing activities during the nine months ended September 30, 2023 was $13.4 million compared to $56.8 million for the nine months ended September 30, 2022.

The net cash provided by financing activities during the nine months ended September 30, 2023 was primarily the result of the receipt of $13.9 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 and $0.2 million payment for deferred offering costs.

The net cash provided by financing activities during the nine months ended September 30, 2022 was primarily the result of the receipt of $56.2 million in proceeds from the issuance of common stock from our at-the-market offerings program and $0.9 million in proceeds from exercise of stock options, partially offset by $0.4 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 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.

As of September 30, 2023, we had $86.9 million of cash, cash equivalents and restricted cash and $53.9 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 September 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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2016-13 as disclosed in Note 2.

For more information regarding our critical accounting policies, we encourage you to read the discussion contained in Item 7 under the heading “Critical Accounting Estimates” and Note 2 “Summary of Significant Accounting Policies” included in the notes to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2022.

For more information regarding our critical accounting policies, we encourage you to read the discussion contained in Item 7 under the heading “Critical Accounting Estimates” and Note 2

“Summary of Significant Accounting Policies” included in the notes to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2022.

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