What changed in this filing

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Item 1. Financial Statements

2021-11-12 compared with 2021-08-12 · 100 added, 68 removed, 422 unchanged (28% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30,

Current assets:

16 unchanged sentences

Series X 1 non-voting convertible preferred stock, $ 0.001 par value, 515,000 shares

108,070 shares issued and outstanding at June 30, 2021 and

108,070 shares issued and outstanding at September 30, 2021 and

December 31, 2020

Series X preferred stock, $ 0.001 par value, 10,000 shares authorized;

6,204 and no shares

issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Common stock, $ 0.001 par value, 200,000,000 shares authorized at June 30, 2021

shares issued and outstanding at September 30, 2021 and December 31, 2020,

Common stock, $ 0.001 par value, 200,000,000 shares authorized at September 30, 2021

and December 31, 2020;

14,306,788 and 15,160,397 shares issued and

outstanding at June 30, 2021 and December 31, 2020, respectively

outstanding at September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

7 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Operating expenses

4 unchanged sentences

Loss from operations

Other income (expense), net

Other income, net

Warrant inducement expense

9 unchanged sentences

(In thousands, except share data)

Series X 1 Preferred Stock

Series X 1 Non-Voting Convertible

Preferred Stock

Series X 1 Non-Voting Convertible Preferred Stock

Series X Preferred Stock

5 unchanged sentences

Stock-based compensation

Stock options exercised

Net loss and other comprehensive loss

Balance as of September 30, 2021

Balance as of June 30, 2021

Balance as of March 31, 2021

Stock-based compensation

Stock options exercised

Net loss and other comprehensive loss

Balance as of June 30, 2021

Balance as of September 30, 2021

Balance as of December 31, 2019

5 unchanged sentences

vesting of restricted stock units

Issuance of common stock in connection with acquisition

Cancellation of common stock in connection

with exchange for preferred stock

Issuance of preferred stock in connection with acquisition

Issuance of preferred stock in connection with PIPE

transaction, net of issuance costs

Fair value of options assumed in acquisition

Fair value of warrants assumed in acquisition

Warrant inducement expense

1 unchanged sentence

Net loss and other comprehensive loss

Balance as of September 30, 2020

Balance as of June 30, 2020

Balance as of March 31, 2020

Issuance of common stock in connection with

conversion of preferred stock

cashless exercise of warrants

Issuance of common stock in connection with

vesting of restricted stock units

Issuance of common stock in connection with acquisition

Issuance of preferred stock in connection with acquisition

Issuance of preferred stock in connection with PIPE

transaction, net of issuance costs

Fair value of options assumed in acquisition

Fair value of warrants assumed in acquisition

Stock-based compensation

Net loss and other comprehensive loss

Balance as of June 30, 2020

Balance as of September 30, 2020

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

Operating activities

10 unchanged sentences

Net cash used in operating activities

Investing activities

Cash and cash equivalents received from acquisition

Net cash provided by investing activities

Financing activities

Proceeds from issuances of non-voting preferred stock, net

Proceeds from exercise of warrants, net

Proceeds from exercise of stock options

Offering costs in connection with PIPE transaction

6 unchanged sentences

Increase in operating lease asset and liability due to lease modification

Issuance of common stock in acquisition

Issuance of non-voting convertible preferred stock in acquisition

Fair value of options assumed in acquisition

Fair value of warrants assumed in acquisition

See accompanying notes to unaudited condensed consolidated financial statements.

3 unchanged sentences

Eledon Pharmaceuticals, Inc.

(formerly Novus Therapeutics, Inc.) is a clinical stage biopharmaceutical company focused on discovering or acquiring, and then developing life-changing, targeted medicines for persons living with an autoimmune disease, requiring an organ or cell-based transplant, or living with amyotrophic lateral sclerosis (“ALS”).

(formerly Novus Therapeutics, Inc.) is a clinical stage biopharmaceutical company focused on discovering or acquiring, and then developing life-changing, targeted medicines for persons requiring an organ or cell-based transplant, living with autoimmune disease, or living with amyotrophic lateral sclerosis (“ALS”).

We believe that this approach has the potential to allow us to:

17 unchanged sentences

The accompanying unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited financial statements and accompanying notes of Eledon for the year ended December 31, 2020 included in the Annual Report on Form 10-K filed by the Company with the SEC on March 31, 2021.

The results of operations and comprehensive loss for the three and six months ended June 30, 2021 are not necessarily indicative of results expected for the full fiscal year or any other future period.

The results of operations and comprehensive loss for the three and nine months ended September 30, 2021 are not necessarily indicative of results expected for the full fiscal year or any other future period.

Principles of Consolidation

10 unchanged sentences

The Company has experienced recurring net losses and negative cash flows from operating activities since its inception.

The Company recorded a net loss of $ 7.4 million and $ 15.9 million for the three and six months ended June 30, 2021, respectively.

As of June 30, 2021, the Company had cash and cash equivalents of $ 101.1 million, working capital of $ 99.9 million and an accumulated deficit of $ 96.3 million.

The Company recorded a net loss of $ 9.8 million and $ 25.7 million for the three and nine months ended September 30, 2021, respectively.

As of September 30, 2021, the Company had cash and cash equivalents of $ 94.0 million, working capital of $ 91.5 million and an accumulated deficit of $ 106.1 million.

Due to continuing research and development activities, the Company expects to continue to incur net losses into the foreseeable future.

3 unchanged sentences

If the Company issues debt securities to raise additional funding, it would incur additional debt service obligations, it could become subject to additional restrictions limiting its ability to operate its business, and it may be required to further encumber its assets.

At the time of issuance of the condensed consolidated financial statements for the three and six months ended June 30, 2021, the Company’s management performed an analysis and concluded that the Company had sufficient cash resources to meet its anticipated cash needs through at least the next 12 months from the date of issuance of the accompanying condensed consolidated financial statements.

At the time of issuance of the condensed consolidated financial statements for the three and nine months ended September 30, 2021, the Company’s management performed an analysis and concluded that the Company had sufficient cash resources to meet its anticipated cash needs through at least the next 12 months from the date of issuance of the accompanying condensed consolidated financial statements.

Use of Estimates

6 unchanged sentences

Cash equivalents are held for the purpose of meeting short-term liquidity requirements, rather than for investment purposes.

The Company had $ 9.2 million of cash equivalents at June 30, 2021 and December 31, 2020.

The Company had $ 9.2 million of cash equivalents at September 30, 2021 and December 31, 2020.

Concentration of Credit Risk and Other Risks and Uncertainties

As of June 30, 2021 and December 31, 2020, all of the Company’s long-lived assets were located in the United States.

As of September 30, 2021 and December 31, 2020, all of the Company’s long-lived assets were located in the United States.

Financial instruments that are subject to concentration of credit risk consist primarily of cash equivalents.

6 unchanged sentences

In addition, after approval by the FDA, there is still an ongoing risk of adverse events that did not appear during the product approval process.

of proprietary technology, compliance with government and environmental regulations, uncertainty of market acceptance of products, product liability, the volatility of its stock price and the need to obtain additional financing.

The Company is subject to risks common to companies in the pharmaceutical industry, including, but not limited to, new technological innovations, clinical development risk, establishment of appropriate commercial partnerships, protection of proprietary technology, compliance with government and environmental regulations, uncertainty of market acceptance of products, product liability, the volatility of its stock price and the need to obtain additional financing.

Our facilities and equipment, including those of our suppliers and vendors, may be affected by natural or man-made disasters.

17 unchanged sentences

The Company estimates its research and development expenses and the related accrual as of each balance sheet date based on the facts and circumstances known to the Company at that time.

There have been no material adjustments to the Company’s prior‑period accrued estimates for clinical trial activities through June 30, 2021.

There have been no material adjustments to the Company’s prior‑period accrued estimates for clinical trial activities through September 30, 2021.

Net Loss Per Share

3 unchanged sentences

Therefore, basic and diluted net loss per share was the same for the periods presented due to the Company’s net loss position.

Basic weighted average shares outstanding for the three and six months ended June 30, 2021 include 509,117 shares underlying warrants to purchase common shares.

As the shares underlying these warrants can be issued for little consideration (an exercise price per share equal to $ 0.001 per share), these shares are deemed to be issued for purposes of basic earnings per share.

Basic weighted average shares outstanding for the three and nine months ended September 30, 2021, include 509,117 shares underlying warrants to purchase common shares.

As the shares underlying these warrants can be issued for

little consideration (an exercise price per share equal to $ 0.001 per share), these shares are deemed to be issued for purposes of basic earnings per share.

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

(In thousands, except share and per share data)

4 unchanged sentences

The computation of diluted earnings per share excludes stock options, warrants, and restricted stock units that are anti-dilutive.

As of June 30, 2021 and 2020, common share equivalents of 5,089,938 shares and 457,442 shares were anti-dilutive, respectively.

As of September 30, 2021 and 2020, common share equivalents of 674,295 shares and 1,828,531 shares were anti-dilutive, respectively.

Stock-based Compensation

16 unchanged sentences

The 2014 Plan was closed to new grants following the approval of the 2020 plan, and therefore, there were no longer any shares reserved for issuance under the 2014 Plan as of December 31, 2020.

The number of shares reserved for issuance under the 2020 Plan and ESPP was 4,135,044 and 24,077 shares, respectively, as of June 30, 2021.

The number of shares reserved for issuance under the 2020 Plan and ESPP was 4,082,708 and 24,077 shares, respectively, as of September 30, 2021.

Reclassifications

4 unchanged sentences

Prepaid expenses and other current assets consisted of the following (in thousands):

September 30,

Prepaid insurance

6 unchanged sentences

Accrued expenses and other liabilities consisted of the following (in thousands):

September 30,

Accrued compensation and related expenses

9 unchanged sentences

The Company leases office space under various operating leases.

Total rental expense for all operating leases in the accompanying condensed consolidated statements of operations and comprehensive loss was $ 63,000 and $ 47,000 for the three months ended June 30, 2021 and 2020, respectively, and $ 126,000 and $ 93,000 for the six months ended June 30, 2021 and 2020, respectively.

Total rental expense for all operating leases in the accompanying condensed consolidated statements of operations and comprehensive loss was $ 63,000 and $ 50,000 for the three months ended September 30, 2021 and 2020, respectively, and $ 189,000 and $ 143,000 for the nine months ended September 30, 2021 and 2020, respectively.

The Company has an operating lease for 5,197 square feet of office space in Irvine, California, which was set to expire on September 30, 2021 .

19 unchanged sentences

The components of lease expense were as follows:

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Operating lease cost (a)

1 unchanged sentence

Other information related to leases was as follows (in thousands, except lease term and discount rate):

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Supplemental Cash Flows Information

10 unchanged sentences

Present value of lease liabilities

Less current portion

Less current portion of operating lease liability

Non-current operating lease liability

Grants and Licenses

7 unchanged sentences

Both of these milestones were achieved as of December 31, 2018 and 2017.

The fee due for the achievement of these milestones was $ 1,000,000 each.

During 2018 and 2017, Anelixis issued $ 1,000,000 worth of its common stock in lieu of making a cash payment.

There were no milestones achieved during the six months ended June 30, 2021 and the year ended December 31, 2020.

The fee due for the achievement of these milestones was $ 1.0 million each.

During 2018 and 2017, Anelixis issued $ 1.0 million worth of its common stock in lieu of making a cash payment.

There were no milestones achieved during the nine months ended September 30, 2021 and the year ended December 31, 2020.

The Agreement was amended and restated in February 2020, and a first amendment to the restated license agreement was executed in September 2020.

1 unchanged sentence

In the event that the Company develops a second licensed product, the Company is obligated to pay up to $ 2.5 million in additional milestone payments.

In addition to the milestone payments, the Company is required to pay ALSTDI an amended annual license maintenance fee of $ 100,000 beginning on the earlier of January 1, 2022, the Company’s first sublicense, or change in control, as defined in the Agreement.

In addition to the milestone payments, the Company is required to pay ALSTDI an amended annual license maintenance fee of $ 0.1 million beginning on the earlier of January 1, 2022, the Company’s first sublicense, or change in control, as defined in the Agreement.

Furthermore, the Company shall pay ALSTDI fees based on reaching certain levels of annual net sales of any product produced with the patent rights.

A royalty in the low single digits will be due on aggregate net sales.

Upon the first calendar year of reaching $ 500 million in aggregate net sales, the Company shall pay ALS TDI a one-time milestone payment of $ 15,000,000 .

Upon the first calendar year of reaching $ 1 billion in aggregate net sales, the Company is obligated to pay ALSTDI a one-time milestone payment of $ 30,000,000 .

Upon the first calendar year of reaching $ 500.0 million in aggregate net sales, the Company shall pay ALS TDI a one-time milestone payment of $ 15.0 million.

Upon the first calendar year of reaching $ 1.0 billion in aggregate net sales, the Company is obligated to pay ALSTDI a one-time milestone payment of $ 30.0 million.

Israeli Innovation Authority Grant

From 2012 through 2015, the Company received grants in the amount of approximately $ 537,000 from the Israeli Innovation Authority (previously the Office of Chief Scientist) of the Israeli Ministry of Economy and Industry designated for investments in research and development.

From 2012 through 2015, the Company received grants in the amount of approximately $ 0.5 million from the Israeli Innovation Authority (previously the Office of Chief Scientist) of the Israeli Ministry of Economy and Industry designated for investments in research and development.

The grants are linked to the U.S.

4 unchanged sentences

The Company has no obligation to repay these grants, if the research and development program fails, is unsuccessful or aborted or if no sales are generated.

The Company has not yet generated sales as of June 30, 2021;

The Company has not yet generated sales as of September 30, 2021;

therefore, no liability was recorded for the repayment in the accompanying condensed consolidated financial statements.

7 unchanged sentences

Each matter presents its own unique circumstances, and prior litigation does not necessarily provide a reliable basis on which to predict the outcome, or range of outcomes, in any individual proceeding.

Because of the uncertainties related to the occurrence, amount, and range of loss on any pending litigation or claim, the Company does not consider a liability probable and is currently unable to predict their ultimate outcome, and, with respect to any pending litigation or claim where no liability has been accrued, to make a meaningful estimate of the reasonably possible loss or range of loss that could result from an unfavorable outcome.

loss or range of loss that could result from an unfavorable outcome.

In the event that opposing litigants in outstanding litigation proceedings or claims ultimately succeed at trial and any subsequent appeals on their claims, any potential loss or charges in excess of any established accruals, individually or in the aggregate, could have a material adverse effect on the Company’s business, financial condition, results of operations, and/or cash flows in the period in which the unfavorable outcome occurs or becomes probable, and potentially in future periods.

11 unchanged sentences

The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated.

There have been no contingent liabilities requiring accrual at June 30, 2021.

There have been no contingent liabilities requiring accrual at September 30, 2021.

Stockholders’ Equity

1 unchanged sentence

On March 31, 2021, the Company filed a prospectus and prospectus supplement (the “2021 Prospectus”) under which the Company may offer and sell, from time to time, pursuant to an equity distribution agreement with Jeffries LLC, up to $ 75.0 million in shares of its common stock.

During the six months ended June 30, 2021, no shares were sold under the 2021 Prospectus.

During the nine months ended September 30, 2021, no shares were sold under the 2021 Prospectus.

Common Stock Warrants

As of June 30, 2021, a total of 846,939 warrants were exercisable into common stock.

As of September 30, 2021, a total of 1,145,631 warrants were exercisable into common stock.

The shares of common stock underlying the warrants are registered for offer and sale under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the Company’s effective registration statements on Form S-1.

On September 21, 2021, the Company issued warrants exercisable for 298,692 shares of common stock in exchange for warrants exercisable for 5,376.456 shares of Series X 1 Non-Voting Convertible Preferred Stock (“Series X 1 Preferred Stock”) previously issued as part of the Anelixis merger.

These Series X 1 Preferred Stock warrants were replaced by Eledon for the outstanding warrants issued by Anelixis that were not settled upon completion of the merger.

The following table shows the warrant activity:

5 unchanged sentences

Warrants exchanged for common stock

Warrants exchanged for preferred stock warrants

Balance as of December 31, 2020

Cancelled/Expired

Balance as of June 30, 2021

Balance as of September 30, 2021

Preferred Stock Warrants

As of June 30, 2021, 55,853.875 warrants were exercisable into Series X 1 Preferred Stock.

As of September 30, 2021, 50,207.419 warrants were exercisable into Series X 1 Preferred Stock.

Each share of Series X 1 Preferred Stock is convertible into approximately 55.5556 shares of common stock.

5 unchanged sentences

Assumed and replaced

Cancelled/Expired

Balance as of June 30, 2021

Cancelled/Exchanged

Balance as of September 30, 2021

Exchange Agreements

5 unchanged sentences

Following the Exchanges, the Company had 6,203.98 shares of Series X Preferred Stock outstanding, which are convertible into 344,663 shares of Common Stock (after rounding for fractional shares).

As of June 30, 2021, a total of 509,117 warrants were available for exercise.

As of September 30, 2021, a total of 509,117 warrants were available for exercise.

The shares of common stock underlying the registered direct placement agent warrants are registered for offer and sale under the Securities Act, pursuant to the Company’s effective registration statements on Form S-1.

2 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

Research and development

15 unchanged sentences

If Anelixis was not an operating entity, the acquisition would instead be considered a capital transaction and equivalent to the issuance of shares by Eledon for the net monetary assets of Anelixis accompanied by a recapitalization.

Conversely, if Anelixis was determined to be a business, the acquisition method of accounting would apply and the difference between the acquisition date fair value of

the total consideration transferred and the aggregate values assigned to the assets acquired and liabilities assumed would be recorded as goodwill.

Conversely, if Anelixis was determined to be a business, the acquisition method of accounting would apply and the difference between the acquisition date fair value of the total consideration transferred and the aggregate values assigned to the assets acquired and liabilities assumed would be recorded as goodwill.

The Company evaluated the terms of the Merger Agreement and the transaction under the applicable accounting guidance and determined that Anelixis satisfied the definition of a business under ASC 805 and as further clarified by ASU 2017-01.

1 unchanged sentence

Additionally, the Company was determined to be both the legal and accounting acquirer as it had issued equity interests to acquire all of Anelixis’ equity interests.

Goodwill generated from the acquisition was primarily attributable to the expected synergies from combining operations and expanding market potential, together with certain intangible assets that do not qualify for separate recognition.

Goodwill generated from the acquisition was primarily attributable to the expected synergies from combining

operations and expanding market potential, together with certain intangible assets that do not qualify for separate recognition.

None of the approximately $ 48.6 million in goodwill is expected to be deductible for tax purposes.

6 unchanged sentences

As a result, approximately 231,068 shares of Series X 1 Preferred Stock were converted into 12,837,056 shares of the Company’s common stock.

As of June 30, 2021 and December 31, 2020, approximately 108,070 shares of Series X 1 Preferred Stock remain outstanding.

As of September 30, 2021 and December 31, 2020, approximately 108,070 shares of Series X 1 Preferred Stock remain outstanding.

On December 23, 2020, the Company sold 1,004,111 shares of its common stock for gross proceeds of $ 9.0 million that was contingent upon the satisfaction of certain incremental closing conditions, as described above.

34 unchanged sentences

The following unaudited pro forma combined financial information is presented to illustrate the estimated effects of the Merger based on the historical financial statements and accounting records of Eledon and Anelixis after giving effect to the Merger and the Merger-related pro forma adjustments.

Three Months Ended

Six Months Ended

September 30,

Net loss and other comprehensive loss

The unaudited pro forma combined statements of operations for the three and six months ended June 30, 2020 combine the historical statements of operations of Eledon and Anelixis, giving effect to the Merger as if it had occurred on January 1, 2020, the first day of the fiscal year ended December 31, 2020.

The unaudited pro forma combined statements of operations for the three and nine months ended September 30, 2020 combine the historical statements of operations of Eledon and Anelixis, giving effect to the Merger as if it had occurred on January 1, 2020, the first day of the fiscal year ended December 31, 2020.

The unaudited pro forma combined financial information has been presented for informational purposes only.

1 unchanged sentence

The unaudited pro forma combined financial information does not reflect any potential cost savings that may be realized as a result of the Merger and also does not reflect any restructuring or integration-related costs to achieve those potential cost savings.

Additionally, the unaudited pro forma combined financial information does not reflect any merger-related expenses , which totaled approximately $ 9,000 and $ 39,000 during the three and six months ended June 30, 2020 .

There were no merger related expenses during the periods ended June 30, 2021.

Additionally, the unaudited pro forma combined financial information does not reflect any merger-related expenses , which totaled approximately $ 2.7 million during the three and nine months ended September 30, 2020 .

There were no merger related expenses during the periods ended September 30, 2021.

Anelixis has not recognized any revenue since its acquisition by the Company.

Subsequent Events

The Company has evaluated events subsequent to June 30, 2021 through the filing date of this Quarterly Report on Form 10-Q.

The Company has evaluated events subsequent to September 30, 2021 through the filing date of this Quarterly Report on Form 10-Q.

Any material subsequent events that occurred during this time have been properly recognized or disclosed in the condensed consolidated financial statements and accompanying notes.

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 1. Financial Statements