What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-12 compared with 2024-08-14 · 126 added, 99 removed, 404 unchanged (36% of the section changed)

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to “LACQ” refer to Leisure Acquisition Corp., a Delaware corporation, prior to the Closing.

is a clinical stage pharmaceutical company seeking to develop innovative solutions for severe pain relief while reducing the fear of

and the potential for opioid misuse, abuse and overdose.

is a clinical stage pharmaceutical company developing innovative solutions for severe pain relief while reducing the potential for opioid

abuse and overdose.

Our lead product candidate, PF614, is an extended release TAAP prodrug of oxycodone.

TAAP modification of prescription drugs removed the ability to crush, chew or manipulate and inject to achieve the effect of the medication

more quickly than by swallowing.

MPAR® adds a layer of overdose protection to each TAAP product.

TAAP modification of prescription

drugs removes the ability to crush, chew or manipulate and inject to achieve the effect of the medication more quickly than by swallowing.

Our MPAR® technology adds a layer of overdose protection to each TAAP product.

our inception in 2003, we devoted substantially all of our efforts and financial resources to organizing and staffing our company, business

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clinical trials, nor have we obtained any regulatory approvals, manufactured a commercial-scale drug, or conducted sales and marketing

have incurred significant operating losses since inception and we expect to continue to incur net losses for the foreseeable future.

We expect that our expenses and capital requirements will increase substantially in connection with our ongoing development activities,

particularly if and as we:

have incurred significant operating losses since inception and we expect to incur net losses for the foreseeable future.

We expect that

our expenses and capital requirements will increase substantially in connection with our ongoing development activities, particularly

if and as we:

preclinical studies and continues existing and initiates new clinical trials for PF614, PF614-MPAR and nafamostat, our lead product

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to commercialize our product candidates, if approved, we may require substantial additional funding in the future.

Warrant Inducement

February Warrant Inducement

February 2024, the Company entered into an Inducement Letter with certain holders of existing warrants to purchase up to an aggregate

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Stock at a reduced exercise price of $1.31 per share in consideration of the Company’s agreement to issue new unregistered Series

A Warrants (the “Series A Warrants”) to purchase up to 3,601,752 shares of Common Stock and new unregistered Series B Warrants

(the “Series B Warrants”) to purchase up to 3,601,752 shares of Common Stock (collectively, the “New Warrant Shares”).

The Series A Warrants have an exercise price of $1.06 per share and have a term equal to eighteen months from the date of issuance.

Series B Warrants have an exercise price of $1.06 per share and will expire on May 12, 2028.

The gross proceeds to the Company from the

exercise of the warrants were approximately $4.7 million, prior to deducting placement agent fees and estimated offering expenses.

closing of the offering occurred on February 14, 2024.

A Warrants to purchase up to 3,601,752 shares of Common Stock and new unregistered Series B Warrants to purchase up to 3,601,752 shares

of Common Stock.

The Series A Warrants have an exercise price of $1.06 per share and have a term equal to eighteen months from the date

The Series B Warrants have an exercise price of $1.06 per share and will expire on May 12, 2028.

The gross proceeds to the

Company from the exercise of the warrants were approximately $4.7 million, prior to deducting placement agent fees and estimated offering

connection with the execution of the Inducement Letter, the Company entered into a waiver related to the 2023 Notes’ SPA it had

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repayment of the remaining $0.5 million of investor held notes issued under the SPA with a premium of $0.5 million following closing

of the transaction contemplated thereby.

of the inducement transaction.

Company utilized an exclusive placement agent for the 2024 Warrant Inducement and incurred approximately $0.3 million in legal fees and

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the reduced exercise price per Existing Warrant).

Registered Direct Offering and 2024 August Warrant Inducement

August 2024, the Company entered into a definitive Securities Purchase Agreement with certain institutional investors, pursuant to which

the Company agreed to issue and sell in a registered direct offering, (i) an aggregate of 2,490,798 shares of common stock of the Company,

par value $0.0001 per share at an offering price of $0.47 per share, (ii) pre-funded warrants to purchase up to 1,062,396 shares of Common

Stock, at a price per pre-funded warrant equal to $0.4699, the price per share less $0.0001, for gross proceeds of approximately $1.67

million before the deduction of placement agent fees and offering expenses.

The pre-funded warrants were subsequently exercised in full

and were not outstanding as of September 30, 2024.

Company also entered into an inducement agreement with certain warrant holders for the exercise of certain outstanding warrants to purchase

up to an aggregate of 7,203,504 shares of common stock of the Company originally issued in February 2024, having an exercise price of

$1.06 per share, at a reduced exercise price of $0.47 per share.

The Company also agreed to amend certain existing warrants to purchase

up to an aggregate of 2,000,000 shares of common stock that were previously issued in November 2023 and have an exercise price of $1.5675

per share such that the amended warrants will have a reduced exercise price of $0.47 per share effective upon the closing of the offering

and will be exercisable from the date on which stockholder approval is received with respect to the issuance of the shares of common

stock issuable upon exercise of such warrants.

a concurrent private placement, pursuant to the terms of the inducement agreement and Securities Purchase Agreement, the Company also

agreed to issue and sell unregistered warrants to purchase up to 28,716,900 shares of common stock.

The warrants have an exercise price

of $0.47 per share and are exercisable from the date on which stockholder approval is received with respect to the issuance of the shares

of common stock issuable upon exercise of the warrants.

One half of the warrants will expire eighteen months after they are exercisable

and the other half will expire five years after they are exercisable.

The warrants contain customary anti-dilution adjustments to the

exercise price, including for share splits, share dividends, rights offering and pro rata distributions.

Company agreed to pay the placement agent a cash fee equal to 7% of the aggregate gross proceeds of the offerings or $354,000.

also agreed to pay the placement agent $100,950 for expenses.

The Company also issued to the placement agent warrants to purchase up

to 752,969 shares of common stock.

These warrants have an exercise price equal to $0.5875 per share and are exercisable for five years

from the commencement of sales in the Offerings.

of Our Operating Results

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have received funding under federal grants from the NIH through NIDA.

In September 2018, we were awarded a research and development grant

related to the development of our MPAR® overdose prevention technology (the “MPAR Grant”).

In September 2019, we were

awarded a second research and development grant related to the development of our TAAP/MPAR abuse deterrent technology for Opioid Use

Disorder (“OUD”) (the “OUD Grant”).

Grant funds are awarded annually through a Notice of Award which contains

certain terms and conditions including, but not limited to, complying with the grant program legislation, regulation and policy requirements,

complying with conditions on expenditures of funds with respect to other applicable statutory requirements such as the federal appropriations

acts, periodic reporting requirements, and budget requirements.

In September 2018 and August 2024, we were awarded research and

development grants related to the development of our MPAR® overdose prevention technology.

In September 2019, we were awarded a second

research and development grant related to the development of our TAAP/MPAR abuse deterrent technology for Opioid Use Disorder (“OUD”).

Grant funds are awarded annually through a Notice of Award which contains certain terms and conditions including, but not limited to,

complying with the grant program legislation, regulation and policy requirements, complying with conditions on expenditures of funds

with respect to other applicable statutory requirements such as the federal appropriations acts, periodic reporting requirements, and

budget requirements.

and Development Expenses

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or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered.

estimate and accrue for the value of goods and services received from CROs and certain other third parties each reporting period based

We estimate and accrue for the value of goods and services received from CROs and certain other third parties each reporting period based

on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers.

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compensation for personnel in executive, business development, finance, human resources, legal, information technology, and administrative

General and administrative expenses also include direct and allocated facility-related costs as well as insurance costs and

professional fees for legal, patent, consulting, investor and public relations, accounting and audit services.

We expense general and

administrative costs as incurred.

General and administrative expenses also include insurance costs and professional fees for legal, patent, consulting, investor

and public relations, accounting and audit services.

We expense general and administrative costs as incurred.

anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support the continued

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all recorded as interest expense.

Interest expense related to the 2021 Notes and 2022 Notes was included in the estimate of fair value

of the convertible notes.

Interest expense related to the 2022 Notes was included in the estimate of fair value of the convertible

for Income Taxes

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available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

As of June 30, 2024

As of September 30,

2024 and December 31, 2023, we continue to maintain a full valuation allowance against all of our deferred tax assets based on our evaluation

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of Operations

of the three months ended June 30, 2024 and 2023:

Three Months Ended June 30,

of the three months ended September 30, 2024 and 2023:

Three Months Ended

September 30,

Federal grants

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Total operating expenses

Loss from operations

Income (loss) from operations

Other income (expense):

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Total other income (expenses), net

Net loss attributable to noncontrolling interests

Deemed dividend related to warrants down round provision

Net loss attributable to common stockholders

$ (1,967,793 )

Net income (loss)

Net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to common stockholders

$ (2,689,571 )

grant funding

from federal grants for the three months ended June 30, 2024 and 2023 totaled $0.2 million and $0.5 million, respectively.

The difference

is due to the timing of research activities eligible for funding, as current funding under the MPAR grant was completed in December 2023.

We expect funding from federal grants to increase in the third quarter due to increased preclinical activities under the OUD grant following

the recent selection of a lead drug candidate.

from federal grants for the three months ended September 30, 2024 and 2023 totaled $3.4 million and $0.4 million, respectively.

is due to the timing of research activities eligible for funding, with increased activities under the OUD grant following the selection

of a lead drug candidate in June 2024 and funding under the newly awarded MPAR grant commencing in September 2024.

We expect revenue

from federal grants to decrease in coming quarters due to the completion of the OUD grant in August 2024 and the timing of research activities

under the MPAR grant.

and development expenses

and development expenses for the three months ended June 30, 2024 and 2023 were $0.9 million and $1.6 million, respectively, representing

and development expenses for the three months ended September 30, 2024 and 2023 were $1.7 million and $1.9 million, respectively, representing

a decrease of $0.2 million.

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We expect future

research and development expenses to approximate current levels but may need to adjust the timing of research and development based on

our ability to raise capital sufficient to fund these expenses.

research and development expenses to increase from current levels with the availability of funding from the new MPAR grant.

and administrative expenses

and administrative expenses for the three months ended June 30, 2024 and 2023 were $1.2 million and $1.1 million, respectively, representing

an increase of $0.1 million.

and administrative expenses for the three months ended September 30, 2024 and 2023 were $1.1 million and $1.2 million, respectively,

representing an decrease of $0.1 million.

We expect future general and administrative expenses to approximate current levels.

income and expense

income and expense for the three months ended June 30, 2024, consisted primarily of interest expenses associated with the amortization

of the original issue discount and the debt issuance costs associated with the 2023 Notes.

The comparative period for 2023 consisted

primarily of changes in fair value associated with the Company’s liability-classified warrants.

income and expense for the three months ended September 30, 2024, consisted primarily of interest income from cash and cash equivalents.

The comparative period for 2023 consisted primarily of changes in fair value associated with the Company’s liability-classified

of Operations

of the six months ended June 30, 2024 and 2023:

Six Months Ended June 30

of the nine months ended September 30, 2024 and 2023:

Nine Months Ended

September 30,

Federal grants

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Interest expense

Other income, net

Total other income, net

Other income (expense), net

Total other income (expense), net

Net loss attributable to noncontrolling interests

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grant funding

from federal grants for the six months ended June 30, 2024 and 2023 totaled $0.5 million and $1.3 million, respectively.

from federal grants for the nine months ended September 30, 2024 and 2023 totaled $3.9 million and $1.7 million, respectively.

The difference

is due to the timing of research activities eligible for funding, as current funding under the MPAR grant was completed in December 2023.

We expect funding from federal grants to increase in the second half of 2024 due to increased preclinical activities under the OUD grant

following the recent selection of a lead drug candidate.

is due to the timing of research activities eligible for funding, with increased activities under the OUD grant following the selection

of a lead drug candidate in June 2024 and funding under the newly awarded MPAR grant which began in September 2024.

and development expenses

and development expenses for the six months ended June 30, 2024 and 2023 were $1.7 million and $3.4 million, respectively, representing

and development expenses for the nine months ended September 30, 2024 and 2023 were $3.4 million and $5.4 million, respectively, representing

a decrease of $2.0 million.

The decrease was primarily the result of reduced external research and development costs related to clinical

and pre-clinical programs for PF614 and PF614-MPAR.

We do not currently track expenses on a program-by-program basis.

We expect future

research and development expenses to approximate current levels but may need to be adjusted based on our ability to raise capital sufficient

to fund these expenses.

and pre-clinical programs for PF614 and PF614-MPAR, with decreased clinical trial activity for both programs in the 2024 period.

not currently track expenses on a program-by-program basis.

and administrative expenses

and administrative expenses for the six months ended June 30, 2024 and 2023 were $2.6 million and $2.7 million, respectively, representing

and administrative expenses for the nine months ended September 30, 2024 and 2023 were $3.6 million and $3.9 million, respectively, representing

a decrease of $0.3 million.

We expect future general and administrative expenses to approximate current levels.

income and expense

income and expense for the six months ended June 30, 2024, consisted primarily of interest expense associated with the amortization of

the original issue discount and the debt issuance costs associated with the 2023 Notes and represented a net change in other income and

expense of $1.3 million compared to the six months ended June 30, 2023.

income and expense for the nine months ended September 30, 2024, consisted primarily of interest expense associated with the amortization

of the original issue discount and the debt issuance costs for the 2023 Notes and represented a net change in other income and expense

of $1.3 million compared to the nine months ended September 30, 2023.

The comparative period for 2023 consisted primarily of changes

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of liquidity and capital

of June 30, 2024, we had $1.0 million of cash and cash equivalents.

Since inception, we have generated limited revenues and have incurred

significant operating losses and negative cash flows from our operations, and we anticipate that we will continue to incur losses for

the foreseeable future.

We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales

of any product candidates for several years, if at all.

of September 30, 2024, we had $4.2 million of cash and cash equivalents.

Since inception, we have generated limited revenues and have

incurred significant operating losses and negative cash flows from our operations, and we anticipate that we will continue to incur losses

for the foreseeable future.

We have not yet commercialized any of our product candidates and we do not expect to generate revenue from

sales of any product candidates for several years, if at all.

have funded our operations to date primarily with proceeds from the sale of common equity, funding under federal research grants and

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financing will be available to us on favorable terms, if at all.

cash funding under two approved federal research grants totaled $1.9 million at June 30, 2024 and is expected to be utilized by August

Pursuant to the terms and conditions of the two grants, we are required to submit progress reports to NIDA on an annual basis

and a final research performance progress report within 120 days of the performance period end date.

remaining cash funding under the MPAR federal research grant totaled $14 million at September 30, 2024 and is expected to be utilized

by May 31, 2027.

Pursuant to the terms and conditions, we are required to submit progress reports to NIDA on an annual basis and a final

research performance progress report within 120 days of the performance period end date.

have generated limited revenues and have incurred significant operating losses since our inception.

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Without capital raised through financing transactions, existing cash resources

are sufficient to allow us to fund current planned operations into the third quarter of 2024, which raises substantial doubt about the

are sufficient to allow us to fund current planned operations into the first quarter of 2025, which raises substantial doubt about the

Company’s ability to continue as a going concern.

following table summarizes our cash flows for each of the periods presented:

Six Months Ended June 30,

Nine Months Ended

September 30,

Net cash used in operating activities

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$ (8,978,107 )

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

the six months ended June 30, 2024 and 2023, we used cash in operating activities of $5.7 million and $6.7 million, respectively.

decrease primarily resulted from the timing of vendor invoicing and payments and a reduction in research and development activities in

the 2024 period.

the six months ended June 30, 2024, net cash provided by financing activities was $5.6 million, primarily consisting of net proceeds

from warrant exercises and the warrant inducement, less repayment of convertible notes and financed insurance premiums.

During the six

months ended June 30, 2023, net cash provided by financing activities was $7.4 million, primarily consisting of net proceeds from the

2023 February and 2023 May Offerings, less repayment of convertible notes and financed insurance premiums.

$ (1,683,321 )

the nine months ended September 30, 2024 and 2023, we used cash in operating activities of $6.7 million and $9.0 million, respectively.

The decrease primarily resulted from the timing of vendor invoicing and payments and a reduction in research and development activities

in the 2024 period.

the nine months ended September 30, 2024, net cash provided by financing activities was $9.8 million, primarily consisting of net proceeds

from the August 2024 public offering $1.7 million, warrant exercises and the warrant inducement, net transaction costs $8.9 million,

less repayment of convertible notes of $0.5 million and financed insurance premiums of $0.3 million.

During the nine months ended September

30, 2023, net cash provided by financing activities was $7.3 million, primarily consisting of proceeds from 2023 February and 2023 May

offerings of $9.1 million, net of transaction costs of $0.4 million and the repayment of financed insurance premiums of $0.3 million

and cash payment of 2022 Notes of $1.0 million.

primary use of cash is to fund operating expenses, primarily related to our research and development activities.

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the costs of operating as a public company.

commitments as of June 30, 2024, included approximately $16 million related to open purchase orders and contractual obligations that

occurred in the ordinary course of business, including commitments with contract research organizations for multi-year pre-clinical and

clinical research studies.

Although open purchase orders are considered enforceable and legally binding, the terms generally allow us

the option to cancel, reschedule, and adjust requirements based on our business needs prior to the delivery of goods or the performance

commitments as of September 30, 2024, included approximately $13.3 million related to open purchase orders and contractual obligations

that occurred in the ordinary course of business, including commitments with contract research organizations for multi-year pre-clinical

and clinical research studies.

Although open purchase orders are considered enforceable and legally binding, the terms generally allow

us the option to cancel, reschedule, and adjust requirements based on our business needs prior to the delivery of goods or the performance

of the numerous risks and uncertainties associated with research, development and commercialization of biologic product candidates, we

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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