What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-10-31 compared with 2024-08-01 · 171 added, 134 removed, 552 unchanged (36% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

September 30,

CURRENT ASSETS

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Redeemable common stock, $ 0.001 par value;

75,697 shares issued and outstanding (Note 9)

no shares and 75,697 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively (Note 9)

STOCKHOLDERS’ EQUITY

13 unchanged sentences

For the Three Months Ended

For the Six Months Ended

September 30,

For the Nine Months Ended

September 30,

OPERATING EXPENSES

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COMPREHENSIVE LOSS

Other comprehensive income (loss) – foreign currency translation

Other comprehensive loss – foreign currency translation

Total comprehensive loss

4 unchanged sentences

IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER

(In thousands, except share amounts)

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Balance as of June 30, 2024

Stock-based compensation

Common stock and warrants issued for cash

Reclassification from redeemable common stock

Loss on foreign currency translation

Balance as of September 30, 2024

$ ( 153,886 )

4 unchanged sentences

IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER

(In thousands, except share amounts)

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Balance as of June 30, 2023

Issuance of common stock for cash, net

Reclassification to redeemable common stock

Stock-based compensation

Loss on foreign currency translation

Balance as of September 30, 2023

$ ( 112,614 )

4 unchanged sentences

(In thousands)

For the Six Months Ended

For the Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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revenue from the commercialization of its product candidates.

During the six months ended June 30, 2024, the Company incurred a net loss

of $ 20.8 million and had net cash flows used in operating activities of $ 15.4 million.

Given the Company’s projected operating

requirements and its existing cash and cash equivalents, the Company is projecting insufficient liquidity to sustain its operations through

one year following the date that the financial statements are issued.

These conditions and events raise substantial doubt about the Company’s

ability to continue as a going concern.

During the nine months ended September 30, 2024, the Company incurred a

net loss of $ 32.9 million and had net cash flows used in operating activities of $ 22.3 million.

Given the Company’s projected

operating requirements and its existing cash and cash equivalents, the Company is projecting insufficient liquidity to sustain its operations

through one year following the date that the financial statements are issued.

These conditions and events raise substantial doubt about

the Company’s ability to continue as a going concern.

In response to these conditions, management is

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These efforts require significant amounts of additional resources, adequate personnel, infrastructure and extensive compliance and reporting.

The Company’s product candidates are still

in development and, to date, none of the Company’s product candidates have been approved for sale.

There can be no assurance that the Company’s

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The Company maintains its cash deposits with major financial institutions.

Accounts Receivable

Accounts receivable are presented net of

allowances for credit losses.

The Company maintains an allowance for credit losses resulting from the inability of its

customers to make required payments.

At June 30, 2024, the Company has a $ 590,000 note receivable from a vendor payable quarterly over 2 years including interest payable at prime plus 2 % ( 10.5 % at June 30, 2024).

The Company has

recorded a full valuation allowance of $ 590,000 for the receivable based on the financial condition of the vendor.

Accounts Receivable and Notes Receivable

Accounts receivable are presented net of allowances

for credit losses.

The Company maintains an allowance for credit losses resulting from the inability of its customers to make

required payments.

At September 30, 2024, the Company has a $ 545,000 note receivable from a vendor payable quarterly over 2 years including

interest payable at prime plus 2 % ( 10.0 % at September 30, 2024).

The Company has recorded a full valuation allowance of $ 545,000 for

the receivable based on the financial condition of the vendor.

and Development Tax Incentive Receivable

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basic and diluted shares outstanding due to the Company’s net loss position.

At June 30, 2024 and 2023, the Company had potentially

issuable shares as follows:

At September 30, 2024 and 2023, the Company had

potentially issuable shares as follows:

September 30,

Stock options

53 unchanged sentences

Recently Adopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board “FASB”, issued Accounting Standards Update “ASU”, No.

2023-09, Income

Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

The guidance in ASU 2023-09 improves the transparency

of income tax disclosures by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction.

The standard is effective for public companies for fiscal years beginning after December 15, 2024, with early adoption permitted.

Company is currently evaluating the impact that the adoption of ASU 2023-09 may have on its consolidated financial statements.

In December 2023, the Financial Accounting Standards

Board “FASB”, issued Accounting Standards Update “ASU”, No.

2023-09, Income Taxes (Topic 740):

to Income Tax Disclosures (“ASU 2023-09”).

The guidance in ASU 2023-09 improves the transparency of income tax disclosures

by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction.

is effective for public companies for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently

evaluating the impact that the adoption of ASU 2023-09 may have on its consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280).

The amendments in this update expand segment disclosure

requirements, including new segment disclosure requirements for entities with a single reportable segment among other disclosure requirements.

This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December

The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

Subsequent Events

evaluates events that have occurred after the balance sheet date of June 30, 2024, through the date which the financial statements are

evaluates events that have occurred after the balance sheet date of September 30, 2024, through the date which the financial statements

NOTE 4 – RESEARCH AND DEVELOPMENT

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The Company’s Australian subsidiary submits R&D tax credit requests annually for research and development expenses incurred.

At June 30, 2024 and December 31, 2023, the Company recorded a research and development tax credit receivable of $ 3,143,000 and $ 1,905,000 ,

At September 30, 2024 and December 31, 2023, the Company recorded a research and development tax credit receivable of $ 1,109,000 and $ 1,905,000 ,

respectively, for R&D expenses incurred in Australia.

During the six months ended June 30, 2024 and 2023, the Company received $ 0

During the nine months ended September 30, 2024 and 2023, the Company received

$ 2,475,000 and $ 3,763,000 , respectively, of R&D tax credit reimbursements from Australia.

During July 2024 the Company received a $ 2,475,000

R&D tax credit reimbursement from Australia.

License Agreement

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Company initiated a Phase I trial with INKmune in patients with metastatic castration-resistant prostate cancer and has recorded a $ 25,000 payable

to Immune Ventures as of June 30, 2024 and December 31, 2023.

to Immune Ventures as of September 30, 2024 and December 31, 2023.

The term of the agreement began on October 29,

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(i) annual maintenance fees, (ii) royalty payments based on the sale of products making use of the licensed technology, and (iii) milestone

Annual maintenance fees under the PITT Agreement

include the following:

(in thousands)

June 26 of each year 2021-2022

June 26 of each year 2023-2024

June 26 of each year 2025 until first commercial sale

Upon first commercial sale of a product making

use of the licensed technology under the PITT Agreement, the Licensee is required to pay royalties equal to 2.5 % of net sales each calendar

Beginning on June 26, 2025, the Company has annual

maintenance fees under the PITT Agreement of $ 25,000 until first commercial sale.

Upon first commercial sale of a product making use

of the licensed technology under the PITT agreement, the Licensee is required to pay royalties equal to 2.5 % of net sales each calendar

Moreover, under the PITT Agreement the Licensee

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The Company had no amounts owed pursuant to the

PITT Agreement as of June 30, 2024.

PITT Agreement as of September 30, 2024.

The PITT Agreement expires upon the earlier of:

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(in thousands)

June 30, 2024:

September 30, 2024:

Cash equivalents

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assets and liabilities:

(in thousands, except years and rate) June 30,

(in thousands, except years and rate) September 30,

2024 December 31,

6 unchanged sentences

NOTE 7 – RELATED PARTY TRANSACTIONS

30, 2024 and December 31, 2023, the Company recorded $0 and $ 112,000 , respectively, of prepaid expenses – related party

for payments made to UCL in advance of medical research to be provided.

At June 30, 2024 and December 31, 2023, the Company recorded $ 84,000

and $ 0 , respectively, of accrued expenses – related party owed to UCL for medical research performed on behalf of the Company.

the six months ended June 30, 2024 and 2023, the Company paid UCL $ 0 and $ 209,000 , respectively.

UCL is a wholly owned subsidiary of the University of London.

The Company’s Chief Scientific and Manufacturing Officer is a professor

at the University of London.

At September 30, 2024 and December

31, 2023, the Company recorded $ 15,000 and $ 112,000 , respectively, of prepaid expenses – related party for payments made

to UCL in advance of medical research to be provided.

During the nine months ended September 30, 2024 and 2023, the Company paid UCL $ 252,000

and $ 334,000 , respectively.

UCL is a wholly owned subsidiary

of the University of London.

The Company’s Chief Scientific and Manufacturing Officer is a professor at the University of London.

30, 2024 and December 31, 2023, the Company owed AmplifyBio $ 30,000 and $ 10,000 , respectively, in connection with medical research

1 unchanged sentence

The CEO of AmplifyBio is on the Board of Directors of the Company.

During the six months ended

June 30, 2024 and 2023, the Company paid AmplifyBio $ 233,000 and $ 6,000 , respectively.

During the nine months ended

September 30, 2024 and 2023, the Company paid AmplifyBio $ 324,000 and $ 7,000 , respectively.

NOTE 8 – DEBT

1 unchanged sentence

Credit Fund VIII, L.P.

The Term Loan provided for a $ 15.0 million term loan, of which the Company borrowed the entire amount on June

The Term Loan provided for a $ 15.0 million term loan, of which the Company borrowed the entire amount during

2021, and is secured by the Company’s assets.

loan and debt discount are as follows as of June 30, 2024:

loan and debt discount are as follows as of September 30, 2024:

(in thousands)

1 unchanged sentence

Current portion of debt

three and six months ended June 30, 2024, the Company recognized interest expense of $ 250,000 and $ 607,000 , respectively, related to the

For the three and six months ended June 30, 2023, the Company recognized interest expense of $ 631,000 and $ 1,243,000 , respectively,

related to the Term Loan.

three and nine months ended September 30, 2024, the Company recognized interest expense of $ 145,000 and $ 752,000 , respectively, related

to the Term Loan.

For the three and nine months ended September 30, 2023, the Company recognized interest expense of $ 568,000 and $ 1,811,000 ,

respectively, related to the Term Loan.

is required to make interest and principal payments monthly through the maturity date of January 1, 2025.

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Registered Direct Offerings

During September 2024, the Company entered into

securities purchase agreements with investors whereby the Company sold 2,341,260 shares of the Company’s common stock and warrants

to purchase an additional 2,341,260 shares of the Company’s common stock exercisable six months from the issuance date in a registered

direct offering in exchange for gross proceeds of $ 13.0 million (net proceeds of approximately $ 12.0 million).

and officers that participated in the offering paid a combined offering price of $ 6.50 per share and warrant, and other investors paid

$ 5.50 per share and warrant.

The exercise price of the warrants is $ 6.40 , and are exercisable beginning on March 16, 2025 and will terminate

on March 16, 2030 unless accelerated pursuant to the terms of the warrant agreements.

The Company determined the warrants were equity

The fair value of the warrants was approximately $ 9.1 million and was calculated using the Black-Scholes option-pricing

Variables used in the Black-Scholes option-pricing model include:

(1) discount rate of 3.41 % based on the applicable US Treasury

bill rate (2) expected life of 5.5 years, (3) expected volatility of approximately 92 % based on the trading history of

the Company, and (4) zero expected dividends.

During April 2024, the Company entered into a

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(1) discount rate of 4.89 % based on the applicable US Treasury bill rate (2) expected life of 2.0 years,

(3) expected volatility of approximately 78 % based on the trading history of the Company, and (4) zero expected dividends.

(3) expected volatility of approximately 78 % based on the trading history of similar companies, and (4) zero expected dividends.

Common Stock – At the Market Offering

1 unchanged sentence

sales agreement (“Sales Agreement”) with BTIG, LLC (“BTIG”), as sales agent, to establish an At-The-Market (“ATM”)

offering program of up to $ 45 million of common stock, subject to certain limitations on the amount of common stock that may be offered

and sold by the Company set forth in the sales agreement.

During August 2023, the Company and BTIG entered into Amendment No.

Sales Agreement.

The Company is required to pay BTIG a commission of 3 % of the gross proceeds from the sale of shares.

2023, the Company sold 75,697 shares of its common stock at an average price of $ 10.56 per share under the ATM program.

The aggregate net proceeds were approximately $ 775,000 after offering expenses.

These shares were inadvertently sold under a registration

statement filed with the SEC that had in fact expired prior to the time the shares were sold.

Consequently, the Company may

be subject to claims for rescission by purchasers who purchased shares of common stock under the ATM program.

Under Section

12(a)(1) of the Securities Act, a purchaser of security in a transaction made in violation of Section 5 of the Securities Act may obtain

recovery of the consideration paid in connection with its purchase, plus statutory interest, or, if it had already sold the shares, recover

damages resulting from its purchase.

While the Company believes, it is unlikely that a successful claim will be asserted against the Company

by any purchasers who purchased shares of common stock under the ATM Agreement in July 2023, the Company cannot guarantee that no such

legal claims will be asserted against the Company by any purchasers.

In addition, the Company could become subject to enforcement actions

and/or penalties and fines by federal authorities, and the Company is unable to predict the likelihood of any such enforcement actions

being brought, or the amount of any such potential penalties or fines.

As of June 30, 2024, there have been no claims or demands to exercise

As a result of these potential rescission rights, the Company reclassified 75,697 shares, with an aggregate purchase

price of $ 799,000 of its common stock as temporary equity presented outside stockholders’ equity.

The reclassification of these

shares shall remain for a period of one year from transaction date.

These shares have been treated as issued and outstanding for financial

reporting purposes.

six months ended June 30, 2024, the Company issued and sold 198,364 shares of common stock at an average price of $ 10.56 per

offering program of up to $ 45 million of common stock, which the Company amended in August 2023.

The Company was required to pay BTIG

a commission of 3 % of the gross proceeds from the sale of shares.

During the nine months ended September 30, 2024, the Company issued

and sold 198,364 shares of common stock at an average price of $ 10.56 per share under the ATM program.

The aggregate net

proceeds were approximately $ 2.0 million after BTIG’s commission expenses.

During August 2024, the Company entered into an

amended and restated at-the-market sales agreement with RBC Capital Markets LLC and BTIG (together, the “Sales Agents”) relating

to the offer and sale of shares of our common stock with an aggregate offering price of up to $ 75.0 million.

This amended and restated

at-the-market sales agreement replaced the Sales Agreement entered into with BTIG in March 2021, as amended in August 2023.

is required to pay the Sales Agents a commission of 3 % of the gross proceeds from the sale of shares.

the nine months ended September 30, 2024, the Company issued and sold 48,762 shares of common stock at an average price of $ 6.96 per

share under the ATM program.

The aggregate net proceeds were approximately $ 2.0 million after BTIG’s commission expenses.

30, 2024, the Company had $ 26.7 million of common stock available under the ATM program.

The aggregate net proceeds were approximately $ 0.3 million after commission expenses.

At September 30,

2024, the Company had $ 74.7 million of common stock available under the amended and restated at-the-market agreement.

During July 2023, the Company

sold 75,697 shares of its common stock at an average price of $ 10.56 per share under the ATM program.

The aggregate net

proceeds were approximately $ 775,000 after offering expenses.

These shares were inadvertently sold under a registration statement filed

with the SEC that had in fact expired prior to the time the shares were sold.

As of December 31, 2023, the Company reclassified 75,697 shares,

with an aggregate purchase price of $ 799,000 of its common stock as temporary equity presented outside stockholders’ equity

as a result of potential rescission rights.

There have been no claims or demands to exercise such rights.

As of September 30,

2024, the rescission rights for these shares have lapsed and the shares were reclassified to permanent equity.

Stock options

During the six months

ended June 30, 2024, the Company granted certain employees, directors and consultants, options to purchase 795,807 shares of

its common stock pursuant to the 2021 Amended and Restated Incentive Stock Plan.

The stock options had a fair value of approximately $ 6.5 million

that was calculated using the Black-Scholes option-pricing model.

Variables used in the Black-Scholes option-pricing model include:

During the nine months

ended September 30, 2024, the Company granted certain employees, directors and consultants, options to purchase 832,307 shares

of its common stock pursuant to the 2021 Amended and Restated Incentive Stock Plan.

The stock options had a fair value of approximately

$ 6.8 million that was calculated using the Black-Scholes option-pricing model.

Variables used in the Black-Scholes option-pricing

model include:

(1) discount rate of 3.90 % – 4.48 % based on the applicable US Treasury bill rate (2) expected life of 5.0 – 10.0 years,

(3) expected volatility of approximately 101 % - 106 % based on the trading history of similar companies, and (4) zero expected dividends.

following table summarizes stock option activity during the six months ended June 30, 2024:

The following

table summarizes stock option activity during the nine months ended September 30, 2024:

(in thousands, except share and per share amounts) Number of

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Options cancelled ( 31,500 ) $ 7.35 - -

Outstanding at June 30, 2024 6,291,807 $ 8.87 6.29 $ 10,655

Exercisable at June 30, 2024 4,890,811 $ 8.54 5.51 $ 10,469

During the three and six months ended June 30,

Outstanding at September 30, 2024 6,296,807 $ 8.87 5.90 $ 2,531

Exercisable at September 30, 2024 5,032,843 $ 8.62 5.19 $ 2,531

During the three and nine months ended September

30, 2024, the Company recognized stock-based compensation expense of approximately $ 1.7 million and $ 5.8 million, respectively,

related to the vesting of stock options.

During the three and six months ended June 30, 2023, the Company recognized stock-based compensation

expense of approximately $ 1.9 million and $ 3.6 million, respectively, related to the vesting of stock options.

30, 2024, there was approximately $ 11.0 million of total unrecognized compensation cost related to non-vested stock options which is expected

to be recognized over a weighted-average period of 2.19 years.

During the three and nine months ended September 30, 2023, the Company recognized stock-based

compensation expense of approximately $ 1.9 million and $ 5.5 million, respectively, related to the vesting of stock options.

of September 30, 2024, there was approximately $ 9.1 million of total unrecognized compensation cost related to non-vested stock options

which is expected to be recognized over a weighted-average period of 2.33 years.

issued warrants to the Company’s lenders upon obtaining its loan in June 2021.

1 unchanged sentence

price of $ 14.05 .

At June 30, 2024, 45,386 of these warrants are outstanding and the intrinsic value of these warrants is $ 0 .

At September 30, 2024, 45,386 of these warrants are outstanding and the intrinsic value of these warrants is $ 0 .

2024, the Company issued 1,557,592 warrants to investors in connection with the sale of common stock.

At June 30, 2024, 1,557,592 of these

warrants are outstanding and are exercisable for cash at a weighted average price of $ 9.59 per share.

The intrinsic value of these warrants

was $ 0 as of June 30, 2024.

At September 30, 2024, 1,557,592

of these warrants are outstanding and are exercisable for cash at a weighted average price of $ 9.59 per share.

The intrinsic value of

these warrants was $ 0 as of September 30, 2024.

During September

2024, the Company issued 2,341,260 warrants to investors in connection with the sale of common stock.

At September 30, 2024, 2,341,260

of these warrants are outstanding and are exercisable for cash at a weighted average price of $ 6.40 per share.

The intrinsic value of

these warrants was $ 0 as of September 30, 2024.

Stock-based Compensation by Class of Expense

The following summarizes the components of stock-based

compensation expense in the consolidated statements of operations for the six months ended June 30, 2024 and 2023 respectively:

compensation expense in the consolidated statements of operations for the three and nine months ended September 30, 2024 and 2023,

respectively:

(in thousands)

September 30,

Research and development

3 unchanged sentences

“Board”) of the Company approved and adopted a Rights Agreement, dated as of December 30, 2020, by and between the Company

and VStock Transfer, LLC, as rights agent, pursuant to which the Board declared a dividend of one preferred share purchase right (each,

a “Right”) for each outstanding share of the Company’s common stock held by stockholders as of the close of business

and VStock Transfer, LLC, as rights agent, pursuant to which the Board declared a dividend of one preferred share purchase right

(each, a “Right”) for each outstanding share of the Company’s common stock held by stockholders as of the close of business

on January 11, 2021.

1 unchanged sentence

of a share of a newly designated series of preferred stock, Series A Junior Participating Preferred Stock, par value $ 0.001 per share,

of the Company, at an exercise price of $ 300.00 per one one-thousandth of a Series A Junior Participating Preferred Share, subject to

of the Company, at an exercise price of $ 300.00 per one one-thousandth of a Series A Junior Participating Preferred Share, subject

to adjustment.

Subject to various exceptions, the Rights become exercisable in the event any person (excluding certain exempted or grandfathered

persons) becomes the beneficial owner of twenty percent or more of the Company’s common stock without the approval of the Board.

On December 20, 2021, the Company entered into Amendment No.

1 to the Rights Agreement (“Amendment No.

1”) to extend the expiration

of the Rights Agreement to December 30, 2022.

On December 9, 2022, the Company and VStock Transfer, LLC entered into Amendment No.

2 to Rights Agreement (“Amendment No.

Pursuant to Amendment No.

2, the Rights Agreement extended the expiration of the

Rights Agreement to December 30, 2023.

The Rights are in all respects subject to and governed by the provisions of the Rights Agreement,

as amended by the Amendment No.1 and Amendment No.

The Rights Agreement was amended in 2021, 2022 and 2023 to extend the expiration date and shall expire on December 30, 2024.

NOTE 10 – COLLABORATIVE AGREEMENTS

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in patients with treatment resistant depression.

As of June 30, 2024, the Company has not received any proceeds pursuant to this grant.

As of September 30, 2024, the Company has not received any proceeds pursuant to this

NOTE 11 – COMMITMENTS

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Long-term operating lease liability

During the three and six months ended June 30,

During the three and nine months ended September

30, 2024, the Company recognized $ 40,000 and $ 120,000 , respectively, in operating lease expense, which is included in general and administrative

expenses in the Company’s consolidated statement of operations.

During the three and six months ended June 30,

During the three and nine months ended September

30, 2023, the Company recognized $ 41,000 and $ 123,000 , respectively, in operating lease expense, which is included in general and administrative

expenses in the Company’s consolidated statement of operations

has an ongoing dispute with a vendor in which the Company believes that the vendor did not properly provide services for which they have

invoiced the Company.

As of September 30, 2024, the Company has outstanding invoices with the vendor which aggregate approximately $ 1.2

million, of which the Company has recorded approximately $ 0.2 million, which is the Company’s estimate of the obligation incurred,

and the remaining $ 1.0 million has not been recorded by the Company as the Company believes the invoices were sent erroneously.

and the vendor are still attempting to resolve the dispute and legal proceedings have not been threatened.

is subject to claims and suits that arise from time to time in the ordinary course of our business.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements