Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those contained in or implied by any forward-looking statements. Factors that could cause or contribute to these differences include those under “Risk Factors” included in Part I, Item 1A and under “Special Note Regarding Forward-Looking Statements” or in other parts of this Annual Report on Form 10-K.
Overview
We are a late-stage biopharmaceutical company whose mission is to improve patient care in populations with cardiometabolic diseases where currently approved therapies have not been adequate or well tolerated. We seek to fill a significant unmet need for a safe, well tolerated and convenient LDL-C lowering therapy. In multiple Phase 3 trials, we have investigated obicetrapib, an oral, low-dose, once-daily, highly selective CETP inhibitor, alone or as a fixed-dose combination with ezetimibe, as preferred LDL-C lowering therapies to be used as an adjunct to statin therapy for patients at risk of CVD with elevated LDL-C, for whom existing therapies are not sufficiently effective or well tolerated. We believe that CETP inhibition may also play a role in other indications by potentially mitigating the risk of developing diseases such as Alzheimer’s disease.
Obicetrapib, is a next-generation, oral, low-dose, highly selective CETP inhibitor that we are developing to potentially overcome the limitations of current LDL-C lowering treatments. In addition to LDL-C, obicetrapib has shown significant reductions in Lp(a) and small LDL particles, all with safety comparable to placebo. We believe that obicetrapib has the potential to be a once-daily oral CETP inhibitor for lowering LDL-C, if approved. In each of our Phase 3 clinical trials, BROADWAY and BROOKLYN, evaluating obicetrapib as an adjunct to high-intensity statin therapy, obicetrapib met its primary and secondary endpoints, with statistically significant reductions in LDL-C observed. In our Phase 3 TANDEM clinical trial, evaluating obicetrapib in combination with ezetimibe as an adjunct to high-intensity statin therapy, obicetrapib in combination with ezetimibe met its primary and secondary endpoints, with statistically significant reductions in LDL-C observed. In five of our Phase 2 clinical trials, TULIP, ROSE, OCEAN, ROSE2 and our Japan Phase 2b clinical trial, evaluating obicetrapib as a monotherapy or a combination therapy with ezetimibe 10 mg, we observed statistically significant LDL-C lowering with side effects similar in frequency and severity to placebo including muscle-related side effects and drug-related TESAEs. We have observed obicetrapib to be well tolerated in an aggregate of over 3,500 patients with dyslipidemia in our clinical trials to date. Furthermore, we believe that obicetrapib’s oral delivery, demonstrated activity at low doses, chemical properties and tolerability make it well-suited for combination approaches.
Lowering of LDL-C, has been associated with MACE benefit in trials of LDL-C lowering drugs, including the REVEAL trial with the CETP inhibitor, anacetrapib. In our Phase 3 BROADWAY clinical trial we observed a positive trend in the exploratory MACE endpoint and we are performing a Phase 3 CVOT PREVAIL trial to reconfirm this relationship.
Obicetrapib has shown to not only reduce LDL-C but also several additional biomarkers associated with MACE. To date, obicetrapib has shown reductions in non-HDL-C, ApoB, and sdLDL-P. In our clinical trials, we have also observed reductions in Lp(a), which is believed to be an independent MACE risk factor, along with reductions in total LDL particles and more specifically small LDL particles, which are believed to be more atherogenic particles.
CVD is a leading cause of death worldwide. ASCVD is primarily caused by atherosclerosis, which involves the build-up of fatty material within the inner walls of the arteries. Atherosclerosis is the primary cause of heart attacks, strokes and peripheral vascular disease. One of the most important risk factors for ASCVD is hypercholesterolemia, which refers to elevated LDL-C levels within the body, commonly known as high cholesterol.
A significant proportion of patients with high cholesterol do not achieve acceptable LDL-C levels using statin therapy alone. We estimate that in the United States there are approximately 30 million patients that are not at their risk-based LDL-C goals despite treatment with lipid lowering therapy, including approximately 13 million with ASCVD. Existing non-statin treatment options have been largely unable to address the needs of patients with high cholesterol due to limited efficacy, an inconvenient injectable administration route and, in the past, market access restrictions. It is estimated that over 75% of ASCVD and HeFH outpatients prefer oral drugs to injectable therapies.
Our goal is to develop and commercialize an LDL-C lowering monotherapy and a fixed-dose combination therapy, which offers the advantage of a single, low dose, once-daily oral pill, and fulfills the significant unmet need for an effective and convenient LDL-C lowering therapy. If we obtain marketing approval, we intend to commercialize obicetrapib for patients with ASCVD and/or HeFH and elevated levels of LDL-C despite being treated with currently available optimal lipid lowering therapy.
We have partnered with Menarini, providing them with the exclusive rights to commercialize obicetrapib 10 mg, either as a sole active ingredient product or in a fixed-dose combination with ezetimibe, in the majority of European countries, if approved. Subject to receipt of marketing approval, our current plan is to pursue development and commercialization of obicetrapib in the United States ourselves, and to consider additional partners for jurisdictions outside of the United States and the EU, including in Japan and China. In addition to our partnership with Menarini, we may in the future utilize a variety of types of collaboration, license, monetization, distribution and other
90
arrangements with other third parties relating to the development or commercialization, once approved, of obicetrapib or future product candidates or indications. We are also continually evaluating the potential acquisition or license of new product candidates.
As of December 31, 2024, we had cash and cash equivalents of $771.7 million as compared to $340.5 million as of December 31, 2023. The increase in cash is primarily driven by the proceeds of the February 2024 Offering (as defined below), the December 2024 Offering (as defined below), Warrant exercises, exercises of options and the achievement of a clinical development milestone, partially offset by cash outflows related to research and development costs as we continue development of obicetrapib and increased spending on selling, general and administrative expenses to support our growing organization.. As of December 31, 2024, we no longer qualify as an “emerging growth company,” and, as a result, we are no longer able to avail ourselves of certain reduced reporting requirements applicable to emerging growth companies, and we expect to incur increased expenses as a result.
Recent Developments
December 2024 Follow-On Offering
On December 13, 2024, the Company completed an underwritten public offering (the “December 2024 Offering”) of 14,667,347 Ordinary Shares at a public offering price of $24.50 per Ordinary Share and, in lieu of Ordinary Shares to certain investors, Pre-Funded Warrants to purchase 4,882,653 Ordinary Shares at a public offering price of $24.4999 per Pre-Funded Warrant, which represents the per share public offering price for the Ordinary Shares, less the $0.0001 per share exercise price for each such Pre-Funded Warrant. Of the 14,667,347 Ordinary Shares issued and sold in the offering, 2,550,000 Ordinary Shares were issued and sold pursuant to the exercise of the underwriters’ option to purchase additional Ordinary Shares at the public offering price per share. The net proceeds to the Company from the December 2024 Offering were $453.4 million after deducting underwriting discounts and commissions and offering expenses payable by the Company.
Positive Topline Data from Pivotal Phase 3 BROADWAY Clinical Trial
On December 10, 2024, we announced positive topline data from our Phase 3 BROADWAY clinical trial. The primary endpoint was the least-squares mean of the percent change in LDL-C from baseline to day 84 for obicetrapib 10 mg compared to placebo, using imputation for missing data. The primary endpoint was achieved with statistical significance with an LDL-C reduction of 33% (p<0.0001). As part of the safety analysis, the trial adjudicated MACE as an exploratory endpoint, including death, non-fatal myocardial infarction, non-fatal stroke and coronary revascularization. In addition, a 21% reduction in MACE favoring obicetrapib was observed. The observed changes in other biomarkers, including HDL-C, non-HDL-C, Lp(a), ApoB, and Apolipoprotein A1 (ApoA1) were consistent with data reported in our prior clinical trials. As part of the safety analysis, key AEs of special interests were monitored. Among these AEs, glycemic control and renal function were monitored and each of the events favored obicetrapib. Overall, obicetrapib was also observed to be well-tolerated, with safety results, including blood pressure, comparable to placebo.
Positive Topline Data from Pivotal Phase 3 TANDEM Clinical Trial
On November 20, 2024, we announced positive topline data from our Phase 3 TANDEM clinical trial. The co-primary endpoints were percent change from baseline in LDL-C of the fixed-dose combination compared to each monotherapy arm after 84 days and obicetrapib 10 mg compared to placebo after day 84. Secondary endpoints incorporated percent changes from baseline in other biomarkers, including Lp(a), non-HDL-C and ApoB. The TANDEM trial met all co-primary endpoints, including the obicetrapib-ezetimibe fixed dose combination achieving an LS mean reduction of 48.6% (p < 0.0001) compared to placebo at day 84. In the trial, the fixed-dose combination of obicetrapib and ezetimibe was observed to be well tolerated, with safety results comparable to placebo.
Positive Topline Data from Pivotal Phase 3 BROOKLYN Clinical Trial
On November 18, 2024, we announced additional positive data from our Phase 3 BROOKLYN clinical trial. The trial met its primary endpoint of percent change from baseline in LDL-C of obicetrapib 10 mg compared to placebo after 84 days. The trial also met several of its prespecified secondary endpoints with statistical significance and observed results consistent with our prior clinical trials. Key secondary endpoints included percent changes from baseline of obicetrapib 10 mg compared to placebo after 84 days in Lp(a), ApoB, HDL-C and non-HDL-C. The p-value for the LS mean for all secondary endpoints compared to placebo was <0.0001 following 84 days of treatment with obicetrapib. Obicetrapib was also observed to be well tolerated, with safety results in the treatment arm comparable to placebo and no observed increase in blood pressure.
Components of our Results of Operations
Revenue
To date, we have not generated any revenue from the sale of pharmaceutical products. Our revenue has been solely derived from our license agreement with Menarini. Two performance obligations for the Menarini license were identified at contract inception, comprising a license to use the Company's intellectual property (the "license performance obligation") and a promise to continue the development activities for the licensed compound (the "R&D performance obligation"). Pursuant to the Menarini License, we received a non-refundable, non-creditable upfront amount of $120.9 million (€115.0 million) from Menarini on July 7, 2022, of which $98.6 million (€93.5 million) was
91
attributed to the license performance obligation and recognized as revenue upon the execution of the Menarini License on June 23, 2022. The remaining $22.3 million (€21.5 million) was attributed to the R&D performance obligation and initially recognized as deferred revenue.
Additionally, in partial contribution to our costs of development of the Licensed Products, Menarini may pay us €27.5 million, payable in two equal annual installments. Due to the scientific uncertainties around the commercialization of the Licensed Products based on the success of clinical trials, which is out of our control, the fixed €27.5 million was considered constrained at contract execution and is not initially recognized within the transaction price until it becomes highly probable of no significant revenue reversal. At the end of each reporting period, we assess the probability of significant reversals for any amounts that become likely to be realized prior to recognizing the constrained amounts associated with these payments within the transaction price.
Under the Menarini License, we are also entitled to receive certain cost sharing payments, sales-based royalties and payments based upon the achievement of defined development, regulatory and commercial milestones linked to the enhanced value of the license performance obligation. These milestones are contingent payments and represent variable considerations that are not initially recognized within the transaction price, due to the scientific uncertainties around the commercialization of the Licensed Products based on the success of clinical trials. Our ability to receive and generate revenue from these payments is dependent upon a number of factors, including our ability to successfully complete the development of and obtain regulatory approval for obicetrapib within the Menarini Territory. The uncertainty of achieving these milestones significantly impacts our ability to generate revenue. At the end of each reporting period, we assess the probability of significant reversals for any amounts that become likely to be realized prior to recognizing the variable consideration associated with these payments within the transaction price.
We do not expect to generate any revenue from product sales for the foreseeable future. Any revenue generated from potential future collaborations may vary due to the many uncertainties in the development of obicetrapib and other factors.
Research and Development Expenses
Research and development expenses are recognized as an expense when incurred and are typically made up of costs from our clinical and preclinical activities, drug development and manufacturing costs, and costs for CROs and investigative sites. Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using data provided by vendors of their actual costs incurred. At each balance sheet date, we estimate the level of services provided by vendors and the associated expenditure incurred for the services performed.
All such costs are for the purpose of advancing our product candidate to successfully complete clinical development, attain regulatory approval and, if approved, commercialize our product candidate. Much of our current focus in our ongoing trials is on patient recruitment and retention and data cleaning. Research and development expenses consist of the following:
• clinical expenses primarily incurred by CROs assisting with our sponsored clinical trials and including clinical investigator costs, patient enrollments and costs of clinical sites;
• manufacturing expenses arising from API and drug product development as performed by our CMOs, which are used in our clinical trials and research and development activities;
• costs associated with obtaining potential regulatory approval of our product candidate, including preparation and submission of filings, ongoing monitoring and compliance with comments and recommendations provided by regulatory authorities, and regulatory-related advisory fees;
• contracted personnel and employment costs attributed to research and development efforts, which includes management fees, salaries, share-based compensation expenses, bonus plans and payments to contractors who work for us for a fixed number of hours per week or per month;
• preclinical and nonclinical research and development expenses of the product candidate; and
• other clinical costs such as clinical trial insurance and other consultancy fees.
We expect our research and development expenses to be significant as we advance obicetrapib through clinical trials and pursue regulatory approval. The process of conducting the necessary clinical trials to obtain regulatory approval is costly and time-consuming. Clinical trials generally become larger and more costly to conduct as they advance into later stages and, in the future, we will be required to make estimates for expense accruals related to clinical trial expenses. At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of obicetrapib. See the section entitled “ Risk Factors—Risks Related to Our Product Development, Regulatory Approval and Commercialization ” for more information regarding the risks associated with clinical development.
Selling, General and Administrative Expenses
92
We recognize selling, general and administrative expenses on the accrual basis when incurred. These expenses mainly relate to consultant fees, employee costs, legal costs, marketing and communication, intellectual property costs due to increased efforts to drug patent development and protection globally, and general overhead costs.
Due to the general growth of the organization associated with administering ongoing and planned clinical trials and our focus on commercial preparedness, we expect that our selling, general and administrative expenses may increase. We will incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance costs as well as investor and public relations expenses associated with being a public company. Additionally, if and when a regulatory approval of a product candidate appears likely, we anticipate an increase in payroll and expenses as a result of our preparation for commercial operations.
Interest Income
Interest income is recognized using the effective interest rate method. Finance income for the year ended December 31, 2024 is related to interest earned on cash, cash equivalents and marketable securities.
Net Foreign Exchange Gain/Loss
Our exchange gain/loss relates mainly to cash balances denominated in foreign currencies, but also to transactions denominated in foreign currencies. Our foreign currency exposure is mainly related to the Euro. As of December 31, 2024, our net exposure to foreign currency risk was $108.6 million compared to $114.3 million as of December 31, 2023, mainly related to the Euro.
Income Tax
We have a history of losses and therefore have de minimis amounts of corporate tax. We expect to continue incurring losses as we continue to invest in our clinical and preclinical development programs. Consequently, any deferred tax assets are fully offset by a valuation allowance on our balance sheet.
Results of Operations
Comparison of the Years Ended December 31, 2024 and December 31, 2023
The following table summarizes our consolidated statements of operations for the periods indicated:
For the year ended December 31,
(In thousands of USD)
2024
2023
Change
Revenue
45,563
14,090
31,473
Operating Expenses:
Research and development expenses
151,406
159,424
(8,018
)
Selling, general and administrative expenses
70,446
37,633
32,813
Total operating expenses
221,852
197,057
24,795
Operating Loss
(176,289
)
(182,967
)
6,678
Other income (expense):
Interest income
16,881
11,283
5,598
Fair value change - earnout
(37,010
)
(266
)
(36,744
)
Fair value change - warrants
(38,583
)
(10,018
)
(28,565
)
Foreign exchange gains/(losses)
(6,598
)
5,058
(11,656
)
Loss before tax
(241,599
)
(176,910
)
(64,689
)
Income tax expense
(1
)
27
(28
)
Loss for the year
(241,598
)
(176,937
)
(64,661
)
Revenue
Revenue increased by $31.5 million, or 223.4%, to $45.6 million for the year ended December 31, 2024 compared to $14.1 million for the year ended December 31, 2023. This change is largely due to $27.3 million of revenue recognized in the year ended December 31, 2024 related to the license performance obligation under the Menarini License for a clinical success milestone compared to $5.4 million of such revenue recognized in the year ended December 31, 2023. The remainder of the change is due to an increase of $9.5 million in the revenue recognized related to the R&D performance obligation in the year ended December 31, 2024 as compared to the year ended December 31, 2023. This increase in revenue related to the R&D performance obligation is composed of the following:
• recognition of $11.9 million of revenue for a general development cost reimbursement in the year ended December 31, 2024 while no such cost reimbursement was recognized in the year ended December 31, 2023; and
• an offsetting decrease of $2.3 million in recognition of deferred revenues in the year ended December 31, 2024 as compared to the year ended December 31, 2023 due to differences in the percentage of completion achieved in each respective year related to the performance obligation.
93
Research and Development Expenses
Research and development expenses decreased by $8.0 million, or 5.0%, to $151.4 million for the year ended December 31, 2024 compared to $159.4 million for the year ended December 31, 2023. This was primarily driven by:
• a $10.2 million decrease in manufacturing costs;
• a $1.1 million decrease in non-clinical expenses related to preclinical studies;
• a $0.9 million decrease in clinical expenses due to clinical trial which are complete or nearing completion;
• a partially offsetting $0.9 million increase in regulatory expenses; and
• a partially offsetting $3.1 million increase in personnel expenses.
The following table summarizes our research and development expenses for the periods indicated:
For the year ended December 31,
(In thousands of USD)
2024
2023
Change
Clinical expenses
105,904
106,770
(866
)
Non-clinical expenses
1,859
2,917
(1,058
)
Personnel expenses
24,019
20,877
3,142
Manufacturing costs
17,188
27,430
(10,242
)
Regulatory expenses
2,186
1,297
889
Other research and development costs
250
133
117
Total research and development expenses
151,406
159,424
(8,018
)
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $32.8 million, or 87.2%, to $70.4 million for the year ended December 31, 2024 compared to $37.6 million for the year ended December 31, 2023. This was primarily driven by:
• a $25.9 million increase in personnel expenses related to selling, general and administrative expenses, of which our share-based compensation arrangements account for $10.3 million. The remainder is largely due to increased recruitment and employment costs for individuals involved with administrative and commercial preparedness activities to support the growth of the organization;
• a $10.9 million increase in marketing and communication expenses related to startup costs as we begin to build capabilities to support our planned commercial launch of obicetrapib, if approved; and
• a partially offsetting $3.5 million decrease in finance and administration expenses primarily due to costs incurred in 2023 in connection with an underwritten public offering of Ordinary Shares by certain of our shareholders. We did not sell any Ordinary Shares in the offering and did not receive any proceeds from the offering.
Interest Income
Interest income increased by $5.6 million, to $16.9 million for the year ended December 31, 2024 compared to $11.3 million for the year ended December 31, 2023. This increase was primarily driven by greater cash balances and investments in marketable securities during the year ended December 31, 2024 as compared to cash balances during the year ended December 31, 2023.
Fair Value Change - Earnout
Fair value change - earnout was a loss of $37.0 million for the year ended December 31, 2024 compared to a loss of $0.3 million for the year ended December 31, 2023. The change is driven by changes in the market price during the period for Ordinary Shares and an increase in the estimated probability of achieving the earnout milestone from 40% as of December 31, 2023 to 100% as of December 31, 2024.
Fair Value Change - Warrants
Fair value change - warrants was a loss of $38.6 million for the year ended December 31, 2024 compared to a loss of $10.0 million for the year ended December 31, 2023. The change is driven by changes in the market price during the period for the Warrants, which trade under the symbol "NAMSW."
Foreign Exchange Gains/(Losses)
Net foreign exchange gains/(losses) were a loss of $6.6 million for the year ended December 31, 2024 compared to a gain of $5.1 million for the year ended December 31, 2023. This change was largely driven by a weakening of the Euro against the U.S. Dollar.
94
Loss for the Year
Loss for the year increased by $64.7 million, to $241.6 million for the year ended December 31, 2024 compared to $176.9 million for the year ended December 31, 2023. The individual components of the change are described above.
Comparison of the Years Ended December 31, 2023 and December 31, 2022
Please refer to the section titled “Management Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for a comparative discussion of our fiscal years ended December 31, 2023 and December 31, 2022.
Liquidity and Capital Resources
We are a clinical-stage biopharmaceutical company and, since inception, we have incurred significant operating losses and expect to continue to do so for the foreseeable future. Since inception, we have not generated any product revenues or net positive cash flows from operating activities. We will not receive any product revenues or net positive cash flows from operating activities until we successfully develop a product candidate, obtain regulatory approval, and successfully commercialize it.
To date, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, undertaking preclinical studies and conducting clinical trials of obicetrapib. As a result, we are not yet profitable and have incurred losses in each annual period since our inception. As of December 31, 2024, we had an accumulated loss of $558.6 million. We expect to continue to incur significant losses for the foreseeable future. We anticipate that our expenses will relate primarily to, and increase substantially as a result of:
• the progress and costs of our discovery, preclinical and non-clinical development;
• the progress and costs of our clinical trials, including costs related to clinical sites, clinical investigators and CROs that are assisting with our sponsored clinical trials, and other research and development activities;
• the costs and timing of obtaining regulatory approval, including the expenses of filing NDAs and MAAs, and the related expenses involved in validating our manufacturing processes;
• the costs associated with any future investigator-sponsored preclinical studies and clinical trials;
• the costs of filing, prosecuting, defending and enforcing any patent applications, claims, patents and other intellectual property rights;
• the costs and timing of obtaining sufficient quantities of our product candidate for clinical trials by establishing production capacities through contracts with CMOs;
• the terms and timing of any collaborative, licensing and other arrangements that we may establish;
• compensation expenses associated with increased headcount;
• the costs of preparing for launch and commercialization of our product candidate;
• losing our status as an emerging growth company; and
• the costs of operating as a public company in the United States.
We may encounter unforeseen expenses, difficulties, complications, delays and other factors that may adversely affect our business. The magnitude of our future net losses will depend on the rate of future growth of our expenses combined with our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our shareholders’ equity and working capital unless and until eliminated by revenue generation and growth.
We have historically funded our operations primarily through private placements and public offerings of shares, the sale of convertible notes, proceeds from the Menarini License and the proceeds from the Business Combination. As of December 31, 2024, we had cash and cash equivalents of $771.7 million. Until we can generate substantial revenue, if ever, we expect to finance our cash needs through a combination of public or private equity offerings, debt financings, convertible loans, warrants, collaborations, or other means. We may consider raising additional capital to take advantage of favorable market conditions or for other strategic considerations even if we have sufficient funds for planned operations. In addition to our partnership with Menarini, we may in the future utilize a variety of types of collaboration, license, monetization, distribution and other arrangements with other third parties relating to the development or commercialization, once approved, of obicetrapib or future product candidates or indications. If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, future revenue streams or research programs or grant licenses on terms that may not be favorable to us. If we raise additional capital through public or privately placed equity offerings of securities, the terms of these securities or offerings may include liquidation or other preferences that adversely affect our other shareholders’ rights. To the extent that we raise additional funds by issuing and selling equity or
95
equity-linked securities, shareholders will experience dilution. If we raise additional capital through debt financing, we would likely be subject to fixed payment obligations and may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, licensing or selling assets, making capital expenditures or declaring dividends. Capital may become difficult or impossible to obtain due to poor market or other conditions outside of our control. If we are unable to raise sufficient additional funds on favorable terms as and when needed, we may be required to delay, reduce, or terminate some or all of our development programs and clinical trials. We may also be required to sell or license to others any of our potential future product candidates that we would prefer to develop and commercialize ourselves. See the section titled “ Risk Factors ” for additional detail regarding these risks.
We plan to utilize our existing cash and other financial assets on hand primarily to fund our research and development initiatives to continue or commence clinical trials and seek regulatory approval for obicetrapib. We also expect to make capital expenditures to support our anticipated growth. Cash in excess of immediate requirements is invested in accordance with our investment policy which has the primary purpose of capital preservation and liquidity. We are also continually evaluating the potential acquisition or license of new product candidates.
Sources of Liquidity
December 2024 Follow-on Offering
On December 13, 2024, we completed the December 2024 Offering of 14,667,347 Ordinary Shares at a public offering price of $24.50 per Ordinary Share and, in lieu of Ordinary Shares to certain investors, Pre-Funded Warrants to purchase 4,882,653 Ordinary Shares at a public offering price of $24.4999 per Pre-Funded Warrant, which represents the per share public offering price for the Ordinary Shares, less the $0.0001 per share exercise price for each such Pre-Funded Warrant. Of the 14,667,347 Ordinary Shares issued and sold in the December 2024 Offering, 2,550,000 Ordinary Shares were issued and sold pursuant to the exercise of the underwriters’ option to purchase additional Ordinary Shares at the public offering price per share. The net proceeds to the Company from the December 2024 Offering were $453.4 million after deducting underwriting discounts and commissions and offering expenses payable by the Company.
February 2024 Follow-on Offering
On February 16, 2024, we completed an underwritten public offering (the “February 2024 Offering”) of 5,871,909 Ordinary Shares at a public offering price of $19.00 per Ordinary Share and, in lieu of Ordinary Shares to certain investors, Pre-Funded Warrants to purchase 4,736,841 Ordinary Shares at a public offering price of $18.9999 per Pre-Funded Warrant, which represents the per share public offering price for the Ordinary Shares less the $0.0001 per share exercise price for each such Pre-Funded Warrant. Of the 5,871,909 Ordinary Shares issued and sold in the February 2024 Offering, 1,383,750 Ordinary Shares were issued and sold pursuant to the exercise of the underwriters’ option to purchase additional Ordinary Shares at the public offering price per share. The net proceeds to the Company from the February 2024 Offering were $190.0 million after deducting underwriting discounts and commissions and offering expenses payable by the Company.
Menarini License
On June 23, 2022, we entered into the Menarini License, pursuant to which we granted Menarini an exclusive, royalty-bearing, sublicensable license under certain of our intellectual property and our regulatory documentation to undertake post approval development activities and commercialize the Licensed Products, for any use in the Menarini Territory. Pursuant to the Menarini License, Menarini made a non-refundable, non-creditable upfront payment to us of €115 million. Menarini has also committed to providing us €27.5 million in funding for the research and development activities related to the Licensed Products over two years, together with bearing 50% of any development costs incurred in respect of the pediatric population in the Menarini Territory. We are also eligible to receive up to €863 million upon the achievement of various clinical, regulatory and commercial milestones, €30 million of which has been received to date. If obicetrapib is approved, and successfully commercialized by Menarini, we will be entitled to tiered royalties ranging from the low double-digits to the mid-twenties as a percentage of net sales in the Menarini Territory, with royalty step-downs in the event of generic entrance or in respect of required third-party IP payments. See the section titled “ Business—Commercial ” for a full description of the Menarini License.
As of December 31, 2024, we have received a total of €30 million in milestone payments from Menarini, €25 million of which was received in the year ended December 31, 2024.
Warrants
In the year ended December 31, 2024, 1,384,640 Warrants were exercised at an exercise price of $11.50 per Ordinary Share, generating gross proceeds of $13.8 million. As of December 31, 2024, we had another 2,632,581 outstanding Warrants to purchase 2,632,581 Ordinary Shares, exercisable at an exercise price of $11.50 per share, which will expire on November 23, 2027, at 5:00 p.m., Eastern Standard Time. Based on the exercise price of the Warrants, we may receive up to $30.3 million, assuming the exercise of all Warrants outstanding as of December 31, 2024. The exercise of the Warrants, and any proceeds we may receive from their exercise, are highly dependent on the price of our Ordinary Shares and the spread between the exercise price of the Warrant and the price of an Ordinary Share at the time of exercise. For example, to the extent that the trading price of the Ordinary Shares exceeds $11.50 per share, it is more likely that holders of our Warrants will exercise their Warrants. If the trading price of the Ordinary Shares is less than $11.50 per share, it is unlikely that such holders will exercise their Warrants. The exercise price of the Warrants has at times exceeded the market price of the Ordinary Shares. To the extent that the price of our Ordinary Shares is below $11.50, we believe that the Warrant holders will be unlikely to cash exercise their warrants, resulting in little to
96
no cash proceeds to us. There can be no assurance that our Warrants will be in the money prior to their expiration and, as such, certain unexercised Warrants may expire worthless. As such, it is possible that we may never generate any additional cash proceeds from the exercise of our Warrants. We have not included, and do not intend to include, any potential cash proceeds from the exercise of our Warrants in our short-term or long-term liquidity projections. We will continue to evaluate the probability that the Warrants are exercised over the life of our Warrants and the merit of including potential cash proceeds from the exercise thereof in our liquidity projections.
Business Combination and PIPE Financing
In July 2022, we entered into a Business Combination Agreement with FLAC, NewAmsterdam Pharma and Merger Sub, which closed on November 22, 2022.
Concurrently with the execution of the Business Combination Agreement, we and FLAC also entered into subscription agreements with certain investors (the "PIPE Investors"), pursuant to which the PIPE Investors agreed to subscribe for and purchase from us, and we agreed to issue and sell to such PIPE Investors in a private placement, an aggregate of 23,460,000 Ordinary Shares at $10.00 per share for gross proceeds of $234.6 million (the "PIPE Financing"). The PIPE Financing closed substantially concurrently with the Business Combination.
We received an aggregate of $306.3 million from the Business Combination and associated PIPE Financing at the closing of the Business Combination, prior to deducting the $2.6 million of transaction costs directly attributable to these financing activities.
Cash Flows
The following is a summary of cash flows for the years ended December 31, 2024, 2023 and 2022:
For the year
ended December 31,
(In thousands of USD)
2024
2023
2022
Net cash (used in)/provided by operating activities
(158,564
)
(141,218
)
10,665
Net cash used in investing activities
(62,848
)
(24
)
(221
)
Net cash provided by financing activities
659,507
8,912
391,905
Foreign exchange differences
(6,802
)
5,052
5,248
Cash and cash equivalents at the beginning of the year
340,450
467,728
60,131
Cash and cash equivalents at the end of the year
771,743
340,450
467,728
Net Cash Flows Provided By/Used In Operating Activities
Net cash used in operating activities increased by $17.4 million from $141.2 million in 2023 to $158.6 million in 2024. This change was primarily due to an increase in operating expenditures, the underlying reasons for which are described above, partially offset by an increase in the amount of cash received related to the achievement of clinical development milestones in the current period as compared to the same period in the prior year.
Net Cash Flows Provided By/Used In Investing Activities
Net cash flows used in investing activities increased by $62.8 million from $0.0 million in 2023 to $62.8 million in 2024. This change was primarily due to investments in marketable securities.
Net Cash Flows Provided By Financing Activities
Net cash flows provided by financing activities was $659.5 million in 2024 compared to $8.9 million in 2023, an increase of $650.6 million. This change was primarily related to the February 2024 Offering and the December 2024 Offering, which together generated net proceeds of $645.0 million after deducting underwriting discounts and commissions and offering expenses paid by the Company. The remaining change is due to a $5.1 million increase in the proceeds received from the exercise of Warrants and a $0.5 increase in net proceeds from the exercise of options.
Operating Capital and Capital Expenditure Requirements
Third-Party Service Agreements
We have entered into a variety of agreements and financial commitments in the normal course of business with CROs, CMOs, and other third parties for preclinical and clinical development and manufacturing services. The terms generally provide us with the option to cancel, reschedule and adjust our requirements based on our business needs, prior to the delivery of goods or performance of services. Payments due upon cancellation generally consist only of payments for services provided or expenses incurred, including non-cancelable obligations of our service providers, up to the date of cancellation. However, some of our service providers also charge cancellation fees upon cancellation. The amount and timing of such payments are not known, but at December 31, 2024 they are estimated to be a maximum of $11.8 million due within
97
one year and $2.4 million due in more than a year. As of December 31, 2024, we had cash and cash equivalents of $771.7 million, which is sufficient to fund these obligations.
Leases
We are party to a services agreement (the "Naarden Lease") pursuant to which an affiliate of Forbion leased us office space; an office lease agreement with Renaissance Aventura LLC, dated May 24, 2021, as amended April 9, 2024 (as amended, the “Miami Lease”); and an office sublease agreement with GR8 People, Inc., dated April 2, 2024 (the “Yardley Lease”). Under the Naarden Lease, we are obligated to pay €40 thousand per year in rent. The Naarden Lease will continue until terminated by either us or the landlord. Pursuant to the Miami Lease, we are required to pay annual rent ranging from $75 thousand to $82 thousand, increasing from the low end of the range to the higher end of the range for each year of the lease. The Miami Lease will expire by its terms on October 31, 2027, unless terminated earlier by either party pursuant to the terms of the Miami Lease. Pursuant to the Yardley Lease, we are required to pay annual rent ranging from $189 thousand to $194 thousand, increasing from the low end of the range to the higher end of the range for each year of the lease. The Yardley Lease will expire by its terms on April 3, 2026, unless terminated earlier by either party pursuant to the terms of the Yardley Lease.
Menarini License
We will be responsible for the development and commercialization costs related to Licensed Products other than those in the Menarini Territory. In addition, under specified conditions of the agreement, we agreed to bear 50% of certain development costs incurred by the other party in the development of the Licensed Products in the Menarini Territory. Please see “ Business—Marketing and Sales ” above for a description of the Menarini License.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. Prior to 2023, we prepared our financial statements in accordance with the IFRS as permitted in the United States based on our qualification as a foreign private issuer under the rules and regulations of the SEC. In connection with the loss of our status as a foreign private issuer effective on January 1, 2024, we, as a domestic filer, prepared our financial statements in accordance with U.S. GAAP. The transition was made retrospectively for all periods from our inception.
The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. We based our estimates on historical experience, known trends and other market-specific or other relevant factors that we believe to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. If actual results differ from our estimates, or to the extent these estimates are adjusted in future periods, our results of operations could either benefit from, or be adversely affected by, any such change in estimate.
See Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a summary of significant accounting policies and the effect on our consolidated financial statements.