What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-02 compared with 2022-05-02 · 45 added, 33 removed, 222 unchanged (26% of the section changed)

2 unchanged sentences

Examples of these statements include, but are not limited to, statements regarding the following:

potential future development plans for rNAPc2 (AB201) and Gencaro, including the potential for rNAPc2 to treat COVID-19, our ability to secure sufficient financing to support our anticipated clinical trials of rNAPc2 and Gencaro, the likelihood that any Phase 3 clinical trial results for Gencaro will satisfy the requirements of our Special Protocol Assessment agreement, the expected features and characteristics of Gencaro, including the potential for genetic variations to predict individual patient response to Gencaro, Gencaro’s potential to treat atrial fibrillation, or AF, future vaccines and treatment options for patients with COVID-19, future treatment options for patients with AF, the potential for Gencaro to be the first genetically-targeted AF prevention treatment, statements regarding potential Phase 3 development plans for Gencaro, including the timing and results thereof, and the ability of ARCA’s financial resources to support its operations at the current levels through at least the middle of fiscal year 2023, the sufficiency of our current capital to reach certain of our corporate objectives, our ability to obtain additional funding when needed or enter into a strategic or other transaction, including our ability to raise sufficient capital to fund any clinical trials for rNAPc2 and Gencaro and our other operations, the extent to which our issued and pending patents may protect our products and technology, the potential of such product candidates to lead to the development of safe or effective therapies, our ability to enter into collaborations, our ability to maintain listing of our common stock on a national exchange, our future operating expenses, our future losses, our future expenditures, and the sufficiency of our cash resources to maintain operations.

potential future development plans for rNAPc2 (AB201) and Gencaro, including the potential for rNAPc2 to treat COVID-19, our ability to secure sufficient financing to support any clinical trials of rNAPc2 and Gencaro, the likelihood that any Phase 3 clinical trial results for Gencaro will satisfy the requirements of our Special Protocol Assessment agreement, the expected features and characteristics of Gencaro, including the potential for genetic variations to predict individual patient response to Gencaro, Gencaro’s potential to treat atrial fibrillation, or AF, future vaccines and treatment options for patients with COVID-19, future treatment options for patients with AF, the potential for Gencaro to be the first genetically-targeted AF prevention treatment, statements regarding potential Phase 3 development plans for Gencaro, including the timing and results thereof, and the ability of ARCA’s financial resources to support its operations at the current levels through at least the end of fiscal year 2023, the sufficiency of our current capital to reach certain of our corporate objectives, our ability to obtain additional funding when needed or enter into a strategic or other transaction, including our ability to raise sufficient capital to fund any clinical trials for rNAPc2 and Gencaro and our other operations, the extent to which our issued and pending patents may protect our products and technology, the potential of such product candidates to lead to the development of safe or effective therapies, our ability to enter into collaborations, our ability to maintain listing of our common stock on a national exchange, our future operating expenses, our future losses, our future expenditures, and the sufficiency of our cash resources to maintain operations.

Actual results and performance could differ materially from those projected in the forward-looking statements as a result of many factors discussed herein and elsewhere.

9 unchanged sentences

rNAPc2 targets COVID-19 patients with biomarker evidence of coagulopathy, while Gencaro is being developed for patients who have a genotype that identifies a drug target associated with heightened efficacy.

In April 2022, the Board of Directors established a Special Committee to evaluate strategic options, including transactions involving the merger or sale of all or part of our assets, and other alternatives with the goal of maximizing stockholder value.

In April 2022, the Board of Directors established a Special Committee and, in May, retained Ladenburg Thalmann & Co.

to evaluate strategic options, including transactions involving the merger or sale of all or part of our assets, and other alternatives with the goal of maximizing stockholder value.

We believe there are multiple potential opportunities to enhance value for our shareholders.

17 unchanged sentences

The disease caused by the SARS-CoV-2 virus has been designated COVID-19.

According to the World Health Organization, since this outbreak was first reported in late 2019, there have been over 509 million confirmed cases of COVID-19 and over 6 million deaths worldwide attributed to the virus (as of April 2022).

According to the World Health Organization, since this outbreak was first reported in late 2019, there have been over 570 million confirmed cases of COVID-19 and over 6 million deaths worldwide attributed to the virus (as of July 2022).

COVID-19 is associated with a high incidence of both arterial and venous coagulation-related adverse events in large and small blood vessels.

49 unchanged sentences

There was no difference between rNAPc2 and standard-of-care heparin in major or non-major clinically relevant bleeding.

We plan to meet with the FDA to review the Phase 2b clinical study data.

The clinical trial is being managed in collaboration with the Colorado Prevention Center, or CPC, the University of Colorado's Academic Research Organization.

We have financed the development of rNAPc2 through public equity sales.

Our rNAPc2 development plans, including the timeline, depend on our ability to enroll patients during the COVID-19 pandemic, the results of our Phase 2b clinical trial, FDA guidance, and availability of drug product, all of which are currently uncertain.

The clinical trial was managed in collaboration with the Colorado Prevention Center, or CPC, the University of Colorado's Academic Research Organization.

We own the clinical development program of rNAPc2, including the Phase 2b clinical development.

6 unchanged sentences

Wolfram Ruf, the Scientific Director and Alexander von Humboldt Professor at the Center for Thrombosis and Hemostasis (CTH) of the University Medical Center Mainz, and his collaborators.

We have upfront and potential milestone obligations to the

University Medical Center Mainz that could total approximately €1.6 million and royalty obligations in the low single digit range, if rNAPc2 receives regulatory approval and is commercialized.

We have upfront and potential milestone obligations to the University Medical Center Mainz that could total approximately €1.6 million and royalty obligations in the low single digit range, if rNAPc2 receives regulatory approval and is commercialized.

The term of the Agreement extends to the date of expiration of the last to expire of any of the assigned patents.

39 unchanged sentences

We have developed a laboratory platform for the diagnostic test that would be used to prescribe Gencaro;

this platform was approved by FDA for use in the Phase 2B clinical trial.

this platform was approved by FDA for use in the Phase 2B

clinical trial.

We retain all rights to this test platform;

we expect to use it in future clinical trials, and we believe it could be one of multiple diagnostic platforms used for commercialization .

To support the continued development of rNAPc2 and Gencaro, we will need additional financing to fully fund the planned clinical trials, and our general and administrative costs through the clinical trials’ projected completion and potential commercialization.

To support the continued development of rNAPc2 and Gencaro, we will need additional financing to fully fund any clinical trials, and our general and administrative costs through the clinical trials’ projected completion and potential commercialization.

Considering the substantial time and costs associated with the development of rNAPc2 and Gencaro and the risk that we may be unable to raise a significant amount of capital on acceptable terms, we are also pursuing co-development and commercialization partnering opportunities with large pharmaceutical and/or specialty pharmaceutical companies and may pursue a strategic combination or other strategic transactions.

If we are unable to obtain sufficient financing or are unable to complete a strategic transaction, we may discontinue our development activities on rNAPc2 or Gencaro or discontinue our operations .

We believe our cash and cash equivalents as of March 31, 2022 will be sufficient to fund our operations at the current levels through at least the middle of fiscal year 2023.

We believe our cash and cash equivalents as of June 30, 2022 will be sufficient to fund our operations at the current levels through at least the end of fiscal year 2023.

Our review of our strategic options may impact this projection.

4 unchanged sentences

Initiating any Phase 3 clinical trial of Gencaro is dependent on sustained improvement in the COVID-19 pandemic and will require additional financing .

In April 2022, the Board of Directors established a Special Committee and, in May, retained Ladenburg Thalmann & Co.

to evaluate strategic options, including transactions involving the merger or sale of all or part of our assets, and other alternatives with the goal of maximizing stockholder value.

We believe there are multiple potential opportunities to enhance value for our shareholders.

4 unchanged sentences

333-254585) .

As of April 29, 2022, the amount available for the offering under the prospectus supplement is subject to the limitation of not selling a total value amount of shares exceeding more than one-third of our public float in any 12-month period, which as of April 29, 2022 would have been approximately $10.1 million .

As of August 1, 2022, the amount available for the offering under the prospectus supplement is subject to the limitation of not selling a total value amount of shares exceeding more than one-third of our public float in any 12-month period, which as of August 1, 2022 would have been approximately $9.9 million .

In March 2020, the World Health Organization declared the outbreak of COVID-19, a novel strain of Coronavirus, a global pandemic.

6 unchanged sentences

Our R&D expense is almost entirely generated by our activities relating to the development of rNAPc2 (AB201).

R&D expense for the three months ended March 31, 2022 was $2.2 million compared to $2.9 million for the corresponding period of 2021, a decrease of $0.7 million.

Clinical expense decreased approximately $0.9 million for the three months ended March 31, 2022, as compared to the corresponding periods of 2021.

R&D expense for the three months ended June 30, 2022 was $1.5 million compared to $3.6 million for the corresponding period of 2021, a decrease of $2.1 million.

R&D expense for the six months ended June 30, 2022 was $3.7 million compared to $6.5 million for the corresponding period of 2021, a decrease of $2.8 million.

Clinical expense decreased approximately $1.2 million and $2.1 million for the three and six months ended June 30, 2022, as compared to the corresponding periods of 2021.

The decrease was related to the completion of enrollment in our rNAPc2 (AB201) international Phase 2b clinical trial in the fourth quarter of 2021.

Manufacturing process development costs increased approximately $0.4 million for the three months ended March 31, 2022, as compared to the corresponding periods of 2021.

R&D personnel costs decreased approximately $0.1 million for the three months ended March 31, 2022, as compared to the corresponding periods of 2021.

Manufacturing process development costs decreased approximately $1.0 million and $0.6 million for the three and six months ended June 30, 2022, as compared to the corresponding periods of 2021.

R&D personnel costs in creased approximately $ 0.2 million for the three months ended June 30 , 2022 , as compared to the corresponding period of 202 1 .

R&D personnel costs was relatively unchanged for the six months ended June 30, 2022, as compared to the corresponding period of 2021.

In July 2022, we implemented a strategic reduction of our workforce by approximately 67%, or 12 employees.

Personnel reductions were primarily focused in research and development and general and administrative functions.

The restructuring was a result of our decision to manage our operating costs and expenses.

In July, we recorded total restructuring charges of approximately $790,000, of which $490,000 and $300,000 were recognized in research and development and general and administrative expenses, respectively, in connection with the restructuring, all in the form of one-time termination benefits.

R&D expense in 2022 is expected to be lower than 2021, as we completed our rNAPc2 (AB201) international Phase 2b clinical trial in the fourth quarter of 2021.

1 unchanged sentence

General and administrative, or G&A, expenses primarily consist of personnel costs, consulting and professional fees, insurance, facilities and depreciation expenses, and various other administrative costs.

G&A expenses were $1.1 million for the three months ended March 31, 2022 compared to $1.2 million for the corresponding period of 2021, a decrease of $0.1 million.

The decrease was primarily a result of lower personnel costs in 2022, offset by increases in consulting costs.

G&A expenses were $1.7 million for the three months ended June 30, 2022 compared to $1.3 million for the corresponding period of 2021, an increase of $0.5 million.

The increase for the three month period was primarily a result of increases in professional fees and consulting costs.

G&A expenses were $2.8 million for the six months ended June 30, 2022 compared to $2.5 million for the corresponding period of 2021, an increase of $0.3 million.

The increase for the six month period was primarily a result of increases in professional fees and consulting costs, offset by lower personnel costs in 2022.

G&A expenses in 2022 are expected to be consistent with 2021 as we maintain administrative activities to support our ongoing operations.

In July 2022, w e recorded total restructuring charges of approximately $300,000 which were recognized in general and administrative expenses in connection with the restructuring, all in the form of one-time termination benefits

Interest and Other Income

Interest and other income was $7,000 and $2,000 in the three months ended March 31, 2022 and 2021, respectively.

Interest and other income was $72,000 and $3,000 in the three months ended June 30, 2022 and 2021, respectively.

Interest and other income was $79,000 and $5,000 in the six months ended June 30, 2022 and 2021, respectively.

Interest income for the remainder of 2022 is expected to be negligible.

Other Expense

Other expense was $2,000 for the three months ended March 31, 2022.

Other expense was $2,000 for the three and six months ended June 30, 2022.

Based on our current capital structure, other expense for the remainder of 2022 is expected to be negligible.

3 unchanged sentences

Cash and cash equivalents

As of March 31, 2022, we had total cash and cash equivalents of $49.1 million, as compared to $53.4 million as of December 31, 2021.

The net decrease of $4.3 million primarily reflects the cash used in operating activities during the three months ended March 31, 2022.

As of June 30, 2022, we had total cash and cash equivalents of $46.4 million, as compared to $53.4 million as of December 31, 2021.

The net decrease of $6.9 million primarily reflects the cash used in operating activities during the six months ended June 30, 2022.

In July 2022, we implemented a strategic reduction of our workforce.

In July, we recorded total restructuring charges of approximately $790,000 in connection with the restructuring, all in the form of one-time termination benefits.

Cash Flows from Operating, Investing and Financing Activities

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

4 unchanged sentences

Net (decrease) increase in cash and cash equivalents

Net cash used in operating activities for the three months ended March 31, 2022 decreased $0.9 million compared with the same period in 2021.

Net cash used in operating activities for the six months ended June 30, 2022 decreased $2.0 million compared with the same period in 2021.

This was primarily due to lower outflows related to changes in operating assets and liabilities and a lower net loss in 2022, as discussed in Results of Operations above.

Net cash used in investing activities for the three months ended March 31, 2022 was $2,000 for the purchase of property and equipment.

Net cash used in investing activities for the three months ended March 31, 2021 was $6,000 for the purchase of property and equipment.

There were no financing activities in the three months ended March 31, 2022.

Net cash provided by financing activities was $23.1 million for the three months ended March 31, 2021 related to net proceeds from sales of our common stock in our “at the market” equity offering in the period.

Net cash used in investing activities for the six months ended June 30, 2022 was $2,000 for the purchase of property and equipment.

Net cash used in investing activities for the six months ended June 30, 2021 was $22,000 for the purchase of property and equipment.

There were no financing activities in the six months ended June 30, 2022.

Net cash provided by financing activities was $23.1 million for the three months ended June 30, 2021 related to net proceeds from sales of our common stock in our “at the market” equity offering in the period.

Sources and Uses of Capital

4 unchanged sentences

In April 2021, we amended the new sales agreement and have $50.0 million available for the offering under our prospectus to our registration statement on Form S-3 (No.

In March 2020, the World Health Organization declared the outbreak of COVID-19, a novel strain of Coronavirus, a global pandemic.

10 unchanged sentences

the terms and conditions of our existing collaborative and licensing agreements.

We believe our cash and cash equivalents as of March 31, 2022 will be sufficient to fund our operations at the current levels through at least the middle of fiscal year 2023.

We believe our cash and cash equivalents as of June 30, 2022 will be sufficient to fund our operations at the current levels through at least the end of fiscal year 2023.

Our review of our strategic options may impact this projection .

5 unchanged sentences

We may not be able to raise sufficient capital on acceptable terms, or at all, to continue development and potential commercialization of rNAPc2 or Gencaro or to otherwise continue operations and may not be able to execute any strategic transaction.

In April 2022, the Board of Directors established a Special Committee and, in May, retained Ladenburg Thalmann & Co.

to evaluate strategic options, including transactions involving the merger or sale of all or part of our assets, and other alternatives with the goal of maximizing stockholder value.

We believe there are multiple potential opportunities to enhance value for our shareholders.

18 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 2. Management’s Discussion and Analysis