Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled “Risk Factors" in Part I, Item 1A of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. See “Cautionary Note Regarding Forward-Looking Statements.”
Our Business
We are a clinical-stage biotechnology company comprised of experienced biopharma industry leaders with extensive research, development, and rare disease expertise with a mission to develop and commercialize life-transforming therapies for patients with severe and rare diseases. Since our launch in January 2018, we have built a broad pipeline of promising product candidates aimed at addressing diseases with unmet medical need in the areas of maternal fetal health, complement dysregulation, hematology, and metabolic disorders. Our two most advanced programs are in clinical development: RLYB212, an anti-HPA-1a antibody for the prevention of FNAIT and RLYB116, an inhibitor of complement C5, with the potential to treat several diseases of complement dysregulation. RLYB212 is currently in a Phase 2 clinical trial in pregnant women and we plan to initiate a confirmatory PK and PD study of RLYB116 in the second quarter of 2025.
Maternal Fetal Blood Disorders
RLYB212 is a monoclonal anti-HPA-1a antibody for the prevention of FNAIT, a potentially life-threatening rare hematological disease that impacts fetuses and newborns. We are currently conducting a Phase 2 clinical trial of RLYB212 in pregnant women at higher risk for HPA-1a alloimmunization and FNAIT at sites across Europe. The primary objective of this single-arm Phase 2 trial is to assess the PK and safety of RLYB212 with secondary objectives that include assessments of pregnancy and neonatal/infant outcomes, and the occurrence of emergent HPA-1a alloimmunization. Subcutaneous administration of RLYB212 will be initiated by Gestational Week 16 and will continue every four weeks through parturition.
The Phase 2 trial is designed to enroll participants in three stages: first with a sentinel pregnant woman, an initial Cohort 1 that will include three pregnant women, and a Cohort 2 that will include four pregnant women, for a total target enrollment of eight participants. A data review for participants and infants is planned prior to the initiation of each cohort. Following completion of this Phase 2 dose confirmation trial and consultation with regulatory authorities, we expect to initiate a Phase 3 registrational trial. Both the U.S. FDA and EMA have designated RLYB212 as an orphan drug. Orphan drug designation offers certain incentives including tax credits, marketing exclusivity upon marketing approval, fee waivers, and the ability to interact with both agencies to receive specialized regulatory advice and assistance.
The Phase 2 trial follows completion of two RLYB212 clinical studies: a Phase 1 first-in-human clinical study and a Phase 1b proof-of-concept clinical study. The Phase 1 first-in-human clinical study was a single-blind, placebo-controlled study that investigated the safety and PK of SC administration of RLYB212 in HPA-1a negative healthy participants. The clinical study included a single dose cohort and a multiple dose cohort. In the multiple dose cohort, subjects received SC RLYB212 or placebo every two weeks for 12 weeks. We reported results from the multi-dose cohort in the fourth quarter of 2023. The data and our clinical pharmacology modeling predictions support a once monthly dosing regimen for the Phase 2 clinical trial.
In the first quarter of 2023, we announced RLYB212 achieved proof-of-concept in the Phase 1b study. In this study, SC RLYB212 administration produced a dose-dependent, rapid and complete elimination of transfused HPA-1a positive platelets in HPA-1a negative subjects, with both dose groups meeting the pre-specified proof-of-concept criteria of ≥ 90% reduction in mean platelet elimination half-life. Mean platelet elimination half-life was 5.8 hours (0.09mg dose) and 1.5 hours (0.29mg dose) for RLYB212 compared to 71.7 hours for placebo. In both Phase 1 studies, RLYB212 was observed to be generally well-tolerated with no reports of serious or severe adverse events.
We have a prospective, non-interventional, multinational natural history study. This study is designed to screen expectant mothers presenting at gestational week 10 to 14 prenatal visit to determine the frequency of women at higher FNAIT risk among expectant mothers of different racial and ethnic characteristics, as well as the frequency of HPA-1a alloimmunization and pregnancy outcomes among these women. An additional objective
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of the FNAIT natural history study is to operationalize de novo the laboratory screening test paradigm for FNAIT risk and generate FNAIT laboratory test performance data for future regulatory discussions. We recently transitioned screening activities from the natural history study to the Phase 2 clinical trial where sites will continue to collect natural history data in women who do not receive RLYB212. We expect that natural history data from both the natural history study and the Phase 2 clinical trial will contribute historical control data to support a planned single-arm Phase 3 registrational clinical trial of RLYB212. As of January 31, 2025, more than 14,300 pregnant women had been screened in this study.
In April 2024, we entered into the J&J Collaboration Agreement, pursuant to which we and J&J will support the development of complementary therapeutic approaches aimed at reducing the risk of FNAIT. Under the J&J Collaboration Agreement, we will share certain aggregated, anonymized data with J&J, collected from the FNAIT natural history study and our RLYB212 Phase 2 clinical trial, where the Phase 2 data will be restricted to certain natural history data in support of the natural history study. We also agreed to disseminate information to our FNAIT study sites related to J&J’s and its affiliates’ research and development of complementary therapeutic approaches aimed at reducing the risk of FNAIT. Pursuant to the agreement, we received an upfront payment of $0.5 million from J&J. In addition, we are eligible for payments upon the achievement of certain enrollment-related events, totaling up to $0.7 million. We are also eligible to receive additional payments upon certain triggers related to the companies' FNAIT studies. In addition, we received an equity investment of $6.6 million from Johnson & Johnson Innovation – JJDC, Inc. ("JJDC"). See "Liquidity and Capital Resources - Sources of Liquidity" below. In connection with the registration requirements and the restrictions on the sale or transfer of the common stock sold, we expect to recognize up to an additional $1.2 million of revenue.
Complement Dysregulation
We are also developing therapies that address diseases of complement dysregulation, including PNH, APS and gMG. RLYB116 is a novel, potentially long-acting, subcutaneously injected inhibitor of C5 in development for the treatment of patients with complement-related diseases. RLYB114 is a pegylated C5 inhibitor in development for complement-mediated ophthalmic disorders.
We have completed a Phase 1 clinical study in healthy participants that included the study of RLYB116 as a SAD and a MAD. The SAD portion of the RLYB116 clinical study included five cohorts with a dose ranging from 2mg up to 300mg. Data from the SAD portion of the study showed that all study participants that were administered a single 1 mL SC injection of 100 mg of RLYB116 (n=6) demonstrated a reduction in free C5 greater than 99% within 24 hours of dosing. Subcutaneously administered RLYB116 in the SAD portion of the study was observed to be generally well-tolerated at the 100 mg dose, with mild adverse events and no drug-related serious adverse events reported.
The MAD portion of the RLYB116 Phase 1 study included an adaptive single-blind design with a 4-week treatment duration to evaluate the safety, tolerability, PK, and PD of RLYB116 with multiple dose SC administration. The MAD portion of the study included four cohorts: Cohort 1 (weekly dosing of 100 mg), Cohort 2 (three doses of 100 mg the first week followed by weekly dosing), Cohort 3 (150 mg weekly dosing reduced to 125 mg weekly dosing) and Cohort 4 (75 mg twice the first week followed by 100 mg twice per week) with post-treatment / study follow-up for 10 weeks. In December 2023, we reported data from the MAD portion of the study that demonstrated a 100 mg low volume (1 mL) once-a-week dose of subcutaneously administered RLYB116 achieved sustained mean reductions in free C5 of greater than 93%, including at Day 29 with measurement prior to the last dose. The reduction from pre-treatment free C5 at 24 hours after the first dose of 100 mg was greater than 99%. RLYB116 administered in the MAD portion of the study as a 100 mg once-a-week dose was also observed to be generally well tolerated.
Based on the results of the RLYB116 Phase 1 trial, we conducted a series of biomarker characterization analyses. These analyses indicate the RLYB116 assay used to measure free C5 in the Phase 1 trial overestimated the levels of free C5 by approximately ten-fold, indicating that RLYB116 produced greater complement inhibition than initially reported. We now believe that RLYB116 has the potential to be an effective treatment for patients with a variety of complement-mediated diseases, including PNH, gMG and APS. We also completed manufacturing process enhancements with a goal of further improving the tolerability of RLYB116. Based on the results of enhanced analytical techniques, including mass spectrometry, these process enhancements have successfully further purified the RLYB116 drug substance. As a result, we believe that RLYB116 will have a favorable tolerability profile at doses at and above those evaluated in the Phase 1 MAD trial. We plan to initiate a RLYB116 confirmatory clinical PK/PD trial in the second quarter of 2025 to demonstrate improved tolerability as well as complete and sustained complement inhibition. This single-blind MAD trial will evaluate a 4-week treatment duration that will include two cohorts of eight participants each. Our
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current plan is that Cohort 1 will evaluate weekly dosing of 150 mg and Cohort 2 will evaluate weekly dosing of 225 mg with 10 weeks of follow-up after the conclusion of treatment.
Hematological Disorders
In May 2022, we obtained worldwide exclusive rights to RLYB331, a preclinical, monoclonal antibody that is designed to inhibit MTP-2. The inhibition of MTP-2 significantly increases levels of hepcidin, decreases iron load and treats ineffective erythropoiesis. In 2024, we re-engineered RLYB331 to extend its half-life and completed non-clinical studies that demonstrated favorable tolerability, dose-dependent PK, and sustained PD effects with RLYB332, a long-acting version of RLYB331. These findings, which were presented in a poster at the 66th annual meeting of ASH, support the continued development of RLYB332 as a potentially best-in-class therapeutic for treating diseases of iron overload.
Metabolic Disorders
Our collaboration with Exscientia on the discovery of a small molecule targeting an ENPP1 inhibitor for the treatment of HPP has continued after the acquisition of Exscientia by Recursion in 2024. HPP is a rare, genetic disease characterized by mutations in the ALPL gene. The ALPL gene provides instructions for making an enzyme called tissue-nonspecific alkaline phosphatase, which plays an important role in the growth and development of bones and teeth. We believe that a small molecule inhibitor of ENPP1 has the potential to bring meaningful benefit to HPP patients. In 2024, we presented data at the ASBMR from an early lead ENPP1 inhibitor, REV101, in a mouse model of later-onset HPP demonstrating a 30% reduction PPi, a key biomarker that is elevated in HPP and contributes to poor bone mineralization. Together with Recursion, we also advanced REV102, an ENPP1 inhibitor for the treatment of patients HPP to position the molecule for additional preclinical development activities in 2025.
In December 2022, we entered into a strategic alliance to discover, develop, and commercialize novel antibody-based therapeutics for rare diseases. This multi-year, multi-target collaboration will combine AbCellera’s antibody discovery engine with our clinical and commercial expertise in rare diseases to identify optimal clinical candidates with a goal of delivering therapies to patients.
Our Operations
Since inception, we have devoted substantially all of our resources to raising capital, organizing and staffing the Company, business planning, conducting discovery and research activities, acquiring or discovering product candidates, establishing and protecting our intellectual property portfolio, developing and progressing our product candidates, preparing for and conducting clinical trials and establishing arrangements with third parties for the manufacture of our product candidates and component materials, including activities relating to our preclinical development and manufacturing activities for each of our programs. We do not have any product candidates approved for sale and have not generated any revenue from product sales.
Since our inception, we have funded our operations primarily through equity financings. From our inception and prior to our IPO, we received proceeds of approximately $182.5 million from equity financings. In August 2021, we closed our IPO and issued and sold 7,130,000 shares of common stock, inclusive of 930,000 shares sold pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $13.00 per share. We received net proceeds of approximately $83.0 million, after deducting underwriting discounts and commissions and other offering costs.
In November 2022, we completed a follow-on offering of approximately $54.8 million pursuant to which we issued 5,803,655 shares of common stock, inclusive of 803,654 shares of common stock sold pursuant to the partial exercise of the underwriters' option to purchase additional shares at a price of $6.00 per share and to certain investors in lieu of common stock, pre-funded warrants to purchase up to an aggregate of 3,333,388 shares of common stock at a price of $5.9999, which represents the per share public offering price for the shares less the $0.0001 per share exercise price for each pre-funded warrant. The net proceeds from the November 2022 follow-on offering were approximately $50.8 million, after deducting underwriting discounts and commissions and other offering costs.
In April 2024, we entered into the a securities purchase agreement with JJDC (the "JJDC Securities Purchase Agreement") pursuant to which we sold to JJDC, in an unregistered offering, 3,636,363 shares of our common stock at a price of $1.82 per share, which represents a 10% premium on the Company’s closing stock price on April 9, 2024, for aggregate gross proceeds of approximately $6.6 million, before deducting offering expenses. We agreed, among other things, to file with the SEC a registration statement covering the resale of the shares, which we filed on May 10, 2024.
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As of December 31, 2024, we had cash, cash equivalents and marketable securities of $65.5 million. We believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements into the second half of 2026. This estimate and our expectation to advance the preclinical and clinical development of RLYB212, RLYB116, REV102 and any other product candidates are based on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect, or our clinical trials may be more expensive, time consuming or difficult to design or implement than we currently anticipate. See “—Liquidity and Capital Resources.”
We have incurred significant operating losses since inception, including net losses of $57.8 million and $74.6 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit of $293.0 million. These losses have resulted primarily from costs incurred in connection with research and development activities and general and administrative costs associated with our operations. We have not commercialized any products and have never generated revenue from the commercialization of any product. We expect to incur significant additional operating losses in the foreseeable future as we advance our programs through preclinical and clinical development, expand our research and development activities, acquire and develop new product candidates, complete preclinical studies and clinical trials, finance our business development strategy, seek regulatory approval for the commercialization of our product candidates and commercialize our products, if approved. Our expenses will increase substantially over time if and as we:
▪ advance our Phase 2 clinical trial for RLYB212;
▪ advance our FNAIT natural history study and any other studies to support our development program and related regulatory submissions for RLYB212;
▪ plan for and conduct any future clinical trials for RLYB116 and any of our other product candidates;
▪ seek regulatory approvals for RLYB212, RLYB116 and any other product candidates, as well as for any related companion diagnostic, if required;
▪ advance our discovery and preclinical development activities for our product candidates;
▪ continue to discover and develop additional product candidates;
▪ hire additional clinical, scientific, and commercial personnel;
▪ maintain, expand, and protect our intellectual property portfolio;
▪ acquire or in-license other product candidates or technologies;
▪ secure manufacturing sources and supply chain capacity sufficient to produce adequate quantities of our product candidates, including any product candidate for which we obtain regulatory approval; and
▪ establish a sales, marketing and distribution infrastructure to commercialize our programs, if approved, and for any other product candidates for which we may obtain marketing approval.
As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Our inability to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies. There can be no assurances, however, that the current operating plan will be achieved or that additional funding will be available on terms acceptable to us, or at all.
Components of Results of Operations
Revenue
We do not have any product candidates approved for sale and have not generated any revenue from product sales. Our collaboration and license revenue generated to date is related to data collection and data submission performance obligations pursuant to the two-year J&J Collaboration Agreement to facilitate the advancement of research into products to address unmet needs relating to FNAIT. Pursuant to the J&J Collaboration Agreement, we received an upfront payment of $0.5 million from J&J for the information dissemination and data provision services under the agreement. In addition, we are eligible for payments upon the achievement of certain
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enrollment-related events, totaling up to $0.7 million. We are also eligible to receive additional payments upon certain triggers related to the companies' FNAIT studies.
We evaluated the agreement and determined it was within the scope of the Accounting Standards Codification Topic 606, Revenue from Contracts with Customers . We determined there were performance obligations as follows:
(1) Data collection & submission revenue – derived from Rallybio’s ongoing management of our studies including the maintenance of a minimum site footprint, the license to utilize, and timely, semi-annual submission of the anonymized data, in the required formats to J&J.
(2) Dissemination of J&J materials & participant revenue – derived from Rallybio’s dissemination of content, information or materials that are developed by J&J and related to the J&J-Sponsored Studies and are provided by Rallybio to staff at Rallybio study sites for the purpose of disseminating such content, information, or materials to provide to potential eligible participants regarding J&J’s independent study.
In April 2024, we also entered into the JJDC Securities Purchase Agreement. Under the terms of the JJDC Securities Purchase Agreement, JJDC made an equity investment purchasing 3,636,363 shares of common stock with a par value of $0.0001 per share for a share purchase price of $1.82 per share which includes a 10% premium for an aggregate purchase price of $6.6 million. The JJDC Securities Purchase Agreement contains provisions related to the registration of the shares and the restriction on the sale or transfer of the shares for a period of time. We determined the J&J Collaboration Agreement and the JJDC Securities Purchase Agreement represented combined agreements. In accordance with the Accounting Standards Codification Topic 606, Revenue from Contracts with Customers and the Accounting Standards Codification Topic 820, Fair Value Measurement , total consideration of $1.2 million for the shares of common stock from the JJDC Securities Purchase Agreement, which represents the premium of $0.7 million and discount for lack of marketability of $0.5 million, has been allocated to revenue and will be recognized over the two year expected performance period.
Operating Expenses
Research and Development Expenses
Research and development expenses consist of costs incurred in connection with our research and development activities, including our drug discovery efforts and the development of our product candidates. We expense research and development costs as incurred, which include:
▪ external research and development expenses incurred under agreements with third parties, such as CROs as well as investigative sites and consultants that conduct our clinical trials and other scientific development services;
▪ costs related to manufacturing material for our clinical trials, including expenses related to the manufacturing scale-up and fees paid to CMOs;
▪ employee-related expenses, including salaries, bonuses, benefits, share-based compensation and other related costs for those employees involved in research and development efforts;
▪ costs of outside consultants, including their fees, and related travel expenses;
▪ expenses to acquire technologies, such as intellectual property, to be used in research and development including in-process research and development ("IPR&D") that has no alternative future use at the time of asset acquisitions;
▪ costs related to compliance with quality and regulatory requirements; and
▪ facilities, depreciation and other indirect costs allocated to employees and activities supporting our research and development efforts.
Costs for certain activities are recognized based on an evaluation of the progress to completion of each specific contract using information and data provided to us by our vendors and analyzing the progress of our research studies or other services performed. Significant judgments and estimates are made in determining the expenses incurred at the end of any reporting period.
Our direct, external research and development expenses consist primarily of fees paid to outside consultants, CROs, CMOs and research laboratories in connection with our process development, manufacturing and clinical development activities. Our direct external research and development expenses also include fees
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incurred under license and intellectual property purchase agreements. We track these external research and development costs on a program-by-program basis.
We do not allocate employee costs, costs associated with our facilities, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources and third-party consultants primarily to conduct our research and development activities as well as for managing our process development, manufacturing and clinical development activities.
The successful development of our product candidates is highly uncertain. We plan to continue investing in our research and development activities for the foreseeable future as we continue the development of our product candidates and the related manufacturing processes and conduct discovery and research activities for our clinical programs. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future clinical trials of our product candidates due to the inherently unpredictable nature of preclinical and clinical development. Clinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future clinical trials, regulatory developments, our ongoing assessments as to each product candidate’s commercial potential and the availability of capital. We will need to raise substantial additional capital in the future. Our clinical development costs are expected to increase significantly as our programs advance to later stages of development. We anticipate that our expenses may fluctuate from quarter to quarter, particularly due to the numerous risks and uncertainties associated with developing product candidates, including the uncertainty of:
▪ the scope, rate of progress and expenses of our ongoing research activities and clinical trials and other research and development activities;
▪ successful enrollment in and completion of clinical trials;
▪ whether our product candidates show safety and efficacy in our clinical trials;
▪ establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;
▪ obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates;
▪ receipt of marketing approvals from applicable regulatory authorities;
▪ commercializing product candidates, if and when approved, whether alone or in collaboration with others; and
▪ continued acceptable safety profile of the products following any regulatory approval.
Any changes in the outcome of any of these variables with respect to the development of our product candidates in clinical development could mean a significant change in the costs and timing associated with the development of these product candidates. We may never succeed in achieving regulatory approval for any of our product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. For example, if the FDA, EMA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that product candidate.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, benefits and share-based compensation for our personnel in executive, legal, business development, finance and accounting, and other administrative functions. General and administrative expenses also include legal fees relating to intellectual property and corporate matters, professional fees paid for accounting, auditing, tax and consulting services, insurance costs, travel expenses and direct and allocated facility costs not otherwise included in research and development expenses.
Total Other Income, Net
Total other income, net, includes interest income earned on cash, cash equivalents and marketable securities, and income and expense items.
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Loss on Investment in Joint Venture
The Company recognizes its pro-rata share of losses in the joint venture with Recursion (as successor in interest to Exscientia) on its consolidated statements of operations and comprehensive loss within the loss on investment in joint venture line item, with a corresponding change to the joint venture investment asset on the consolidated balance sheets for equity method investments for which it does not have a controlling interest in.
Results of Operations
Comparison of the years ended December 31, 2024 and 2023
The following table summarizes our results of operations:
FOR THE YEAR ENDED
DECEMBER 31,
(in thousands) 2024 2023 CHANGE
Revenue:
Collaboration and license revenue $ 636 $ — $ 636
Total revenue 636 — 636
Operating expenses:
Research and development 41,507 53,544 (12,037)
General and administrative 19,625 25,388 (5,763)
Total operating expenses 61,132 78,932 (17,800)
Loss from operations (60,496) (78,932) 18,436
Total other income, net 4,960 6,409 (1,449)
Loss before equity in losses of joint venture (55,536) (72,523) 16,987
Loss on investment in joint venture 2,239 2,041 198
Net loss $ (57,775) $ (74,564) $ 16,789
Revenue
Collaboration and license revenue was $0.6 million for the year ended December 31, 2024. There was no collaboration and license revenue for the year ended December 31, 2023. The increase of $0.6 million in 2024 as compared to 2023 was due to our entrance into the J&J Collaboration Agreement in the second quarter of 2024 and the recognition of revenue related to the collaboration performance obligations.
Operating Expenses
Research and Development Expenses
The following table summarizes our research and development costs for each of the periods presented:
FOR THE YEAR ENDED
DECEMBER 31,
(in thousands) 2024 2023 CHANGE
Direct research and development by program
RLYB212 $ 21,287 $ 25,685 $ (4,398)
RLYB116 4,841 8,791 (3,950)
Other program candidates 1,901 3,411 (1,510)
Other unallocated research and development costs
Personnel expenses (including share-based compensation) 12,488 14,160 (1,672)
Other expenses 990 1,497 (507)
Total research and development expenses $ 41,507 $ 53,544 $ (12,037)
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Research and development expenses were $41.5 million for the year ended December 31, 2024, compared to $53.5 million for the year ended December 31, 2023. The decrease of $12.0 million was primarily due to:
▪ a $4.4 million decrease in costs related to the development of RLYB212, primarily attributable to a decrease in manufacturing and other related development costs; which were partially offset by an increase in clinical costs;
▪ a $4.0 million decrease in costs related to the development of RLYB116, primarily attributable to a decrease in clinical and other related development costs; which were partially offset by an increase in manufacturing costs;
▪ a $1.7 million decrease in payroll and personnel-related expenses, primarily related to the workforce reduction, effective March 6, 2024; and
▪ a $1.5 million decrease in costs related to the development of other program candidates.
General and Administrative Expenses
General and administrative expenses were $19.6 million for the year ended December 31, 2024, compared to $25.4 million for the year ended December 31, 2023. The decrease of $5.8 million was primarily due to:
▪ a $3.7 million decrease in consulting fees, director and officer insurance premiums, professional fees and other related general and administrative expenses; and
▪ a $2.1 million decrease in payroll and personnel-related costs, primarily related to the workforce reduction, effective March 6, 2024, in addition to lower ongoing headcount in 2024 as compared to 2023.
Total Other Income, Net
Total other income, net, for the year ended December 31, 2024 was $5.0 million compared to $6.4 million for the year ended December 31, 2023. The decrease in total other income of $1.4 million was primarily due to a decrease in interest income from marketable securities due to a lower excess cash balance.
Loss on Investment in Joint Venture
Loss on investment in joint venture for the year ended December 31, 2024 was $2.2 million compared to $2.0 million for the year ended December 31, 2023. The increase in loss on investment in joint venture of $0.2 million was primarily due to an increase in REVI development costs.
Liquidity and Capital Resources
Sources of Liquidity
Since our inception, we have funded our operations primarily through equity financings. From our inception and prior to our IPO, we received proceeds of approximately $182.5 million from equity financings. In August 2021, we closed our IPO and issued and sold 7,130,000 shares of common stock, inclusive of 930,000 shares sold pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $13.00 per share. We received net proceeds of approximately $83.0 million, after deducting underwriting discounts and commissions and other offering costs.
In August 2022, we filed a Registration Statement on Form S-3 (the “Shelf”) with the SEC in relation to the registration and potential future issuance of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof in the aggregate amount of up to $300.0 million. The Shelf was declared effective on August 15, 2022. The Company also simultaneously entered into a Sales Agreement (the "Sales Agreement") with Cowen and Company, LLC ("Cowen"). In accordance with the terms of the Sales Agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to $100.0 million from time to time at prices through Cowen acting as our agent. Pursuant to the Sales Agreement, sales of our common stock, if any, will be made in sales deemed to be “at the market offerings” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended (the "Securities Act"). Under the Sales Agreement, Cowen will be entitled to compensation equal to 3.0% of the gross proceeds of any shares of common stock sold under the Sales Agreement. As of December 31, 2024, the Company had not sold any shares of common stock pursuant to the Sales Agreement.
In November 2022, we completed a follow-on offering of approximately $54.8 million consisting of 5,803,655 shares of common stock, inclusive of 803,654 shares of common stock sold pursuant to the partial exercise of the underwriters' option to purchase additional shares at the price of $6.00 per share, and to certain investors in
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lieu of common stock, pre-funded warrants to purchase up to an aggregate of 3,333,388 shares of common stock at a price of $5.9999, which represents the per share public offering price for the shares less the $0.0001 per share exercise price for each pre-funded warrant. The net proceeds from the November 2022 follow-on offering were approximately $50.8 million, after deducting underwriting discounts and commissions and other offering costs.
In April 2024, we entered into a Securities Purchase Agreement with JJDC, pursuant to which we sold to JJDC in an unregistered offering, 3,636,363 shares of our common stock at a price of $1.82 per share, which represents a 10% premium on the Company’s closing stock price on April 9, 2024, for aggregate gross proceeds of approximately $6.6 million, before deducting offering expenses. We agreed, among other things, to file with the SEC a registration statement covering the resale of the shares within 120 days following the closing of the offering. We filed this registration statement on May 10, 2024.
As of December 31, 2024, we had $65.5 million of cash, cash equivalents and marketable securities.
Uses of Liquidity
We currently have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years. See "Contractual Obligations" below.
Funding Requirements
We believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements into the second half of 2026. This estimate and our expectation to advance the development of RLYB212, RLYB116, REV102 and any other product candidates are based on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect, or our clinical trials may be more expensive, time consuming or difficult to design or implement than we currently anticipate. We expect to incur significant expenses and operating losses in the foreseeable future as we advance our product candidates through clinical development, seek regulatory approval and pursue commercialization of any approved product candidates.
Because of the numerous risks and uncertainties, length of time and scope of activities associated with research, development and commercialization of pharmaceutical product candidates, we are unable to estimate the actual amount of funds we will require for development, approval and any approved marketing and commercialization activities. Our future capital requirements, both near and long-term, will depend on many factors, including, but not limited to:
▪ the initiation, progress, timing, costs and results of our clinical trials through all phases of development;
▪ the identification, assessment, acquisition and/or development of additional research programs and additional product candidates;
▪ the outcome, timing and cost of meeting regulatory requirements established by the FDA, EMA and other comparable foreign regulatory authorities, including any regulatory designations allowing for priority review and any additional clinical trials required by the FDA, EMA or other comparable foreign regulatory authorities;
▪ the willingness of the FDA, EMA and other comparable foreign regulatory authorities to accept our clinical trial designs, as well as data from our completed and planned preclinical studies and clinical trials, as the basis for review and approval of RLYB212, RLYB116 and any other product candidates;
▪ the cost and timing of the manufacture and supply of non-clinical and clinical trial material for RLYB212, RLYB116, REV102 and our other product candidates;
▪ the progress, timing and costs of the development by us or third parties of companion diagnostics, if required, for RLYB212 or any other product candidates, including design, manufacturing and regulatory approval;
▪ the cost of filing, prosecuting and enforcing our patent claims and other intellectual property rights;
▪ the cost of defending potential intellectual property disputes, including patent infringement actions brought by third parties against us;
▪ the costs associated with potential clinical trial liability or product liability claims, including the costs associated with obtaining insurance against such claims and with defending against such claims;
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▪ the effect of competing technological and market developments;
▪ the cost of making royalty, milestone or other payments under our current or any future in-license agreements;
▪ our ability to maintain our collaborations with Recursion and AbCellera on favorable terms and establish any new collaborations;
▪ the extent to which we in-license or acquire additional product candidates or technologies; and
▪ the costs of operating as a public company.
A change in the outcome of any of these, or other variables with respect to the development of any of our product candidates, could significantly change the costs and timing associated with the development of that product candidate. We will need to continue to rely on additional financing to achieve our business objectives.
In addition to the variables described above, if and when any of our product candidates successfully complete development, we will incur substantial additional costs associated with regulatory filings, marketing approvals, post-marketing requirements, maintaining our intellectual property rights and regulatory protection, in addition to other commercial costs. We cannot reasonably estimate these costs at this time.
Until such time, if ever, as we generate significant revenue from product sales, we expect to finance our operations through the sale of equity, debt financings, marketing and distribution arrangements and collaborations, strategic alliances and licensing arrangements or other sources. We currently have no credit facility or committed sources of capital. Any future sales of equity will result in dilution to our existing stockholders. If we raise additional funds through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, and we may need to dedicate a substantial additional portion of any operating cash flows to the payment of principal and interest on such indebtedness. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, intellectual property, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate product candidate development or future commercialization efforts.
Cash Flows
The following table summarizes our cash flows for each of the periods presented:
FOR THE YEAR ENDED
DECEMBER 31,
(in thousands) 2024 2023
Net cash used in operating activities $ (49,282) $ (60,265)
Net cash provided by investing activities 33,492 27,658
Net cash provided by financing activities 5,199 143
Net decrease in cash and cash equivalents $ (10,591) $ (32,464)
Operating Activities
During the year ended December 31, 2024, net cash used in operating activities was $49.3 million as compared to $60.3 million for the year ended December 31, 2023. The decrease in net cash used in operating activities was primarily related to a decrease in research and development and general and administrative activities and changes in working capital.
Investing Activities
Net cash provided by investing activities was $33.5 million for the year ended December 31, 2024 as compared to $27.7 million of net cash used in investing actives for the year ended December 31, 2023. The increase of $5.8 million in net cash provided by investing activities was primarily related to proceeds of $84.4 million from maturities of highly-rated debt securities, partially offset by purchases of highly-rated debt securities of $48.9 million during the year ended December 31, 2024, as compared to proceeds from maturities of highly-rated debt securities of $138.3 million, partially offset by purchases of highly-rated debt securities of $108.4 million during the year ended December 31, 2023.
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Financing Activities
Net cash provided by financing activities for the year ended December 31, 2024 was $5.2 million, representing proceeds from the issuance of common stock pursuant to the JJDC Securities Purchase Agreement, after deducting offering costs and accounting for the total consideration allocation related to the J&J Collaboration Agreement of $1.2 million. Net cash provided by financing activities for the year ended December 31, 2023 was $0.1 million, representing the issuance of common stock under the 2021 Employee Stock Purchase Plan, offset by payments of offering costs related to our November 2022 follow-on offering.
Contractual Obligations
The following table summarizes our contractual obligations as of December 31, 2024:
PAYMENTS DUE BY PERIOD
(in thousands) TOTAL LESS THAN
1 YEAR 1-3 YEARS 3-5 YEARS MORE THAN
5 YEARS
Operating lease obligations $ 156 $ 156 $ — $ — $ —
The contractual obligation amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions and the approximate timing of the actions under the contracts.
Purchase and Other Obligations
We enter contracts in the normal course of business with CROs and other third-party vendors for clinical trials and testing and manufacturing services. Aside from those included in the table above, most contracts do not contain minimum purchase commitments and are cancellable by us upon written notice. Payments that may be due upon cancellation consist of payments for services provided or expenses incurred. These payments are not included in the table above as the amount and timing of such payments are not known.
We may incur contingent payments upon our achievement of clinical, regulatory and commercial milestones, as applicable under agreements we have entered into with various third-party entities pursuant to which we have acquired or in-licensed intellectual property. Due to the uncertainty of the achievement and timing of the events that require payment under these agreements, the amounts to be paid by us are not fixed or determinable at this time and have not been included in the table above. See “Business—License Agreements” and “Business—Asset Purchase Agreements” included elsewhere in this Annual Report on Form 10-K for a description of these agreements.
Critical Accounting Policies and Significant Judgments and Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in Note 2 “Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation” to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Research and Development Expenses
As part of the process of preparing our consolidated financial statements, we are required to estimate our research and development expenses that are incurred as of each reporting period. This process involves reviewing open contracts and purchase orders, communicating with our personnel and with vendors to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary.
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We base our expenses related to research and development activities on our estimates of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct research and development on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the research and development expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid balance accordingly. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.
Although we do not expect our estimates to be materially different from amounts incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period.
Share-Based Compensation
The Company accounts for share-based compensation in accordance with the Accounting Standards Codification 718, Compensation—Stock Compensation . Generally, share-based compensation is measured at the grant date for all equity-based awards made to employees based on the fair value of the awards and is recognized over the requisite service period, which is generally the vesting period. Share-based compensation for awards with performance conditions are recognized over the service period when achievement of the performance condition is probable. The Company has elected to recognize the actual forfeitures by reducing the share-based compensation in the same period as the forfeitures occur. The Company classifies share-based compensation in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipients’ payroll costs are classified.
The Black-Scholes option-pricing model uses as inputs the fair value of our common stock and assumptions we make for the volatility of our common stock, the expected term of our common stock options, the risk-free interest rate for a period that approximates the expected term of our common stock options, and our expected dividend yield. See Note 2 “Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation” of our consolidated financial statements for additional information on the assumptions utilized in the Black-Scholes option-pricing model.
Emerging Growth Company and Smaller Reporting Company
As an emerging growth company (an “EGC”) under the JOBS Act, we may delay the adoption of certain accounting standards until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act, for EGCs include presentation of only two years of audited financial statements in a registration statement for an initial public offering, an exemption from the requirement to provide an auditor’s report on internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation, and less extensive disclosure about our executive compensation arrangements. Additionally, the JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an EGC to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an EGC. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. Therefore, the reported results of operations contained in our consolidated financial statements may not be directly comparable to those of other public companies.
We are also a “smaller reporting company” meaning that the market value of our stock held by non-affiliates is less than $700.0 million and our annual revenue was less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue was less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an EGC, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
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Off-Balance Sheet Arrangements
As of December 31, 2024 and 2023, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations and footnote disclosures is disclosed in Note 2 “Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation” to our consolidated financial statements for the year ended December 31, 2024 appearing elsewhere in this Annual Report on Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, and are not required to provide the information under this item.
Item 8. Financial Statements and Supplementary Data.
The financial information required by Item 8 is located beginning on page F-1 of this Annual Report.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.