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Item 2. Management’s Discussion and Analysis

2024-08-14 compared with 2024-05-15 · 93 added, 71 removed, 137 unchanged (54% of the section changed)

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The following discussion and analysis are meant to provide material information relevant to an assessment of the financial condition and results of operations of our Company, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources, so as to allow investors to better view our Company from management’s perspective.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements for the three months ended March 31, 2024, included elsewhere in this Quarterly Report on Form 10-Q.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements for the quarter ended June 30, 2024, included elsewhere in this Quarterly Report on Form 10-Q.

In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.

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We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this report, including those set forth under Item 1A.

"Risk Factors" in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 and in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Form 10-K”).

"Risk Factors" in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Form 10-K”).

Overview and Recent Developments

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Our pipeline includes:

• LTI-03, a peptide, for which we are currently recruiting patients for a Phase 1b dose-ranging, placebo-controlled safety, tolerability, and pharmacodynamic biomarker activity trial in development for the treatment of IPF, that has demonstrated the ability to protect healthy lung epithelial cells and reduce pro-fibrotic signaling;

• LTI-01, a proenzyme that completed a Phase 2a dose-ranging, placebo-controlled trial and a Phase 1b safety, tolerability and proof of mechanism trial in LPE patients, an indication that has no approved drug treatment;

• LTI-03, a peptide, for which we are currently recruiting patients for a Phase 1b dose-ranging, placebo-controlled safety, tolerability, and pharmacodynamic biomarker activity trial in development for the treatment of Idiopathic Pulmonary Fibrosis, or IPF, that has demonstrated the ability in both preclinical studies and clinical trials to protect healthy lung epithelial cells and reduce pro-fibrotic signaling;

• LTI-01, a proenzyme that completed a Phase 2a dose-ranging, placebo-controlled trial and a Phase 1b safety, tolerability and proof of mechanism trial in loculated pleural effusion, or LPE, patients, an indication that has no approved drug treatment;

• preclinical programs targeting cystic fibrosis and a peptide program focused on the Cav1 protein for systemic fibrosis indications.

In June 2024, we decided to temporarily delay clinical development of LTI-01 in an effort to focus our resources on clinical development of LTI-03 and until additional funds are raised.

Prior to the termination of development of our main product candidate in February 2023 and the Lung Acquisition (as described below), our focus was the development of our main product candidate, ALRN-6924, a MDM2/MDMX dual inhibitor that leveraged our proprietary peptide drug technology.

Since our inception, we have devoted a substantial portion of our resources to developing our product candidates, including ALRN-6924, developing our proprietary stabilized cell-permeating peptide platform, building our intellectual property portfolio, business planning, raising capital and providing general and administrative support for these operations.

Data from Cohort 1 of Phase 1b Clinical Trial of LTI-03

On May 1, 2024, we announced positive data from Cohort 1 of the ongoing Phase 1b clinical trial evaluating the safety and tolerability of inhaled LTI-03 in patients diagnosed with IPF.

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In addition to the safety and tolerability of LTI-03, in the trial, various biomarkers relating to epithelial damage, fibrosis and inflammation in blood cells were assessed.

The eight biomarkers that the Company evaluated in Cohort 1 included:

The eight biomarkers that we evaluated in Cohort 1 included:

thymic stromal lymphopoietin (TSLP), galectin-7 (GAL-7), interleukin-11 (IL-11), collagen 1 alpha chain (Col-1α1), phosphorylated SMAD2/3 (pSMAD2/3/tSMAD2/3), phosphorylated AKT kinase (pAKT), soluble (sol) receptor for advanced glycation end-products (solRAGE), and CXC chemokine 7 (CXCL7).

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The findings from Cohort 1 include:

• LTI-03 reduced expression of multiple profibrotic proteins in both pathologic basal-like cells and fibroblasts, with statistically significant decreases observed in three biomarkers - GAL-7 (p=0.0014, SEM 0.901), TSLP (p=0.0223, SEM 5.163) and Col-1α1 (p=0.0489, SEM 0.7102) - supporting the potential of LTI-03 to reduce fibrosis, inflammation and associated changes in the lung.

5.163) and Col-1α1 (p=0.0489, SEM 0.7102) - supporting the potential of LTI-03 to reduce fibrosis, inflammation and associated changes in the lung.

• LTI-03 stimulated production of solRAGE (p=0.1407, SEM 0.3269), a factor indicative of type I epithelial cell health that is a critically important aspect of IPF and has gone largely unaddressed.

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The Phase 1b trial is ongoing, with topline results from the high-dose Cohort 2 expected in the third quarter of 2024.

Announcement of Exploration of Strategic Alternatives

In February 2023, we announced a review of initial data from our Phase 1b chemoprotection trial of ALRN-6924 in patients with p53-mutated breast cancer.

Based on these findings, we decided to terminate the Phase 1b breast cancer trial and further development of ALRN-6924.

We also announced that we were exploring a range of strategic alternatives to maximize shareholder value.

We engaged Ladenburg Thalmann & Co., Inc.

to act as a strategic advisor for this process.

Strategic alternatives that were being evaluated included, but were not limited to, an acquisition, a merger, a business combination, a sale of assets or other transactions.

In addition, in February 2023, we determined to reduce our workforce from nine to three full-time employees, which we completed in the second quarter of 2023.

The Lung Acquisition

On October 31, 2023, we acquired Lung Therapeutics, Inc., or Lung, pursuant to an Agreement and Plan of Merger (the “Lung Acquisition Agreement”).

Following our acquisition of Lung (the “Lung Acquisition”) the business conducted by Lung became the business primarily conducted by the Company and we shifted our operating disease focus to advancing a pipeline of first-in-class medicines to address significant unmet medical needs in orphan pulmonary and fibrosis indications.

Under the terms of the Lung Acquisition Agreement, at the closing of the Lung Acquisition, we issued to the stockholders of Lung 344,345 shares of our common stock and 19,903 shares of our newly designated Series X Preferred Stock.

Following our acquisition of Lung (the “Lung Acquisition”), Lung became a wholly-owned subsidiary of the Company.

In addition, following the Lung Acquisition, the business conducted by Lung became the business primarily conducted by the Company and we shifted our operating disease focus to advancing a pipeline of first-in-class medicines to address significant unmet medical needs in orphan pulmonary and fibrosis indications.

Each share of Series X Preferred Stock is convertible into 1,000 shares of common stock.

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Following approval of the conversion of outstanding Series X Preferred Stock, the Company had approximately 29,495,512 shares of common stock issued and outstanding on a pro forma basis, which gives effect to the full conversion of the Series X Preferred Stock as of the date of our 2023 annual meeting of stockholders, without regard to beneficial ownership limitations that may limit the ability of certain holders of Series X Preferred Stock to convert such shares to common stock as such time.

On March 5, 2024, based upon existing beneficial ownership limitations, 11,957 shares of Series X Preferred Stock were automatically converted into 11,957,000 shares of common stock and approximately 12,653 shares of Series X Preferred Stock (which are convertible into 12,653,000 shares of common stock) remained convertible at the option of the holder thereof, subject to certain beneficial ownership limitations.

On March 5, 2024, based upon existing beneficial ownership limitations, 11,957 shares of Series X Preferred Stock were automatically converted into 11,957,000 shares of common stock.

Components of our Results of Operations

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• salaries, benefits and other related costs, including stock-based compensation expense, for personnel engaged in research and development functions;

• expenses incurred in connection with the clinical development of its product candidates, including under agreements with third parties, such as consultants and contract research organizations, or CROs;

• the cost of manufacturing product candidates for use in its clinical trials and preclinical studies, including under agreements with third parties, such as consultants and contract manufacturing organizations, or CMOs;

• expenses incurred in connection with the preclinical development of its product candidates, including outsourced professional scientific development services, consulting research fees and payments made under sponsored research arrangements with third parties;

• expenses incurred in connection with the clinical development of our product candidates, including under agreements with third parties, such as consultants and contract research organizations, or CROs;

• the cost of manufacturing product candidates for use in our clinical trials and preclinical studies, including under agreements with third parties, such as consultants and contract manufacturing organizations, or CMOs;

• expenses incurred in connection with the preclinical development of our product candidates, including outsourced professional scientific development services, consulting research fees and payments made under sponsored research arrangements with third parties;

• the costs of laboratory supplies and acquiring, developing and manufacturing preclinical study and clinical trial materials;

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Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid or accrued research and development expenses.

In addition, we typically used our employee and infrastructure resources across our development programs.

We tracked outsourced development costs and milestone payments made under our licensing arrangements by product candidate or development program, but we did not allocate personnel costs, license payments made under our licensing arrangements or other internal costs to specific development programs or product candidates because these costs are deployed across multiple programs and, as such, are not separately classified.

In addition, we typically use our employee and infrastructure resources across our development programs.

We track outsourced development costs and milestone payments made under our licensing arrangements by product candidate or development program, but we do not allocate personnel costs, license payments made under our licensing arrangements or other internal costs to specific development programs or product candidates because these costs are deployed across multiple programs and, as such, are not separately classified.

Research and development activities are central to our business model.

The duration, costs and timing of clinical trials and development of a product candidate will depend on a variety of factors, including:

• the scope, rate of progress, expense and results of clinical trials of the product candidate that we are developing and other research and development activities that we have conducted;

The duration, costs and timing of clinical trials and development of a product candidate depend on a variety of factors, including:

• the scope, rate of progress, expense and results of clinical trials of the product candidates that we are developing and other research and development activities that we have conducted;

• uncertainties in clinical trial design and patient enrollment rates;

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A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate.

For example, if the FDA, or another regulatory authority were to have required us to conduct clinical trials beyond those that we anticipated would be required for the completion of clinical development of a product candidate, or if we experienced significant trial delays due to patient enrollment or other reasons, we would have been required to expend significant additional financial resources and time on the completion of clinical development.

For example, if the FDA, or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate would be required for the completion of clinical development of a product candidate, or if we experience significant trial delays due to patient enrollment or other reasons, we could be required to expend significant additional financial resources and time on the completion of clinical development.

General and Administrative Expenses

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Restructuring Costs

Restructuring-related charges are comprised of one-time termination costs in connection with the reduction-in-workforce, including severance, benefits, and related costs.

Restructuring-related charges are comprised of one-time termination costs in connection with our reduction-in-workforce in 2023, including severance, benefits, and related costs.

Other Income, net

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Results of Operations

Comparison of the Three Months Ended March 31, 2024 and 2023

The following table summarizes our results of operations for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2024 and 2023

The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023:

Three Months Ended June 30,

(in thousands)

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Loss from operations

Other income (expense), net

Other income, net

Research and Development Expenses

Research and development expenses for the three months ended March 31, 2024 were $3.5 million, compared to $1.8 million for the three months ended March 31, 2023.

The increase of $1.7 million was primarily a result of the Lung Acquisition in October 2023.

During the three months ended March 31, 2024, Aileron spent $1.1 million on clinical trials, $1.6 million on manufacturing, and $0.2 million on regulatory and development consulting as well as $0.6 million on employee and related expenses associated with clinical programs acquired in the Lung Acquisition.

These programs and related activities did not exist during the three months ended March 31, 2023 and were offset by the termination of ALRN-6924 activities during the three months ended March 31, 2023.

Research and development expenses for the three months ended June 30, 2024 were $3.7 million, compared to $0.2 million for the three months ended June 30, 2023.

The increase of $3.5 million was primarily a result of the clinical programs acquired as part of the Lung Acquisition in October 2023.

During the three months ended June 30, 2024, we incurred expenses of $1.1 million on clinical trials, $2.0 million on manufacturing including $1.8 million write-offs due to the expiration of clinical materials, and $0.1 million on regulatory and development consulting as well as $0.5 million on employee and related expenses associated with clinical programs acquired in the Lung Acquisition.

These programs and related activities did not exist during the three months ended June 30, 2023 and were offset by the termination of ALRN-6924 activities during the three months ended June 30, 2023.

General and Administrative Expenses

General and administrative expenses were $3.7 million for the three months ended March 31, 2024, compared to $2.2 million for the three months ended March 31, 2023.

The increase of $1.5 million was primarily due to increased professional fees of $1.0 million and increased employee and related expenses of $0.3 million as a result of the Lung Acquisition, and increased facilities and other expenses of $0.2 million in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

General and administrative expenses were $5.3 million for the three months ended June 30, 2024, compared to $1.9 million for the three months ended June 30, 2023.

The increase of $3.4 million was primarily due to increased professional fees of $1.0 million and increased employee and related expenses of $1.8 million as a result of increased business activity, headcount associated with the Lung Acquisition and severance expense recognized due to departure of former employees, and increased facilities and other expenses of $0.5 million during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Restructuring and Other Costs

There were no restructuring-related expenses incurred in the three months ended March 31, 2024.

On February 16, 2023, our Board of Directors determined to reduce the Company’s remaining workforce from nine to three full-time employees.

As a result, we incurred restructuring-related charges of $1.0 million for the three months ended March 31, 2023.

There were no restructuring-related expenses incurred in the three months ended June 30, 2024.

In February 2023, our Board of Directors determined to reduce the Company’s workforce at that time from nine to three full-time employees.

We incurred restructuring-related charges of less than $0.1 million for the three months ended June 30, 2023.

Restructuring-related charges were comprised of one-time termination costs in connection with the reduction-in-workforce, including severance, benefits, and related costs.

All restructuring-related expenses incurred and were paid in 2023.

All restructuring-related expenses were incurred and paid in 2023.

Other Income, net

Other income, net for the three months ended March 31, 2024 was less than $0.1 million.

Other income, net, in the three months ended March 31, 2024 was primarily driven by fluctuations in foreign currency exchange rates and interest of our money market funds.

Other income, net for the three months ended June 30, 2024 was less than $0.1 million and it was primarily driven by fluctuations in foreign currency exchange rates and interest of our money market funds.

Comparison of the Six Months Ended June 30, 2024 and 2023

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

(in thousands)

Operating expenses:

Research and development

General and administrative

Restructuring and Other Costs

Total operating expenses

Loss from operations

Other income, net

Research and Development Expenses

Research and development expenses for the six months ended June 30, 2024 were $7.2 million, compared to $2.0 million for the six months ended June 30, 2023.

The increase of $5.2 million was primarily a result of the clinical programs acquired as part of the Lung Acquisition in October 2023.

During the six months ended June 30, 2024, we incurred expenses of $2.2 million on clinical trials, $3.6 million on manufacturing including $2.4 million write-offs due to the expiration of clinical materials, and $0.3 million on regulatory and development consulting as well as $1.1 million on employee and related expenses associated with clinical programs acquired in the Lung Acquisition.

These programs and related activities did not exist during the six months ended June 30, 2023 and were offset by the termination of ALRN-6924 activities during the six months ended June 30, 2023.

General and Administrative Expenses

General and administrative expenses were $9.0 million for the six months ended June 30, 2024, compared to $4.1 million for the six months ended June 30, 2023.

The increase of $4.9 million was primarily due to increased professional fees of $2.0 million and increased employee and related expenses of $2.1 million as a result of increased business activity, headcount associated with the Lung Acquisition and severance expense recognized due to departure of former employees, and increased facilities and other expenses of $0.8 million during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Restructuring and Other Costs

There were no restructuring-related expenses incurred in the six months ended June 30, 2024.

We incurred restructuring-related charges of $0.9 million for the six months ended June 30, 2023 in connection with our February 2023 restructuring.

Restructuring-related charges were comprised of one-time termination costs in connection with the reduction-in-workforce, including severance, benefits, and related costs.

All restructuring-related expenses were incurred and paid in 2023.

Other Income, net

Other income, net for the six months ended June 30, 2024 was less than $0.2 million and it was primarily driven by fluctuations in foreign currency exchange rates and interest of our money market funds.

Liquidity and Capital Resources

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See the section titled “ Risk Factors ” found elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 15, 2024 for additional risks associated with our substantial capital requirements.

To date, we have funded our operations through sales of common stock in our initial public offering and follow-on public offerings, sales of common stock and warrants in a private placement, sales of common stock in “at-the-market” offerings, sales of common stock under our equity line with Lincoln Park Capital LLC, sales of preferred stock prior to our initial public offering, payments received under a collaboration agreement and sales of common stock, preferred stock and warrants in connection with the Lung Acquisition and the Financing.

As of March 31, 2024, we had cash and cash equivalents of $12.0 million.

On May 1, 2024, we entered into an underwriting agreement with Titan Partners Group LLC, a division of American Capital Partners, LLC, as underwriter, relating to an underwritten offering (the “Offering”) of 4,273,505 shares of our common stock, par value $0.001 per share and accompanying warrants to purchase 4,273,505 shares of our common stock.

All of the shares and warrants were sold by May 3, 2024 for the net proceeds from the Offering of approximately $17.9 million, after deducting underwriting discounts and commissions and estimated offering expenses, and excluding any proceeds that may be received from exercise of the warrants.

We expect to use the net proceeds from the Offering, together with our existing cash and cash equivalents, to fund the development and commercialization of our product candidates, including an ongoing Phase 1b clinical trial of LTI-03;

and for working capital and other general corporate purposes.

To date, we have funded our operations through sales of common stock in our initial public offering, sales of common stock and warrants in follow-on public offerings, sales of common stock and warrants in a private placement, sales of common stock in “at-the-market” offerings, sales of common stock under our now terminated equity line with Lincoln Park Capital LLC, sales of preferred stock prior to our initial public offering, payments received under a collaboration agreement, sales of common stock, preferred stock and

warrants in connection with the Lung Acquisition and the PIPE Financing and sales of common stock upon option exercises.

As of June 30, 2024, we had cash and cash equivalents of $21.9 million.

In May 2024, we completed an underwritten follow-on public offering (the “Offering”) of 4,273,505 shares of our common stock and accompanying warrants to purchase 4,273,505 shares of our common stock.

All of the shares and accompanying warrants sold in the Offering were sold by the Company.

Each share was offered and sold together with an accompanying warrant at a combined offering price of $4.68, and the underwriter purchased each share and accompanying warrant at a combined price of $4.35.

Net proceeds from the Offering were approximately $18.2 million, after deducting underwriting discounts and commissions and offering expenses, and excluding any proceeds that may be received from exercise of the warrants.

In July 2024, we entered into an Equity Distribution Agreement with Citizens JMP Securities, LLC, or Citizens JMP, as agent and/or principal, under which we may offer and sell up to $50.0 million of our common stock from time to time through or to Citizens JMP.

Sales of common stock through or to Citizens JMP may be made by any method that is deemed an “at the market” offering as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended, including sales made directly on or through the Nasdaq Capital Market.

The following table summarizes our sources and uses of cash for each of the periods presented:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

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Cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash, cash equivalents and restricted cash

Operating Activities.

During the three months ended March 31, 2024, net cash used in operating activities was $5.3 million primarily due to our net loss of $7.1 million, offset by cash provided by the change in operating assets and liabilities of $1.6 million and non-cash charges of $0.2 million.

During the six months ended June 30, 2024, net cash used in operating activities was $13.7 million primarily due to our net loss of $16.1 million, offset by cash provided by the change in operating assets and liabilities of $1.8 million and non-cash charges of $0.6 million.

Non-cash charges resulted primarily from stock-based compensation expense of $0.5 million.

Changes in our operating assets and liabilities during the three months ended March 31, 2024 consisted primarily of a decrease of $1.3 million in other assets due to the recognition of a prepaid expense, and an increase of $1.0 million in accounts payable, offset by a decrease of $0.8 million in accrued expenses and other current liabilities.

During the three months ended March 31, 2023, net cash used in operating activities was $4.7 million primarily due to our net loss of $4.8 million.

Changes in our operating assets and liabilities during the six months ended June 30, 2024 consisted primarily of a decrease of $1.5 million in other assets due to the recognition of a prepaid expense, and an increase of $1.0 million in accrued expenses and other current liabilities, offset by an increase of $0.3 million in prepaid expenses and other current assets and a decrease of $0.4 million in accounts payable.

During the six months ended June 30, 2023, net cash used in operating activities was $7.8 million primarily due to our net loss of $6.6 million and $1.8 million of decreased net operating assets and liabilities, offset by $0.6 million in non-cash expenses.

Investing Activities .

During the three months ended March 31, 2024, net cash provided by investing activities was $0 million.

During the three months ended March 31, 2023, net cash provided by investing activities was $7.3 million primarily resulting from proceeds from the sale of investments.

During the six months ended June 30, 2024, there were no cash provided by investing activities.

During the six months ended June 30, 2023, net cash provided by investing activities was $15.8 million primarily resulting from proceeds from the sale of investments.

Financing Activities.

During the three months ended March 31, 2024 and 2023, net cash provided by financing activities was $0 million.

During the six months ended June 30, 2024, net cash provided by financing activities was $18.3 million primarily due to the Offering in May 2024.

During the six months ended June 30, 2023, there were no cash provided by financing activities.

Funding Requirements

Our plan of operation is to continue implementing our business strategy, continue research and development of LTI-03 and LTI-01 and any other product candidates we may acquire or develop and continue to expand our research pipeline and our internal research and development capabilities.

Our plan of operation is to continue implementing our business strategy, continue research and development of LTI-03 and any other product candidates we may acquire or develop and continue to expand our research pipeline and our internal research and development capabilities.

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our current and future product candidates.

In addition, we expect to incur

additional costs associated with operating as a public company.

In addition, we expect to incur additional costs associated with operating as a public company.

Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.

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As of March 31, 2024, we had cash and cash equivalents of $12.0 million.

Based on our research and development plans, and using the proceeds from the Offering, we believe that our existing cash and cash equivalents, will be sufficient to fund our operations into the second half of 2025.

As of June 30, 2024, we had cash and cash equivalents of $21.9 million.

Based on our current operating plan, we believe that our existing cash and cash equivalents as of June 30, 2024 will enable us to fund our operating expenses and capital expenditure requirements for at least twelve months from the date of issuance of these condensed consolidated financial statements.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

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If we incur indebtedness, we could become subject to covenants that would restrict our operations.

If we raise funds through strategic collaboration, licensing or other arrangements, we may relinquish significant rights or grant licenses on terms that are not favorable to us.

If we raise funds through strategic collaborations, licensing or other arrangements, we may relinquish significant rights or grant licenses on terms that are not favorable to us.

Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide.

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The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and 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 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.

During the three months ended March 31, 2024, there were no material changes to the items that we disclosed as our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on April 15, 2024.

During the three and six months ended June 30, 2024, there were no material changes to the items that we disclosed as our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on April 15, 2024.

Recent Accounting Pronouncements

See Note 2 to our unaudited condensed consolidated financial statements to this Report on Form 10-Q for a discussion of recent accounting pronouncements.

Emerging Growth Company Status

We ceased to qualify as an emerging growth company as of December 31, 2022, and became subject to Section 14A(a) and (b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), beginning with our fiscal year that started January 1, 2023.

However, notwithstanding the loss of our status as an emerging growth company, we will continue to be exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002 for so long as we are neither a “large accelerated filer” nor an “accelerated filer” as those terms are defined in Rule 12b-2 under the Exchange Act.

We are a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act.

Smaller Reporting Company Status

We are a “smaller reporting company” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

We may continue to be a smaller reporting company if either (i) the market value of our shares 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 shares held by non-affiliates is less than $700.0 million.

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Quantitative and Qualitati ve Disclosures About Market Risk.

We are a smaller reporting company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, for this reporting period and are not required to provide the information required under this item.

We are a smaller reporting company, as defined in Rule 12b-2 under the Exchange Act, for this reporting period and are not required to provide the information required under this item.

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