Item 1. Business
Item 1.
Business.
Rezolute, Inc. (“ Rezolute ”,
the “ Company ”, “ we ” or “ us ”) is a clinical-stage biopharmaceutical company developing
transformative therapies for metabolic diseases related to chronic glucose imbalance.
Overview
In October 2020 we completed a private placement
of equity securities that resulted in net proceeds to the Company of approximately $37.4 million.
Also in October 2020, our Board of Directors (our
“ Board of Directors ” or our “ Board ”) approved a one share for every fifty shares reverse stock split
of our common stock (the “ Reverse Stock Split ”). The Reverse Stock Split was previously approved by shareholders at
our annual meeting on October 23, 2019 and was effective at 5:00 PM EST on October 9, 2020. The first day of trading after the Reverse
Stock Split was on October 13, 2020. In connection with the Reverse Stock Split, proportionate adjustments were made to increase the per
share exercise prices and decrease the number of shares of common stock issuable upon exercise of stock options and warrants whereby approximately
the same aggregate price is required to be paid for such securities upon exercise as had been payable immediately preceding the Reverse
Stock Split. In addition, any fractional shares that would otherwise be issued as a result of the Reverse Stock Split were rounded up
to the nearest whole share. All references in this Annual Report to the number of shares of common stock and the related per share amounts
have been retroactively adjusted to give effect to the Reverse Stock Split.
In September 2020, we made adjustments to the
composition of our Board of Directors, which included appointing Philippe Fauchet as an independent director. Furthermore, in March 2021,
our Board of Directors appointed Dr. Nerissa C. Kreher and Dr. Wladimir Hogenhuis as independent directors. Our board consists of a majority
of independent directors.
In November 2020, our application to the Nasdaq
Capital Markets was approved and we began trading on this market under the “RZLT” ticker.
In December 2020, we entered into an Equity Distribution
Agreement (“ EDA ”) with Oppenheimer & Co. Inc., pursuant to which we may offer and sell, from time to time, shares
of the our common stock, par value $0.001 per share, having an aggregate offering price of up to $50.0 million. In
August 2021, we sold 138,388 shares of our common stock pursuant to the EDA at an average price per share of $10.78 for net proceeds of
approximately $1.5 million.
In April 2021, we entered into a Loan and Security
Agreement (the “ Loan Agreement ”) with SLR Investment Corp. (“ SLR ”) and certain other lenders (the
“ Lenders ”) that provided for total borrowings up to $30.0 million in three tranches. The initial tranche of funding
for $15.0 million was received in April 2021. Under the Loan Agreement, we are required to maintain a restricted cash balance of at least
$5.0 million beginning no later than December 31, 2021. The second tranche for $7.5 million is available upon our request by January 2022,
and the third tranche for $7.5 million is available upon our request by September 2022. Access to the additional borrowings under the
second and third tranches is subject to our ability by the requested funding date to raise cumulative equity or subordinated debt financing
of $35.0 million and $70.0 million, respectively, and the achievement of certain clinical milestones related to RZ358 and RZ402. We are
permitted to make interest-only payments on each term loan at least through May 1, 2023, and the maturity date is on April 1, 2026.
In June 2021, we merged with and into our wholly
owned subsidiary, Rezolute Nevada Merger Corporation, a Nevada corporation (“ Merger Sub ”), pursuant to an Agreement
and Plan of Merger, dated as of June 18, 2021 (the “ Reincorporation Merger Agreement ”), between us and Merger Sub,
with Merger Sub as the surviving corporation (the “ Reincorporation Merger ”). At the effective time of the Reincorporation
Merger (the “ Effective Time ”), the Merger Sub was renamed “Rezolute, Inc.” and succeeded to the assets,
continued our business and assumed our rights and obligations by operation of law. The Reincorporation Merger Agreement was approved by
our shareholders at the 2021 annual meeting of our shareholders held on May 26, 2021.
Summary of Clinical Assets
Our lead clinical asset, RZ358, is an
antibody therapy in Phase 2b development as a potential treatment for congenital hyperinsulinism (“ HI ”), an
ultra-rare pediatric genetic disorder. In February 2020, we announced the initiation of the RZ358-606 Phase 2b study
(“ RIZE ”) globally at multiple study centers. Prior to COVID-19, we had planned to complete the RIZE study by the
middle of calendar year 2021. In March 2020, we paused the RIZE study as a result of the COVID-19 pandemic. In January 2021, as the
COVID-19 pandemic began to abate in different regions, we resumed clinical activities including trial site initiations and patient
enrollment. Subject to COVID-19 conditions, we are expecting to substantially complete enrollment in the RIZE study by the end of
calendar year 2021 and have top-line data in the first quarter of calendar year 2022.
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In addition, in the first half of calendar year
2020, we had positive interactions with the U.S. Food and Drug Administration (“ FDA ”). In June 2020, we announced that
FDA granted us Rare Pediatric Disease (“ RPD ”) designation for RZ358, which qualifies us to receive a priority review
voucher (“PRV”) upon marketing approval of the drug in HI. Such a voucher could be redeemed to receive a priority review of
a subsequent marketing application for any drug candidate in any disease indication. Further, we submitted the RIZE protocol to FDA which
allows us to expand the study to clinical sites in the United States.
Our second clinical asset, RZ402, is a selective
and potent plasma kallikrein inhibitor (“ PKI ”) being developed as a potential oral therapy for the chronic treatment
of diabetic macular edema (“ DME ”). RZ402 is currently in Phase 1 development. In January 2021, we dosed the first subject
in the Phase 1a study, and in May 2021, we announced positive topline results whereby single dose oral administration of RZ402 resulted
in plasma concentrations that substantially exceeded target pharmacologically-active drug levels, demonstrating the potential for once
daily dosing. RZ402 was generally safe and well-tolerated at all doses tested, without dose-limiting toxicities. In August 2021, we announced
the initiation in the Phase 1b multiple-ascending dose study and planned to be completed by the first quarter of calendar year 2022. If
favorable results are also obtained in the Phase 1b study, we expect to advance developmental activities toward a Phase 2a proof-of-concept
study during the second half of calendar year 2022.
RZ358
HI is an ultra-rare pediatric genetic disorder
characterized by excessive production of insulin by the pancreas. If untreated, the elevated insulin levels in these patients can induce
extreme hypoglycemia (low blood sugar) events, increasing the risk of neurological and developmental complications, including persistent
feeding problems, learning disabilities, recurrent seizures, brain damage or even death. There are no approved therapies for HI and the
current standard of care treatments are suboptimal. In some cases, pancreatic surgery is a treatment option, but this approach is invasive
and may require repeat surgeries.
Our lead candidate, RZ358, is an intravenously
administered human monoclonal antibody that binds to a unique site (allosteric) on the insulin receptor throughout the body, such as in
the liver, fat, and muscle. The antibody modifies insulin's binding and signaling to maintain glucose levels in a normal range which counteracts
the effects of elevated insulin in the body. Therefore, we believe that RZ358 is ideally suited as a potential therapy for conditions
characterized by excessive insulin levels, and it is being developed to treat the hyperinsulinism and low blood sugar characteristic of
diseases such as HI. As RZ358 acts downstream from the beta cells, it has the potential to be universally effective at treating HI caused
by any of the underlying genetic defects.
RZ358 received Pediatric Rare Disease Designation
in the U.S. as well as Orphan Drug Designation in the U.S. and European Union. RZ358 is currently in Phase 2b development (the RIZE study,
RZ358-606). The RIZE study is a multi-center, open-label, repeat-dose Phase 2b study of RZ358 in four sequential dosing cohorts of patients
with HI who are at least two years old and have residual low blood sugar (<70 mg/dL) that is inadequately controlled on existing therapies.
In addition to safety and pharmacokinetic evaluations, continuous glucose monitoring (“CGM”) and self-monitored blood glucose
will be utilized to evaluate several glycemic efficacy endpoints. The primary endpoint is the time within a glucose target range of 70-180
mg/dL by CGM after week 8 of treatment compared to baseline.
RZ402
DME is a vascular complication of diabetes and
a leading cause of blindness in the U.S. and elsewhere. Chronic exposure to high blood sugar levels can lead to inflammation, cell damage,
and the breakdown of blood vessel walls. Specifically, in DME, blood vessels behind the back of the eye become porous and permeable leading
to the unwanted infiltration of fluid into the macula. This fluid leakage creates distorted vision and left untreated, blindness.
Currently available treatments for DME
involve frequent burdensome anti-vascular growth factor (anti-VEGF) injections into the eye or invasive laser surgery. RZ402 is
designed to be a once daily oral therapy for the treatment of DME. Unlike the anti-VEGF therapies, RZ402 targets the
Kallikrein–Kinin System in order to address inflammation and vascular leakage. We believe that systemic exposure through oral
delivery is critical to target the microvasculature behind the back of the eye. Further, as an oral therapy, RZ402 has the potential
to substantially change the therapeutic paradigm for patients suffering with DME by providing a convenient, self-administered
treatment option to encourage patients to initiate therapy sooner, adhere to prescribed treatment guidelines, and improve overall
outcomes.
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Competition
We face competition from pharmaceutical and biotechnology
companies, academic institutions, governmental agencies, and private research organizations in recruiting and retaining highly qualified
scientific personnel and consultants and in the development and acquisition of technologies.
There are a handful of companies developing therapies
for HI that are potential competitors to RZ358. Crinetics Pharmaceuticals Inc is one such company.
There are a handful of companies developing oral
therapies for DME that are potential competitors to the PKI therapy, KalVista Pharmaceuticals
being one such company.
Government Regulation
Regulation by governmental authorities in the
U.S. and other countries is a significant factor in the development, manufacture and marketing of pharmaceutical products. All of our
potential products will require regulatory approval by governmental agencies prior to commercialization. In particular, pharmaceutical
therapies are subject to rigorous preclinical testing and clinical trials and other pre-market approval requirements by the FDA and regulatory
authorities in foreign countries. Various federal, state and foreign statutes and regulations also govern or influence the manufacturing,
safety, labeling, storage, record keeping and marketing of such products.
We are also subject to various federal, state,
and local laws, regulations and recommendations relating to safe working conditions; laboratory and manufacturing practices; the experimental
use of animals; and the use and disposal of hazardous or potentially hazardous substances, including radioactive compounds and infectious
disease agents, used in connection with our research, development and manufacturing.
Research and Development
We incurred approximately $15.0 million and $14.5
million in research and development expenses for the fiscal years ended June 30, 2021 and 2020, respectively. For further discussion of
activities related to our RZ358 and RZ402 product candidates, please refer to the discussion above. For further discussion of our research
and development expenses, please refer to the discussion under the caption Results of Operations under Item 7 of this Annual Report.
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Human Capital Management
Employees
As of June 30, 2021, we had 26 employees, of which
19 employees were engaged in research and development, manufacturing, clinical operations and quality activities and 7 employees in general
administrative functions. Of the 26 employees, all were located in the United States. We have a number of employees who hold advanced
degrees, such as a Ph.D. degree. None of our employees are covered by a collective bargaining agreement, and we have experienced no work
stoppages nor are we aware of any employment circumstances that are likely to disrupt work at any
of our facilities . As part of our measures to attract and retain personnel, we provide a number of benefits to our full-time employees,
including health insurance, life insurance, retirement plans, paid holiday and vacation time. We believe that we maintain good relations
with our employees.
Diversity and Inclusion
Diversity and inclusion are priorities for us.
We believe that a rich culture of inclusion and diversity enables us to create, develop and fully leverage the strengths of our workforce.
Human Resources, Hiring and Professional
Development
The development, attraction and retention of employees
is critical to our success. We work diligently to attract the best talent from a diverse range of sources in order to meet the current
and future demands of our business. We leverage both formal and informal programs to identify, foster and retain top talent.
Business
Ethics
Our Code of Business Conduct and Ethics ensures
that our conduct of business is consistent with the highest standards of business ethics. Our Code of Business Conduct and Ethics serves
as a critical tool to help employees recognize and report unethical conduct, while preserving our culture of excellence. Our Board of Directors, management and staff are provided with training regarding our Code of Business Conduct and Ethics.
Corporate Information
We were incorporated in Delaware in 2010 and
re-incorporated in Nevada in June 2021. We maintain an executive office located at 201 Redwood Shores Parkway, Suite 315, Redwood City,
CA 94065 and our phone number is (650) 206-4507. Our website is located at www.rezolutebio.com . The information contained in,
or that can be accessed through, our website is not part of, and is not incorporated into this document.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.