What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-03-31 compared with 2024-03-29 · 125 added, 213 removed, 153 unchanged (69% of the section changed)

6 unchanged sentences

and its subsidiaries.

We are a clinical-stage, biopharmaceutical company focused on the development of powerful and proprietary immunotherapeutic polyclonal human antibodies to treat and prevent infectious diseases and immune and autoimmune disorders, including infectious diseases resulting from outbreaks and pandemics as well as immunology, gastroenterology, and respiratory diseases that have significant mortality and health impacts on immunocompromised patients.

We have applied advanced genetic engineering and antibody science to develop transchromosomic (Tc) Bovine.

Our novel immunotherapy platform that is developing fully-human hIgC for delaying the onset or progression of T1D.

We are advancing clinical programs in two indications, and preclinical development in three indications.

In addition, we are executing on two research collaborations with global pharmaceutical companies, including CSL Behring and an undisclosed collaboration.

We formed SAB Australia, in order to qualify for the Australian government’s research and development tax credit for research and development dollars spend in Australia.

The primary purpose of SAB Australia is to conduct clinical trials for SAB-142.

We started phase 1 trials in the fourth quarter of 2023.

We generated total revenue of $2.2 million and $23.9 million for the years ended December 31, 2023 and 2022, respectively (90.6% decline).

Our revenue to date has been primarily derived from government grants.

We plan to focus a substantial portion of our resources on continued research and development efforts towards deepening our technology and expertise with our platform and as well as indications in infectious disease and autoimmune indications.

As a result, we expect to continue to make significant investments in these areas for the foreseeable future.

We incurred research and development expenses of $16.5 million and $36.4 million for the years ended December 31, 2023 and 2022, respectively, and general and administrative expenses of $23.8 million and $16.4 million for the years ended December 31, 2023 and 2022, respectively.

We expect to continue to incur significant expenses, and we expect such expenses to increase substantially in connection with our ongoing activities, including as we:

• invest in research and development activities to optimize and expand our immunotherapy platform;

• develop new and advance preclinical and clinical progress of pipeline programs;

• market to and secure partners to commercialize our products;

• expand and enhance operations to deliver products, including investments in manufacturing;

• acquire businesses or technologies to support the growth of our business;

• continue to establish, protect and defend our intellectual property and patent portfolio;

• operate as a public company.

To date, we have primarily financed our operations from government agreements and the issuance and sale of common stock and preferred stock.

Our net loss for the year ended December 31, 2023, was $42.2 million and our net loss for the year ended December 31, 2022 was $18.7 million.

As of December 31, 2023, we had an accumulated deficit of $90.1 million, and cash and cash equivalents totaling $56.6 million.

Company Overview

We are a clinical-stage biopharmaceutical company focused on the development of human polyclonal immunotherapeutic antibodies, or hIgG, to address immunology disorders.

Our programs are based on mechanisms of action that have achieved proof-of-concept in clinical trials in indications with significant unmet medical needs.

We are focused on developing product candidates for disease targets where a differentiated approach has the greatest potential to be either first-in-class against novel targets or best-in-class against complex targets to treat diseases, including T1D and other autoimmune disorders.

Our internally discovered antibodies are both target-specific and polyclonal, meaning they are comprised of multiple hIgG and can bind to multiple sites on targeted immunogens, making them ideally suited to address the complexities associated with many immune-mediated disorders.

Our proprietary platform, referred to as holds the potential to generate additional novel therapeutic candidates to expand our pipeline.

Our platform utilizes the human immune response to generate the optimal repertoire of hIgG for drug targets of interest.

We believe it is the only technology capable of producing disease-targeted, hIgG in large quantities without the need for human plasma donors.

We have optimized genetic engineering in the development of transchromosomic cattle, or Tc Bovine, which produce hIgG.

Our engineering of our production platform drives IgG1 production across our pipeline.

In addition, this differentiated approach using polyclonal antibodies has no biosimilar pathway which provides a significant barrier to competitive polyclonal approaches.

Recent Developments

Effective January 5, 2024, we filed articles of amendment to our articles of incorporation to affect a one-for-ten reverse split of our issued and outstanding shares of Common Stock.

All references to common stock, warrants and options to purchase

common stock, including per share data and related information contained in the accompanying Consolidated Financial Statements have been retroactively adjusted to reflect the effect of the Reverse Stock Split for all periods presented.

On January 28, 2025 we announced positive topline phase 1 clinical results with the Company’s potentially disease-modifying T1D therapy SAB-142.

Based on the data, we plan to advance SAB-142 into a Phase 2b trial in 2025 to evaluate the therapeutic candidate in adult and pediatric patients with new-onset T1D.

The SAB-142 Phase 1 trial was designed as a randomized, double-blind, placebo-controlled, single-ascending dose, adaptive design clinical study among healthy volunteers and one cohort of participants with T1D.

The objectives include establishing the safety, tolerability, pharmacokinetic, immunogenicity and pharmacodynamic profile for SAB-142.

SAB-142 demonstrated a favorable safety profile with no reported serum sickness or anti-drug antibodies (ADA) across Phase 1 doses (0.03mg/kg to 2.5mg/kg), supporting chronic ambulatory dosing, while exhibiting sustained immunomodulation and a multi-target mechanism of action analogous to rabbit ATG, with correlations to C-peptide preservation.

Corporate Strategy

Our business strategy is focused on SAB-142 as a first-in-class, human, multi-target antibody treatment designed to provide superior efficacy and safety in delaying the onset or progression of T1D.

Our proprietary platform, represents the first technology of its kind to produce large-scale human high-titer and high-avidity antibodies across multiple modalities.

Leveraging our proprietary production system will help us advance a robust pipeline of differentiated hIgG-based therapies for the treatment of immune system disorders and infectious diseases.

Our hIgG have been safely demonstrated up through Phase 3 clinical trials with a patient safety database that includes over 700 patients who were safely administered our hIgG therapeutics.

We have a demonstrated regulatory pathway through each of the FDA, CBER, MHRA, and TGA.

These organizations understand our science and are familiar with the multivalent and multitarget properties of our single vial drug products.

This further streamlines our ability to develop new and novel drug products rapidly and efficiently where single target mAbs cannot replicate or duplicate our drug product attributes.

Key Factors Affecting Our Results of Operations and Future Performance

1 unchanged sentence

These factors also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations.

Our ability to successfully address these challenges is subject to various risks and uncertainties, including those described in Part I, Item 1A of this Form 10-K.

Our ability to successfully address these challenges is subject to various risks and uncertainties, including those described in Part I, Item 1A of this Annual Report.

Components of Results of Operations

4 unchanged sentences

Expenses for grants are tracked by using a project code specific to the grant, and the employees also track hours worked by using the project code.

For the years ended December 31, 2023 and 2022, we received the following grants:

Government grants

The total revenue for government grants was approximately $2.2 million and $23.9 million, respectively, for the years ended December 31, 2023 and 2022.

National Institute of Health – National Institute of Allergy and Infectious Disease (“NIH-NIAID”) (Federal Award #1R44AI117976-01A1) – this grant was for $1.4 million and started in September 2019 through August 2021.

This grant was subsequently amended to extend the end date to August 2022.

No grant income was recognized for the year ended December 31, 2023.

For the year ended December 31, 2022 there was approximately $182 thousand in grant income recognized from this grant.

This grant was completed in 2022.

NIH-NIAID (Federal Award #1R41AI131823-02) – this grant was for approximately $1.5 million and started in April 2019 through March 2021.

The grant was subsequently amended to extend the date through March 2023.

For the years ended December 31, 2023 and 2022, approximately $192 thousand and $328 thousand, respectively, in grant income was recognized from this grant.

This grant was completed as of June 30, 2023.

NIH-NIAID through Geneva Foundation (Federal Award #1R01AI132313-01, Subaward #S-10511-01) – this grant was for approximately $2.7 million and started in August 2017 through July 2021.

The grant was subsequently amended to extend the end date to July 2023.

For the years ended December 31, 2023 and 2022, there was approximately $273 thousand and $1.1 million, respectively, in grant income recognized from this grant.

This grant was completed as of June 30, 2023.

Department of Defense (“DoD”), Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense Enabling Biotechnologies (“JPEO”) through Advanced Technology International – this grant was for a potential of $25 million, awarded in stages starting in August 2019 and with potential stages running through February 2023.

Additional contract modifications were added to this contract in 2020 and 2021 for work on a COVID therapeutic, bringing the contract total to $203.6 million.

For the years ended December 31, 2023 and 2022, there was approximately $1.8 million and $22.2 million, respectively, in grant income recognized from this grant.

This grant was terminated in 2022.

The grants for the JPEO Rapid Response contract are cost reimbursement agreements, with reimbursement of qualified direct research and development expense (labor and consumables) with an overhead charge (based on actual, reviewed quarterly) and a fixed fee (9%).

On August 3, 2022, we received notice from the DoD terminating the JPEO Rapid Response contract (the “JPEO Rapid Response Contract Termination”).

We engaged in negotiations with the DoD to compensate us for services provided prior to the JPEO Rapid Response Contract Termination and costs we would be expected to bear in future periods.

A termination and settlement proposal was submitted to the DoD on September 9, 2022;

we submitted a final invoice on December 15, 2022;

and received payment from the DoD on or about January 12, 2023.

The terms of the arrangement provide for a cost-reimbursable structure, and state that the parties will work in good faith equitable reimbursement for work performed toward accomplishment of tasks provided in the agreement.

At this time, other than certain deferred obligations (presented within deferred grant income within our consolidated balance sheet) potentially payable to the DoD solely due to subsequent negotiations with third-party vendors, we believe and have been advised there is a reasonable, good faith basis for the position that no present or future obligations exist.

Revenue recognized subsequent to the JPEO Rapid Response Contract Termination relates to satisfaction of residual obligations under the termination and settlement agreement—see Note 2, Summary of Significant Accounting Policies for further information about our established revenue recognition process.

Total revenue recognized from government grants was approximately $1.3 million and $2.2 million for the years ended December 31, 2024 and 2023, respectively.

We had two grants from The National Institute of Health – National Institute of Allergy and Infectious Disease (“NIH-NIAID”).

The first grant, directly from NIH-NIAID, totaled approximately $1.5 million, and the second grant through Geneva Foundation, totaling approximately $2.7 million.

Both of these grants were completed as of June 30, 2023.

No grant income was recognized for these grants for the year ended December 31, 2024 and for the year ended December 31, 2023, we recognized approximately $0.4 million in total grant income, $0.2 million from each grant, respectively.

The Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense Enabling Biotechnologies (“JPEO”) Rapid Response Contract (the “JPEO Rapid Response Contract”), initially awarded for up to $25 million and later expanded to $203.6 million, was terminated in 2022 (the “JPEO Rapid Response Contract Termination”).

A final settlement was reached with the US Department of Defense (the “DoD”) in January 2023.

Approximately $1.3 million and $1.8 million in deferred grant income was recognized for the JPEO Rapid Response Contract for the years ended December 31, 2024 and December 31, 2023, respectively.

See Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements for further information about our established revenue recognition process and Note 4, Revenue, to our consolidated financial statements for further information about revenue recognized from government grants for the years ended December 31, 2024 and 2023.

Operating Expenses

4 unchanged sentences

We expense all research and development costs in the period in which they are incurred.

Research and development activities consist of discovery research for our platform development and the various indications we are working on.

We have not historically tracked our research and development expenses on a product candidate-by-product candidate basis.

For the years ended December 31, 2023 and 2022, we had contracts with multiple CROs to conduct and complete clinical studies.

In the case of SAB-185, the CRO has been contracted and paid by the US government.

For SAB-176, PPD Development, LP, acting as CRO oversaw the Phase 1 safety study.

The terms of that agreement are subject to confidentiality, and the status of the agreement is that it is current, in good standing and 100% of the contract has been paid as of December 31, 2023.

SAB has also contracted with hVIVO Services Limited to conduct the Phase 2a influenza study on SAB-176.

The terms of that agreement are subject to confidentiality, and the status of the agreement is that it is current, in good standing and 100% of the contract has been paid as of December 31, 2023.

For SAB-142, Avance, acting as CRO oversaw Phase 1 safety study.

Research and development activities consist of discovery research for our platform development and the indications we are working on.

For SAB-142, Avance Clinical PTY, Ltd (“Avance”), acts as the contract research organization (“CRO”) overseeing our Phase 1 safety study.

This study started in December 2023 and the terms of that agreement are subject to confidentiality and the status of the agreement is that it is current.

We expect to continue to incur substantial research and development expenses as we conduct discovery research to enhance our platform and work on our indications.

For the years ended December 31, 2024 and 2023 we continued to incur costs to advance our progress towards commercialization of SAB-142.

We expect to continue to incur substantial research and development expenses as we conduct discovery research to enhance our platform and work on our

We expect to hire additional employees and continue research and development and manufacturing activities.

As a result, we expect that our research and development expenses will continue to increase in future periods and vary from period to period as a percentage of revenue.

Major components within our research and development expenses are salaries and benefits (laboratory & farm), laboratory supplies, animal care, contract manufacturing, clinical trial expense, outside laboratory services, project consulting, and facility expense.

Our platform allows us to work on multiple projects with the same resources, as the research and development process of each product is very similar (with minimal differences in the manufacturing process).

As a result, we expect that our research and development expenses will continue to increase in future periods and vary from period to period.

Major components within our research and development expenses are salaries and benefits (laboratory & animal care), laboratory supplies, animal care, contract manufacturing, clinical trial expense, outside laboratory services, project consulting, and facility expenses.

Research and development expenses by component for the years ended December 31, 2024 and 2023 were as follows:

12 unchanged sentences

General and administrative expenses also include rent and facilities expenses allocated based upon total direct costs.

We expect that our general and administrative expenses will continue to increase in future periods, primarily due to increased headcount to support anticipated growth in the business and due to incremental costs associated with operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a securities exchange and costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC and stock exchange listing standards, public relations, insurance and professional services.

We anticipate that general and administrative expenses will rise as we expand our workforce and invest in the advancement of our lead therapeutic candidate in preparation for potential commercialization.

Additionally, as our operations grow in complexity and we progress toward commercialization, we may incur higher costs related to accounting, audit, legal, regulatory compliance, director and officer insurance, and investor relations.

We expect these expenses to vary from period to period in absolute terms and as a percentage of revenue.

Nonoperating (Expense) Income

Nonoperating Income (Expense)

Gain (loss) on change in fair value of warrant liabilities

Gain (loss) on change in fair value of warrant liabilities consists of the changes in the fair value of the warrant liabilities.

Other income primarily consists of income associated with the refundable portion of Australian research and development tax credits.

Other income (expense)

Other income primarily consists of income associated with the refundable portion of the Australian research and development tax credit and dividend income from non-interest bearing short-term investments.

Interest income

Interest income consists of interest earned on cash balances in our bank accounts.

Interest income consists of interest earned on our investments in debt securities, cash, and cash equivalents.

Interest expense

Interest expense consists primarily of interest related to borrowings under notes payable for equipment, abated rent, and insurance financing.

Interest expense consists primarily of interest related to abated rent and insurance financing.

Results of Operations

14 unchanged sentences

Loss before income taxes

Income tax expense (benefit)

Comparison of the Years Ended December 31, 2024 and 2023

2 unchanged sentences

Revenue decreased by $0.9 million, or 40.9%, in 2024, primarily due to the JPEO Rapid Response Contract Termination.

Included in revenues for the year ended December 31, 2023, are amounts for billable costs related to closeout activities and charges of $0.1 million for labor, $0.8 million for supplies, and $1.3 million for outside research manufacturing services, as compared to $3.1 million for labor, $5.4 million for supplies, and $5.3 million for outside research manufacturing services for the year ended December 31, 2022.

Included in revenues for the year ended December 31, 2024, are amounts for billable costs related to closeout activities and charges of $1.3 million for supplies, as compared to $0.1 million for labor, $0.8 million for supplies, and $1.4 million for outside research manufacturing services for the year ended December 31, 2023.

We expect to recognize no further revenue on the JPEO Rapid Response Contract Termination and do not anticipate pursuing additional funded research opportunities outside of our primary focus area in T1D.

Research and development

2 unchanged sentences

Total research and development expenses

Research and development expenses decreased by $19.9 million, or 54.7%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to decreases in laboratory supplies (year-over-year decrease of $5.4 million, 84.4%), contract manufacturing costs (year-over-year decrease of $4.9 million, 92.6%), salaries and benefits (year-over-year decrease of $5.4 million, 45.0%), outside lab services due to the JPEO Rapid Response Contract Termination (year-over-year decrease of $3.6 million, 78.3%), project consulting (year-over-year decrease of $0.4 million, 53.9%) and offset by overhead costs (year-over-year increase of $0.1 million, 1.7%).

Research and development expenses increased by $13.7 million, or 83.2%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to increases in outside lab services (year-over-year increase of $4.7 million, 479.4%), laboratory supplies (year-over-year increase of $0.4 million, 39.9%), an out-of-period adjustment of $0.9 million, salaries and benefits (year-over-year increase of $3.5 million, 53.4%), project consulting (year-over-year increase of $1.1 million, 288.6%), overhead costs (year-over-year increase of $0.5 million, 9.0%), clinical trial costs (year-over-year increase of $3.4 million, 415.0%), offset by contract manufacturing costs (year-over-year decrease of $0.4 million, 100.0%) and animal care (year-over-year decrease of $0.4 million, 43.2%).

We expect Research and Development expenses

to increase in future years as we advance our lead therapeutic candidate through Phase 2 clinical trials and invest in the necessary foundation to support potential commercialization.

General and administrative

2 unchanged sentences

Total general and administrative expenses

General and administrative expenses increased by $7.4 million, or 45.3%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to other administrative support fees relating to IT, human resources, and legal (year-over-year increase of $7.7 million, 131.5%), and salaries and benefits (year-over-year increase of $2.2 million, 35.5%), offset by insurance costs (year-over-year decrease of $1.4 million, 51.5%), project consulting (year-over-year decrease of $1.2 million, 73.6%).

We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates.

We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance costs as well as investor and public relations expenses associated with being a public company.

General and administrative expenses decreased by $9.8 million, or 41.3%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to other administrative support fees relating to IT, human resources, and legal (year-over-year decrease of $1.5 million, 25.3%);

non-capitalized financing costs (year-over-year decrease of $7.5 million, 100.0%);

salaries and benefits (year-over-year decrease of $0.2 million, 2.6%);

insurance costs (year-over-year decrease of $0.5 million, 31.7%);

and forgiveness of a trade payable of $0.7 million;

offset by project consulting (year-over-year increase of $0.6 million, 131.5%).

While administrative support and non-capitalized financing costs declined substantially in the year ended December 31, 2024, we anticipate that general and administrative expenses will rise as we expand our workforce and invest in the advancement of our lead therapeutic candidate in preparation for potential commercialization.

Non-operating (expense) income

1 unchanged sentence

Changes in fair value of warrant liabilities

Total non-operating income

Total non-operating income decreased by $14.8 million, or 142.1% for the year ended December 31, 2023 as compared to the year ended December 31, 2022 primarily due to changes in the fair value of the warrant liabilities (year-over-year decrease of $15.2 million, 146.4%), primarily offset by the Australian research and development tax credit of $0.3 million.

Total non-operating income (expense)

Total non-operating income increased by $12.2 million, or (278.61)% for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

This increase was primarily driven by changes in the fair value of the warrant liabilities (year-over-year increase of $10.2 million, 211.6%);

a $1.6 million increase in the Australian research and development tax credit;

and a $0.4 million increase in income from non-interest-bearing short-term investments, primarily consisting of dividend income and realized gains and losses.

Interest expense

2 unchanged sentences

Total interest expense

Interest expense increased for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to the 8% Unsecured Convertible Note accrued interest payable realized over a full year.

Interest expense for the year ended December 31, 2024 remained consistent with interest expense for the year ended December 31, 2023, primarily due to the stability of our finance lease portfolio year-over-year.

Interest income

2 unchanged sentences

Total interest income

Interest income increased by $514 thousand, or 723.1% for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to higher interest rates and interest earning cash balances.

Interest income increased by $701 thousand, or 119.84% for the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to interest earned on our investments in debt securities, and higher interest earning cash, and cash equivalent balances.

Future interest income will be largely dependent on our total liquid cash and investment balances, which are in turn influenced by our capital resources and future fundraising activities.

Liquidity and Capital Resources

As of December 31, 2023 and December 31, 2022, we had $56.6 million and $15.0 million, respectively, of cash and cash equivalents.

As of December 31, 2024 and December 31, 2023, we had $20.8 million and $56.6 million, respectively, of cash, cash equivalents and investments.

We intend to continue to invest in our business and, as a result, may incur operating losses in future periods.

4 unchanged sentences

While we intend to continue to keep operating expenses at a reduced level there can be no assurance that our current level of operating expenses will not increase or that other uses of cash will not be necessary.

Based on our current level of operating expenses, existing resources will be sufficient to cover operating cash needs through the twelve months following the date these financials are made available for issuance.

Based on our current level of operating expenses, existing resources will not be sufficient to cover operating cash needs through the twelve months following the date these financials are made available for issuance.

These conditions raise substantial doubt about our ability to continue as a going concern.

We intend to seek additional capital through equity and/or debt financings, collaborative or other funding arrangements.

3 unchanged sentences

Since our inception, we have financed our operations primarily from revenue in the form of government grants and from equity financings.

Equity Financings and Option Exercises

As of December 31, 2023, we have raised approximately $157.4 million since our inception from the issuance and sale of convertible preferred shares, net of issuance costs associated with such financings, the merger transaction in 2021, proceeds from private placements of securities, and exercises of employee stock options.

Notes payable

8% Unsecured Convertible Note

Pursuant to the Fourth Amendment to our lease with Sanford Health, we agreed to a period of abated rent (“Abated Rent”) from October 1, 2022 to September 30, 2023 pertaining to our leased laboratory bay at the Research Center.

Pursuant to the fourth amendment to our lease with Sanford Health, we agreed to a period of abated rent (the “Abated Rent”) from October 1, 2022 to September 30, 2023.

In exchange for the Abated Rent, effective as of October 1, 2022, we issued to Sanford Health an 8% unsecured, convertible promissory note (the “8% Unsecured Convertible Note”).

Pursuant to the 8% Unsecured Convertible Note, we shall pay the sum of approximately $542 thousand plus accrued and unpaid interest thereon on September 30, 2024.

Simple interest shall accrue on the outstanding Principal from and after the date of the 8% Unsecured Convertible Note and shall be payable on September 31, 2024 (the “Maturity Date”).

Sanford Health shall have the right, but not the obligation, to convert all or any part of the outstanding Principal of the 8% Unsecured Convertible Note, together with any accrued and unpaid interest thereon to the date of such conversion, into such number of fully paid and non-assessable shares of our common stock, at any time and from time to time, prior to the later of the Maturity Date and the date on which the 8% Unsecured Convertible Note is paid in full, subject to certain restrictions, at a conversion price per share of common stock equal to greater of (x) $15.00 and (y) the price at which the we sells shares of common stock in any bona fide private or public equity financing prior to the Maturity Date.

Pursuant to the 8% Unsecured Convertible Note, we shall pay the sum of approximately $542 thousand (the “Principal”) plus accrued and unpaid interest thereon on September 30, 2024 (the “Maturity Date”).

Simple interest shall accrue on the outstanding Principal from and after the date of the 8% Unsecured Convertible Note and shall be payable on the Maturity Date.

We repaid the Principal of $542 thousand and total accrued interest of $87 thousand during the year ended December 31, 2024.

Insurance Financing

We obtained financing for certain Director & Officer liability insurance policy premiums.

The agreement assigns First Insurance Funding (the “Lender”) a first priority lien on and security interest in the financed policies and any additional premium required in the financed policies including (a) all returned or unearned premiums, (b) all additional cash contributions or collateral amounts assessed by the insurance companies in relation to the financed policies and financed by Lender, (c) any credits generated by the financed policies, (d) dividend payments, and (e) loss payments which reduce unearned premiums.

For the year ended December 31, 2024, the agreement assigns AFCO Direct as the lender a first priority lien on and security interest in the financed policies and any additional premium required in the financed policies including (a) all returned or unearned premiums, (b) all additional cash contributions or collateral amounts assessed by the insurance companies in relation to the financed policies and financed by Lender, (c) any credits generated by the financed policies, (d) dividend payments, and (e) loss payments which reduce unearned premiums.

If any circumstances exist in which premiums related to any Financed Policy could become fully earned in the event of loss, Lender shall be named a loss-payee with respect to such policy.

The total premiums, taxes and fees financed is approximately $0.8 million with an annual interest rate of 7.96% and approximately $1.2 million with an annual interest rate 5.47% for the years ended December 31, 2023 and 2022, respectively.

In consideration of the premium payment by Lender to the insurance companies or the agent or broker, we unconditionally promise to pay lender the amount financed plus interest and other charges permitted under the agreement.

We paid the financing through installment payments with the last payment for the current note being September 22, 2023.

At December 31, 2023 and 2022 we recognized approximately $509 thousand and $773 thousand, respectively as an insurance financing note payable in our consolidated financial statements.

We will pay the insurance financing through installment payments with the last payment for the current note being on September 22, 2024.

For the year ended December 31, 2023, we entered into a similar agreement with First Insurance Funding.

This agreement also assigned First Insurance Funding a first priority lien on the security interest in the financed policies and associated rights.

The total premiums, taxes, and fees financed under the current insurance financing agreement are approximately $516 thousand, for AFCO Direct with an annual interest rate of 7.37%.

In consideration of the premium payment by the AFCO Direct to the insurance companies or the Agent or Broker (as defined in the agreement with the lender), we unconditionally promise to pay the lender the amount financed plus interest and other charges permitted under the agreement.

At December 31, 2024, and 2023, we recognized approximately $276 thousand and $509 thousand, respectively, as an insurance financing note payable in our consolidated balance sheets.

We incurred $17 thousand and $22 thousand of interest expense related to the insurance financing note for the years ended December 31, 2024, and 2023, respectively.

Our current insurance financing agreement is being repaid through installment payments, with the final payment scheduled for September 22, 2025.

During the year ended December 31, 2024, we also made payments on a prior insurance financing agreement, which had an original principal balance of $765 thousand with an annual interest rate of 7.96%.

This prior agreement was fully repaid, with the final installment made on September 22, 2024.

Please refer to Note 9, Notes Payable , in our consolidated financial statements for additional information on our debt.

3 unchanged sentences

Net cash used in investing activities

Net cash provided by financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

1 unchanged sentence

Operating Activities

Net cash used by operating activities increased by $1.7 million in the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to an increase in our net loss adjusted for non-cash items of $4.2 million, offset by a decrease in cash used in operating activities related to change in our operating assets and liabilities of $2.5 million.

Year-over-year changes in cash used by operating activities is explained by shifts in the working capital balances as we continue to advance our lead programs after the JPEO Rapid Response Contract Termination.

Net cash used by operating activities increased by $9.2 million in the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to an increase in our net loss adjusted for non-cash items of $4.5 million, compounded by an increase in cash used in operating activities related to change in our operating assets and liabilities of $4.6

Year-over-year changes in cash used for operating activities were primarily driven by working capital needs to support the advancement of our Phase 1 trial.

Investing Activities

Net cash used by investing activities decreased by $1.9 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to a decrease in purchases of equipment.

Capital asset purchases completed in 2022 relate substantially to leasehold improvements at the Company’s corporate headquarters and completion of the clinical manufacturing facility at the Research Center.

Net cash used by investing activities increased by $11.8 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to increased purchases of short-term investments following the completion of the Company’s 2023 PIPE.

Capital expenditures were minimal in 2024, as major asset purchases in prior years were primarily related to leasehold improvements at our Corporate Headquarters.

We do not anticipate a significant increase in capital asset purchases in the near term, as our investment focus remains on advancing our lead therapeutic candidate through Phase 2 clinical trials.

Financing Activities

Net cash provided by financing activities increased by $65.7 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to increased proceeds from equity issuances of $59.7 million, a reduction in stock repurchases of $5.5 million, and reduced net payments on notes payable of $0.8 million.

Net cash provided by (used in) financing activities decreased by $67.9 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023, primarily due to the absence of any material equity financing activities in 2024.

Contractual Obligations and Commitments

We enter into contracts in the normal course of business with third parties, including CROs.

We enter into contracts in the normal course of business with third parties, including contract research organizations (“CRO”).

These payments are not included in the table above, as the amount and timing of such payments are not known.

14 unchanged sentences

Research and development expenses

Costs incurred in connection with research and development activities are expensed as incurred.

These include licensing fees to use certain technology in our research and development projects, fees paid to consultants and various entities that perform certain research and testing on behalf of us, and expenses related to animal care, research-use equipment depreciation, salaries, benefits, and stock-based compensation granted to employees in research and development functions.

Expenses incurred in connection with research and development activities are expensed as incurred.

These include licensing fees to use certain technology in our research and development projects, fees paid to consultants and various entities that

perform certain research and testing on behalf of us, and expenses related to animal care, research-use equipment depreciation, salaries, benefits, and stock-based compensation granted to employees in research and development functions.

We had contracts with multiple CROs to complete studies as part of research grant agreements.

These costs include upfront, milestone and monthly expenses as well as reimbursement for pass through costs.

All research and development costs are expensed as incurred except when we are accounting for nonrefundable advance payments for goods or services to be used in

future research and development activities.

All research and development costs are expensed as incurred except when we are accounting for nonrefundable advance payments for goods or services to be used in future research and development activities.

In these cases, these payments are capitalized at the time of payment and expensed in the period the research and development activity is performed.

As actual costs become known to us, we adjust our accrual;

such changes in estimate may be a material change in our clinical study accrual, which could also materially affect our results of operations.

Revenue Recognition

Our revenue is primarily generated through grants from government and other (non-government) organizations.

Grant revenue is recognized for the period that the research and development services occur, as qualifying expenses are incurred or conditions of the grants are met.

We concluded that payments received under these grants represent conditional, nonreciprocal contributions, as described in ASC 958, Not-for-Profit Entities , and that the grants are not within the scope of ASC 606, Revenue from Contracts with Customers , as the organizations providing the grants do not meet the definition of a customer.

Expenses for grants are tracked by using a project code specific to the grant, and the employees also track hours worked by using the project code.

As actual costs become known, we will adjust the accrual;

such changes in estimate may result in a material change in our clinical study accrual, which could also materially affect reported results of operations.

Stock-Based Compensation

FASB ASC Topic 718, Compensation – Stock Compensation , prescribes accounting and reporting standards for all share-based payment transactions in which employee and non-employee services are acquired.

We recognize compensation cost relating to stock-based payment transactions using a fair-value measurement method, which requires all stock-based payments to employees, directors, and non-employee consultants, including grants of stock options, to be recognized in operating results as compensation expense based on fair value over the requisite service period of the awards.

The board of directors elected to determine the fair value of our common stock based on the closing market price at closing on the date of grant.

In determining the fair value of our stock-based awards, we utilize the Black-Scholes option-pricing model, which uses both historical and current market data to estimate fair value.

We determine the fair value of common stock based on the closing market price at closing on the date of the grant.

In determining the fair value of stock-based awards, we utilize the Black-Scholes option-pricing model, which uses both historical and current market data to estimate fair value.

The Black-Scholes option-pricing model incorporates various assumptions, such as the value of the underlying common stock, the risk-free interest rate, expected volatility, expected dividend yield, and expected life of the options.

For awards with performance-based vesting criteria, we estimate the probability of achievement of the performance criteria and recognize compensation expense related to those awards expected to vest.

We recognized stock-based compensation expense over the expected term.

For awards with performance-based vesting criteria, we estimate the probability of achievement of the performance criteria and recognizes compensation expense related to those awards expected to vest.

No awards may have a term in excess of ten years.

Forfeitures are recorded when they occur.

Stock-based compensation expense is classified in our consolidated statements of operations based on the function to which the related services are provided.

We recognize stock-based compensation expense over the expected term.

See Note 11, Stock Option Plan, in our consolidated financial statements for information concerning certain specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options granted for the for the years ended December 31, 2023 and 2022.

Warrant Liabilities Valuations

Stock-based compensation expense is classified in the consolidated statements of operations based on the function to which the related services are provided.

We recognize stock-based compensation expense over the vesting period.

Liability Classified Warrants

We are required to periodically estimate the fair value liability of our private placement warrants issued simultaneously with the closing of our initial public offering (the “Private Placement Warrant”) liabilities with the assistance of an independent third-party valuation firm.

The assumptions underlying these valuations represented our best estimates, which involved inherent uncertainties and the application of significant levels of our judgment.

The fair value liability of our public warrants issued upon the closing of our initial public offering (the “Public Warrants”) is determined by reference to the quoted market price.

The warrants are accounted for as liabilities in accordance with ASC 815-40, Derivatives and Hedging — Contracts in Entity ’ s Own Equity , and were presented within warrant liabilities on the consolidated balance sheets as of December 31, 2023 and 2022.

The initial fair value of the warrant liabilities were measured at fair value on the issuance date, and changes in the fair value of the warrant liabilities were presented within changes in fair value of warrant liabilities in the consolidated statements of operations for the years ended December 31, 2023 and 2022.

Public Warrants and Private Placement Warrants

The fair value of the Private Placement Warrants was determined utilizing both the Black-Scholes Merton formula and a Monte Carlo Simulation (“MCS”) analysis.

Specifically, we considered a MCS to derive the implied volatility in the publicly listed price of the Public Warrants We then considered this implied volatility in selecting the volatility for the application of a Black-Scholes Merton model for the Private Placement Warrants.

We account for our Public Warrants, Private Placement Warrants, and Preferred Warrants as liabilities in accordance with ASC 815-40, Derivatives and Hedging — Contracts in Entity ’ s Own Equity.

The initial fair value of the warrant liabilities was measured at fair value at the Closing Date, and changes in the fair value of the warrant liabilities were presented within changes in fair value of warrant liabilities in our consolidated statements of operations.

On the Closing Date, the Company established the fair value of the Private Placement Warrants utilizing both the Black-Scholes Merton formula and a Monte Carlo Simulation (the “MCS”) analysis.

Specifically, we considered an MCS to derive the implied volatility in the publicly-listed price of the Public Warrants.

We then considered this implied volatility in selecting the volatility for the application of a Black-Scholes Merton model for the Private Placement Warrants.

We determined the fair value of the Public Warrants by reference to the quoted market price.

The Public Warrants were classified as a Level 1 fair value measurement, due to the use of the quoted market price, and the Private Placement Warrants held privately by assignees of Big Cypress Holdings LLC, were classified as a Level 3 fair value measurement, due to the use of unobservable inputs.

See Note 12, Warrants, for further information regarding the Public Warrants and Private Placement Warrants.

The measurement as of December 31, 2023 and 2022 for the Private Placement Warrant liability was approximately $6 thousand and $10 thousand, respectively, and the change in fair value of the Private Placement Warrant liability was approximately $4 thousand and $417 thousand, for the years ended December 31, 2023 and 2022, respectively.

The key inputs into the valuations as of December 31, 2023 and 2022 were as follows:

Risk-free interest rate

Expected term remaining (years)

Implied volatility

Closing common stock price on the measurement date

September 2023 Purchase Agreement Warrants

We established fair value of the Preferred Warrants utilizing the Black-Scholes Merton formula.

All tranches of the Preferred Warrants were classified as Level 3 fair value measurements, due to unobservable inputs.

See Note 12, Warrants , for further information regarding the Preferred Warrants.

The initial measurement as of October 3, 2023 and the measurement of December 31, 2023 for the Preferred Warrant liability was approximately $10.9 million and $11.6 million, respectively.

The change in fair value of the Preferred Warrant liability was approximately $0.7 million for the year ended December 31, 2023.

In November 2023, 59,654 Tranche A Warrants with a value of $0.7 million were exercised and 10,486 Tranche A Warrants with a value of $0.1 million, 9,154 Tranche B Warrants with a value of $1.1 million and 22,885 Tranche C Warrants with a value of $2.4 million were forfeited.

The key inputs utilized in determining the fair value of each Tranche A Warrant as of the Initial Issuance Date was as follows:

October 3, 2023

Initial Measurement

Risk-free interest rate (1)

Expected term remaining (years) (1)

Implied volatility

Underlying Stock Price (Preferred Series A)

Reflects a probability-weighted input derived from multiple Black-Scholes calculations.

These calculations account for various potential dates for the public announcement of the comprehensive data set from the Sanofi S.A.

Protect trial, spanning from mid-October to December 15, 2023.

The key inputs utilized in determining the fair value of each Tranche B Warrants as of the Initial Issuance Date and December 31, 2023 were as follows:

October 3, 2023

Initial Measurement

Risk-free interest rate (1)

Expected term remaining (years) (1)

Implied volatility

Underlying Stock Price (Preferred Series A)

(1) Reflects a probability-weighted input derived from multiple Black-Scholes calculations.

These calculations take into account the various potential dates for the announcement of the SAB-142-101 data.

Specifically, we assumed a 50.0% probability of no data release on the Initial Measurement Date.

This probability was later adjusted to 45.0% as of December 31, 2023.

(2) Reflects a 5% discount for lack of marketability.

The key inputs utilized in determining the fair value of each Tranche C Warrants as of the Initial Issuance Date and December 31, 2023 were as follows:

October 3, 2023

Initial Measurement

Risk-free interest rate (1)

Expected term remaining (years) (1)

Implied volatility

Underlying Stock Price (Preferred Series A)

(1) Reflects a probability-weighted input derived from multiple Black-Scholes calculations.

These calculations incorporate our estimated probability of dissolution, should SABS’ intellectual property fail to yield positive results in forthcoming clinical trials, potentially leading to dissolution before 2028.

Initially, we estimated a 20.0% probability of continuing operations through the expected remaining term.

This probability was later adjusted to 25.0% as of December 31, 2023.

(2) Reflects a 5% discount for lack of marketability.

The initial fair value of each Preferred Placement Agent Warrant issued and exercisable at $6.30 has been determined using the Black-Scholes option-pricing model.

The key inputs into the valuations as of the October 3, 2023 initial measurement date were as follows:

Initial Measurement

Risk-free interest rate

Expected term remaining (years)

Implied volatility

Closing common stock price on the measurement date

Upon initial measurement, the fair value of each Preferred Placement Agent Warrant was determined to be $4.40, per warrant for a value of approximately $3.7 million.

The total fair value of the Preferred PIPE Placement Agent Warrants was recognized as a non-cash expense and allocated to additional paid-in capital within the consolidated statement of changes in stockholders’ equity and consolidated balance sheet.

Common Stock Valuations

Prior to becoming a public company, we were required to periodically estimate the fair value of our common stock with the assistance of an independent third-party valuation firm, as discussed above, when issuing stock options and computing our estimated stock-based compensation expense.

The assumptions underlying these valuations represented our best estimates, which involved inherent uncertainties and the application of significant levels of our judgment.

In order to determine the fair value of our common stock, we considered, among other items, previous transactions involving the sale of our securities, our business, financial condition and results of operations, economic and industry trends, the market performance of comparable publicly traded companies, and the lack of marketability of our common stock.

We determine the fair value of our common stock based on the closing market price at closing on the date of grant.

Compensation expense related to stock-based transactions is measured and recognized in the financial statements at fair value of our post-merger common stock based on the closing market price at closing on the date of grant.

Stock-based compensation expense is measured at the grant date based on the fair value of the equity award and is recognized as expense over the requisite service period, which is generally the vesting period, on the straight-line method.

We estimate the fair value of each stock option award on the date of grant using the Black-Scholes option-pricing model.

Determining the fair value of stock option awards at the grant date requires judgment, including estimating the expected volatility, expected term, risk-free interest rate, and expected dividends.

Lease Liabilities and Right-of-Use Assets

We are party to certain contractual arrangements for equipment, lab space, and an animal facility, which meet the definition of leases under FASB ASC Topic 842, Leases (“ASC 842”).

In accordance with ASC 842, we, as of January 1, 2018 (the date of adoption), recorded right-of-use assets and related lease liabilities for the present value of the lease payments over the lease terms.

We utilized the practical expedient regarding lease and non-lease components and have combined such items into a single combined component.

Our incremental borrowing rate was used in the calculation of our right-of-use assets and lease liabilities.

See Note 12, Warrants , for the key inputs and further details for our warrants classified as liabilities.

Our Public Warrants were classified as a Level 1 fair value measurement, due to the use of the quoted market price, and our Private Placement Warrants held privately by assignees of Big Cypress Holdings LLC, were classified as a Level 3 fair value measurement, due to the use of unobservable inputs.

See Note 13, Fair Value Measurements, for changes in fair value of the Private Placement Warrants.

Equity Classified Warrants

We determined the Ladenburg Warrants, PIPE Warrants, PIPE Placement Agent Warrants, and Preferred PIPE Placement Agent Warrants met all necessary criteria to be accounted for as equity in accordance with ASC 815-40, Derivatives and Hedging — Contracts in Entity ’ s Own Equity.

As such, they are presented within additional paid-in capital within our consolidated statements of changes in stockholders’ equity and consolidated balance sheets.

Warrants classified as equity are initially measured at fair value.

Subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity.

The initial fair value of each Ladenburg Warrant, PIPE Warrant and PIPE Placement Agent Warrant issued was determined using the Black-Scholes option-pricing model.

See Note 12, Warrants for further details on our warrants classified as equity.

Recently Issued Accounting Pronouncements

1 unchanged sentence

JOBS Act Accounting Election

We qualify as an “emerging growth company” as defined in the JOBS Act.

An emerging growth company may take advantage of reduced reporting requirements that are not otherwise applicable to public companies.

These provisions include, but are not limited to:

• being permitted to present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K;

• not being required to comply with the auditor attestation requirements on the effectiveness of our internal controls over financial reporting;

• not being required to comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis);

• reduced disclosure obligations regarding executive compensation arrangements;

• exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

The Jumpstart Our Business Startups (“JOBS”) Act, enacted in April 2012, permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies.

We have and intend to continue to take advantage of all of the reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards, for an emerging growth company under Section 107 of the JOBS Act.

We may use these provisions until the last day of our fiscal year in which the fifth anniversary of the completion of our initial public offering occurred.

However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer,” our annual gross revenue exceeds $1.235 billion, or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period.

We have elected to take advantage of certain of the reduced disclosure obligations in this Form 10-K and may elect to take advantage of other reduced reporting requirements in future filings.

We have elected to take advantage of certain of the reduced disclosure obligations in this Annual Report and may elect to take advantage of other reduced reporting requirements in future filings.

As a result, the information that we provide to our shareholders may be different than the information you receive from other public companies in which you hold stock.

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis