What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-14 compared with 2024-05-13 · 145 added, 91 removed, 329 unchanged (42% of the section changed)

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This Quarterly Report on Form 10-Q for the three-month

period ended March 31, 2024 contains “forward-looking statements” within the meaning of the Securities Act of 1933, as amended

period ended June 30, 2024 contains “forward-looking statements” within the meaning of the Securities Act of 1933, as amended

(the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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Our net losses were $18.4 million and $11.1 million

for the three months ended March 31, 2023 and March 31, 2024, respectively.

As of March 31, 2024, we had an accumulated deficit of $85.5

We expect that our operating expenses will increase significantly as we advance our product candidates through pre-clinical and

clinical development, seek regulatory approval, and prepare for and, if approved, proceed to commercialization;

acquire, discover, validate

and develop additional product candidates;

for the six months ended June 30, 2023 and June 30, 2024, respectively.

As of June 30, 2024, we had an accumulated deficit of $75.6 million.

We expect that our operating expenses will increase significantly as we advance our product candidates through pre-clinical and clinical

development, seek regulatory approval, and prepare for and, if approved, proceed to commercialization;

acquire, discover, validate and

develop additional product candidates;

obtain, maintain, protect and enforce our intellectual property portfolio;

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our Chief Executive Officer and principal stockholder.

Our ability to generate

product revenue will depend on the successful development, regulatory approval and eventual commercialization of our current product candidates

and future product candidates.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance

our operations through private or public equity or debt financings, collaborative or other arrangements with corporate sources, or through

other sources of financing.

Our ability to generate product revenue will depend

on the successful development, regulatory approval and eventual commercialization of our current product candidates and future product

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through

private or public equity or debt financings, collaborative or other arrangements with corporate sources, or through other sources of financing.

Adequate funding may not be available to us on acceptable terms, or at all.

If we fail to raise capital or

enter into agreements to raise capital as and when needed, we may have to significantly delay, scale back or discontinue the development

and commercialization of our current product candidates and future product candidates.

We plan to continue to

use third-party service providers, including contract manufacturing organizations, to carry out our pre-clinical and clinical development

and to manufacture and supply the materials to be used during the development and commercialization of our product candidates.

If we fail to raise capital or enter into agreements to raise

capital as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our

current product candidates and future product candidates.

We plan to continue to use third-party service

providers, including contract manufacturing organizations, to carry out our pre-clinical and clinical development and to manufacture and

supply the materials to be used during the development and commercialization of our product candidates.

Recent Developments

On March 13, 2024, the Company signed a securities purchase agreement

with certain healthcare-focused institutional investors that provided $50 million in gross proceeds to us through a private placement.

Pursuant to the securities purchase agreement, the Company issued to institutional purchasers $50.0 million in shares of the Company’s

Series B Convertible Preferred Stock.

50,000 Shares of Series B Convertible Preferred Stock were issued at a price of $1,000.00 per share

and are convertible into common stock at $1.00 per share.

On March 13, 2024, we signed a securities purchase agreement with certain

healthcare-focused institutional investors that provided $50 million in gross proceeds to us through a private placement.

the securities purchase agreement, we issued to institutional investors $50.0 million in shares of our Series B Convertible Preferred

50,000 Shares of Series B Convertible Preferred Stock were issued at a price of $1,000.00 per share and are convertible into common

stock at $1.00 per share.

The COVID-19 Pandemic and its Impact on Our

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We expense both internal and external research and development expenses as they are incurred.

We do not allocate our costs by product

candidate, as a significant amount of research and development expenses include internal costs, such as payroll and other personnel expenses,

laboratory supplies and allocated overhead, and external costs, such as fees paid to third parties to conduct research and development

activities on our behalf, are not tracked by product candidate.

We do not allocate our costs by product candidate,

as a significant amount of research and development expenses include internal costs, such as payroll and other personnel expenses, laboratory

supplies and allocated overhead, and external costs, such as fees paid to third parties to conduct research and development activities

on our behalf, are not tracked by product candidate.

We expect our research and development expenses

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Results of Operations

Comparison of the Three Months Ended March 31,

Comparison of the Three Months Ended June

30, 2023 and 2024

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Total other income (expenses)

Net income (loss)

Licensing Revenues

Licensing revenues of approximately $0.7 million

were recorded in the three months ended March 31, 2023.

There was no comparable revenue earned in the current period.

We may earn additional

licensing revenue in the future if we negotiate business development arrangements with third parties.

There was no Licensing revenue recorded in the

three months ended June 30, 2023 or in the three months ended June 30, 2024.

We may earn additional licensing revenue in the future if

we negotiate business development arrangements with third parties.

Research and Development Expenses

Research and development expenses increased by

approximately $3.8 million, or 125%, from approximately $3.0 million for the three months ended March 31, 2023, to approximately $6.8

million for the three months ended March 31, 2024.

The increase in research and development expenses was primarily due to a $3.6 million

increase in drug development costs.

Research and development expenses increased by approximately $2.6 million,

or 115%, from approximately $2.3 million for the three months ended June 30, 2023, to approximately $4.9 million for the three months

ended June 30, 2024.

The increase in research and development expenses was primarily due to a $2.2 million increase in drug development

Labor costs increased $88,000 from the prior period.

Consulting and other costs increased $147,000.

Non-cash stock compensation costs increased $146,000.

Non-cash stock compensation

costs increased $200,000.

General and Administrative Expenses

General and administrative expenses increased

by $544,000, or 29%, from approximately $1.8 million for the three months ended March 31, 2023, to approximately $2.4 million for the

three months ended March 31, 2024 primarily due to an increase of $232,000 in non-cash stock compensation costs.

Insurance expense for

directors and officers decreased $97,000.

Labor costs increased $188,000 from the prior period.

General and administrative expenses increased by $478,000, or 23%,

from approximately $2.1 million for the three months ended June 30, 2023, to approximately $2.5 million for the three months ended June

30, 2024 primarily due to an increase of $297,000 in non-cash stock compensation costs.

Insurance expense decreased $68,000.

increased $92,000 from the prior period.

Travel, rent, and other costs increased $157,000.

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Other income (expenses) increased $ 16.8 million,

or 13%, from $10.4 in the three months ended March 31, 2023 to $11.8 million for the three months ended March 31, 2024 due primarily to

or 3465%, from $0.5 in the three months ended June 30, 2023 to $17.3 million for the three months ended June 30, 2024 due primarily to

a change in fair value of our warrant liability.

Comparison of the Six Months Ended June

30, 2023 and 2024

Six Months Ended

Licensing revenues:

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expenses):

Interest income

Interest expense

Change in fair value of warrant liability

Total other income (expenses)

Licensing Revenues

Licensing revenues decreased approximately $0.7

million, or 100%, from the six months ended June 30, 2023 due to an upfront payment of approximately $0.7 million associated with a licensing

agreement entered into with Lotus International Pte Ltd.

in February 2023.

There was no comparable revenue earned in the current period.

We may earn additional licensing revenue in the future if we negotiate business development arrangements with third parties.

Research and Development Expenses

Research and development expenses increased by approximately $6.4 million,

or 121%, from approximately $5.3 million for the six months ended June 30, 2023 to approximately $11.7 million for the six months ended

June 30, 2024.

The increase in research and development expenses was primarily due to a $5.8 million increase in drug development costs.

Labor costs increased $137,000 from the prior period.

Consulting and other costs increased $93,000.

Non-cash stock compensation increased

General and Administrative Expenses

General and administrative expenses increased by $1.0 million, or 26%,

from approximately $3.9 million for the six months ended June 30, 2023 to approximately $4.9 million for the six months ended June 30,

2024 primarily due to an increase of $530,000 in noncash stock compensation expense.

Labor costs increased $281,000.

Insurance, travel

and other costs increased $212,000 from the prior period.

Other Income (Expenses)

Other income (expenses) increased by $15.4 million

(income), or 156%, from $9.9 million expense in the six months ended June 30, 2023 to $5.5 million income for the six months ended June

30, 2024 due primarily to the change in fair value of our warrant liability.

Liquidity and Capital Resources

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for the commercial launch of oxylanthanum carbonate in the U.S.

On March 13, 2024, the Company entered into a securities purchase agreement

On March 13, 2024, we entered into a securities purchase agreement

with certain accredited investors pursuant to which we agreed to issue and sell, in a private placement, 50,000 shares of our Series B

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We have incurred net losses since our inception.

For the three months ended March 31, 2024, we had a net loss of $20.9 million, and we expect to incur substantial additional losses in

future periods.

As of March 31, 2024, we had an accumulated deficit of $85.5 million.

For the six months

ended June 30, 2024, we had a net loss of $11.1 million, and we expect to incur substantial additional losses in future periods.

June 30, 2024, we had an accumulated deficit of $75.6 million.

We expect to continue incurring losses in the

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additional capital, the requirements for which will depend on many factors, including:

the scope, timing, rate of progress and costs of our drug discovery efforts, pre-clinical development activities, laboratory testing and clinical trials for our current product candidates and future product candidates;

the number and scope of clinical programs we decide to pursue;

the cost, timing and outcome of preparing for and undergoing regulatory review of our current product candidates and future product candidates;

the scope and costs of development and commercial manufacturing activities;

the cost and timing associated with commercializing our current product candidates and future product candidates, if they receive marketing approval;

the extent to which we acquire or in-license other product candidates and technologies;

the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;

our ability to establish and maintain collaborations on favorable terms, if at all;

our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our current product candidates and future product candidates and, ultimately, the sale of our products, following FDA approval;

the impact, if any, of the coronavirus pandemic on our business operations;

● the scope, timing, rate of

progress and costs of our drug discovery efforts, pre-clinical development activities, laboratory testing and clinical trials for our

current product candidates and future product candidates;

● the number and scope of clinical

programs we decide to pursue;

● the cost, timing and outcome

of preparing for and undergoing regulatory review of our current product candidates and future product candidates;

● the scope and costs of development

and commercial manufacturing activities;

● the cost and timing associated

with commercializing our current product candidates and future product candidates, if they receive marketing approval;

● the extent to which we acquire

or in-license other product candidates and technologies;

● the costs of preparing, filing

and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related

● our ability to establish and

maintain collaborations on favorable terms, if at all;

● our efforts to enhance operational

systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our current

product candidates and future product candidates and, ultimately, the sale of our products, following FDA approval;

● the impact, if any, of the

coronavirus pandemic on our business operations;

● our ability to access capital;

our implementation of operational, financial and management systems;

the costs associated with being a public company.

● our implementation of operational,

financial and management systems;

● the costs associated with being

a public company.

A change in the outcome of any of these or other

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and uses of cash for each of the periods presented below (in thousands):

Three Months Ended

Six Months Ended

Net cash (used in) provided by:

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Net cash used in operating activities was $ 12.8

million for the three months ended March 31, 2024.

million for the six months ended June 30, 2024.

Cash used in operating activities was primarily due to the use of funds for development

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Net cash used in operating activities was $9.4

million for the three months ended March 31, 2023.

million for the six months ended June 30, 2023.

Cash used in operating activities was primarily due to the use of funds for development

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Cash Flows from Investing Activities

Net cash used in investing activities was $26,000 for the six months

ended June 30, 2024 and was due to the purchase of lab equipment.

Net cash used in investing activities was $12,000

for the three months ended March 31, 2024 and was due to the purchase of furniture and fixtures for our corporate office.

There were no comparable fixed asset purchases

during the current three months ended March 31, 2023.

for the six months ended June 30, 2023 and was due to the purchase of furniture and fixtures for our corporate office.

Cash Flows from Financing Activities

Net cash provided by financing activities was

$45.7 million during the three months ended March 31, 2024 due primarily to the private placement financing agreement we signed on March

$44.9 million during the six months ended June 30, 2024 due primarily to the private placement financing agreement we signed on March

Net cash provided by financing activities was

$27.8 million during the three months ended March 31, 2023 due primarily to the private placement financing agreement we signed on March

$27.8 million during the six months ended June 30, 2023 due primarily to the private placement financing agreement we signed on March

Critical Accounting Policies, Significant Judgments and Use of Estimates

Our financial statements have been prepared

in accordance with U.S.

Our financial statements have been prepared in

accordance with U.S.

generally accepted accounting principles (“GAAP”).

The preparation of these financial statements

requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of

contingent assets and liabilities at the date of the financial statements and the reported expenses incurred during the reporting

Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the

circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are

not readily apparent from other sources.

The preparation of these financial statements requires

us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and

liabilities at the date of the financial statements and the reported expenses incurred during the reporting periods.

Our estimates are

based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of

which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other

Actual results may differ from these estimates under different assumptions or conditions.

We consider our critical accounting policies and estimates to be related to revenue, research and development, stock-based

compensation, debt and equity classification and warrant liabilities.

There have been no other material changes to our critical

accounting policies and estimates during the three months ended March 31, 2024 from those used for the year ended December 31, 2023.

We consider our critical accounting

policies and estimates to be related to revenue, research and development, stock-based compensation, debt and equity classification and

warrant liabilities.

There have been no other material changes to our critical accounting policies and estimates during the six months

ended June 30, 2024 from those used for the year ended December 31, 2023.

The below policies represent our critical accounting policies.

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We account for these warrants as liabilities (in accordance

with ASC 480) on the balance sheets as a result of certain redemption clauses that are not within the control of the Company.

The warrant liabilities are initially measured at fair value, resulting in an implied discount on the related preferred stock financing

arrangement (recognized as a partial offset to the carrying value of the Series A-1 Preferred Stock), and are remeasured at fair value

each reporting period.

Changes in the fair value of the warrant liabilities are recognized in earnings during each period.

liabilities are measured using Level 3 fair value inputs.

See Note 12 for a description of warrant liabilities and the related valuations.

with ASC 480, Distinguishing Liabilities from Equity ) on the balance sheets as a result of certain redemption clauses

that are not within the control of the Company.

The warrant liabilities are initially measured at fair value, resulting in an implied

discount on the related preferred stock financing arrangement (recognized as a partial offset to the carrying value of the Series A-1

Preferred Stock), and are remeasured at fair value each reporting period.

Changes in the fair value of the warrant liabilities are recognized

in earnings during each period.

The warrant liabilities are measured using Level 3 fair value inputs.

See Note 12 for a description of

warrant liabilities and the related valuations.

Research and Development

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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