46 unchanged sentences
Short-term investments — 4,497
−Removed: Accounts receivable — 11
Prepaid expenses and other assets 1,474 4,525
11 unchanged sentences
Total current liabilities 1,639 34,067
−Removed: Long-term debt, net — 16,589
Deferred revenue, noncurrent — 11,509
10 unchanged sentences
Additional paid-in capital 187,571 181,301
−Removed: Accumulated other comprehensive (loss) income ( 2 ) 83
+Added: Accumulated other comprehensive loss — ( 2 )
Accumulated deficit ( 172,649 ) ( 170,067 )
18 unchanged sentences
Interest expense ( 595 ) ( 1,691 )
−Removed: Other (expense) income, net ( 11 ) 322
−Removed: Total other (expense) income, net ( 1,553 ) 768
+Added: Other expense, net ( 40 ) ( 11 )
+Added: Total other expense, net ( 542 ) ( 1,553 )
Net loss before provision for income taxes ( 2,373 ) ( 64,102 )
20 unchanged sentences
Equity-based compensation — — 2,939 — — 2,939
−Removed: Issuance of common stock 1,081,184 — 2,766 — — 2,766
−Removed: Other comprehensive income, net — — — — 110 110
+Added: Vesting of restricted stock units and related repurchases 807 — ( 14 ) — — ( 14 )
+Added: Issuance of common stock-ESPP 6,306 — 209 — — 209
+Added: Issuance of common stock and warrants, net 685,868 — 10,233 — — 10,233
+Added: Other comprehensive loss, net — — — — ( 85 ) ( 85 )
Net loss — — — ( 64,102 ) — ( 64,102 )
4 unchanged sentences
Issuance of common stock-ESPP 1,851 — 5 — — 5
−Removed: Issuance of common stock and warrants 20,576,068 2 10,231 — — 10,233
+Added: Issuance of common stock and warrants, net 1,334,035 — 4,900 — — 4,900
Other comprehensive income, net — — — — 2 2
28 unchanged sentences
Capital expenditures ( 10 ) ( 968 )
+Added: Proceeds from sale of capital assets 205 —
Net cash provided by investing activities 4,696 43,085
2 unchanged sentences
Payment of common stock financing costs ( 154 ) ( 1,111 )
−Removed: Proceeds from long-term borrowing — 17,500
Payment of long-term debt fees and issuance costs ( 506 ) —
1 unchanged sentence
Proceeds from issuance of employee stock purchase plan 5 209
+Added: Proceeds from exercise of common stock warrants 14 8
Proceeds from exercise of common stock options — 546
Payments for minimum statutory tax withholding related to net share settlement of equity awards ( 4 ) ( 14 )
−Removed: Net cash provided by financing activities 1,116 15,130
−Removed: Net increase (decrease) in cash, cash equivalents, and restricted cash 9,382 ( 13,998 )
+Added: Net cash (used in) provided by financing activities ( 3,105 ) 1,116
+Added: Net (decrease) increase in cash, cash equivalents, and restricted cash ( 34,067 ) 9,382
Cash, cash equivalents, and restricted cash - beginning of period 43,844 34,462
5 unchanged sentences
Supplemental disclosure of cash flow information
−Removed: Non-cash operating activities:
−Removed: Right-of-use asset acquired through operating leases $ — $ 8,147
Non-cash investing activities:
1 unchanged sentence
Non-cash financing activities:
−Removed: Debt fees (accrued expense and other noncurrent liabilities) — 656
Common stock issuance costs (accounts payable and accrued expenses) — 142
11 unchanged sentences
Exicure, Inc.
−Removed: is an early-stage biotechnology company developing nucleic acid therapies targeting ribonucleic acid against validated targets to neurological disorders and hair loss.
−Removed: The team includes a diverse scientific group with expertise in nucleic acid chemistry, drug development and neuroscience.
−Removed: Headquartered in Chicago, Illinois, the Company conducts its discovery and development efforts in-house with a dedicated 30,000 square foot facility, including rapid and automated high throughput nucleic acid synthesis and screening.
−Removed: The Company’s therapeutic discovery and development efforts are supported by its proprietary Spherical Nucleic Acid, or SNA, technology.
−Removed: SNAs are nanoscale constructs consisting of densely packed synthetic nucleic acid sequences that are radially arranged in three dimensions.
−Removed: The Company believes the design of SNAs gives rise to distinct chemical and biological properties that may provide advantages over other nucleic acid therapeutics and enable therapeutic activity outside of the liver.
−Removed: The Company’s platform for therapeutic nucleic acids has demonstrated potential high potency, broad uptake, and prolonged efficacy in both in vitro and in vivo neurological models.
−Removed: The basis of the Company’s discovery approach harnesses our expertise in oligonucleotide chemistry for use against validated targets where we can screen thousands of oligonucleotides efficiently and identify top candidates in the appropriate cell and live animal models.
−Removed: The Company is conducting preclinical studies for a non-opioid analgesic directed against SCN9A (Nav1.7);
−Removed: undisclosed targets in Huntington’s disease and Angelman syndrome as part of our collaboration with Ipsen Biopharm Limited, or Ipsen;
−Removed: and undisclosed targets in hair loss disorders as part of our collaboration with AbbVie Inc., or AbbVie.
+Added: has historically been an early-stage biotechnology company focused on developing nucleic acid therapies targeting ribonucleic acid against validated targets.
+Added: In September 2022, the Company announced a significant reduction in force, suspension of preclinical activities and halting of all research and development, and that the Company was exploring strategic alternatives to maximize stockholder value.
+Added: With respect to the Company’s historical assets, this includes continuing to explore out-licensing opportunities for cavrotolimod, the Company’s clinical-stage asset in immuno-oncology, as well as for the Company’s preclinical candidate associated with the SCN9A program for neuropathic pain.
+Added: While the foregoing efforts are continuing, the Company does not expect they will generate significant value for stockholders, at least in the near term.
+Added: Therefore, the Company is engaging in a broader exploration of strategic alternatives.
+Added: This effort involves exploring growth through transactions with potential partners that see opportunity in joining an existing, publicly-traded organization.
+Added: The Company is exploring transactions both within its historical biotechnology and life science industry and in other industries unrelated to its historical operations.
Throughout these consolidated financial statements, the terms the “Company,” and “Exicure” refer to Exicure, Inc.
7 unchanged sentences
All intercompany transactions and accounts are eliminated in consolidation.
−Removed: EXICURE, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
−Removed: Significant Risks and Uncertainties
−Removed: As discussed in Note 3, Collaborative Research and License Agreements , revenue recognized under the AbbVie Collaboration Agreement (as defined in Note 3, Collaborative Research and License Agreements ) for the year ended December 31, 2021 reflects the cumulative catchup adjustment (reduction) of revenue of recorded in connection with a change in estimate that occurred during the third quarter of 2021.
−Removed: The Company currently estimates significant additional efforts will be required to satisfy the performance obligation under the AbbVie Collaboration Agreement.
−Removed: These increased estimated efforts in connection with the change in workplan resulted in less progress occurring relative to the increased estimate of total project hours to complete the research services during the year ended December 31, 2021 as compared to the amount of revenue recognized at December 31, 2020, which led to a full year revenue reversal of $( 2,792 ) in the current year.
−Removed: Due to uncertainties inherent in the estimation process, it is at least reasonably possible that estimated efforts required to complete the research services under the AbbVie Collaboration Agreement will be further revised in the near-term which may result in additional adjustments (reductions of revenue) in future periods.
−Removed: As discussed in Note 2, Significant Accounting Policies — Revenue Recognition , determining the estimate of total project hours used to recognize revenue for the Company’s collaboration agreements requires significant judgment and any changes to those estimates may have a significant impact on the amount and timing of revenue recognition for the Ipsen Collaboration Agreement or the AbbVie Collaboration Agreement (each, as defined in Note 3, Collaborative Research and License Agreements ) in future periods.
−Removed: COVID-19 Risks and Uncertainties
−Removed: In response to the ongoing COVID-19 pandemic, the Company has taken and continues to take active measures designed to address and mitigate the impact of the COVID-19 pandemic on its business.
−Removed: The Company continues to monitor closely the developments and continue to take active measures to protect the health of its employees and their families, and its communities.
−Removed: Its on-site activities continue with protocols for safely accessing and working within its facilities.
−Removed: While the Company continues to conduct research and development activities, the COVID-19 pandemic has impacted, and may continue to impact, certain of its early-stage discovery efforts.
−Removed: The Company is working closely with its third-party manufacturers and other partners to manage its supply chain activities and mitigate potential disruptions as a result of the COVID-19 pandemic.
−Removed: The Company has observed minor delays in receipt of key chemicals, reagents and materials as certain manufacturers have had supply disruptions related to the COVID-19 pandemic.
−Removed: If the COVID-19 pandemic continues to persist for an extended period of time and impacts essential distribution systems such as FedEx and postal delivery, the Company could experience future disruptions to its supply chain and operations and associated delays in the manufacturing and its clinical supply, which would adversely impact its preclinical and clinical development activities.
−Removed: However, if the COVID-19 pandemic continues to persist for an extended period of time, the Company could experience further significant disruptions to its clinical and preclinical development timelines, which would adversely affect its business, financial condition, results of operations and growth prospects.
−Removed: In addition, the Company is subject to other challenges and risks specific to its business and its ability to execute on its business plan and strategy, as well as risks and uncertainties common to companies in the biotechnology industry with research and development operations, including, without limitation, risks and uncertainties associated with:
−Removed: obtaining regulatory approval of its product candidates;
−Removed: delays or problems in obtaining clinical supply, loss of single source suppliers or failure to comply with manufacturing regulations;
−Removed: identifying, acquiring or in-licensing additional products or product candidates;
−Removed: product development and the inherent uncertainty of clinical success;
−Removed: and the challenges of protecting and enhancing its intellectual property rights;
−Removed: and the challenges of complying with applicable regulatory requirements.
−Removed: In addition, to the extent the ongoing COVID-19 pandemic adversely affects the Company’s business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties..
+Added: Reverse Stock Split
+Added: The Company effected a reverse stock split of its Common Stock at a ratio of 1-for-30 as of 5:00 p.m.
+Added: Eastern Time on June 29, 2022.
+Added: No fractional shares were issued in connection with the reverse stock split.
+Added: Stockholders of record who would otherwise be entitled to receive a fractional share received a cash payment in lieu thereof.
+Added: All information presented in the accompanying consolidated financial statements, unless otherwise indicated herein, assumes a 1-for-30 reverse stock split of the Company’s outstanding shares of Common Stock, and unless otherwise indicated, all such amounts and corresponding conversion price or exercise price data set forth herein have been adjusted to give effect to such assumed reverse stock split.
EXICURE, INC.
6 unchanged sentences
As of December 31, 2022, the Company has generated an accumulated deficit of $ 191,486 since inception and expects to incur significant expenses and negative cash flows for the foreseeable future.
−Removed: As of December 31, 2021, the Company’s cash, cash equivalents, short-term investments, and restricted cash were $ 48,341 .
+Added: As of December 31, 2022, the Company’s cash, cash equivalents, and restricted cash were $ 9,777 .
Management believes that given the Company’s current cash position, operating plans and forecasted negative cash flows from operating activities over the next twelve months, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued.
The Company has no committed sources of additional capital at this time and substantial additional financing will be needed by the Company to fund its operations.
−Removed: Management believes that it will be able to obtain additional funding through equity or debt financings, collaboration agreements, strategic partnerships and licensing arrangements, or other arrangements to fund its current operations and business strategy.
−Removed: However, there can be no assurance that such additional financing will be available and, if available, can be obtained on terms acceptable to the Company.
−Removed: If the Company is unable to raise additional capital, the Company could be forced to delay, reduce the scope of or eliminate its research and development programs or the Company may be required to relinquish rights to assets or preclinical programs that it might otherwise seek to develop independently, any of which could adversely affect its business prospects, or the Company may be unable to continue operations.
+Added: Management believes that existing cash and cash equivalents could enable the Company to fund its operating expenses into the beginning of the fourth quarter of 2023.
+Added: However, this estimate is based on assumptions about how the Company can limit spending that may prove to be wrong.
+Added: It is very difficult to project the Company’s current cash burn rate given the transitional status of the Company and this estimate may prove inaccurate.
+Added: Depending on the direction of the Company’s review of strategic alternatives, the Company may use available resources sooner than management currently expects.
+Added: The Company has already engaged in significant cost reductions, so our ability to further cut costs and extend the Company’s operating runway is limited.
+Added: As a result, substantial additional financing will be needed by the Company within the next few months to pay expenses, fund the ongoing exploration of strategic alternatives and pursue any alternatives that may be identified.
+Added: There can be no assurance that such additional financing will be available and, if available, can be obtained on acceptable terms.
The accompanying consolidated financial statements have been prepared as though the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
17 unchanged sentences
Restricted cash
−Removed: As of December 31, 2021, the Company was required to maintain a balance of $ 8,000 in a blocked account in connection with Amendment No.
−Removed: 4 to the MidCap Credit Agreement (see Note 6);
−Removed: this amount is considered restricted cash and is presented within other noncurrent assets on the accompanying consolidated balance sheet at December 31, 2021.
−Removed: The Company also secures a standby letter of credit with a restricted certificate of deposit account as part of its Chicago lease agreement.
+Added: The Company secures a standby letter of credit with a restricted certificate of deposit account as part of its Chicago lease agreement.
The Company considers the restricted certificate of deposit account in the amount of $ 1,200 to be restricted cash because its use to the Company is contractually limited and presents the balance within other noncurrent assets on the accompanying consolidated balance sheet at December 31, 2022.
1 unchanged sentence
The Company has estimated the fair value of its financial instruments.
−Removed: The carrying amounts for cash, cash equivalents, accounts receivable, and accounts payable approximate their fair value due to the relatively short-term nature of these instruments.
+Added: The carrying amounts for cash, cash equivalents, and accounts payable approximate their fair value due to the relatively short-term nature of these instruments.
The Company records short-term investments at their estimated fair value based on quoted market prices for identical or similar instruments.
−Removed: The Company believes that its long-term debt bears interest at the prevailing market rate for instruments with similar characteristics and, accordingly, the carrying value of long-term debt also approximates its fair value.
Concentrations of credit risk and other risks and uncertainties
8 unchanged sentences
The Company has no financial instruments with off-balance sheet risk of loss.
−Removed: For the year ended December 31, 2021, the Company’s revenue was generated from its collaborations with Ipsen and AbbVie.
+Added: For the year ended December 31, 2022, the Company’s revenue was generated from its collaborations with Ipsen and AbbVie, which were terminated in the fourth quarter.
The Company is currently not profitable and no assurance can be provided that it will ever be profitable.
1 unchanged sentence
See also Note 1, Going Concern , for more information.
+Added: The Company is subject to risks common to biotechnology firms including, but not limited to, new and disruptive technological innovations, dependence on key personnel, protection of proprietary technology, the validity of and continued access to its owned and licensed intellectual property, limitations on the supply of critical materials, compliance with governmental regulations and market acceptance.
+Added: The Company is also subject to risks associated with its exploration of strategic alternatives including, but not limited, the inability to identify any
EXICURE, INC.
1 unchanged sentence
(in thousands, except share and per share data)
−Removed: The Company is subject to risks common in therapeutic development including, but not limited to, therapeutic candidates that appear promising in the early phases of development often fail because they prove to be inefficacious or unsafe, clinical trial results are unsuccessful, regulatory bodies may not approve the therapeutic or the therapeutic may not be economical in production or distribution.
−Removed: The Company is also subject to risks common to biotechnology firms including, but not limited to new and disruptive technological innovations, dependence on key personnel, protection of proprietary technology, the validity of and continued access to its owned and licensed intellectual property, limitations on the supply of critical materials, compliance with governmental regulations and market acceptance.
+Added: transactions that will generate value for stockholders, incurrence of excessive costs in seeking to identify and pursue transactions and the possibility that any transaction the Company does pursue will not provide anticipated benefits.
Property and equipment
9 unchanged sentences
Revenue recognition
−Removed: Effective January 1, 2018, the Company adopted the provisions of ASC 606, Revenue from Contracts with Customers using the modified retrospective method for all contracts not completed as of the date of adoption.
−Removed: Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.
+Added: Under ASC 606, Revenue from Contracts with Customers , the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.
To determine revenue recognition for arrangements that are within the scope of ASC 606, the Company performs the following five steps:
3 unchanged sentences
Identify the performance obligations in the contract.
−Removed: Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other available resources, and are distinct in the context of the contract, whereby the transfer of the good or
−Removed: EXICURE, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
−Removed: service is separately identifiable from other promises in the contract.
+Added: Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other available resources, and are distinct in the context of the contract, whereby the transfer of the good or service is separately identifiable from other promises in the contract.
To the extent a contract includes multiple promised goods and services, the Company must apply judgment to determine whether promised goods and services are both capable of being distinct and distinct in the context of the contract.
2 unchanged sentences
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and services to the customer.
−Removed: To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method, depending on the nature of the variable consideration.
+Added: To the extent the transaction price includes variable consideration, the Company estimates the amount of variable
+Added: EXICURE, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (in thousands, except share and per share data)
+Added: consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method, depending on the nature of the variable consideration.
Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.
17 unchanged sentences
Determining the estimate of total project hours requires significant judgment and may have a significant impact on the amount and timing of revenue recognition.
−Removed: For example, as discussed in Note 3, Collaborative Research and License Agreements , revenue recognized under the AbbVie Collaboration Agreement (as defined in Note 3, Collaborative Research and License Agreements ) for the year ended
−Removed: EXICURE, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
−Removed: December 31, 2021 was $( 2,792 ) due primarily to the cumulative catchup adjustment (reduction) of revenue recorded in connection with a change in estimate that occurred during the third quarter of 2021.
Licenses of intellectual property :
3 unchanged sentences
Milestone payments:
−Removed: At the inception of each arrangement that includes development milestone payments, the Company evaluates the probability of reaching the milestones and estimates the amount to be included in the transaction price using the most likely amount method.
+Added: At the inception of each arrangement that includes development milestone payments, the Company evaluates the probability of reaching the milestones and estimates the amount to be included in the
+Added: EXICURE, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (in thousands, except share and per share data)
+Added: transaction price using the most likely amount method.
If it is probable that a significant revenue reversal would not occur in the future, the associated milestone value is included in the transaction price.
17 unchanged sentences
The Company determines if an arrangement is a lease at contract inception.
−Removed: Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s
−Removed: EXICURE, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
−Removed: obligation to make lease payments arising from the lease.
+Added: Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
Operating lease assets and liabilities are recognized on the balance sheet at the commencement date of the lease based upon the present value of lease payments over the lease term.
4 unchanged sentences
The Company combines lease and non-lease components, which are accounted for together as a single lease component.
−Removed: Variable lease payments, such as real estate taxes and facility maintenance costs that are allocated by the lessor to the lessee and are not based on an index or a rate, are excluded from the measurement of the lease liability.
+Added: Variable lease payments, such as real
+Added: EXICURE, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (in thousands, except share and per share data)
+Added: estate taxes and facility maintenance costs that are allocated by the lessor to the lessee and are not based on an index or a rate, are excluded from the measurement of the lease liability.
Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
22 unchanged sentences
The effective date of ASU 2016-13 was deferred by ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)—Effective Dates to the annual period beginning after December 15, 2022 for companies that (i) meet the definition of an SEC filer and (ii) are eligible as “smaller reporting companies” as such term is defined by the SEC, with early adoption permitted.
−Removed: The Company is currently assessing the impact of adoption of ASU 2016-13 to its consolidated financial statements.
+Added: The Company expects that the adoption of ASU 2016-13 will not have a material impact to the Company’s consolidated financial statements.
Collaborative Research and License Agreements
5 unchanged sentences
Upon written notice to the Company, Ipsen may exercise its option during the corresponding collaboration program’s applicable option exercise period, (each, an “Ipsen Option Exercise Period”).
−Removed: As of the Ipsen Effective Date, the Company and Ipsen have agreed upon a development plan for each Ipsen Collaboration Program that describes the development activities and timelines required to advance each such Ipsen Collaboration Program through its first IND filing (each, an “Ipsen Development Plan”).
−Removed: The activities described in the Ipsen Development Plans are conducted under the supervision of the Ipsen Joint Steering Committee (the “Ipsen JSC”) consisting of three members from each of the Company and Ipsen.
−Removed: Under the terms of the Ipsen Collaboration Agreement, the Company will use commercially reasonable efforts to conduct discovery and development in two collaboration programs for Huntington’s disease (the “HD Program”) and Angelman syndrome (the “AS Program”) (the “Ipsen Development Activities”) respectively.
−Removed: The Company shall be solely responsible for all costs and expenses of conducting each Ipsen Collaboration Program through the selection of SNA therapeutic candidates for further development (“Ipsen Selection”), and Ipsen shall be responsible for all costs and expenses of all activities that are necessary to enable the first filing of an IND for each proposed product candidate.
−Removed: In the event that Ipsen exercises an option, Ipsen will be responsible for further development from the license effective date and commercialization of the corresponding licensed product.
−Removed: Following the completion of all Ipsen Development Activities for the Ipsen Selection (the “Ipsen First R&D Term Activities”), the Company is required to deliver to Ipsen a report that describes the results of the Ipsen First R&D Term Activities and identifies at least one SNA-based compound that satisfies certain criteria for such Ipsen Collaboration Program as determined by the Ipsen JSC (the “Ipsen First Option Data Package”).
−Removed: Following the delivery of the Ipsen First Option Data Package for an Ipsen Collaboration Program, Ipsen will have the ability for a defined period of time (the “Ipsen First Option Exercise Period”) to exercise an option (each a “First Ipsen Option”)
+Added: On December 12, 2022 (the “Ipsen Termination Agreement Effective Date”), the Company and Ipsen entered into a Mutual Termination Agreement (the “Ipsen Termination Agreement”), pursuant to which the parties mutually agreed to terminate the Ipsen Collaboration Agreement.
+Added: Following such termination, the parties will jointly own R&D Term IP (as defined in the Ipsen Collaboration Agreement) and Patents Covering the R&D Term IP (as defined in the Ipsen Collaboration Agreement), with each party owning an equal, undivided interest in and to such R&D Term IP and patents.
+Added: As a result of the termination of the Ipsen Collaboration Agreement, the Company regained the ability to independently develop medicines targeting Angelman syndrome and Huntington’s disease while Ipsen retains the right to re-enter into the collaboration with the Company in Huntington’s disease and Angelman’s syndrome.
+Added: As of the Ipsen Effective Date and through the Ipsen Termination Agreement Effective Date, the Company and Ipsen had agreed upon a development plan for each Ipsen Collaboration Program that describes the development activities and timelines required to advance each such Ipsen Collaboration Program through its first IND filing (each, an “Ipsen Development Plan”).
+Added: The activities described in the Ipsen Development Plans were conducted under the supervision of the Ipsen Joint Steering Committee (the “Ipsen JSC”) consisting of three members from each of the Company and Ipsen.
+Added: Under the terms of the Ipsen Collaboration Agreement, the Company was to use commercially reasonable efforts to conduct discovery and development in two collaboration programs for Huntington’s disease (the “HD Program”) and Angelman syndrome (the “AS Program”) (the “Ipsen Development Activities”) respectively.
+Added: The Company was solely responsible for all costs and expenses of conducting each Ipsen Collaboration Program through the selection of SNA therapeutic candidates for further development (“Ipsen
EXICURE, INC.
1 unchanged sentence
(in thousands, except share and per share data)
−Removed: to obtain worldwide rights and license to the Company’s SNA technology and the Company’s interest in joint collaboration technology to make, have made, import, use, sell or offer for sale any product (each an “Ipsen Licensed Product”) that results from such Ipsen Collaboration Program during the term of the Ipsen Collaboration Agreement.
−Removed: In the event Ipsen (i) does not exercise the First Ipsen Option with respect to an Ipsen Collaboration Program, (ii) the Ipsen Collaboration Agreement has not expired or been terminated with respect to such Ipsen Collaboration Program, and (iii) Ipsen agrees to fully fund additional research activities for an Ipsen Collaboration Program through IND filing, the Company will be responsible for research and development activities for such Ipsen Collaboration Program through IND filing (the “Ipsen Second R&D Term Activities”).
−Removed: Following the completion of the Ipsen Second R&D Term Activities, the Company is required to deliver to Ipsen a report that describes the results of the Ipsen Second R&D Term Activities (the “Ipsen Second Option Data Package”).
−Removed: Following the delivery of the Ipsen Second Option Data Package for an Ipsen Collaboration Program, Ipsen will have the ability for a defined period of time (the “Ipsen Second Option Exercise Period”) to exercise an option (each a “Second Ipsen Option” and together with the First Ipsen Option, the “Ipsen Options”) to obtain worldwide rights and license to the Company’s SNA technology and the Company’s interest in joint collaboration technology to make, have made, import, use, sell or offer for sale any Ipsen Licensed Product” that results from such Ipsen Collaboration Program during the term of the Ipsen Collaboration Agreement.
−Removed: After Ipsen’s exercise of an Ipsen Option for an Ipsen Collaboration Program, the Company shall supply to Ipsen the licensed SNAs under current Good Manufacturing Practice, at the Company’s manufacturing cost pursuant to a clinical supply agreement to be negotiated by the Company and Ipsen in good faith following the Ipsen Effective Date and executed within twelve (12) months after the Ipsen Effective Date (the “Ipsen Supply Agreement”).
−Removed: The Ipsen Supply Agreement will provide for the transfer by the Company to Ipsen of all documents and information, and the provision by the Company of technical assistance and support, for Ipsen to manufacture or have manufactured by a third party contractor engaged by Ipsen the applicable licensed SNA to the extent it is intended to be actually used in the development and manufacture of the applicable licensed products.
−Removed: Under the terms of the Ipsen Collaboration Agreement, the Company received an upfront payment of $ 20,000 (the “Ipsen Upfront Payment”).
−Removed: If Ipsen exercises a First Ipsen Option, Ipsen is required to pay the Company the First Ipsen Option exercise fee of $ 10,000 for each Ipsen Collaboration Program.
−Removed: If Ipsen exercises a Second Ipsen Option, Ipsen is required to pay the Company the Second Ipsen Option exercise fee of $ 25,000 for each Ipsen Collaboration Program.
−Removed: Ipsen will pay a pre-clinical milestone payment of $ 5,000 for each Ipsen Collaboration Program upon achievement of such milestone regardless of whether an Ipsen Option is exercised.
−Removed: In addition to the option exercise fees and the pre-clinical milestones described above, if Ipsen exercises an Ipsen Option for an Ipsen Collaboration Program, development and regulatory milestones will be payable for that program upon the initiation of certain clinical trials and the filing for processing by the United States Food and Drug Administration (“FDA”) in the United States and by two additional regulators outside the United States of a marketing application for review, per the Ipsen Collaboration Program, with an aggregate total of up to $ 180,000 if both Ipsen Options are exercised.
−Removed: Commercial milestones will be payable for that Ipsen Collaboration Program upon first commercial sale of a licensed product in certain jurisdictions and the achievement of specified aggregate sales thresholds for all licensed products from that program, with an aggregate total of up to $ 762,000 if both Ipsen Options are exercised.
−Removed: In the event a therapeutic candidate subject to the Ipsen Collaboration Agreement results in commercial sales, the Company is eligible to receive tiered royalties at percentages ranging from the mid-single digits to the mid-teens on future net product sales of such commercialized therapeutic candidates.
−Removed: A percentage of the aforementioned payments will be due to Northwestern University upon receipt, pursuant to the terms of the Company’s existing license agreements with Northwestern University (see Note 15, Commitment and Contingencies, for more information on the Northwestern University License Agreements (as defined below)).
−Removed: In connection with the receipt of the Ipsen Upfront Payment, the Company paid a $ 3,000 license fee to Northwestern University under the terms of the Northwestern License Agreements.
+Added: Selection”), and Ipsen was responsible for all costs and expenses of all activities that were necessary to enable the first filing of an IND for each proposed product candidate.
+Added: In the event that Ipsen exercised an option, Ipsen would have been responsible for further development from the license effective date and commercialization of the corresponding licensed product.
+Added: In the event of completion of all Ipsen Development Activities for the Ipsen Selection (the “Ipsen First R&D Term Activities”), the Company was required to deliver to Ipsen a report that described the results of the Ipsen First R&D Term Activities and identified at least one SNA-based compound that satisfies certain criteria for such Ipsen Collaboration Program as determined by the Ipsen JSC (the “Ipsen First Option Data Package”).
+Added: Following the delivery of the Ipsen First Option Data Package for an Ipsen Collaboration Program, Ipsen would have had the ability for a defined period of time (the “Ipsen First Option Exercise Period”) to exercise an option (each a “First Ipsen Option”) to obtain worldwide rights and license to the Company’s SNA technology and the Company’s interest in joint collaboration technology to make, have made, import, use, sell or offer for sale any product (each an “Ipsen Licensed Product”) that resulted from such Ipsen Collaboration Program during the term of the Ipsen Collaboration Agreement.
+Added: In the event Ipsen (i) did not exercise the First Ipsen Option with respect to an Ipsen Collaboration Program, (ii) the Ipsen Collaboration Agreement had not expired or been terminated with respect to such Ipsen Collaboration Program, and (iii) Ipsen agreed to fully fund additional research activities for an Ipsen Collaboration Program through IND filing, the Company would have been responsible for research and development activities for such Ipsen Collaboration Program through IND filing (the “Ipsen Second R&D Term Activities”).
+Added: In the event of completion of the Ipsen Second R&D Term Activities, the Company would have been required to deliver to Ipsen a report that described the results of the Ipsen Second R&D Term Activities (the “Ipsen Second Option Data Package”).
+Added: Following the delivery of the Ipsen Second Option Data Package for an Ipsen Collaboration Program, Ipsen would have had the ability for a defined period of time (the “Ipsen Second Option Exercise Period”) to exercise an option (each a “Second Ipsen Option” and together with the First Ipsen Option, the “Ipsen Options”) to obtain worldwide rights and license to the Company’s SNA technology and the Company’s interest in joint collaboration technology to make, have made, import, use, sell or offer for sale any Ipsen Licensed Product” that results from such Ipsen Collaboration Program during the term of the Ipsen Collaboration Agreement.
+Added: In the event of Ipsen’s exercise of an Ipsen Option for an Ipsen Collaboration Program, the Company would have been required to supply to Ipsen the licensed SNAs under current Good Manufacturing Practice, at the Company’s manufacturing cost pursuant to a clinical supply agreement to be negotiated by the Company and Ipsen in good faith following the Ipsen Effective Date and executed within twelve (12) months after the Ipsen Effective Date (the “Ipsen Supply Agreement”).
+Added: The Ipsen Supply Agreement would have provided for the transfer by the Company to Ipsen of all documents and information, and the provision by the Company of technical assistance and support, for Ipsen to manufacture or have manufactured by a third party contractor engaged by Ipsen the applicable licensed SNA to the extent it is intended to be actually used in the development and manufacture of the applicable licensed products.
+Added: Under the terms of the Ipsen Collaboration Agreement, the Company received a nonrefundable upfront payment of $ 20,000 (the “Ipsen Upfront Payment”).
+Added: If Ipsen exercised a First Ipsen Option, Ipsen was required to pay the Company the First Ipsen Option exercise fee of $ 10,000 for each Ipsen Collaboration Program.
+Added: If Ipsen exercised a Second Ipsen Option, Ipsen was required to pay the Company the Second Ipsen Option exercise fee of $ 25,000 for each Ipsen Collaboration Program.
+Added: Ipsen would have been required to pay a preclinical milestone payment of $ 5,000 for each Ipsen Collaboration Program upon achievement of such milestone regardless of whether an Ipsen Option was exercised.
+Added: In addition to the option exercise fees and the preclinical milestones described above, if Ipsen exercised an Ipsen Option for an Ipsen Collaboration Program, development and regulatory milestones would have been payable for that program upon the initiation of certain clinical trials and the filing for processing by the United States Food and Drug Administration (“FDA”) in the United States and by two additional regulators outside the United States of a marketing application for review, per the Ipsen Collaboration Program, with an aggregate total of up to $ 180,000 if
EXICURE, INC.
1 unchanged sentence
(in thousands, except share and per share data)
−Removed: The Company’s obligations to conduct activities defined in the Ipsen Development Plan under the Ipsen Collaboration Agreement commenced on July 30, 2021 and continues, unless earlier terminated, until (a) the expiration of the later-to-expire Ipsen Option Exercise Period, if Ipsen does not exercise either Ipsen Option, or (b) the expiration of the last-to-expire royalty term for any licensed product in such country on a licensed product-by-licensed product and country-by-country basis, if Ipsen exercises one or both Ipsen Options.
−Removed: Upon expiration of the royalty term with respect to a particular licensed product in a country, the license for such product in such country will convert to a fully-paid, irrevocable and perpetual license.
−Removed: The Ipsen Collaboration Agreement also contains customary provisions for termination by either party, including by Ipsen for any or no reason in its entirety upon ( 90 ) days prior written notice and including in the event of breach of the Ipsen Collaboration Agreement, subject to cure, and by the Company upon a challenge of the licensed patents, subject, in certain cases, to customary reversion rights.
−Removed: Upon termination of the Ipsen Collaboration Agreement by the Company for Ipsen’s breach or bankruptcy, all licenses granted by the Company to Ipsen will terminate.
−Removed: The Ipsen Collaboration Agreement includes customary representations and warranties on behalf of both the Company and Ipsen.
−Removed: The Ipsen Collaboration Agreement also provides for customary mutual indemnities.
−Removed: In addition, the Ipsen Collaboration Agreement imposes certain exclusivity obligations on Ipsen and the Company, respectively, with respect to the development, use, manufacture and commercialization of oligonucleotide-based therapeutic targeting the same targets in the collaboration programs and/or certain other specific targets.
−Removed: Either party may assign the Ipsen Collaboration Agreement or delegate its obligations to an affiliate or to a successor to substantially all of the business to which the Ipsen Collaboration Agreement relates without the consent of the other party.
+Added: both Ipsen Options were exercised.
+Added: Commercial milestones would have been payable for that Ipsen Collaboration Program upon first commercial sale of a licensed product in certain jurisdictions and the achievement of specified aggregate sales thresholds for all licensed products from that program, with an aggregate total of up to $ 762,000 if both Ipsen Options were exercised.
+Added: In the event a therapeutic candidate subject to the Ipsen Collaboration Agreement resulted in commercial sales, the Company was eligible to receive tiered royalties at percentages ranging from the mid-single digits to the mid-teens on future net product sales of such commercialized therapeutic candidates.
+Added: A percentage of the aforementioned payments would have been due to Northwestern University upon receipt, pursuant to the terms of the Company’s existing license agreements with Northwestern University (see Note 15, Commitment and Contingencies, for more information on the Northwestern University License Agreements (as defined below)).
+Added: In connection with the receipt of the Ipsen Upfront Payment, the Company paid a $ 3,000 license fee to Northwestern University under the terms of the Northwestern License Agreements.
+Added: The Company’s obligations to conduct activities defined in the Ipsen Development Plan under the Ipsen Collaboration Agreement commenced on July 30, 2021 and continued through the Ipsen Termination Agreement effective date.
Accounting Analysis
−Removed: The Company concluded that Ipsen is a customer in this arrangement, and as such the arrangement falls within the scope of the revenue recognition guidance.
+Added: The Company concluded that Ipsen was a customer in this arrangement, and as such the arrangement falls within the scope of the revenue recognition guidance.
Under the Ipsen Collaboration Agreement, the Company has identified two performance obligations, as follows:
3 unchanged sentences
The Company has also concluded that the Ipsen HD Program JSC Services and the Ipsen AS Program JSC Services are not distinct from the activities related to entering the Ipsen Supply Agreements for each respective program.
−Removed: The Ipsen JSC provides oversight and management of the overall Ipsen Collaboration Agreement, and the members of the Ipsen JSC from the Company have specialized industry knowledge, particularly as it relates to SNA technology.
−Removed: The Ipsen JSC is meant to facilitate the early stage research being performed and coordinate the activities of both the Company and Ipsen.
−Removed: Further, the Ipsen JSC services are critical to the ongoing evaluation of the Ipsen Collaboration Programs and the drafting and evaluation of the Ipsen First Option Data Package.
−Removed: The Ipsen JSC will also provide oversight and management of the activities to enter into the Ipsen Supply Agreement.
−Removed: Accordingly, the Company’s participation on the Ipsen JSC is essential to Ipsen receiving value from the Ipsen HD Program R&D Services and the Ipsen AS Program R&D Services, and as such, (i) the Ipsen HD Program JSC Services, along with the Ipsen HD Program R&D Services and the activities related to entering the Ipsen Supply Agreement within twelve months of the Ipsen Effective Date for that program are considered a single performance obligation (the “Ipsen HD Program Services”) and (ii) the Ipsen AS Program JSC Services along with the Ipsen AS Program R&D Services and the
−Removed: EXICURE, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
−Removed: activities related to entering the Ipsen Supply Agreement within twelve months of the Ipsen Effective Date for that program are considered a single performance obligation (the “Ipsen AS Program Services”).
+Added: The Ipsen JSC provided oversight and management of the overall Ipsen Collaboration Agreement, and the members of the Ipsen JSC from the Company have specialized industry knowledge, particularly as it relates to SNA technology.
+Added: The Ipsen JSC was meant to facilitate the early stage research being performed and coordinate the activities of both the Company and Ipsen.
+Added: Further, the Ipsen JSC services were critical to the ongoing evaluation of the Ipsen Collaboration Programs and the drafting and evaluation of the Ipsen First Option Data Package.
+Added: The Ipsen JSC would also have provided oversight and management of the activities to enter into the Ipsen Supply Agreement.
+Added: Accordingly, the Company’s participation on the Ipsen JSC was essential to Ipsen receiving value from the Ipsen HD Program R&D Services and the Ipsen AS Program R&D Services, and as such, (i) the Ipsen HD Program JSC Services, along with the Ipsen HD Program R&D Services and the activities related to entering the Ipsen Supply Agreement within twelve months of the Ipsen Effective Date for that program are considered a single performance obligation (the “Ipsen HD Program Services”) and (ii) the Ipsen AS Program JSC Services along with the Ipsen AS Program R&D Services and the activities related to entering the Ipsen Supply Agreement within twelve months of the Ipsen Effective Date for that program are considered a single performance obligation (the “Ipsen AS Program Services”).
As of the Ipsen Effective Date, the total transaction price was determined to be $ 20,000 , consisting solely of the Ipsen Upfront Payment.
1 unchanged sentence
As of the Ipsen Effective Date, there were no milestones included in the transaction price.
−Removed: The pre-clinical, development, regulatory, and commercial milestones were fully constrained due to the significant uncertainties surrounding such payments.
−Removed: The Company considered the stage of development and the risks associated with the remaining development required to achieve the milestone, as well as whether the achievement of the milestone is outside the control of the Company or Ipsen.
+Added: The preclinical, development, regulatory, and commercial milestones were fully constrained due to the significant uncertainties surrounding such payments.
+Added: The Company considered the stage of development
+Added: EXICURE, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (in thousands, except share and per share data)
+Added: and the risks associated with the remaining development required to achieve the milestone, as well as whether the achievement of the milestone is outside the control of the Company or Ipsen.
The Company has determined that any commercial milestones and sales-based royalties will be recognized when the related sales occur and therefore, they have also been excluded from the transaction price.
−Removed: The Company will re-evaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur.
−Removed: As of December 31, 2021, the Company determined that any pre-clinical, development, regulatory, or commercial milestones continue to be constrained and therefore the related milestone payments continue to be excluded from the transaction price at December 31, 2021.
+Added: The Company re-evaluated the transaction price at the end of each reporting period and as uncertain events were resolved or other changes in circumstances occurred.
+Added: As of the Ipsen Termination Agreement Effective Date, the Company determined that the total transaction price was $ 20,000 .
The Company allocated the total transaction price to each of the two identified performance obligations under the Ipsen Collaboration Agreement based on an expected cost plus a margin approach, as follows:
$ 10,793 of the transaction price allocated to the Ipsen HD Program Services and $ 9,207 of the transaction price allocated to the Ipsen AS Program Services.
−Removed: The Company will recognize revenue related to each of Ipsen HD Program Services and the Ipsen AS Program Services as those performance obligations are satisfied using an input method to measure progress for each of those performance obligations.
+Added: The Company recognized revenue related to each of Ipsen HD Program Services and the Ipsen AS Program Services as those performance obligations were satisfied using an input method to measure progress for each of those performance obligations.
The Company believes the input method that most accurately depicts the measure of progress is the actual hours incurred to date relative to projected hours to complete the activities for the Ipsen HD Program Services and the Ipsen AS Program Services.
−Removed: During the year ended December 31, 2021, the Company recognized revenue under the Ipsen Collaboration Agreement of approximately $ 2,309 .
−Removed: As of December 31, 2021 , there was $ 17,691 of deferred revenue related to the Ipsen Collaboration Agreement, of which is $ 8,757 is classified as current and $ 8,934 is classified as noncurrent on the consolidated balance sheet.
−Removed: Deferred revenue under the Ipsen Collaboration Agreement will be recognized as revenue in future periods as the Company satisfies its obligations under the Ipsen Collaboration Agreement, which the Company currently estimates to be over the next 30 to 39 months.
+Added: In connection with the Ipsen Termination Agreement, the Company recognized as revenue any remaining deferred revenue associated with the Ipsen Collaboration Agreement in the fourth quarter of 2022.
+Added: During the years ended December 31, 2022 and 2021, the Company recognized revenue under the Ipsen Collaboration Agreement of approximately $ 17,691 and $ 2,309 , respectively.
AbbVie Collaboration Agreement
4 unchanged sentences
Under each such license (obtained in connection with the exercise of an AbbVie Option, as defined and discussed further below), the Company would grant to AbbVie exclusive, royalty-bearing, sublicensable, nontransferable, worldwide rights to develop, manufacture, use and commercialize such SNA therapeutics.
−Removed: Under the AbbVie Collaboration Agreement, the Company will use commercially reasonable efforts to conduct the AbbVie Collaboration Programs, each focused on one or more hair loss disorders to discover one or more SNA products that are directed to, bind to or inhibit one or more specific AbbVie Collaboration Program targets.
−Removed: EXICURE, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
−Removed: As of the AbbVie Effective Date, the Company and AbbVie have agreed upon a development plan for each AbbVie Collaboration Program that describes the development activities and timelines required to advance such AbbVie Collaboration Program through its first IND filing (each, an “AbbVie Development Plan”).
−Removed: The activities described in the AbbVie Development Plan are conducted under the supervision of the AbbVie Joint Development Committee (the “AbbVie JDC”) consisting of three members from each of the Company and AbbVie.
−Removed: The Company is primarily responsible for performing early-stage discovery and preclinical activities (the “AbbVie Collaboration Program Initial Development Activities”) set forth in the AbbVie Development Plan for each AbbVie Collaboration Program and will be solely responsible for all costs and expenses related to the AbbVie Collaboration Program Initial Development Activities.
−Removed: AbbVie may elect, in its sole discretion and at its sole cost and expense, to conduct formulation assessment and in vivo testing as set forth in an AbbVie Development Plan.
−Removed: During the third quarter of 2021, the AbbVie JDC revised the AbbVie Initial Development Plan for each AbbVie Collaboration Program.
−Removed: In connection with the revised workplan for each AbbVie Collaboration Program, the Company expects to perform additional early stage discovery and preclinical activities to those set forth in the AbbVie Development Plan.
−Removed: As such, the Company currently estimates significant additional efforts will be required to satisfy the performance obligation under the AbbVie Collaboration Agreement due to the revised workplan for each AbbVie Collaboration Program.
−Removed: Further changes to estimated additional efforts may be required in future periods should there be further revisions to the workplan for each AbbVie Collaboration Program.
−Removed: Following the completion of all AbbVie Initial Development Activities, the Company is required to deliver to AbbVie a report that describes the results of the AbbVie Initial Development Activities and identifies at least one SNA-based compound that satisfies certain criteria for such AbbVie Collaboration Program as determined by the AbbVie JDC (the “AbbVie Initial Development Report”).
−Removed: Following the delivery of the AbbVie Initial Development Report for an AbbVie Collaboration Program, AbbVie will have the ability for a defined period of time (the “AbbVie Initial Option Exercise Period”) to exercise an option (each an “AbbVie Option”) to obtain worldwide rights and license to the Company’s SNA technology and the Company’s interest in joint collaboration technology to make, have made, import, use, sell or offer for sale any product (each an “AbbVie Licensed Product”) that results from such AbbVie Collaboration Program during the term of the AbbVie Collaboration Agreement.
−Removed: At AbbVie’s sole option, AbbVie may extend the AbbVie Initial Option Exercise Period (the “AbbVie Option Extension”) and require the Company to perform IND-enabling activities described in the AbbVie Development Plan (the “AbbVie IND-Enabling Activities”), subject to the payment of additional consideration (“AbbVie Extension Exercise”).
−Removed: If AbbVie exercises the AbbVie Option Extension, the Company would be responsible for conducting the AbbVie IND-Enabling Activities and would be solely responsible for all costs and expenses associated with such activities.
−Removed: Upon completion of the AbbVie IND-Enabling Activities, the Company is required to deliver a report that describes the results of the AbbVie IND-Enabling Activities (the “AbbVie IND-Enabling Activities Data Package”) to AbbVie.
−Removed: Following the delivery of AbbVie IND-Enabling Activities Data Package, AbbVie will have the ability for a defined period of time (the “AbbVie Extended Option Exercise Period”) to exercise an AbbVie Option with respect to such AbbVie Collaboration Program.
−Removed: After the exercise of an AbbVie Option with respect to an AbbVie Collaboration Program, AbbVie will be responsible for all development, manufacturing and commercialization activities, and costs and expense associated with such activities in connection with AbbVie Licensed Products arising from such AbbVie Collaboration Program.
−Removed: The Company’s obligation to conduct the activities defined in the AbbVie Development Plan under the AbbVie Collaboration Agreement commenced on November 13, 2019 and continues until the earlier of (i) the date AbbVie exercises an AbbVie Option, (ii) the date AbbVie abandons an AbbVie Collaboration Program and foregoes its AbbVie Option to that AbbVie Collaboration Program, or (iii) the fifth anniversary of the AbbVie Effective Date (the “AbbVie Research Term”).
−Removed: If the AbbVie Initial Option Exercise Period or AbbVie Extended Option Exercise Period is still in effect for an AbbVie Collaboration Program or if the Company has not delivered a complete AbbVie Initial Development Report or, if AbbVie made an AbbVie Extension Exercise for an AbbVie Collaboration Program, a complete AbbVie IND-Enabling Activities Data Package for such AbbVie Collaboration Program, as
+Added: Under the AbbVie Collaboration Agreement, the Company was to use commercially reasonable efforts to conduct the AbbVie Collaboration Programs, each focused on one or more hair loss disorders to discover one or more SNA products that are directed to, bind to or inhibit one or more specific AbbVie Collaboration Program targets.
+Added: On December 13, 2022 (the “AbbVie Termination Agreement Effective Date”), the Company and Allergan entered into a letter agreement (the “AbbVie Termination Agreement”), pursuant to which the parties mutually agreed to terminate the AbbVie Collaboration Agreement.
+Added: Following such termination, the Company transferred to Allergan all data, information, and reports made or generated by the Company in the course of performing activities under the Development Plan (as defined in the AbbVie Collaboration Agreement), and granted to Allergan all rights to transfer, publish, present, or otherwise publicly disclose any Collaboration Technology (as defined in the AbbVie Collaboration Agreement) and data made or generated by the Company in the course of performing activities under the Development Plan.
+Added: As a result of the termination of the AbbVie Collaboration Agreement, the Company regained the ability to independently develop medicines targeting hair loss disorders.
+Added: As of the AbbVie Effective Date and through the AbbVie Termination Agreement Effective Date, the Company and AbbVie had agreed upon a development plan for each AbbVie Collaboration Program that described the development activities and timelines required to advance such AbbVie Collaboration Program through its first IND
EXICURE, INC.
1 unchanged sentence
(in thousands, except share and per share data)
−Removed: determined by the AbbVie JDC, then the AbbVie Research Term will automatically extend by one-year increments until such obligation is satisfied, but in no event past the seventh anniversary of the AbbVie Effective Date.
+Added: filing (each, an “AbbVie Development Plan”).
+Added: The activities described in the AbbVie Development Plan were conducted under the supervision of the AbbVie Joint Development Committee (the “AbbVie JDC”) consisting of three members from each of the Company and AbbVie.
+Added: The Company was primarily responsible for performing early-stage discovery and preclinical activities (the “AbbVie Collaboration Program Initial Development Activities”) set forth in the AbbVie Development Plan for each AbbVie Collaboration Program and would have been solely responsible for all costs and expenses related to the AbbVie Collaboration Program Initial Development Activities.
+Added: AbbVie had the right to elect, in its sole discretion and at its sole cost and expense, to conduct formulation assessment and in vivo testing as set forth in an AbbVie Development Plan.
+Added: In the event of completion of all AbbVie Initial Development Activities, the Company would have been required to deliver to AbbVie a report that described the results of the AbbVie Initial Development Activities and identified at least one SNA-based compound that satisfies certain criteria for such AbbVie Collaboration Program as determined by the AbbVie JDC (the “AbbVie Initial Development Report”).
+Added: Following the delivery of the AbbVie Initial Development Report for an AbbVie Collaboration Program, AbbVie would have had the ability for a defined period of time (the “AbbVie Initial Option Exercise Period”) to exercise an option (each an “AbbVie Option”) to obtain worldwide rights and license to the Company’s SNA technology and the Company’s interest in joint collaboration technology to make, have made, import, use, sell or offer for sale any product (each an “AbbVie Licensed Product”) that resulted from such AbbVie Collaboration Program during the term of the AbbVie Collaboration Agreement.
+Added: At AbbVie’s sole option, AbbVie had the right to extend the AbbVie Initial Option Exercise Period (the “AbbVie Option Extension”) and require the Company to perform IND-enabling activities described in the AbbVie Development Plan (the “AbbVie IND-Enabling Activities”), subject to the payment of additional consideration (“AbbVie Extension Exercise”).
+Added: If AbbVie exercised the AbbVie Option Extension, the Company would have been responsible for conducting the AbbVie IND-Enabling Activities and would have been solely responsible for all costs and expenses associated with such activities.
+Added: In the event of completion of the AbbVie IND-Enabling Activities, the Company would have been required to deliver a report that describes the results of the AbbVie IND-Enabling Activities (the “AbbVie IND-Enabling Activities Data Package”) to AbbVie.
+Added: Following the delivery of AbbVie IND-Enabling Activities Data Package, AbbVie would have had the ability for a defined period of time (the “AbbVie Extended Option Exercise Period”) to exercise an AbbVie Option with respect to such AbbVie Collaboration Program.
+Added: After the exercise of an AbbVie Option with respect to an AbbVie Collaboration Program, AbbVie would have been responsible for all development, manufacturing and commercialization activities, and costs and expense associated with such activities in connection with AbbVie Licensed Products arising from such AbbVie Collaboration Program.
+Added: The Company’s obligation to conduct the activities defined in the AbbVie Development Plan under the AbbVie Collaboration Agreement commenced on November 13, 2019 and continued through the AbbVie Termination Agreement Effective Date.
Under the terms of the AbbVie Collaboration Agreement, the Company received a $ 25,000 upfront, non-refundable, non-creditable cash payment (the “AbbVie Upfront Payment”) related to the Company’s research and development costs for conducting the AbbVie Development Plan for two AbbVie Collaboration Programs, each focused on one or more targets, and certain options to obtain exclusive, worldwide licenses under certain intellectual property rights owned or controlled by the Company to develop, manufacture and commercialize certain products resulting from each such AbbVie Collaboration Programs.
−Removed: The option exercise fee during the AbbVie Initial Option Exercise Period is $ 10,000 per AbbVie Collaboration Program.
−Removed: If AbbVie elects to extend the AbbVie Initial Option Exercise Period, AbbVie is required to pay an additional fee of $ 10,000 .
−Removed: If AbbVie elects to exercise its option during the AbbVie Extended Option Exercise Period, AbbVie must pay the Company the option exercise fee of $ 15,000 .
−Removed: Following the exercise by AbbVie of an AbbVie Option with respect to an AbbVie Collaboration Program, AbbVie would be required to make certain milestone payments to the Company upon the achievement of specified development, product approval and launch, and commercial events, on an AbbVie Licensed Product by AbbVie Licensed Product basis.
−Removed: On an AbbVie Licensed Product by AbbVie Licensed Product basis, for the first AbbVie Licensed Product to achieve the associated milestone event, the Company is eligible to receive up to an aggregate of $ 55,000 for development milestone payments and $ 132,500 for product approval and launch milestone payments.
−Removed: The Company is also eligible for up to $ 175,000 in sales milestone payments on an AbbVie Collaboration Program by AbbVie Collaboration Program basis, associated with aggregate worldwide sales.
−Removed: Certain product approval milestones are subject to certain reductions under specified circumstances, including for payments required to be made by AbbVie to obtain certain third-party intellectual property rights.
−Removed: In addition, to the extent there is any AbbVie Licensed Product, the Company would be entitled to receive tiered royalty payments of mid-single digits to the mid-teens percentage on future net worldwide product sales of such AbbVie Licensed Products, subject to certain reductions under specified circumstances.
−Removed: Royalties are due on a AbbVie Licensed Product by AbbVie Licensed Product and country by country basis from the date of the first commercial sale of each AbbVie Licensed Product in a country until the latest to occur of:
−Removed: (i) the expiration date in such country of the last to expire valid claim within the licensed intellectual property covering the manufacture, use or sale of such AbbVie Licensed Product in such country, (ii) the tenth anniversary of the first commercial sale of such AbbVie Licensed Product in such country, and (iii) the expiration of regulatory exclusivity for such AbbVie Licensed Product in such country.
−Removed: AbbVie may terminate the AbbVie Collaboration Agreement for any reason or no reason, either in its entirety or on an AbbVie Collaboration Program by AbbVie Collaboration Program basis, at any time on 90 days’ prior written notice to the Company.
−Removed: Unless earlier terminated, the term of the AbbVie Collaboration Agreement shall continue until (i) if both AbbVie Option Exercise Periods expire without AbbVie exercising either AbbVie Option, the expiration of the later to expire AbbVie Option Exercise Period, and (ii) if either or both AbbVie Options are exercised on an AbbVie Licensed Product by AbbVie Licensed Product and country-by-country basis, the expiration of the royalty term for such AbbVie Licensed Product in such country.
−Removed: Either party may terminate the AbbVie Collaboration Agreement if the other party has materially breached or defaulted in the performance of any of its material obligations and such breach or default continues after the specified cure period.
−Removed: Termination of the AbbVie Collaboration Agreement for any reason will not release either party from any liability which, at the time of such termination, has already accrued to the other party or which is attributable to a period prior to such termination.
−Removed: In addition, termination of the AbbVie Collaboration Agreement will not preclude either party from pursuing any rights and remedies it may have under the agreement or at law or in equity with respect to any breach of the AbbVie Collaboration Agreement.
−Removed: If either party terminates the AbbVie Collaboration Agreement, the license and rights granted to AbbVie with respect to the terminated AbbVie Collaboration Program or AbbVie License Product shall terminate.
+Added: The option exercise fee during the AbbVie Initial Option Exercise Period was $ 10,000 per AbbVie Collaboration Program.
+Added: If AbbVie elected to extend the AbbVie Initial Option Exercise Period, AbbVie would have been required to pay an additional fee of $ 10,000 .
+Added: If AbbVie elected to exercise its option during the AbbVie Extended Option Exercise Period, AbbVie would have been required to pay the Company the option exercise fee of $ 15,000 .
+Added: Following the exercise by AbbVie of an AbbVie Option with respect to an AbbVie Collaboration Program, AbbVie would have been required to make certain milestone payments to the Company upon the achievement of specified development, product approval and launch, and commercial events, on an AbbVie Licensed Product by
EXICURE, INC.
1 unchanged sentence
(in thousands, except share and per share data)
+Added: AbbVie Licensed Product basis.
+Added: On an AbbVie Licensed Product by AbbVie Licensed Product basis, for the first AbbVie Licensed Product to achieve the associated milestone event, the Company was eligible to receive up to an aggregate of $ 55,000 for development milestone payments and $ 132,500 for product approval and launch milestone payments.
+Added: The Company was also eligible for up to $ 175,000 in sales milestone payments on an AbbVie Collaboration Program by AbbVie Collaboration Program basis, associated with aggregate worldwide sales.
+Added: Certain product approval milestones were subject to certain reductions under specified circumstances, including for payments required to be made by AbbVie to obtain certain third-party intellectual property rights.
+Added: In addition, to the extent there was any AbbVie Licensed Product, the Company would have been entitled to receive tiered royalty payments of mid-single digits to the mid-teens percentage on future net worldwide product sales of such AbbVie Licensed Products, subject to certain reductions under specified circumstances.
+Added: Royalties were due on a AbbVie Licensed Product by AbbVie Licensed Product and country by country basis from the date of the first commercial sale of each AbbVie Licensed Product in a country until the latest to occur of:
+Added: (i) the expiration date in such country of the last to expire valid claim within the licensed intellectual property covering the manufacture, use or sale of such AbbVie Licensed Product in such country, (ii) the tenth anniversary of the first commercial sale of such AbbVie Licensed Product in such country, and (iii) the expiration of regulatory exclusivity for such AbbVie Licensed Product in such country.
Accounting Analysis
−Removed: The Company concluded that AbbVie is a customer in this arrangement, and as such the arrangement falls within the scope of the revenue recognition guidance.
+Added: The Company concluded that AbbVie was a customer in this arrangement, and as such the arrangement falls within the scope of the revenue recognition guidance.
Under the AbbVie Collaboration Agreement, the Company has identified a single performance obligation that includes (i) the research and development activities during the AbbVie Research Term (the “AbbVie R&D Services”), and (ii) AbbVie Joint Development Committee services during the AbbVie Research Term (the “AbbVie JDC Services”).
The Company has concluded that the AbbVie R&D Services is not distinct from the AbbVie JDC Services during the AbbVie Research Term.
−Removed: The AbbVie JDC provides oversight and management of the overall AbbVie Collaboration Agreement, and the members of the AbbVie JDC from the Company have specialized industry knowledge, particularly as it relates to SNA technology.
−Removed: The AbbVie JDC is meant to facilitate the early-stage research being performed and coordinate the activities of both the Company and AbbVie.
−Removed: Further, the AbbVie JDC services are critical to the ongoing evaluation of an AbbVie Collaboration Program and the drafting and evaluation of the AbbVie Initial Development Report and the AbbVie IND-Enabling Data Package.
−Removed: Accordingly, the Company’s participation on the AbbVie JDC is essential to AbbVie receiving value from the AbbVie R&D Services and as such, the AbbVie JDC Services along with the AbbVie R&D Services are considered one performance obligation (the “AbbVie Collaboration Program Services”).
−Removed: In addition, the Company has concluded that the option to purchase two development and commercialization licenses is considered a marketing offer as the options did not provide any discounts or other rights that would be considered a material right in the arrangement, and thus, not a performance obligation at the onset of the agreement.
−Removed: The consideration for these options will be accounted for when they are exercised.
+Added: The AbbVie JDC provided oversight and management of the overall AbbVie Collaboration Agreement, and the members of the AbbVie JDC from the Company have specialized industry knowledge, particularly as it relates to SNA technology.
+Added: The AbbVie JDC was meant to facilitate the early-stage research being performed and coordinate the activities of both the Company and AbbVie.
+Added: Further, the AbbVie JDC services were critical to the ongoing evaluation of an AbbVie Collaboration Program and the drafting and evaluation of the AbbVie Initial Development Report and the AbbVie IND-Enabling Data Package.
+Added: Accordingly, the Company’s participation on the AbbVie JDC was essential to AbbVie receiving value from the AbbVie R&D Services and as such, the AbbVie JDC Services along with the AbbVie R&D Services are considered one performance obligation (the “AbbVie Collaboration Program Services”).
+Added: In addition, the Company has concluded that the option to purchase two development and commercialization licenses was considered a marketing offer as the options did not provide any discounts or other rights that would be considered a material right in the arrangement, and thus, not a performance obligation at the onset of the agreement.
+Added: The consideration for these options would have been accounted for when they are exercised.
As of the AbbVie Effective Date, the total transaction price was determined to be $ 25,000 , consisting solely of the AbbVie Upfront Payment.
4 unchanged sentences
The Company has determined that any commercial milestones and sales-based royalties will be recognized when the related sales occur and therefore they have also been excluded from the transaction price.
−Removed: The Company will re-evaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur.
−Removed: As of December 31, 2021, the Company determined that any development, regulatory or commercial milestones continue to be constrained and therefore the related milestone payments continue to be excluded from the transaction price at December 31, 2021.
−Removed: The Company will recognize revenue related to the AbbVie Collaboration Program Services as the performance obligation is satisfied using an input method to measure progress.
−Removed: The Company believes the input method that most accurately depicts the measure of progress is the actual hours incurred to date relative to projected hours to complete the research service.
−Removed: As discussed above, during the third quarter of 2021, the AbbVie JDC revised the AbbVie Initial Development Plan for each AbbVie Collaboration Program.
−Removed: As a result, the Company has increased its estimate of total hours to complete the research services, requiring an adjustment to cumulative revenue recognized (considered a change in estimate pursuant to ASC 606), which led to a full year revenue reversal of $( 2,792 ) in the current year.
−Removed: During the year ended December 31, 2021, the Company recognized revenue under the AbbVie Collaboration Agreement of approximately $( 2,792 ), reflecting the cumulative catchup adjustment (reduction) of revenue discussed above due to a change in estimate.
−Removed: The Company currently estimates significant additional efforts will be required to satisfy the performance obligation under the AbbVie Collaboration Agreement due to the revised workplan for each AbbVie Collaboration Program.
−Removed: These increased estimated efforts in connection with the change in workplan resulted in less progress occurring relative to the increased estimate of total project hours to complete the research services during the year ended December 31, 2021 as compared to the amount of revenue recognized at December 31, 2020, which led to revenue reversal in the current year period.
−Removed: During the year ended December 31,
+Added: The Company re-evaluated the transaction price at the end of each reporting period and as uncertain events were resolved or other changes in circumstances occurred.
+Added: As of the AbbVie Termination Agreement Effective Date, the Company determined the total transaction price was $ 25,000 .
+Added: The Company recognized revenue related to the AbbVie Collaboration Program Services as the performance obligation is satisfied using an input method to measure progress.
+Added: The Company believes the input method that most
EXICURE, INC.
1 unchanged sentence
(in thousands, except share and per share data)
−Removed: 2020, the Company recognized revenue under the AbbVie Collaboration Agreement of approximately $ 16,486 .
−Removed: As of December 31, 2021, there was $ 11,135 of deferred revenue related to the AbbVie Collaboration Agreement, of which $ 8,560 is classified as current and $ 2,575 is classified as noncurrent on the consolidated balance sheet.
−Removed: Deferred revenue under the AbbVie Collaboration Agreement will be recognized as revenue in future periods as the Company satisfies its obligations under the AbbVie Collaboration Agreement, which the Company currently estimates to be over the next 21 to 24 months.
−Removed: As of December 31, 2020, there was $ 8,343 of deferred revenue related to the AbbVie Collaboration Agreement, which was classified as current on the consolidated balance sheet based on the estimated contract completion date at that time.
−Removed: Dermelix Collaboration Agreement
−Removed: On February 17, 2019, Exicure entered into a License and Development Agreement (the “Dermelix Collaboration Agreement”) with Dermelix, LLC d/b/a Dermelix Biotherapeutics (“Dermelix”).
−Removed: Under the terms of the Dermelix Collaboration Agreement, Exicure received an upfront payment of $ 1,000 , to be applied against the initial $ 1,000 of the Company’s development expenses.
−Removed: The Company initially recorded the upfront payment of $ 1,000 as deferred revenue related to its wholly unsatisfied performance obligation and reduced this balance to zero during 2019 by recognizing revenue as services were provided.
−Removed: The Company recognized no revenue under the Dermelix Collaboration Agreement during the year ended December 31, 2021.
−Removed: The Company recognized $ 127 of revenue during the year ended December 31, 2020 which reflected reimbursement by Dermelix for additional costs incurred by Exicure for early-stage development costs beyond the initial $ 1,000 upfront payment.
+Added: accurately depicts the measure of progress is the actual hours incurred to date relative to projected hours to complete the research service.
+Added: During the third quarter of 2021, the AbbVie JDC revised the AbbVie Initial Development Plan for each AbbVie Collaboration Program.
+Added: As a result, the Company had increased its estimate of total hours to complete the research services, requiring an adjustment to cumulative revenue recognized (considered a change in estimate pursuant to ASC 606), which led to a full year revenue reversal of $( 2,792 ) in the prior year.
+Added: In connection with the AbbVie Termination Agreement, the Company recognized as revenue any remaining deferred revenue associated with the AbbVie Collaboration Agreement in the fourth quarter of 2022.
+Added: During the years ended December 31, 2022 and 2021, the Company recognized revenue under the AbbVie Collaboration Agreement of approximately $ 11,135 and $( 2,792 ), respectively.
Summary of Contract Liabilities
1 unchanged sentence
The following table presents changes in the balances of the Company’s contract liabilities (in thousands):
−Removed: Deferred Revenue Balance at January 1, 2021 Additions Revenue
−Removed: (Recognized) Reversed Deferred Revenue Balance at December 31, 2021
−Removed: Ipsen Collaboration Agreement $ — $ 20,000 $ ( 2,309 ) $ 17,691
−Removed: AbbVie Collaboration Agreement $ 8,343 $ — $ 2,792 $ 11,135
−Removed: Total $ 8,343 $ 20,000 $ 483 $ 28,826
+Added: AbbVie Collaboration Agreement Ipsen Collaboration Agreement
+Added: Deferred revenue - Balance at January 1, 2021 $ 8,343 $ —
+Added: Additions — 20,000
+Added: Revenue (recognized) reversed 2,792 ( 2,309 )
+Added: Deferred revenue - Balance at December 31, 2021 11,135 17,691
+Added: Additions — —
+Added: Revenue recognized ( 11,135 ) ( 17,691 )
+Added: Deferred revenue - Balance at December 31, 2022 $ — $ —
Supplemental Balance Sheet Information
9 unchanged sentences
Restricted cash $ 1,200 $ 9,200
−Removed: Other 125 193
+Added: Prepaid insurance, noncurrent 2,252 —
Other noncurrent assets $ 3,490 $ 9,325
1 unchanged sentence
Scientific equipment $ 6,087 $ 6,471
−Removed: Leasehold improvements — 192
Computers and software 63 60
5 unchanged sentences
Depreciation and amortization expense was $ 1,163 and $ 1,123 , for the years ended December 31, 2022 and 2021, respectively.
+Added: During the year ended December 31, 2022, the Company sold scientific equipment with a net book value of $ 222 and recognized a loss of $ 17 in the accompanying statement of operations for the year ended December 31, 2022.
Accrued expenses and other current liabilities
10 unchanged sentences
The Company periodically reviews and modifies these guidelines to maximize trends in yields and interest rates without compromising safety and liquidity.
+Added: As of December 31, 2022, the balance of available-for-sale securities was zero as the Company’s excess cash was primarily invested in money market funds.
EXICURE, INC.
1 unchanged sentence
(in thousands, except share and per share data)
−Removed: The following table summarizes the contract maturity of the available-for-sale securities the Company held as of December 31, 2021:
−Removed: One year or less 100 %
−Removed: After one year but within two years — %
−Removed: All of the Company’s available-for-sale securities are available to the Company for use in its current operations.
−Removed: As a result, the Company categorizes all of these securities as current assets even though the stated maturity of some individual securities may be one year or more beyond the balance sheet date.
−Removed: The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of cash equivalents and available-for-sale securities by type of security at December 31, 2021 and 2020 were as follows:
−Removed: December 31, 2021
−Removed: Amortized Costs Gross Unrealized Holding Gains Gross Unrealized Holding Losses Fair Value
−Removed: Commercial paper $ 10,498 $ — $ ( 2 ) $ 10,496
−Removed: $ 10,498 $ — $ ( 2 ) $ 10,496
+Added: As of December 31, 2021, the Company’s available-for-sale securities were available to the Company for use in its current operations.
+Added: As a result, the Company categorized all of these securities as current assets even though the stated maturity of some individual securities may be one year or more beyond the balance sheet date.
+Added: The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of available-for-sale securities by type of security at December 31, 2021 were as follows:
December 31, 2021
1 unchanged sentence
Commercial paper $ 10,498 $ — $ ( 2 ) $ 10,496
−Removed: Corporate notes/bonds 29,227 72 ( 3 ) 29,296
−Removed: Treasuries 2,251 2 — 2,253
−Removed: Government agency securities 1,265 13 — 1,278
$ 10,498 $ — $ ( 2 ) $ 10,496
−Removed: EXICURE, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
MidCap Credit Agreement
−Removed: On December 10, 2021, the Company entered into an amendment (“Amendment No.
−Removed: 4”) to the Company’s Credit and Security Agreement, dated as of September 25, 2020, as amended on October 21, 2020, July 30, 2021 and September 30, 2021, with MidCap Financial Trust, as agent (“MidCap”), and the lenders party thereto from time to time (as amended, the “MidCap Credit Agreement”), to prepay $ 10,000 of the Company’s outstanding loans under the MidCap Credit Agreement.
−Removed: Additionally, in connection with Amendment No.
−Removed: 4, the Company is required to maintain a balance of $ 20,000 in all accounts at Silicon Valley Bank, including $ 8,000 in a blocked account at Silicon Valley Bank.
−Removed: The balance of $ 8,000 in the blocked account at Silicon Valley Bank is restricted cash and is presented within other noncurrent assets on the accompanying consolidated balance sheet.
−Removed: The MidCap Credit Agreement provides for a secured term loan facility in an aggregate principal amount of up to $ 25,000 (the “MidCap Credit Facility”).
+Added: On March 15, 2022, pursuant to the terms of the Company’s Credit and Security Agreement, dated as of September 25, 2020, as amended on October 21, 2020, July 30, 2021, September 30, 2021, and December 10, 2021 with MidCap Financial Trust, as agent, and the lenders party thereto from time to time (as amended, the “MidCap Credit Agreement”), the Company repaid all remaining outstanding obligations under the MidCap Credit Agreement, including the outstanding principal balance of $ 7,500 and an exit fee of $ 506 .
+Added: The MidCap Credit Agreement provided for a secured term loan facility in an aggregate principal amount of up to $ 25,000 (the “MidCap Credit Facility”).
The Company borrowed the first advance of $ 17,500 (“Tranche 1”) on September 25, 2020 (the “Closing Date”).
1 unchanged sentence
4 terminated the availability of the second advance of $ 7,500 (“Tranche 2”), effective as of December 9, 2021, that was previously available under the MidCap Credit Agreement subject to certain conditions.
−Removed: Tranche 1 bears interest at a floating rate equal to 6.25 % per annum, plus the greater of (i) 1.50 % or (ii) one-month LIBOR.
+Added: Tranche 1 bore interest at a floating rate equal to 6.25 % per annum, plus the greater of (i) 1.50 % or (ii) one-month LIBOR.
Interest on each loan advance is due and payable monthly in arrears.
−Removed: Principal on each loan advance is payable in 36 equal monthly installments beginning October 1, 2022 until paid in full on October 1, 2025 (the “Maturity Date”).
−Removed: Prepayments of the loans under the MidCap Credit Agreement, in whole or in part, will be subject to early termination fees in an amount equal to 3.0 % of principal prepaid if prepayment occurs on or prior to the first anniversary of the Closing Date and 1.0 % of principal prepaid if prepayment occurs after the first anniversary of the Closing Date and prior to the maturity date.
−Removed: In connection with Amendment No.
−Removed: 4, the early termination fee associated with the prepayment of $ 10,000 made in December 2021 was waived and if the remaining principal amount is repaid on or prior to March 31, 2022, the associated early termination fee for that prepayment will be waived.
+Added: Principal on each loan advance was payable in 36 equal monthly installments beginning October 1, 2022 until paid in full on October 1, 2025 (the “Maturity Date”).
+Added: Prepayments of the loans under the MidCap Credit Agreement, in whole or in part, were subject to early termination fees in an amount equal to 3.0 % of principal prepaid if prepayment occurs on or prior to the first anniversary of the Closing Date and 1.0 % of principal prepaid if prepayment occurs after the first anniversary of the Closing Date and prior to the maturity date.
+Added: Pursuant to Amendment No.
+Added: 4, the early termination fee associated with the prepayment of $ 10,000 made in December 2021 was waived and, since the remaining principal amount was repaid on or prior to March 31, 2022, the associated early termination fee for that prepayment was also waived.
In connection with execution of the MidCap Credit Agreement, the Company paid MidCap a $ 125 origination fee.
−Removed: At the Maturity Date or on any earlier date on which all amounts advanced to the Company become due and payable in full, or are otherwise paid in full, the Company is required to pay an exit fee equal to 3.75 % of the principal amount of all loans advanced to the Company under the MidCap Credit Agreement.
+Added: At the Maturity Date or on any earlier date on which all amounts advanced to the Company become due and payable in full, or are otherwise paid in full, the Company was required to pay an exit fee equal to 3.75 % of the principal amount of all loans advanced to the Company under the MidCap Credit Agreement.
Upon the advance of Tranche 1, the Company accrued $ 656 for the related exit fee.
−Removed: In connection with Amendment No.
−Removed: 4, if the remaining principal amount is repaid on or prior to March 31, 2022, a portion of the related exit fee that has not been earned by MidCap will be waived.
−Removed: The Company’s obligations under the MidCap Credit Agreement are secured by a security interest in substantially all of its assets, excluding intellectual property (which is subject to a negative pledge).
−Removed: Additionally, the Company’s future subsidiaries, if any, may be required to become co-borrowers or guarantors under the MidCap Credit Agreement.
−Removed: The MidCap Credit Agreement contains customary affirmative covenants and customary negative covenants limiting the Company’s ability and the ability of the Company’s subsidiaries, if any, to, among other things, dispose of assets, undergo a change in control, merge or consolidate, make acquisitions, incur debt, incur liens, pay dividends, repurchase stock and make investments, in each case subject to certain exceptions.
−Removed: The MidCap Credit Agreement also contains customary events of default relating to, among other things, payment defaults, breaches of covenants, a material adverse change, delisting of the Company’s common stock, bankruptcy and insolvency, cross defaults with certain material indebtedness and certain material contracts, judgments, and inaccuracies of representations and warranties.
−Removed: Upon an event of default, the agent and the lenders may declare all or a portion of the Company’s outstanding obligations to be immediately due and payable and
+Added: Pursuant to Amendment No.
+Added: 4, since the remaining principal amount was repaid on or prior to March 31, 2022, a portion of the related exit fee that had not been earned by MidCap was waived.
+Added: The Company’s obligations under the MidCap Credit Agreement were secured by a security interest in substantially all of its assets, excluding intellectual property (which is subject to a negative pledge).
+Added: Additionally, the Company’s future subsidiaries, if any, may have been required to become co-borrowers or guarantors under the MidCap Credit Agreement.
EXICURE, INC.
1 unchanged sentence
(in thousands, except share and per share data)
−Removed: exercise other rights and remedies provided for under the agreement.
−Removed: During the existence of an event of default, interest on the obligations could be increased by 2.0 %.
+Added: The MidCap Credit Agreement contained customary affirmative covenants and customary negative covenants limiting the Company’s ability and the ability of the Company’s subsidiaries, if any, to, among other things, dispose of assets, undergo a change in control, merge or consolidate, make acquisitions, incur debt, incur liens, pay dividends, repurchase stock and make investments, in each case subject to certain exceptions.
+Added: The MidCap Credit Agreement also contained customary events of default relating to, among other things, payment defaults, breaches of covenants, a material adverse change, delisting of the Company’s common stock, bankruptcy and insolvency, cross defaults with certain material indebtedness and certain material contracts, judgments, and inaccuracies of representations and warranties.
+Added: Upon an event of default, the agent and the lenders may declare all or a portion of the Company’s outstanding obligations to be immediately due and payable and exercise other rights and remedies provided for under the agreement.
+Added: During the existence of an event of default, interest on the obligations could have been increased by 2.0 %.
Total proceeds, net of fees and issuance costs, borrowed under Tranche 1 were $ 16,512 .
−Removed: Fees and issuance costs of $ 332 , as well as fees of $ 656 that are payable to MidCap at maturity of Tranche 1, are recorded as a reduction to the carrying amount of long-term debt on the Company’s balance sheet and will be amortized to interest expense through the maturity date of October 1, 2025 using the effective interest method.
+Added: Fees and issuance costs of $ 332 , as well as fees of $ 656 that were payable to MidCap at maturity of Tranche 1, were recorded as a reduction to the carrying amount of long-term debt on the Company’s balance sheet and, prior to the repayment of all remaining outstanding obligations under the MidCap Credit Agreement on March 15, 2022, were amortized to interest expense through the maturity date of October 1, 2025 using the effective interest method.
Fees and issuance costs of $ 73 attributed to the amount available to be borrowed under Tranche 2 were paid and recorded as deferred financing costs (other assets) and were amortized and recorded to interest expense in 2021 when it was determined that amounts under Tranche 2 would not be borrowed.
−Removed: As of December 31, 2021, deferred financing costs attributed to Tranche 2 are zero.
−Removed: As of December 31, 2021, the aggregate carrying value of the Company’s long-term debt is $ 6,873 .
−Removed: As of December 31, 2021, the principal maturities of the Company’s long-term debt were as follows:
−Removed: December 31, 2021
−Removed: Principal balance outstanding 7,500
−Removed: unamortized discount and debt issuance costs ( 627 )
−Removed: Long-term debt 6,873
−Removed: Current portion 6,873
−Removed: Noncurrent portion $ —
The Company paid interest on the MidCap Credit Agreement of $ 194 and $ 1,375 during the years ended December 31, 2022 and 2021, respectively.
−Removed: The Company paid interest on the Hercules Loan Agreement (as discussed below) of $ 0 and $ 142 during the years ended December 31, 2021 and 2020, respectively.
−Removed: On March 15, 2022 the Company repaid all remaining outstanding obligations under the MidCap Credit Agreement.
−Removed: Refer to Note 17, Subsequent Events for more information.
−Removed: Hercules Loan Agreement
−Removed: On March 2, 2020, pursuant to the terms of the loan agreement with Hercules Technology Growth Capital (“Hercules”) and subsequent amendments thereto (the “Hercules Loan Agreement”), the Company repaid all remaining outstanding obligations under the Hercules Loan Agreement as of the maturity date, including the outstanding principal balance of $ 4,999 and the end of term fee of $ 100 .
−Removed: The Company’s lease arrangements at December 31, 2021 consist of (i) a lease for office and laboratory space at its headquarters in Chicago, Illinois that commenced in July 2020 (the “Chicago Lease”), (ii) a lease for office space at a multi-tenant facility in Cambridge, Massachusetts that commenced in March 2019 and is cancelable at any time (the “Cambridge Lease”), and (iii) leases for office equipment (the “Office Equipment Leases”).
−Removed: Each of these leases are classified as operating leases.
−Removed: EXICURE, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
−Removed: Due to the nature of the Cambridge Lease, the Company determined that this lease represented a short-term lease with an initial term of less than twelve months and, as such, the Cambridge Lease is not recorded on the balance sheet and related lease costs are recognized in the statement of operations as they are incurred.
−Removed: The Company has also elected to not record the Office Equipment Leases on the balance sheet since related payment amounts and lease costs are insignificant.
−Removed: Lease costs for the Office Equipment Leases are recognized in the statement of operations on a straight-line basis over the lease term.
+Added: The Company’s lease arrangements at December 31, 2022 consist of (i) a lease for office and laboratory space at its headquarters in Chicago, Illinois that commenced in July 2020 (the “Chicago Lease”) and (ii) leases for office equipment (the “Office Equipment Leases”).
+Added: The Chicago Lease and the Office Equipment Leases are classified as operating leases.
The Company’s lease arrangement for office and laboratory space at its former headquarters in Skokie, Illinois ended in February 2021 in accordance with the terms of that lease arrangement.
9 unchanged sentences
The Company also paid the landlord a net amount of $ 697 toward tenant improvements.
+Added: EXICURE, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (in thousands, except share and per share data)
As part of the agreement for the Chicago Lease, the Company is required to maintain a standby letter of credit during the term of the lease, currently in the amount of $ 1,200 and subject to reduction over time, which is secured by a restricted certificate of deposit account and presented within other noncurrent assets on the Company’s consolidated balance sheet at December 31, 2022.
2 unchanged sentences
The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease.
−Removed: As of December 31, 2021, the Company determined it is not reasonably certain that the renewal option would be exercised.
−Removed: In connection with the Company’s relocation of its headquarters from Skokie, Illinois to its new facility in Chicago, Illinois on July 1, 2020, the Company determined that the remaining useful life of the right of use asset underlying the Skokie Lease at June 30, 2020 was zero and therefore recognized remaining amortization expense related to the Skokie Lease of $ 211 during the three month period then ended.
−Removed: EXICURE, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
+Added: As of December 31, 2022, the Company determined it is not reasonably certain that the renewal option would not be exercised.
Information related to the Company’s operating lease asset and related operating lease liabilities were as follows:
7 unchanged sentences
The Company made cash payments for operating leases of $ 3,024 and $ 2,134 during the years ended December 31, 2022 and 2021, respectively.
+Added: EXICURE, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (in thousands, except share and per share data)
Maturities of the Company’s lease liability as of December 31, 2022 were as follows:
8 unchanged sentences
Restructuring
+Added: September 2022 Restructuring
+Added: On September 26, 2022, the Company announced its commitment to a plan to wind down the Company’s R&D activities (the “September 2022 Restructuring”).
+Added: This plan resulted in a reduction in force where the Company reduced approximately 66 % of the Company’s existing workforce in early fourth quarter of 2022.
+Added: Notified employees were offered separation benefits, including severance payments and temporary healthcare coverage assistance, the majority of which were paid in October 2022 as a lump sum payment.
+Added: All of the severance costs associated with the September 2022 Restructuring represented cash expenditures and were recorded within research and development expense within the accompanying consolidated statement of operations.
+Added: December 2021 Restructuring
On December 10, 2021, the Company announced its commitment to a plan to wind down the Company’s immuno-oncology program for cavrotolimod (AST-008) and the Company’s XCUR-FXN preclinical program for the treatment of Friedreich’s ataxia.
−Removed: The Company intends to realign its research and development resources to support (i) the development of its preclinical program targeting SCN9A for neuropathic pain, (ii) the continued advancement of its partnered programs with Ipsen Biopharm Limited to develop SNA-based treatments in neuroscience targeting Huntington’s disease and Angelman syndrome, (iii) its continued advancement of its partnered program with AbbVie to develop SNA-based treatments for hair loss disorders, as well as (iv) the continued research and development of other undisclosed therapeutic product candidates.
−Removed: This plan resulted in a
−Removed: EXICURE, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
−Removed: reduction in force where the Company eliminated approximately 50% of the Company’s existing workforce on a staggered basis through January 2022 as well as other cost-cutting measures.
+Added: The Company intended at the time to realign its research and development resources to support (i) the development of its preclinical program targeting SCN9A for neuropathic pain, (ii) the continued advancement of its partnered programs with Ipsen Biopharm Limited to develop SNA-based treatments in neuroscience targeting Huntington’s disease and Angelman syndrome, (iii) its continued advancement of its partnered program with AbbVie to develop SNA-based treatments for hair loss disorders, as well as (iv) the continued research and development of other undisclosed therapeutic product candidates.
+Added: This plan resulted in a reduction in force where the Company eliminated approximately 50 % of the Company’s existing workforce on a staggered basis through January 2022 as well as other cost-cutting measures.
Notified employees were offered separation benefits, including severance payments and temporary healthcare coverage assistance.
1 unchanged sentence
Certain of the notified employees had employment agreements which provided for separation benefits in the form of salary continuation;
−Removed: these benefits will be paid between February 2022 and January 2023.
+Added: these benefits were paid between February 2022 and January 2023.
All of the severance costs represent cash expenditures.
−Removed: The Company expensed the following costs associated with these future termination benefit payments resulting from the strategic reduction in force:
−Removed: Year Ended December 31,
−Removed: Research and development expense $ 623
−Removed: General and administrative expense 575
−Removed: At December 31, 2021, the accrued liability balance associated with the strategic reduction in force announced in the fourth quarter of 2021 is $ 1,191 , presented within accrued expense and other current liabilities on the accompanying consolidated balance sheet.
+Added: The following table presents changes in the accrued restructuring liability balance for the periods presented (in thousands):
+Added: EXICURE, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (in thousands, except share and per share data)
+Added: December 2021 Restructuring September 2022
+Added: Restructuring Total
+Added: Balance at December 31, 2021 $ 1,191 $ — $ 1,191
+Added: Payments ( 1,154 ) ( 489 ) ( 1,643 )
+Added: Additions — 488 488
+Added: Adjustments (non-cash) 11 1 12
+Added: Balance at December 31, 2022 $ 48 $ — $ 48
+Added: The accrued liability balance at December 31, 2022 associated with the strategic reduction in force announced December 2021 of separation benefits in the form of salary continuation pursuant to an employment agreement and was paid in January 2023.
Stockholders’ Equity
9 unchanged sentences
The outstanding shares of the Company’s common stock are fully paid and non-assessable.
−Removed: Registered Direct Offering
−Removed: On December 16, 2021, the Company completed a securities purchase agreement (the “Purchase Agreement”) with certain institutional purchasers (the “Purchasers”) entered into on December 14, 2021, pursuant to which the Company offered to the Purchasers, in a registered direct offering priced at-the-market consistent with the rules of the Nasdaq Stock Market (the “Registered Direct Offering”), (i) an aggregate of 13,006,614 shares (the “Shares”) of the Company’s common stock, $ 0.0001 par value per share, (ii) pre-funded warrants to purchase up to an aggregate
+Added: September 2022 PIPE
+Added: Securities Purchase Agreement
+Added: On September 26, 2022, the Company entered into a securities purchase agreement (the “September 2022 Securities Purchase Agreement”) with CBI USA, pursuant to which the Company agreed to issue and sell to CBI USA in a private placement an aggregate of 3,400,000 shares (the “September 2022 PIPE Shares”) of its common stock, par value $ 0.0001 per share (the “Common Stock”), at a purchase price of $ 1.60 per share (the “September 2022 PIPE”).
+Added: The September 2022 PIPE closed on February 24, 2023 (the “2023 PIPE Closing Date”).
+Added: Immediately following the closing of the September 2022 PIPE, CBI USA holds approximately 50.4 % of the shares of the Company’s common stock.
+Added: At closing of the September 2022 PIPE, the Company received aggregate gross proceeds of $ 5,440 (or net proceeds of approximately $ 4,597 after transaction expenses).
+Added: Refer to Note 17, Subsequent Event , for more information on the September 2022 PIPE.
EXICURE, INC.
1 unchanged sentence
(in thousands, except share and per share data)
−Removed: of 21,569,454 shares of Common Stock (the “Pre-Funded Warrants”), and (iii) warrants to purchase up to 17,288,034 shares of Common Stock (the “Warrants”).
+Added: September 2022 Registration Rights Agreement
+Added: Also, on September 26, 2022, the Company entered into a registration rights agreement (the “September 2022 Registration Rights Agreement”) with CBI USA, pursuant to which the Company agreed to register the resale of the September 2022 PIPE Shares.
+Added: Under the September 2022 Registration Rights Agreement, the Company has agreed to file a registration statement covering the resale of the September 2022 PIPE Shares no later than the sixtieth (60th) day following the September 2022 PIPE Closing Date.
+Added: The Company has agreed to use reasonable best efforts to cause such registration statement to become effective as promptly as practicable after the filing thereof but in any event on or prior to the Effectiveness Deadline (as defined in the September 2022 Registration Rights Agreement), and to keep such registration statement continuously effective until the earlier of (i) the date the September 2022 PIPE Shares covered by such registration statement have been sold or may be resold pursuant to Rule 144 without restriction, or (ii) the date that is two (2) years following the September 2022 PIPE Closing Date.
+Added: The Company has also agreed, among other things, to pay all reasonable fees and expenses (excluding any underwriters’ discounts and commissions and all fees and expenses of legal counsel, accountants and other advisors for CBI USA except as specifically provided in the September 2022 Registration Rights Agreement) incident to the performance of or compliance with the September 2022 Registration Rights Agreement by the Company.
+Added: In the event the registration statement has not been filed within 90 days following the September 2022 PIPE Closing Date, subject to certain limited exceptions, then the Company has agreed to make pro rata payments to CBI USA as liquidated damages in an amount equal to 0.5 % of the aggregate amount invested by CBI USA in the September 2022 PIPE Shares per 30-day period or pro rata for any portion thereof for each such month during which such event continues, subject to certain caps set forth in the September 2022 Registration Rights Agreement.
+Added: The Company has granted CBI USA customary indemnification rights in connection with the registration statement.
+Added: CBI USA has also granted the Company customary indemnification rights in connection with the registration statement.
+Added: May 2022 PIPE
+Added: Securities Purchase Agreement
+Added: On May 9, 2022, the Company entered into a securities purchase agreement (the “May 2022 Securities Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which the Company agreed to issue and sell to the Investors in a private placement an aggregate of 867,369 shares (the “May 2022 PIPE Shares”) of the Company’s Common Stock, par value $ 0.0001 per share, at a purchase price of $ 5.81 per share (the “May 2022 PIPE”).
+Added: The May 2022 PIPE closed on May 18, 2022 (the “May 2022 PIPE Closing Date”).
+Added: The Company received aggregate net proceeds from the May 2022 PIPE of approximately $ 4,886 after deducting transaction-related expenses.
+Added: Registration Rights Agreement
+Added: Also, on May 9, 2022, the Company entered into a registration rights agreement (the “May 2022 Registration Rights Agreement”) with the Investors, pursuant to which the Company agreed to register the resale of the May 2022 PIPE Shares.
+Added: Under the May 2022 Registration Rights Agreement, the Company agreed to file a registration statement covering the resale of the Shares no later than July 18, 2022.
+Added: On July 11, 2022, the Company filed a registration statement on Form S-3 with the SEC for the resale of the Shares and caused the registration statement to become effective on July 20, 2022.
+Added: The Company has granted the Investors customary indemnification rights in connection with the registration statement.
+Added: The Investors have also granted the Company customary indemnification rights in connection with the registration statement.
+Added: EXICURE, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (in thousands, except share and per share data)
+Added: Registered Direct Offering
+Added: On December 16, 2021, the Company completed a securities purchase agreement (the “Purchase Agreement”) with certain institutional purchasers (the “Purchasers”) entered into on December 14, 2021, pursuant to which the Company offered to the Purchasers, in a registered direct offering priced at-the-market consistent with the rules of the Nasdaq Stock Market (the “Registered Direct Offering”), (i) an aggregate of 433,553 shares (the “Shares”) of the Company’s common stock, $ 0.0001 par value per share, (ii) pre-funded warrants to purchase up to an aggregate of 718,981 shares of Common Stock (the “Pre-Funded Warrants”), and (iii) warrants to purchase up to 576,261 shares of Common Stock (the “Warrants”).
The combined purchase price of each share of Common Stock and accompanying Warrant is $ 9.9780 per share.
The combined purchase price of each Pre-Funded Warrant and accompanying Warrant is $ 9.9480 (equal to the combined purchase price per share of Common Stock and accompanying Warrant, minus $ 0.03 ).
−Removed: The per share exercise price for the Warrants is $ 0.2701 , the closing bid price of the Company’s Common Stock on December 13, 2021.
+Added: The per share exercise price for the Warrants is $ 8.1031 , the closing bid price of the Company’s Common Stock on December 13, 2021 (and as adjusted for the reverse stock split referenced in Note 1).
The Warrants will be exercisable immediately from the closing December 16, 2021, and will expire on the five-year anniversary of the date of issuance, or December 16, 2026.
11 unchanged sentences
In lieu of making the cash payment otherwise contemplated to be made to the Company upon exercise of a Pre-Funded Warrant in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of Common Stock determined according to a formula set forth in the Pre-Funded Warrants.
−Removed: Refer to Note 17, Subsequent Events for more information on Pre-Funded Warrants.
−Removed: December 2019 Offering
−Removed: On December 23, 2019, the Company sold 10,000,000 shares of its common stock at the public offering price of $ 2.75 per share in an underwritten public offering for gross proceeds of $ 27,500 and estimated net proceeds of $ 25,344 after deducting underwriting discounts and commission and other offering expenses payable by the Company (the “December 2019 Offering”).
−Removed: In addition, the Company granted the underwriters a 30-day option to purchase an additional 1,500,000 shares of common stock.
−Removed: On January 6, 2020, the underwriters exercised such option with respect to 1,081,184 shares of common stock at the public offering price of $ 2.75 per share for
EXICURE, INC.
1 unchanged sentence
(in thousands, except share and per share data)
−Removed: additional gross proceeds of $ 2,973 and net proceeds of $ 2,766 after deducting underwriting discounts and commission and other offering expenses.
−Removed: The shares sold in the December 2019 Offering were sold pursuant to a registration statement on Form S-3 that was declared effective by the SEC on July 24, 2019.
Common Stock Warrants
In December 2021, 252,315 Pre-Funded Warrants were exercised for a total exercise price of $ 8 , resulting in the issuance of 252,315 shares of common stock.
−Removed: As of December 31, 2021, Pre-Funded Warrants to purchase 14,000,000 shares of common stock at a price of $ 0.001 per share remain outstanding and Warrants to purchase 17,288,034 shares of common stock at a price of $ 0.2701 per share remain outstanding.
+Added: In January 2022, Pre-Funded Warrants were exercised for a total exercise price of $ 14 , resulting in the issuance of 466,666 shares of common stock.
+Added: As of December 31, 2022, there are no unexercised pre-funded warrants that are outstanding.
+Added: As of December 31, 2022, warrants to purchase 576,261 shares of common stock at a price of $ 8.1031 per share that were acquired in the December 2021 registered-direct offering transaction remain outstanding.
The warrants are classified as equity.
−Removed: As of December 31, 2020, warrants to purchase 413,320 shares of common stock at a price of $ 3.00 per share that were issued in connection with a private placement offering of common stock in 2017 remained outstanding.
−Removed: These warrants expired unexercised as follows:
−Removed: 163,174 warrants expired on March 27, 2021, 132,884 expired on April 28, 2021, and 117,262 expired on May 3, 2021.
−Removed: These warrants were classified as a liability which was remeasured each period at fair value.
−Removed: See Note 13, Fair Value Measurements for more information on the fair value of the common stock warrant liability.
+Added: As a result of the closing of the September 2022 PIPE (see Note 17, Subsequent Events ), a warrant holder elected to exercise their option within 30 days of the closing of the September 2022 PIPE (February 24, 2023) to receive a cash payout for the outstanding warrants in the amount of the Black-Scholes value of each warrant as prescribed in the warrant agreement (or $ 800 in the aggregate).
Accumulated Other Comprehensive Loss
2 unchanged sentences
Balance at December 31, 2021 $ ( 2 ) $ ( 2 )
+Added: Other comprehensive income before reclassifications 2 2
+Added: Net current period other comprehensive income 2 2
+Added: Balance at December 31, 2022 $ — $ —
+Added: The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for 2021:
+Added: Unrealized gains (losses) on short-term investments Total
+Added: Balance at December 31, 2020 $ 83 $ 83
Other comprehensive loss before reclassifications ( 84 ) ( 84 )
−Removed: Net gains reclassified from accumulated other comprehensive loss ( 1 ) ( 1 )
+Added: Net losses reclassified from accumulated other comprehensive income ( 1 ) ( 1 )
Net current period other comprehensive loss ( 85 ) ( 85 )
3 unchanged sentences
Proceeds related to these sales were $ 4,000 .
−Removed: The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for 2020:
−Removed: Unrealized gains (losses) on short-term investments Total
−Removed: Balance at December 31, 2019 $ ( 27 ) $ ( 27 )
−Removed: Other comprehensive income (loss) before reclassifications 107 107
−Removed: Net losses reclassified from accumulated other comprehensive loss 3 3
−Removed: Net current period other comprehensive income 110 110
−Removed: Balance at December 31, 2020 $ 83 $ 83
EXICURE, INC.
1 unchanged sentence
(in thousands, except share and per share data)
−Removed: The net loss reclassified from accumulated other comprehensive loss during the year ended December 31, 2020 resulted from sales of available-for-sale securities prior to maturity.
−Removed: The gross realized gains and gross realized losses of these sales for the year ended December 31, 2020 were $ 23 and $ 6 , respectively.
−Removed: The basis on which the cost of the securities was determined was specific identification.
−Removed: Proceeds related to these sales were $ 9,404 .
Equity-Based Compensation
19 unchanged sentences
As such, any shares underlying the Inducement Grant are not, upon forfeiture, cancellation or expiration, returned to a pool of shares reserved for future issuance.
−Removed: As of December 31, 2021, stock options to purchase up to 600,000 shares of common stock remained outstanding under the Inducement Grant.
In connection with Mr.
45 unchanged sentences
Treasury bond rate appropriate for the expected term in effect at the time of grant.
−Removed: The expected volatility is based on calculated enterprise value volatilities for publicly traded companies in the same industry and general stage of development.
+Added: For stock options granted after December 31, 2021, the expected volatility is based on the volatility of shares of the Company.
+Added: For stock options granted prior to January 1, 2022, the expected volatility is based on calculated enterprise value volatilities for publicly traded companies in the same industry and general stage of development.
The estimated forfeiture rates were based on historical experience for similar classes of employees.
13 unchanged sentences
A summary of common stock option activity as of the periods indicated is as follows:
−Removed: Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value (thousands)
+Added: Options Weighted-Average Exercise Price (1)
+Added: Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value (thousands)
Outstanding - December 31, 2021 331,420 $ 61.82 7.0 $ —
Granted 232,028 4.56
−Removed: Exercised ( 342,246 ) 1.60
+Added: Settled ( 124 ) 5.51
Forfeited ( 340,491 ) 60.18
3 unchanged sentences
December 31, 2022 213,753 $ 4.78 7.4 $ —
+Added: (1) On March 24, 2022, the Company’s Board of Directors unanimously approved the repricing of all outstanding and unexercised stock options granted under our 2015 Equity Incentive Plan and 2017 Equity Incentive Plan and held by its current employees, executive officers, and directors.
+Added: Effective April 1, 2022, the exercise price of the eligible stock options was reduced to $ 5.51 , the closing price of our common stock on April 1, 2022.
+Added: See below section titled “Repricing of Outstanding and Unexercised Options” for more information.
The aggregate intrinsic value of common stock options exercised during the years ended December 31, 2022 and 2021 was $ 0 and $ 243 , respectively.
12 unchanged sentences
The restricted stock units granted during the 2022 period generally vest evenly on a quarterly basis over a period of 4 years in exchange for continued service provided by the restricted stock unit recipient during that vesting period.
+Added: A summary of performance-based restricted stock unit activity of the periods indicated is as follows:
+Added: Restricted Stock Units Weighted-Average Grant Date Fair Value
+Added: Unvested balance - December 31, 2021 — $ —
+Added: Granted 97,643 3.45
+Added: Unvested balance - December 31, 2022 97,643 $ 3.45
+Added: The grant date fair value of performance-based restricted stock units is based on the Company’s closing stock price at the date of grant.
+Added: At vesting, each outstanding restricted stock unit will be exchanged for one share of the Company’s common stock.
+Added: Certain performance metrics must be met by the performance measurement date in 2023 in order for the performance-based restricted stock units granted during 2022 to vest as follows:
+Added: one-third on May 16, 2023, one-third on May 16, 2024, and one-third on May 16, 2025, in exchange for continued service provided by the performance-based restricted stock unit recipient during that vesting period.
+Added: Repricing of Outstanding and Unexercised Options
+Added: On March 24, 2022, the Board unanimously approved the repricing of all outstanding and unexercised stock options granted under the 2015 Plan and 2017 Plan (the “Plans”) and held by current employees, executive officers, and directors of the Company (the “Eligible Stock Options”).
+Added: Effective April 1,2022, the exercise price of the eligible stock options was reduced to $ 5.51 , the closing price of its common stock on April 1, 2022.
+Added: Except for the modification to the exercise price of the Eligible Stock Options, all other terms and conditions of each of the Eligible Stock Options will remain in full force and effect.
+Added: Pursuant to the Plans, the Board, as the administrator of the Plans, has discretionary authority, exercisable on such terms and conditions that it deems appropriate under the circumstances, to reduce the exercise price in effect for outstanding options under the Plans.
+Added: In approving the repricing, the Board considered the impact of the current exercise prices of outstanding stock options on the incentives provided to employees and directors, the lack of retention value provided by the outstanding stock options to employees and directors, and the impact of such options on the capital structure of the Company.
+Added: As of March 24, 2022, there were 233,224 stock options outstanding under the Plans, and all of the Company’s outstanding stock options had exercise prices in excess of the current fair market
+Added: EXICURE, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (in thousands, except share and per share data)
+Added: value of the Company’s common stock as of March 24, 2022, which is why the Board made the determination to deem all outstanding and unexercised stock options held by current employees, executive officers, and directors as Eligible Stock Options.
+Added: Matthias Schroff, the Company’s Chief Executive Officer, and Elias Papadimas, the Company’s Chief Financial Officer, held Eligible Stock Options exercisable into an aggregate of 29,373 and 12,513 shares of the Company’s common stock, respectively.
+Added: Former non-employee directors, Jeffrey Cleland, Elizabeth Garofalo, Bali Muralidhar and James Sulat, held Eligible Stock Options exercisable into an aggregate of 3,835 , 5,000 , 3,835 and 3,112 shares of the Company’s common stock, respectively.
+Added: The option repricing resulted in incremental stock-based compensation of $ 291 , of which $ 213 was recorded as expense in the year ended December 31, 2022 and the remaining balance is expected to be recognized as expense over the requisite service period in which the stock options vest.
Pre-tax loss before income taxes was $ 2,373 and $ 64,102 for the years ended December 31, 2022 and 2021, respectively, which consists entirely of losses in the U.S.
−Removed: and resulted in no provision for income tax expense during the years then ended.
+Added: and resulted in $ 209 and $ 0 provision for income tax expense during the years then ended, respectively.
+Added: Components for the provision for income taxes consist of the following:
+Added: Federal $ 115 $ —
+Added: State and local 94 —
+Added: Total current tax expense $ 209 $ —
+Added: Federal $ — $ —
+Added: State and local — —
+Added: Total deferred tax expense $ — $ —
+Added: Provision for income tax expense $ 209 $ —
+Added: EXICURE, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (in thousands, except share and per share data)
The differences between income taxes computed using the U.S.
3 unchanged sentences
Permanent differences 108 ( 4.6 ) 245 ( 0.4 )
+Added: Research and development credit ( 31 ) 1.3 — —
Other ( 16 ) 0.7 ( 32 ) —
1 unchanged sentence
$ 209 ( 8.8 ) % $ — — %
−Removed: The Company’s effective income tax rate for the years ended December 31, 2021 and 2020 is 0 % because the Company has generated tax losses and has provided a full valuation allowance against its deferred tax assets to an amount that is more likely than not to be realized.
−Removed: EXICURE, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
+Added: The effective tax rate for the year ended December 31, 2022 is attributable to the fact that the Company is subject to the IRC Sec.
+Added: 174 regulations requiring companies to capitalize certain research and experimental expenditures and IRC Sec.
+Added: 382 loss limitation rules on the Company's ability to utilize net operating losses to offset the capitalization requirement.
+Added: The effective income tax rate for the year ended December 31, 2021 was 0 % because the Company generated tax losses and provided a full valuation allowance against its deferred tax assets to an amount that is more likely than not to be realized.
The significant components of the Company’s net deferred tax assets are as follows:
2 unchanged sentences
Tax credits 472 3,922
+Added: Capitalized R&D expenses 5,795 —
Intangibles 117 134
11 unchanged sentences
Deferred taxes, net $ — $ —
−Removed: The Company has recorded a full valuation allowance against its deferred tax assets to an amount that is more likely than not to be realized at December 31, 2021 and 2020.
+Added: EXICURE, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (in thousands, except share and per share data)
+Added: The Company’s effective income tax rate for the year ended December 31, 2022 is ( 8.8 )%.
+Added: The Company has recorded a full valuation allowance against its deferred tax assets.
This determination is based on significant negative evidence, including:
3 unchanged sentences
Projections of future pre-tax book loss and taxable losses based on the Company's recent actual performance and current industry data indicate it is more likely than not that the benefits will not be recognized.
−Removed: At December 31, 2021, the Company had a federal net operating loss carryforward of $ 150,329 , of which $ 31,809 will begin to expire in 2035 and $ 118,520 which do not expire and may be carried forward indefinitely.
+Added: At December 31, 2022, the Company had a federal net operating loss carryforward of $ 120,346 , which will begin to expire in 2035.
At December 31, 2022, the Company had $ 148,344 of state net operating loss carryforwards which will begin to expire in 2027.
+Added: As provided by Section 382 of the Internal Revenue Code of 1986 (“Section 382”), and similar state provisions, utilization of net operating losses and tax credit carryforwards may be subject to substantial annual limitations due to ownership change limitations that have previously occurred or that could occur in the future.
+Added: Ownership changes may limit the amount of net operating losses and tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively.
+Added: In general, an ownership change, as defined by Section 382, results from transactions that increase the ownership of five percent stockholders in the stock of a corporation by more than 50 percent in the aggregate over a three-year period.
+Added: The Company completed a review of its changes in ownership through December 31, 2022 and determined that it had experienced an “ownership change” within the meaning of Section 382(g) during the fourth quarter of 2022.
+Added: This ownership change has and will continue to subject the Company’s net operating loss carryforwards to an annual limitation, which will significantly restrict the Company’s ability to use them to offset its taxable income in periods following the ownership change.
+Added: In general, the annual use limitation equals the aggregate value of our stock at the time of the ownership change multiplied by a specified tax-exempt interest rate.
+Added: The Company determined that at the date of the 2022 ownership change, it had a net unrealized built-in loss ("NUBIL").
+Added: The NUBIL was determined based on the difference between the fair market value of the Company’s assets and their tax basis at the ownership change date.
+Added: Because of the NUBIL, certain deductions recognized during the five-year period beginning on the date of the Section 382 ownership change (the “recognition period”) are subject to the same limitation as the net operating loss carryforwards or certain other deductions.
At December 31, 2022 and 2021, the Company had no unrecognized tax benefits.
7 unchanged sentences
There are no pending examinations in any jurisdiction.
−Removed: EXICURE, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
Loss Per Common Share
1 unchanged sentence
Diluted loss per common share is calculated using the treasury share method by giving effect to all potentially dilutive securities that were outstanding.
−Removed: Potentially dilutive options, restricted stock units and warrants to purchase common stock that were outstanding during the periods presented were excluded from the diluted loss per share calculation for the periods presented because such shares had an anti-dilutive effect due to the net loss reported in those periods.
+Added: Potentially dilutive options, restricted stock units and warrants to purchase common stock that were outstanding during the periods presented were excluded from the diluted loss per share calculation for the periods presented because such shares had an anti-
+Added: EXICURE, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (in thousands, except share and per share data)
+Added: dilutive effect due to the net loss reported in those periods.
Therefore, basic and diluted loss per common share is the same for each of the years ended December 31, 2022 and 2021.
6 unchanged sentences
Restricted stock units 20,885 10,109
+Added: Performance stock units 97,643 —
Warrants to purchase common stock 576,261 1,042,927
4 unchanged sentences
and Level 3 Inputs - unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
−Removed: EXICURE, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
Assets measured at fair value on a recurring basis as of December 31, 2022 are as follows:
2 unchanged sentences
Money market funds $ 1,612 $ 1,612 $ — $ —
−Removed: Commercial paper 5,999 — 5,999 —
−Removed: Short-term investments:
−Removed: Commercial paper 4,497 — 4,497 —
Total financial assets $ 1,612 $ 1,612 $ — $ —
−Removed: Assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 are as follows:
+Added: EXICURE, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (in thousands, except share and per share data)
+Added: Assets measured at fair value on a recurring basis as of December 31, 2021 are as follows:
Total Level 1 Level 2 Level 3
1 unchanged sentence
Money market funds $ 21,125 $ 21,125 $ — $ —
+Added: Commercial paper 5,999 — 5,999 —
Short-term investments:
Commercial paper 4,497 — 4,497 —
−Removed: Corporate notes/bonds 29,296 — 29,296 —
−Removed: Treasuries 2,253 — 2,253 —
−Removed: Government agency securities 1,278 — 1,278 —
Total financial assets $ 31,621 $ 21,125 $ 10,496 $ —
−Removed: Common stock warrant liability $ 15 $ — $ — $ 15
−Removed: Total financial liabilities $ 15 $ — $ — $ 15
−Removed: EXICURE, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
The Company uses the market approach and Level 1 and Level 2 inputs to value its cash equivalents and Level 2 inputs to value its short-term investments.
−Removed: The Company’s long-term debt bore interest at the prevailing market rates for instruments with similar characteristics and, accordingly, the carrying value for this instrument also approximates its fair value and the financial measurement is also classified within Level 2 of the fair value hierarchy.
−Removed: As of December 31, 2021, the Company’s common stock warrant liability was $ 0 and no warrants were outstanding underlying the common stock warrant liability (refer to Note 9, Stockholders’ Equity , for more information).
+Added: The Company’s long-term debt bore interest at the prevailing market rates for instruments with similar characteristics and, accordingly, the carrying value for this instrument also approximated its fair value and the financial measurement was also classified within Level 2 of the fair value hierarchy.
+Added: As of December 31, 2022, the Company’s common stock warrant liability associated with warrants issued in a private placement offering of common stock in 2017 was $ 0 and no warrants were outstanding underlying the common stock warrant liability as those warrants expired unexercised during 2021.
The following is a reconciliation of the Company’s liabilities measured at fair value on a recurring basis using unobservable inputs (Level 3) for the years ended December 31, 2022 and 2021:
16 unchanged sentences
Exicure, Inc.
+Added: et al., Case No.
1:21-cv-0663.
On February 4, 2021, plaintiff filed an amended putative securities class action complaint.
−Removed: The amended complaint alleges that Messrs.
−Removed: Giljohann and Bock made materially false and/or misleading statements related to the Company’s clinical programs purportedly causing losses to investors who acquired Company securities between January 7, 2021 and December 10, 2021.
−Removed: The amended complaint does not quantify any alleged damages but, in addition to attorneys’ fees and costs, plaintiff seeks to recover damages on behalf of himself and others who acquired the Company’s stock during the putative class period at allegedly inflated prices and purportedly suffered financial harm as a result.
−Removed: On February 11, 2022, four members of the putative class moved the Court for appointment as lead plaintiff in the action pursuant to the Private Securities Litigation Reform Act of 1995.
−Removed: Two of those motions were withdrawn on February 25, 2022, and two remain pending.
−Removed: On February 16, 2022, the Court entered an order stating that defendants need not answer, or otherwise respond, until the Court enters an order appointing lead plaintiff and lead counsel, and the parties then submit a schedule to the Court for the filing of a further amended complaint and the timing of defendants’ answer or response.
−Removed: On March 1, 2022, Kapil Puri filed a shareholder derivative lawsuit on behalf of the Company in the United States District Court for the Northern District of Illinois, against Messrs.
−Removed: Giljohann and Bock, Jeffrey L.
+Added: The amended complaint alleges that Dr.
+Added: Giljohann and Mr.
+Added: Bock made materially false and/or misleading statements related to the Company’s clinical programs purportedly causing losses to investors who acquired Company securities between January 7, 2021 and December 10, 2021.
+Added: EXICURE, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (in thousands, except share and per share data)
+Added: complaint does not quantify any alleged damages but, in addition to attorneys’ fees and costs, plaintiff seeks to recover damages on behalf of himself and others who acquired the Company’s stock during the putative class period at allegedly inflated prices and purportedly suffered financial harm as a result.
+Added: On March 20, 2023, the Court issued an Order appointing James Mathew as Lead Plaintiff, and Bleichmar Fonti & Auld LLP as Lead Counsel for the purported class.
+Added: The parties are required to submit, within two weeks of that Order, a schedule to the Court governing the filing of a further amended complaint and the timing of defendants’ answer or response.
+Added: On March 1, 2022, Kapil Puri filed a shareholder derivative lawsuit on behalf of the Company in the United States District Court for the Northern District of Illinois, against Dr.
+Added: Giljohann and Mr.
+Added: Bock, Jeffrey L.
Cleland, Elizabeth Garofalo, Bosun Hau, Bali Muralidhar, Andrew Sassine, Matthias Schroff, James Sulat and Timothy Walbert, captioned Puri v.
−Removed: Giljohann, et al.
+Added: Giljohann, et al., Case No.
1:22-cv-01083.
On March 8, 2022, Yixin Sim filed a similar shareholder derivative lawsuit in the same court against the same individuals, captioned Sim v.
−Removed: Giljohann, et al.
+Added: Giljohann, et al., Case No.
+Added: 1:22-cv-01217.
+Added: On April 25,2022, Stourbridge Investments LLC filed a similar shareholder derivative lawsuit against the same individuals in the United States District Court for the District of Delaware, captioned Stourbridge Investments LLC v.
Exicure, Inc.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
+Added: et al., Case No.
1:22-cv-00526.
−Removed: Based on similar factual allegations presented in the Colwell complaint, described above, the Puri and Sim complaints (the “Derivative Complaints”) allege that the defendants caused the Company to issue false and/or misleading statements in its 2021 proxy statement regarding risk oversight, code of conduct, clinical program and compensation matters, among other things, in violation of federal securities law, and committed breaches of fiduciary duties owed under state law.
−Removed: The Derivative Complaints also assert that Messrs.
−Removed: Giljohann and Bock are liable for contribution under the federal securities laws.
−Removed: The Puri complaint further asserts state law claims for unjust enrichment, abuse of control, gross mismanagement and corporate waste.
−Removed: The plaintiffs do not quantify any alleged damages in the Derivative Complaints, but seeks restitution for damages to the Company, attorneys’ fees, costs, and expenses, as well as an order directing that certain proposals for strengthening board oversight be put to a vote of the Company’s shareholders.
+Added: Based on similar factual allegations presented in the Colwell complaint, described above, the Puri, Sim, and Stourbridge complaints (collectively, the “Derivative Complaints”) allege that the defendants caused the Company to issue false and/or misleading statements in the proxy statement for its 2021 Annual Meeting of Stockholders regarding risk oversight, code of conduct, clinical program and compensation matters, among other things, in violation of federal securities law, and committed breaches of fiduciary duties.
+Added: The Derivative Complaints also assert that Dr.
+Added: Giljohann and Mr.
+Added: Bock are liable for contribution under the federal securities laws.
+Added: The Puri and Stourbridge complaints further assert state law claims for unjust enrichment, and the Puri complaint additionally asserts state law claims for abuse of control, gross mismanagement and corporate waste.
+Added: The plaintiffs do not quantify any alleged damages in the Derivative Complaints, but seek restitution for damages to the Company, attorneys’ fees, costs, and expenses, as well as an order directing that certain proposals for strengthening board oversight be put to a vote of the Company’s shareholders.
+Added: All of the Derivative Cases have been stayed pending a decision on any motion to dismiss that may be filed in the Colwell case.
+Added: In addition, the Stourbridge case has been administratively closed pending the decision on motion to dismiss that may be filed in the Colwell case.
Refer to Note 7, Leases , for a discussion of the commitments associated with the Company’s lease agreements.
+Added: EXICURE, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (in thousands, except share and per share data)
Northwestern University License Agreements
9 unchanged sentences
The Company received consulting services from, and paid fees to, one of its co-founders who is not an employee but, through April 30, 2021, served as a member of the Board.
−Removed: The Company recognized expense of $ 75 and $ 100 for the years ended December 31, 2021 and 2020 in connection with these consulting services in the accompanying consolidated statement of operations.
The consulting agreement with this co-founder and former Board member expired on September 30, 2021 under the terms of the agreement and was not renewed.
−Removed: EXICURE, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (in thousands, except share and per share data)
+Added: The Company recognized expense of $ 75 for the year ended December 31, 2021 in connection with these consulting services in the accompanying consolidated statement of operations.
Subsequent Events
−Removed: MidCap Credit Agreement
−Removed: On March 15, 2022, pursuant to the terms of the MidCap Credit Agreement, the Company repaid all remaining outstanding obligations under the MidCap Credit Agreement, including the outstanding principal balance of $ 7,500 and an exit fee of $ 506 .
−Removed: Exercise of Pre-Funded Warrants
−Removed: On January 4, 2022 and January 21, 2022, the holder of the Pre-Funded Warrants exercised the right to purchase 7,500,000 shares and 6,500,000 shares, respectively, of the Company’s common stock.
−Removed: As a result, 14,000,000 aggregate shares of the Company’s common stock were issued upon such exercises with aggregate proceeds from totaling $ 14 such exercises.
−Removed: There are no remaining unexercised Pre-Funded Warrants as a result of such exercises in January 2022.
−Removed: Repricing of Outstanding and Unexercised Options
−Removed: On March 24, 2022, the Board unanimously approved the repricing of all outstanding and unexercised stock options granted under the 2015 Plan and 2017 Plan (the “Plans”) and held by current employees, executive officers, and directors of the Company (the “Eligible Stock Options”).
−Removed: The exercise price of the Eligible Stock Options will be reduced to the closing price of the Company’s common stock on April 1, 2022.
−Removed: Except for the modification to the exercise price of the Eligible Stock Options, all other terms and conditions of each of the Eligible Stock Options will remain in full force and effect.
−Removed: Pursuant to the Plans, the Board, as the administrator of the Plans, has discretionary authority, exercisable on such terms and conditions that it deems appropriate under the circumstances, to reduce the exercise price in effect for outstanding options under the Plans.
−Removed: In approving the repricing, the Board considered the impact of the current exercise prices of outstanding stock options on the incentives provided to employees and directors, the lack of retention value provided by the outstanding stock options to employees and directors, and the impact of such options on the capital structure of the Company.
−Removed: As of March 24, 2022, there are currently 6,996,741 stock options outstanding under the Plans, and all of the Company’s outstanding stock options have exercise prices in excess of the current fair market value of the Company’s common stock, which is why the Board made the determination to deem all outstanding and unexercised stock options held by current employees, executive officers, and directors as Eligible Stock Options.
−Removed: Matthias Schroff, the Company’s Chief Executive Officer, and Elias Papadimas, the Company’s Chief Financial Officer, hold Eligible Stock Options exercisable into an aggregate of 881,200 and 375,417 shares of the Company’s common stock, respectively.
−Removed: Non-employee directors Jeffrey Cleland, Elizabeth Garofalo, Bali Muralidhar and James Sulat hold Eligible Stock Options exercisable into an aggregate of 115,079 , 150,000 , 115,079 and 93,386 shares of the Company’s common stock, respectively.
−Removed: The Company expects to record the impact of the option repricing in the quarter ending June 30, 2022.
+Added: Closing of September 2022 PIPE
+Added: The September 2022 PIPE (see Note 9, Stockholders’ Equity) closed on February 24, 2023.
+Added: As a result of the closing of the September 2022 PIPE, CBI USA is the beneficial owner of approximately 50.4 % of the Company’s outstanding shares.
+Added: Pursuant to the board designation rights of CBI USA, CBI USA designated three members to the Company’s board of directors effective as of February 24, 2023.
+Added: Subsequently, the board appointed additional directors.
+Added: As a result, the board of directors current has 6 members, only one which, Matthias Schroff, the Company’s Chief Executive Officer, served as a director prior to the closing.
+Added: In February 2023, the Company received gross proceeds of $ 5,440 from the September 2022 PIPE (or net proceeds of $ 4,597 after transaction expenses).
+Added: Following the closing, a holder of warrants to purchase 526,151 shares of common stock at a price of $ 8.1031 per share that were acquired in the December 2021 registered-direct offering transaction elected to exercise their option to receive a cash payout for the outstanding warrants in the amount of the Black-Scholes value of each warrant as prescribed in the warrant agreement (or $ 800 in the aggregate).
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
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.