What changed in this filing

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Item 1. Business

2024-06-06 compared with 2023-03-27 · 40 added, 121 removed, 41 unchanged (80% of the section changed)

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In September 2022, we announced a significant reduction in force, suspension of preclinical activities and halting of all research and development, and that we were exploring strategic alternatives to maximize stockholder value.

With respect to our historical assets, this includes continuing to explore out-licensing opportunities for cavrotolimod, our clinical-stage asset in immuno-oncology, as well as for our preclinical candidate associated with the SCN9A program for neuropathic pain.

While the foregoing efforts with respect to our historical assets are continuing, we do not expect they will generate significant value for stockholders, at least in the near term.

While the foregoing efforts are continuing, with respect to the Company’s historical assets, we do not expect they will generate significant value for stockholders.

Therefore, we are engaging in a broader exploration of strategic alternatives.

This effort involves exploring growth through transactions with potential partners that see opportunity in joining an existing, publicly-traded organization.

We are exploring transactions both within our historical biotechnology and life science industry, as well as in other industries unrelated to our historical operations.

Because we currently have no source of revenue or committed financing, we will require substantial additional funding within the next few months in order to continue operations and our exploration of strategic alternatives and consummate any transactions that we may identify.

We are exploring transactions in industries unrelated to our historical operations.

Because we currently have no source of revenue or committed financing, we will require substantial additional funding in the very near term in order to satisfy existing obligations, continue operations and our exploration of strategic alternatives and consummate any transactions that we may identify.

Recent Developments

Restructuring

On December 10, 2021, we announced a strategic reduction in force and other cost cutting measures to reduce cash burn.

On September 26, 2022, we announced our commitment to a plan to wind down our existing preclinical programs, including the development of our SCN9A program, to suspend all of our research and development (“R&D”) activities, including suspension of all partnered programs, and to implement a reduction in force whereby we reduced approximately 66% of our then-existing workforce, as well as other cost-cutting measures (collectively, the “Plan”).

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Change of Control

On February 24, 2023, following the satisfaction of closing conditions, including the approval by our stockholders at a Special Meeting of Stockholders held on December 15, 2022, we closed our private placement (the “Private Placement”) to CBI USA, Inc.

Exicure received gross proceeds of approximately $5.4 million in connection with the close of the Private Placement (or net proceeds of approximately $4.6 million after transaction expenses) and expects to use the net proceeds for general working capital purposes as we pursue strategic alternatives as well as for the payout for warrant put rights that were exercised as a result of the change of control.

Following the closing of the Private Placement, CBI USA is the beneficial owner of approximately 50.4% of the Company’s outstanding shares, resulting in a "change of control" of Exicure under the applicable rules of Nasdaq.

At closing, CBI USA designated three members to the Company’s board of directors effective as of February 24, 2023.

Additional directors were subsequently appointed by the board, and our board of directors currently includes 6 members, only one of which (Matthias Schroff, our Chief Executive Officer) was a director prior to the closing of the Private Placement.

We are currently relying on Nasdaq’s “controlled company” exemption from the requirements that a majority of our board be independent and that we have an independent compensation committee and an independent nominating committee or function.

On September 26, 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with CBI USA, Inc.

(“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 of Common Stock, at a purchase price of $1.60 per share.

The private placement closed on February 24, 2023 (the “Closing Date”).

CBI USA funded the acquisition pursuant to the Securities Purchase Agreement through a loan from its affiliate, DGP Co., Ltd.

On June 23, 2023, DGP exercised its the option pursuant to the loan and acquired the 3,400,000 shares of Common Stock initially acquired by CBI USA pursuant to the Securities Purchase Agreement.

DGP subsequently agreed to sell its shares to a third party, with the closing of 10% (340,000 shares) occurring in February 2024 and the remainder to close by or on June 30, 2024.

The Securities Purchase Agreement, as confirmed and clarified by that certain letter agreement, dated October 31, 2022, between the Company and CBI USA, provided CBI USA together with its affiliates and any “group” of which it or they are a member with the right to designate directors to the Company’s board of directors in proportion to the ownership of CBI USA and its affiliates and any such group.

CBI USA and DGP have announced they expect to exercise such rights as a group.

Together, they beneficially own 45% of the outstanding shares of Common Stock based on their most recent Schedule 13D amendment.

As noted above, DGP has entered into an agreement to sell its remaining shares to a third party by or on June 30, 2024.

Current Focus

The Company currently expects to focus its efforts on the following:

• continue to implement its previously announced restructuring plan and efforts to maximize stockholder value that can be derived from historical biotechnology assets.

The Company expects to evaluate on an ongoing basis whether the resources dedicated to these activities are sustainable and commensurate with the potential value that can be derived from them.

• explore growth through transactions with potential partners that see opportunity in joining an existing, publicly-traded organization.

The board of directors will consider any promising transactions that it believes can create value for stockholders.

We are exploring transactions both within our historical biotechnology and life science industry and in other industries unrelated to our historical operations.

The Company expects these efforts may be focused in Asia where CBI USA’s affiliates have relationships and business connections, although domestic transactions are also being considered.

The board of directors will consider any promising transactions that it believes can create value for stockholders, including in industries unrelated to our historical operations.

The Company expects these efforts may be focused in Asia where its significant investors and board members have relationships and business connections, although domestic transactions will also being considered.

Transactions that may be explored could include reverse mergers or share exchanges, as well as acquisitions of other businesses or investments.

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• seek additional financing for the Company as needed to support these activities.

Without a current source of revenue or committed financing, the Company believes that it will be necessary to obtain substantial additional financing in the next few months in order to provide sufficient runway to continue operating and pursue these activities.

Without a current source of revenue or committed financing, it is necessary to obtain substantial additional financing in the very near term in order to satisfy existing obligations, operate and pursue these activities.

There can be no assurance that such financing, or financing in sufficient amounts or on acceptable terms, will be received.

Our Proprietary Technology:

Spherical Nucleic Acids

Prior to the restructuring announced in September 2022 (as discussed above), our historical therapeutic discovery and development efforts were supported by our proprietary Spherical Nucleic Acid, or SNA, technology.

SNAs are nanoscale constructs consisting of densely packed synthetic nucleic acid molecules that are radially arranged in three dimensions.

We refer to these synthetic nucleic acid molecules in our SNAs as oligonucleotides and the radial orientation of the oligonucleotides without lipid or polymer encapsulation as our “inside out” or “3-D” approach.

Our SNAs, unlike many other nucleic acid therapeutics, do not require lipid or polymer encapsulation or complexation in order to be delivered.

Encapsulation is the process of confining the nucleic acids inside the cavities of larger structures, typically liposomes, whereas complexation is the process of creating an assembly of nucleic acids bound together with other molecules, typically lipids or polymers.

This arrangement of oligonucleotides allows our proprietary SNAs to enter cells through class A scavenger receptors.

Class A scavenger receptors are commonly found on the surface of cells throughout the body, which we believe provides a ubiquitous mechanism of cellular entry for the local administration of our SNA therapeutic candidates.

This mechanism of cellular entry is different from many other nucleic acid therapeutics that typically bind to receptors found only in the liver.

During 2022, we continued to investigate the utility of our SNA technology for the treatment of neurological conditions in pain, Huntington’s disease and Angelman syndrome.

SCN9A, for the Treatment of Chronic Pain

As previously disclosed on our Current Report on Form 8-K dated September 27, 2022, for the SCN9A program targeting SCN9A, a gene that encodes the NaV1.7 channel, for neuropathic pain, we developed several potential candidates that had shown promising activity in preclinical studies with a significant level of knockdown of the SCN9A mRNA transcript.

Unfortunately, results from a non-human primate study did not meet desired target engagement levels.

Additional preclinical studies would be required to understand these findings, likely delaying the

timing of IND-enabling work.

As a result, as discussed above, we suspended further preclinical activities for the SCN9A program as we continue to assess strategic alternatives for all our assets, including our platform technology, with the goal of maximizing stockholder value.

Huntington’s disease and Angelman syndrome

In July 2021 we signed a collaboration agreement with Ipsen to develop SNA-based treatments in neuroscience, targeting Huntington’s disease and Angelman syndrome.

This partnership combines our differentiated SNA platform for hard-to-drug targets requiring deep brain penetration and persistence with Ipsen’s expertise in neuroscience and rare diseases.

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.

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.

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.

Dermatology, Hair loss disorders

In November 2019, we signed a collaboration agreement with Allergan to develop SNA-based treatments for hair loss disorders.

This collaboration was a combination of our knowledge of nucleic acid therapeutics and dermatology with Allergan’s expertise in medical aesthetics.

On May 8, 2020, Allergan was acquired by AbbVie.

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.

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.

As a result of the termination of the AbbVie Collaboration Agreement, the Company regained the ability to independently develop medicines targeting hair loss disorders.

Immuno-oncology, cavrotolimod (AST-008)

Cavrotolimod (AST-008) is a toll-like receptor 9, or TLR9, agonist designed for immuno-oncology applications utilizing our SNA technology.

TLR9 agonists bind to and activate TLR9.

We believe cavrotolimod (AST-008) may be used for anti-infective and immuno-oncology applications with the latter in combination with checkpoint inhibitors.

On December 10, 2021, in connection with an announcement to implement strategic measures to reduce cash burn and prioritize our pipeline focus, we announced the wind-down of our cavrotolimod (AST-008) program.

We discontinued further enrollment of the then ongoing Phase 1b/2 clinical trial in patients with solid tumors.

We are currently pursuing various strategic alternatives to maximize shareholder value of cavrotolimod, including pursuit of out-licensing activities.

• continue our efforts to seek to maximize stockholder value that can be derived from historical biotechnology assets.

In February 2024, the Company exclusively licensed its relevant patents in the field of hepatitis to a third party for the development of our prior drug candidate cavrotolimod.

In return, the Company received a small, one-time payment and is entitled to a modest royalty on future sales of the licensed technology.

We are continuing to explore additional licenses or sales of our intellectual property.

While these transactions may provide short-term liquidity relief in the form of upfront payments and/or the possibility to receive royalties in the future, we do not expect they will provide material benefits to the Company or our stockholders, either in the short or long term.

The Company expects to evaluate on an ongoing basis whether the resources dedicated to these activities are sustainable and commensurate with the potential value that can be derived from them.

Our Intellectual Property

Proprietary Protection

We have built our intellectual property portfolio relating to our historical therapeutic candidates and our SNA technology platform.

Our policy has been to seek to protect our proprietary position by, among other methods, filing

and licensing U.S.

and certain foreign patent applications related to our proprietary technology, inventions and improvements that are important to the development and implementation of our business.

We also rely on trade secrets, know-how, and technological innovation to develop and maintain our proprietary position.

We cannot be sure that patents will be granted with respect to any of our owned or licensed pending patent applications or with respect to any patent applications filed or licensed by us in the future, nor can we be sure that any of our existing owned or licensed patents or any patents that may be granted or licensed to us in the future will be commercially useful in protecting our technology.

Patent Rights

Our patent portfolio includes pending patent applications and issued patents in the United States and in foreign countries.

As of December 31, 2022, our patent portfolio consists of over 80 issued patents and patent applications and over 40 pending patent applications.

Our general practice is to seek patent protection in major markets worldwide, including the U.S., Canada, China, Japan, Australia, certain members of the European Union, among others.

The majority of the issued patents and allowed patent applications are licensed from Northwestern (as described below).

Among the pending patent applications, we license 5 from Northwestern, we exclusively own 32, we jointly own 1 with Seven Score Pharmaceuticals, LLC (which was assigned from Dermelix), and we jointly own 4 with Northwestern.

Our license from Northwestern is for royalty bearing worldwide exclusive rights to the use of SNAs for therapeutic applications.

Pursuant to the license, we are allowed to manufacture, use, offer for sale, sell and import products covered by the licensed patent rights.

Our SCN9A patent portfolio includes one international patent application filed under the Patent Cooperation Treaty, or PCT, relating to modified oligonucleotides that reduce SCN9A mRNA and NaV1.7 channel activity in cells.

The application broadly describes oligonucleotides that span select lengths of the SCN9A mRNA where we observed high target knockdown, and the use of such compounds to treat a wide range of pain conditions and related symptomatology.

Any patents that may issue from this application would expire by 2042.

The expiration date does not take into consideration any potential patent term adjustment that may be applied by the U.S.

Patent Office upon issuance of the patent, any terminal disclaimers that may be filed in the future or any regulatory extensions that may be obtained.

In September 2022, we ceased all research and development activities, including those related to the development of our SCN9A program.

As a result, we may elect to no longer pursue this application further and may elect to abandon it.

Our cavrotolimod (AST-008) patent portfolio includes 38 issued and 17 pending U.S.

nonprovisional and foreign patent applications.

Foreign jurisdictions where we are seeking patent protection for our cavrotolimod (AST-008) patent portfolio include Canada, China, Japan, Australia, the European Union, India, South Korea and Mexico.

Each of these applications is a composition of matter and/or method of use type application.

The claims of these applications are directed to certain nanoscale constructs, liposomal particles, and multivalent nanostructures, and their methods of use for treating cancer and other disorders, with or without additional therapeutic agents such as checkpoint inhibitors.

Any patents that may issue from these applications would expire between 2034 and 2041.

The expiration dates do not take into consideration any potential patent term adjustment that may be applied by the U.S.

Patent Office upon issuance of the patent, any terminal disclaimers that may be filed in the future or any regulatory extensions that may be obtained.

We discontinued further enrollment of our prior Phase 1b/2 clinical trial of cavrotolimod (AST-008) in patients with solid tumors.

As a result, we may elect to abandon or let lapse some or all of these patents and applications.

Northwestern University License Agreements

We have licensed the SNA technology from Northwestern University under two separate license agreements, or the Northwestern University License Agreements.

The Restated License Agreement was assigned to us on December 12, 2011 by our former parent, AuraSense LLC, in the field of the use of nanoparticles, nanotechnology, microtechnology or nanomaterial-based constructs as therapeutics or accompanying therapeutics as a means of delivery, but expressly excluding diagnostics.

The license was restated in all material aspects in August 2015.

We entered into the Co-owned Technology License with Northwestern in February 2016, in which we obtained

exclusive license as to Northwestern’s rights in certain SNA technology we jointly own with Northwestern.

The Northwestern University License Agreements provide to us the exclusive, worldwide right to make, have made, use, modify, sell, offer for sale and import any product or process that is covered by any claim in the licensed Northwestern patents and patent applications.

We have the right to sublicense these rights to third parties.

The Northwestern University License Agreements require us to use commercially reasonable efforts, consistent with demand in the marketplace, regulatory procedures and industry conditions and development timelines, to research, develop, market and manufacture the licensed products.

Our rights under the Northwestern University License Agreements are subject to a variety of material limitations.

First, the license specifically excludes use of the licensed patent rights to perform qualitative or quantitative in vitro analysis, testing, or measurement as well as detection of a variety of combinations of biodiagnostics field subsets and targets.

Second, the license specifically prohibits us from using the licensed patent rights with regard to diagnostics, including without limitation, theradiagnostics.

Third, though the license is otherwise exclusive in the assigned field, Northwestern retains the right to use the licensed patent rights for research, teaching, and other educational purposes, including the right to distribute and publish materials related to the licensed patent rights.

Fourth, the license is subject to the rights of the U.S.

government under any and all applicable laws including substantially manufacturing all licensed products in the U.S.

unless such requirement is waived by the U.S.

Fifth, other than in certain circumstances, the Northwestern University License Agreements are non-transferable without the consent of Northwestern.

Under the terms of the Northwestern University License Agreements, depending on the circumstances, either we or Northwestern can sue to enforce the patent rights against third party infringers.

In order to secure the assignment of the Northwestern ASLLC license in the field, we assumed the obligation to pay Northwestern an annual license fee, which may be credited against any royalties based on sales of licensed products that are due to Northwestern in the same year, and to reimburse Northwestern for expenses associated with the prosecution and maintenance of the licensed patent rights.

In addition, we assumed the obligation to pay Northwestern royalties at a low single-digit percentage of any net revenue generated by our sale or transfer of any licensed product.

In the event we grant a sublicense under the licensed patent rights, we also assumed the obligation to pay Northwestern, on a quarterly basis, a percentage of all sublicense payments we receive, and the greater of a mid-teen percentage of all sublicensee royalties or a low single-digit percent of any net revenue generated by a sublicensee’s sale or transfer of any licensed product.

We may terminate the Northwestern University License Agreements at any time by providing 90 days written notice to Northwestern.

Northwestern may terminate the agreements or, alternatively, convert our exclusive rights to non-exclusive rights if we fail to comply with certain prescribed timelines for research, development, marketing and manufacturing milestones for the licensed products.

Northwestern may also terminate the agreements if we sue, or do not terminate all agreements with a sublicensee who sues Northwestern, in a matter not arising from the agreements themselves.

Either party may terminate the agreements in the event of a material breach by the other that remains uncured for a period of 30 days after the non-breaching party provides notice to the breaching party.

The agreements will automatically terminate if we reach specified thresholds of financial distress.

In the event of termination, all rights immediately revert to Northwestern.

The agreements will automatically expire upon the expiration of the last to expire patent rights.

In the event of expiration, the license automatically becomes a non-exclusive, irrevocable, fully-paid license to use or sublicense the use of know-how to make and sell products in each country where the license had previously been in effect.

In our historical business, we built an intellectual property portfolio relating to our prior therapeutic candidates and our SNA technology platform.

We have a patent portfolio that includes pending patent applications and issued patents in the United States and in foreign countries.

In the past, our portfolio included patents licensed from Northwestern University under two separate license agreements related to SNA technology, as well as owned patents.

Our licenses from Northwestern University were terminated in 2023, but we continue to own numerous issued patents and pending patent applications.

As described above, we are exploring ways to generate value from our historical intellectual property.

We have entered into one license agreement as described above and expect to continue to explore others.

However, we do not expect these efforts to generate significant value for stockholders and expect to evaluate on an ongoing basis whether the resources dedicated to these efforts are appropriate.

As part of these efforts, we may abandon or let lapse some of our patents and applications, unless any completed license agreements require us to continue to maintain such patents and applications (as is the case with the license agreement completed in February 2024).

Manufacturing and Supply

We do not currently own or operate manufacturing facilities for the production of preclinical, clinical or commercial quantities of any of our therapeutic candidates.

Historically, we have contracted with two therapeutic substance and two drug product manufacturers for the supply of SNAs.

In connection with the restructuring in September 2022 (discussed above), we no longer have preclinical supply needs to support our current business operations.

We do not currently own or operate manufacturing facilities.

Following our restructuring in September 2022 (discussed above), we currently do not have any manufacturing or supply needs.

In our historical operations, we faced competition at the technology and therapeutic indication levels from both large and small biotechnology companies, academic institutions, government agencies and public and private research institutions.

Many of our competitors had significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do.

Many of our competitors had significantly greater financial resources and expertise in research

and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do.

These competitors also competed with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

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We currently do not have marketing, sales and distribution capabilities.

As of December 31, 2022, we had 13 full time employees which were engaged in finance, legal, human resources, business development and general management activities, as well as winding down research and development programs.

As of December 31, 2023, we had 6 full time employees which were engaged in finance, human resources, and general management activities after the wind down of our research and development programs.

We have no collective bargaining agreement with our employees and we have not experienced any work stoppages.

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Available Information

We are subject to the informational requirements of the Exchange Act, and, accordingly, file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, with the Securities and Exchange Commission,

In addition, the SEC maintains a web site (http://www.sec.gov) that contains material regarding issuers that file electronically, such as ourselves, with the SEC.

We maintain a website at www.exicuretx.com, to which we regularly post copies of our press releases as well as additional information about us.

Our filings with the SEC will be available free of charge through the website as soon as reasonably practicable after being electronically filed with or furnished to the SEC.

Our filings with the SEC will be available free of charge through the website as

soon as reasonably practicable after being electronically filed with or furnished to the SEC.

Information contained in our website is not a part of, nor incorporated by reference into, this Annual Report on Form 10-K or our other filings with the SEC.

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

What changed 10-K

Item 1. Business