譲渡異議申立書 99.2
経営陣の財務状況および業績に関する分析と討論
この経営陣による議論と分析は、財務の状況および業績の説明を提供することを目的としています。私たちは、2024年6月30日および2023年を終了する6か月間の未監査の簡易連結中間財務諸表（本報告書への6-k形式のエクシビット99.1として提示）と併せてお読みいただくことをお勧めします。これらは国際会計基準（IAS）34に準拠して作成されています。 （IAS 34）中間財務報告書また、私たちは、2023年12月31日を終了する年次報告書（米国証券取引委員会（SEC）への提出を含む）に掲載されている当社の経営陣による議論と分析、監査済みの連結財務諸表およびその注記をお読みいただくことをお勧めします。これは米国証券取引法（修正後）に基づく米国証券取引委員会（SEC）へ提出された証券取引法第1934条による当社の年次報告書です。
特に表示されている場合や文脈が異なる要求をしない限り、本報告書における「アルタミラ」、「会社」、「私たち」、「私たちの」、「私たちのもの」、「私たち」または類似の用語は、アルタミラ・セラピューティクスを指します。本報告書に記載されている商標、商号およびサービスマークは、それぞれの所有者の財産です。
アルタミラ・セラピューティクス社はバミューダの法律に基づいて設立された免税会社です。弊社の登録オフィスはバミューダ、ハミルトンのチャーチストリート2番地のクラレンドンハウスにあります。 2023年12月13日、会社は発行済みおよび流通中の普通株式の1対20の逆株式分割（「2023年逆株式分割」）を実施しました。この報告書に記載されているすべての株式あたりの金額および普通株式の数は2023年逆株式分割を反映しています。
私たちは、国際会計基準委員会（「IASB」）が発行した国際財務報告基準（「IFRS」）に従って、連結財務諸表および財務情報を作成し、報告します。私たちの財務諸表は、米国の一般に受け入れられている会計原則（「U.S. GAAP」）に従って作成されたものではありません。私たちは、米ドルで帳簿と記録を維持しています。管理の議論と分析に含まれるいくつかの数値に対して、四捨五入の調整を行いました。そのため、一部の表に示される合計としての数値は、それに先行する数値の算術的な合計ではない場合があります。特に表示されていない限り、この議論と分析における通貨額のすべての参照は米ドルで示されています。
この議論と分析は2024年9月23日付であります。
概要
私たちは、RNAを肝外組織に効率的に届けるためのペプチドベースのナノ粒子テクノロジーを開発・提供する前臨床段階のバイオ医薬品会社です（OligoPhore™ / SemaPhore™プラットフォーム）。現在、当社の独自の送達テクノロジーを使用した2つの主要なsiRNAプログラムを持っています。KRASに起因するがんのためのAm-401と、関節リウマチのためのAm-411の2つで、どちらもin vivoの概念実証を超えた前臨床開発段階にあります。この多用途な送達プラットフォームは、mRNAやその他のRNA形態にも適しており、製薬会社やバイオテクノロジー企業に対してアウトライセンスを通じて提供されています。2023年には、アレルギー性鼻炎に対するotc鼻スプレーBentrio®を製造・販売するAltamira Medica AGの51％の株式をスピンオフすることで、RNA送達ビジネスを中心に会社を再構築する第一歩を踏み出しました。このため、私たちはBentrio®ビジネスに49％の株式を保持し（追加の経済的権利も含む）、さらに、めまいに対する鼻スプレーAm-125（フェーズ2以降）や耳鳴りや聴力喪失に関する初期から後期の臨床開発プログラムをパートナーシップまたは売却する意向を発表しました。
Recent Developments
2024年8月12日、Nature Immunologyに掲載された査読付き論文の発表をお知らせいたします。この論文では、AltamiraのSemaPhore™ナノ粒子技術を用いてZbtb46 mRNAを投与したことにより、動物がんモデルで腫瘍成長が著しく抑制されたことが示されました。Washington University、St. Louis MOの研究チームによるこの論文によると、サルコーマおよび転移性乳がんのマウスモデルにおいて、SemaPhore™ナノ粒子を用いたZbtb46 mRNAの全身投与により、Zbtb46の持続的な発現、回復した免疫刺激性腫瘍微環境、腫瘍成長の大幅な減少が示されました（p<0.0001）。免疫チェックポイント阻害剤（anti-PD1）治療との併用では、さらに効果が増加しました。著者によると、「Zbtb46ナノ粒子は、[サルコーマ]および[乳がん]のそれぞれに対するanti-PD1応答を劇的に誘発し、多くの治療対象動物で腫瘍の長期完全寛解をもたらしました。」。Zbtb46ナノ粒子の単剤療法を延長すると、PD1治療に耐性のマウスでも完全寛解が得られました。サルコーマが治療により除去されたマウスは、繰り返し挑戦しても新たながんを発症せず、免疫記憶の形成が示されました。
2024年7月19日に、腹部大動脈瘤（AAA）の効果的な治療を動物モデルで実証する研究のプレプリント出版を発表しました。この研究は、ワシントン大学セントルイス校とサウスフロリダ大学タンパ校の研究グループによって実施され、AAAマウスにシステム的にSOD2 mRNAをペプチドベースのナノ粒子（SemaPhore™）で投与することが、未治療の対照群と比較して、大動脈の拡張の有意な減少（p<0.05）、破裂の遅延、そして生存率の非常に高い改善（p<0.01）に結びついたことを示しました。AAAは、過剰な活性酸素種（ROS）によって引き起こされる酸化ストレスを伴う炎症性疾患であり、腹部大動脈の異常な拡大（膨らみ）を引き起こします。AAAの破裂は命を脅かす可能性があり、2024年にShaw氏と同僚によるStatPearlsでの発表によると、50％以上の患者が緊急室に到達する前に死亡し、生存者は非常に高いモルビディティを持っています。
2024年5月1日に、アメリカ特許商標庁（USPTO）に新しいナノ粒子組成に関する暫定特許出願を行ったことを発表しました。 この組成は、OligoPhore™、Altamiraのペプチドベースのオリゴヌクレオチドデリバリープラットフォーム、またはその誘導体と、p65タンパク質を標的としたsiRNA配列と組み合わせています。 p65の活性化は、複数の種類の癌や多くの炎症性疾患で観察されています。たとえば、p65はリウマチ性関節炎（RA）炎症における重要なチェックポイントとして知られており、細胞の増殖、細胞死を調節し、癌における転移を刺激する役割があると考えられています。この新しい出願は、RA治療のためのAm-411開発プログラムに関連するAltamiraの知的財産を拡張することを目的としています。
2024年3月25日、私たちはUnivercellsグループ（Univercells）との協力 契約を締結したことを発表しました。契約の目的は、当社のSemaPhore™プラットフォームを mRNAワクチンのデリバリーに評価することです。Univercellsは、生物製剤の開発と 製造を行うグローバルなライフサイエンス企業で、mRNAワクチンや治療薬を シンプルで拡張可能、かつコスト効率的な方法で生産するプラットフォームを 作成しています。契約条件として、UnivercellsはAltamiraのSemaPhore™ナノ粒子プラットフォームを用いた 独自のmRNAワクチンをin vitroおよびin vivoで試験します。実験が 成功すれば、UnivercellsとAltamiraは、Univercellsの製造プラットフォームを使用して ナノ粒子ベースのmRNAワクチンの開発と製造に関する 商業契約について協議し、交渉する予定です。
On February 7, 2024 we announced the publication of an article by Meng and colleagues in the Journal of Integrative Medicine which evaluates the use of various peptides to enhance adeno-associated virus (AAV) cell transduction. Recombinant AAVs are commonly used as carriers to introduce nucleic acids in cells for gene therapy; several AAV-based gene therapy drugs have already been approved by the U.S. Food and Drug Administration (FDA). The study sought to find ways of increasing the endosomal release of AAV-based therapeutics by using peptides derived from melittin, a component of bee venom known for its ability to permeabilize biological membranes. The research group evaluated 76 melittin derivatives, including p5RHH, the peptide underlying Altamira’s OligoPhore™ / SemaPhore™ nanoparticle platform for RNA delivery. The scientists discovered that insertion of p5RHH into the AAV vector (p5RHH-rAAV) not only enhanced cell transduction, but also succeeded in transducing cell lines typically considered resistant to AAVs. Further, an in vivo study in mice showed that the addition of p5RHH to the AAV capsid of several AAV serotypes significantly enhanced liver transduction compared to non-modified AAV vectors, observed up to the last time point four weeks after systemic administration.
On January 24, 2024 we announced that we had filed a second provisional patent application with the USPTO to provide broad coverage of different KRAS mutations in human cancer treatment with nanoparticles comprising the Company’s OligoPhore™ platform and a single siRNA sequence, polyKRASmut. The nanoparticles are developed by Altamira as AM-401. The second provisional application contains in vitro data confirming the ability of polyKRASmut siRNA to knock down a broad range of KRAS mutations in cancer cell lines. These mutations include G12C, G12V, G12D, G12R, G12A, and A146T, which account for 90.9% of KRAS mutations reported in pancreatic ductal adenocarcinoma (PDAC), 65.3% in colorectal cancer (CRC) and 80.0% in non-small cell lung cancer (NSCLC).
Bentrio® for protection against airborne allergens
On August 23, 2024, and September 16, 2024, we announced the extension of two of our exclusive distribution agreements for Bentrio®. The earlier extension was agreed with Pharma Nordic AS (“Pharma Nordic”) to also include Sweden and Denmark in the license territory, in addition to Norway. Pharma Nordic intends to introduce Bentrio® in these two additional Scandinavian countries in 2025. The second extension was agreed with Nuance Pharma (“Nuance”) to extend the territory from China, Hong Kong, Macau and South Korea to also include Singapore, Malaysia, Thailand, Philippines, Indonesia, Vietnam and Taiwan. We further announced that Nuance recently submitted the request for marketing approval for Mainland China.
On April 24, 2024 we announced the publication of the detailed results from the NASAR clinical trial with Bentrio® nasal spray in seasonal allergic rhinitis (SAR) by Becker and colleagues in the journal Allergy. The NASAR trial enrolled 100 patients during two allergy seasons in Australia who were randomized at a 1:1 ratio to receive either Bentrio® or saline nasal spray, the current standard of care in drug-free SAR management. Study participants self-administered the treatment for two weeks three times per day. The primary efficacy endpoint was the reduction in the mean daily reflective Total Nasal Symptom Score (rTNSS; ANCOVA model).
Bentrio®-treated patients achieved a significantly lower rTNSS than the saline group (least square means difference -1.1, p = 0.013) with improvement observed across all individual nasal symptoms. Health-related quality of life, as measured by the Rhinoconjunctivitis Quality of Life Questionnaire (RQLQ), was significantly improved as well (p < 0.001). Patients and investigators rated the efficacy of treatment as significantly better with Bentrio® compared to saline control (both p < 0.001). Both treatments showed similarly good safety and tolerability. With Bentrio®, fewer patients used relief medication and more enjoyed symptom-free days compared to saline treatment.
AM-125 in acute vestibular syndrome
On June 20, 2024 we announced the publication of an article by Özgirgin and colleagues in the journal Frontiers in Neurology describing the rationale for and use of betahistine in the treatment of residual dizziness following standard of care physical repositioning procedures for benign paroxysmal positional vertigo (BPPV). BPPV is characterized by repeated episodes of vertigo produced by changes in the head position relative to gravity, e.g. when tipping the head backward. It is typically caused by dislodged inner ear particles (otoconia) in one of the semicircular canals, most often the posterior canal. The debris elicits unwanted vestibular stimulation and is often cleared through physical repositioning procedures such as the Epley maneuver, which is strongly recommended by the Clinical Practice Guideline of the American Academy of Otolaryngology–Head and Neck Surgery.
Even in case of a successful physical repositioning procedure, patients may experience residual dizziness. This may last for a few days up to several weeks and may affect quality of life and be of incapacitating nature. Based on their review of available treatment options, the authors of the publication suggest the use of vestibular habituation therapies and vestibular rehabilitation programs to facilitate vestibular compensation and treatment with betahistine, the active substance of AM-125, for improvement of inner ear blood supply and promotion of vestibular compensation. BPPV is the most common type of vertigo and accounts for 17 to 42% of all diagnosed cases; in the United States, healthcare costs associated with the diagnosis of BPPV alone approach $2 billion per year.
2
Public offering of common shares
On September 17, 2024 we announced the pricing of a public offering of an aggregate of 5,555,556 common shares (or pre-funded warrants in lieu thereof) accompanied by Series A-1 common warrants to purchase up to 5,555,556 common shares and Series A-2 common warrants to purchase up to 5,555,556 common shares, at a combined public offering price of $0.72 per share (or per pre-funded warrant in lieu thereof) and accompanying Series A-1 common warrant and Series A-2 common warrant. The Series A-1 common warrants have an exercise price of $0.72 per share, are immediately exercisable upon issuance and will expire on the earlier of the eighteen-month anniversary of the initial issuance date or 60 days following the date the Company publicly announces positive biodistribution data for AM-401 or AM-411 nanoparticles. The Series A-2 common warrants have an exercise price of $0.72 per share, are immediately exercisable upon issuance and will expire on the earlier of the five-year anniversary of the initial issuance date or six months following the date the Company publicly announces the entry into one or more agreements relating to the further development and commercialization for AM-401 or AM-411, provided at least one such agreement covers a territory that includes all or a part of the European Union or the United States. The offering closed on September 19, 2024, subject to the satisfaction of customary closing conditions. The gross proceeds to the Company from this offering were $4.0 million, before deducting the placement agent's fees and other offering expenses payable by the Company. The net proceeds to the Company were $3.3 million.
“At the market program”
On January 19, 2024, we entered into a sales agreement with H.C. Wainwright & Co., LLC (“HCW” and the “HCW Sales Agreement”). Pursuant to the terms of the HCW Sales Agreement we may offer and sell our common shares, from time to time through HCW by any method deemed to be an “at-the-market” offering as defined in Rule 415(a)(4) promulgated under the Securities Act. In the first six months of 2024, we sold 637,460 shares under the HCW Sales Agreement for aggregate gross proceeds of $1.66 million.
The HCW Sales Agreement effectively replaced the sales agreement that we had concluded with A.G.P./Alliance Global Partners (“A.G.P.” and the “A.G.P. Sales Agreement”) on November 20, 2018 and amended on April 5, 2019. Pursuant to the terms of the A.G.P. Sales Agreement, the Company could offer and sell its common shares, from time to time through A.G.P. by any method deemed to be an “at-the-market” offering as defined in Rule 415(a)(4) promulgated under the Securities Act. Prior to its termination, we sold an aggregate 123,512 of our common shares for an aggregate offering price of $13.1 million pursuant to the A.G.P. Sales Agreement.
2023 reverse share split
On December 13, 2023, we effected a reverse share split (the “2023 Reverse Share Split”) of our common shares at a ratio of one-for-twenty. When the reverse share split became effective, every 20 of our pre-split issued and outstanding common shares, par value $0.0001 per share, were combined into one common share, par value $0.002 per share. Effecting the 2023 Reverse Share Split reduced the number of our issued and outstanding common shares from 29,556,487 common shares to 1,477,785 common shares (after giving effect to rounding of fractional shares). It also simultaneously adjusted outstanding options issued under our equity incentive plan and outstanding warrants to purchase common shares. All per share amounts and numbers of common shares in this management’s discussion and analysis reflect the 2023 Reverse Share Split.
Collaboration and License Agreements
On December 11, 2020, we entered into an Exclusive License Agreement with Washington University located in St. Louis, Missouri (“WU”). Pursuant to the Agreement, WU granted us an exclusive, worldwide, royalty-bearing license (with the right to sublicense) during the term of the agreement under certain patent rights owned or controlled by WU to research, develop, make, have made, sell, offer for sale, use and import pharmaceutical products covered under such patent rights for all fields of use. Such licensed products may include “silencing RNA” (siRNAs) pharmaceutical preparations formulated in combination with our proprietary delivery technologies. In consideration for such worldwide, exclusive license, we will be obligated to pay WU: annual license maintenance fees in the low five figures through first commercial sale; pre-clinical and clinical regulatory milestones; sales milestones; and a low single digit royalty based on annual net sales of licensed products worldwide for at least the applicable patent term or period of marketing exclusivity, whichever is longer, but in no case less than a minimum royalty term of 12 years; and a percentage share (in the double digits) of sublicensing revenues received by the Company in connection with licensed products. Such regulatory and sales milestones may total up to an aggregate of $4,375,000. In the event the Company fails to meet certain regulatory diligence milestones, WU will have the right to terminate the license.
3
Research and Development Expense
Our research and development expense is highly dependent on the development phases of our research projects and therefore may fluctuate substantially from period to period. Our research and development expense mainly relates to the following key programs:
| ● | OligoPhore™ / SemaPhore™ delivery platforms. Through the acquisition of Trasir Therapeutics Inc. (“Trasir”) in 2021 we entered the field of RNA delivery technology. OligoPhore™ and SemaPhore™ are based on a propriety peptide which allows for efficient delivery of nucleic acid payloads such as siRNA (small interfering ribonucleic acid) or mRNA (messenger ribonucleic acid) into target cells, notably into non-liver tissues, using systemic or local administration. We are developing the OligoPhore™ / SemaPhore™ delivery technology to make it available through out-licensing to partners in the pharma / biotech industry for use with their proprietary RNA molecules. |
| ● | AM-401 for KRAS Driven Cancer. In July 2021 we initiated the development of AM-401 as the first lead program to demonstrate the potential of our OligoPhore™ oligonucleotide delivery platform. The therapeutic objective for AM-401 is to slow down KRAS driven tumor cell proliferation or to stop it altogether by delivering siRNA specifically inside tumor cells for gene knock down. We are employing siRNA which is targeting different KRAS mutations (polyKRASmut) and have shown that it knocks down a broad range of KRAS mutations in cancer cell lines. We aim to advance the AM-401 program through preclinical studies with the objective of filing for an IND in 2026. In this context, we initiated various development work relating to the peptide and siRNA components of AM-401. |
| ● | AM-411 for Rheumatoid Arthritis. In July 2022 we announced the initiation of AM-411, our second lead program for an RNA therapeutic based on the OligoPhore™ delivery platform. AM-411 seeks to treat rheumatoid arthritis (RA) by targeting siRNA at p65, one of the main transcriptional regulators of the NF-kB pathway and a key checkpoint in RA inflammation. We aim to advance the AM-411 program through preclinical studies with the objective of filing for an IND in 2026. |
| ● | AM-125 for Vertigo. We have been developing AM-125 as a reformulation of betahistine for intranasal delivery. In 2019 we initiated the “TRAVERS” Phase 2 trial to evaluate the safety and efficacy of AM-125 in 124 patients suffering from acute vestibular syndrome following surgery. In June 2022 we reported top-line results from the trial showing good tolerability and a dose- and time-dependent improvement in balance and signs and symptoms of vestibular dysfunction. In parallel to the clinical development, we have been conducting various preclinical studies with AM-125 and working on the analytical and process development for the manufacturing of the drug product. The FDA cleared our IND application in June 2023 which will allow for the conduct of clinical trials in the U.S. In the context of our strategic transition to become a company focused on RNA delivery technology, we intend to out-license or sell the AM-125 program. |
| ● | Bentrio® for Allergy and Viral Infection: In September 2020 we initiated the development of AM-301, a drug-free nasal spray for protection against airborne viruses and allergens, through our new subsidiary Altamira Medica AG. Following formulation development, we tested AM-301 first in vitro in a series of experiments using reconstituted human nasal epithelia. Our clinical development in allergic rhinitis comprised four trials: one study each with controlled exposure to grass pollen for 4 hours and to house dust mites for 3 hours (both with 36 patients), one study on the distribution and residence time of AM-301 within the nasal cavity (8 healthy volunteers), and one study with environmental exposure to seasonal allergens for two weeks (NASAR trial; 100 patients). The two challenge studies were completed in 2021 and 2022 and showed good tolerability and protective effects of AM-301 for 3-4 hours; the extended nasal residence time of the formulation within the nasal cavity was confirmed in the trial with human volunteers. The NASAR trial demonstrated a statistically significant and clinically relevant improvement in nasal symptoms and health related quality of life in seasonal allergic rhinitis (SAR) and was also superior in efficacy outcomes to saline nasal spray, the current standard of care in drug free treatments for SAR. In viral infection, we conducted a trial in patients suffering from acute COVID-19 in 2022; top-line results were presented as inconclusive in early 2023. In the context of our decision to reposition our company around the RNA delivery business, we sold in November 2023 51% of the share capital of Altamira Medica to a Swiss private equity investor. We retained 49% of the company’s share capital and will be entitled to receive 25% of Altamira Medica’s future gross licensing income. |
Other research and development expenses mainly relate to the maintenance of our late-stage projects Sonsuvi® (AM-111) and Keyzilen® (AM-101) and pre-clinical studies of AM-102 (second generation tinnitus treatment).
For a discussion of our other key financial statement line items, please see “Item 5—Operating and Financial Review and Prospects–Operating results — Financial Operations Overview” in the Annual Report.
4
Results of Operations
The numbers below have been derived from our unaudited condensed consolidated interim financial statements as of and for the six months ended June 30, 2024 and 2023. The discussion below should be read along with this financial information, and it is qualified in its entirety by reference to them.
Comparison of the six months ended June 30, 2024 and 2023
| JUNE 30 | ||||||||||||
| 2024 | 2023 | Change | ||||||||||
| (in thousands of US$) | % | |||||||||||
| Other operating income | 34 | 77 | (56 | )% | ||||||||
| Research and development | (1,963 | ) | (1,481 | ) | 33 | % | ||||||
| Sales and marketing | - | - | n/a | |||||||||
| General and administrative | (1,988 | ) | (2,252 | ) | (12 | )% | ||||||
| Operating loss | (3,917 | ) | (3,656 | ) | 7 | % | ||||||
| Finance expense | (186 | ) | (938 | ) | (80 | )% | ||||||
| Finance income | 1 | 70 | (99 | )% | ||||||||
| Share of loss of an associate | (237 | ) | - | n/a | ||||||||
| Loss before tax | (4,339 | ) | (4,524 | ) | (4 | )% | ||||||
| Income tax gain/(loss) | - | - | n/a | |||||||||
| Net loss from continuing operations | (4,339 | ) | (4,524 | ) | (4 | )% | ||||||
| Discontinued operations: | ||||||||||||
| Loss after tax from discontinued operations | - | (1,421 | ) | (100 | )% | |||||||
| Net loss attributable to owners of the Company | (4,339 | ) | (5,945 | ) | (27 | )% | ||||||
| Other comprehensive income/(loss): | ||||||||||||
| Items that will never be reclassified to profit or loss | ||||||||||||
| Remeasurements of defined benefit liability, net of taxes of $ 0 | 198 | (31 | ) | (739 | )% | |||||||
| Items that are or may be reclassified to profit or loss | ||||||||||||
| Foreign currency translation differences, net of taxes of $ 0 | 15 | (80 | ) | (119 | )% | |||||||
| Share of other comprehensive income of an associate | (44 | ) | - | n/a | ||||||||
| Other comprehensive income/(loss), net of taxes of $ 0 | 169 | (111 | ) | (252 | )% | |||||||
| Total comprehensive loss attributable to owners of the Company | (4,170 | ) | (6,056 | ) | (31 | )% | ||||||
5
Research and development expense
| SIX MONTHS ENDED | ||||||||||||
| JUNE 30, 2024 | JUNE 30, 2023 | Change % | ||||||||||
| (in thousands of US$) | ||||||||||||
| Clinical projects | 27 | 110 | (75 | )% | ||||||||
| Pre-clinical projects | 276 | 115 | 140 | % | ||||||||
| Drug manufacturing and substance | 567 | 150 | 278 | % | ||||||||
| Employee benefits | 845 | 924 | (9 | )% | ||||||||
| Other research and development expenses | 248 | 182 | 36 | % | ||||||||
| Total | 1,963 | 1,481 | 33 | % | ||||||||
Research and development expenses amounted to $2.0 million in the six months ended June 30, 2024. This represents an increase of 33% compared to the six months ended June 30, 2023. Research and development expenses reflected the following:
| ● | Clinical projects. In the six months ended June 30, 2024 clinical expenses were $27 thousand, which was 75% lower than in the six months ended June 30, 2023 as clinical trials had essentially been completed in 2023. |
| ● | Pre-clinical projects. In the six months ended June 30, 2024, pre-clinical expenses were $276 thousand and thus more than double the amount in the six months ended June 30, 2023 due to increased activities in RNA delivery projects. |
| ● | Drug manufacture and substance. In the six months ended June 30, 2024, expenses related to drug manufacture and substance rose by $417 thousand or 278% over the level in the first half of 2023 as the Company’s RNA delivery projects progressed (analytical development, formulation development, peptide and RNA synthesis). |
| ● | Employee benefits. Employee expenses decreased by 9% in the six months ended June 30, 2024 to reach $845 thousand primarily due to a reduction in headcount as there were no longer any clinical trials ongoing compared to the same period in 2023. |
| ● | Other research and development expenses. Other research and development expenses increased by $66 thousand in the six months ended June 30, 2024 compared to the same period in 2023 which was primarily due to higher expenditures for intellectual property filings and prosecution. |
General and administrative expense
| SIX MONTHS ENDED | ||||||||||||
| JUNE 30, 2024 | JUNE 30, 2023 | Change % | ||||||||||
| (in thousands of US$) | ||||||||||||
| Employee benefits | 574 | 342 | 68 | % | ||||||||
| Lease expenses | 15 | 10 | 50 | % | ||||||||
| Business development | - | 7 | (100 | )% | ||||||||
| Travel and representation | 24 | 19 | 26 | % | ||||||||
| Administration costs | 1,312 | 1,809 | (27 | )% | ||||||||
| Depreciation Right-of-use assets | 63 | 65 | (3 | )% | ||||||||
| Total | 1,988 | 2,252 | (12 | )% | ||||||||
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General and administrative expense decreased to CHF 2.0 million in the six months ended June 30, 2024, compared to CHF 2.3 million in the same period in the previous year, primarily due to lower general and administration costs, whereas employee benefits increased primarily due to the reinforcement of headcount in finance and administration.
Finance income and finance expense
| SIX MONTHS ENDED | ||||||||||||
| JUNE 30, 2024 | JUNE 30, 2023 | |||||||||||
| (in thousands of US$) | ||||||||||||
| Interest income | 1 | 29 | (97 | )% | ||||||||
| Gain on modification of financial instruments | - | 41 | (100 | )% | ||||||||
| Total finance income | 1 | 70 | (99 | )% | ||||||||
| Interest expense (incl. Bank charges) | 6 | 575 | (99 | )% | ||||||||
| Net foreign exchange loss | 180 | 131 | 37 | % | ||||||||
| Revaluation loss from derivative financial instrument | - | 224 | (100 | )% | ||||||||
| Loss on derecognition of financial instruments | - | 8 | (100 | )% | ||||||||
| Total finance expense | 186 | 938 | (80 | )% | ||||||||
| Finance income/(expense), net | (185 | ) | (868 | ) | (79 | )% | ||||||
Interest expense
Interest expense in the six months ended June 30, 2024 decreased 99% to $6 thousand and included interest related to lease liabilities and bank charges. In the first half of 2023, interest expense included interest on the FiveT convertible loans.
Foreign currency exchange gain / (loss), net
For the six months ended June 30, 2024, fluctuations in foreign currency exchange rates resulted in a loss of $180 thousand, compared to a loss of $131 thousand during the same period in the previous year.
Revaluation gain / (loss) from derivative financial instruments
For the six months ended June 30, 2024, there was no revaluation gain or loss recorded through profit or loss. In the six months ended June 30, 2023, the revaluation loss of $224 thousand from derivative financial instruments included the revaluation of the financial derivatives embedded in the 2022 FiveT Loan.
On January 30, 2018 we issued 1,875 warrants in connection with a direct offering of 3,125 common shares, each warrant entitling its holder to purchase one common share at an exercise price of $2,000.00 per common share. As of June 30, 2024, the fair value of the warrants amounted to $0. There was no revaluation gain or loss of the derivative for the six months ended June 30, 2024 and 2023.
Cash flow
Comparison of the six months ended June 30, 2024 and 2023
The table below summarizes our cash flows for the six months ended June 30, 2024 and 2023:
| SIX MONTHS ENDED | ||||||||
| JUNE 30, 2024 | JUNE 30, 2023 | |||||||
| (in thousands of US$) | ||||||||
| Net cash used in operating activities | (3,204 | ) | (8,431 | ) | ||||
| Net cash from investing activities | 1 | - | ||||||
| Net cash from financing activities | 2,514 | 8,412 | ||||||
| Net effect of currency translation on cash | 20 | 57 | ||||||
| Cash and cash equivalents at beginning of the period | 734 | 17 | ||||||
| Cash and cash equivalents at end of the period | 65 | 55 | ||||||
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Cash and funding sources
On January 19, 2024, we entered into a sales agreement with H.C. Wainwright & Co., LLC (“HCW” and the “HCW Sales Agreement”). Pursuant to the terms of the HCW Sales Agreement we may offer and sell our common shares, from time to time through HCW by any method deemed to be an “at-the-market” offering as defined in Rule 415(a)(4) promulgated under the Securities Act. Pursuant to the HCW Sales Agreement. In the first six months of 2024, we sold 637,460 shares under the HCW Sales Agreement for aggregate gross proceeds of $1.66 million.
The HCW Sales Agreement effectively replaced the sales agreement that we had concluded with A.G.P./Alliance Global Partners (“A.G.P.” and the “A.G.P. Sales Agreement”) on November 20, 2018 and amended on April 5, 2019. Pursuant to the terms of the A.G.P. Sales Agreement, the Company could offer and sell its common shares, from time to time through A.G.P. by any method deemed to be an “at-the-market” offering as defined in Rule 415(a)(4) promulgated under the Securities Act. In 2023, we sold 104,147 shares under the ATM for aggregate proceeds of $5.1 million. We terminated the A.G.P. Sales Agreement effective January 1, 2024. Prior to its termination, we sold an aggregate 123,512 of our common shares for an aggregate offering price of $13.1 million pursuant to the A.G.P. Sales Agreement.
On November 21, 2023, we closed the transaction for the partial divestiture of our Bentrio® business, by selling a 51% stake in our subsidiary Altamira Medica AG to a Swiss private equity investor. The transaction also included the sale of Auris Medical Pty Ltd, Melbourne (Australia), a wholly owned subsidiary of Altamira Medica AG, which was subsequently renamed Altamira Medica Pty Ltd. The cash consideration for the 51% stake was CHF 2,040,000. The transaction further included a cash contribution of CHF 1,000,000 in total to Altamira Medica’s capital by its two shareholders pro rata of their shareholdings following the closing. Accordingly, we contributed CHF 490,000 in cash to our investment in Altamira Medica.
On July 10, 2023, the Company closed a public offering of 43,750 common shares and 511,806 pre-funded warrants and accompanying common warrants to purchase up to 555,556 common shares, at a combined public offering price of $9.00 per share, pre-funded warrant and accompanying common warrant. The common warrants have an exercise price of CHF 8.00 per share, are exercisable immediately and expire five years from the date of issuance. The Company additionally granted 36,113 warrants to the Placement Agent with a strike price of CHF 10.00 and an exercise period of 5 years. As of December 31, 2023, all pre-funded warrants were exercised for a total amount of $112,597. The total gross proceeds from the offering amounted to $5,000,000.
On May 1, 2023, the Company entered into a convertible loan agreement with FiveT IM ( see Note 4, Loans). Under the 2023 FiveT Loan we sold an aggregate 443,294 common shares at an average price of CHF 5.07 to FiveT IM in 2023. In connection with the 2023 FiveT Loan, FiveT IM received warrants to purchase an aggregate of 81,274 common shares at an exercise price of CHF 30.76 per common share, which could be exercised up to five years. On December 7, 2023, we entered into a letter agreement (the “Warrant Inducement Agreement”) under which FiveT IM was granted the option to exercise the warrants by or before December 14, 2023 at a reduced exercise price which was defined as 90% of the daily trading volume weighted average price for our common shares on the NASDAQ stock exchange on the trading day following the date of each such exercise and receive additional warrants upon any such exercise. FiveT IM exercised all existing warrants at the weighted average exercise price of CHF 6.656 per common share, yielding proceeds of CHF 541,034 to the Company. On December 15, 2023, we issued to FiveT IM new warrants to purchase 81,274 common shares at CHF 6.656 each for six months from their date of issuance and to purchase 81,274 common shares at CHF 6.656 each for two years from their date of issuance. The 6-month warrants expired unexercised on June 15, 2024.
On February 4, 2022, the Company entered into a convertible loan agreement, as amended, with FiveT IM (the “Lender”), pursuant to which the Lender agreed to loan to the Company CHF 5,000,000 (the “2022 FiveT Loan”), which bore interest at the rate of 10% per annum and matured 12 months from the disbursement date of February 8, 2022.
On April 13, 2023, the Company and FiveT IM entered into an amendment to the 2022 FiveT Loan, which amended the conversion price of the 2022 FiveT Loan to a fixed price equal to the lower of (a) the mean daily trading volume weighted average price (“VWAP”) of the Company’s common shares on the Nasdaq Stock Market on the 20 trading days preceding the effective date of the FiveT Loan Amendment or (b) 90% of the VWAP on the effective date of the FiveT Loan Amendment. From April 13, 2023 to April 17, 2023, FiveT IM converted the entire 2022 FiveT Loan into an aggregate of 217,051 common shares at an average conversion price of $28.95 per share. As a result, the 2022 FiveT Loan is no longer outstanding and has been terminated.
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On December 28, 2022, the Company entered into two separate loan agreements with two private investors (the “Private Lenders”), pursuant to which Private Lenders agreed to loan to the Company an aggregate of CHF 350,000, which loans bear interest at the rate of 5% per annum and were to mature as of May 30, 2023. The Company agreed to grant to the Private Lenders warrants to purchase an aggregate 2,359 common shares. The warrants are exercisable at an exercise price of CHF 89.02 per share for up to five years from the date of issuance. On May 12, 2023, the Company and the Private Lenders entered into an amendment to the loan agreement, which extended the maturity date of the loan from May 31, 2023 to July 31, 2023 and lowered the strike price for the Warrants attached to the loan to CHF 17.62 per common share, which is the Swiss Franc equivalent of the trading volume weighted average price for common shares on the NASDAQ stock exchange on the trading day preceding the date of the amendment. The loans were repaid on July 15, 2023.
On September 9, 2022, the Company entered into a loan agreement with FiveT IM, Dominik Lysek and Thomas Meyer, the Company’s CEO (the “Lenders”), pursuant to which the Lenders agreed to loan to the Company an aggregate of CHF 600,000 (the “September 2022 Loan Agreement”), which loan bears interest at the rate of 5% per annum and was to mature as of March 31, 2023. The Company agreed to issue to the Lenders warrants to purchase an aggregate 2,085 common shares. Such warrants are exercisable at an exercise price of CHF 144 per share for up to five years form October 1, 2022. On May 12, 2023, the Company and the Lenders entered into an amendment to the loan agreement, which extended the maturity date of the loan from May 31, 2023 to July 31, 2023, introduced a right for Lenders to convert the loan into common shares of the Company at CHF 22.40 per common share, which is the Swiss Franc equivalent of 120% of the mean daily trading volume weighted average price for common shares on the NASDAQ stock exchange on the 20 trading days preceding the date of the amendment, and a right for the Company to repay the loan in common shares of the Company priced at the lower of (i) the mean daily trading volume weighted average price for the common shares on the 20 trading days preceding the repayment date or (ii) 90% of the daily trading volume weighted average price for common shares on the repayment date, and lowered the strike price for the Warrants attached to the loan to CHF 17.62 per common share, which is the Swiss Franc equivalent of the trading volume weighted average price for common shares on the NASDAQ stock exchange on trading day preceding the date of the amendment. The loan was repaid on July 15, 2023.
On December 5, 2022, we entered into a purchase agreement with Lincoln Park Capital Fund, LLC (“LPC” and the “2022 Commitment Purchase Agreement”). Pursuant to the purchase agreement, LPC agreed to subscribe for up to $10.0 million of our common shares over the 24-month term of the purchase agreement. As consideration for LPC’s irrevocable commitment to purchase common shares upon the terms of and subject to satisfaction of the conditions set forth in the 2022 Commitment Purchase Agreement, the Company agreed to issue 2,500 common shares immediately to LPC as commitment shares. In 2023, we issued an aggregate 17,500 common shares for aggregate proceeds of $854,475 and in the first six months of 2024 we issued an aggregate of 555,279 common shares for aggregate proceeds of $984,087 to LPC under the 2022 Commitment Purchase Agreement.
The 2022 Commitment Purchase Agreement effectively replaced the 2020 Commitment Purchase Agreement. Under the 2020 Commitment Purchase Agreement LPC agreed to purchase common shares for up to $10,000,000 over the 30-month term of the Purchase Agreement. Prior to its termination we had issued 325,000 common shares for aggregate proceeds of $4.0 million to LPC under the 2020 Commitment Purchase Agreement.
We have no other ongoing material financial commitments, such as lines of credit or guarantees that are expected to affect our liquidity over the next five years, other than leases.
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Funding requirements
We expect that we will need additional funding. We have incurred recurring losses and negative cash flows from operations since inception and we expect to generate losses from operations for the foreseeable future primarily due to research and development costs for our RNA delivery platforms and our product candidates AM-401 and AM-411. We also expect to continue to incur additional costs associated with operating as a public company.
We expect our total cash need in 2024 to be in the range of $5.8 to 7.0 million. We believe that our cash position of $65 thousand at June 30, 2024, proceeds from the public offering of common shares with warrants in September 2024, the exercise of warrants and the planned divestiture or partnering of our AM-125 development program and revenues from our 49% stake in our associated company Altamira Medica AG, the receipt of grants, licensing and service fees from collaborations in the field of RNA delivery as well as further issuances of common shares under the HCW Sales Agreement or an equity line will fund our projected operations through August 2025.
We have based the above estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
Our future funding requirements will depend on many factors, including but not limited to:
| ● | the scope, rate of progress, results and cost of our nonclinical testing and other related activities; |
| ● | the cost of sourcing key ingredients for our RNA delivery programs and of manufacturing our product candidates and any products that we may develop; |
| ● | the scope of the further development of our RNA delivery platforms and the number and characteristics of product candidates that we pursue; and |
| ● | the terms and timing of any collaborative, licensing, and other arrangements that we may establish, including any required milestone and royalty payments thereunder. |
As of the date of this Interim Report we have warrants outstanding, which are exercisable for an aggregate of 12,150,116 common shares at a weighted average exercise price of $1.20 per share, which comprise an aggregate 11,111,112 warrants linked to the Company reaching certain development and business milestones, options which are exercisable for an aggregate of 404,608 common shares at a weighted average exercise price of $2.56 per share, and sold an aggregate of $1.66 million of common shares under the HCW Sales Agreement, and we may seek to register additional common shares for sale under such agreement, subject to the volume limitations under Instruction I.B.5 of Form F-3.
Additional funds may not be available on a timely basis, on favorable terms, or at all, and such funds, if raised, may not be sufficient to enable us to continue to implement its long-term business strategy. If additional capital is not available when required, we may need to delay or curtail our operations until such funding is received. The length of time and cost of developing our product candidates and/or failure of them at any stage of the approval process will materially affect our financial condition and future operations. Such matters are not within our control and thus all associated outcomes are uncertain. If we are not able to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs, which could materially harm our business, prospects, financial condition and operating results. This could then result in bankruptcy, or the liquidation of the Company. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements have been prepared on a going concern basis, which contemplates the continuity of normal activities and realization of assets and settlement of liabilities in the normal course of business.
For more information as to the risks associated with our future funding needs, see “Item 3—Key Information-D. Risk factors” in the Annual Report.
Contractual obligations and commitments
Under the terms of our collaboration and license agreement with Xigen related to AM-111, we are obliged to make development milestone payments on an indication-by-indication basis of up to CHF 1.5 million upon the successful completion of a Phase 2 clinical trial and regulatory milestone payments on a product-by-product basis of up to CHF 2.5 million, subject to a mid-twenties percentage reduction for smaller indications, e.g., those qualifying for orphan drug status, upon receiving marketing approval for a product. The milestones are not included in the table above as they have not met the recognition criteria for provisions and the timing of these is not yet determinable as it is dependent upon the achievement of earlier mentioned milestones.
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Significant Accounting Policies and Use of Estimates and Judgment
There have been no material changes to the significant accounting policies and estimates described in “Item 5—Operating and Financial Review and Prospects–A. Operating results—Significant accounting policies and use of estimates and judgment” in the Annual Report.
Recent Accounting Pronouncements
See Note 4 to our audited financial statements included in our most recent Annual Report on Form 20-F for a full description of recent accounting pronouncements, including the expected dates of adoption and effects on the Company’s financial condition, results of operations and cash flows.
Cautionary Statement Regarding Forward Looking Statements
Forward-looking statements appear in a number of places in this discussion and analysis and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to:
| ● | our operation as a drug development-stage company with limited operating history and a history of operating losses; |
| ● | our need for substantial additional funding to continue the development of our RNA delivery platforms and product candidates before we can expect to become profitable from sales of our platform technology and products and the possibility that we may be unable to raise additional capital when needed; |
| ● | the timing, scope, terms and conditions of a potential divestiture or partnering of the Company’s AM-125 development program in vertigo as well as the cash such transaction(s) may generate; |
| ● | our dependence on the success of OligoPhore™, SemaPhore™, AM-401 and AM-411, which are still in preclinical development, and may eventually prove to be unsuccessful; |
| ● | the chance that we may become exposed to costly and damaging liability claims resulting from the testing of our product candidates in the clinic; |
| ● | the chance our clinical trials may not be completed on schedule, or at all, as a result of factors such as delayed enrollment or the identification of adverse effects; |
| ● | our reliance on our current strategic relationship with Washington University and the potential success or failure of strategic relationships, joint ventures or mergers and acquisitions transactions; |
| ● | our reliance on third parties to conduct certain of our nonclinical studies and on third-party, single-source suppliers to supply certain key ingredients for RNA delivery platforms or to produce our product candidates; |
| ● | our ability to obtain, maintain and protect our intellectual property rights and operate our business without infringing or otherwise violating the intellectual property rights of others; |
| ● | our ability to meet the continuing listing requirements of Nasdaq and remain listed on The Nasdaq Capital Market; |
| ● | the chance that certain intangible assets related to our product candidates will be impaired; and |
| ● | other risk factors set forth in our most recent Annual Report on Form 20-F. |
Our actual results or performance could differ materially from those expressed in, or implied by, any forward-looking statements relating to those matters. Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on our results of operations, cash flows or financial condition. Except as required by law, we are under no obligation, and expressly disclaim any obligation, to update, alter or otherwise revise any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise.
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