美国
证券交易委员会
华盛顿特区20549
表格
根据1934年证券交易所法第13或15(d)条周期性报告 |
截至2024年6月30日季度结束
根据1933年证券法第13或第15(d)条，进行过渡报告 |
到 至
委员会档案编号：
（依凭章程所载的完整登记名称）
(依据所在地或其他管辖区) 的注册地或组织地点) | (I.R.S. Employer or 识别号码) |
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(总部办公地址) | （邮政编码） |
(
(注册人电话号码，包括区号)
不适用
(如果自上次报告以来更改，请提供公司的前名、前地址和前财政年度)
根据法案第12(b)条注册的证券：
每个课程的标题 |
| 交易 |
| 每个交易所的名称 |
|---|---|---|---|---|
无 |
请勾选是否 (1) 依据《1934年证券交易法》第13或15(d)条的规定，在过去12个月（或登记人所必须提交此等报表的较短期间）中已提交必须提交的所有报告，并且 (2) 在过去90天中已受到此等提交要求的约束。
标记是否表示在过去12个月内（或对于要求提交此类文件的较短期间）每一个根据Regulation S-t（本章节第232.405条）第405条规定应提交的互动式数据文件已经以电子方式提交？
请载明检查标记，公司是否为大型加速披露人、加速披露人、非加速披露人、小型报告公司或新兴成长公司。请于「交易所法案」第1202条中查阅「大型加速披露人」、「加速披露人」、「小型报告公司」和「新兴成长公司」的定义。
大型高速申报者 | ☐ | 快速文件提交者 | ☐ |
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☒ | 小型报告公司 | ||
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| 新兴增长型企业 |
如果一家新兴成长型企业，请勾选“是”表示注册人选择不使用根据证券交易所法第13(a)条所提供的任何新的或修改后的财务会计准则的延长过渡期来遵守。 ☐
标示勾选是否本登记机构是一间壳公司（按照交易所法案第120亿2条所定义）：是
截至2024年9月30日，本登记机构$0.001面值普通股的发行股数共有所有板块股，共有
第一部分。财务资讯
项目1。合并财务报表
CytoDyn Inc.
合并资产负债表
(未经审核，以千为单位，除每股价值外)
2024年8月31日 |
| (IRS Employer | ||||
资产 |
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流动资产: |
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现金 | $ | | $ | | ||
限制性现金 |
| — |
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预付款项 |
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预付服务费 |
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其他应收帐款（附注9） | | — | ||||
全部流动资产 |
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其他非流动资产 |
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资产总额 | $ | | $ | | ||
负债及股东权益不足 |
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流动负债： |
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应付账款 | $ | | $ | | ||
应计负债及补偿 |
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可转换票据上的应计利息 |
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可转换优先股应计分红派息 |
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应付可转换票据，净额 |
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流动负债合计 |
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营运租赁 |
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其他负债（注9） | | | ||||
总负债 |
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承诺和条款（注9） |
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股东资本赤字： |
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优先股，面额$0.01，授权股数为5,000,000股，发行且流通股数为截至2024年6月30日和2023年12月31日之184,668,188股和181,364,180股。 |
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B系可转换优先股，$ |
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C系列可换股优先股，已授权； |
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D系列可转换优先股，$ |
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0.01 |
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库藏股，$ | ||||||
资本公积额额外增资 |
| |
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累积亏损 |
| ( |
| ( | ||
股东权益的赤字为 |
| ( |
| ( | ||
负债总额和股东权益总赤字 | $ | | $ | |
请参阅附注以获取公司的基本报表。
3
CytoDyn Inc.
综合损益表
（未经审核，以千位单位计算，每股数据除外）
截至8月31日止三个月, | ||||||
| 2024 |
| 2023 | |||
营业费用： |
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总务与行政 | $ | | $ | | ||
研发费用 |
| ( |
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折旧 |
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营业费用总计 |
| ( |
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营运获利（亏损） |
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| ( | ||
利息收入及其他收入（费用）： | ||||||
利息收入 | | — | ||||
可转换票据利息 |
| ( |
| ( | ||
可转换票据折价摊销 | ( | ( | ||||
债务发行成本摊销 |
| — |
| ( | ||
历史转换损失 | ( | ( | ||||
财务费用 |
| ( |
| ( | ||
清偿债券的亏损 |
| — |
| ( | ||
(亏损)衍生工具之利益 | ( | | ||||
利息总额及其他费用 |
| ( |
| ( | ||
税前收益（亏损） |
| |
| ( | ||
所得税补充 |
| |
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净利润（损失） | $ | | $ | ( | ||
每股盈余（损失）： | ||||||
基础 | $ | | $ | ( | ||
稀释 | $ | | $ | ( | ||
在计算每股收益（损失）时使用的加权平均普通股数： | ||||||
基础 | | | ||||
稀释 | | | ||||
请参阅附注以获取公司的基本报表。
4
CytoDyn Inc.
股东赤字变动合并报表
（未经审计，以千为单位）
优先股 | 普通股 | 库藏股 |
| 额外的 |
| 累计 |
| 股东总数 | ||||||||||||||||
| 股份 |
| 金额 |
| 股份 |
| 金额 |
| 股份 |
| 金额 | 实收资本 | 赤字 | 赤字 | ||||||||||
2024年5月31日结存 | | $ | — | | $ | | | $ | — | $ | | $ | ( | $ | ( | |||||||||
发行股票以偿还可转换票据 | — | — | | | — | — |
| |
| — |
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历史转换损失 | — | — | — | — | — | — |
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| — |
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股票发行用于要约收购 | — | — | | | — | — |
| |
| — |
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股票发行与招标要约相关的发行成本 | — | — | — | — | — | — |
| ( |
| — |
| ( | ||||||||||||
在C和D转换优先股上所累积的分红派息 | — | — | — | — | — | — |
| ( |
| — |
| ( | ||||||||||||
股票酬劳 | — | — | — | — | — | — |
| |
| — |
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净利润 | — | — | — | — | — | — |
| — |
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2024年8月31日结余 | | $ | — | | $ | | | $ | — | $ | | $ | ( | $ | ( | |||||||||
优先股 | 普通股 | 库藏股 |
| 额外的 |
| 累计 |
| 股东总人数' | ||||||||||||||||
| 股份 |
| 金额 |
| 股份 |
| 金额 |
| 股份 |
| 金额 | 实收资本 | 赤字 | 赤字 | ||||||||||
2023年5月31日结余 | | $ | — | | $ | | | $ | — | $ | | $ | ( | $ | ( | |||||||||
发行股份作为可转换票据偿还 | — | — | | | — | — |
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| — |
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历史转换损失 | — | — | — | — | — | — |
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| — |
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附股票的票据发行 | — | — | — | — | — | — |
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| — |
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向联属公司分派 | — | — | | | — | — |
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认股权行使 | — | — | | | — | — |
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| — |
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在C和D系列可转换优先股上赚取的分红派息 | — | — | — | — | — | — |
| ( |
| — |
| ( | ||||||||||||
将warrants由负债重新分类为权益分类 | — | — | — | — | — | — |
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| — |
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股票酬劳 | — | — | — | — | — | — | | — | | |||||||||||||||
净损失 | — | — | — | — | — | — |
| — |
| ( |
| ( | ||||||||||||
2023年8月31日结余 | | $ | — | | $ | | | $ | — | $ | | $ | ( | $ | ( | |||||||||
请参阅附注以获取公司的基本报表。
5
CytoDyn Inc.
综合现金流量表
（未经审计，以千为单位）
截至8月31日止三个月, | ||||||
| 2024 |
| 2023 | |||
经营活动现金流量： |
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净利润（损失） | $ | | $ | ( | ||
调整使净利润（损失）与经营活动中使用的现金相符： |
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摊提与折旧 |
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债务发行成本摊销 |
| — |
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可转换票据折价摊销 |
| |
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衍生工具损益 | | ( | ||||
历史转换损失 | | | ||||
清偿债券的亏损 |
| — |
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股份报酬 |
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营运资产和负债的变化： |
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预付费用及其他资产 | ( | ( | ||||
应付账款、应计费用及其他负债 |
| ( |
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营运活动之净现金提供（使用）量 |
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投资活动之现金流量: |
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投资活动提供的净现金 |
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来自筹资活动的现金流量: |
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认股证交易的收益，扣除发行成本 | | — | ||||
普通股和warrants出售所得款项，扣除发行成本后净额 |
| — |
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warrants行使所得款项 |
| — |
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(支付现金) 由应付票据所得款项 | ( | | ||||
筹资活动提供的净现金 |
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现金及限制性现金净变动 |
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期初现金和受限现金 |
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期末现金和受限现金 | $ | | $ | | ||
现金和受限制现金分别如下： | ||||||
现金 | $ | | $ | | ||
限制性现金 | — | | ||||
总现金和受限现金资产 | $ | | $ | | ||
补充披露: | ||||||
支付利息的现金 | $ | | $ | | ||
非现金投资和融资交易： |
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与warrants相关的衍生负债 | $ | — | $ | | ||
为可换股票本金发行普通股 | $ | | $ | | ||
C和D系列可换股优先股累积股息 | $ | | $ | | ||
发行给配售代理的认股权证 | $ | — | $ | | ||
注意转换为普通股和认股权证 | $ | — | $ | | ||
请参阅附注以获取公司的基本报表。
6
CYTODYN INC.
基本报表附注
截至2024年8月31日
(未经查核)
附注1. 组织
CytoDyn公司（以及其全资子公司，以下简称"公司"）原先于2002年5月2日根据科罗拉多州法律成立，名为RexRay Corporation，并于2015年8月27日起根据特拉华州法律重新注册。公司是一家以临床为主的生物技术公司，专注于基于其产品候选药物leronlimab开发创新治疗方案，leronlimab是一种针对C-C趋化因子受体类5（“CCR5”）的新型人源化单克隆抗体。
该公司目前正努力通过对慢性炎症、肿瘤学等的临床开发，进一步巩固leronlimab的地位，以及对一些其他潜在探索性适应症的影响。从历史上看，该公司一直将leronlimab作为治疗人类免疫缺陷病毒（“HIV”）的病毒进入抑制剂进行研究，被认为具有竞争性结合CCR5受体的N-端和第二细胞外环。对于免疫学而言，CCR5受体被认为涉及免疫介导疾病，例如代谢功能失调相关脂肪肝炎（“MASH”），替代词为非酒精性脂肪肝炎（“NASH”）。leronlimab正在或曾经在MASH、肿瘤学的实体肿瘤、COVID-19、长期COVID和HIV适应症的研究中，其中CCR5被认为在疾病发病机制中起著至关重要的作用。
Note 2. 主要会计政策摘要
呈现基础
未经审计的合并财务报表包括CytoDyn Inc.和其全资子公司CytoDyn Operations Inc.的账户。 所有公司内部交易和余额在合并中被消除。 合并财务报表反映了管理层认为对中期财务报表的营运结果进行公正表述所必要的所有正常循环调整。根据美国通用会计准则（“U.S. GAAP”或“GAAP”）准则和法规的规定，一些通常包含在按照会计原则编制的财务报表中的信息和附注披露已被省略。 （“U.S. GAAP”或“GAAP”） 已根据美国通用接受的会计原则(“U.S. GAAP”或“GAAP”)的规则和法规省略了财务报表准则中通常包含的某些信息和附注披露。 美国证券交易委员会（“SEC”）应阅读截至2024年5月31日的公司最新年度报告10-K表，并受第1号10-K/A表所修改（“2024年10-K表”），以配合其中的暂编财务资讯和附注。. 所呈现期间的营运结果不一定代表整个财政年度或任何未来年度或中期期间的预期结果。
持续经营
附带的合并财务报表已按照持续经营基础编制，此基础包括在正常业务进行过程中实现资产和满足债务的假设。依据附带的合并财务报表，公司在所有呈现期间均出现亏损，除了本期之外。截至2024年8月31日，公司累积亏损约为$百万。这些因素等，包括附注9中讨论的各种事项，
公司作为持续营业的能力取决于其能否获得额外的营运资金，完成其产品候选药物leronlimab的开发，获得监管机构批准商业化leronlimab，继续外包leronlimab的制造，在最终赚取收入并实现盈利。公司计划继续从事与leronlimab相关的研究和开发活动，以及为多个适应症开发新型或修改型的长效治疗方法，并预计将承担重大研究和
7
未来开发费用主要与其监管遵循相关，包括在各种指标中进行额外的临床前期和临床研究，以及寻求其产品候选品获得商业化的监管批准。这些研究和开发活动面临著重大风险和不确定性。公司打算主要通过出售股权和债券型证券，以及从其他来源获得的额外资金，来筹措未来的开发活动和营运资金需求。但无法保证公司将在这些努力中取得成功。
估计的使用
未经审计的合并财务报表是根据GAAP编制的，要求管理层进行估算和判断，影响合并财务报表日期的资产、负债的报告金额以及条件性资产和负债的披露，以及财务报表期间的营业收入和费用的报告金额。每个期间都会评估估计并更新以反映当前资讯，例如我们对临床试验结果的分析状态和/或与美国食品药品监督管理局（“FDA”）的讨论，这可能对公司的重要会计估计和假设产生影响。公司的估计基于历史经验和各种其他认为在当时是合理的假设。重要估计包括但不限于与基于股权报酬、用于估值认股权证和认股权证修改的假设有关。实际结果可能与这些估计有所不同。
限制性现金
截至2024年8月31日，公司有
金融工具的公允价值
根据规定的会计指引，公司使用包括公平价值阶梯在内的衍生工具的公平价值进行测量。
一级。 在活跃市场上对相同资产或负债的报价价格。
二级。 | 除了一级价格外，观察到的输入，例如相似资产或负债的报价价格，在交易量不足或不常见的市场中的报价价格（较不活跃市场），或者是从观察到的市场数据中主要可观察到的或者可以主要推导自或者可以主要经由观察到的市场数据为基本的模型衍生估值，用于资产或负债的整个有效期内的所有重要输入。二级输入还包括无约束力的市场共识价格，可以与观察到的市场数据印证，以及已根据特定安全限制进行调整的报价价格。 |
三级。 | 对估值方法的非观察得到的价格对于资产或负债的公平价值的测量至关重要。这些三级输入还包括无约束力的市场共识价格或公司无法透过观察到的市场数据印证的无约束力经纪人报价。 |
最近会计宣告
2023年10月，财务会计准则委员会（“FASB”）发布了《会计标准更新》（“ASU”）2023-06。揭露改进– 编码修订以回应SEC的披露更新和简化计划。修订澄清或改进了各种披露领域的披露和陈述要求，包括现金流量表、每股收益、债务、权益和衍生工具。这些修订将使FASB会计标准编码（“ASC”）中的要求与SEC的规定保持一致。此《ASU》中的修订将在相关披露被删除的日期生效。
8
Regulation S-X或Regulation S-K由证交会制定，若到2027年6月30日时，证交会未撤除相关披露要求，则将不生效。禁止提前采用。公司目前正在评估这些修订对其财务报表披露的影响。
2023年11月，FASb发布了ASU 2023-07，旨在改善可报告的部门披露，以及增强有关显著可报告的部门费用的披露。此指引将于我们的年度报告开始生效，即2024年12月31日结束的财政年度及其后的中期期间，并要求对所有已呈报的前期期间进行追溯应用。由于这些修订不改变营运部门的识别方法，营运部门的汇总或定量门槛的应用以确定可报告的部门，我们不认为此指引对我们的财务状况或经营业绩产生实质影响。 分节报告（TOPIC 280）：改进报告的分节披露 （ASU 2023-07）。此标准旨在改善年度和中期报告的可报告部门披露要求，而不论报告单位的数量，主要通过加强重要支出的披露。修订要求上市实体披露定期提供给CODm的重要部门支出，并将其包括在每份部门利润和损失的报告指标中。该标准自2023年12月15日后的年度期间生效。可提前采用，并应回顾性地应用本更新中的修订到所有呈现的期间。 公司目前正在评估此更新对其财务报表披露的影响，但并不认为这将对财务报表产生实质影响。
2023年12月14日，FASB发布了ASU No. 2023-09。 所得税揭露的改进该标准要求披露分解的所得税支付，为有效税率调解的元件指定标准类别，并修改其他与所得税相关的披露。该ASU自2024年12月15日后开始生效，允许采用前瞻性基础，并提供回顾性选项。公司目前正在评估此更新对其合并基本报表及相关披露的影响。
附注3. 应计负债与薪酬
应计负债和薪酬的元件如下（以千为单位）:
2024年8月31日 | (IRS Employer | |||||
补偿和相关费用 | $ | | $ | | ||
法律费用和和解金 | | | ||||
临床费用 | | | ||||
执照费用 | | | ||||
租赁应付款 | | | ||||
投资者收益被存放在托管中 | — | | ||||
其他负债 | | | ||||
总应计负债 | $ | | $ | |
附录4. 可转换工具及应计利息
可转换优先股
以下表格显示普通股可能发行的份数，假如优先股及未宣告及应计的优先股分红转换为普通股。
2024年8月31日 | (IRS Employer | |||||||||||||||||
(以千为单位，除汇率) |
| 协议 |
| Series C |
| D系列 |
| 协议 |
| Series C |
| D系列 | ||||||
优先股份总量 | | | | | | | ||||||||||||
普通股转换率 | ||||||||||||||||||
如转换，普通股的总份额 | | | | | | | ||||||||||||
未宣布的分红派息 | $ | | $ | — | $ | — | $ | | $ | — | $ | — | ||||||
应计分红派息 | $ | — | $ | | $ | | $ | — | $ | | $ | | ||||||
如果分红派息转换，普通股的总份额 | | | | | | | ||||||||||||
根据公司修订后的公司组织章程（以下简称“公司组织章程”），对其优先b系列可转换优先股（以下简称“b系列优先股”）的股息可以按公司的选择以现金或公司普通股支付。分红派息于
9
Series C可转换优先股（“C系列优先股”）和Series D可转换优先股（“D系列优先股”）可由持有人选择以现金或普通股支付。只有在公司董事会宣布时，优先股股东才有权享有股息。根据德拉瓦州《公司法》第170条，公司仅可在资本盈余或者如无资本盈余则可在当年度宣布的纯利润或前一年度净利润中派发股息。
B系列优先股享有优先偿还权，优先于普通股，每股$
可转换债券和应计利息
以下表格显示截至2024年8月31日和2024年5月31日的可转换债券和应计利息：
2024年8月31日 | (IRS Employer | |||||||||||||||||
（以千为单位） |
| 2021年4月2日备注 |
| 2021年4月23日备注 |
| 总计 |
| 2021年4月2日备注 |
| 2021年4月23日备注 | 总计 | |||||||
可转换票据应付未清偿本金 | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
减：未摊销债务折扣及发行成本 | ( | ( | ( | ( | ( | ( | ||||||||||||
应付可转换票据，净额 | | | | | | | ||||||||||||
可转换票据上的应计利息 | | | | | | | ||||||||||||
拥有未清偿的可转换票据负债，净额及应计利息 | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
可转换票据未偿余额变动调解，包括应计利息，情况如下:
（以千为单位） | 2021年4月2日备忘录 | 2021年4月23日备忘录 | 总计 | ||||||
2024年5月31日的未清余额 | $ | | $ | | $ | | |||
已收到的代价 | — | — | — | ||||||
发行折扣和成本摊销 | | | | ||||||
利息费用 | | | | ||||||
股票和warrants交换的公平市值以偿还 | — | ( | ( | ||||||
市值与股本减少的差异 | — | | | ||||||
2024年8月31日的未清余额 | $ | | $ | | $ | | |||
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2021年4月2日和2021年4月23日笔记
优先可换股票据的关键条款如下：
2024年8月31日 | ||||||||
| 2021年4月2日备忘录 |
| 2021年4月23日备忘录 | |||||
年息率 | | % | | % | ||||
转换价格每股 交易日前通知 | $ | | $ | | ||||
掌控转换权利的一方 | 投资者 | 投资者 | ||||||
到期日 | 2025年4月5日 | 2025年4月23日 | ||||||
安防利益 | 所有公司资产（除了智慧财产） | |||||||
In addition to standard anti-dilution adjustments, the conversion price of the April 2, 2021 Note and April 23, 2021 Note is subject to full-ratchet anti-dilution protection, pursuant to which the conversion price will be automatically reduced to equal the effective price per share in any new offering by the Company of equity securities that have registration rights, are registered, or become registered under the Securities Act of 1933, as amended (the “Securities Act”). The April 2, 2021 Note and April 23, 2021 Note provide for liquidated damages upon failure to deliver common stock within specified timeframes and require the Company to maintain a share reservation of
During the three months ended August 31, 2024, in satisfaction of redemptions, the Company and April 23, 2021 Noteholder entered into exchange agreements, pursuant to which the April 23, 2021 Note was partitioned into new notes (the “Partitioned Notes”) with an aggregate principal amount of $
截至2024年9月30日，根据发生在该日期之前的各种事件，2021年4月2日和2021年4月23日的持有人放弃了可转换票据中的所有条款，该条款可能会引发预设利率的征收、转换价格的下调或指定与预设、违约或处以惩罚相关的其他条款。因此，该公司在2024年9月30日的票据下并未违约。
定向增发代理票据
在2023年4月至6月期间，公司根据证券购买协议发行了带著抵押权诉求的应计利息率制定的保证票据，并将其发售给经认证的投资者通过一个放置代理人（“定向增发代理票据”），总本金约为
有关票据发行，公司向投资者发行了购买约
2023年6月期间，就Placement Agent Notes的投资人与拟议修订条款，规定票据的本金金额及应计但未支付的利息将在首次私下配售普通股和认股权证中转换为普通股和认股权证。每单位的视为购买价格为
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增发，而认股权证的行使价设定为$
在2023年7月，通过增发代理的次要普通股和认股权证的首次收盘发生。因此，增发代理注记被转换为与Note 6中描述的定向增发相同定价的单位， 普通股和认股权证的私募 - 通过增发代理 在公司2024年度10-k表中。
由于2024年7月与Amarex的和解，公司约欠款约$
请参考第5项附注， 可换股凭证和应计利息，在公司2024年第10-k表格中提供更多资讯。
第5项附注 定向增发普通股和认股权证
要约收购
2024年7月19日，公司完成了一次要约收购，包括购买约
认股证
下表显示认股权证的相关活动：
期权 | ||||||||||
平均 | ||||||||||
期权 | 剩余的 | 总计 | ||||||||
购回的股票数目 | 平均 | 合约的 | 内在 | |||||||
（以千为单位，股份资料和年份除外） |
| 股份 |
| 行使价格 |
| 寿命（年） |
| 价值 | ||
截至2024年5月31日，未行使的认股权证 |
| | $ | |
| $ | | |||
已授予股份 |
| — | $ | — |
|
| ||||
行使 |
| ( | $ | |
|
| — | |||
被没收、过期和取消 |
| ( | $ | |
|
| ||||
截至2024年8月31日，未行使的认股权证。 |
| | $ | |
| $ | | |||
截至2024年8月31日，持有并可行使的认股权证。 |
| | $ | |
| $ | | |||
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第6条权益激励计划
权益激励计划（EIP）
截至2024年8月31日，公司有
EIP提供了股票期权为了购买普通股，受限和无限制的普通股，受限制股票单位（“RSUs”）和绩效股份单位（“PSUs”）。
公司根据授予日估计公平价值对员工和董事提供的股权奖励的服务的补偿成本。基于员工或董事需要提供服务以换取奖励的期间，认列股份基本薪酬成本，并且随著丧失的情况发生，到目前为止认列的相关补偿成本将被撤销。对于具有基于绩效的支付条件的奖励，公司根据实现绩效条件的概率认列补偿成本，并将对期望变化的变化认列为调整，认识到当期收益。如果最终未满足条件，则已认列的补偿成本将被撤销。
加权平均行使价
期权交易活动呈现在下表中：
期权 | ||||||||||
平均 | ||||||||||
期权 | 剩余的 | 总计 | ||||||||
购回的股票数目 | 平均 | 合约的 | 内在 | |||||||
（以千计，除每股数据和年份外） |
| 股份 |
| 行使价格 |
| 年龄（年） |
| 价值 | ||
2024年5月31日留存的期权 |
| | $ | |
| $ | — | |||
已授予股份 |
| — | $ | — |
|
| ||||
行使 |
| — | $ | — |
|
| ||||
屈服、过期和取消 |
| ( | $ | |
|
| ||||
2024年8月31日未解期权 |
| | $ | |
| $ | — | |||
2024年8月31日的期权未履行及可履行 |
| | $ | |
| $ | — | |||
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7. 每股收益（损失）备注
基本每股收益（损失）是通过将修正后的净利润（损失）除以期间内流通普通股的加权平均数得出的。稀释每股收益（损失）包括加权平均数普通股以及可能具有稀释效果的普通股等同物。基本和稀释净利润（损失）每股计算的分子和分母调和情况如下：
截至8月31日止三个月, | |||||
（以千为单位，除每股金额外） | 2024 | 2023 | |||
每股基本净利润（亏损）: | |||||
净利润（损失） | $ | | $ | ( | |
减：应计优先股股利 | ( | ( | |||
适用于普通股东的净利润（亏损） | $ | | $ | ( | |
基本每份收益： | |||||
加权平均流通在外的普通股股数 | | | |||
每股盈利（亏损） | $ | | $ | ( | |
每股稀释后净利润（损失）： | |||||
净利润（损失） | $ | | $ | ( | |
未分配盈余重新分配，因优先股转换而产生 | | — | |||
适用于普通股东的净利润（损失） | $ | | $ | ( | |
基本计算中使用的股份数量 | | | |||
摊薄证券的加权平均影响 | |||||
认股权行使 | | — | |||
优先股转换 | | — | |||
摊薄加权平均普通股股数 | | | |||
每股稀释收益（损失） | $ | | $ | ( | |
下表显示了关于未计算在已发行普通股公开调配、授予或转换的期权、认股权证、可转换票据和可转换优先股（包括未宣布的分红派息）的近似股份数，这些股份在所报告期间并未计算在考虑已发行普通股公开调配的稀释加权平均股份数之内：
截至8月31日止三个月, | ||||
（以千为单位） | 2024 |
| 2023 | |
股票期权和warrants | | | ||
可换债券 | | | ||
可换股优先股 | — | | ||
预留用于通过配售代理发行普通股 | — | | ||
预留用于与票据转换相关的普通股发行 | — | | ||
注8. 所得税
为了确定公司每季的所得税提存，公司使用预计年度有效所得税率，该率基于公司预期年度收入和各司法管辖区的法定税率。公司在其中营运的各司法管辖区的特定重大非常规或罕见发生的项目将分开报告，分开在发生的季度中予以认可，并且可能成为导致有效所得税率每季波动的来源。
截至2024年6月29日或2023年12月31日，公司拥有外汇期货合约、股票掉期合约或普通股投资，均属于第三层资产。
14
maintaining a full valuation allowance on its net deferred tax assets, as the Company does not consider it more likely than not that the benefits from the net deferred tax assets will be realized.
Note 9. Commitments and Contingencies
Commitments with Samsung BioLogics Co., Ltd. (“Samsung”)
On April 3, 2024, the Company and Samsung executed a side letter agreement (the “Side Letter”), wherein the parties reached an agreement for an orderly process for winding down services and a restructuring of the amount payable by the Company to Samsung (the “Total Balance”). The Total Balance due to Samsung, as restructured under the Side Letter, is approximately $
“…the gross revenue generated by Client and its Affiliates, less the following items (if not previously deducted from the amount invoiced): (a) reasonable and customary trade, quantity, and cash discounts actually granted and legally permitted wholesaler chargebacks actually paid or credited by Client and its Affiliates to wholesalers of products; (b) reasonable, customary, and legally permitted rebates and retroactive price reductions actually granted; (c) freight charges for the delivery of products; (d) the portion of the administrative fees paid during the relevant time period to group purchasing organizations, pharmaceutical benefit managers and/or government-mandated Medicare or Medicaid Prescription Drug Plans relating specifically to the product; and (e) sales, use or excise taxes imposed and actually paid in connection with the sale of products (but excluding any value added taxes or taxes based on income or gross receipts).”
The $
Operating lease commitments
We lease our principal office location in Vancouver, Washington (the “Vancouver Lease”). The Vancouver Lease expires on April 30, 2026. Consistent with the guidance in ASC 842, Leases, we have recorded this lease in our consolidated balance sheet as an operating lease. For the purpose of determining the right of use asset and associated lease liability, we determined that the renewal of the Vancouver lease was not reasonably probable. The lease does not include any restrictions or covenants requiring special treatment under ASC 842, Leases. Operating lease costs for the three months ended August 31, 2024 and 2023 were approximately $
(in thousands) | August 31, 2024 | May 31, 2024 | |||||
Assets | |||||||
$ | | $ | | ||||
Liabilities | |||||||
$ | | $ | | ||||
Non-current operating lease liability |
| |
| | |||
Total operating lease liability | $ | $ | |||||
15
The minimum (base rental) lease payments are expected to be as follows as of August 31, 2024 (in thousands):
Fiscal Year | Amount | ||
2025 - 9 months remaining | $ | | |
2026 | | ||
Thereafter | — | ||
Total operating lease payments | | ||
Less: imputed interest | ( | ||
Present value of operating lease liabilities | $ | | |
Supplemental information related to operating leases was as follows:
August 31, 2024 | |||
Weighted average remaining lease term | years | ||
Weighted average discount rate | % | ||
Distribution and licensing commitments
Refer to Note 10, Commitments and Contingencies, in the 2024 Form 10-K for additional information.
Legal proceedings
As of August 31, 2024, the Company did not record any accruals related to the outcomes of the legal matters described below. It is not possible to determine the outcome of these proceedings, including the defense and other litigation-related costs and expenses that may be incurred by the Company, as the outcomes of legal proceedings are inherently uncertain. Therefore, it is possible that the ultimate outcome of any proceeding, if in excess of a recognized accrual, if any, could be material to the Company’s consolidated financial statements.
Securities Class Action Lawsuits
On March 17, 2021, a stockholder filed a putative class-action lawsuit (the “March 17, 2021 lawsuit”) in the U.S. District Court for the Western District of Washington against the Company and certain former officers. The complaint generally alleges the defendants made false and misleading statements regarding the viability of leronlimab as a potential treatment for COVID-19. On April 9, 2021, a second stockholder filed a similar putative class action lawsuit in the same court, which the plaintiff voluntarily dismissed without prejudice on July 23, 2021. On August 9, 2021, the court appointed lead plaintiffs for the March 17, 2021 lawsuit. On December 21, 2021, lead plaintiffs filed an amended complaint, which is brought on behalf of an alleged class of those who purchased the Company’s common stock between March 27, 2020 and May 17, 2021. The amended complaint generally alleges that the defendants violated Sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder by making purportedly false or misleading statements concerning, among other things, the safety and efficacy of leronlimab as a potential treatment for COVID-19, the Company’s CD10 and CD12 clinical trials, and its HIV Biologic License Application (“BLA”). The amended complaint also alleges that the individual defendants violated Section 20A of the Exchange Act by selling shares of the Company’s common stock purportedly while in possession of material nonpublic information. The amended complaint seeks, among other relief, a ruling that the case may proceed as a class action and unspecified damages and attorneys’ fees and costs. On February 25, 2022, the defendants filed a motion to dismiss the amended complaint. On June 24, 2022, lead plaintiffs filed a second amended complaint. The second amended complaint is brought on behalf of an alleged class of those who purchased the Company’s common stock between March 27, 2020 and March 30, 2022, makes similar allegations, names the same defendants, asserts the same claims as the prior complaint, adds a claim for alleged violation of Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) promulgated thereunder, and seeks the same relief as the prior complaint. All defendants have filed motions to dismiss the second amended complaint in whole or in part. The Company and the individual defendants deny all allegations of wrongdoing in the complaint and intend to vigorously defend the matter. Since this case is in an early stage where the number of plaintiffs is not known, and the claims do not specify an amount of damages, the Company is unable to predict the ultimate outcome of the lawsuit and cannot reasonably estimate the potential loss or range of loss the Company may incur.
16
Shareholder Derivative Lawsuits
On June 4, 2021, a stockholder filed a purported derivative lawsuit against certain of the Company’s former officers and directors, and the Company as a nominal defendant, in the U.S. District Court for the Western District of Washington. Two additional shareholder derivative lawsuits were filed against the same defendants in the same court on June 25, 2021 and August 18, 2021, respectively. The court has consolidated these three lawsuits for all purposes (“Consolidated Derivative Suit”). On January 20, 2022, the plaintiffs filed a consolidated complaint. The consolidated complaint generally alleges that the director defendants breached their fiduciary duties by allowing the Company to make false and misleading statements regarding, among other things, the safety and efficacy of leronlimab as a potential treatment for COVID-19, the Company’s CD10 and CD12 clinical trials and its HIV BLA, and by failing to maintain an adequate system of oversight and controls. The consolidated complaint also asserts claims against one or more individual defendants for waste of corporate assets, unjust enrichment, contribution for alleged violations of the federal securities laws, and for breach of fiduciary duty arising from alleged insider trading. The consolidated complaint seeks declaratory and equitable relief, an unspecified amount of damages, and attorneys’ fees and costs.
On January 29, 2024, two purported stockholders filed a purported derivative lawsuit against certain of the Company’s former officers, certain current and former directors, and the Company as a nominal defendant, in the Delaware Court of Chancery. The complaint generally makes allegations similar to those set forth in the Consolidated Derivative Suit and asserts that the individual defendants breached their fiduciary duties by allowing the Company to make false and misleading statements and by failing to maintain an adequate system of oversight and controls. The complaint also asserts claims against certain individual defendants for breach of fiduciary duty arising from alleged insider trading.
The Company and the individual defendants deny all allegations of wrongdoing in the complaints and intend to vigorously defend the litigation. In light of the fact that the suit(s) is/are in an early stage and the claims do not specify an amount of damages, the Company cannot predict the ultimate outcome of the matter(s) and cannot reasonably estimate the potential loss or range of loss the Company may incur.
Securities and Exchange Commission and Department of Justice Investigations
The Company has received subpoenas from the SEC and the United States Department of Justice (“DOJ”) requesting documents and information concerning, among other matters, leronlimab, the Company’s public statements regarding the use of leronlimab as a potential treatment for COVID-19, HIV, and triple-negative breast cancer, related communications with the FDA, investors, and others, litigation involving former employees, the Company’s retention of investor relations consultants, and trading in the Company’s securities. Certain former Company executives and directors have received subpoenas concerning similar issues and have been interviewed by the DOJ and SEC, including the Company’s former CEO, Nader Z. Pourhassan.
On January 24, 2022, Mr. Pourhassan was terminated and removed from the Board of Directors and has had no role at the Company since. On December 20, 2022, the DOJ announced the unsealing of a criminal indictment charging both Mr. Pourhassan, and Kazem Kazempour, CEO of Amarex, a subsidiary of NSF International, Inc., and which had formerly served as the Company’s contract research organization (“CRO”). Mr. Pourhassan was charged with one count of conspiracy, four counts of securities fraud, three counts of wire fraud, and three counts of insider trading. Mr. Kazempour was charged with one count of conspiracy, three counts of securities fraud, two counts of wire fraud, and one count of making a false statement. That same day, the SEC announced charges against both Mr. Pourhassan and Mr. Kazempour for alleged violations of federal securities laws.
The Company is committed to cooperating fully with the DOJ and SEC and will continue to comply with the requests of each agency. The Company cannot predict the ultimate outcome of the DOJ or SEC investigations or the cases against Mr. Pourhassan, nor can it predict whether any other governmental authorities will initiate separate investigations or litigation. The investigations and any related legal and administrative proceedings could include a wide variety of outcomes, including the institution of administrative, civil injunctive or criminal proceedings involving the Company and/or former executives and/or former directors in addition to Mr. Pourhassan, the imposition of fines and other penalties, remedies and/or sanctions, modifications to business practices and compliance programs and/or referral
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to other governmental agencies for other appropriate actions. It is not possible to accurately predict at this time when matters relating to the investigations will be completed, the final outcome of the investigations, what additional actions, if any, may be taken by the DOJ or SEC or by other governmental agencies, or the effect that such actions may have on our business, prospects, operating results and financial condition, which could be material.
The DOJ and SEC investigations, including any matters identified in the investigations and indictments, could also result in (1) third-party claims against the Company, which may include the assertion of claims for monetary damages, including but not limited to interest, fees, and expenses, (2) damage to the Company's business or reputation, (3) loss of, or adverse effect on, cash flow, assets, results of operations, business, prospects, profits, or business value, including the possibility of certain of the Company's existing contracts being cancelled, (4) adverse consequences on the Company's ability to obtain or continue financing for current or future projects, and/or (5) claims by directors, officers, employees, affiliates, advisors, attorneys, agents, debt holders or other interest holders, or constituents of the Company or its subsidiaries, any of which could have a material adverse effect on the Company's business, prospects, operating results, and financial condition. Further, to the extent that these investigations and any resulting third-party claims yield adverse results over time, such results could jeopardize the Company's operations, exhaust its cash reserves, and could cause stockholders to lose their entire investment.
Settlement of Amarex Dispute
On July 2, 2024, the Company and Amarex, the Company’s former CRO, entered into an agreement settling a lawsuit filed by the Company in October 2021 (the “Settlement Agreement”).
The terms of the Settlement Agreement include: (i) the payment by Amarex of $
Note 10. Subsequent Events
The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the consolidated financial statements as of and for the three months ended August 31, 2024.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Certain information included in this quarterly report on Form 10Q contains, or incorporates by reference, forward-looking statements that involve risks, uncertainties, and assumptions that are difficult to predict. Words and expressions reflecting optimism, satisfaction or disappointment with current prospects, as well as words such as “believes,” “intends,” “estimates,” “expects,” “projects,” “plans,” “anticipates” and variations thereof, or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking.
Our forward-looking statements are not guarantees of performance, and actual results could vary materially from those contained in or expressed by such statements. In evaluating all such statements, we urge you to specifically consider various risks identified in Part II, Item 1A and elsewhere in this quarterly report, and those set forth in Item 1A. Risk Factors in the 2024 Form 10-K, any of which could cause actual results to differ materially from those indicated by our forward-looking statements.
Our forward-looking statements reflect our current views with respect to future events and are based on currently available financial, economic, scientific, and competitive data and information about current business plans.
Forward-looking statements include, among others, statements about leronlimab, its ability to have positive health outcomes, the Company’s ability to implement a successful operating strategy for the development of leronlimab and thereby create shareholder value, the ability to obtain regulatory approval of the Company’s drug products for commercials sales, and the strength of the Company’s leadership team. The Company’s forward-looking statements are not guarantees of performance, and actual results could vary materially from those contained in or expressed by such statements due to risks and uncertainties, including: (i) the regulatory determinations of leronlimab’s safety and effectiveness to treat the disease and conditions for which we are studying the product by the FDA and, potentially, drug regulatory agencies in other countries; (ii) the Company’s ability to raise additional capital to fund its operations; (iii) the Company’s ability to meet its debt and other payment obligations; (iv) the Company’s ability to enter into or maintain partnership or licensing arrangements with third parties; (v) the Company’s ability to recruit and retain key employees; (vi) the timely and sufficient development, through internal resources or third-party consultants, of analyses of the data generated from the Company’s clinical trials required by the FDA or other regulatory agencies in connection with applications for approval of the Company’s drug product; (vii) the Company’s ability to achieve approval of a marketable product; (viii) the design, implementation and conduct of clinical trials; (ix) the results of any such clinical trials, including the possibility of unfavorable clinical trial results; (x) the market for, and marketability of, any product that is approved; (xi) the existence or development of vaccines, drugs, or other treatments that are viewed by medical professionals or patients as superior to the Company’s products; (xii) regulatory initiatives, compliance with governmental regulations and the regulatory approval process; (xiii) legal proceedings, investigations or inquiries affecting the Company or its products; (xiv) stockholder actions or proposals with regard to the Company, its management, or its Board of Directors; (xv) general economic and business conditions; (xvi) changes in foreign, political, and social conditions; (xvii) and various other matters, many of which are beyond the Company’s control.
We intend that all forward-looking statements made in this quarterly report will be subject to the safe harbor protection of the federal securities laws pursuant to Section 27A of the Securities Act and Section 21E of the Exchange Act, to the extent applicable. Except as required by law, we do not undertake any responsibility to update these forward-looking statements to address events or circumstances that occur after the date of this quarterly report. Additionally, we do not undertake any responsibility to update you on the occurrence of any unanticipated events that may cause actual results to differ from those expressed or implied by these forward-looking statements.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our 2024 Form 10-K, and the other sections of this Form 10-Q, including our consolidated financial statements and related notes set forth in Part I, Item 1. This discussion and analysis contain forward-looking statements, including information about possible or assumed results of our financial condition, operations, plans, objectives and performance that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated and set forth in such forward-looking statements.
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Overview
The Company is a clinical stage biotechnology company focused on the clinical development and potential commercialization of its product candidate, leronlimab, which is being studied for oncology and inflammation, as well as other potential indications, including HIV and MASH.
Our current business strategy is the clinical development of leronlimab, which may include the following:
| 1. | Conducting a Phase II study of leronlimab in patients with relapsed/refractory microsatellite stable colorectal cancer; |
| 2. | Conducting a Phase II study exploring leronlimab and its effects on inflammation; and |
| 3. | Continuing our work researching and developing a new or modified long-acting version of leronlimab. |
Other programs that may be pursued include steatosis and liver fibrosis associated with MASH, either alone or as a combination therapy; and for metastatic triple-negative breast cancer with current standard of care, and/or exploring other trials with current standard of care and other cancer and immunologic indications.
We will need significant additional funding to execute the business strategy described above, including conducting additional pre-clinical studies and clinical trials, in furtherance of our efforts to obtain FDA approval to commercialize leronlimab. In addition to traditional fundraising the Company will pursue non-dilutive financing opportunities, such as license agreements and co-development or strategic partnerships, to help implement its strategy.
Corporate developments
During the quarter ended August 31, 2024, the Company completed a tender offer resulting in net proceeds of approximately $10.4 million.
On July 2, 2024, the Company and Amarex, the Company’s former CRO, entered into an agreement settling a lawsuit filed by the Company in October 2021 (the “Settlement Agreement”).The terms of the Settlement Agreement include: (i) the payment by Amarex of $12,000,000 to the Company, of which $10,000,000 was paid on execution of the Settlement Agreement and the balance will be paid on or before July 2, 2025; (ii) the release of the Company’s surety bond posted in the lawsuit and the return of the Company’s cash collateral in the amount of $6,500,000 provided as security to the surety; (iii) the crediting of all amounts claimed by Amarex as due and payable for its CRO services, totaling approximately $14,000,000, against the Company’s outstanding balance, reducing the balance to zero, with no funds required to be paid by the Company; and (iv) a mutual release of claims, resolving all legal claims between the parties.
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Results of Operations
Fluctuations in operating results
The Company’s operating results may fluctuate significantly depending on the outcomes, number and timing of pre-clinical and clinical studies, patient enrollment and/or completion rates in the studies, and their related effect on research and development expenses, regulatory and compliance activities, activities related to seeking FDA approval of our drug product, general and administrative expenses, professional fees, and legal and regulatory proceedings and related consequences. We require a significant amount of capital to continue to operate; therefore, we regularly conduct financing offerings to raise capital, which may result in various forms of non-cash interest expense or other expenses. Additionally, we periodically seek to negotiate settlement of debt payment obligations in exchange for equity securities of the Company and enter into warrant exchanges or modifications that may result in non-cash charges. Our ability to continue to fund operations will depend on our ability to raise additional funds. See the Liquidity and Capital Resources and Going Concern sections in this Item 2 of Part I and Part II, Item 1A Risk Factors included in this quarterly report and Item 1A. Risk Factors in our 2024 Form 10-K.
The results of operations were as follows for the periods presented:
Three months ended August 31, | Change | |||||||||||
(in thousands, except for per share data) |
| 2024 |
| 2023 |
| $ |
| % | ||||
Operating expenses: |
|
| ||||||||||
General and administrative | $ | 1,604 |
| $ | 2,688 | $ | (1,084) | (40) | % | |||
Research and development |
| (24,046) |
|
| 1,914 |
| (25,960) | (1,356) | ||||
Depreciation |
| 5 |
|
| 10 |
| (5) | (50) | ||||
Total operating expenses |
| (22,437) |
|
| 4,612 |
| (27,049) | (586) | ||||
Operating gain (loss) |
| 22,437 |
|
| (4,612) |
| 27,049 | 586 | ||||
Interest and other income (expense): | ||||||||||||
Interest income | 126 | — | 126 | 100 | ||||||||
Interest on convertible notes | (1,165) | (1,197) | 32 | 3 | ||||||||
Amortization of discount on convertible notes |
| (125) |
|
| (400) |
| 275 | 69 | ||||
Amortization of debt issuance costs | — | (366) | 366 | 100 | ||||||||
Loss on induced conversion | (1,180) | (2,004) | 824 | 41 | ||||||||
Finance charges |
| (14) |
|
| (912) |
| 898 | 98 | ||||
Loss on note extinguishment |
| — |
|
| (2,084) |
| 2,084 | 100 | ||||
(Loss) gain on derivatives | (852) | 4 | (856) | (21,400) | ||||||||
Total interest and other expenses |
| (3,210) |
|
| (6,959) |
| 3,749 | 54 | ||||
Gain (loss) before income taxes |
| 19,227 |
|
| (11,571) |
| 30,798 | 266 | ||||
Income tax benefit |
| — |
|
| — |
| — | — | ||||
Net income (loss) | $ | 19,227 | $ | (11,571) | $ | 30,798 | 266 | % | ||||
Income (Loss) per share: |
| |||||||||||
Basic | $ | 0.02 | $ | (0.01) | $ | 0.03 | 300 | |||||
Diluted | $ | 0.02 |
| $ | (0.01) | $ | 0.03 | 300 | % | |||
Weighted average common shares used in calculation of income (loss) per share: | ||||||||||||
Basic | 1,135,043 | 923,587 | 211,456 | 23 | ||||||||
Diluted | 1,198,287 | 923,587 | 274,700 | 30 | % | |||||||
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General and administrative (“G&A”) expenses
G&A expenses consisted of the following:
Three months ended August 31, | Change | ||||||||||
(in thousands) | 2024 |
| 2023 |
| $ |
| % | ||||
Salaries, benefits, and other compensation | $ | 425 | $ | 642 | $ | (217) | (34) | % | |||
Stock-based compensation |
| 136 |
| 503 | (367) | (73) | |||||
Legal fees | 376 | 317 | 59 | 19 | |||||||
Insurance | 323 | 416 | (93) | (22) | |||||||
Other |
| 344 |
| 810 | (466) | (58) | |||||
Total general and administrative | $ | 1,604 | $ | 2,688 | $ | (1,084) | (40) | % | |||
The decrease in G&A expenses for the three-month period ended August 31, 2024, compared to the same period in the prior year, was primarily due to a reduction in Stock-based compensation and Salaries, benefits and other compensation based upon a classification of clinical employees’ compensation split between expense categories.
Research and development (“R&D”) expenses
R&D expenses consisted of the following:
Three months ended August 31, | Change | ||||||||||
(in thousands) | 2024 |
| 2023 |
| $ |
| % | ||||
Clinical | $ | 737 | $ | 1,250 | $ | (513) | (41) | % | |||
Non-clinical |
| (14) |
| 250 | (264) | (106) | |||||
CMC |
| (30) |
| 169 | (199) | (118) |
| ||||
License and patent fees |
| 246 |
| 245 | 1 | 0 |
| ||||
Return of clinical expenses | (24,985) | — | (24,985) | 100 | |||||||
Total research and development | $ | (24,046) | $ | 1,914 | $ | (25,960) | (1,356) | % | |||
The decrease in R&D expense in the three-month period ended August 31, 2024, compared to the same period in the prior year, was primarily due to a return of clinical expenses related to the settlement of the Company’s litigation with Amarex in July 2024.
The future trend of our R&D expenses is dependent on the costs of any future clinical trials, our decision-making and timing of which indications on which to focus our future efforts toward the development and study of leronlimab, which may include pre-clinical and clinical studies for oncology, MASH and HIV related indications, as well as efforts to develop a long-acting new or modified therapeutic, the timing and outcomes of such efforts, and the timing of the final close-out of closed studies.
Interest and other income (expense)
Interest and other income (expense) consisted of the following:
Three months ended August 31, | Change | ||||||||||
(in thousands) | 2024 |
| 2023 |
| $ |
| % | ||||
Interest income | $ | 126 | — | $ | 126 | 100 | % | ||||
Interest on convertible notes payable | (1,165) | $ | (1,197) | 32 | (3) | ||||||
Amortization of discount on convertible notes |
| (125) |
| (400) | 275 | (69) | |||||
Amortization of debt issuance costs | — | (366) | 366 | (100) | |||||||
Loss on induced conversion |
| (1,180) |
| (2,004) | 824 | (41) |
| ||||
Finance charges |
| (14) |
| (912) | 898 | (98) |
| ||||
Loss on note extinguishment | — | (2,084) | 2,084 | 100 | |||||||
(Loss) gain on derivatives | (852) | 4 | (856) | (21,400) | |||||||
Total interest and other expenses | $ | (3,210) | $ | (6,959) | $ | 3,749 | (54) | % | |||
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The decrease in interest and other expenses for the three-month period ended August 31, 2024, compared with the same period in the prior year, was primarily due to the decrease in loss on note extinguishment and finance charges. The decrease in loss on note extinguishment is due to note extinguishments occurring in the prior period. The decrease in finance charges is due to restructuring the balance due to Samsung, which removed any future interest. The decrease in interest and other expenses was offset by an increase in loss on derivatives due to the value of the interest in the Amarex settlement received by investors in the Placement Agent Notes.
Liquidity and Capital Resources
As of August 31, 2024, we had a total of approximately $24.9 million in cash and approximately $69.6 million in short-term liabilities. We expect to continue to incur operating losses and require a significant amount of capital in the future as we continue to seek approval to commercialize leronlimab. There can be no assurance that future funding will be available to us when needed on terms that are acceptable to us, or at all. We sell securities and incur debt when the terms of such arrangements are deemed acceptable to both parties under then current circumstances and as necessary to fund our current and projected cash needs. As of September 30, 2024, we have approximately 199.3 million shares of common stock available for issuance in new financing transactions.
Since inception, the Company has financed its activities principally from the public and private sale of equity securities as well as with proceeds from issuance of convertible notes and related party notes payable. The Company intends to finance its future operating activities and its working capital needs largely from the sale of equity and debt securities. The sale of equity and convertible debt securities to raise additional capital is likely to result in dilution to stockholders and those securities may have rights senior to those of common shares. If the Company raises funds through the issuance of additional preferred stock, convertible debt securities or other debt or equity financing, the related transaction documents may contain covenants restricting its operations.
During the 2021 fiscal year, the Company entered into long-term convertible notes that are secured by all of our assets (excluding our intellectual property), and include certain restrictive provisions, including limitations on incurring additional indebtedness and future dilutive issuances of securities, any of which could impair our ability to raise additional capital on acceptable terms.
Future third-party funding arrangements may also require the Company to relinquish valuable rights. Additional capital, if available, may not be available on reasonable or non-dilutive terms.
Cash
The Company’s cash position of approximately $24.9 million and no restricted cash, as of August 31, 2024, increased by approximately $21.8 million and decreased by approximately $6.7 million, respectively, when compared to the balance of $3.1 million and $6.7 million, respectively, as of May 31, 2024. This increase was primarily the result of approximately $10.0 million cash received for a legal settlement, the release of the $6.7 million surety bond, and approximately $9.7 million in cash provided by financing activities during the three months ended August 31, 2024. Refer to Item 1, Note 2, Summary of Significant Accounting Policies – Going Concern, and the Going Concern discussion below for information regarding concerns about the Company’s ability to continue to fund its operations and satisfy its payment obligations and commitments. A summary of cash flows and changes between the periods presented is as follows:
Three months ended August 31, | Change | |||||||||
(in thousands) | 2024 |
| 2023 |
| $ | |||||
Net cash provided by (used in): | ||||||||||
Net cash provided by (used in) operating activities | $ | 5,440 | $ | (4,495) | $ | 9,935 | ||||
Net cash provided by/ used in investing activities | $ | — | $ | — | $ | — | ||||
Net cash provided by financing activities | $ | 9,667 | $ | 4,019 | $ | 5,648 | ||||
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Cash provided by operating activities
Net cash provided by operating activities totaled approximately $5.4 million during the three months ended August 31, 2024, representing an improvement of approximately $9.9 million compared to the three months ended August 31, 2023. The increase in the net amount of cash provided by operating activities was due primarily to a legal settlement of approximately $10.0 million. Refer to Note 9, Commitments and Contingencies – Legal Proceedings – Settlement of Amarex Dispute for further discussion.
Cash provided by financing activities
Net cash provided by financing activities totaled approximately $9.7 million during the three months ended August 31, 2024, an increase of approximately $5.6 million compared to the three months ended August 31, 2023. The increase in net cash provided was primarily the result of raising funds through a warrant exchange tender offer during the current period compared a lower amount raised through private placements of common stock and warrants in the prior period.
Pre-launch inventories
The Company previously capitalized pre-launch inventories which were subsequently charged-off in October 2022 for GAAP accounting purposes due to no longer qualifying for pre-launch inventory capitalization resulting from the withdrawal of the Company’s biologic license application submission. Work-in-progress and finished drug product inventories continue to be physically maintained, can be used for clinical trials, and can be sold commercially upon regulatory approval if the shelf-lives can be extended as a result of the performance of on-going stability tests. Raw materials continue to be maintained to that they can be used in the future if needed.
Convertible debt
April 2, 2021 Convertible Note
On April 2, 2021, we issued a convertible note with a principal amount of $28.5 million resulting in net cash proceeds of $25.0 million, after $3.4 million of debt discount and $0.1 million of offering costs. The note accrues interest daily at a rate of 10% per annum, contains a stated conversion price of $10.00 per share, and matures in April 2025. The April 2, 2021 Note required monthly debt reduction payments of $7.5 million for the six months beginning in May 2021, which could also be satisfied by payments on other notes held by the noteholder or its affiliates. Beginning six months after the issuance date, the noteholder may request monthly redemptions of up to $3.5 million. As of August 31, 2024, the outstanding balance of the April 2, 2021 Note, including accrued interest, was approximately $7.7 million.
April 23, 2021 Convertible Note
On April 23, 2021, we issued a convertible note with a principal amount of $28.5 million resulting in net cash proceeds of $25.0 million, after $3.4 million of debt discount and $0.1 million of offering costs. The note accrues interest daily at a rate of 10% per annum, contains a stated conversion price of $10.00 per share, and matures in April 2025. Beginning six months after the issuance date, the noteholder may request monthly redemptions of up to $7.0 million. As of August 31, 2024, the outstanding balance of the April 23, 2021 Note, including accrued interest, was approximately $37.9 million.
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Common stock
We have 1,750.0 million authorized shares of common stock. The table below summarizes intended uses of common stock.
As of | |
(in millions) | August 31, 2024 |
Issuable upon: | |
Warrant exercises | 232.2 |
Convertible preferred stock and undeclared dividends conversion | 37.8 |
Outstanding stock option exercises | 25.8 |
Reserved for issuance pursuant to future stock-based awards under equity incentive plan | 23.1 |
Reserved and issuable upon conversion of outstanding convertible notes | 12.0 |
Total shares reserved for future uses | 330.9 |
Common stock outstanding | 1,219.8 |
As of August 31, 2024, we had approximately 199.3 million unreserved authorized shares of common stock available for issuance. Our ability to continue to fund our operations depends on our ability to raise capital. The funding necessary for our operations may not be available on acceptable terms, or at all. If we deplete our cash reserves, we may have to discontinue our operations and liquidate our assets. In extreme cases, we could be forced to file for bankruptcy protection.
Off-Balance Sheet Arrangements
As of August 31, 2024, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our current or future financial condition, results of operations, liquidity, capital expenditures or capital resources.
Contractual Obligations
Refer to Note 3, Accrued Liabilities and Compensation, Note 4, Convertible Instruments and Accrued Interest, and Note 9, Commitments and Contingencies included in Part I, Item 1 of this Form 10-Q, and Notes 5 and 10 in Part II, Item 8 in the 2024 Form 10-K.
Legal Proceedings
The Company is a party to various legal proceedings described in Part I, Item 1, Note 9, Commitments and Contingencies – Legal Proceedings of this Form 10-Q. The Company recognizes accruals for such proceedings to the extent a loss is determined to be both probable and reasonably estimable. The best estimate of a loss within a possible range is accrued; however, if no estimate in the range is more probable than another, then the minimum amount in the range is accrued. If it is determined that a material loss is not probable but reasonably possible and the loss or range of loss can be estimated, the possible loss is disclosed.
It is not possible to predict the outcome of these proceedings, including the defense and other litigation-related costs and expenses that may be incurred by the Company, as the outcomes of legal proceedings are inherently uncertain, and the outcomes could differ significantly from recognized accruals. Therefore, it is possible that the ultimate outcome of any proceeding, if in excess of a recognized accrual, if any, could be material to the Company’s consolidated financial statements. As of August 31, 2024, the Company had not recorded any accruals related to the outcomes of the legal matters discussed in this Form 10-Q.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As presented in
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the accompanying consolidated financial statements, the Company had losses for all periods presented, except for the current quarter. Net income of $19.2 million in the current quarter resulted from the recovery of approximately $25.0 million in clinical expenses due to the settlement of the Company’s litigation with Amarex, which is a non-recurring event. The Company has an accumulated deficit of approximately $872.3 million as of August 31, 2024. These factors, among several others, raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company’s continuance as a going concern is dependent upon its ability to obtain additional operating capital, complete the development of its product candidate, leronlimab, obtain approval to commercialize leronlimab from regulatory agencies, continue to outsource manufacturing of leronlimab, and ultimately achieve revenues and attain profitability. The Company plans to continue to engage in research and development activities related to leronlimab and a new or modified longer-acting therapeutic for multiple indications and expects to incur significant research and development expenses in the future, primarily related to its regulatory compliance, including performing additional clinical trials and seeking regulatory approval of its product candidate for commercialization. These research and development activities are subject to significant risks and uncertainties. The Company intends to finance its future development activities and its working capital needs primarily from the sale of equity and debt securities, combined with additional funding from other sources. However, there can be no assurance that the Company will be successful in these endeavors. See also Liquidity and Capital Resources above.
New Accounting Pronouncements
Refer to Part I, Item 1, Note 2, Summary of Significant Accounting Policies – Recent Accounting Pronouncements in this Form 10-Q for the discussion.
Critical Accounting Estimates
This discussion and analysis of the Company’s financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our financial statements and related disclosures requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company’s critical accounting estimates are described under the heading Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates in our 2024 Form 10-K.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes from the information previously reported in Part II, Item 7A of the 2024 Form 10-K.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Our management, with the participation of our Chief Executive Officer and Interim Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of August 31, 2024 (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our
26
Chief Executive Officer and Interim Chief Financial Officer concluded, based upon the evaluation described above, that as of August 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level.
During the quarter ended August 31, 2024, there have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – Other Information
Item 1. Legal Proceedings
For a description of pending material legal proceedings, please see Note 9, Commitments and Contingencies–Legal Proceedings, of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Item 1A. Risk Factors
There have been no material changes in the risk factors that were included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024, which was filed with the SEC on August 15, 2024. You should carefully consider those risk factors in addition to other information in this Form 10-Q.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuances of Shares in Convertible Note Exchange Transactions
In August 2024, the Company and the holder of its April 23, 2021 Note, in partial satisfaction of the holder’s redemption rights, entered into an exchange agreement pursuant to which a portion of the original note was partitioned into a new note with an aggregate principal amount of $0.5 million. The new note was exchanged concurrently with issuance of a total of approximately 4.9 million shares of common stock. The Company relied on the exemption provided by Section 3(a)(9) of the Securities Act in connection with the exchange transaction.
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Item 6. Exhibits
Incorporated by Reference | ||||||||
Exhibit |
| Description | Filed | Form | Exhibit No. | Filing Date | ||
31.1 | Rule 13a-14(a) Certification by Principal Executive Officer of the Registrant. | X | ||||||
31.2 | Rule 13a-14(a) Certification by Principal Financial Officer of the Registrant. | X | ||||||
32 | X | |||||||
101.INS | Inline XBRL Instance Document. | X | ||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | X | ||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | X | ||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | X | ||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | X | ||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | X | ||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | X | ||||||
*Furnished, not filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| CYTODYN INC. | |
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| (Registrant) | |
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|
|
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Dated: October 15, 2024 |
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| /s/ Jacob Lalezari |
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|
| Jacob Lalezari |
|
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| Chief Executive Officer |
|
|
| (Principal Executive Officer) |
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|
|
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Dated: October 15, 2024 |
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| /s/ Mitchell Cohen |
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|
| Mitchell Cohen |
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| Interim Chief Financial Officer |
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|
| (Principal Financial and Accounting Officer) |
30