美国
证券交易委员会 及交易所
华盛顿特区，20549
表单
截至年度季度结束
在从________到________的过渡期间
委员会
案件编号
（注册人在章程中指定的正确名称）
(州 或司法管辖区 公司设立或组织 |
国税局雇主 识别号码 |
| (主要 执行人员之地址) | (邮政编码) |
根据交易所法规（17 CFR 240.14a-12）第14a-12规定的招股材料
根据法案第12(b)节注册的证券:
| 每个类别的标题 | 交易标志 | 在哪个交易所上市的名字 | ||
勾选表示公司已按照证券交易法第13或15(d)条款的规定，在过去12个月（或公司需要提交此类报告的较短期限内）提交了所有所需的报告；并且公司在过去90天内一直受到此类提交报告的要求。
标示
勾选该项，表示申报人于过去12个月（或更短期间，申报人必须申报此类档案的期间）内已按照法规S-t第405条（本章节第232.405条）要求递交每一个互动式资料档案。
请标示是否有以下选项的适用：大型加速报表申报者、加速报表申报者、非加速报表申报者、较小报表申报 公司或新兴成长公司。请参阅《交易所法》第120亿2条中「大型加速报表申报者」、「加速报表申报者」、「较小 报表申报公司」和「新兴成长公司」的定义。
| 大型及加速提交者 | ☐ | 加速提交者 | ☐ |
| ☒ | 较小的报告公司 | ||
| 新兴成长型公司 |
如为新兴成长企业，则应打勾选项表示申报人已选择不使用交易所法第13(a)条所提供的任何新或修订财务会计准则延长过渡期遵守。
请打勾表示公司是否为壳公司（根据《交易所法》第120亿2条的定义）。是 ☐ 否
2024年11月5日，普通股份的流通数量为 .
目录
| 页码 号码。 | ||
| 第一部分 - 财务资讯 | ||
| 项目1。 | 基本报表 | |
| 截至2024年9月30日的总体资产负债表（未经审核）和2023年12月31日。 | F-1 | |
| 截至2024年9月30日及2023年的三个月和九个月的总体业务运作简明综述（未经审核）。 | F-2 | |
| 截至2024年9月30日及2023年的三个月和九个月的总体股东权益变动简明综述（未经审核）。 | F-3 | |
| 截至2024年9月30日和2023年的九个月现金流量总表（未经审核）。 | F-4 | |
| 基本报表注记 | F-5 | |
| 项目2。 | 财务状况和业绩的管理讨论和分析 | 5 |
| 项目3。 | 市场风险相关数量和质量的披露 | 15 |
| 项目4。 | 控制和程序 | 15 |
| 其他资讯第二部分 | 15 | |
| 项目 1. | 法律诉讼 | 15 |
| 项目 1A。 | 风险因素 | 16 |
| 项目 2. | 未注册的股票销售和收益使用 | 16 |
| 项目 3. | 债券不履行标准 | 16 |
| 项目 4. | 矿山安全披露 | 16 |
| 项目5。 | 其他信息 | 16 |
| 项目6。 | 附件 | 16 |
| 签名 | 17 | |
| 2 |
关于前瞻性陈述和行业数据的警语
本季度10-Q表格中包含根据《证券法》第27A条修订 （以下简称“证券法”）和《证券交易法》第21E条修订（以下简称“交易所法”）的安全港条款发布的前瞻性陈述。这些陈述可能被识别为“可能”、“应该”、“期望”、“意图”、“计划”、“预测”、“相信”、“估计”，“预测”、“潜在”、“持续”或其他可比较的术语。我们的前瞻性陈述基于我们公司的一系列期望、假设、估计和预测，并非对未来结果或业绩的保证，并涉及重大风险和不确定性。我们实际上可能无法实现这些前瞻性陈述中披露的计划、意图或期望。实际结果或事件可能与这些前瞻性陈述中披露的计划、意图和期望不同。我们的业务和我们的前瞻性陈述涉及重大已知和未知的风险和不确定性，包括与我们的陈述相关的风险和不确定性：
| ● | 我们的 预计财务状况及预估现金消耗率； | |
| ● | 我们的 有关开支、未来收入和资本需求的估算； | |
| ● | 我们的 能够继续作为持续的企业； | |
| ● | 我们的 需要筹集大量额外资金来资助我们的营运； | |
| ● | 该 我们临床试验的成功、成本和时间； | |
| ● | 我们的 在进行我们的临床试验时依赖第三方； | |
| ● | 我们的 能够获得所需的监管批准以推销和商业化我们的产品候选产品； | |
| ● | 该 健康疫情对我们的业务、临床试验、研究计划、医疗保健系统或全球经济的影响 整体而言； | |
| ● | 该 临床前和临床试验的结果可能表明我们目前的产品候选产品或任何未来的产品候选 我们可能会寻求发展不安全或无效； | |
| ● | 该 我们或其他人进行的市场调查结果； | |
| ● | 我们的 为我们目前和未来的产品候选人获得和维持知识产权保护的能力； | |
| ● | 我们的 保护我们的知识产权的能力，以及我们可能因应执行诉讼而产生重大成本 或保护我们的知识产权； | |
| ● | 该 第三方可能声称我们或我们的第三方授权人侵犯、滥用或以其他方式侵犯他们的 知识产权，以及我们可能会产生大量费用，并且需要花费大量时间保护 对我们的索偿； | |
| ● | 我们的 依赖第三方供应商和制造商； | |
| ● | 该 具备竞争性的治疗和产品的成功； | |
| ● | 我们的 能够扩大我们的组织以配合潜在成长以及我们保留和吸引关键人员的能力； |
| 3 |
| ● | 我们可能会因产品责任诉讼而遭受巨额成本，这些诉讼可能会限制我们对产品候选者的商业化； | |
| ● | 市场是否接受我们的产品候选者，当前产品候选者和我们可能开发的任何未来产品候选者的潜在市场的规模和增长以及我们是否能够满足这些市场的需求；以及 | |
| ● | 我们商业化能力（包括销售和营销能力）的成功发展。 |
所有板块的前瞻性陈述仅限于本第10-Q表格的提交日期。在每种情况下，实际结果可能与这些前瞻性资讯有所不同。我们不能保证这些期望或前瞻性陈述将被证明正确。在本第10-Q表格中提及的一个或多个风险因素或风险和不确定性发生或出现任何重大不利变化，或包含在我们的其他公开披露或其他定期报告或其他文件或提交给美国证券交易委员会（“SEC”）的文件可能会对我们的业务，前景，财务状况和经营成果产生重大不利影响。除非法律要求，否则我们不打算更新或修订任何此类前瞻性陈述，以反映实际结果，计划变更，假设，估计或投资组合的变化，或发生在本第10-Q提交日之后影响此类前瞻性陈述的其他情况，即使这些结果，变化或情况清楚表明任何前瞻性资讯也不会实现。我们在本第10-Q提交后公开的任何声明或披露，如果对本第10-Q中包含的任何前瞻性陈述进行修改或影响，将被视为修改或取代此类陈述在本第10-Q中的陈述。
本季度10-Q表格的内容可能包括市场数据和某些行业数据和预测，我们可能从内部公司调查、市场调研、顾问调查、公开可得信息、政府机构的报告和行业出版物、文章和调查中获得。行业调查、出版物、顾问调查和预测通常声明所包含的信息来源认为是可靠的，但不保证此类信息的准确性和完整性。虽然我们相信这样的研究和出版物是可靠的，但我们没有独立验证来自第三方来源的市场和行业数据。
| 4 |
THARIMMUNE， INC.
简明合并资产负债表
| 2024年9月30日 | 12月31日， | |||||||
| (未经查核) | 2023 | |||||||
| 资产 | ||||||||
| 流动资产合计 | ||||||||
| 现金及现金等价物 | $ | $ | ||||||
| 预付费用及其他流动资产 | ||||||||
| 全部流动资产 | ||||||||
| 资产总额 | $ | $ | ||||||
| 负债及股东权益 | ||||||||
| 流动负债 | ||||||||
| 应付账款 | $ | $ | ||||||
| 应计费用 | ||||||||
| 保险保费融资负债 | ||||||||
| 流动负债合计 | ||||||||
| 总负债 | ||||||||
| 负债和承诺（见附注5） | ||||||||
| 股东权益 | ||||||||
| 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。 每股面额为 股份已授权 2024年9月30日和2023年12月31日，已发行和流通的股份 | ||||||||
| 0.01面值， 股份数量 已认可， 和 股份发行和 股份及 股份流通 截至2024年9月30日和2023年12月31日，分别* | ||||||||
| 资本公积额额外增资 | ||||||||
| 累积亏损 | ( | ) | ( | ) | ||||
| 按成本核算的库藏股 2024年9月30日及2023年12月31日的库藏股份 | ( | ) | ( | ) | ||||
| 股东权益总额 | ||||||||
| 负债和股东权益总额 | $ | $ | ||||||
| * |
附注是这些简明综合财务报表的不可分割部分。
| F-1 |
THARIMMUNE， INC.
综合损益表
(未经查核)
| 截至九月三十日止的三个月中， | 截至九月三十日止九个月中， | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 营运开支 | ||||||||||||||||
| 研究与开发 | $ | $ | $ | $ | ||||||||||||
| 一般及行政 | ||||||||||||||||
| 营运开支总额 | ||||||||||||||||
| 营运损失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他收入（费用） | ||||||||||||||||
| 利息支出 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 利息收入 | ||||||||||||||||
| 其他收入总额，净值 | ||||||||||||||||
| 净亏损 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 每股净亏损： | ||||||||||||||||
| 基础和稀释 | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| 超出的普通股数 * 的加权平均数目： | ||||||||||||||||
| 基础和稀释 | ||||||||||||||||
| * |
附注是这些简明综合财务报表的不可分割部分。
| F-2 |
THARIMMUNE， INC.
股东权益变动总表
截至2024年和2023年9月30日的三个和九个月
(未经查核)
| 普通股 | 额外的 实收资本 | 累计 | 库藏股 | |||||||||||||||||||||||||
| 股份 | 金额 | 资本 | 赤字累计 | 股份 | 金额 | 总计 | ||||||||||||||||||||||
| 截至2023年9月30日止三个月： | ||||||||||||||||||||||||||||
| 2023年6月30日结余 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| 根据服务协议发行股票 | - | |||||||||||||||||||||||||||
| 净损失 | - | ( | ) | - | ( | ) | ||||||||||||||||||||||
| 股票给予报酬 | - | - | ||||||||||||||||||||||||||
| 2023年9月30日的余额 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| 截至2023年9月30日止九个月： | ||||||||||||||||||||||||||||
| 2022年12月31日的结存 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| 根据服务协议进行的股票发行 | - | |||||||||||||||||||||||||||
| 公开发行，扣除发行成本$ | - | |||||||||||||||||||||||||||
| 净损失 | - | ( | ) | - | ( | ) | ||||||||||||||||||||||
| 股票给予报酬 | - | - | ||||||||||||||||||||||||||
| 2023年9月30日的余额 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| 截至2024年9月30日为止的三个月： | ||||||||||||||||||||||||||||
| 2024年6月30日资产负债表 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| 与Form S-3注册声明相关的发行成本 | - | ( |
) | - | ( |
) | ||||||||||||||||||||||
| 免现金行使预先资金化认股权证 | ( |
) | - | |||||||||||||||||||||||||
| 净损失 | - | ( | ) | - | ( | ) | ||||||||||||||||||||||
| 股票给予报酬 | - | - | ||||||||||||||||||||||||||
| 2024年9月30日结余 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| 截至2024年9月30日止九个月： | ||||||||||||||||||||||||||||
| 2023年12月31日结余 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| 根据服务协议进行股票发行 | - | |||||||||||||||||||||||||||
| 私募股权公开发行，扣除$发行成本 | - | |||||||||||||||||||||||||||
| 与Form S-3注册声明相关的发行成本 | - | ( |
) | - | ( |
) | ||||||||||||||||||||||
| 无现金行使预先资助的认股权证 | ( | ) | - | |||||||||||||||||||||||||
| 净损失 | - | ( | ) | - | ( | ) | ||||||||||||||||||||||
| 股票给予报酬 | - | - | ||||||||||||||||||||||||||
| 2024年9月30日结余 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
附注是这些简明综合财务报表的不可分割部分。
| F-3 |
THARIMMUNE, INC.
简明财务报表现金流量表
(未经查核)
| 截至9月30日的九个月 | ||||||||
| 2024 | 2023 | |||||||
| 经营活动现金流量： | ||||||||
| 净损失 | $ | ( | ) | $ | ( | ) | ||
| 调整为使净亏损转化为经营活动所使用现金： | ||||||||
| 股票给予报酬 | ||||||||
| 根据服务协议进行股票发行 | ||||||||
| 营运资产增加： | ||||||||
| 预付费用及其他流动资产 | ( | ) | ( | ) | ||||
| 营业负债的增加（减少）: | ||||||||
| 应付账款 | ( | ) | ||||||
| 应计费用 | ( | ) | ||||||
| 经营活动所使用之净现金流量 | ( | ) | ( | ) | ||||
| 投资活动提供的（使用的）净现金 | ||||||||
| 来自筹资活动的现金流量: | ||||||||
| 私募公开股权再融资所筹集的普通股款项 | ||||||||
| 普通股公开发行筹集的款项，扣除承销折扣和发行成本 | ||||||||
| 支付推迟发售成本 | ( | ) | ( | ) | ||||
| 保险保费融资负债的款项 | ||||||||
| 弥补保险保费融资负债 | ( | ) | ( | ) | ||||
| 筹资活动提供的净现金 | ||||||||
| 现金减少净额 | ( | ) | ( | ) | ||||
| 期初现金余额 | ||||||||
| 期末现金余额 | $ | $ | ||||||
| 补充关于非现金筹资活动的披露： | ||||||||
| 普通股股票发行： | ||||||||
| 预付行销和投资者相关咨询服务 | $ | $ | ||||||
| 研究和开发服务授权协议无形许可资产 | $ | $ | ||||||
附带附注是这些简明综合财务报表中不可或缺的一部分。
| F-4 |
THARIMMUNE， INC.
注释 简明合并基本报表附注
(未经查核)
注意 1 – 业务和流动性描述
业务性质
Tharimmune，Inc.（前身为Hillstream BioPharma, Inc.）（下称“Tharimmune”或“公司”）成立于2017年3月28日，为一家德拉瓦C型公司。截至2024年9月30日，Tharimmune拥有一家全资子公司：Hillstream Oncology, Inc.（下称Hillstream Oncology），前身为Hb Pharma Corp。
Tharimmune 是一家临床阶段的生物技术公司，开发罕见、炎症性和肿瘤性疾病高度未满足需要的治疗候选药物。2023年11月3日，该公司与 Avior 公司（代表 Avior Bio, LLC）签订了专利许可协议（「Avior 许可协议」），根据协议，其获得了独家可转让权和许可权，以在世界各地开发、使开发、制造、使制造、使用、卖出、进口、出口和商业化TH104和TH103，并在上述相关事项中实践许可技术（于Avior 许可协议中定义）。2023年2月，美国食品和药物管理局（FDA）批准了TH104的新药试验申请（IND）。TH104通过影响多种受体实现双重作用，已知可抑制慢性、令人困扰的瘙痒或「难以控制的发痒」。对于TH104，该公司打算首先寻求批准，用于治疗原发性胆道疾病患者中中度至严重的慢性瘙痒，该疾病是一种罕见的肝脏疾病，目前没有已知治愈方法，其中70%以上的患者患有令人困扰的慢性瘙痒。至于TH103，公司打算开发产品候选药物，在与监管机构讨论后，可能提交一份IND。
2024年9月11日，Tharimmune与Intract Pharma Limited（“Intract”）签订了专利许可协议（“Intract协议”），根据该协议，公司独家许可了INt-023/TH023，一种口服抗肿瘤坏死因子-α（TNF-α）单克隆抗体英夫利西麦（infliximab）。 Infliximab是一种含有灵长类和人类元件的纯化的重组DNA衍生的嵌合igg单克隆抗体蛋白质，可以抑制肿瘤TNF-α。根据协议的条款，公司获得了全球（韩国以外地区）Intract的Soteria®和Phloral®递送平台的开发和商业化权利，以及用于口服产品开发计划中的已存在的英夫利西麦供应协定。
公司还在开发一系列新型治疗候选药物，针对经过验证的高价值免疫肿瘤学（“IO”）标靶，包括人类表皮生长因子受体2（“HER2”）、人类表皮生长因子受体3（“HER3”）和程序性细胞死亡蛋白1（“PD-1”）。公司正在开发包括双特异性抗体、抗体药物连结物（“ADC”）和小分子量牛源Picobodies™或抗体“旋钮”区域等抗体，这些抗体有潜力比全尺寸抗体更有效地针对并结合“不可药用”的表位。公司正在推进TH3215，一种针对HER2和HER3的双特异性抗体，该抗体针对一个新型“桥接表位”，涵盖HER2细胞外区域的多个区段，以及阻断HER3细胞外区域的配体依赖和非依赖性，将于2024年进入IND启动研究阶段。此外，公司预计TH0059，一种HER2/HER3双特异性ADC（“bsADC”），和TH1940，一种PD-1 Picobody，将于2025年进入IND启动研究阶段。
姓名 更改
2023年9月21日，Hillstream BioPharma, Inc.向特拉华州州务卿提交了一份名为「Amendment」的公司章程修订证明（作为修订后的「Certificate of Incorporation」），根据该修订，公司更名为Tharimmune, Inc.，生效日期为2023年9月25日。该更名已于2023年9月25日在纳斯达克资本市场生效，并且公司的普通股票已经在纳斯达克资本市场以新名称和新的股票代码“THAR”进行交易。
| F-5 |
另外，在2024年5月23日，Hb Pharma corp.向德拉瓦州州务卿提交了一份修订后的公司章程证书，根据此证书，该公司将其名称更改为Hillstream Oncology, Inc.，生效日期为2024年5月23日。
流动性 和持续经营能力
随附的简明合并基本报表是根据公司将作为持续经营的前提，其中包括资产的实现和负债在业务正常进程中的清偿。截至2024年9月30日止九个月，公司遭遇运营亏损约为xxx美元，运用于营运活动的净现金约为xxx百万美元，截至2024年9月30日累积赤字约为xxx百万美元。到2024年9月30日止，公司主要通过其普通股的公开和私人发行来资助其业务。公司从2022年1月14日的首次公开募股（“IPO”）中获得净收益约为xxx百万美元。此外，公司于2023年5月2日结束了一次普通股的公开发行（“五月募资”），公司从五月募资中获得的净收益约为xxx百万美元。公司最近于2023年11月30日结束了另一次公开募股（“十一月募资”），公司从十一月募资中获得的净收益约为xxx百万美元。详细资讯请参见简明合并基本报表的注3，关于五月和十一月的募资。此外，于2024年6月7日，公司以根据“架构”注册程序提交了一份Form S-3的注册声明到SEC，根据“ATm协议”，公司可随时透过适用的销售经理一次或多次出售普通股达到总额xxx百万美元的一个或多个募资。更进一步地，于2024年6月17日，公司举行了一次私募（“PIPE募资”）与某些合格投资者，包括向这些投资者提供公司普通股的发行和/或预先资助的warrants以取得公司普通股以及取得公司普通股的warrants，公司的净收益约为xxx百万美元。
基于公司有限的营运历史、持续的负现金流、目前的计划和可用资源，公司需要大量的额外资金来支持未来的营运活动。公司得出结论，目前的情况和持续面临的流动性风险对公司的营运能力构成重大的怀疑，这种怀疑至少会在发布这些合并财务报表的日期之后的一年内持续存在。附带的简明合并财务报表不包括任何调整，如果公司无法继续作为营运实体，这些调整可能是必要的。
公司可能通过出售额外的股权或债务证券、进行战略合作、获得补助款，或其他安排，或以上所述的组合来筹集额外资金以支持其未来业务运营；然而，无法保证公司将能够按照公司可接受的条件及时或根本获得额外资本。未能获得足够的额外资金可能会不利影响公司实现其业务目标和产品开发时间表的能力，并可能导致公司延迟或终止临床试验活动，这可能对公司业绩产生重大不利影响。
其他 风险和不确定因素
无法保证该公司的产品一经批准就会被市场接受，也无法保证未来的产品能以可接受的成本和合适的性能特征开发或制造，或者如果有的话能够成功销售。该公司面临著与生物制药公司相同的风险，包括但不限于：新技术创新的发展，对关键人员的依赖，专利技术的保护，遵守政府法规，产品责任，产品市场接受的不确定性以及获得额外融资的需求。该公司依赖于第三方供应商。该公司的产品在开始在美国进行商业销售之前，需要获得FDA的批准或清关。在公司可能许可或销售其产品的外国司法管辖区域中，也需要获得批准或清关。无法保证该公司的产品将获得所有所需的批准或清关。
| F-6 |
意向书
2024年9月30日，公司与Intract签署了一份非约束性独家意向书（LOI），根据该意向书，公司将以新发行的受限普通股交换全部在外流通的Intract私人持有的普通股。根据LOI的条款，在签署明确协议并完成合并后，Intract的股东将拥有公司的完全所有股份。 ％的公司股权，Intract将成为公司的全资子公司。截至2024年9月30日结束的三个月和九个月内，公司支付了一笔独家费用，为了签署LOI。
备注 2 - 重要会计政策摘要
报表说明基础
这些附注的未经审核的总体进步报表是根据美国证券交易委员会（“SEC”）的规则和条例，由公司编制的。 这些简明的总体财务报表未经审核，在管理方面的看法中，包括所有必要的调整（包括正常重复性调整和应付款）以公平地报告所呈现期间的资产负债表、营运业绩和现金流量，符合美国公认会计原则（“U.S. GAAP”）的准则。 截至2024年9月30日的九个月营运业绩不一定代表可能预期到达的截至2024年12月31日，或任何其他未来期间的结果。 根据SEC的规则和条例来进行暂时报告，通常包含在根据U.S. GAAP编制的年度财务报表中的某些信息和附注披露已被省略。 公司的财务状况、营运业绩和现金流量以美元呈现。 这些简明的总体财务报表和相关附注应与公司于2024年2月23日向SEC提交的10-K表格中包含的截至2023年12月31日年度财务报表和相关附注一起阅读。 公司在一个板块运营。
拆股并股
于2023年11月17日，公司通过修订公司章程，在德拉瓦州州务卿处提交并经公司董事会和股东批准，对其普通股进行了一次按比例进行的股票合并，比例是1股合并成25股。在2024年5月24日，公司再次根据修订的公司章程，在德拉瓦州州务卿处提交并经公司董事会和股东批准，对其普通股进行了另一次按比例进行的股票合并，比例是1股合并成25股。不论是哪次股票合并，公司普通股的面值都没有调整。所有报表中关于已发行和流通的普通股的张数和每股数量在呈现的所有时期均已进行了追溯性调整，以反映这些股票合并。
合并财务报表的准则
简明合并基本报表包括Tharimmune及其全资子公司Hb和Farrington Therapeutics LLC的账户。所有重要的公司间余额和交易已经在合并中被消除。于2023年2月27日，该公司向特拉华州州务区提交了一份关于Farrington Therapeutics LLC的注销证明书。
使用估计值
依据美国通用会计准则编制财务报表时，管理层需要进行估计和假设，这些将影响资产和负债的报告金额，以及财务报表日期的潜在资产和负债的披露，以及报告期间的营业收入和费用金额。管理层的估计基于历史经验和在当时认为合理的假设。估计过程通常会产生一系列可能合理的未来结果估计，管理层必须从该合理估计范围内选择一个金额。估计可能最显著影响获得简明综合财务报表的领域包括研发费用认列、普通股和基于股份的报酬估值、递延税款资产拨备、债务相关工具估值，以及对持续经营的现金流假设。尽管管理层认为所使用的估计是合理的，实际结果可能与所使用的估计有所不同。
| F-7 |
信用风险的集中度
该公司与各金融机构保持现金余额。在这些机构的账户余额由联邦存款保险公司保险，最高达$
现金及现金等价物
公司在购入时拥有三个月或更短原始到期日的所有高流动性投资，被视为等价现金。如有任何等价现金，均按成本列示，主要包括货币市场账户。
研发
研究和开发成本按照支出记录处理。研究和开发费用包括与研究和开发活动相关的人员费用，包括由第三方承包商进行研究、进行临床试验和制造药品供应和材料的费用。公司根据其对外部服务提供者的服务进行估算和费用记录，纳入合同研究组织和临床调查者的费用。这些估算包括第三方提供的服务水平、临床试验中的患者招募、第三方所承担的行政费用和完成的其他指标。
公司在财务报表中承认因向员工、非员工和董事发行股票为报酬而导致的成本作为费用，该费用根据每项股票奖励的公平价值测量，在必要的服务期间内在简明的合并营业报表中作为费用支出。对于向员工、非员工和董事发放的每项期权授予，其公平价值在授予日使用Black-Scholes期权定价模型估计，扣除实际放弃。公平价值依直线基础分摊为报酬成本，分摊期即为股票奖励的必要服务期，通常为获准期。
期权授予的每股公平价值是根据准予日期使用Black-Scholes期权定价模型进行估算的。在2022年1月12日之前，公司是一家私人公司，公司的普通股自该日期以来才开始公开交易。因此，公司缺乏特定公司的历史和隐含波动率信息。因此，它基于与一组公开交易的同行公司的波动率相关的历史数据来估计其预期股票波动率。授予的期权预期期限为五至七年。无风险利率是根据准予奖励时的美国国库券收益率曲线来确定，时间段大致等于奖励的预期期限。
公允价值衡量
本公司遵循财务会计准则委员会（FASB）的会计标准编码（ASC）820号来应用会计准则，该准则建立了测量公平价值的框架，并澄清了该框架内公平价值的定义。ASC 820定义公平价值为退出价格，即在公司的主要市场或最有利市场上，市场参与者在测量日期进行有序交易时将收到的资产价格或支付的负债价格。ASC 820建立的公平价值层次结构通常要求实体在测量公平价值时最大限度地使用可观察的输入，并尽量减少使用不可观察的输入。可观察的输入反映了市场参与者在定价资产或负债时将使用的假设，并且是根据从报告实体独立获得的市场数据开发的。不可观察的输入反映了实体根据市场数据和实体对市场参与者在定价资产或负债时将使用的假设的判断，并且必须根据在该情况下可用的最佳信息制定。 公平价值测量（ASC 820）确立了一个测量公平价值并在其框架内澄清公平价值定义的框架。ASC 820将公平价值定义为退出价格，即在公司的主要市场或最有利市场上，在测量日期上，市场参与者可获得的资产价格或支付的负债价格。在ASC 820建立的公平价值层次结构中，一般要求实体在测量公平价值时最大化使用可观察的输入，并在测量公平价值时最小化使用不可观察的输入。可观察的输入反映了市场参与者在定价资产或负债时将使用的假设，并且是根据自报告实体独立获得的市场数据开发的。不可观察的输入反映了实体根据市场数据和实体对市场参与者在定价资产或负债时将使用的假设的判断，并且必须根据该情况下最好的现有信息制定。 公平价值测量（ASC 820）确立了一个测量公平价值并在其框架内澄清公平价值定义的框架。ASC 820将公平价值定义为退出价格，即在公司的主要市场或最有利市场上，在测量日期上，市场参与者可获得的资产价格或支付的负债价格。在ASC 820建立的公平价值层次结构中，一般要求实体在测量公平价值时最大化使用可观察的输入，并在测量公平价值时最小化使用不可观察的输入。可观察的输入反映了市场参与者在定价资产或负债时将使用的假设，并且是根据自报告实体独立获得的市场数据开发的。不可观察的输入反映了实体根据市场数据和实体对市场参与者在定价资产或负债时将使用的假设的判断，并且必须根据该情况下最好的现有信息制定。
| F-8 |
The carrying value of the Company’s cash, prepaid expenses, accounts payable, and accrued expenses approximate fair value because of the short-term maturity of these financial instruments.
The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below:
| Level 1 Inputs: Observable inputs such as quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. | |
| Level 2 Inputs: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for assets or liabilities recently traded in active markets, with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals, as well as quoted prices for identical or similar assets or liabilities in markets that are not active. | |
| Level 3 Inputs: Unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities, that reflect the reporting entity’s own assumptions. |
Deferred Offering Costs
Deferred
offering costs consists primarily of legal, accounting, underwriters’ fees, printing, and filing fees that are incurred prior to
an offering of the Company’s common stock and are initially capitalized and then subsequently reclassified to additional paid-in
capital upon completion of the offering. If an offering is not completed, any associated offering costs will be expensed immediately
upon termination of the offering. At September 30, 2024, the Company incurred $
Insurance Premium Financing Liability
In
January 2023, the Company entered into an insurance premium financing agreement for $
In
January 2024, the Company entered into an insurance premium financing agreement for $
Retirement Plan
The
Company has a 401(k) defined contribution plan which covers all employees that meet the plan’s eligibility requirements. Eligible
employees may contribute a percentage of their salary subject to certain limitations. The Company makes a discretionary match which is
currently equal to 3% of employee contributions. Total company contributions to the plan were $
| F-9 |
Income Taxes
The Company accounts for income taxes using the asset-and-liability method in accordance with FASB ASC Topic 740, Income Taxes (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
Deferred income taxes are recognized for the tax effect of temporary differences between the financial statement carrying amount of assets and liabilities and the amounts used for income tax purposes and for certain changes in valuation allowances. Valuation allowances are recorded to reduce certain deferred tax assets when, in management’s estimation, it is more-likely-than-not that a tax benefit will not be realized. A full valuation allowance has been recognized for all periods since it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized in future periods.
The Company follows the guidance in FASB ASC Subtopic 740-10 in assessing uncertain tax positions. The standard applies to all tax positions and clarifies the recognition of tax benefits in the financial statements by providing for a two-step approach of recognition and measurement. The first step involves assessing whether the tax position is more-likely-than-not to be sustained upon examination based upon its technical merits. The second step involves measurement of the amount to be recognized. Tax positions that meet the more-likely-than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate finalization with the taxing authority. The Company recognizes the impact of an uncertain income tax position in the financial statements if it believes that the position is more-likely-than-not to be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense. At September 30, 2024 and December 31, 2023, the Company had no unrecognized uncertain income tax positions, and therefore no amounts have been recognized in the condensed consolidated financial statements.
The Company reports loss per share in accordance with FASB ASC Subtopic 260-10, Earnings Per Share, which provides for calculation of basic and diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. The calculation of diluted net earnings (loss) per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive.
Potentially
dilutive securities not included in the computation of loss per share for the nine months ended September 30, 2024 and 2023 included
options to purchase and shares of common stock, respectively. Other potentially dilutive securities also not included in
the computation of loss per share for the nine months ended September 30, 2024 and 2023 included warrants to purchase shares of the
Company’s common stock related to the IPO and warrants to purchase an additional and shares of the Company’s common
stock issued in the May and November Offerings, respectively. Additional other potentially dilutive securities also not included in the
computation of loss per share for the nine months ended September 30, 2024 included warrants to purchase an additional shares
of the Company’s common stock issued in the PIPE Offering and warrants to purchase shares of the Company’s common
stock issued to the placement agents in the PIPE Offering. All common share amounts as of September 30, 2024 and December 31, 2023 and
per share amounts for the three and nine months ended September 30, 2024 and 2023 have been retroactively adjusted to reflect a
| F-10 |
Recently Adopted Accounting Pronouncements
The Company has evaluated all recent accounting pronouncements that were required to be adopted and believes that other than the following, none of them will have a material effect on the Company’s financial position, results of operations, or cash flows.
The FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), to reduce complexity in applying U.S. GAAP to certain financial instruments with characteristics of liabilities and equity. The guidance in ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. The guidance in ASC Subtopic 470-20 applies to convertible instruments for which the embedded conversion features are not required to be bifurcated from the host contract and accounted for as derivatives. In addition, the amendments revise the scope exception from derivative accounting in ASC Subtopic 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification. These amendments are expected to result in more freestanding financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer embedded features requiring separate accounting from the host contract. The amendments in ASU 2020-06 further revise the guidance in FASB ASC Topic 260, Earnings Per Share, to require entities to calculate diluted earnings per share (“EPS”) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. The amendments in ASU 2020-06 are effective for public entities that meet the definition of an SEC filer, excluding smaller reporting companies as defined by the SEC for fiscal years beginning after December 15, 2021. For all other entities, including the Company, the amendments are effective for fiscal years beginning after December 15, 2023. The Company adopted this guidance effective January 1, 2024 and the adoption of ASU 2020-06 did not have a material impact on its condensed consolidated financial statements.
Note 3 – Common Stock
Pursuant
to an amendment to the Company’s Certificate of Incorporation filed in April 2019, the Company increased the number of authorized
shares of common stock to shares. On November 17, 2023, the Company effectuated a reverse split of shares of its common stock
at a ratio of
On
February 16, 2022, the Company entered into an agreement for marketing and investor related consulting services. Pursuant to the agreement,
compensation includes a monthly fee and an upfront issuance of shares of the Company’s common stock. On the effective date of February
16, 2022, the Company issued shares of its common stock with a per share value of $ and a total value of $
On
March 17, 2023, the Company filed a Registration Statement on Form S-3 with the SEC using a “shelf” registration process
pursuant to which, the Company may sell, from time to time in one or more offerings, shares of common stock and preferred stock, various
series of debt securities and/or warrants to purchase any of such securities, either individually or as units comprised of a combination
of one or more of the other securities in one or more offerings up to a total dollar amount of $
On
May 2, 2023, the Company closed a public offering pursuant to which it issued shares of its common stock at a public offering
price of $ per share. The gross proceeds to the Company from the May Offering were approximately $
| F-11 |
On July 26, 2023, pursuant to the research and development collaboration and license agreement with Applied Biomedical Science Institute (“ABSI”), further described in Note 5 to the condensed consolidated financial statements, the Company issued shares of its common stock with a per share value of $, representing total compensation expense of $ (as calculated based on the trailing 10-day average closing value of the Company’s common stock prior to the agreement date).
On
November 30, 2023, the Company closed a public offering pursuant to which it issued shares of its common stock at a public offering
price of $ per share and pre-funded warrants to purchase up to
On
January 24, 2024, pursuant to a corporate advisory consulting agreement, the Company issued shares of its common stock with a per
share value of $, representing total compensation expense of $
On
June 7, 2024, the Company entered into an At the Market Offering Agreement (the “ATM Agreement”) with Rodman & Renshaw
LLC (the “ATM Sales Manager”) under which the Company may sell, from time to time through the ATM Sales Manager, shares of
common stock in one or more offerings up to a total dollar amount of $
On
June 21, 2024, the Company closed a private placement offering with certain accredited investors of $
Incentive Plans and Options
Under the Company’s 2017 Stock Incentive Plan (the “2017 Plan”) the Company may grant incentive stock options, non-statutory stock options, rights to purchase common stock, stock appreciation rights, restricted stock, performance shares, and performance units to employees, directors, and consultants of the Company and its affiliates. Up to shares of the Company’s common stock may be issued pursuant to the 2017 Plan.
| F-12 |
The Company has granted options to acquire shares of common stock at $ per share under the 2017 Plan, and options to acquire shares of common stock remain available for issuance. At both September 30, 2024 and December 31, 2023, there were options outstanding to acquire shares of common stock. As of September 30, 2024 and December 31, 2023, all such options were fully vested, and the weighted average remaining contractual life for such options was approximately and years, respectively.
In July 2019, the Company authorized an additional plan, the 2019 Stock Incentive Plan (the “2019 Plan”). Under the 2019 Plan, the Company may grant incentive stock options, non-statutory stock options, rights to purchase common stock, stock appreciation rights, restricted stock, performance shares, and performance units to employees, directors, and consultants of the Company and its affiliates. At both September 30, 2024 and December 31, 2023, a total of shares were authorized for issuance under the 2019 Plan.
As of both September 30, 2024 and December 31, 2023, the Company has granted options to acquire shares of common stock under the 2019 Plan and shares of common stock remain available for issuance under the 2019 Plan. There are stock options outstanding to acquire shares of common stock with a weighted-average exercise price of $ at both September 30, 2024 and December 31, 2023 and weighted average contractual terms of years and years at September 30, 2024 and December 31, 2023, respectively.
On August 17, 2023, the Company authorized a new plan, the Tharimmune, Inc. 2023 Omnibus Incentive Plan (the “2023 Plan”). Under the Company’s 2023 Plan, the Company may grant incentive stock options, non-statutory stock options, rights to purchase common stock, stock appreciation rights, restricted stock, performance shares, and performance units to employees, directors, and consultants of the Company and its affiliates. Initially, options to purchase up to shares of the Company’s common stock were able to be issued pursuant to the 2023 Plan. Under an amendment to the 2023 Plan by vote of the Company’s stockholders on May 14, 2024, an amended total of up to options to purchase shares of the Company’s common stock may be issued pursuant to the 2023 Plan. In addition, under the amendment, an “evergreen” provision was added to automatically increase the number of shares available under the 2023 Plan on January 1 annually, beginning January 1, 2025 and ending January 1, 2033, equal to the lesser of five percent of the shares of Common Stock outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year or such lesser number of shares of the Company’s Common Stock as determined by the Board of Directors.
During the three and nine months ended September 30, 2024, the Company granted options to acquire shares of common stock under the 2023 Plan. At September 30, 2024 and December 31, 2023, and shares of common stock remain available for issuance under the amended and initial 2023 Plan, respectively. There are stock options outstanding to acquire and shares of common stock with a weighted-average exercise price of $ and $ at September 30, 2024 and December 31, 2023, respectively, and weighted-average contractual terms of years and years at September 30, 2024 and December 31, 2023, respectively.
| Weighted | Weighted | |||||||||
| Shares | Average | Average | ||||||||
| Underlying | Exercise | Contractual | ||||||||
| Options | Price | Terms | ||||||||
| Outstanding at December 31, 2023 | $ | years | ||||||||
| Granted | $ | years | ||||||||
| Outstanding at September 30, 2024 | $ | years | ||||||||
| Exercisable options at September 30, 2024 | $ | years | ||||||||
| Vested and expected to vest at September 30, 2024 | $ | years | ||||||||
| F-13 |
The fair value of stock option awards is estimated at the date of grant using the Black-Scholes option-pricing model. The estimated fair value of each stock option is then expensed over the requisite service period, which is generally the vesting period (ranging between immediate vesting and four years). The determination of fair value using the Black-Scholes model is affected by the Company’s share price as well as assumptions regarding a number of complex and subjective variables, including expected price volatility, expected life, risk-free interest rate and forfeitures. Forfeitures are accounted for as they occur.
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2024 | 2023* | 2024 | 2023 | |||||||||||||
| Expected volatility | % | N/A | % | % | ||||||||||||
| Risk-free interest rate | % | N/A | % | % | ||||||||||||
| Expected dividend yield | % | N/A | % | % | ||||||||||||
| Expected life of options in years | N/A | |||||||||||||||
| Estimated fair value of options granted | $ | N/A | $ | $ | ||||||||||||
| * | No stock options were granted during the three months ended September 30, 2023. |
The weighted-average grant date fair value of stock options granted during the three and nine months ended September 30, 2024 was $. The weighted-average fair value of stock options vested during the three and nine months ended September 30, 2024 was approximately $ and $, respectively. The weighted-average grant date fair value of stock options granted during the nine months ended September 30, 2023 was $. The weighted-average fair value of stock options vested during the three and nine months ended September 30, 2023 was approximately $ and $, respectively.
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total stock-based compensation | $ | $ | $ | $ | ||||||||||||
As of September 30, 2024, the total unrecognized compensation expense related to non-vested options was approximately $ and is expected to be recognized over the remaining weighted-average service period of approximately years.
Warrants
In
connection with the IPO, the Company issued warrants to purchase such number of shares of the Company’s common stock equal to 5%
of the total shares of common stock issued in the IPO, or
| F-14 |
In
connection with the May Offering as described in Note 3 to the consolidated financial statements, the Company issued warrants to designees
of the underwriter (the “Representative’s Warrants”) to purchase
In
connection with the November Offering as described in Note 3 to the consolidated financial statements, the Company issued pre-funded
warrants to purchase
In
connection with the PIPE Offering as described in Note 3 to the consolidated financial statements, the Company issued Pre-Funded Warrants
to purchase
Terms of the warrants outstanding at September 30, 2024 are as follows:
| Initial | Expiration | Exercise | Warrants | Warrants | Warrants | |||||||||||||||
| Issuance Date | Exercise Date | Date | Price | Issued | Exercised | Outstanding | ||||||||||||||
| $ | ||||||||||||||||||||
| $ | ||||||||||||||||||||
| N/A | $ | |||||||||||||||||||
| N/A | $ | |||||||||||||||||||
| $ | ||||||||||||||||||||
| N/A | $ | |||||||||||||||||||
| $ | ||||||||||||||||||||
| $ | ||||||||||||||||||||
| F-15 |
Note 5 – Commitments and Contingencies
Small Molecule Analogues
On
December 30, 2019,
Research Collaboration and Product License Agreement with Minotaur Therapeutics, Inc. (“Minotaur”) and Commercial License Agreement with Taurus Biosciences, LLC (“Taurus”)
The Company has entered into a research collaboration and product license agreement with Minotaur (as amended, the “Minotaur Agreement”) and a commercial license agreement with Taurus (the “Taurus Agreement”) for use of certain technology, including OmniAb antibodies, to advance Picobodies against novel, unreachable, and undruggable epitopes in high-value validated targets starting with PD-1. The Minotaur Agreement and Taurus Agreement are for the development of proprietary targeted biologics, including TH 1940, against PD-1. It is anticipated that the Company will collaborate with Minotaur under the license from Taurus to discover, develop, and advance biotherapeutics against high-value validated IO targets starting with PD-1.
The
Minotaur Agreement included an up-front payment of $
Research and Development Collaboration and License Agreement with Applied Biomedical Science Institute
On July 5, 2023 (the “ABSI Effective Date”), the Company entered into a Research and Development Collaboration and License Agreement (the “ABSI Agreement”) with ABSI pursuant to which ABSI granted the Company an exclusive royalty-bearing, sublicensable license to the ABSI Patents (as defined in the ABSI Agreement) and a non-exclusive, royalty-bearing, sublicensable license to the ABSI Know-How (as defined in the ABSI Agreement) to Exploit (as defined in the ABSI Agreement) the ABSI Products (as defined in the ABSI Agreement) for the treatment, diagnosis, prediction, detection or prevention of disease in humans and animals worldwide (the “Territory”).
| F-16 |
Pursuant to the ABSI Agreement, the parties shall form a committee to manage the preclinical, investigational new drug enabling studies and such other activities as shall lead to the initiation of a Phase 1 clinical trial of the ABSI Product. The parties will collaborate on a Target-by-Target basis to identify and evaluate ABSI Products directed against such Target (as defined below) with a view to identifying or generating suitable Products (as defined in the ABSI Agreement) for the Company to Exploit. “Target” means ErB2 (Her2) and ErbB3. Upon completion of the Discovery Timeline (as defined in the ABSI Agreement) for a Target, subject to the terms and conditions of ABSI Agreement, the Company shall exclusively own any ABSI Products against such Target. In the event the committee determines that the discovery activities are unsuccessful with respect to a Target, the Company may propose an additional target, which, upon approval by ABSI, shall replace a failed Target.
Pursuant
to the ABSI Agreement: (i) the Company issued ABSI shares of its common stock which is equal to $
On a Product-by-Product basis, upon the expiration of the last Royalty Term of such Product in the Territory, licenses granted to the Company with respect to such Product shall be deemed non-exclusive, fully paid, royalty-free, perpetual and irrevocable. The ABSI Agreement shall expire upon the expiration of the last Royalty Term of the last Product, unless such agreement is terminated earlier pursuant to its terms. The ABSI Agreement may also be terminated (i) by either the Company or ABSI for (A) a material breach of the ABSI Agreement or (B) bankruptcy, (ii) ABSI may terminate the ABSI Agreement upon the commencement of a Challenge Proceeding (as defined in the ABSI Agreement) or (iii) the Company may terminate the ABSI Agreement at any time upon 90 days prior written notice to ABSI. Upon termination or expiration of the ABSI Agreement other than as a result of a bankruptcy or Challenge Proceeding, all licenses granted to the Company pursuant to such agreement will terminate and all rights under such licenses shall revert to ABSI.
On
March 11, 2024, the Company entered into an addendum to the ABSI Agreement to fund research services with quarterly payments of $
| F-17 |
Avior Patent License Agreement
On
November 3, 2023 (the “Avior Effective Date”), the Company entered into the Avior Patent License Agreement with Avior pursuant
to which the Company received an exclusive sublicensable right and license to Licensed Patent Rights and Licensed Technology to, among
other things, Develop, have Developed, make, have made, use, sell, import, export and commercialize TH104 and TH103 and to practice the
Licensed Technology in connection with the foregoing, throughout the world. Pursuant to the Avior Patent License Agreement, the Company
shall pay Avior a mid-six digit up front license fee within ten days of the Avior Effective Date and an additional mid six-digit license
fee which shall be paid in four equal installments within ten days of the end of each fiscal quarter following the Avior Effective Date.
In addition, the Company shall pay Avior a high single digit percentage of any upfront payments received by it as a result of the grant
of any sublicenses with respect to TH104. The Company shall also pay Avior milestone payments in the aggregate amount of $
During
the three and nine months ended September 30, 2024, the Company paid license fees of $
Enkefalos License Agreement
On
June 17, 2024 (the “Enkefalos Effective Date”), the Company signed a letter of intent to enter into the Enkefalos License
Agreement with Enkefalos Biosciences Inc. pursuant to which the Company is licensing the global rights in all fields of use for the products
related to the compounds knows as cyclotides to deliver HER2 antibodies across the blood-brain barrier and all associated know-how, technology,
intellectual property and related information and constructs, and any associated authorized generic rights and all related assets (collectively,
the “Products” referred to in this letter as ENBI-01) from Enkefalos Biosciences, Inc. Pursuant to the Enkefalos License
Agreement,
During
the nine months ended September 30, 2024, the Company incurred license fees of $
| F-18 |
Intract Patent License Agreement
On
September 11, 2024, the Company entered into a patent license agreement (the “Intract Agreement”) with Intract. Pursuant
to the Intract Agreement, the Company exclusively licensed INT-023/TH023, an oral anti-Tumor Necrosis Factor-alpha (TNF-α) monoclonal
antibody infliximab. Under the terms of the Intract Agreement, the Company licensed global development and commercialization rights (outside
of South Korea) to Intract’s Soteria® and Phloral® delivery platform along with an existing supply agreement for infliximab
to be used in the oral product development program. Pursuant to the Intract Agreement, the Company paid Intract an up-front license fee
of $
During
the three and nine months ended September 30, 2024, the Company incurred fees of $
Employment Agreements
On
June 1, 2021, the Company entered into an Amended and Restated Employment Agreement with the Company’s CEO, as amended periodically
(the “Amended and Restated Employment Agreement”). The term of the Amended and Restated Employment Agreement commenced upon
the closing of the Company’s IPO in January 2022 and continues for a period of five years and automatically renews for successive
one-year periods at the end of each term unless either party provides written notice of their intent not to renew at least 60 days prior
to the expiration of the then effective term. Pursuant to the Amended and Restated Employment Agreement, the CEO will receive an annual
base salary of $
On January 1, 2023, in lieu of half of his 2023 salary, the CEO was issued options to purchase up to shares of the Company’s common stock at an exercise price of $ per share, which options vested immediately on the date of grant.
| F-19 |
On
July 6, 2023, the Company entered into an amended and restated employment agreement (the “CEO Employment Agreement”) with
the CEO. The Employment Agreement has the same terms as the COO Employment Agreement (as defined below) except, the CEO shall (i) receive
a base salary of $
In
connection with the appointment of the Company’s Chief Operating Officer, on July 11, 2023 (the “Effective Date”),
the Company entered into an employment agreement (the “COO Employment Agreement”) with the COO. The COO Employment Agreement
shall continue for a period of five years and, thereafter, shall automatically renew for successive one-year terms unless either party
provides the other party with written notice of non-renewal at least 60 days prior to the last day of the then-current term. Pursuant
to the COO Employment Agreement, the COO shall: (i) receive a base salary of $
Note 6 – Subsequent Events
There were no material subsequent events that required recognition or additional disclosure in these condensed consolidated financial statements.
| F-20 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited interim condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as may be amended, supplemented, or superseded from time to time by other reports we file with the SEC. All amounts in this report are in U.S. dollars, unless otherwise noted.
Throughout this Quarterly Report on Form 10-Q, references to “we,” “our,” “us,” the “Company,” or “Tharimmune,” refer to Tharimmune, Inc. (formerly, Hillstream BioPharma, Inc.), individually, or as the context requires, collectively with its subsidiaries.
Overview
Tharimmune is a clinical-stage biotechnology company developing therapeutic candidates in immunology and inflammation with high unmet need. On November 3, 2023, we entered into a patent license agreement (the “Avior License Agreement”) with Avior Inc. d/b/a Avior Bio, LLC (“Avior”) pursuant to which we received an exclusive sublicensable right and license to Licensed Patent Rights and Licensed Technology to, among other things, Develop, have Developed, make, have made, use, sell, import, export and commercialize TH104 and TH103 and to practice the Licensed Technology in connection with the foregoing, throughout the world, each as defined in the Avior License Agreement. In February 2023, the U.S. Food and Drug Administration (“FDA”) approved an investigational new drug (“IND”) application for TH104. TH104 has a dual mechanism of action by affecting multiple receptors, known to suppress chronic, debilitating pruritis or “uncontrollable itching.” With respect to TH104, we intend to first seek approval for the treatment of moderate-to-severe chronic pruritis in patients with primary biliary cholangitis (“PBC”), an orphan rare form of liver disease with no known cure in which more than 70% of patients suffer from debilitating chronic pruritic. The Company expects to obtain topline data in a Phase 2 trial with TH104 in Q4 2025 and with respect to TH103, we intend to develop the product candidate and potentially file an IND.
On September 11, 2024, we entered into a Patent License Agreement (the “Intract Agreement”) with Intract Pharma Limited (“Intract”), pursuant to which, we exclusively licensed INT-023/TH023, an oral anti-Tumor Necrosis Factor-alpha (TNF-α) monoclonal antibody infliximab. Infliximab is a purified, recombinant DNA-derived chimeric IgG monoclonal antibody protein that contains both murine and human components that inhibit tumor TNF-α. Under the terms of the Intract Agreement, we licensed global development and commercialization rights (outside of South Korea) to Intract’s Soteria® and Phloral® delivery platform along with an existing supply agreement for infliximab to be used in the oral product development program.
We are also developing an early-stage pipeline of novel therapeutic candidates targeting validated high value immuno-oncology (“IO”) targets including human epidermal growth factor (“EGF”) receptor 2 (“HER2”), human EGF receptor 3 (“HER3”) and programmed cell death protein 1 (“PD-1”). We are developing antibodies including bispecific antibodies, antibody drug conjugates (“ADCs”) and small molecular weight bovine-derived Picobodies™ or antibody “knob” domains which have the potential to target and bind more tightly to “undruggable” epitopes better than full sized antibodies. We are advancing TH3215, a bispecific against both HER2 and HER3 antibody which targets a novel “bridging epitope” encompassing multiple domains of the HER2 extracellular domain (“ECD”) as well as ligand-dependent and independent blocking of the ECD of HER3 into IND-enabling studies in 2025. In addition, we anticipate that TH0059, a HER2/HER3 bispecific ADC (“bsADC”), and TH1940, a PD-1 Picobody, will progress to enter IND-enabling studies in 2025.
| 5 |
The critical components of our business strategy to achieve our goals include:
| ● | Develop TH104 as a transmucosal buccal film product for the treatment of moderate-to-severe chronic pruritis in PBC and other inflammatory diseases; | |
| ● | Develop TH023 by obtaining regulatory authorization to initiate a first-in-human bioavailability clinical trial and pursue an IND through the US FDA; | |
| ● | Create a preclinical and clinical path forward for, TH1940, a novel PD-1 knob-domain antibody fragment with nolve binding differentiation compared to full length antibodies for IO vulnerable tumors; | |
| ● | Continue to advance pre-clinical candidate selection activities against HER2/HER3 receptors with various antibody formats, including TH3215 designed for multiple solid tumor types; | |
| ● | Effectively create a development strategy for TH0059 as a bispecific ADC specifically targeted to both HER2 and HER3 receptors in high unmet need standard-of-care resistant tumors with a high capacity to metastasize | |
| ● | Hasten the discovery of next generation multi-specific (bi- and tri) antibodies with binding capabilities to novel epitopes of combinations of HER2, HER3, PD-1, PD-L1, TROP2 with and without toxin delivery capacity to multiple high unmet need rare cancers and other validated immunology and metabolic targets, including glucose-dependent insulinotropic peptide (GIP) | |
| ● | Pursue strategic collaboration opportunities including potential M & A transactions to maximize the value of our pipeline to bring novel therapies to patients suffering from high unmet need conditions |
Applied Biomedical Research Institute Research and Development Collaboration and License Agreement
On July 5, 2023 (the “ABSI Effective Date”), we entered into a Research and Development Collaboration and License Agreement (the “ABSI Agreement”) with Applied Biomedical Science Institute (“ABSI”) pursuant to which ABSI granted us an exclusive royalty-bearing, sublicensable license to the ABSI Patents and a non-exclusive, royalty-bearing, sublicensable license to the ABSI Know-How to Exploit the ABSI Products for the treatment, diagnosis, prediction, detection or prevention of disease in humans and animals worldwide (the “Territory”). Pursuant to the ABSI Agreement, the parties shall form a committee to manage the preclinical, IND- enabling studies and such other activities as shall lead to the initiation of a Phase 1 clinical trial of the ABSI Product. The parties will collaborate on a Target-by-Target basis to identify and evaluate ABSI Products directed against such Target with a view to identifying or generating suitable Products for our Company to Exploit. “Target” means ErB2 (Her2) and ErbB3. Upon completion of the Discovery Timeline for a Target, subject to the terms and conditions of ABSI Agreement, we shall exclusively own any ABSI Products against such Target. In the event the committee determines that the discovery activities are unsuccessful with respect to a Target, we may propose an additional target, which, upon approval by ABSI, shall replace a failed Target, each capitalized term as defined in the ABSI Agreement.
As part of the ABSI Agreement, on July 26, 2023, we issued 1,674 shares of our common stock with a per share value of $149.34, representing total compensation expense of $250,000.
On March 11, 2024, we entered into an addendum to the ABSI Agreement to fund research services with quarterly payments of $50,000 beginning March 18, 2024 with subsequent payments due on the 18th of each calendar quarter.
| 6 |
Avior Patent License Agreement
On November 3, 2023 (the “Avior Effective Date”), we entered into the Avior Patent License Agreement with Avior pursuant to which we received an exclusive sublicensable right and license to Licensed Patent Rights and Licensed Technology to, among other things, develop, have developed, make, have made, use, sell, import, export and commercialize TH104 and TH103 and to practice the Licensed Technology in connection with the foregoing throughout the world. Pursuant to the Avior Patent License Agreement, we paid Avior a mid-six digit up front license fee within ten days of the Avior Effective Date and an additional mid-six digit license fee which shall be paid in four equal installments within ten days of the end of each fiscal quarter following the Avior Effective Date. In addition, we shall pay Avior a high single digit percentage of any upfront payments received by us as a result of the grant of any sublicenses with respect to TH104. We shall also pay Avior milestone payments in the aggregate amount of $24.25 million upon the occurrence of various development milestones (the “Development Milestone Payments”). Furthermore, we shall pay Avior certain fees based upon sales milestones. The payments for such sales milestones range from the low seven digits to the low eight digits with higher sales being subject to higher fees. Finally, we shall pay Avior royalties based on net sales. Such royalties range from low single digit percentages to mid-single digit percentages with higher sales being subject to lower percentages. The Avior Patent License Agreement shall expire upon the expiration of the final payment obligation due to Avior as set forth in such agreement. Upon the expiration of the Avior Patent License Agreement, we shall have a fully paid-up, irrevocable, freely transferable and sublicensable worldwide license to the Licensed Patent Rights and Licensed Technology to Develop, have Developed, make, have made, use, have used sell, offer for sale, have sold, import, have imported, export, have exported, commercialize or have commercialized any and all Licensed Products and to practice the Licensed Technology worldwide. Pursuant to the Avior Patent License Agreement, we may terminate the agreement at any time without cause, upon 30 days’ prior written notice to Avior along with payment of the next unpaid Development Milestone Payment, if any. Furthermore, either we or Avior may terminate the Avior Patent License Agreement (i) on written notice to the other party if the other party materially breaches any provision of the Avior Patent License Agreement and fails to cure such breach within 30 days after the breaching party receives written notice thereof or (ii) on written notice in the event that either party (A) becomes insolvent or admits its inability to pay its debts generally as they become due; (B) becomes subject, voluntarily or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency law, which is not fully dismissed or vacated within 60 days; (C) is dissolved or liquidated or takes any corporate action for such purpose; (D) makes a general assignment for the benefit of creditors; or (E) has a receiver, trustee, custodian or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business. Upon termination of the Avior Patent License Agreement, the license granted pursuant to such agreement shall terminate and all rights in the Licensed Patent Rights and Licensed Products shall revert back to Avior.
Enkefalos License Agreement
On June 17, 2024 (the “Enkefalos Effective Date”), we signed a letter of intent (the “Enkefelos LOI”) to enter into the Enkefalos License Agreement with Enkefalos Biosciences Inc. pursuant to which we are licensing the global rights in all fields of use for the products related to the compounds knows as cyclotides to deliver HER2 antibodies across the blood-brain barrier and all associated know-how, technology, intellectual property and related information and constructs, and any associated authorized generic rights and all related assets (collectively, the “Products” referred to in this letter as ENBI-01) from Enkefalos Biosciences, Inc. Pursuant to the Enkefalos License Agreement, we paid Enkefalos an upfront license fee of $150,000 upon signing of the Enkefalos LOI and an additional $150,000 license fee to be paid 6 months after the Enkefalos Effective Date. In addition, we shall pay Enkefalos a $50,000 annual license fee and milestone payments in the aggregate amount of up to $8,500,000 upon the occurrence of various development milestones (the “Enkefalos Development Milestone Payments”). Furthermore, we shall pay Enkefalos royalties based on net sales. Such royalties range from low-single digit percentages to mid-single digit percentages with higher sales being subject to lower percentages. The Enkefalos License Agreement shall expire upon the expiration of the final payment obligation due to Enkefalos as set forth in such agreement. Upon the expiration of the Enkefalos Patent License Agreement, we shall have a fully paid, irrevocable, freely transferable and sublicensable worldwide license to the Licensed Patent Rights and Licensed Technology to Develop, have Developed, make, have made, use, have used sell, offer for sale, have sold, import, have imported, export, have exported, commercialize or have commercialized any and all Licensed Products and to practice the Licensed Technology worldwide. Pursuant to the Enkefalos License Agreement, either the Company or Enkefalos may terminate the Enkefalos License Agreement on written notice to the other party. Upon termination of the Enkefalos License Agreement, the license granted pursuant to such agreement shall terminate and all rights in the Licensed Patent Rights and Licensed Products shall revert back to Enkefalos.
| 7 |
Intract Patent License Agreement
On September 11, 2024 (the “Intract Effective Date”), we entered into a Patent License Agreement (the “Intract Agreement”) with Intract Pharma Limited, (“Intract”), pursuant to which the Company exclusively licensed INT-023/TH023, an oral anti-Tumor Necrosis Factor-alpha (TNF-α) monoclonal antibody infliximab. Under the terms of the Intract Agreement, we licensed global development and commercialization rights (outside of South Korea) to Intract’s Soteria® and Phloral® delivery platform along with an existing supply agreement for infliximab to be used in the oral product development program. Pursuant to the Intract Agreement, Intract recieved a mid-six digit upfront paymentis eligible to receive additional payments upon an equity financing of the Company and is eligible for future development, regulatory and commercial milestones, as well as mid-single digit royalties based on net product sales. Under the terms of the Intract Agreement, we retain a right of first refusal to continue development and commercialization after a Phase 2 clinical trial and have the option to exercise the license to Intract’s platform for up to four additional targets. The term of the Intract Agreement expires upon the final payment obligation of the Company under the Intract Agreement. In addition, the Intract Agreement may be terminated by us at any time upon 90 days written notice to Intract. Either party may terminate the Intract Agreement if the other party materially breaches any provision of the Intract Agreement and fails to cure such breach within thirty (30) days after the breaching party receives written notice thereof. In addition, either party may terminate the Intract Agreement on written notice in the event that either party declare: (a) becomes insolvent or admits inability to pay its debts generally as they become due; (b) becomes subject, voluntarily or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency law, which is not fully dismissed or vacated within sixty (60) days; (c) is dissolved or liquidated or takes any corporate action for such purpose; (d) makes a general assignment for the benefit of creditors; or (e) has a receiver, trustee, custodian or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business.
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Recent Developments
On June 17, 2024, we entered into a securities purchase agreement with certain accredited investors for the issuance and sale in a private placement (the “PIPE Offering”), consisting of an offering of shares of our common stock and/or pre-funded warrants to acquire shares of our common stock and warrants to acquire shares of our common stock, with net proceeds of approximately $1.8 million. See Note 3 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for details regarding these offerings.
We signed a manufacturing agreement for clinical trial supply with regards to TH104 and the upcoming Phase 2 clinical trial on July 25, 2024 with a contract manufacturing organization located in North Carolina. The development work includes both TH104 active product and corresponding placebo batches expected to be released for clinical packaging by the end of the year.
On September 30, 2024, we entered into a nonbinding, exclusive letter of intent (the “LOI”) with Intract pursuant to which we will acquire all outstanding shares of common stock of the privately-held Intract for newly issued restricted common stock. Intract is a biopharmaceutical company incorporated in England and Wales developing disruptive delivery solutions for oral biologics. Under the terms of the LOI, following the execution of a definitive agreement and the closing of the merger, Intract shareholders will own 49% of the total equity in the combined entity, which will be named Tharimmune, Inc., with Intract becoming a wholly owned subsidiary. We believe the merger and business combination will form a best-in-class, transformative oral biologics company and the synergies between our clinical-stage assets and Intract’s delivery platform will drive pipeline growth. During the three and nine months ended September 30, 2024, we paid a $75,000 exclusivity fee to enter into the LOI agreement.
Components of Results of Operations
Revenue
We have not recognized revenue since inception.
Research and Development Expenses
Research and development expenses include personnel costs associated with research and development activities, including third-party contractors to perform research, conduct clinical trials, and manufacture drug supplies and materials as well as stock-based compensation for our research and development personnel. Research and development expenses are charged to operations as incurred.
We accrue costs incurred by external service providers, including contract research organizations and clinical investigators, based on estimates of service performed and costs incurred. These estimates include the level of services performed by third parties, patient enrollment in clinical trials, administrative costs incurred by third parties, and other indicators of the services completed. Based on the timing of amounts invoiced by service providers, we may also record payments made to those providers as prepaid expenses that will be recognized as expense in future periods as the related services are rendered.
We have incurred research and development expenses related to the development of HSB-1216, which has been deprioritized. We expect that our research and development expenses will increase as we plan for and commence our clinical trials of TH3215 and TH1940.
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We cannot determine with certainty the duration and costs of future clinical trials of our product candidates, TH3215 and TH1940, or any other product candidates we may develop or if, when or to what extent we will generate revenue from the commercialization and sale of any of our product candidates for which we obtain marketing approval. We may never succeed in obtaining marketing approval for any of our product candidates. The duration, costs and timing of clinical trials and development of our current and future product candidates will depend on a variety of factors, including:
| ● | the scope, rate of progress, expense and results of clinical trials of our current product candidates, as well as of any future clinical trials of our future product candidates and other research and development activities that we may conduct; |
| ● | uncertainties in clinical trial design and patient enrollment rates; |
| ● | the actual probability of success for our product candidates, including their safety and efficacy, early clinical data, competition, manufacturing capability and commercial viability; |
| ● | significant and changing government regulations and regulatory guidance; and |
| ● | the timing and receipt of any marketing approvals. |
A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant delays in our clinical trials due to slower than expected patient enrollment or other reasons, we would be required to expend significant additional financial resources and time on the completion of clinical development.
General and Administrative Expenses
General and administrative expenses consist primarily of compensation and consulting related expenses, including stock-based compensation for our general and administrative personnel. General and administrative expenses also include professional fees and other corporate expenses, including legal fees relating to corporate matters; professional fees for accounting, auditing, tax, and consulting services; insurance costs; travel expenses and other operating costs that are not specifically attributable to research activities.
We expect that our general and administrative expenses will increase in the future as we increase our personnel headcount to support our continued research activities and development of our product candidates. We also incur expenses associated with being a public company, including expenses related to compliance with the rules and regulations of the SEC and Nasdaq, directors and officers insurance expenses, corporate governance expenses, investor relations activities and other administrative and professional services.
Interest Income
Interest income consists of interest income from funds held in our cash accounts.
Results of Operations
Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023
Three Months Ended September 30, | ||||||||||||
| 2024 | 2023 | Change | ||||||||||
| Condensed Consolidated Statements of Operations Data: | ||||||||||||
| Operating expenses: | ||||||||||||
| Research and development | $ | 2,281,827 | $ | 488,177 | $ | 1,793,650 | ||||||
| General and administrative | 1,583,744 | 1,356,893 | 226,851 | |||||||||
| Total operating expenses | 3,865,571 | 1,845,070 | 2,020,501 | |||||||||
| Other income (expense): | ||||||||||||
| Interest expense | (3,009 | ) | (3,496 | ) | 487 | |||||||
| Interest income | 72,728 | 28,451 | 44,277 | |||||||||
| Total other income (expense) | 69,719 | 24,955 | 44,764 | |||||||||
| Net loss | $ | (3,795,852 | ) | $ | (1,820,115 | ) | $ | (1,975,737 | ) | |||
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Research and Development Expenses
Research and development expenses increased by $1.8 million, or 367%, to $2.3 million for the three months ended September 30, 2024 from $0.5 million for the three months ended September 30, 2023. The increase was primarily the result of an increase in clinical trial expenses of approximately $0.5 million due to completion of our Phase 1 clinical trial in TH104, an increase of $1.1 million in license fees, and an increase of $0.2 million in pre-clinical expenses.
General and Administrative Expenses
General and administrative expenses increased by $0.2 million, or 17%, to $1.6 million for the three months ended September 30, 2024 from $1.4 million for the three months ended September 30, 2023. The change in general and administrative expenses was primarily due to an increase of $0.1 million in personnel costs, an increase of $0.1 million in investor relations and an increase of $0.1 million in professional fees. These increases were offset by a decrease of $0.1 million in insurance.
Interest Expense
Interest expense decreased by $487, or 14%, to $3,009 for the three months ended September 30, 2024 from $3,496 for the three months ended September 30, 2023. The decrease in interest expense was primarily related to the decrease in D&O insurance premium financing liability.
Interest Income
Interest income increased by $44,277, or 156%, to $72,728 for the three months ended September 30, 2024 from $28,451 for the three months ended September 30, 2023. The increase in interest income was primarily due to the increase in cash from the November 2023 Offering and the June 2024 PIPE Offering.
Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Nine Months Ended September 30, | ||||||||||||
| 2024 | 2023 | Change | ||||||||||
| Condensed Consolidated Statements of Operations Data: | ||||||||||||
| Operating expenses: | ||||||||||||
| Research and development | $ | 4,306,638 | $ | 2,566,910 | $ | 1,739,728 | ||||||
| General and administrative | 4,279,690 | 4,357,154 | (77,464 | ) | ||||||||
| Total operating expenses | 8,586,328 | 6,924,064 | 1,662,264 | |||||||||
| Other income (expense): | ||||||||||||
| Interest expense | (12,926 | ) | (16,151 | ) | 3,225 | |||||||
| Interest income | 222,236 | 94,898 | 127,338 | |||||||||
| Total other income (expense) | 209,310 | 78,747 | 130,563 | |||||||||
| Net loss | $ | (8,377,018 | ) | $ | (6,845,317 | ) | $ | (1,531,701 | ) | |||
Research and Development Expenses
Research and development expenses increased by $1.7 million, or 68%, to $4.3 million for the nine months ended September 30, 2024 from $2.6 million for nine months ended September 30, 2023. The increase was primarily the result of an increase in clinical trial expenses of approximately $0.9 million due to completion of our Phase 1 clinical trial in TH104 and an increase of $1.5 million in license fees. These increases were offset by a decrease of $0.5 million in pre-clinical expenses and a decrease of $0.1 million in stock-based compensation expense related to our research and development personnel.
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General and Administrative Expenses
General and administrative expenses decreased by less than $0.1 million, or 2%, to $4.3 million for the nine months ended September 30, 2024 from $4.4 million for the nine months ended September 30, 2023. The change in general and administrative expenses was primarily due to a decrease of $0.4 million in investor relations, a decrease of $0.3 million in insurance, a decrease of $0.1 million in professional fees, and a decrease of $0.1 million in stock-based compensation expense related to our general and administrative personnel. These decreases were offset by an increase in wages of $0.7 million and an increase of $0.1 million in director remuneration.
Interest Expense
Interest expense decreased by $3,225, or 20%, to $12,926 for the nine months ended September 30, 2024 from $16,151 for the nine months ended September 30, 2023. The decrease in interest expense was primarily related to the decrease in D&O insurance premium financing liability.
Interest Income
Interest income increased by $127,338, or 134%, to $222,236 for the nine months ended September 30, 2024 from $94,898 for nine months ended September 30, 2023. The increase in interest income was primarily due to the increase in cash from the November 2023 Offering and the June 2024 PIPE Offering.
Liquidity and Capital Resources
The accompanying condensed consolidated financial statements have been prepared on the basis that we are a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. For the nine months ended September 30, 2024, we incurred operating losses of approximately $8.6 million, expended approximately $7.9 million in cash in operating activities, and had an accumulated deficit of approximately $33.1 million as of September 30, 2024. We have financed our working capital requirements through September 30, 2024 primarily through the issuance of common stock in various public and private offerings. During the year ended December 31, 2023, we received gross proceeds of approximately $13.6 million through public offerings of our common stock in the May Offering and November Offering which generated net proceeds to us of approximately $2.1 million and $9.7 million, respectively. In addition, on June 7, 2024, we filed a Registration Statement on Form S-3 with the SEC using a “shelf” registration process pursuant to which, under an At the Market Offering Agreement (the “ATM Agreement”), we may sell, from time to time through the applicable sales manager, shares of common stock in one or more offerings up to a total dollar amount of $1.65 million. Further, on June 17, 2024, we entered into a securities purchase agreement with certain accredited investors as a part of the PIPE Offering, consisting of an offering of shares of our common stock and/or pre-funded warrants to acquire shares of our common stock and warrants to acquire shares of our common stock, with net proceeds of approximately $1.8 million. See Note 3 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for details regarding these offerings.
Based on our limited operating history, recurring negative cash flows from operations, current plans and available resources, we will need substantial additional funding to support future operating activities. We have concluded that the prevailing conditions and ongoing liquidity risks faced by us raise substantial doubt about our ability to continue as a going concern for at least one year following the date these condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q are issued. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.
We may seek to raise additional funding through the sale of additional equity or debt securities, enter into strategic partnerships, grants or other arrangements or a combination of the foregoing to support our future operations; however, there can be no assurance that we will be able to obtain additional capital on terms acceptable to us, on a timely basis, or at all. The failure to obtain sufficient additional funding could adversely affect our ability to achieve our business objectives and product development timelines and may result in delaying or terminating clinical trial activities which could have a material adverse effect on our results of operations.
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Cash Flow Activities for the Nine Months Ended September 30, 2024 and 2023
The following table sets forth a summary of our cash flows for the periods presented.
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Net cash used in operating activities | $ | (7,868,344 | ) | $ | (5,884,679 | ) | ||
| Net cash provided by financing activities | 1,707,229 | 2,063,206 | ||||||
| Net decrease in cash | $ | (6,161,115 | ) | $ | (3,821,473 | ) | ||
Cash Flows from Operating Activities
Cash used in operating activities for the nine months ended September 30, 2024 was $7.9 million which consisted of net loss of $8.4 million and non-cash stock-based compensation of $0.5 million, offset by increases in prepaid and other current assets of $0.4 million and operating liabilities of $0.3 million.
Cash used in operating activities for the nine months ended September 30, 2023 was $5.9 million which consisted of net loss of $6.8 million and an increase of $0.1 million in prepaid expenses and other current assets, partially offset by non-cash stock-based compensation of $0.6 million, $0.3 million of non-cash stock issuance pursuant to a services agreement and an increase of $0.2 million in accounts payable.
Cash Flows from Financing Activities
Cash provided by financing activities for the nine months ended September 30, 2024 was $1.7 million. The net increase in financing activities was due to proceeds from the PIPE Offering of $2.1 million and insurance premium financing liability of $0.4 million, offset by payments of deferred offering costs of $0.5 million and repayments of insurance premium financing liability of $0.3 million.
Cash provided by financing activities for the nine months ended September 30, 2023 was $2.1 million. The net increase in financing activities was from net cash proceeds of $2.3 million from the issuance of our common stock in connection with a public offering and $0.7 million in proceeds received from insurance premium financing liability offset by deferred offering costs of $0.3 million and $0.6 million in repayments of insurance premium financing liability.
Reverse Stock Split
On May 24, 2024, the Company effectuated an additional reverse split of shares of its common stock at a ratio of 1-for-15 pursuant to an amendment to the Company’s Certificate of Incorporation, as amended, filed with the Delaware Secretary of State and approved by the Company’s board of directors and stockholders. The par value of the Company’s common stock was not adjusted as a result of the reverse split. All issued and outstanding common stock share and per share amounts contained in the accompanying condensed consolidated financial statements have been retroactively adjusted to reflect the reverse split for all periods presented.
Critical Accounting Policies and Use of Estimates
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. Estimates are used in the following areas, among others: research and development expense recognition, stock-based compensation, allowances of deferred tax assets, and cash flow assumptions regarding going concern considerations. Although management believes the estimates that have been used are reasonable, actual results could vary from the estimates that were used.
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Critical Accounting Policies
Research and development
Research and development costs are expensed as incurred. Research and development expenses include personnel costs associated with research and development activities, including third-party contractors to perform research, conduct clinical trials and manufacture drug supplies and materials. We accrue for costs incurred by external service providers, including contract research organizations and clinical investigators, based on our estimates of service performed and costs incurred. These estimates include the level of services performed by third parties, patient enrollment in clinical trials, administrative costs incurred by third parties, and other indicators of the services completed.
Stock-based compensation
Stock-based compensation represents the cost related to stock-based awards granted to our employees, directors, consultants, and affiliates. We measure stock-based compensation costs at the grant date, based on the estimated fair value of the award and recognize the cost over the requisite service period.
We recognize compensation costs resulting from the issuance of stock-based awards to employees, non-employees and directors as an expense in the condensed consolidated statements of operations over the requisite service period based on a measurement of fair value for each stock-based award. The fair value of each option grant to employees, non-employees and directors is estimated as of the date of grant using the Black-Scholes option-pricing model, net of actual forfeitures. The fair value is amortized as compensation cost on a straight-line basis over the requisite service period of the awards, which is generally the vesting period.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Prior to January 12, 2022, we were a private company and our common stock has only been publicly traded since that date. As a result, we lack company-specific historical and implied volatility information. Therefore, we have estimated our expected stock price volatility based on the historical volatility of a publicly traded set of peer companies. The expected term of stock options granted was between five and seven years. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award.
Recently Issued and Adopted Accounting Standards
See Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
JOBS Act
On April 5, 2012, the Jumpstart Our Business Startups Act (the “JOBS Act”) was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We have chosen to take advantage of the extended transition periods available to emerging growth companies under the JOBS Act for complying with new or revised accounting standards until those standards would otherwise apply to private companies provided under the JOBS Act. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates for complying with new or revised accounting standards.
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Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions, including, without limitation, (i) providing an auditor’s attestation report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, and (ii) complying with the requirement adopted by the Public Company Accounting Oversight Board regarding the communication of critical audit matters in the auditor’s report on financial statements. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our IPO; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our principal executive officer and principal financial officer evaluated the effectiveness of our “disclosure controls and procedures” as of September 30, 2024, the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures” as defined in Rules 13a-15© and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is accumulated and communicated to a company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of September 30, 2024, our Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.
Changes in Internal Control
There were no significant changes in our internal control over financial reporting that occurred during the three months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedure, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedure relative to their costs.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.
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ITEM 1A. RISK FACTORS.
Risk factors that affect our business and financial results are discussed in Part I, Item 1A “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 23, 2024 (“Annual Report”). There have been no material changes in our risk factors from those previously disclosed in our Annual Report. You should carefully consider the risks described in our Annual Report which could materially affect our business, financial condition or future results. The risks described in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
During
the fiscal quarter ended September 30, 2024, none of the Company’s directors or executive officer
ITEM 6. EXHIBITS.
| * | Filed herewith. |
| ** | Furnished herewith. |
# Pursuant to Item 601(b)(10) of Regulation S-K, certain confidential portions of this exhibit were omitted by means of marking such portions with an asterisk because such information is both not material and is the type that the Company treats as private or confidential.
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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.
| THARIMMUNE, INC. | ||
| Date: November 7, 2024 | By: | /s/ Randy Milby |
| Randy Milby | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: November 7, 2024 | By: | /s/ Thomas Hess |
| Thomas Hess | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
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