Dianthus Therapeutics Inc DE

Previous wording

We are a clinical-stage biotechnology company focused on developing next-generation complement therapeutics for patients living with severe autoimmune and inflammatory diseases. We believe our lead novel and proprietary monoclonal antibody product candidate, DNTH103, has the potential to address a broad array of complement-dependent diseases as currently available therapies or those in development leave room for improvements in efficacy, safety, and/or dosing convenience. We have purposefully engineered DNTH103 to selectively bind to only the active form of the C1s complement protein (“C1s”) and to exhibit improved potency and an extended half-life. By selectively targeting only the active form of C1s, which drives disease pathology and constitutes only a small fraction of the total protein present in circulation, we aim to reduce the amount of drug required for a therapeutic effect. We intend to deliver our product candidate through a lower dose, less frequent, self-administered, convenient subcutaneous (“S.C.”) injection suitable for a pre-filled pen.

Current wording

We are a clinical-stage biotechnology company focused on developing next-generation complement therapeutics for patients living with severe autoimmune and inflammatory diseases. We believe our lead novel and proprietary monoclonal antibody product candidate, DNTH103, has the potential to address a broad array of complement-dependent diseases as currently available therapies or those in development leave room for improvements in efficacy, safety, and/or dosing convenience. We have purposefully engineered DNTH103 to selectively bind to only the active form of the C1s complement protein (“C1s”) and to exhibit improved potency and an extended half-life. By selectively targeting only the active form of C1s, which drives disease pathology and constitutes only a small fraction of the total protein present in circulation, we aim to reduce the amount of drug required for a therapeutic effect. We intend to deliver our product candidate through a lower dose, less frequent, self-administered, convenient subcutaneous (“S.C.”) injection suitable for an auto-injector.

Previous wording

Our most advanced product candidate, DNTH103, is a clinical-stage, highly potent, highly selective and fully human monoclonal immunoglobulin G4 with picomolar binding affinity that is designed to selectively bind only to the active form of the C1s complement protein. The active form of C1s is generated during complement activation by cleavage of the inactive proenzyme C1s. As a validated complement target in the autoimmune and inflammatory field, C1s inhibition prevents further progression of the classical pathway cascade. DNTH103 is engineered with YTE half-life extension technology, a specific three amino acid change in the Fc domain, and has a pharmacokinetic profile designed to support less frequent, lower dose, self-administration as a convenient S.C. injection. Data reported from DNTH103’s Phase 1 clinical trial in 60 healthy volunteers across eight dose cohorts validates the extended half-life and potent classical pathway inhibition and supports a potentially differentiated safety profile of DNTH103. The topline data confirmed its approximately 60-day half-life and highly potent classical pathway inhibition with every two weeks S.C. dosing of 300mg/2mL surpassing the calculated IC90 of 87ug/mL, establishing DNTH103’s best-in-class potential to be the first self-administered subcutaneous injection dosed as infrequently as every two weeks to treat a range of autoimmune disorders. Based on the clinical data available to date, DNTH103 was generally well tolerated with no serious adverse events or complement-related infections. DNTH103 is designed to selectively target the active form of C1s, inhibiting only the classical pathway, while leaving the lectin and alternative pathways intact. As a result, we aim to demonstrate that DNTH103 may have a reduced risk of infections from encapsulated bacteria when compared to C5 terminal inhibitors, thus potentially avoiding a U.S. Food and Drug Administration Boxed Warning and associated Risk Evaluation and Mitigation Strategy (“REMS”). We believe that DNTH103 has the potential to yield therapeutic benefit in multiple autoimmune and inflammatory disease indications where inappropriate activation of the classical pathway cascade drives or exacerbates the disease pathology by inhibiting the ability of activated C1s to effect downstream complement activity, ameliorating complement mediated cell death and disruption of normal cellular function.

Current wording

Our most advanced product candidate, DNTH103, is a clinical-stage, highly potent, highly selective and fully human monoclonal immunoglobulin G4 with picomolar binding affinity that is designed to selectively bind only to the active form of the C1s complement protein. The active form of C1s is generated during complement activation by cleavage of the inactive proenzyme C1s. As a validated complement target in the autoimmune and inflammatory field, C1s inhibition prevents further progression of the classical pathway cascade. DNTH103 is engineered with YTE half-life extension technology, a specific three amino acid change in the Fc domain, and has a pharmacokinetic profile designed to support less frequent, lower dose, self-administration as a convenient S.C. injection. Data reported from DNTH103’s Phase 1 clinical trial in 60 healthy volunteers across eight dose cohorts validates the extended half-life and potent classical pathway inhibition and supports a potentially differentiated safety profile of DNTH103. The topline data confirmed its approximately 60-day half-life and highly potent classical pathway inhibition with every two weeks S.C. dosing of 300mg/2mL surpassing the calculated IC90 of 87ug/mL, establishing DNTH103’s best-in-class potential to be the first self-administered subcutaneous injection dosed as infrequently as every two weeks to treat a range of autoimmune disorders. Based on the clinical data available to date, DNTH103 was generally well tolerated with no serious adverse events or complement-related infections.

Previous wording

Since our inception in 2019, we have devoted substantially all of our resources to conducting research and development activities (including with respect to the DNTH103 program) and undertaking preclinical studies, conducting a clinical trial and the manufacturing of the product used in our clinical trials and preclinical studies, business planning, developing and maintaining our intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these activities.

Current wording

Since our inception in 2019, we have devoted substantially all of our resources to conducting research and development activities (including with respect to the DNTH103 program) and undertaking preclinical studies, conducting clinical trials and the manufacturing of the product used in our clinical trials and preclinical studies, business planning, developing and maintaining our intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these activities.

Previous wording

To date, we have funded our operations primarily with proceeds from the sale of capital stock and have raised aggregate gross proceeds of $423.5 million from private placements. As of March 31, 2024, we had cash, cash equivalents and short-term investments of $377.1 million. Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments should be sufficient to fund our operations into the second half of 2027. Until we achieve profitability, we plan to fund our operations and capital expenditures with cash on hand and expect to seek to raise any necessary additional capital through private or public equity or debt financings, loans or other capital sources, which could include income from collaborations, partnerships or other marketing, distribution, licensing or other strategic arrangements with third parties, or from grants. There can be no assurance that we will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to us. If we are unable to raise sufficient additional capital, we will be required to seek other alternatives which may include, among others, a delay or termination of our clinical trials or the development of our product candidates, temporary or permanent curtailment of our operations, a sale of our assets, or other alternatives with strategic or financial partners.

Current wording

To date, we have funded our operations primarily with proceeds from the sale of capital stock and have raised aggregate gross proceeds of $423.5 million from private placements. As of June 30, 2024, we had cash, cash equivalents and short-term investments of $360.7 million. Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments should be sufficient to fund our operations into the second half of 2027. Until we achieve profitability, we plan to fund our operations and capital expenditures with cash on hand and expect to seek to raise any necessary additional capital through private or public equity or debt financings, loans or other capital sources, which could include income from collaborations, partnerships or other marketing, distribution, licensing or other strategic arrangements with third parties, or from grants. There can be no assurance that we will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to us. If we are unable to raise sufficient additional capital, we will be required to seek other alternatives which may include, among others, a delay or termination of our clinical trials or the development of our product candidates, temporary or permanent curtailment of our operations, a sale of our assets, or other alternatives with strategic or financial partners.

Previous wording

We have incurred significant recurring losses. We generated net losses of $13.7 million and $7.1 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, we had an accumulated deficit of $103.2 million. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on a variety of factors, including the timing, scope and results of our research and development activities. We expect our expenses and capital requirements will increase substantially in connection with our ongoing activities, if and as we:

Current wording

We have incurred significant recurring losses. We generated net losses of $31.4 million and $18.2 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, we had an accumulated deficit of $120.8 million. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on a variety of factors, including the timing, scope and results of our research and development activities. We expect our expenses and capital requirements will increase substantially in connection with our ongoing activities, if and as we:

Previous wording

We do not have any products approved for commercial sale and we have not generated any commercial revenue from product sales. Our ability to generate product revenue sufficient to achieve and maintain profitability will depend upon the successful development and eventual commercialization of DNTH103 or any future product candidates, which we expect, if it ever occurs, will take many years. We expect to spend a significant amount on development and marketing costs prior to such time. We will therefore require substantial additional capital to develop DNTH103 and any future product candidates and to support our continuing operations. We may never succeed in achieving regulatory and marketing approval for DNTH103 or any future product candidates. We may obtain unexpected results from our preclinical and clinical trials. We may elect to discontinue, delay, or modify preclinical and clinical trials of DNTH103 or any future product candidates. 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. Accordingly, until such time that we can generate a sufficient amount of revenue from product sales or other sources, if ever, we expect to finance our operations through private or public equity or debt financings, loans or other capital sources, which could include income from collaborations, partnerships or other marketing, distribution, licensing or other strategic arrangements with third parties, or from grants. However, we may be unable to raise additional capital from these sources on favorable terms, or at all. Our failure to obtain sufficient capital on acceptable terms when needed could have a material adverse effect on our business, results of operations or financial condition, including requiring us to to seek other alternatives which may include, among others, a delay or termination of our clinical trials or the development of our product candidates, temporary or permanent curtailment of our operations, a sale of our assets, or other alternatives with strategic or financial partners. We may also be required to license rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose. We cannot provide assurance that we will ever generate positive cash flow from operating activities. See the section titled “—Liquidity and Capital Resources.”

Current wording

We do not have any products approved for commercial sale and we have not generated any commercial revenue from product sales. Our ability to generate product revenue sufficient to achieve and maintain profitability will depend upon the successful development and eventual commercialization of DNTH103 or any future product candidates, which we expect, if it ever occurs, will take many years. We expect to spend a significant amount on development and marketing costs prior to such time. We will therefore require substantial additional capital to develop DNTH103 and any future product candidates and to support our continuing operations. We may never succeed in achieving regulatory and marketing approval for DNTH103 or any future product candidates. We may obtain unexpected results from our preclinical and clinical trials. We may elect to discontinue, delay, or modify preclinical and clinical trials of DNTH103 or any future product candidates. 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. Accordingly, until such time that we can generate a sufficient amount of revenue from product sales or other sources, if ever, we expect to finance our operations through private or public equity or debt financings, loans or other capital sources, which could include income from collaborations, partnerships or other marketing, distribution, licensing or other strategic arrangements with third parties, or from grants. However, we may be unable to raise additional capital from these sources on favorable terms, or at all. Our failure to obtain sufficient capital on acceptable terms when needed could have a material adverse effect on our business, results of operations or financial condition, including requiring us to seek other alternatives which may include, among others, a delay or termination of our clinical trials or the development of our product candidates, temporary or permanent curtailment of our operations, a sale of our assets, or other alternatives with strategic or financial partners. We may also be required to license rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose. We cannot provide assurance that we will ever generate positive cash flow from operating activities. See the section titled “—Liquidity and Capital Resources.”

Previous wording

Uncertainty in the global economy presents significant risks to our business. We are subject to continuing risks and uncertainties in connection with the current macroeconomic environment, including increases in inflation, rising interest rates, general economic slowdown or a recession, changes in foreign currency exchange rates, recent bank failures, the prospect of a shutdown of the U.S. federal government, geopolitical factors, including rising tensions between China and Taiwan, the ongoing conflict in the Middle East, the attacks on marine vessels traversing the Red Sea and the conflict between Russia and Ukraine and the responses thereto, pandemics or other public health crises and supply chain disruptions. While we are closely monitoring the impact of the current macroeconomic conditions on all aspects of our business, including the impacts on participants in our clinical trials, employees, suppliers, vendors, business partners and regulators, the ultimate extent of the impact on our business remains highly uncertain and will depend on future developments and factors that continue to evolve. Most of these developments and factors are outside of our control and could exist for an extended period of time. We will continue to evaluate the nature and extent of the potential impacts to Dianthus’ business, results of operations, liquidity and capital resources. For additional information, see the section titled “Risk Factors” found elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 21, 2024.

Current wording

Uncertainty in the global economy presents significant risks to our business. We are subject to continuing risks and uncertainties in connection with legislative, regulatory, political, geopolitical and macroeconomic developments beyond our control, including inflationary pressures, general economic slowdown or a recession, high interest rates, changes in monetary policy or foreign currency exchange rates, instability in financial institutions, the prospect of a shutdown of the U.S. federal government, the ongoing conflict in Ukraine, conflict in the Middle East, rising tensions between China and Taiwan, the attacks on marine vessels traversing the Red Sea and the responses thereto, pandemics or other public health crises and supply chain disruptions. While we are closely monitoring the impact of the current macroeconomic conditions on all aspects of our business, including the impacts on participants in our clinical trials, employees, suppliers, vendors, business partners and regulators, the ultimate extent of the impact on our business remains highly uncertain and will depend on future developments and factors that continue to evolve. Most of these developments and factors are outside of our control and could exist for an extended period of time. We will continue to evaluate the nature and extent of the potential impacts to Dianthus’ business, results of operations, liquidity and capital resources. For additional information, see the section titled “Risk Factors” found elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 21, 2024.

Previous wording

We are a party to an option agreement and license agreement with Zenas BioPharma Limited (“Zenas BioPharma”), a related party. In September 2020, we entered into an option agreement with Zenas BioPharma (“Zenas Option”), through which we provided Zenas BioPharma an option to enter into an exclusive license agreement for the development and commercialization of products arising from our research of monoclonal antibody antagonists targeting certain specific complement proteins. In June 2022, we and Zenas BioPharma executed a license agreement (“Zenas License Agreement”). The Zenas Option and Zenas License Agreement are collectively referred to as the “Zenas Agreements.” The Zenas License Agreement provides Zenas BioPharma with a license in the People’s Republic of China, including Hong Kong, Macau, and Taiwan, for the development and commercialization of sequences and products under the first antibody sequence.

Current wording

We are a party to an option agreement and license agreement with Zenas BioPharma, Inc. (formerly Zenas BioPharma Limited) (“Zenas BioPharma”), a related party. In September 2020, we entered into an option agreement with Zenas BioPharma (“Zenas Option”), through which we provided Zenas BioPharma an option to enter into an exclusive license agreement for the development and commercialization of products arising from our research of monoclonal antibody antagonists targeting certain specific complement proteins. In June 2022, we and Zenas BioPharma executed a license agreement (“Zenas License Agreement”). The Zenas Option and Zenas License Agreement are collectively referred to as the “Zenas Agreements.” The Zenas License Agreement provides Zenas BioPharma with a license in the People’s Republic of China, including Hong Kong, Macau, and Taiwan, for the development and commercialization of sequences and products under the first antibody sequence.

Previous wording

For the three months ended March 31, 2024 and 2023, we recognized related party license revenue totaling $0.9 million and $0.5 million, respectively, associated with the Zenas Agreements.

Current wording

For the three months ended June 30, 2024 and 2023, we recognized related party license revenue totaling $1.9 million and $1.0 million, respectively, associated with the Zenas Agreements. For the six months ended June 30, 2024 and 2023, we recognized related party license revenue totaling $2.7 million and $1.5 million, respectively, associated with the Zenas Agreements.

Previous wording

Research and development expenses were $13.1 million for the three months ended March 31, 2024, as compared to $5.8 million for the three months ended March 31, 2023, an increase of $7.3 million. This increase was due to (1) a $4.7 million increase in external research and development costs, consisting of preclinical study costs, CMC activities, third-party consulting services, clinical operation activities, license and milestone payments and discovery activities and (2) a $2.6 million increase in internal research and development costs, consisting of personnel and related costs, stock-based compensation expense, and other costs.

Current wording

Research and development expenses were $18.1 million for the three months ended June 30, 2024, as compared to $10.3 million for the three months ended June 30, 2023, an increase of $7.8 million. This increase was due to (1) a $5.1 million increase in external research and development costs, consisting of preclinical study costs, CMC activities, third-party consulting services, clinical operation activities, license and milestone payments and discovery activities and (2) a $2.7 million increase in internal research and development costs, consisting of personnel and related costs, stock-based compensation expense, and other costs.

Previous wording

General and administrative expenses were $5.6 million for the three months ended March 31, 2024, as compared to $2.3 million for the three months ended March 31, 2023, an increase of $3.3 million. The increase was primarily due to increases of $0.8 million in personnel-related costs, $0.9 million in stock-based compensation expense, $0.7 million in professional services costs, $0.6 million in consulting costs and $0.3 million in other costs. The increases were due to building out the general and administrative function to operate as a public company and support our ongoing and multiple planned Phase 2 clinical trials.

Current wording

General and administrative expenses were $6.0 million for the three months ended June 30, 2024, as compared to $2.5 million for the three months ended June 30, 2023, an increase of $3.5 million. The increase was primarily due to increases of $0.8 million in personnel-related costs, $1.4 million in stock-based compensation expense, $0.4 million in professional services costs, $0.3 million in third-party consulting services costs and $0.6 million in other costs. The increases in costs were due to the build out of our general and administrative function to support our operations as a public company and to support our ongoing and planned Phase 2 clinical trials.

Previous wording

Other income/(expense) was $4.1 million for the three months ended March 31, 2024, as compared to $0.6 million for the three months ended March 31, 2023, an increase of $3.5 million. The increase was primarily due to an increase of $3.6 million in interest income from a larger investment balance and higher interest rates on investments.

Current wording

Other income was $4.6 million for the three months ended June 30, 2024, as compared to $0.6 million for the three months ended June 30, 2023, an increase of $4.0 million. The increase was primarily due to an increase in interest income from a larger investment balance and higher interest rates on investments.

Previous wording

Under the terms of the Zenas Agreements, we recognized related party license revenue of $0.9 million and $0.5 million for the three months ended March 31, 2024 and 2023, respectively. The increase was primarily due increased clinical operations activity costs associated with the commencement of DNTH103's Phase 2 clinical trial in generalized Myasthenia Gravis (“gMG”) in the first quarter of 2024.

Current wording

Under the terms of the Zenas Agreements, we recognized related party license revenue of $2.7 million and $1.5 million for the six months ended June 30, 2024 and 2023, respectively. The increase was primarily due increased clinical operations activity costs associated with the commencement of DNTH103's Phase 2 clinical trial in gMG in the first quarter of 2024, along with preparations to initiate additional Phase 2 clinical trials in MMN and CIDP in the second half of 2024.

Previous wording

The $4.7 million increase in external research and development costs was due to a $4.6 million increase in expenses related to our lead product candidate, DNTH103, and a $0.1 million increase in discovery activities. For three months ended March 31, 2024, as compared to the three months ended March 31, 2023, there were increases related to DNTH103 of $2.6 million in clinical operations activities, $2.3 million in CMC activities and $0.3 million in third-party consulting services partially offset by a decrease related to DNTH103 of $0.6 million in preclinical study costs. The increased amount of DNTH103-related costs in clinical operations, CMC and consulting results from activities related to the commencement of a Phase 2 clinical trial in gMG in the first quarter of 2024 along with preparations to initiate additional Phase 2 clinical trials in Multifocal Motor Neuropathy in the second quarter of 2024 and Chronic Inflammatory Demyelinating Polyneuropathy in the second half of 2024. The decreased amounts of DNTH103-related preclinical study costs results from the substantial completion of a chronic toxicology study in the second half of 2023. The $0.1 million increase in discovery expenses related to development activities of potential molecules beyond DNTH103 in the three months ended March 31, 2024.

Current wording

The $9.7 million increase in external research and development costs was due to a $9.6 million increase in expenses related to our lead product candidate, DNTH103, and a $0.1 million increase in expenses related to our discovery activities. For the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, there were increases in expenses related to DNTH103 of $6.1 million in clinical operations activities, $3.1 million in CMC activities, $0.5 million in third-party consulting services and $0.5 million in licensing and milestone payments, partially offset by a decrease of $0.6 million in preclinical study costs related to DNTH103. The increased amount of DNTH103-related costs in clinical operations, CMC, consulting and milestone payments results from activities related to the commencement of DNTH103’s Phase 2 clinical trial in gMG in the first quarter of 2024 and our preparations to initiate additional Phase 2 clinical trials in MMN (following the clearance of our Phase 2 IND application by the FDA in the second quarter of 2024) and in CIDP in the second half of 2024. The decreased amounts of DNTH103-related preclinical study costs was due to the substantial completion of a chronic toxicology study in the second half of 2023. The $0.1 million increase in expenses related to our discovery activities was due to development activities of potential molecules beyond DNTH103 in the six months ended June 30, 2024.

Previous wording

The $2.6 million increase in internal research and development costs was due to a $1.8 million increase in personnel and related costs, a $0.6 million increase in share-based compensation, and a $0.2 million increase in other costs. The increases were due to building out the research and development function to support multiple planned Phase 2 clinical trials.

Current wording

The $5.4 million increase in internal research and development costs was due to a $3.0 million increase in personnel and related costs, a $1.9 million increase in stock-based compensation expense, and a $0.5 million increase in other costs. The increases were due to the build out of our internal research and development function to support our ongoing and planned Phase 2 clinical trials.

Previous wording

In order to complete the development of DNTH103 or any future product candidates and to build the sales, marketing and distribution infrastructure that we believe will be necessary to commercialize product candidates, if approved, we will require substantial additional capital. Accordingly, until such time that we can generate a sufficient amount of revenue from product sales or other sources, if ever, we expect to seek to raise any necessary additional capital through private or public equity or debt financings, loans or other capital sources, which could include income from collaborations, partnerships or other marketing, distribution, licensing or other strategic arrangements with third parties, or from grants. To the extent that we raise additional capital through equity financings or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, including restricting our operations and limiting our ability to incur liens, issue additional debt, pay dividends, repurchase our common stock, make certain investments or engage in merger, consolidation, licensing, or asset sale transactions. If we raise capital through collaborations, partnerships, and other similar arrangements with third parties, we may be required to grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. We may be unable to raise additional capital from these sources on favorable terms, or at all. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from recent bank failures, other general macroeconomic conditions and otherwise. Our failure to obtain sufficient capital on acceptable terms when needed could have a material adverse effect on our business, results of operations or financial condition, including requiring us to to seek other alternatives which may include, among others, a delay or termination of our clinical trials or the development of our product candidates, temporary or permanent curtailment of our operations, a sale of our assets, or other alternatives with strategic or financial partners. We cannot provide assurance that we will ever generate positive cash flow from operating activities.

Current wording

In order to complete the development of DNTH103 or any future product candidates and to build the sales, marketing and distribution infrastructure that we believe will be necessary to commercialize product candidates, if approved, we will require substantial additional capital. Accordingly, until such time that we can generate a sufficient amount of revenue from product sales or other sources, if ever, we expect to seek to raise any necessary additional capital through private or public equity or debt financings, loans or other capital sources, which could include income from collaborations, partnerships or other marketing, distribution, licensing or other strategic arrangements with third parties, or from grants. To the extent that we raise additional capital through equity financings or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, including restricting our operations and limiting our ability to incur liens, issue additional debt, pay dividends, repurchase our common stock, make certain investments or engage in merger, consolidation, licensing, or asset sale transactions. If we raise capital through collaborations, partnerships, and other similar arrangements with third parties, we may be required to grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. We may be unable to raise additional capital from these sources on favorable terms, or at all. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from bank failures, other general macroeconomic conditions and otherwise. Our failure to obtain sufficient capital on acceptable terms when needed could have a material adverse effect on our business, results of operations or financial condition, including requiring us to seek other alternatives which may include, among others, a delay or termination of our clinical trials or the development of our product candidates, temporary or permanent curtailment of our operations, a sale of our assets, or other alternatives with strategic or financial partners. We cannot provide assurance that we will ever generate positive cash flow from operating activities.

Previous wording

To date, we have funded our operations primarily with proceeds from the sale of capital stock and have raised aggregate gross proceeds of $423.5 million. However, we have incurred significant recurring losses. We had an accumulated deficit of $103.2 million as of March 31, 2024. As of March 31, 2024, we had cash, cash equivalents and short-term investments of $377.1 million. Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments should be sufficient to fund our operations into the second half of 2027. Until we achieve profitability, we plan to fund our operations and capital expenditures with cash on hand and expect to seek to raise any necessary additional capital through private or public equity or debt financings, loans or other capital sources, which could include income from collaborations, partnerships or other marketing, distribution, licensing or other strategic arrangements with third parties, or from grants. There can be no assurance that we will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to us. Our failure to obtain sufficient capital on acceptable terms when needed could have a material adverse effect on our business, results of operations or financial condition, including requiring us to to seek other alternatives which may include, among others, a delay or termination of our clinical trials or the development of our product candidates, temporary or permanent curtailment of our operations, a sale of our assets, or other alternatives with strategic or financial partners.

Current wording

To date, we have funded our operations primarily with proceeds from the sale of capital stock and have raised aggregate gross proceeds of $423.5 million. However, we have incurred significant recurring losses. We had an accumulated deficit of $120.8 million as of June 30, 2024. As of June 30, 2024, we had cash, cash equivalents and short-term investments of $360.7 million. Based on our current operating plan, we believe that our existing cash, cash equivalents and short-term investments should be sufficient to fund our operations into the second half of 2027. Until we achieve profitability, we plan to fund our operations and capital expenditures with cash on hand and expect to seek to raise any necessary additional capital through private or public equity or debt financings, loans or other capital sources, which could include income from collaborations, partnerships or other marketing, distribution, licensing or other strategic arrangements with third parties, or from grants. There can be no assurance that we will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to us. Our failure to obtain sufficient capital on acceptable terms when needed could have a material adverse effect on our business, results of operations or financial condition, including requiring us to seek other alternatives which may include, among others, a delay or termination of our clinical trials or the development of our product candidates, temporary or permanent curtailment of our operations, a sale of our assets, or other alternatives with strategic or financial partners.

Previous wording

For the three months ended March 31, 2024, net cash used in operating activities consisted of a net loss of $13.7 million and an increase in net operating assets and liabilities of $2.8 million, partially offset by net non-cash operating expenses of $1.6 million. The increase in net operating assets and liabilities was primarily attributable to a decrease in accounts payable, accrued expenses and lease liabilities of $3.0 million and increases in unbilled receivable from Zenas BioPharma of $0.3 million and receivable from Zenas BioPharma of $0.1 million, partially offset by decreases in prepaid expenses and other current assets of $0.3 million and other assets of $0.3 million. The non-cash operating expenses consisted mainly of stock-based compensation expense of $2.0 million and amortization of right-of-use lease assets of $0.1 million, partially offset by accretion of discount on short-term investments of $0.5 million.

Current wording

For the six months ended June 30, 2024, net cash used in operating activities consisted of a net loss of $31.4 million and an increase in net operating assets and liabilities of $2.5 million, partially offset by net non-cash operating expenses of $4.4 million. The increase in net operating assets and liabilities was primarily attributable to increases in other assets of $1.5 million, unbilled receivable from Zenas BioPharma of $0.6 million, receivable from Zenas BioPharma of $0.5 million and prepaid expenses and other current assets of $0.1 million, partially offset by an increase in accounts payable, accrued expenses and operating lease liabilities of $0.2 million. The non-cash operating expenses consisted mainly of stock-based compensation expense of $5.1 million and amortization of right-of-use operating lease assets of $0.2 million, partially offset by accretion of discount on short-term investments of $0.9 million.

Previous wording

For the three months ended March 31, 2023, net cash used in operating activities consisted of a net loss of $7.1 million and an increase in net operating assets and liabilities of $3.4 million, partially offset by net non-cash operating expenses of $0.2 million. The increase in net operating assets and liabilities was primarily due to a decrease in accounts payable, accrued expenses and lease liabilities of $4.7 million, partially offset by decreases in receivable from Zenas BioPharma of $0.8 million, unbilled receivable from Zenas BioPharma of $0.4 million and prepaid expenses and other current assets of $0.1 million. The non-cash operating expenses consisted mainly of stock-based compensation expense of $0.5 million and amortization of right-of-use lease assets of $0.1 million, partially offset by accretion of discount on short-term investments of $0.4 million.

Current wording

For the six months ended June 30, 2023, net cash used in operating activities consisted of a net loss of $18.2 million, partially offset by a decrease in net operating assets and liabilities of $2.6 million and net non-cash operating expenses of $0.6 million. The decrease in net operating assets and liabilities was primarily attributable to decreases in receivable from Zenas BioPharma of $4.3 million, unbilled receivable from Zenas BioPharma of $0.5 million and prepaid expenses and other current assets of $0.7 million, partially offset by an increase in deferred transaction costs related to the Reverse Merger of $1.2 million and a decrease in accounts payable, accrued expenses and operating lease liabilities of $1.7 million. The non-cash operating expenses consisted mainly of stock-based compensation expense of $1.0 million and amortization of right-of-use operating lease assets of $0.1 million, partially offset by accretion of discount on short-term investments of $0.5 million.

Previous wording

For the three months ended March 31, 2024, net cash used in investing activities consisted of $20.5 million of purchases of short-term investments, partially offset by $15.0 million of proceeds from maturities of short-term investments.

Current wording

For the six months ended June 30, 2024, net cash used in investing activities consisted of $27.3 million of purchases of short-term investments, partially offset by $23.0 million of proceeds from maturities of short-term investments.

Previous wording

For the three months ended March 31, 2023, net cash provided by investing activities consisted of $22.0 million of proceeds from maturities of short-term investments, partially offset by $3.9 million of purchases of short-term investments.

Current wording

For the six months ended June 30, 2023, net cash provided by investing activities consisted of $43.9 million of proceeds from maturities of short-term investments, partially offset by $3.9 million of purchases of short-term investments.

Previous wording

For the three months ended March 31, 2024, net cash provided by financing activities primarily consisted of $217.5 million of net proceeds from the private placement and $0.3 million of proceeds from the exercise of stock options.

Current wording

For the six months ended June 30, 2024, net cash provided by financing activities consisted of $215.3 million of net proceeds from the private placement and $0.3 million of proceeds from the exercise of stock options.

Previous wording

For the three months ended March 31, 2023, net cash provided by financing activities consisted of $0.4 million of proceeds from promissory notes payable to related party, offset by a $0.4 million repayment of promissory notes payable to related party.

Current wording

For the six months ended June 30, 2023, net cash provided by financing activities consisted of $0.4 million of proceeds from promissory notes payable to Fairmount Funds, offset by a $0.4 million repayment of promissory notes payable to Fairmount Funds.

Previous wording

In September 2022, Former Dianthus entered into a commercial platform license agreement and services agreement with two subsidiaries of Ligand Pharmaceuticals Incorporated (“Ligand”). In November 2022, Ligand spun-off these subsidiaries into a separate legal entity, OmniAb, Inc. (“OmniAb”), for (i) a worldwide, non-exclusive, non-sublicensable license under the OmniAb technology to use chicken animals for generation of OmniAb antibodies for research purposes and (ii) a worldwide, non-exclusive license under the OmniAb technology to use rodent animals for generation of OmniAb antibodies for research purposes. In addition to annual license fees, we are obligated to pay development milestones payments of up to $12.2 million and to pay royalties in the low to mid-single digits.

Current wording

In September 2022, Former Dianthus entered into a commercial platform license agreement and services agreement with two subsidiaries of Ligand Pharmaceuticals Incorporated (“Ligand”). In November 2022, Ligand spun-off these subsidiaries into a separate legal entity, OmniAb, Inc. (“OmniAb”). The platform license agreement and services agreement with OmniAb grants us (i) a worldwide, non-exclusive, non-sublicensable license under the OmniAb technology to use chicken animals for generation of OmniAb antibodies for research purposes and (ii) a worldwide, non-exclusive license under the OmniAb technology to use rodent animals for generation of OmniAb antibodies for research purposes. In addition to annual license fees, we are obligated to pay development milestones payments of up to $12.2 million and to pay royalties in the low to mid-single digit percentages.

Previous wording

We enter consulting, research, and other agreements with commercial firms, researchers, and others for the provision of goods and services. Under such agreements, we may pay for services on a monthly, quarterly, project or other basis. Such arrangements are generally cancelable upon reasonable notice and payment of costs incurred. Costs are considered incurred based on an evaluation of the progress to completion of specific tasks under each contract using information and data provided to us by our service providers or our estimate of the level of service that has been performed at each reporting date, whereas payments are dictated by the terms of each agreement. As such, depending on the timing of payment relative to the receipt of goods or services, we may record either prepaid expenses or accrued services. These costs consist of direct and indirect costs associated with specific projects, as well as fees paid to various entities that perform certain research on our behalf.

Current wording

We enter into consulting, research, and other agreements with commercial firms, researchers, and others for the provision of goods and services. Under such agreements, we may pay for services on a monthly, quarterly, project or other basis. Such arrangements are generally cancelable upon reasonable notice and payment of costs incurred. Costs are considered incurred based on an evaluation of the progress to completion of specific tasks under each contract using information and data provided to us by our service providers or our estimate of the level of service that has been performed at each reporting date, whereas payments are dictated by the terms of each agreement. As such, depending on the timing of payment relative to the receipt of goods or services, we may record either prepaid expenses or accrued services. These costs consist of direct and indirect costs associated with specific projects, as well as fees paid to various entities that perform certain research on our behalf.

Previous wording

We account for stock-based compensation awards in accordance with ASC Topic 718, Compensation—Stock Compensation, (“ASC 718”). ASC 718 requires all stock-based payments, including grants of stock options and restricted stock, to be recognized in the consolidated statements of operations and comprehensive loss based on their fair values. All of our stock option awards are subject only to service-based vesting conditions. We estimate the fair value of our stock-based awards using the Black-Scholes option pricing model, which requires the input of assumptions, including (a) the fair value of the common stock, (b) the expected stock price volatility, (c) the calculation of expected term of the award, (d) the risk-free interest rate and (e) expected dividends. We estimate the fair value of the restricted stock awards using the fair value of our common stock. Forfeitures are recognized as they are incurred.

Current wording

We account for stock-based compensation awards in accordance with ASC Topic 718, Compensation—Stock Compensation, (“ASC 718”). ASC 718 requires all stock-based payments, including grants of stock options and restricted stock, to be recognized in the unaudited condensed consolidated statements of operations and comprehensive loss based on their fair values. All of our stock option awards are subject only to service-based vesting conditions. We estimate the fair value of our stock-based awards using the Black-Scholes option pricing model, which requires the input of assumptions, including (a) the fair value of the common stock, (b) the expected stock price volatility, (c) the calculation of expected term of the award, (d) the risk-free interest rate and (e) expected dividends. We estimate the fair value of the restricted stock awards using the fair value of our common stock. Forfeitures are recognized as they are incurred.

Previous wording

Prior to the Reverse Merger, due to a lack of company-specific historical and implied volatility data, we based our estimate of expected volatility on the historical volatility of a representative group of companies with similar characteristics to us, including stage of product development and life science industry focus. We believed the group selected had sufficiently similar economic and industry characteristics and included companies that were most representative of us. Following the Reverse Merger, expected volatility at the date of grant is estimated using a “look-back” period, which coincides with the expected term, of our stock price as reported on the Nasdaq Capital Market.

Current wording

Prior to the Reverse Merger, due to a lack of company-specific historical and implied volatility data, we based our estimate of expected volatility on the historical volatility of a representative group of companies with similar characteristics to us, including stage of product development and life science industry focus. We believe the group selected had sufficiently similar economic and industry characteristics and includes companies that were most representative of us. Following the Reverse Merger, expected volatility at the date of grant is estimated using a “look-back” period, which coincides with the expected term, of our stock price as reported on the Nasdaq Capital Market.