Coya Therapeutics Inc
For the period ended Jun 30, 2024. Filed Aug 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 12, 2024
COYA$2.99+6.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0000950170-24-057056
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-12.
0000950170-24-095075
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 142 previous paragraphs and 145 current paragraphs.
113 unchanged; 21 reworded; 7 added; 8 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 3 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
We submitted an IND filing with the U.S. Food and Drug Administration, or the FDA, in the second quarter of 2024. On July 12, 2024, we received an email notification from the FDA stating that additional non-clinical data is required prior to the initiation of a Phase 2 trial and that further guidance would be provided. On August 9, 2024, the FDA provided feedback that additional non-clinical toxicology/pharmacology data must be submitted prior to initiating our planned randomized, double-blind placebo-controlled Phase 2 study of our first-in-class biologic combination COYA 302 in patients with ALS. We intend to discuss the recommendations with the FDA in the fourth quarter of 2024 to align on our revised non-clinical package to enable the implementation of the study. We will provide further details following the meeting with the FDA. While we hope to initiate a Phase 2 clinical trial of COYA 302 in ALS after coming to agreement with the FDA on our non-clinical plans and after receiving their approval of our IND, there can be no certainty that the FDA will find that additional information sufficient or that they will permit us to start clinical trials with COYA 302 within our proposed timing or at all.
Current report
On October 9, 2023, we announced that the randomized, double-blind placebo-controlled Investigator Initiated Trial in Alzheimer’s Disease assessing LD IL-2 entitled: “A Phase II Clinical Trial of Interleukin-2 (IL-2) in Patients with Mild to Moderate Alzheimer's Disease,” was fully enrolled with 38 patients. This study is being conducted by investigators at Houston Methodist Research Institute and is supported by the Gates Foundation and the Alzheimer’s Association. The study will evaluate the safety and tolerability, biological activity, blood and cerebrospinal fluid biomarkers, neuroimaging, and changes in cognitive function of LD IL-2 compared to placebo at pre-specified timepoints over the course of the 21-week treatment period and at 9 weeks after the last dose of study treatment. Although we had expected to disclose the data from the study during the summer of 2024, based on the decision by the investigators (who are independent from us) this data will now be presented at a poster presentation in person during the 17th edition of the Clinical Trials on Alzheimer’s Disease Conference, or CTAD24, to be held in Madrid (Spain) on October 29th - November 1, 2024.
Current report
We intend to provide an update on the proposed timing for filing an IND for COYA 302 for the treatment of FTD after the proposed fourth quarter 2024 discussion with the FDA discussed above.
Current report
On May 17, 2024, we entered into a Securities Purchase Agreement with the Alzheimer's Drug Discovery Foundation, or the ADDF, for the issuance and sale in a private placement of 603,136 shares of our common stock at a purchase price of $8.29 per share for net proceeds of $4.9 million, or the 2024 Private Placement. In connection with the Securities Purchase Agreement, we entered into an Agreement to Accept Conditions for Biotechnology Funding agreement, or the Funding Agreement, with ADDF, pursuant to which the proceeds received in connection with the Securities Purchase agreement shall be used for a Phase 2 study of COYA 302 in FTD.
Current report
Comparison of the six months ended June 30, 2024 and 2023
Current report
General and administrative expenses increased by $1.0 million from $3.5 million for the six months ended June 30, 2023 compared to $4.5 million for the six months ended June 30, 2024. The increase was primarily due to an $0.8 million increase in personnel related expenses primarily related to an increase in stock-based compensation and employee headcount, and a $0.3 million increase in board fees and taxes, partially offset by a $0.1 million decrease in office expenses.
Current report
In June 2024, we entered into the First Amendment to the DRL Development Agreement, or the First Amendment, with DRL and Dr. Reddy's, pursuant to which, among other things, Dr. Reddy's paid us a one-time payment of $3.9 million and, in return, Dr. Reddy's will have no obligation to pay the first $6.0 million in royalty payments that would have otherwise been payable to us under the DRL Development Agreement.
Removed paragraphs (8)
Previous report
On December 5, 2023, we entered into a Securities Purchase Agreement with certain accredited investors for the issuance and sale in a private placement of 4,370,382 shares of our common stock, or the 2023 Private Placement, at a price of $6.06 per share which resulted in net proceeds of approximately $24.0 million. In connection with the 2023 Private Placement, we issued to the placement agents and our financial advisor warrants to purchase up to an aggregate of 319,004 shares of common stock with an exercise price of $7.58 per share. These warrants have a term of four years from issuance, and will be exercisable beginning six months from the closing of the 2023 Private Placement.
Previous report
On January 3, 2023, we closed our initial public offering, or IPO, of 3,050,000 shares of our common stock and accompanying warrants to purchase up to 1,525,000 shares of common stock. The warrants were offered and sold at the rate of one warrant for every two shares of common stock purchased in the offering, with each full warrant having an exercise price of $7.50 per share. Each share of common stock and accompanying warrant were sold at a combined offering price of $5.00, for gross proceeds of approximately $15.3 million, before deducting underwriting discounts and offering expenses. We issued the underwriters an additional 213,500 warrants with an exercise price of $6.25 per warrant as additional consideration. We granted the underwriters a 30-day over-allotment option to purchase up to an additional 290,000 shares of common stock and warrants to purchase 145,000 shares of common stock at IPO price, less the underwriting discount. On January 25, 2023, we sold an additional 237,804 shares of common stock and accompanying warrants to purchase up to 145,000 shares of common stock upon the underwriters' exercise in part of their over-allotment option for additional gross proceeds of approximately $1.1 million, before deducting underwriting discounts and offering expenses. Upon the sale of the over-allotment option, we issued the underwriters an additional 16,646 warrants with an exercise price of $6.25 per warrant.
Previous report
Research and Development Expenses
Previous report
General and Administrative Expenses
Previous report
Other Income, Net
Previous report
Research and Development Expenses
Previous report
General and Administrative Expenses
Previous report
Other Income, Net
Reworded paragraphs (21)
Previous wording
We are a clinical-stage biotechnology company focused on developing proprietary new therapies to enhance the function of regulatory T cells ("Tregs"). Tregs are a subpopulation of T-lymphocytes consisting of CD4+CD25high hFOXP3+ cells that suppress inflammatory responses. Tregs were first discovered in 1995 by Dr. Shimon Sakaguchi and since their discovery, multiple lines of research have contributed to elucidate Treg biology and its role in health and disease. Tregs and their transcription factors have been shown to be essential to maintaining cellular homeostasis by regulating autoimmune and inflammatory responses and maintaining self-tolerance in mammals. Dysfunctional Tregs underlie numerous disease states, and this cellular dysfunction is driven by the chronic inflammatory environment and high levels of oxidative stress commonly observed in certain diseases. Further, the degree of Treg dysfunction is correlated with the severity and progression of serious and life-threatening conditions. These and other recent advances in the understanding of Treg biology, have made this subset of T-lymphocytes an important potential therapeutic target, which we believe may provide new treatments for serious diseases.
Current wording
We are a clinical-stage biotechnology company focused on developing proprietary new therapies to enhance the function of regulatory T cells, or Tregs. Tregs are a subpopulation of T-lymphocytes consisting of CD4+CD25high hFOXP3+ cells that suppress inflammatory responses. Tregs were first discovered in 1995 by Dr. Shimon Sakaguchi and since their discovery, multiple lines of research have contributed to elucidate Treg biology and its role in health and disease. Tregs and their transcription factors have been shown to be essential to maintaining cellular homeostasis by regulating autoimmune and inflammatory responses and maintaining self-tolerance in mammals. Dysfunctional Tregs underlie numerous disease states, and this cellular dysfunction is driven by the chronic inflammatory environment and high levels of oxidative stress commonly observed in certain diseases. Further, the degree of Treg dysfunction is correlated with the severity and progression of serious and life-threatening conditions. These and other recent advances in the understanding of Treg biology, have made this subset of T-lymphocytes an important potential therapeutic target, which we believe may provide new treatments for serious diseases.
Previous wording
Our operations have consisted of developing our clinical and preclinical product candidates and we have devoted substantially all of our resources to developing product and technology rights, conducting research and development, organizing and staffing our company, business planning and raising capital. We have funded our operations primarily through private convertible preferred stock offerings, a convertible debt financing, the public offering of our securities that closed in January 2023 and private securities offerings. Our net losses were $5.1 million and $2.7 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, we had an accumulated deficit of $30.9 million. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current or future product candidates.
Current wording
Our operations have consisted of developing our clinical and preclinical product candidates and we have devoted substantially all of our resources to developing product and technology rights, conducting research and development, organizing and staffing our company, business planning and raising capital. We have funded our operations primarily through private convertible preferred stock offerings, a convertible debt financing, the public offering of our securities that closed in January 2023, two private security offerings, and payments from Dr. Reddy's Laboratories Ltd., or DRL, and its affiliate, Dr. Reddy's Laboratories SA, collectively, Dr. Reddy's, in accordance with the Development and License Agreement, or DRL Development Agreement, as amended in June 2024. Our net losses were $2.9 million and $3.1 million for the three months ended June 30, 2024 and 2023, respectively. Our net losses were $7.9 million and $5.8 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, we had an accumulated deficit of $33.8 million. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current or future product candidates.
Previous wording
During the first half of 2023, our combination product for neurodegenerative diseases, or COYA 302, and our low dose IL-2, or COYA 301, showed positive results in a proof of concept, or POC, open label study in amyotrophic lateral sclerosis, or ALS, patients and in Alzheimer’s Disease, or AD, patients, respectively. Both POC studies were conducted with commercially available products as investigator-initiated trials.
Current wording
During the first half of 2023, our combination product for neurodegenerative diseases, or COYA 302, and our LD IL-2, or COYA 301, showed positive results in a proof of concept, or POC, open label study in amyotrophic lateral sclerosis, or ALS, patients and in Alzheimer’s Disease, or AD, patients, respectively. Both POC studies were conducted with commercially available products as investigator-initiated trials.
Previous wording
The POC study in support of COYA 302, an open label study conducted in 4 ALS patients, evaluated the safety and tolerability, function of regulatory T-cells, biomarkers, and preliminary efficacy (as measured by the ALSFRS-R scale) utilizing commercially available IL-2 and abatacept. Study data showed no decline or minimal decline at 24 and 48 weeks respectively after initiation of treatment and appeared to be well tolerated in all study patients as no serious adverse events were reported. Twenty-four weeks is an important timepoint as this is the period that ALS studies are usually benchmarked to measure differences in the ALSFRS-R scale for a treatment versus placebo. Based on this POC data, we intend to design a well-powered and well-controlled study to demonstrate the safety and efficacy of COYA 302 (COYA 301 or low dose IL-2, plus an abatacept proposed biosimilar, or DRL_AB, licensed from Dr. Reddy's Laboratories Ltd., or DRL) in patients with ALS. We are now preparing for an IND filing with the FDA in the second quarter of 2024. We intend to initiate a Phase 2 trial after the acceptance of our IND application by the FDA.
Current wording
The POC study in support of COYA 302, an open label study conducted in 4 ALS patients, evaluated the safety and tolerability, function of regulatory T-cells, biomarkers, and preliminary efficacy (as measured by the ALSFRS-R scale) utilizing commercially available IL-2 and abatacept. Study data showed no decline or minimal decline at 24 and 48 weeks respectively after initiation of treatment and appeared to be well tolerated in all study patients as no serious adverse events were reported. Twenty-four weeks is an important timepoint as this is the period that ALS studies are usually benchmarked to measure differences in the ALSFRS-R scale for a treatment versus placebo. Based on this POC data, we decided to design and conduct a well-powered and well-controlled Phase 2 study to demonstrate the safety and efficacy of COYA 302 (COYA 301 or LD IL-2, plus an abatacept proposed biosimilar, or DRL_AB, licensed from DRL) in patients with ALS.
Previous wording
The POC study in support of COYA 301, an open label study conducted in 8 patients with AD, evaluated the safety and tolerability, biological activity, blood biomarkers, and preliminary efficacy of commercially available IL-2. Study data found that (i) cognitive function, as measured by 3 validated tools, either improved or did not decline, (ii) Treg function was significantly enhanced, (iii) pro-inflammatory blood cytokines and chemokines were significantly reduced with evidence of reduced neuroinflammation in the brain and (iv) the study treatment appeared to be well tolerated as no serious adverse events were reported. Currently, an ongoing academic Phase 2 double-blind, placebo-controlled, randomized trial for use of low dose IL-2 in mild to moderate AD patients is underway at Houston Methodist and we anticipate reporting top line data in the summer of 2024. On October 9, 2023, we announced that this study was fully enrolled with 38 patients. The study will evaluate the safety and tolerability, biological activity, blood and cerebrospinal fluid biomarkers, neuroimaging, and changes in cognitive function of LD IL-2 compared to placebo at pre-specified timepoints over the course of the 21-week treatment period and at 9 weeks after the last dose of study treatment.
Current wording
The POC study in support of COYA 301, an open label study conducted in 8 patients with AD, evaluated the safety and tolerability, biological activity, blood biomarkers, and preliminary efficacy of commercially available IL-2. Study data found that (i) cognitive function, as measured by 3 validated tools, either improved or did not decline, (ii) Treg function was significantly enhanced, (iii) pro-inflammatory blood cytokines and chemokines were significantly reduced with evidence of reduced neuroinflammation in the brain and (iv) the study treatment appeared to be well tolerated as no serious adverse events were reported.
Previous wording
In January of 2024, we announced that we are expanding our pipeline in neurodegenerative conditions for COYA 302 beyond ALS to include FTD and PD. Our updated pipeline can be viewed below. More recently, in February of 2024, we announced our expansion of COYA 302 to AD. This expansion advances our approach of combination biologics with low dose IL-2 as a backbone which we believe may represent a new approach to target complex immune pathways in neurodegenerative diseases.
Current wording
In January of 2024, we announced that we are expanding our pipeline in neurodegenerative conditions for COYA 302 beyond ALS to include FTD and PD. More recently, in February of 2024, we announced our expansion of COYA 302 to AD. This expansion advances our approach of combination biologics with LD IL-2 as a backbone which we believe may represent a new approach to target complex immune pathways in neurodegenerative diseases.
Previous wording
We intend to file an IND for COYA 302 for the treatment of FTD before the end of 2024. In addition, studies in animal models of PD are planned in 2024, and based on those studies, a subsequent IND filing is anticipated for the treatment of PD. We will await the results of the ongoing double-blind placebo-controlled trial being conducted by Dr. Appel of low dose IL-2, one of the key components of COYA 302, prior to determining our development plan for COYA 302 in AD patients.
Current wording
In addition, studies in animal models of PD are ongoing, and based on those studies, a subsequent IND filing may be for the treatment of PD. We will await the results of the ongoing double-blind placebo-controlled trial being conducted by Dr. Appel of LD IL-2, one of the key components of COYA 302, prior to determining our development plan for COYA 302 in AD patients.
Previous wording
To date, we have not recognized any revenue from product sales, and we do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all. Collaboration revenue represents revenue from the Development and License Agreement, or DRL Development Agreement, pursuant to which we granted DRL, and its affiliate, Dr. Reddy’s Laboratories SA, or collectively, Dr. Reddy's, an exclusive, royalty-bearing right and license to commercialize COYA 302, solely for use in patients with ALS in the United States, Canada, the European Union and the United Kingdom, or collectively, the New Territories.
Current wording
To date, we have not recognized any revenue from product sales, and we do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all. Collaboration revenue represents revenue from the DRL Development Agreement, as amended in June 2024, pursuant to which we granted Dr. Reddy's an exclusive, royalty-bearing right and license to commercialize COYA 302, solely for use in patients with ALS in the United States, Canada, the European Union and the United Kingdom, or collectively, the New Territories.
Previous wording
Research and development expenses increased by $1.9 million from $1.2 million for the three months ended March 31, 2023 to $3.1 million for the three months ended March 31, 2024. The increase was due to a $1.7 million increase in our preclinical expenses and a $0.2 million increase in internal research and development expenses. External research and development expenses include fees paid to CROs and CMOs and fees paid to regulatory, clinical trial and manufacturing professional service firms largely in connection with preclinical activities necessary to prepare COYA 302 for its initial IND filing and launch of a Phase 2 clinical trial. We expect these expenses to continue to grow in the second quarter of 2024. Once the IND for COYA 302 has been approved, we intend to separately classify the expenses for COYA 302 in the table below under “Clinical Product Candidates.”
Current wording
Research and development expenses increased by $3.5 million from $1.1 million for the three months ended June 30, 2023 to $4.6 million for the three months ended June 30, 2024. The increase was due to a $3.0 million increase in our preclinical expenses primarily due to our preclinical advancement of COYA 302 in ALS, a $0.4 million increase in internal research and development expenses, and a $0.1 million increase in sponsored research. External research and development expenses include fees paid to CROs and CMOs and fees paid to regulatory, clinical trial and manufacturing professional service firms largely in connection with preclinical activities necessary to prepare COYA 302 for its initial IND filing and launch of a Phase 2 clinical trial. We expect these expenses to continue to grow in the third quarter of 2024. Once the IND for COYA 302 has been approved, we intend to expand the table below, creating a new class called "Clinical product candidates", wherein we will disclose the clinical expenses for COYA 302.
Previous wording
General and administrative expenses increased by $0.7 million from $1.7 million for the three months ended March 31, 2023 compared to $2.4 million for the three months ended March 31, 2024. The increase was primarily due to an increase in personnel related expenses and consulting fees as we continue to expand our operations to support our research and development efforts.
Current wording
General and administrative expenses increased by $0.3 million from $1.8 million for the three months ended June 30, 2023 compared to $2.1 million for the three months ended June 30, 2024. The increase was primarily due to a $0.4 increase in personnel related expenses related to an increase in stock-based compensation and employee headcount, partially offset by a $0.1 million decrease in professional fees related costs incurred for the private placement financing in 2023.
Previous wording
Other income, net increased by $0.3 million from the three months ended March 31, 2023 compared to the three months ended March 31, 2024. The increase is primarily due to interest and dividend income earned on cash balances.
Current wording
Other income, net increased by $0.2 million from the three months ended June 30, 2023 compared to the three months ended June 30, 2024. The increase was primarily due to interest and dividend income earned on cash balances.
Previous wording
Since our inception, we have incurred operating losses and incurred negative cash flows from our operations through 2023. We have not yet commercialized any product and we do not expect to generate revenue from sales of any products for several years, if at all. Since our inception through March 31, 2024 we have funded our operations through the sale of convertible promissory notes and convertible preferred stock, our IPO, the 2023 Private Placement, and the DRL upfront payment. As of March 31, 2024 we had $36.0 million in cash and cash equivalents and had an accumulated deficit of $30.9 million. We expect our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into 2026. We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect.
Current wording
Since our inception, we have incurred operating losses and incurred negative cash flows from our operations through 2023. We have not yet commercialized any product and we do not expect to generate revenue from sales of any products for several years, if at all. Since our inception through June 30, 2024 we have funded our operations through the sale of convertible promissory notes and convertible preferred stock, our IPO, two private security offerings, and payments from DRL in accordance with the DRL Development Agreement, as amended in June 2024. As of June 30, 2024 we had $36.6 million in cash and cash equivalents and had an accumulated deficit of $33.8 million. We expect our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into 2026. We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect.
Previous wording
During the three months ended March 31, 2024, cash provided by operating activities was $2.1 million. Cash provided by operating activities reflected our net loss of $5.1 million, offset by a $6.7 million net increase in our operating assets and liabilities and noncash charges of $0.4 million related to stock-based compensation. The net increase in our operating assets was mainly related to the receipt of a $7.5 million payment from DRL pursuant to the DRL Development Agreement during the three months ended March 31, 2024.
Current wording
During the six months ended June 30, 2024, we used $2.4 million of cash in operating activities. Cash used in operating activities reflected our net loss of $7.9 million, offset by a $4.4 million net increase from our operating assets and liabilities and noncash charges of $1.1 million primarily related to stock-based compensation. The net increase in our operating assets was mainly related to the receipt of a $7.5 million payment from DRL pursuant to the DRL Development Agreement during the six months ended June 30, 2024.
Previous wording
During the three months ended March 31, 2023, we used $3.9 million of cash in operating activities. Cash used in operating activities reflected our net loss of $2.7 million and a $1.3 million net decrease in our operating assets and liabilities, partially offset by noncash charges of $0.2 million related to stock-based compensation. The primary use of cash was to fund our operations related to the development of our product candidates.
Current wording
During the six months ended June 30, 2023, we used $6.7 million of cash in operating activities. Cash used in operating activities reflected our net loss of $5.8 million and a $1.6 million net decrease in our operating assets and liabilities, partially offset by noncash charges of $0.7 million related to stock-based compensation and acquired in-process research and development. The primary use of cash was to fund our operations related to the development of our product candidates.
Previous wording
During the three months ended March 31, 2024, we purchased $25,000 of in-process research and development assets. There were no such activities during the three months ended March 31, 2023.
Current wording
During the six months ended June 30, 2024, we purchased $25,000 of in-process research and development assets. During the six months ended June 30, 2023, we purchased $0.4 million of in-process research and development assets relating to the DRL Agreement.
Previous wording
During the three months ended March 31, 2024, financing activities provided $1.2 million of cash from the proceeds received from the exercise of warrants of $1.3 million, partially offset by $0.1 million in payments of offering costs related to the 2023 Private Placement.
Current wording
During the six months ended June 30, 2024, financing activities provided $6.4 million of cash from the proceeds received from the sale of common stock of $5.0 million and the exercise of warrants of $1.5 million, partially offset by $0.1 million in payments of offering costs related to the 2023 private placement.
Previous wording
During the three months ended March 31, 2023, financing activities provided $14.3 million of cash from the issuance of common stock upon our initial public offering, net of deferred financing costs.
Current wording
During the six months ended June 30, 2023, financing activities provided $14.3 million of cash from the issuance of common stock upon our initial public offering, net of deferred financing costs.
Previous wording
Pursuant to the DRL Development Agreement, we received an up-front, nonrefundable payment of $7.5 million in January 2024. Additionally, we are entitled to receive (i) an additional $4.2 million upon FDA acceptance of an Investigational New Drug, or IND, application for COYA 302 for the treatment of ALS and (ii) an additional $4.2 million payment upon the dosing of the first patient in the first phase 2 clinical trial for COYA 302 for the treatment of ALS in the United States. We anticipate an IND filing will be made in the second quarter of 2024. The DRL Development Agreement also calls for up to an aggregate of $40.0 million in development milestones and up to an aggregate of $677.3 million in sales milestones, related to the New Territories, should all such development and sales milestones be achieved. We will also be owed royalties by Dr. Reddy's on Net Sales (as defined in the DRL Development Agreement) of COYA 302 in the low to mid-teens (prior to paying royalties due pursuant to previously disclosed license agreements related to COYA 302).
Current wording
Pursuant to the DRL Development Agreement, we received an up-front, nonrefundable payment of $7.5 million in January 2024. Additionally, we are entitled to receive (i) an additional $4.2 million upon FDA acceptance of an IND application for COYA 302 for the treatment of ALS and (ii) an additional $4.2 million payment upon the dosing of the first patient in the first phase 2 clinical trial for COYA 302 for the treatment of ALS in the United States. The DRL Development Agreement also calls for up to an aggregate of $40.0 million in development milestones and up to an aggregate of $677.3 million in sales milestones, related to the New Territories, should all such development and sales milestones be achieved. We will also be owed royalties by Dr. Reddy's on Net Sales (as defined in the DRL Development Agreement) of COYA 302 in the low to mid-teens (prior to paying royalties due pursuant to previously disclosed license agreements related to COYA 302). Pursuant to the First Amendment, as discussed above, the first $6.0 million of royalty payments will not be owed to us.
Previous wording
During the three months ended March 31, 2024, there were no material changes to our critical accounting policies and estimates from those described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2023 Annual Report filed on Form 10-K.
Current wording
During the six months ended June 30, 2024, there were no material changes to our critical accounting policies and estimates from those described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2023 Annual Report filed on Form 10-K.
Previous wording
In February 2021, we executed the SRA with HMRI. Pursuant to the SRA, we agreed to fund $1.5 million in research in the area of neurodegenerative diseases through February 2022. We subsequently executed a new SRA on May 4, 2023, to fund $0.5 million through May 2024.
Current wording
In May 2023, we executed a Sponsored Research Agreement, or SRA, with Houston Methodist Research Institute, or HMRI, in which we agreed to fund approximately $0.5 million through May 2024. We subsequently amended the SRA in June 2024 to extend the term through September 2025 and increase agreed funding from $0.5 million to $1.0 million in total funding.
Previous wording
In addition, we may also owe tiered payments to ARS based on our achievement of certain developmental milestones. Under the ARS License Agreement, we will pay an aggregate of $13.3 million in developmental milestone payments for the first Combination Product (as defined in the ARS License Agreement) in a new indication. We will then pay an aggregate of $11.6 million in developmental milestone payments for each Combination Product in each subsequent new indication. Further, for the first Mono Product (as defined in the ARS License Agreement), we will pay an aggregate of $11.8 million in developmental milestone payments. We will then pay an aggregate of $5.9 million in developmental milestone payments for each Mono Product in each subsequent new indication, and we will owe an aggregate of $5.9 million if all developmental milestones are achieved for each new indication. We will also owe royalties on net sales of licensed products ranging from low to mid-single digit percentages. In the event we sublicense our rights under the ARS License Agreement, we will owe royalties on sublicense income within the range of 10% to 20%. To date, the $0.1 million option fee and the mid-six-figure up-front fee (upon exercise of the ARS Option) are the only payments made to ARS under ARS License Agreement.
Current wording
In addition, we may also owe tiered payments to ARS based on our achievement of certain developmental milestones. Under the ARS License Agreement, we will pay an aggregate of $13.3 million in developmental milestone payments for the first Combination Product (as defined in the ARS License Agreement) in a new indication. We will then pay an aggregate of $11.6 million in developmental milestone payments for each Combination Product in each subsequent new indication. Further, for the first Mono Product (as defined in the ARS License Agreement), we will pay an aggregate of $11.8 million in developmental milestone payments. We will then pay an aggregate of $5.9 million in developmental milestone payments for each Mono Product in each subsequent new indication, and we will owe an aggregate of $5.9 million if all developmental milestones are achieved for each new indication. We will also owe royalties on net sales of licensed products ranging from low to mid-single digit percentages. In the event we sublicense our rights under the ARS License Agreement, we will owe royalties on sublicense income within the range of 10% to 20%. To date, the $0.1 million option fee and the mid-six-figure up-front fee (upon exercise of the ARS Option) are the only payments made to ARS under the ARS License Agreement.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Research and development expenses increased by $5.4 million from $2.3 million for the six months ended June 30, 2023 to $7.7 million for the six months ended June 30, 2024. The increase was due to a $4.7 million increase in our preclinical expenses primarily due to our preclinical advancement of COYA 302 in ALS, $0.1 million increase in sponsored research, and a $0.6 million increase in internal research and development expenses. External research and development expenses include fees paid to CROs and CMOs and fees paid to regulatory, clinical trial and manufacturing professional service firms largely in connection with preclinical activities necessary to prepare COYA 302 for its initial IND filing and launch of a Phase 2 clinical trial. We expect these expenses to continue to grow in the third quarter of 2024. Once the IND for COYA 302 has been approved, we intend to expand the table below, creating a new class called "Clinical product candidates", wherein we will disclose the clinical expenses for COYA 302.
Current report — wording carried from elsewhere
We do not further classify or evaluate our internal research and development expenses by product candidate or by Series as these expenses primarily relate to compensation, materials and supplies, and other costs which are deployed across multiple therapeutic modalities, multiple product candidates, and multiple therapeutic areas under development.
Current report — wording carried from elsewhere
Research and development expenses disaggregated and classified by preclinical, and external and internal expenses are summarized in the table below:
Current report — wording carried from elsewhere
Other income, net increased by $0.5 million from the six months ended June 30, 2023 compared to the six months ended June 30, 2024. The increase was primarily due to interest and dividend income earned on cash balances.