PALISADE BIO INC

Previous wording

Statements in this Quarterly Report on Form 10-Q that are not strictly historical are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements relate to future events or to our future operating or financial performance and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statem ents. You can identify these forward-looking statements because they involve our expectations, intentions, beliefs, plans, projections, anticipations, or other characterizations of future events or circumstances. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that may cause actual results to differ materially from those in the forward-looking statements as a result of any number of factors. Some of these factors are more fully discussed in the section of this Quarterly Report entitled “Risk Factors” and elsewhere herein. We do not undertake to update any of these forward-looking statements or announce the results of any revisions to these forward-looking statements except as required by law.

Current wording

Statements in this Quarterly Report on Form 10-Q that are not strictly historical are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements relate to future events or to our future operating or financial performance and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statem ents. You can identify these forward-looking statements because they involve our expectations, intentions, beliefs, plans, projections, anticipations, or other characterizations of future events or circumstances. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that may cause actual results to differ materially from those in the forward-looking statements as a result of any number of factors. Some of these factors are more fully discussed in the section of this Quarterly Report on Form 10-Q entitled “Risk Factors” and elsewhere herein. We do not undertake to update any of these forward-looking statements or announce the results of any revisions to these forward-looking statements except as required by law.

Previous wording

Results of Operations — Analysis of our financial results comparing the three months ended March 31, 2024 and 2023.

Current wording

Results of Operations — Analysis of our financial results comparing the three and six months ended June 30, 2024 and 2023.

Previous wording

PALI-2108, our lead product candidate, is a prodrug PDE4 inhibitor that operates through a sophisticated mechanism within colon tissues, targeting the key enzyme phosphodiesterase-4 ("PDE4"). This enzyme is pivotal in cAMP hydrolysis, and by inhibiting PDE4, intracellular cAMP levels are elevated. This elevation leads to the downregulation of inflammatory cytokines and a reduction in the expression of cell adhesion molecules. By modulating these processes, PALI-2108 effectively prevents the local infiltration and activation of inflammatory cells in the colon tissues, offering a targeted approach for UC treatment. With a glucuronic-derived sugar moiety, PALI-2108 remains minimally absorbed until activated by the colonic bacterium enzyme β-glucuronidase. This prodrug exhibits colon preference, as demonstrated in DSS-induced UC mouse models and oxazolone colitis-induced mice, showcasing its localized bioactivation and colon-specific distribution.

Current wording

With a glucuronic-derived sugar moiety, PALI-2108 remains minimally absorbed until activated by the colonic bacterium enzyme β-glucuronidase. The specific localized bioactivation by a bacterial enzyme found in the colon we believe helps focus the effects of PALI-2108 where they are needed the most.

Previous wording

We have produced investigational drug batches of PALI-2108 that are compliant with Good Manufacturing Practice ("GMP"). We have completed rodent and initiated non-rodent, non-pivotal investigation new drug application ("IND") -enabling or a Canadian Clinical Trial Application ("CTA") -enabling pre-clinical studies of PALI-2108 and are currently initiating pivotal IND/CTA-enabling pre-clinical studies, which we expect to be completed by the end of the third quarter of 2024. We plan to submit an IND/CTA in the third quarter of 2024 and initiate clinical trials of PALI-2108 in the fourth quarter of 2024. By the end of 2024, we plan to submit an IND/CTA and initiate a Phase 1a single ascending dose ("SAD") and multiple ascending dose ("MAD") clinical study including food effects in normal healthy volunteers evaluating the safety, tolerability, and pharmacokinetics as well as evaluate a MAD cohort of UC patients with elevated PDE4-associated biomarkers for pharmacodynamic effects. Topline data from the Phase 1a SAD/MAD trial is expected late in the first half of 2025. Following the completion of the Phase 1a SAD/MAD trial, we plan to initiate a Phase 1b/2 POC trial in UC patients in the second half of 2025.

Current wording

We have successfully produced drug substance and engineering batches of the PALI-2108 drug product that are compliant with Good Manufacturing Practice ("GMP"). We have completed rodent and initiated non-rodent, non-pivotal investigational new drug application ("IND") -enabling or a Canadian Clinical Trial Application ("CTA") -enabling pre-clinical studies of PALI-2108 and are currently initiating pivotal IND/CTA-enabling pre-clinical studies, which we expect to be completed by the end of the third quarter of 2024. We plan to submit an IND/CTA in the third quarter of 2024 and initiate clinical trials of PALI-2108 in the fourth quarter of 2024. By the end of 2024, we plan to submit an IND/CTA and initiate a Phase 1 single ascending dose ("SAD") and multiple ascending dose ("MAD") clinical study including food effects in normal healthy volunteers evaluating the safety, tolerability, and pharmacokinetics as well as evaluate a MAD cohort of UC patients with elevated PDE4-associated biomarkers for pharmacodynamic effects. Topline data from the Phase 1 SAD/MAD trial is expected late in the first half of 2025. Following the completion of the Phase 1 SAD/MAD trial, we plan to initiate a Phase 1b/2a proof-of-concept trial in UC patients in the second half of 2025.

Previous wording

We are developing a biomarker-based patient selection approach which, if developed, will aid clinicians in identifying patients who may respond to therapy with a locally acting PDE4 inhibitor such as PALI-2108. We are working with our team of precision medicine focused bioinformatics developers to identify biomarkers and develop optimal algorithms to aid in patient selection, which we believe may enrich the responder population and improve the rate of clinical response previously demonstrated with PDE4 inhibitors. This involves the use of clinical and multiomics data from a large patient population which will be used to identify PDE4-related biomarkers that are associated with disease, correlate with severity, correlate with clinical biomarkers, and are modified with local PDE4 inhibitor therapy in the colon. We have curated clinical study data, including longitudinal biomarker and clinical outcome data, to develop a deep understanding of the potential for patient response to PDE4 therapy, and we are in discussions with potential partners to access additional large scale IBD databanks with clinical, patient-reported, and molecular data that will be used to support and further validate the approach. Additionally, we have initiated the development of corresponding biomarker assays for these PDE4-related biomarkers that will be used in clinical studies with the aim to develop FDA-approved tests for selecting potential responders to PALI-2108.

Current wording

We are developing a biomarker-based patient selection approach that, if developed, we believe may aid clinicians in identifying patients who may respond to therapy with a locally acting PDE4 inhibitor such as PALI-2108. We are working with our team of precision medicine focused bioinformatics developers to identify biomarkers and develop optimal algorithms to aid in patient selection, which we believe may enrich the responder population and improve the rate of clinical response previously demonstrated with PDE4 inhibitors. This involves the use of clinical and multiomics data from a large patient population that will be used to identify PDE4-related biomarkers that are associated with disease, correlate with severity, correlate with clinical biomarkers, and are modified with local PDE4 inhibitor therapy in the colon. We have curated clinical study data, including longitudinal biomarker and clinical outcome data, to develop a deep understanding of the potential for patient response to PDE4 therapy, and we are in discussions with potential partners to access additional large scale IBD databanks with clinical, patient-reported, and molecular data that will be used to support and further validate the approach. Additionally, we have initiated the development of corresponding biomarker assays for these PDE4-related biomarkers that we expect to use in our planned clinical studies with the aim to develop U.S. Food and Drug Administration ("FDA") approved tests for selecting potential responders to PALI-2108.

Previous wording

Recent Developments in the pre-clinical studies of PALI-2108

Current wording

We continue to execute and provide data from our pre-clinical studies of PALI-2108. Recent key findings in the pre-clinical studies of PALI-2108 include (i) PALI-2108 demonstrates similar target engagement to the PDE4 inhibitor, apremilast, which is approved for use in psoriasis and psoriatic arthritis; (ii) in a DSS colitis mouse model, PALI-2108 significantly prevented colon length reduction in dose dependent manner, and showed dose dependent improvements in body weight score, stool consistency score, fecal blood score, overall disease activity index ("DAI") score, and area under the curve of DAI over the course of the study; and (iii) PALI-2108 exhibited a dose-dependent efficacy response in two DSS colitis mouse models, achieving efficacy comparable to doses of apremilast considered intolerable for human use in UC patients.

Previous wording

In May 2024, we completed a private placement for net cash proceeds of approximately $3.6 million consisting of gross cash proceeds of $4.0 million, less cash equity issuance costs of approximately $0.4 million.

Current wording

In May 2024, we completed a private placement for net cash proceeds of approximately $3.5 million consisting of gross cash proceeds of $4.0 million, less cash equity issuance costs of approximately $0.5 million.

Previous wording

We intend to use the net proceeds from the recent financings for working capital and general corporate purposes, including the development of PALI-2108. With the additional net cash proceeds of $3.6 million received subsequent to the end of the first quarter of 2024 from the May 2024 private placement, combined with our cash and cash equivalents balance of $11.3 million as of March 31, 2024, we believe we have sufficient cash to fund our currently planned operations through the first quarter of 2025.

Current wording

We intend to use the net proceeds from the recent financings for working capital and general corporate purposes, including the development of PALI-2108. With our cash and cash equivalents balance of $11.4 million as of June 30, 2024, we believe we have sufficient cash to fund our currently planned operations through the first quarter of 2025.

Previous wording

We generated no revenues from the sale of our product candidates for any of the periods presented. For the three months ended March 31, 2023, we recognized license revenue of approximately $0.3 million from the co-development and distribution agreement with Newsoara, a joint venture established with Biolead Medical Technology Limited, as amended, (the “Newsoara Co-Development Agreement”). For the three months ended March 31, 2024, we recognized no license revenue.

Current wording

We generated no revenues from the sale of our product candidates for any of the periods presented. For the six months ended June 30, 2023, we recognized license revenue of approximately $0.3 million from the co-development and distribution agreement with Newsoara, a joint venture established with Biolead Medical Technology Limited, as amended, (the “Newsoara Co-Development Agreement”). For the three and six months ended June 30, 2024 and the three months ended June 30, 2023, we recognized no license revenue.

Previous wording

Research and development expenses have historically consisted primarily of costs incurred for the clinical development of our product candidate LB1148. On August 9, 2023, based on the results of the efficacy and safety data of the U.S. Phase 2 PROFILE study, we terminated the development of LB1148. The research and development costs included:

Current wording

Research and development expenses have historically consisted primarily of costs incurred for the clinical development of our product candidate LB1148. On August 9, 2023, based on the results of the efficacy and safety data of the U.S. Phase 2 PROFILE study, we terminated the development of LB1148.

Previous wording

We do not expect to incur any significant costs in 2024 or beyond related to the closing down of the associated clinical trials of LB1148. Accordingly, the nature of our research and development expenses is expected to shift from clinical activities to those pre-clinical activities associated with the development of PALI-2108.

Current wording

We do not expect to incur any significant costs in 2024 or beyond related to the closing down of the associated clinical trials of LB1148. Through the first six months of 2024, the nature of our research and development expenses incurred related primarily to the pre-clinical activities associated with the development of PALI-2108. As we prepare to initiate a Phase 1 clinical trial of PALI-2108 expected in the fourth quarter of 2024, we expect our clinical research and development costs to increase in the remainder of 2024.

Previous wording

Our direct research and development expenses are tracked by product candidate and consist primarily of external costs, such as fees paid under third-party license agreements and to outside consultants, Contract Research Organizations ("CROs"), clinical site, contract manufacturing organizations (“CMOs”) and research laboratories in connection with our pre-clinical development, process development, manufacturing, clinical development, and regulatory activities. We do not allocate employee costs and costs associated with our discovery efforts, laboratory supplies and facilities, including other indirect costs, to specific product candidates because these costs are deployed across multiple programs and, as such, are not separately classified. As needed, we manage third parties that are engaged to conduct our (i) research activities, (ii) pre-clinical, clinical and translational science development activities, and (iii) process development. When we perform any research and development or manufacturing activities under a co-development agreement, we record the expense reimbursement from the co-development partner as a reduction to research and development expense once the reimbursement amount is approved for payment by the co-development partner. Pursuant to agreements where we perform research and development activities under a joint development plan, such as our research and collaboration with Giiant Pharma, Inc. (“Giiant”), qualifying development costs are expensed as research and development costs as incurred. On September 1, 2023, we entered into a research collaboration and license agreement for substantially all of Giiant's current and future proposed products (the “Giiant License Agreement”).

Current wording

Our direct research and development expenses are tracked by product candidate and consist primarily of external costs, such as fees paid under third-party license agreements and to outside consultants, Contract Research Organizations ("CROs"), clinical site, contract manufacturing organizations (“CMOs”) and research laboratories in connection with our pre-clinical development, process development, manufacturing, clinical development, and regulatory activities. We do not allocate employee costs and costs associated with our discovery efforts, laboratory supplies and facilities, including other indirect costs, to specific product candidates because these costs are deployed across multiple programs and, as such, are not separately classified. As needed, we manage third parties that are engaged to conduct our (i) research activities, (ii) pre-clinical, clinical and translational science development activities, and (iii) process development. When we perform any research and development or manufacturing activities under a co-development agreement, we record the expense reimbursement from the co-development partner as a reduction to research and development expense once the reimbursement amount is approved for payment by the co-development partner. Pursuant to agreements where we perform research and development activities under a joint development plan, such as our research and collaboration with Giiant, qualifying development costs are expensed as research and development costs as incurred.

Previous wording

On April 5, 2024, we effected a 1-for-15 reverse stock split of our issued and outstanding common stock (the "Reverse Stock Split"). As a result of the Reverse Stock Split, each of our stockholders received one share of our common stock for every 15 shares such stockholder held immediately prior to the effective time of the Reverse Stock Split. Unless otherwise noted, all common stock shares, common stock per share data and shares of common stock underlying convertible preferred stock, stock-based awards and common stock warrants included in these condensed consolidated financial statements, including the exercise or conversion price of such equity instruments, as applicable, have been retrospectively adjusted to reflect the Reverse Stock Split for all periods presented.

Current wording

On April 5, 2024, we effected a 1-for-15 reverse stock split of our issued and outstanding common stock (the "Reverse Stock Split"). As a result of the Reverse Stock Split, each of our stockholders received one share of our common stock for every 15 shares such stockholder held immediately prior to the effective time of the Reverse Stock Split. Unless otherwise noted, all common stock shares, common stock per share data and shares of common stock underlying convertible preferred stock, stock-based awards and common stock warrants included in this Quarterly Report on Form 10-Q, including the exercise or conversion price of such equity instruments, as applicable, have been retrospectively adjusted to reflect the Reverse Stock Split.

Previous wording

The $1.0 million, or 78%, increase in research and development expenses from $1.2 million for the three months ended March 31, 2023 to $2.2 million for the three months ended March 31, 2024 is attributable to approximately $1.6 million of expenses recognized that were directly related to the joint development of our new lead asset, PALI-2108, partially offset by a decrease in costs directly related to our development of LB1148, which we ceased in August of 2023, and lower employee-related costs.

Current wording

The increase in research and development expenses from approximately $2.2 million for the three months ended June 30, 2023 to approximately $2.6 million for the three months ended June 30, 2024 is attributable to higher expenses recognized for the three months ended June 30, 2024 that were directly related to the joint development of our lead asset, PALI-2108, and higher share-based compensation expense, partially offset by a decrease in costs directly related to our development of LB1148, which we ceased in August of 2023, and lower other employee-related costs.

Previous wording

As a result of our decision to no longer pursue the clinical development of LB1148, direct clinical trial-related costs, including clinical trial vendor fees, investigator site fees, and clinical trial consultant and contractor fees, decreased by approximately $0.3 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Similarly, drug manufacturing costs, regulatory activity costs and translational research costs decreased approximately $0.1 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Employee-related costs decreased by approximately $0.2 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023 as a result of a 25% reduction in our employee workforce, specifically research and development employees that were no longer deemed critical for our development of PALI-2108, in October 2023.

Current wording

We continue to rapidly advance our pre-clinical studies of PALI-2108 towards the planned commencement of clinical studies in the fourth quarter of 2024. Accordingly, for the three months ended June 30, 2024 we recognized joint development costs of $1.9 million, of which there were none in the three months ended June 30, 2023. Offsetting these costs, as a result of our decision to no longer pursue the clinical development of LB1148, direct clinical trial-related costs related specifically to the development of that asset, decreased by approximately $1.4 million for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Previous wording

During the three months ended March 31, 2023, we recognized license revenue of $0.3 million earned upon the achievement of a milestone under the Newsoara Co-Development Agreement. During the three months ended March 31, 2024, we recognized no license revenue.

Current wording

During the six months ended June 30, 2023, we recognized license revenue of approximately $0.3 million earned upon the achievement of a milestone under the Newsoara Co-Development Agreement. During the six months ended June 30, 2024, we recognized no license revenue.

Previous wording

Other income, net, for the three months ended March 31, 2024 includes dividend income of approximately $147,000 from our investments of excess cash in money market funds with maturities of three months or less in the period.

Current wording

Other income, net, for the six months ended June 30, 2024 includes dividend income of approximately $0.3 million from our investments of excess cash in money market funds with maturities of three months or less in the period.

Previous wording

Other income, net, for the three months ended March 31, 2023 includes dividend income of approximately $147,000 from our investments of excess cash in money market funds with maturities of three months or less and a non-cash gain of approximately $43,000 associated with the revaluation of liability-classified warrants in the period.

Current wording

Other income, net, for the six months ended June 30, 2023 includes dividend income of approximately $0.3 million from our investments of excess cash in money market funds with maturities of three months or less and a non-cash gain of approximately $0.1 million associated with the revaluation of liability-classified warrants in the period.

Previous wording

Since our inception, we have financed our operations through the sales of our securities, issuance of debt, the exercise of common stock warrants, and to a lesser degree, grants and research contracts as well as the licensing of our intellectual property to third parties. Refer to the paragraph under the heading "Going Concern" in the Results of Operations section above for management's assessment of our ability to continue as a going concern.

Current wording

Since our inception, we have primarily financed our operations through the sales of our securities, issuance of debt, the exercise of common stock warrants, and to a lesser degree, grants and research contracts as well as the licensing of our intellectual property to third parties. Refer to the paragraph under the heading "Going Concern" in the Results of Operations section above for management's assessment of our ability to continue as a going concern.

Previous wording

We expect to incur substantial operating losses for the foreseeable future. We will need to raise additional capital through a combination of equity offerings, debt financings, collaborations, and other similar arrangements. Our ability to raise additional capital may be adversely impacted by: (i) general political or economic conditions, (ii) inflation, (iii) rising interest rates, (iv) ongoing supply chain disruptions, (v) the ongoing global conflicts, including those in the Ukraine and Middle East, (vi) limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry, (vii) or a resurgence of COVID-19, COVID-19 variants, or another pandemic. In the event the we are unable to access additional capital, we may need to curtail or greatly reduce our operations, which could have a materially adverse impact on our business, financial condition, and results of operations.

Current wording

We expect to incur substantial operating losses for the foreseeable future. We will need to raise additional capital through a combination of equity offerings, debt financings, collaborations, and other similar arrangements. Our ability to raise additional capital may be adversely impacted by: (i) general political or economic conditions, (ii) inflation, (iii) rising interest rates, (iv) ongoing supply chain disruptions, (v) the ongoing global conflicts, including those in the Ukraine and Middle East, and (vi) limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry. In the event that we are unable to access additional capital, we may need to curtail or greatly reduce our operations, which could have a materially adverse impact on our business, financial condition, and results of operations.

Previous wording

On May 6, 2024, we completed a private placement of common stock, prefunded warrants to purchase common stock and warrants to purchase common stock (the "May 2024 Offering"). Gross cash proceeds from the May 2024 Offering were $4.0 million and net cash proceeds were approximately $3.6 million after deducting cash equity issuance costs of approximately $0.4 million.

Current wording

On May 6, 2024, we completed a private placement of common stock, prefunded warrants to purchase common stock and warrants to purchase common stock (the "May 2024 Offering"). Gross cash proceeds from the May 2024 Offering were $4.0 million and net cash proceeds were approximately $3.5 million after deducting cash equity issuance costs of approximately $0.5 million.

Previous wording

The Warrant Holders collectively exercised an aggregate of 228,162 Existing Warrants. As a result of the exercises of the Existing Warrants, we issued an aggregate of 228,162 shares of our common stock. The February 2024 Warrant

Current wording

The Warrant Holders collectively exercised an aggregate of 228,162 Existing Warrants. As a result of the exercises of the Existing Warrants, we issued an aggregate of 228,162 shares of our common stock. The February 2024 Warrant Inducement closed on February 1, 2024 net cash proceeds of approximately $2.2 million consisting of gross cash proceeds of $2.5 million, less cash equity issuance costs of approximately $0.3 million.

Previous wording

During the three months ended March 31, 2023, we received gross cash proceeds of approximately $2.7 million from common stock warrant exercises, approximately $1.4 million of which related to common stock warrant exercises on December 30, 2022 for which the related cash was not received by us until January 2023.

Current wording

During the six months ended June 30, 2023 we received gross cash proceeds of approximately $2.7 million from common stock warrant exercises, approximately $1.4 million of which related to common stock warrant exercises on December 30, 2022 for which the related cash was not received by us until January 2023.

Previous wording

As of March 31, 2024, we had $11.3 million in cash, cash equivalents and restricted cash. The following table shows a summary of our cash flows for the three months ended March 31, 2024 and 2023 (in thousands):

Current wording

As of June 30, 2024, we had $11.4 million in cash, cash equivalents and restricted cash. The following table shows a summary of our cash flows for the six months ended June 30, 2024 and 2023 (in thousands):

Previous wording

Cash used in operating activities was approximately $3.2 million for the three months ended March 31, 2024, which reflects an approximately $3.5 million net loss adjusted for (i) approximately $0.2 million of net cash inflows related to changes in operating assets and liabilities and (ii) certain non-cash items impacting the net loss, consisting primarily of an approximately $0.1 million non-cash expense recognized for stock-based compensation and related charges. The net cash inflow from operating assets and liabilities was driven by a cash outflow of approximately $0.6 million from the payment of employee cash bonuses in the period that was more than offset by a cash inflow of approximately $0.8 million from: (i) a decrease in prepaids and other current assets and other noncurrent assets, which was primarily attributable to the amortization of the current and non-current portions of the Company's prepaid insurance policies, and (ii) an increase in accounts payable and accrued liabilities, which was primarily due to an increase in accrued joint development expenses associated with the Giiant License Agreement and the timing of accounts payable payments that were partially offset by accrued severance payments and lower accrued director stipends.

Current wording

Cash used in operating activities was approximately $6.7 million for the six months ended June 30, 2024, which reflects an approximately $7.6 million net loss adjusted for (i) approximately $0.3 million of net cash inflows related to changes in operating assets and liabilities and (ii) certain non-cash items impacting the net loss, consisting primarily of an approximately $0.5 million non-cash expense recognized for stock-based compensation and related charges, and an approximately $0.1 million non-cash expense associated with the issuance of our common stock as payment for vendor services provided. The net cash inflow from operating assets and liabilities was primarily attributable to a net cash outflow of approximately $0.5 million driven by the payment of annual employee cash bonuses in the first quarter of 2024 and a $0.1 million cash outflow related to payments of the our operating lease that was more than offset by a cash inflow of approximately $0.9 million from: (i) a decrease in prepaids and other current assets and other noncurrent assets, which was primarily attributable to the amortization of the current and non-current portions of the Company's prepaid insurance policies, and (ii) an increase in accounts payable and accrued liabilities, which was primarily due to an increase in accrued joint development expenses associated with the Giiant License Agreement that were partially offset by a decrease in accrued severance payments, lower accrued Board and Board committee fees, and lower accounts payable due to the timing of payments.

Previous wording

Cash used in operating activities of approximately $3.5 million for the three months ended March 31, 2023 reflects an approximately $2.3 million net loss for the period adjusted for (i) approximately $1.3 million of net cash outflows related to changes in operating assets and liabilities and (ii) certain non-cash items impacting the net loss, consisting primarily of an approximately $0.1 million non-cash expense recognized for stock-based compensation and related charges. The net cash outflow from operating assets and liabilities was primarily due the recording of an approximately $0.3 million accounts receivable for license revenue recognized in the quarter and an approximately $1.0 million cash outflow for accounts payable and accrued liabilities due to the timing of payments.

Current wording

Cash used in operating activities of approximately $5.7 million for the six months ended June 30, 2023 reflects an approximately $5.7 million net loss for the period adjusted for (i) approximately $0.1 million of net cash outflows related to changes in operating assets and liabilities and (ii) certain non-cash items impacting the net loss, consisting primarily of an approximately $0.2 million non-cash expense recognized for stock-based compensation and related charges. The net cash outflow from operating assets and liabilities was primarily due to (i) the payment of the 2022 annual employee bonuses in the first quarter of 2023, (ii) a $0.4 million cash outflow for accounts payable and accrued liabilities, which was due to the timing of payments, and (iii) a $0.1 million cash outflow related to payments of the our operating lease, partially offset by a cash inflow from the decrease in prepaids and other assets and other noncurrent assets, excluding the reduction in other assets due to cash proceeds of $1.4 million received in the six months ended June 30, 2023 from warrants exercises, which were receivable to us as of December 31, 2022.

Previous wording

For the three months ended March 31, 2024, cash provided by financing activities of approximately $2.0 million was attributable to net cash proceeds of approximately $2.2 million from the exercise of common stock warrants in conjunction with the February 2024 Warrant Inducement, partially offset by payments made on the Company's insurance financing arrangements of approximately $0.2 million.

Current wording

For the six months ended June 30, 2024, cash provided by financing activities of approximately $5.6 million was attributable to net cash proceeds of approximately $2.2 million from the exercise of common stock warrants in conjunction with the February 2024 Warrant Inducement and net cash proceeds of approximately $3.6 million from the May 2024 Offering, partially offset by payments made on the Company's insurance financing arrangements of approximately $0.2 million.

Previous wording

For the three months ended March 31, 2023, cash provided by financing activities of approximately $4.4 million was attributable to cash proceeds of approximately $2.2 million from the January 2023 Offering and approximately $2.7 million from the exercise of common stock purchase warrants, which includes the receipt in early January 2023 of a $1.4 million other receivable from warrant exercises on December 30, 2022, partially offset by payments of equity issuance costs of approximately $0.4 million and payments made on the Company's insurance financing arrangements of approximately $0.1 million.

Current wording

For the six months ended June 30, 2023, cash provided by financing activities of approximately $9.7 million was attributable to cash proceeds of approximately $2.2 million and $5.3 million from the January 2023 Offering and April 2024 Offering, respectively. Also contributing to the cash provided by financing activities in the six months ended June 30, 2023 was $2.8 million from the exercise of common stock purchase warrants, which includes the receipt in early January 2023 of a $1.4 million other receivable from warrant exercises on December 30, 2022, partially offset by payments of equity issuance costs of approximately $0.6 million and payments made on the Company's insurance financing arrangements of approximately $0.1 million.

Previous wording

August 31, 2025. We have the option to renew the Corporate Office Lease for an additional 36-month period at the prevailing market rent upon completion of the initial lease term. We have determined that it is not likely we will exercise this renewal option.

Current wording

We are party a to non-cancelable facility operating lease (the "Corporate Office Lease") of office space for our corporate headquarters. The initial contractual term is for 39-months commencing on June 1, 2022 and expiring on August 31, 2025. We have the option to renew the Corporate Office Lease for an additional 36-month period at the prevailing market rent upon completion of the initial lease term. We have determined that it is not likely we will exercise this renewal option.

Previous wording

Commencing on June 1, 2022, we are subject to contractual monthly lease payments of $10,850, plus certain utilities, for the first 12 months with 3 percent escalations at the first, second and third lease commencement anniversaries. As of March 31, 2024, the total remaining future minimum lease payments associated with the Corporate Office Lease of approximately $196,000, including imputed interest of $13,000 calculated using a discount rate of 10.75%, will be paid over the remaining lease term of approximately 1.4 years.

Current wording

Commencing on June 1, 2022, we are subject to contractual monthly lease payments of $10,850, plus certain utilities, for the first 12 months with 3 percent escalations at the first, second and third lease commencement anniversaries. As of June 30, 2024, the total remaining future minimum lease payments associated with the Corporate Office Lease of approximately $163,000, including imputed interest of $9,000 calculated using a discount rate of 10.75%, will be paid over the remaining lease term of approximately 1.2 years.

Previous wording

Consistent with past practice, in June 2023, we entered into an agreement to finance an insurance policy that renewed in May 2023. The insurance financing arrangement is secured by the associated insurance policy. We made the final principal payment of the insurance financing arrangement during the three months ended March 31, 2024. Accordingly, there is no outstanding balance due as of March 31, 2024. We expect to renew the insurance policy, and enter into an associated insurance financing arrangement accordingly, in late May of 2024.

Current wording

Consistent with past practice, in June 2024, we entered into an agreement to finance insurance policies that renewed in May 2024. The insurance financing arrangement is secured by the associated insurance policies. As of June 30, 2024 the aggregate remaining balance under the insurance financing arrangement of $0.3 million is payable over a 9-month period with the first payment having commenced on June 30, 2024.

Previous wording

We have incurred significant operating losses and negative cash flows from operations since our inception. To date, we have not been able to generate significant revenues nor achieve operating profitability. Based upon our cash and cash equivalents balance of $11.3 million as of March 31, 2024, we believe we have sufficient cash to fund our currently planned operations through the first quarter of 2025. Notwithstanding, should our anticipated level of operations significantly change, we may require additional financing sooner than the first quarter of 2025. Beyond the first quarter of 2025 we will require additional financing to continue at our expected level of operations. If we fail to obtain the needed capital, we will be forced to delay, scale back, or eliminate some or all of our development activities, or potentially cease our operations.

Current wording

We have incurred significant operating losses and negative cash flows from operations since our inception. To date, we have not been able to generate significant revenues nor achieve operating profitability. Based upon our cash and cash equivalents balance of $11.4 million as of June 30, 2024, we believe we have sufficient cash to fund our currently planned operations through the first quarter of 2025. Notwithstanding, should our anticipated level of operations significantly change, we may require additional financing sooner than the first quarter of 2025. Beyond the first quarter of 2025 we will require additional financing to continue at our expected level of operations. If we fail to obtain the needed capital, we will be forced to delay, scale back, or eliminate some or all of our development activities, or potentially cease our operations.