ACHIEVE LIFE SCIENCES INC
For the period ended Jun 30, 2024. Filed Aug 13, 2024.
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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 13, 2024
ACHV$6.72+5.4%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.
0000950170-24-056929
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0000950170-24-096193
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 120 previous paragraphs and 129 current paragraphs.
83 unchanged; 27 reworded; 19 added; 10 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 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 (19)
Current report
In the third quarter of 2024, we received Breakthrough Therapy designation from the FDA for cytisinicline for nicotine e-cigarette, or vaping, cessation. Breakthrough Therapy designation is designed to expedite the development and review of drugs that are intended to treat serious conditions when preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapies. It provides product sponsors the ability to receive an FDA cross-disciplinary project management team for interactive communications with senior managers and expert reviewers from FDA to expedite the development of a product.
Current report
Ongoing Company-Sponsored Clinical Trial
Current report
In May 2024 we initiated the ORCA-OL open label exposure trial. The trial is designed provide long-term cytisinicline safety exposure data from subjects who currently smoke or use nicotine e-cigarettes that is required for submission of the cytisinicline New Drug Application, or NDA, and ultimately for potential approval and marketing authorization in the United States.
Current report
Based on agreement with the FDA to follow ICH E1 guidance, results of the ORCA-OL trial are expected to meet the FDA requirement to provide safety data on a minimum of 300 subjects treated with cytisinicline for a cumulative period of six months as part of the anticipated NDA submission. Subsequently, data on at least 100 subjects treated for a total cumulative period of one year will be provided prior to potential product approval. ORCA-OL is being conducted at 29 clinical trial sites across the United States, all of which participated in previous ORCA-program clinical trials.
Current report
Completed Company-Sponsored Phase 1 Trials
Current report
Completed Phase 1 Safety Trials
Current report
Completed Company-Sponsored Phase 2 Trials
Current report
Final study results were published in the scientific journal Nicotine and Tobacco Research in April 2021.
Current report
ORCA-3 trial results were presented at the SRNT annual meeting in March 2024.
Current report
Total Other Income/(Expense)
Current report
On July 25, 2024, we entered into a contingent convertible debt agreement, or New Debt Agreement, with SVB, a division of First-Citizens Bank & Trust Company, or FCB, in its capacity as administrative agent and collateral agent, and FCB, as a lender, or Lender, pursuant to which the Lender provided term loans having an aggregate original principal amount of $10.0 million, with additional term loans of up to $10.0 million available upon the occurrence of certain events as provided for in the New Debt Agreement and further described below, or New Convertible Term Loan. Our obligations under the New Debt Agreement are secured by substantially all of our assets, other than intellectual property.
Current report
The New Debt Agreement refinanced our Debt Agreement entered into on May 15, 2023 (see Note 7 “Convertible Debt” to our unaudited financial statements for the quarter ended June 30, 2024). Our obligations under the Debt Agreement and Convertible Term Loan were satisfied in full and the Debt Agreement and Convertible Term Loan were terminated in connection with the entrance into the New Debt Agreement and New Convertible Term Loan.
Current report
Subject to certain terms and conditions, the conversion feature grants the Lender or, pursuant to an assignment, any designee thereof, or Conversion Right Holders, the right to convert part or all of the outstanding aggregate original principal amount of the New Convertible Term Loan, plus accrued and unpaid interest, into shares of our common stock, or Initial Voluntary Conversion, at a conversion price equal to $7.00, subject to customary adjustment provisions. The Conversion Rights Holders have the further right to convert part or all of the outstanding principal amount of the second and third tranches of the New Convertible Term Loan, plus accrued and unpaid interest, into shares of our common stock at a conversion price equal to the greater of (i) $4.854, subject to customary adjustment provisions, and (ii) the lower of (a) 150% of the average of the closing sale price of our common stock during the 10 trading days preceding the effective date of such tranche and (b) 150% of the closing sale price of our common stock on the trading day immediately preceding the effective date of such tranche, or Subsequent Conversion Price.
Current report
The conversion rights may be exercised at each Conversion Right Holder's option any time prior to repayment of the New Convertible Term Loan; provided, however, that a Voluntary Conversion will not be permitted without the agreement of the relevant Conversion Right Holder and us if the sum of the amount of debt to be converted; and the aggregate amount of debt previously converted pursuant to any Voluntary Conversion, divided by the aggregate of all debt that is then outstanding or that has been repaid other than by conversion exceeds 50%.
Current report
Additionally, the outstanding principal of the New Convertible Term Loan, plus accrued and unpaid interest, will automatically be converted into Conversion Shares at the Conversion Price on such date if any, when the closing price per share of our common stock has been equal to or greater than (a) in the case of the outstanding aggregate original principal amount of the New Convertible Term Loan, plus accrued and unpaid interest, $24.00 or, (b) in the case of the outstanding principal amount of the second and third tranches of the New Convertible Term Loan, plus accrued and unpaid interest, three times the applicable Subsequent Conversion Price, in each case for the thirty consecutive trading days prior to such date, and the Liquidity Conditions (as defined in the Debt Agreement) have been satisfied.
Current report
The New Convertible Term Loan may be repaid at our election and upon notice to the Agent by paying the Lender an amount equal to (i) a prepayment fee equal to (a) 3.0% of the aggregate outstanding principal balance if such prepayment occurs on or prior to the first anniversary of the New Convertible Term Loan, (b) 2.0% of the aggregate outstanding principal balance if such prepayment occurs after the first anniversary, but on or prior to the second anniversary, of the New Convertible Term Loan or (c) 1.0% of the aggregate outstanding principal balance if such prepayment occurs after the second anniversary of the New Convertible Term Loan and before the maturity date; (ii) 4.0% of the original aggregate principal amount of the New Convertible Term Loan and (iii) all other sums due and payable under the New Convertible Term Loan.
Current report
In connection with the New Debt Agreement, we entered into a Registration Rights Agreement, or RRA, with the Lender, pursuant to which we are required to register for resale shares of our common stock issuable to the Conversion Right Holders upon the conversion of outstanding debt under the New Debt Agreement within 30 days of the date of the RRA. Our obligations under the RRA will terminate with respect to a holder of applicable registrable securities if, as of the date we would be required to provide written notice of such registration, (x) the aggregate number of registrable securities then issued and issuable to such holder and to such holder’s affiliates, together with all other shares then held beneficially and/or of record by such holder and its affiliates, does not exceed 7.0% of our then-total shares issued and outstanding (calculated including all such registrable securities and other shares), or (y) we and such holder mutually reasonably agree that all registrable securities then issued and issuable to such holder and its affiliates may then be sold by such holder without the requirement to be in compliance with Rule 144 promulgated under the Securities Act, or Rule 144, and otherwise without restriction or limitation pursuant to Rule 144.
Current report
Cash Used in Investing Activities
Current report
For the six months ended June 30, 2024, net cash used in investing activities increased to $46.6 million from nil for the six months ended June 30, 2023. Net cash used in investing activities in the three months ended June 30, 2024 was due to transactions involving marketable securities in the normal course of business.
Removed paragraphs (10)
Previous report
Planned Company-Sponsored Clinical Trial
Previous report
Based on agreement with the FDA to follow ICH E1 guidance, the NDA submission will include data from a minimum of 300 subjects who have received cumulative cytisinicline treatment for six months, and prior to potential approval, we will provide the FDA with data from at least 100 subjects treated with cytisinicline for a cumulative duration of one year.
Previous report
Company-Sponsored Completed Phase 1 Trials
Previous report
Other Phase 1 Safety Trials
Previous report
Company-Sponsored Completed Phase 2 Trials
Previous report
Total Other Expenses
Previous report
The Convertible Term Loan matures on December 22, 2024; provided that (a) in the event we fail to receive written notice, or a Filing Communication, that the FDA has accepted for filing our New Drug Application, or NDA, with respect to cytisinicline for a smoking cessation indication, on or prior to July 31, 2024, the maturity date shall be August 1, 2024 or (b) in the event we receive a Filing Communication with respect to cytisinicline for a smoking cessation indication on or prior to August 14, 2024, but where such Filing Communication specifies any material deficiencies or material filing review issues with respect to such NDA, the maturity date shall be August 15, 2024; provided, further, that in the event we have submitted the NDA on or prior to June 30, 2024, the dates listed in (a) and (b) above shall be extended by one calendar month. In light of our recent discussions with the FDA and our current plans for the submission of an NDA for cytisinicline, if we are unable to secure a waiver or renegotiate the terms of the Debt Agreement, we expect that the Convertible Term Loan will mature on August 1, 2024. We are exploring alternative options, including with other lenders for facilities that could replace, in whole or part, the current Convertible Term Loan, but there is no guarantee we will be able to find alternative options or other lenders who are willing to lend to us on favorable terms, or at all.
Previous report
Subject to certain terms and conditions, the Lenders may convert all or any part of the outstanding Convertible Term Loan principal and accrued and unpaid interest at any time prior to maturity into shares of our common stock at a conversion price equal to $9.34 per share, subject to customary anti-dilution adjustments. Additionally, all outstanding Convertible Term Loan principal and accrued and unpaid interest will mandatorily convert into shares of our common stock, at the conversion price, on such date, if any, when the closing price per share of our common stock has been equal to or greater than $24.00 for thirty consecutive trading days prior to such date.
Previous report
We have the right, or Call Right, at any time to repay and retire all (but not less than all) of the outstanding Convertible Term Loan and accrued and unpaid interest, if any, prior to its conversion by payment of a premium equal to 150% of the outstanding principal balance (including any compounded interest), plus accrued and unpaid interest; provided, however, that we may not exercise the Call Right at any time when the Liquidity Conditions (as defined in the Debt Agreement) are not satisfied. Notwithstanding the foregoing, if we (x) elect to repay the Lenders earlier than the maturity date and (y) in the twelve month period following such repayment, (i) enter into an agreement or similar commitment, binding or nonbinding, with any third-party respecting an acquisition, and (ii) such acquisition is subsequently consummated, if the aggregate gross proceeds that would have been payable to the Lenders or, pursuant to an assignment, any designee thereof, or collectively, the Conversion Rights Holders, in connection with such acquisition had we not repaid the Convertible Term Loan and the Conversion Right Holders had exercised, in connection with such acquisition, the right to convert the Convertible Term Loan into shares of our common stock, then (z) we shall pay to the Lenders as an additional call price, the difference between such proceeds as would have been payable to the Conversion Right Holders in connection with such acquisition and the payment actually paid to the Lenders.
Previous report
On February 26, 2024, we entered into a non-binding term sheet, or the Term Sheet, for an extension of the maturity date for the term loans outstanding pursuant to our Debt Agreement with Lenders. There is no guarantee that we will be able to enter into a definitive agreement with the Lenders on the terms provided in the Term Sheet or any at all. (See “Part II Other Information. Item 1A. Risk Factors - Risks Related to Our Financial Condition and Capital Requirements”).
Reworded paragraphs (27)
Previous wording
Our focus is to address the global smoking health and nicotine addiction epidemic through the development and commercialization of cytisinicline. There are an estimated 28 million adults in the United States alone who smoke combustible cigarettes. Tobacco use is currently the leading cause of preventable death and is responsible for more than 8.0 million deaths worldwide and nearly half a million deaths in the United States annually. More than 87% of lung cancer deaths, 61% of all pulmonary disease deaths, and 32% of all deaths from coronary heart disease are attributable to smoking and exposure to secondhand smoke.
Current wording
Our focus is to address the global nicotine addiction epidemic in combustible cigarette and e-cigarette usage through the development and commercialization of cytisinicline. There are an estimated 29 million adults in the United States alone who smoke combustible cigarettes. Tobacco use is currently the leading cause of preventable death and is responsible for more than 8.0 million deaths worldwide and nearly half a million deaths in the United States annually. More than 87% of lung cancer deaths, 61% of all pulmonary disease deaths, and 32% of all deaths from coronary heart disease are attributable to smoking and exposure to secondhand smoke.
Previous wording
In addition, there are approximately 11.0 million adults in the United States who use e-cigarettes, also known as vaping. While nicotine e-cigarettes are thought to be less harmful than combustible cigarettes, they remain addictive and can deliver harmful chemicals which can cause lung injury or cardiovascular disease. In 2023, 2.1 million high school and middle school students reported using e-cigarettes. Research shows adolescents who have used e-cigarettes are seven times more likely to become smokers one year later compared to those who have never vaped. Currently, there are no U.S. Food and Drug Administration, or FDA, approved treatments indicated specifically as an aid to nicotine e-cigarette cessation.
Current wording
In addition, there are approximately 11 million adults in the United States who use e-cigarettes, also known as vaping. While nicotine e-cigarettes are thought to be less harmful than combustible cigarettes, they remain addictive and can deliver harmful chemicals which can cause lung injury or cardiovascular disease. In 2023, 2.1 million high school and middle school students reported using e-cigarettes. Research shows adolescents who have used e-cigarettes are seven times more likely to become smokers one year later compared to those who have never vaped. Recently, the U.S. Food and Drug Administration, or FDA, granted Breakthrough Therapy designation for cytisinicline for nicotine e-cigarette, or vaping, cessation. Breakthrough Therapy designation allows expedited development of drugs that are intended to treat serious conditions, when preliminary clinical evidence indicates that the drug demonstrates substantial improvement over available therapies. Currently, there are no FDA approved therapies indicated specifically as an aid to nicotine e-cigarette cessation.
Previous wording
We have no products approved for commercial sale and have not generated any revenue from product sales to date. We have never been profitable and have incurred operating losses in each year since inception. Our net loss was $6.5 million for the three months ended March 31, 2024. As of March 31, 2024, we had an accumulated deficit of $172.2 million, cash and cash equivalents balance of $66.4 million and a positive working capital balance of $47.1 million. For the three months ended March 31, 2024, net cash used in operating activities was $5.3 million.
Current wording
We have no products approved for commercial sale and have not generated any revenue from product sales to date. We have never been profitable and have incurred operating losses in each year since inception. Our net loss was $15.0 million for the six months ended June 30, 2024. As of June 30, 2024, we had an accumulated deficit of $180.7 million, cash, cash equivalents and short-term investments balance of $61.3 million and a positive working capital balance of $48.8 million. For the six months ended June 30, 2024, net cash used in operating activities was $10.2 million.
Previous wording
Planned Open Label ORCA-OL Trial
Current wording
Ongoing Open Label ORCA-OL Trial
Previous wording
We plan to initiate an open label exposure trial, or ORCA-OL, in the second quarter of 2024 and expect to enroll subjects who previously received cytisinicline as part of the ORCA-program studies. ORCA-OL will recruit from the more than 1,700 subjects who have participated in these prior trials, including more than 1,100 who have already received cytisinicline treatment for up to either 6 or 12 weeks. Participants, whether they were previously using nicotine through smoking or vaping, will be encouraged to enroll in the study if they are currently using either, or both, forms of smoking and/or vaping nicotine. Subjects will receive cytisinicline treatment and be monitored for safety events for up to one year. The primary endpoint is frequency of serious adverse events, or SAEs. Other safety and efficacy outcomes will be assessed. The study is designed to enroll up to 650 subjects and is anticipated to start in the second quarter of 2024.
Current wording
ORCA-OL is designed to evaluate the long-term exposure of 3 mg cytisinicline treatment dosed three times daily in U.S. adults who want to quit smoking or vaping. We are actively enrolling from the more than 1,700 subjects who have previously participated in the ORCA-program studies. Participants are being contacted to enroll in the ORCA-OL study if they are currently using either, or both, combustible cigarettes or nicotine containing e-cigarettes (vaping). Subjects will receive cytisinicline treatment and be monitored for safety events for up to one year. The primary endpoint is frequency of serious adverse events, or SAEs. Other safety and efficacy outcomes will be assessed. The necessary data from the ORCA-OL study is anticipated to be available to support an NDA submission in the first half of 2025.
Previous wording
Cytisinicline Recent Clinical Developments and Highlights
Current wording
Recent Clinical Developments and Highlights
Previous wording
Three additional Phase 1 clinical studies were conducted in 2022 and 2023 for the NDA: one pharmacokinetics, or PK, study to evaluate for any increased cytisinicline blood levels in subjects who have various levels of renal impairment; another PK study to determine various remaining PK parameters for the 3 mg TID cytisinicline regimen, including the timing of steady state dosing; and a cardiac safety study to evaluate for any effects of cytisinicline on QT interval prolongation. All 3 studies have been completed.
Current wording
Three Phase 1 clinical studies were conducted in 2022 and 2023 for the NDA: one pharmacokinetics, or PK, study to evaluate for any increased cytisinicline blood levels in subjects who have various levels of renal impairment; another PK study to determine various remaining PK parameters for the 3 mg TID cytisinicline regimen, including the timing of steady state dosing; and a cardiac safety study to evaluate for any effects of cytisinicline on QT interval prolongation. All 3 studies have been completed.
Previous wording
The primary endpoint for ORCA-V1 was biochemically verified continuous abstinence from nicotine e-cigarette use, measured during the last 4 weeks of treatment. Subjects who received 12 weeks of cytisinicline treatment had 2.6 times higher odds, or likelihood, to have quit vaping during the last four weeks of treatment compared to subjects who received placebo (p=0.035). The vaping cessation rate during weeks 9 through 12 was 31.8% for cytisinicline compared to 15.1% for placebo. A benefit in favor of cytisinicline was consistently observed across the secondary endpoints. Additionally, a cessation benefit was observed for cytisinicline across clinical trial sites and participant demographics such as age, gender, race, or whether they had smoked cigarettes in the past.
Current wording
The primary endpoint for ORCA-V1 was biochemically verified continuous abstinence from nicotine e-cigarette use, measured during the last 4 weeks of treatment. Subjects who received 12 weeks of cytisinicline treatment had 2.64 times higher odds, or likelihood, to have quit vaping during the last four weeks of treatment compared to subjects who received placebo (p=0.04). The vaping cessation rate during weeks 9 through 12 was 31.8% for cytisinicline compared to 15.1% for placebo. A benefit in favor of cytisinicline was consistently observed across the secondary endpoints. Additionally, a cessation benefit was observed for cytisinicline across clinical trial sites and participant demographics such as age, gender, race, or whether they had smoked cigarettes in the past.
Previous wording
ORCA-V1 trial results were presented at the Society for Research on Nicotine and Tobacco, or SRNT, European Annual Meeting in September 2023, the SRNT U.S. Annual Meeting in March 2024, and final study results were published in the Journal of the American Medical Association, or JAMA, Internal Medicine in May 2024.
Current wording
ORCA-V1 trial results were presented at the Society for Research on Nicotine and Tobacco, or SRNT, European Annual Meeting in September 2023, the SRNT U.S. Annual Meeting in March 2024, the Society of General Internal Medicine U.S. Annual Meeting in May 2024 and final study results were published in the Journal of the American Medical Association, or JAMA, Internal Medicine in May 2024.
Previous wording
Company-Sponsored Phase 3 Clinical Trials for Smoking Cessation Indication
Current wording
Completed Company-Sponsored Phase 3 Clinical Trials for Smoking Cessation Indication
Previous wording
Additional analyses from the ORCA-2 trial were presented at the Society for Research on Nicotine and Tobacco, or SRNT, annual meeting in March 2023 and final study results were published in JAMA in July 2023.
Current wording
Additional analyses from the ORCA-2 trial were presented at the SRNT annual meeting in March 2023 and final study results were published in JAMA in July 2023.
Previous wording
As of March 31, 2024, the fair value of the contingent consideration was estimated to be $0.6 million (see Note 5“Fair Value Measurements, Fair Value of Sopharma Share Purchase Agreement Contingent Consideration” in the accompanying consolidated Financial Statements). We recognized a loss of $0.1 million for the three months ended March 31, 2024.
Current wording
As of June 30, 2024, the fair value of the contingent consideration was estimated to be $0.6 million (see Note 5 “Fair Value Measurements, Fair Value of Sopharma Share Purchase Agreement Contingent Consideration” in the accompanying consolidated Financial Statements). We recognized a loss of $0.1 million for the six months ended June 30, 2024.
Previous wording
For the three months ended March 31, 2024 and 2023
Current wording
For the three and six months ended June 30, 2024 and 2023
Previous wording
Our R&D expenses for our clinical development program for the three months ended March 31, 2024 and 2023 were as follows (in thousands):
Current wording
Our R&D expenses for our clinical development program for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):
Previous wording
R&D expenses for the three months ended March 31, 2024 decreased to $2.8 million, from $5.5 million for the three months ended March 31, 2023. The decrease in the three months ended March 31, 2024 as compared to the same period in 2023 was primarily due to costs associated with our Phase 3 ORCA-3 trial and Phase 2 ORCA-V1 trial as both continued fully enrolled during the first quarter of 2023 and were completed in the second quarter of 2023. This was partially offset by higher costs in the first quarter of 2024 associated with planning activities for the expected initiation of our ORCA-OL trial in the second quarter of 2024.
Current wording
R&D expenses for the three months ended June 30, 2024 increased to $5.1 million as compared to $4.6 million for the three months ended June 30, 2024. For the six months ended June 30, 2024, R&D expenses decreased to $7.9 million as compared to $10.1 million for the six months ended June 30, 2023. The increase in expenses for the three months ended June 30, 2024 as compared to the same period in 2023 was primarily due to the initiation and enrollment of our ORCA-OL open label safety trial in May 2024, while both our Phase 3 ORCA-3 trial and Phase 2 ORCA-V1 trial were completed in the second quarter of 2023 and began to wind down in that period. The decrease in R&D expenses for the six months ended June 30, 2024, as compared to the same period in 2023 was primarily due to costs associated with our Phase 3 ORCA-3 trial and Phase 2 ORCA-V1 trial as both continued fully enrolled during the first quarter of 2023 and were completed in the second quarter of 2023. This was partially offset by higher costs in the six months ended June 30, 2024 associated with our ORCA-OL trial, including planning activities and, in May 2024, initiation of the clinical trial and commencement of enrollment.
Previous wording
Our general and administrative expenses for the three months ended March 31, 2024 and 2023 were as follows (in thousands):
Current wording
Our general and administrative expenses for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):
Previous wording
General and administrative expenses for the three months ended March 31, 2024 increased to $3.2 million from $3.0 million for the three months ended March 31, 2023. The increase was primarily due to higher employee expenses associated with stock-based compensation and consulting costs. The increased expenses were partially offset by a decrease in legal costs associated with general corporate activities.
Current wording
General and administrative expenses for the three and six months ended June 30, 2024 increased to $3.3 million and $6.5 million, respectively, from $3.1 million and $6.2 million for the three and six months ended June 30, 2023, respectively. The increase was primarily due to higher employee expenses associated with stock-based compensation and consulting costs. The increased expenses were partially offset by a decrease in legal costs associated with general corporate activities.
Previous wording
Total other expenses for the three months ended March 31, 2024 were $0.5 million. Total other expenses for the three months ended March 31, 2023 were $0.4 million. The increase in 2024 as compared to 2023 was due to an increase in interest expense on our convertible debt as a result of higher interest rates in the first quarter of 2024 as compared to the same period in 2023 and compounding of the accrued paid-in-kind interest. This was partially offset by higher interest income in 2024 as a result of a combination of a higher average cash balance and higher interest rates.
Current wording
Total other expenses for the three and six months ended June 30, 2024 were $30,000 and $0.5 million, respectively. Total other expenses for the three and six months ended June 30, 2023 were $0.5 million and $0.9 million. The decrease in 2024 as compared to 2023 was due to an increase in interest income as a result of a higher average cash balance and higher interest rates. This was partially offset by higher interest expense on our convertible debt as a result of higher interest rates in 2024 as compared to the same period in 2023 and compounding of the accrued paid-in-kind interest.
Previous wording
We have incurred an accumulated deficit of $172.2 million through March 31, 2024 and we expect to incur substantial additional losses in the future as we operate our business and continue or expand our regulatory, manufacturing, pre-commercial and other R&D activities and other operations. We have not generated any revenue from product sales to date, and we may not generate product sales revenue in the near future, if ever. As of March 31, 2024, we had a cash and cash equivalents balance of $66.4 million and a positive working capital balance of $47.1 million. For the three months ended March 31, 2024, net cash used in operations was $5.3 million. We have historically financed our operations through equity and debt financings. While we believe that we will be able to settle our commitments and liabilities in the normal course of business as they fall due during the next 12 months, as a development-stage company with no current sources of revenue, we are dependent on our ability to raise funds (through public or private securities offerings, debt financings, government funding or grants, or other sources, which may include licensing, collaborations or other strategic transactions or arrangements) to support the ongoing advancement of our clinical trials and corporate activities. We believe that our existing cash and cash equivalents will be sufficient for us to fund our current operating expenses and capital expenditures into the second half of 2025, including through potential NDA submission to the FDA for cytisinicline and the potential repayment of our outstanding debt obligations under our contingent convertible term loan.
Current wording
We have incurred an accumulated deficit of $180.7 million through June 30, 2024 and we expect to incur substantial additional losses in the future as we operate our business and continue or expand our regulatory, manufacturing, pre-commercial and other R&D activities and other operations. We have not generated any revenue from product sales to date, and we may not generate product sales revenue in the near future, if ever. As of June 30, 2024, we had a cash, cash equivalents and short-term investment balance of $61.3 million and a positive working capital balance of $48.8 million. For the six months ended June 30, 2024, net cash used in operations was $10.2 million. We have historically financed our operations through equity and debt financings. While we believe that we will be able to settle our commitments and liabilities in the normal course of business as they fall due during the next 12 months, as a development-stage company with no current sources of revenue, we are dependent on our ability to raise funds (through public or private securities offerings, debt financings, government funding or grants, or other sources, which may include licensing, collaborations or other strategic transactions or arrangements) to support the ongoing advancement of our clinical trials and corporate activities. We believe that our existing cash, cash equivalents and short-term investments will be sufficient for us to fund our current operating expenses and capital expenditures into the second half of 2025, including through potential NDA submission to the FDA for cytisinicline and the potential repayment of our outstanding debt obligations under our contingent convertible term loan.
Previous wording
We did not have during the periods presented, and we do not currently have, any commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources.
Current wording
We did not have during the periods presented, and we do not currently have, any commitments or obligations, including contingent obligations, other than the Sopharma Contingent Consideration, arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources.
Previous wording
Interest is calculated on the outstanding principal amount of the Convertible Term Loan at the aggregate of (a) a floating rate per annum equal to the greater of (i) 2.25% and (ii) the prime rate minus 1.0%, which interest shall be payable in cash monthly in arrears, and (b) 7.0% per annum, compounded monthly, which shall be payable on the earlier to occur of the maturity date and the date that the Convertible Term Loan is converted into our common stock.
Current wording
The New Convertible Term Loan matures on December 1, 2027, which maturity date may be extended to June 1, 2028 upon the occurrence of certain events as provided for in the New Debt Agreement. The first tranche of the New Convertible Term Loan, which was advanced on July 25, 2024, has an aggregate original principal amount of $10.0 million. The Lender will further make available to us, upon our request: (a) on or prior to October 31, 2025, a second tranche of the New Convertible Term Loan having an aggregate principal amount of $5.0 million in the event that we receive written notice that the FDA has accepted for filing our NDA with respect to cytisinicline for a smoking cessation indication, or the Additional Term Loan Event I, and (b) on or prior to December 31, 2025, a third tranche of the New Convertible Term Loan having an aggregate principal amount of $5.0 million, subject to the Lender’s sole discretion. Interest is calculated on the outstanding principal amount of the New Convertible Term Loan at a floating rate per annum equal to the greater of (i) 7.0% and (ii) the prime rate minus 1.0%, which interest shall be payable in cash monthly in arrears and shall be payable on the earlier to occur of (x) the first day of the first month following any extension of credit by the Lender for our credit, (y) the date of any prepayment pursuant to the New Debt Agreement, or (z) the maturity date. The New Convertible Term Loan will be “interest-only” until December 31, 2025, subject to extension as provided for in the New Debt Agreement. The “interest-only” period may be extended to June 30, 2026, provided, that in the event (i) after the Effective Date, but prior to December 31, 2025, we have received at least $40,000,000 in net cash proceeds from the issuance equity interests and (ii) the conditions of Additional Term Loan Event I have been satisfied.
Previous wording
The Debt Agreement contains customary affirmative and restrictive covenants, including covenants regarding the incurrence of additional indebtedness or liens, investments, transactions with affiliates, delivery of financial statements, payment of taxes, maintenance of insurance, dispositions of property, mergers or acquisitions, among other customary covenants. We are also restricted from paying dividends or making other distributions or payments on our capital stock, subject to limited exceptions. The Debt Agreement also includes customary representations and warranties, events of default and termination provisions. The Lenders may not engage in any short sales of, or other hedging transactions in, our common stock while any amounts are outstanding under the Debt Agreement. Our obligations under the Debt Agreement are secured by substantially all of our assets, other than intellectual property.
Current wording
The Debt Agreement contains customary affirmative and restrictive covenants, including covenants regarding the incurrence of additional indebtedness or liens, investments, transactions with affiliates, delivery of financial statements, payment of taxes, maintenance of insurance, dispositions of property, mergers or acquisitions, among other customary covenants. We are also restricted from paying dividends or making other distributions or payments on its capital stock, subject to limited exceptions. The New Debt Agreement also includes customary representations and warranties, events of default and termination provisions. The Lender may not engage in any short sales of, or other hedging transactions in, our common stock while any amounts are outstanding under the New Debt Agreement.
Previous wording
Since entry into the ATM, through the date of termination of the ATM, we offered and sold an aggregate of 200,000 shares of our common stock. These aggregate sales resulted in gross proceeds to us of approximately $1.5 million. During the three months ended March 31, 2024, we did not sell any shares of our common stock pursuant to the ATM.
Current wording
Since entry into the ATM, through the date of termination of the ATM, we offered and sold an aggregate of 200,000 shares of our common stock. These aggregate sales resulted in gross proceeds to us of approximately $1.5 million. During the three and six months ended June 30, 2024, we did not sell any shares of our common stock pursuant to the ATM.
Previous wording
For the three months ended March 31, 2024, net cash used in operating activities was $5.3 million compared to $8.3 million for the three months ended March 31, 2023. The decrease in cash used in operations in the 2024 period as compared to the 2023 period was primarily attributable to lower R&D expense in 2024 as both the Phase 3 ORCA-3 trial and Phase 2 ORCA-V1 trial were completed in the second quarter of 2023 and wound down. The decrease was partially offset by higher costs in the first quarter of 2024 associated with planning activities for the expected initiation of our ORCA-OL trial in the second quarter of 2024.
Current wording
For the six months ended June 30, 2024, net cash used in operating activities was $10.2 million compared to $15.0 million for the six months ended June 30, 2023. The decrease in cash used in operations in the 2024 period as compared to the 2023 period was was primarily due to costs associated with our Phase 3 ORCA-3 trial and Phase 2 ORCA-V1 trial as both continued fully enrolled during the first quarter of 2023 and were completed in the second quarter of 2023. This was partially offset by higher costs in the six months ended June 30, 2024 associated with our ORCA-OL trial, including planning activities and, in May 2024, initiation of the clinical trial and commencement of enrollment.
Previous wording
For the three months ended March 31, 2024, net cash provided by financing activities was $56.1 million compared to $47,000 for the three months ended March 31, 2023. Net cash provided by financing activities in the three months ended March 31, 2024 relates to proceeds received from the February 2024 registered direct offering. Net cash provided by financing activities in the three months ended March 31, 2023, relates to proceeds received from warrant exercises.
Current wording
For the six months ended June 30, 2024, net cash provided by financing activities was $56.0 million compared to $15.3 million for the six months ended June 30, 2023. Net cash provided by financing activities in the six months ended June 30, 2024 relates to proceeds received from the February 2024 registered direct offering. Net cash provided by financing activities in the six months ended June 30, 2023, relates to proceeds received from the May 2023 registered direct offering and from warrant exercises.
Previous wording
We previously disclosed certain contractual obligations and contingencies and commitments relevant to us within the financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 28, 2024. There have been no material changes to our “Contractual Obligations” table in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2023 Form 10-K. For more information regarding our current contingencies and commitments, see Note 9 to the financial statements included above.
Current wording
We previously disclosed certain contractual obligations and contingencies and commitments relevant to us within the financial statements and Management’s Discussion and Analysis of Results of Operations and Liquidity and Capital Resources in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 28, 2024. For more information regarding our current contingencies and commitments, see Note 9 to the financial statements included above.
Previous wording
See Note 2, “Accounting Policies,” of the consolidated financial statements for information related to the adoption of new accounting standards in 2024, no new accounting standards were adopted.
Current wording
See Note 2, “Accounting Policies,” of the consolidated financial statements for information related to the adoption of new accounting standards in 2024.