SAB Biotherapeutics Inc
For the period ended Sep 30, 2024. Filed Nov 6, 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.
Sep 30, 2024 · Filed Nov 6, 2024
SABS$3.03+3.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000950170-24-094084
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0000950170-24-122443
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 188 previous paragraphs and 128 current paragraphs.
83 unchanged; 34 reworded; 11 added; 67 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 17 previous and 17 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 (11)
Current report
SAB provided a clinical trial progress update on September 9, 2024 at the European Association for the Study of Diabetes Annual Meeting. The update confirmed that SAB-142 has completed Phase 1 enrollment of all planned cohorts in healthy volunteers and is progressing to enroll patients with type 1 diabetes in the last cohort of the study. Further, the target dose of SAB-142 2.5mg/kg is complete with no observation of serum sickness.
Current report
SAB has elected to add a T1D patient cohort to establish safety, tolerability, pharmacokinetic and immunogenicity profile of SAB-142 in patients with T1D prior to initiation of an upcoming Phase II SAFEGUARD study in patients with new-onset T1D.
Current report
SAB-142 believes that it remains on track for a topline Phase 1 data readout by the end of the year.
Current report
Figure 2. An overview of the SAB-142 pipeline, including potential future anticipated studies for other indications and anticipated milestones.
Current report
The National Institute of Health – National Institute of Allergy and Infectious Disease (“NIH-NIAID”) and Geneva Foundation grants, totaling approximately $4.2 million, were completed as of June 30, 2023. No grant income was recognized for these grants in the three and nine months ended September 30, 2024. The Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense Enabling Biotechnologies (“JPEO”) Rapid Response Contract (the “JPEO Rapid Response Contract”), initially awarded for up to $25 million and later expanded to $203.6 million, was terminated in 2022 (the “JPEO Rapid Response Contract Termination”). A final settlement was reached with the US Department of Defense (the “DoD”) in January 2023. Approximately $1.2 million in deferred grant income was recognized for the JPEO Rapid Response Contract in the nine months ended September 30, 2024. A remaining $115 thousand is expected to be recognized as wind-down activities are completed, subject to potential adjustments from negotiations with third-party vendors.
Current report
See Note 2, Summary of Significant Accounting Policies, to our condensed consolidated financial statements for further information about our established revenue recognition process and Note 4, Revenue, to our condensed consolidated financial statemetns for further information about revenue recognized from government grants for the three and nine months ended September 30, 2024 and 2023.
Current report
Revenue decreased by approximately $1.3 million, or 100.0%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to the JPEO Rapid Response Contract Termination. There was no revenue for the three months ended September 30, 2024, as compared to $413 thousand for supplies and $855 thousand for contract manufacturing, for the three months ended September 30, 2023.
Current report
Insurance Financing Note
Current report
Net cash used by financing activities increased by $0.5 million in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due payments of our convertible note and insurance financing agreement along with an increase in deferred issuance costs.
Current report
Our most critical accounting estimates and assumptions are included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 29, 2024 and our most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 filed with the SEC on August 8, 2024. There have been no significant changes to our critical accounting policies during the three months ended September 30, 2024. See Note 2, Summary of Significant Accounting Policies, to our condensed consolidated financial statements for further details.
Current report
The Jumpstart Our Business Startups (“JOBS”) Act, enacted in April 2012, permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have and intend to continue to take advantage of all of the reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards, for an emerging growth company under Section 107 of the JOBS Act.
Removed paragraphs (67)
Previous report
On May 21, SAB announced that the FDA provided clearance to SAB’s IND application for SAB-142, which enables clinical development of SAB-142 for patients with T1D in the US.
Previous report
As part of its continuing strategic evolution, SAB rebranded on June 20 as SAB BIO, maintaining its corporate headquarters in Miami. The Company will maintain its legal name “SAB Biotherapeutics, Inc.” and continue doing business as SAB BIO. The Company continues to execute its corporate strategy through building partnerships and expertise that advance its program focus on T1D, including a recent poster presentation at the American Diabetes Association 84th Scientific Session on June 23.
Previous report
SAB appointed Lucy To as Chief Financial Officer of SAB BIO, whose appointment is effective as of August 12. To joins SAB from Wells Fargo Securities, where she led healthcare investments as Managing Director.
Previous report
On August 5, 2024, the Company’s announced founding of a new Clinical Advisory Board, comprised of world-renowned experts in T1D and disease modifying therapeutic development. This Board will work closely with SAB leadership to advance and inform our clinical development program for SAB-142.
Previous report
National Institute of Health - National Institute of Allergy and Infectious Disease (“NIH-NIAID”) (Federal Award #1R41AI131823-02) – this grant was for approximately $1.5 million and had an original term of April 2019 through March 2021. The grant was subsequently amended to extend the end date to March 2023. No grant income was recognized for this grant for the three and six months ended June 30, 2024. No grant income was recognized for this grant for the three months ended June 30, 2023 and approximately $192 thousand of grant income was recognized for the six months ended June 30, 2023. This grant was completed as of June 30, 2023.
Previous report
NIH-NIAID through Geneva Foundation (Federal Award #1R01AI132313-01, Subaward #S-10511-01) – this grant was for approximately $2.7 million and had an original term of August 2017 through July 2021. The grant was subsequently amended to extend the end date to July 2023. No grant income was recognized for the three and six months ended June 30, 2024, and approximately $37 thousand and $273 thousand of grant income was recognized for the three and six months ended June 30, 2023, respectively. This grant was completed as of June 30, 2023.
Previous report
US Department of Defense (“DoD”), Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense Enabling Biotechnologies (“JPEO”) through Advanced Technology International – this grant was for a potential of $25 million, awarded in stages starting in August 2019 and with potential stages running through February 2023. Additional contract modifications were added to this contract in 2020 and 2021 for work on a COVID therapeutic, bringing the contract total to $203.6 million. Deferred grant income recognized was approximately $263 thousand and $1.2 million for the three and six months ended June 30, 2024, respectively and $44 thousand and $197 thousand for the three and six months ended June 30, 2023, respectively. This grant was terminated in 2022.
Previous report
The grants for the Company’s Rapid Response contract with JPEO (the “JPEO Rapid Response Contact”) are cost reimbursement agreements, with reimbursement of qualified direct research and development expense (labor and consumables) with an overhead charge (based on actual, reviewed quarterly) and a fixed fee (9%).
Previous report
On August 3, 2022, the Company received notice from the DoD terminating the JPEO Rapid Response contract (the “JPEO Rapid Response Contract Termination”). The Company engaged in negotiations with the DoD to compensate the Company for services provided prior to the JPEO Rapid Response Contract Termination and costs the Company would be expected to bear in future periods. A termination and settlement proposal was submitted to the DoD on September 9, 2022; the Company submitted a final invoice on December 15, 2022; and received payment from the DoD on or about January 12, 2023. The terms of the arrangement provide for a cost-reimbursable structure, and state that the parties will work in good faith equitable reimbursement for work performed toward accomplishment of the tasks provided in the agreement. At this time, other than certain deferred obligations (presented within deferred grant income within the Company’s condensed consolidated unaudited balance sheet) potentially payable to the DoD solely due to subsequent negotiations with third-party vendors, the Company believes and has been advised there is a reasonable, good faith basis for the position that no present or future obligations exist. Revenue recognized subsequent to the JPEO Rapid Response Contract Termination relates to satisfaction of residual obligations under the termination and settlement agreement—see Note 2, Summary of Significant Accounting Policies for further information about the Company’s established revenue recognition process.
Previous report
Insurance Financing
Previous report
Net cash used by financing activities remained steady in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due a decrease in payments on financing agreements for our insurance agreements offset by an increase in payment for deferred issuance costs.
Previous report
While our significant accounting policies are described in more detail in Note 2, Summary of Significant Accounting Policies, in our condensed consolidated financial statements we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our condensed consolidated financial statements.
Previous report
Cash, cash equivalents, and restricted cash
Previous report
Cash and cash equivalents are comprised of cash and highly liquid investments with original maturities of 90 days or less at the date of purchase. Cash equivalents consist primarily of exchange-traded money market funds.
Previous report
The Company is exposed to credit risk in the event of default by the financial institutions or the issuers of these investments to the extent the amounts on deposit or invested are in excess of amounts that are insured.
Previous report
Short-term investments
Previous report
We account for our short-term investments in accordance with Accounting Standard Codification (ASC) Topic 320, Investments - Debt and Equity Securities. Our management determines the appropriate classification of our investments at the time of purchase and reevaluates such determinations at each reporting period.
Previous report
As of June 30, 2024, our short-term investments consisted of U.S. treasury securities with original maturity exceeding 90 days and investments in exchange-traded mutual funds. We classify these securities as both current and non-current depending on their time to maturity. We consider all of our securities for which there is a determinable fair market value, and there are no restrictions on our ability to sell within the next twelve months, as available-for-sale securities.
Previous report
We recognize the change in fair value of available-for-sale equity securities within other income in the condensed consolidated statement of operations and comprehensive loss, and available-for-sale debt securities are measured at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss) in the condensed consolidated statement of operations and comprehensive loss.
Previous report
We review our investments at each reporting date to identify and evaluate whether a decline in fair value below the amortized cost basis of available-for-sale debt securities is due to credit-related factors and determine if such unrealized losses are the result of credit losses that require impairment. Factors considered in determining whether an unrealized loss is the result of a credit loss or other factors include the extent to which the fair value is less than the cost basis, any changes to the rating of the security by a rating agency, the financial condition and near-term prospects of the issuer, any historical failure of the issuer to make scheduled interest or principal payments, any adverse legal or regulatory events affecting the issuer or issuer’s industry, any significant deterioration in economic condition and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.
Previous report
We did not recognize any credit losses on our short-term investments during the six months ended June 30, 2024 and 2023.
Previous report
Research and development expenses
Previous report
During the three and six months ended June 30, 2024 and 2023, we had contracts with multiple contract research organizations (“CRO”) to complete studies as part of research grant agreements. These costs include upfront, milestone and monthly expenses as well as reimbursement for pass through costs. All research and development costs are expensed as incurred except when we are accounting for nonrefundable advance payments for goods or services to be used in future research and development activities. In these cases, these payments are capitalized at the time of payment and expensed in the period the research and development activity is performed. As actual costs become known, we will adjust the accrual; such changes in estimate may be a material change in our clinical study accrual, which could also materially affect reported results of operations. For the three and six months ended June 30, 2024 and 2023, there were no material adjustments to our prior period estimates of accrued expenses for clinical trials.
Previous report
Revenue Recognition
Previous report
Stock-based compensation
Previous report
FASB ASC Topic 718, Compensation– Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee and non-employee services are acquired. We recognize compensation cost relating to stock-based payment transactions using a fair-value measurement method, which requires all stock-based payments to employees, directors, and non-employee consultants, including grants of stock options, to be recognized in operating results as compensation expense based on fair value over the requisite service period of the awards. We determine the fair value of common stock based on the closing market price at closing on the date of the grant.
Previous report
In determining the fair value of stock-based awards, we utilize the Black-Scholes option-pricing model, which uses both historical and current market data to estimate fair value. The Black-Scholes option-pricing model incorporates various assumptions, such as the value of the underlying common stock, the risk-free interest rate, expected volatility, expected dividend yield, and expected life of the options. For awards with performance-based vesting criteria, we estimate the probability of achievement of the performance criteria and recognizes compensation expense related to those awards expected to vest. No awards may have a term in excess of ten years. Forfeitures are recorded when they occur. Stock-based compensation expense is classified in the condensed consolidated statements of operations based on the function to which the related services are provided. We recognize stock-based compensation expense over the vesting period.
Previous report
See Note 11, Stock Option Plans, in our condensed consolidated financial statements for information concerning certain specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options granted for the three and six months ended June 30, 2024 and 2023.
Previous report
Deferred Issuance Costs
Previous report
The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred issuance costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in shareholders’ equity as a reduction of additional paid-in capital generated as a result of the issuance.
Previous report
As of June 30, 2024, the Company had $236 thousand in deferred issuance costs related to the Company’s sales agreement with Cantor Fitzgerald & Co. The sales agreement is discussed further in Note 10, Stockholders’ Equity. The Company had no deferred issuance costs as of December 31, 2023.
Previous report
Foreign Currency Translations and Transactions
Previous report
Assets and liabilities of the Company's foreign subsidiary are translated at the year-end exchange rate. Operating results of the Company's foreign subsidiary are translated at average exchange rates during the period. Translation adjustments have no effect on net loss and are included in “Accumulated other comprehensive income (loss), net” in the accompanying Condensed Consolidated Balance Sheets.
Previous report
Warrant Liabilities Valuations
Previous report
Liability Classified Warrants
Previous report
We are required to periodically estimate the fair value of our Private Placement Warrant liabilities with the assistance of an independent third-party valuation firm. The assumptions underlying these valuations represented our best estimates, which involved inherent uncertainties and the application of significant levels of our judgment. The fair value of our Public Warrant liability is determined by reference to the quoted market price.
Previous report
The warrants are accounted for as liabilities in accordance with ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and were presented within warrant liabilities on the condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023. The initial fair value of the warrant liabilities were measured at fair value on the closing date of our business combination, and changes in the fair value of the warrant liabilities were presented within changes in fair value of warrant liabilities in the condensed consolidated statements of operations for the three and six months ended June 30, 2024 and 2023.
Previous report
Public Warrants and Private Placement Warrants
Previous report
The fair value of the private placement warrants held by assignees of Big Cypress Holdings, LLC (the “Private Placement Warrants”) was determined utilizing both the Black-Scholes Merton formula and a MCS analysis. Specifically, we considered a MCS to derive the implied volatility in the publicly listed price of the public warrants issued in connection with the closing of our initial public offering (the “Public Warrants”). We then considered this implied volatility in selecting the volatility for the application of a Black-Scholes Merton model for the Private Placement Warrants. We determined the fair value of the Public Warrants by reference to the quoted market price.
Previous report
The Public Warrants were classified as a Level 1 fair value measurement, due to the use of the quoted market price, and the Private Placement Warrants held privately by assignees of Big Cypress Holdings LLC, were classified as a Level 3 fair value measurement, due to the use of unobservable inputs. See Note 12, Warrants, for further information regarding the Public Warrants and Private Placement Warrants.
Showing the first 40 of 67 passages. Open the source sections for the rest.
Reworded paragraphs (34)
Previous wording
This Quarterly Report on Form 10-Q (this “Quarterly Report” or “Form 10-Q”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act of 1934, as amended (the "Exchange Act"), as amended, that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements involved known and unknown risks, relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. In addition, historic results, including but not limited to those related to IND enabling GLP safety/toxicology of SAB-142; and Phase 1 & Phase 2a results of SAB-176; do not guarantee that future research or trials will suggest the same conclusions, nor that historic results referred to herein will be interpreted in the same manner due to future preclinical and clinical trial results or otherwise. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the sections entitled “Risk Factors” in this Quarterly Report, our most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, and other periodic reports filed with the Securities and Exchange Commission (the “SEC”) and available at https://www.sec.gov/. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except as expressly required by applicable law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.
Current wording
This Quarterly Report on Form 10-Q (this “Quarterly Report” or “Form 10-Q”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act of 1934, as amended (the "Exchange Act"), that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements involved known and unknown risks, relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. In addition, historic results, including but not limited to those related to IND enabling GLP safety/toxicology of SAB-142; and Phase 1 & Phase 2a results of SAB-176; do not guarantee that future research or trials will suggest the same conclusions, nor that historic results referred to herein will be interpreted in the same manner due to future preclinical and clinical trial results or otherwise. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the sections entitled “Risk Factors” in this Quarterly Report, our most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, and other periodic reports filed with the Securities and Exchange Commission (the “SEC”) and available at https://www.sec.gov/. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except as expressly required by applicable law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.
Previous wording
Figure 1. An overview of phased milestones for SAB-142, starting with Phase 1 study cohorts 1-5 starting end of 2023 through beginning of 2025, with Phase 1 topline results anticipated in late 2024. Phase 2 study POC/DRF is anticipated to begin in early 2025 with Phase 2 topline results expected at the end of 2026.
Current wording
Figure 1. An overview of phased milestones for SAB-142, starting with Phase 1 study cohorts 1-5 starting end of 2023 through beginning of 2025, with Phase 1 topline results anticipated in late 2024. Phase 2 study POC/DRF is anticipated to begin in early 2025 with Phase 2 (SAFEGUARD) topline results expected at the end of 2027.
Previous wording
We believe that our financial performance has been, and in the foreseeable future will continue to be, primarily driven by multiple factors as described throughout our analysis within Components of Results of Operations below, each of which presents growth opportunities for our business. These factors also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations. Our ability to successfully address these challenges is subject to various risks and uncertainties, including those described in the section captioned “Part I, Item 1A, Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and supplemented with the following revised or additional risk factors in “Part II, Item 1A, Risk Factors” included herein.
Current wording
We believe that our financial performance has been, and in the foreseeable future will continue to be, primarily driven by multiple factors as described throughout our analysis within Components of Results of Operations below, each of which presents growth opportunities for our business. These factors also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations. Our ability to successfully address these challenges is subject to various risks and uncertainties, including those described in the section captioned “Part I, Item 1A, Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and supplemented with revised or additional risk factors in our Quarterly Reports on Form 10-Q, including any such risks included in “Part II, Item 1A, Risk Factors” herein.
Previous wording
Total revenue recognized from government grants was approximately $263 thousand and $1.2 million for the three and six months ended June 30, 2024, respectively, and $86 thousand and $667 thousand for the three and six months ended June 30, 2023, respectively.
Current wording
There was no revenue recognized from government grants for the three months ended September 30, 2024 and total revenue recognized from government grants was approximately $1.2 million for the nine months ended September 30, 2024, and $1.3 million and $1.9 million for the three and nine months ended September 30, 2023, respectively.
Previous wording
Research and development activities consist of discovery research for our platform development and the indications we are working on. For SAB-142, Avance Clinical PTY, Ltd (“Avance”), acts as the CRO overseeing our Phase 1 safety study. This study started in December 2023 and the terms of that agreement are subject to confidentiality and the status of the agreement is that it is current. For the three and six months ended June 30, 2024 and 2023, we continued to incur costs to advance our progress towards commercialization of SAB-142. We expect to continue to incur substantial research and development expenses as we conduct discovery research to enhance our platform and work on our indications. We expect to hire additional employees and continue research and development and manufacturing activities. As a result, we expect that our research and development expenses will continue to increase in future periods and vary from period to period as a percentage of revenue.
Current wording
Research and development activities consist of discovery research for our platform development and the indications we are working on. For SAB-142, Avance Clinical PTY, Ltd (“Avance”), acts as the contract research organization (“CRO”) overseeing our Phase 1 safety study. This study started in December 2023 and the terms of that agreement are subject to confidentiality and the status of the agreement is that it is current. For the three and nine months ended September 30, 2024 and 2023, we continued to incur costs to advance our progress towards commercialization of SAB-142. We expect to continue to incur substantial research and development expenses as we conduct discovery research to enhance our platform and work on our indications. We expect to hire additional employees and continue research and development and manufacturing activities. As a result, we expect that our research and development expenses will continue to increase in future periods and vary from period to period.
Previous wording
Major components within our research and development expenses are salaries and benefits (laboratory & farm), laboratory supplies, animal care, contract manufacturing, clinical trial expense, outside laboratory services, project consulting, and facility expense. Our platform allows us to work on multiple projects with the same resources, as the research and development process of each product is very similar (with minimal differences in the manufacturing process).
Current wording
Major components within our research and development expenses are salaries and benefits (laboratory & farm), laboratory supplies, animal care, contract manufacturing, clinical trial expense, outside laboratory services, project consulting, and facility expenses. Our platform allows us to work on multiple projects with the same resources, as the research and development process of each product is very similar (with minimal differences in the manufacturing process).
Previous wording
Research and development expenses by component for the three and six months ended June 30, 2024 and 2023:
Current wording
Research and development expenses by component for the three and nine months ended September 30, 2024 and 2023:
Previous wording
Other income primarily consists of income associated with the refundable portion of Australian research and development tax credits.
Current wording
Other income primarily consists of income associated with the refundable portion of Australian research and development tax credits and dividend income from non-interest bearing short-term investments.
Previous wording
The following tables set forth our results of operations for the six months ended June 30, 2024 and 2023:
Current wording
The following tables set forth our results of operations for the nine months ended September 30, 2024 and 2023:
Previous wording
Comparison of the three and six months ended June 30, 2024 and 2023
Current wording
Comparison of the three and nine months ended September 30, 2024 and 2023
Previous wording
Revenue increased by $541 thousand, or 81.2%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to the JPEO Rapid Response Contract Termination. Included in revenues for the six months ended June 30, 2024, are closeout activities and charges of $1.2 million due to outside services for laboratory supply disposal, as compared to $70 thousand for supplies, $151 thousand for labor, and $442 thousand for contract manufacturing for the six months ended June 30, 2023.
Current wording
Revenue decreased by $0.7 million, or 37.6%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to the JPEO Rapid Response Contract Termination. Included in revenues for the nine months ended September 30, 2024, are closeout activities and charges of $1.2 million due to outside services for laboratory supply disposal, as compared to $0.5 million for supplies, $0.1 million for labor, and $1.4 million for contract manufacturing for the nine months ended September 30, 2023.
Previous wording
Research and development expenses increased by $3.2 million, or 86.3%, for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to increases in outside lab services (year-over-year increase of $1.2 million, 595.8%, salaries and benefits (year-over-year increase of $0.8 million, 49.5%), overhead (year-over-year increase of $0.2 million, 16.8%), project consulting (year-over-year increase of $0.2 million, 300.5%), clinical trial costs (year-over-year increase of $0.5 million, 475.4%), increase in animal care (year-over-year increase of $0.1 million, 58.4%) and an increase in laboratory supplies (year-over-year increase of $0.1 million, 67.7%).
Current wording
Research and development expenses increased by $3.8 million, or 94.8%, for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to increases in outside lab services (year-over-year increase of $1.3 million, 595.8%, salaries and benefits (year-over-year increase of $1.1 million, 49.5%), overhead (year-over-year increase of $0.1 million, 16.8%), project consulting (year-over-year increase of $0.2 million, 300.5%), clinical trial costs (year-over-year increase of $1.3 million, 475.4%), laboratory supplies (year-over-year increase of $0.2 million, 67.7%), offset by a decrease in contract manufacturing (year-over-year decrease of $0.4 million, 100.0%).
Previous wording
Research and development expenses increased by $6.6 million, or 80.2%, for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to increases in outside lab services (year-over-year increase of $2.7 million, 739.0%), salaries and benefits (year-over-year increase of $1.4 million, 41.5%), an out-of-period adjustment of $0.9 million of amortization expense, overhead (year-over-year increase of $0.3 million, 12.2%), project consulting (year-over-year increase of $0.2 million, 82.6%), clinical trial costs (year-over-year increase of $1.3 million, (814.2%), laboratory supplies (year-over-year increase of $0.1 million, 11.8%) offset by a decrease in animal care (year-over-year decrease of $0.4 million, 58.3%).
Current wording
Research and development expenses increased by $10.4 million, or 85.0%, for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to increases in outside lab services (year-over-year increase of $4.0 million, 739.0%), salaries and benefits (year-over-year increase of $2.5 million, 41.5%), an out-of-period adjustment of $0.9 million of amortization expense, overhead (year-over-year increase of $0.5 million, 11.9%), project consulting (year-over-year increase of $0.4 million, 82.6%), clinical trial costs (year-over-year increase of $2.5 million, (814.2%), laboratory supplies (year-over-year increase of $0.3 million, 11.8%) offset by a decrease in animal care (year-over-year decrease of $0.4 million, 58.3%) and contract manufacturing (year-over-year decrease of $0.4 million, 100.0%).
Previous wording
General and administrative expenses increased by $743 thousand, or 25.6%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to salaries and benefits (year-over-year increase of $798 thousand, 68.3%), project consulting (year-over-year increase of $4 thousand, 2.4%), human resources, and legal (year-over-year increase of $50 thousand, 4.1%), offset by a decrease in other administrative support fees relating to IT, and insurance costs (year-over-year decrease of $109 thousand, 31.7%). We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance costs as well as investor and public relations expenses associated with being a public company. Additionally, we anticipate incurring expenses related to the remediation of material weaknesses in our internal control over financial reporting, which involve implementing new processes and engaging with a third-party firm.
Current wording
General and administrative expenses increased by $908 thousand, or 35.3%, in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to salaries and benefits (year-over-year increase of $883 thousand, 68.3%), project consulting (year-over-year increase of $159 thousand, 3.3%), human resources, legal, and other administrative support fees relating to IT (year-over-year increase of $15 thousand, 4.0%), offset by a decrease in insurance costs (year-over-year decrease of $149 thousand, 31.7%). We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates. We anticipate incurring expenses related to the remediation of material weaknesses in our internal control over financial reporting, which involve implementing new processes and engaging with a third-party firm.
Previous wording
General and administrative expenses increased by $1.7 million, or 26.5%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to salaries and benefits (year-over-year increase of $1.7 million, 72.3%), project consulting (year-over-year increase of $0.1 million, 36.3%), offset by a decrease in other administrative support fees relating to IT, human resources, and insurance costs (year-over-year decrease of $0.2 million, 29.8%). We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance costs as well as investor and public relations expenses associated with being a public company. Additionally, we anticipate incurring expenses related to the remediation of material weaknesses in our internal control over financial reporting, which involve implementing new processes and engaging with a third-party firm.
Current wording
General and administrative expenses increased by $2.6 million, or 29.1%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to salaries and benefits (year-over-year increase of $2.6 million, 72.3%), project consulting (year-over-year increase of $0.3 million, 36.7%), and other immaterial administrative support fees relating to IT and human resources, offset by a decrease in insurance costs (year-over-year decrease of $0.4 million, 29.8%). We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates. We anticipate incurring expenses related to the remediation of material weaknesses in our internal control over financial reporting, which involve implementing new processes and engaging with a third-party firm.
Previous wording
Total non-operating income increased by $2.9 million, or 823.0% in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to the change in fair value of warrant liabilities (year-over-year increase of $2.6 million, 720.1%), and other income attributable to the Australian research and development tax credit (year-over-year increase of $0.4 million).
Current wording
Total non-operating income increased by $0.5 million, or 175.7% in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to the other income attributable to the Australian research and development tax credit (year-over-year increase of $0.6 million) and dividend income received from non-interest bearing short-term investments (year-over-year increase of $0.1 million), offset by the change in fair value of warrant liabilities (year-over-year decrease of $0.2 million, 96.5%),
Previous wording
Total non-operating income increased by $8.8 million, or 3201.9% in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to the change in fair value of warrant liabilities (year-over-year increase of $8.0 million, 2895.3%), and Australian research and development tax credit (year-over-year increase of $0.8 million).
Current wording
Total non-operating income increased by $9.3 million, or 918,690.41% in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to the change in fair value of warrant liabilities (year-over-year increase of $7.8 million, 8,097.5%), and Australian research and development tax credit (year-over-year increase of $1.2 million) and income received from non-interest bearing short-term investments (year-over-year increase of $0.3 million).
Previous wording
Interest expense in the six months ended June 30, 2024 was consistent with interest expense in the six months ended June 30, 2023, with the added interest expense on the 8% Unsecured Convertible Note in the current fiscal period offset by lower interest expenses associated with our finance leases in the same period of the prior year.
Current wording
Interest expense in the nine months ended September 30, 2024 was consistent with interest expense in the nine months ended September 30, 2023, with the added interest expense on the 8% Unsecured Convertible Note in the current fiscal period offset by lower interest expenses associated with our finance leases in the same period of the prior year.
Previous wording
Interest income increased by $0.3 million, or 1211.1%, during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to interest earned on our investments in debt securities, and higher interest earning cash, and cash equivalent balances.
Current wording
Interest income increased by $0.3 million, or 1829.6%, during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to interest earned on our investments in debt securities, along with higher interest earning cash and cash equivalent balances.
Previous wording
Interest income increased by $0.8 million, or 908.0%, during the six months ended June 30, 2024 as compared to the six months ended June 30, 2024, primarily due to interest earned on our investments in debt securities, and higher interest earning cash, and cash equivalent balances.
Current wording
Interest income increased by $1.0 million, or 1,039.14%, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2024, primarily due to interest earned on our investments in debt securities, and higher interest earning cash, and cash equivalent balances.
Previous wording
As of June 30, 2024 and December 31, 2023, we had $37.3 million and $56.6 million, respectively, of cash and cash equivalents and investments.
Current wording
As of September 30, 2024 and December 31, 2023, we had $30.4 million and $56.6 million, respectively, of cash, cash equivalents, and investments.
Previous wording
Pursuant to the fourth amendment to our lease with Sanford Health, we agreed to a period of abated rent (the “Abated Rent”) from October 1, 2022 to September 30, 2023 pertaining to our leased laboratory bay at the Sanford Research Center. In exchange for the Abated Rent, effective as of October 1, 2022, we issued to Sanford Health an 8% unsecured, convertible promissory note (the “8% Unsecured Convertible Note”).
Current wording
Pursuant to the fourth amendment to our lease with Sanford Health, we agreed to a period of abated rent (the “Abated Rent”) from October 1, 2022 to September 30, 2023. In exchange for the Abated Rent, effective as of October 1, 2022, we issued to Sanford Health an 8% unsecured, convertible promissory note (the “8% Unsecured Convertible Note”).
Previous wording
Pursuant to the 8% Unsecured Convertible Note, we shall pay the sum of approximately $542 thousand (the “Principal”) plus accrued and unpaid interest thereon on September 30, 2024 (the “Maturity Date”). Simple interest shall accrue on the outstanding Principal from and after the date of the 8% Unsecured Convertible Note and shall be payable on the Maturity Date. Sanford Health shall have the right, but not the obligation, to convert all or any part of the outstanding Principal of the 8% Unsecured Convertible Note, together with any accrued and unpaid interest thereon to the date of such conversion, into such number of fully paid and non-assessable shares of our common stock, at any time and from time to time, prior to the later of the Maturity Date and the date on which the 8% Unsecured Convertible Note is paid in full, subject to certain restrictions, at a conversion price per share of common stock equal to greater of (x) $15.00 and (y) the price at which the we sells shares of common stock in any bona fide private or public equity financing prior to the Maturity Date.
Current wording
Pursuant to the 8% Unsecured Convertible Note, we shall pay the sum of approximately $542 thousand (the “Principal”) plus accrued and unpaid interest thereon on September 30, 2024 (the “Maturity Date”). Simple interest shall accrue on the outstanding Principal from and after the date of the 8% Unsecured Convertible Note and shall be payable on the Maturity Date. The Company repaid the Principal of $542 thousand and total accrued interest of $87 thousand during the three months ended September 30, 2024. We incurred approximately $32 thousand and $36 thousand of interest expense for the three and nine months ended September 30, 2024 and 2023, respectively, related to the 8% Unsecured Convertible Note.
Previous wording
We obtained financing for certain Director & Officer liability insurance policy premiums. The agreement assigns First Insurance Funding (the “Lender”) a first priority lien on and security interest in the financed policies and any additional premium required in the financed policies including (a) all returned or unearned premiums, (b) all additional cash contributions or collateral amounts assessed by the insurance companies in relation to the financed policies and financed by Lender, (c) any credits generated by the financed policies, (d) dividend payments, and (e) loss payments which reduce unearned premiums. If any circumstances exist in which premiums related to any financed policy could become fully earned in the event of loss, Lender shall be named a loss-payee with respect to such policy.
Current wording
We obtained financing for certain Director & Officer liability insurance policy premiums. The agreement assigns First Insurance Funding (“Lender”) a first priority lien on and security interest in the financed policies and any additional premium required in the financed policies including (a) all returned or unearned premiums, (b) all additional cash contributions or collateral amounts assessed by the insurance companies in relation to the financed policies and financed by Lender, (c) any credits generated by the financed policies, (d) dividend payments, and (e) loss payments which reduce unearned premiums. If any circumstances exist in which premiums related to any Financed Policy could become fully earned in the event of loss, Lender shall be named a loss-payee with respect to such policy.
Previous wording
The total premiums, taxes and fees financed is approximately $765 thousand with an annual interest rate of 7.96%. In consideration of the premium payment by Lender to the insurance companies or the agent or broker, we unconditionally promise to pay Lender the amount financed plus interest and other charges permitted under the agreement. We paid the insurance financing through installment payments with the last payment for the current note being September 22, 2024. At June 30, 2024 and December 31, 2023, we recognized approximately $74 thousand and $509 thousand, respectively, as an insurance financing note payable in our condensed consolidated balance sheets.
Current wording
The total premiums, taxes and fees financed is approximately $765 thousand with an annual interest rate of 7.96%. In consideration of the premium payment by Lender to the insurance companies or the Agent or Broker (as such terms are defined in the agreement with Lender), we unconditionally promise to pay Lender the amount financed plus interest and other charges permitted under the agreement. We paid the insurance financing note through installment payments with the last payment for the current note being September 22, 2024. We recognized no insurance financing note payable in its condensed consolidated balance sheet as of September 30, 2024 and recognized approximately $509 thousand of insurance financing note payable in its condensed consolidated balance sheet as of December 31, 2023. We incurred less than $1 thousand of interest expense related to the insurance financing note for the three months ended September 30, 2024 and 2023 and approximately $13 thousand and $13 thousand for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
Please refer to Note 9, Notes Payable, in our condensed consolidated unaudited financial statements for additional information on our debt.
Current wording
Please refer to Note 9, Notes Payable, to our condensed consolidated unaudited financial statements for additional information on our debt.
Previous wording
The following table summarizes our cash flows for the six months ended June 30, 2024 and 2023:
Current wording
The following table summarizes our cash flows for the nine months ended September 30, 2024 and 2023:
Previous wording
Net cash used in operating activities increased by $12.0 million in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to an increase in cash used in operating activities related to change in our operating assets and liabilities of $6.8 million and an increase in our net loss adjusted for non-cash items of $5.2 million. Year-over-year changes in cash used by operating activities is explained by shifts in the non-cash working capital balances as we continue to invest in the development of our lead product candidate, SAB-142.
Current wording
Net cash used in operating activities increased by $13.1 million in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to an increase in cash used in operating activities related to change in our operating assets and liabilities of $3.2 million and an increase in our net loss adjusted for non-cash items of $9.9 million. Year-over-year changes in cash used by operating activities is explained by shifts in the working capital balances as we continue to invest in the development of our lead product candidate, SAB-142.
Previous wording
Net cash used by investing activities increased by $20.1 million in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to an increase in purchases of investment securities.
Current wording
Net cash used by investing activities increased by $21.2 million in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to an increase in purchases, sales and maturities of investment securities.
Previous wording
We enter into contracts in the normal course of business with third parties, including CROs. These payments are not included in the table above, as the amount and timing of such payments are not known.
Current wording
We enter into contracts in the normal course of business with third parties, including CROs.
Previous wording
Due to current and prior year losses the Company does not expect to have any Income Tax Provision.
Current wording
Due to current and prior year losses we do not expect to have any Income Tax Provision.
Previous wording
We continue to record a valuation allowance on its net deferred tax assets. The valuation increased by approximately $4.6 million during the six months ended June 30, 2024. We have not recognized any reserves for uncertain tax positions.
Current wording
We continue to record a valuation allowance on its net deferred tax assets. The valuation increased by approximately $6.8 million during the nine months ended September 30, 2024. We have not recognized any reserves for uncertain tax positions.
Previous wording
The accompanying unaudited condensed consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal course of business. We have experienced net losses, negative cash flows from operations and, as of June 30, 2024, and had an accumulated deficit of $102.4 million. We anticipate we will continue to generate losses for the foreseeable future and expect the losses to increase as we continue the development of, or seek regulatory approvals for, product candidates, and begin commercialization of products. As a result, we will require additional capital to fund operations in order to support our long-term plans.
Current wording
The accompanying unaudited condensed consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal course of business. We have experienced net losses, negative cash flows from operations and, as of September 30, 2024, and had an accumulated deficit of $112.8 million. We anticipate we will continue to generate losses for the foreseeable future and expect the losses to increase as we continue the development of, or seek regulatory approvals for, product candidates, and begin commercialization of products. As a result, we will require additional capital to fund operations in order to support our long-term plans.
Previous wording
We currently expect that our cash, cash equivalents, and short-term investments of $37.2 million as of June 30, 2024 will not be sufficient to fund our operating expenses and capital requirements for more than 12 months from the date the financial statements are issued. These conditions raise substantial doubt about our ability to continue as a going concern.
Current wording
We currently expect that our cash, cash equivalents, and short-term investments of $30.4 million as of September 30, 2024 will not be sufficient to fund our operating expenses and capital requirements for more than 12 months from the date the financial statements are issued. These conditions raise substantial doubt about our ability to continue as a going concern.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Revenue increased by $178 thousand, or 207.7%, in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to the JPEO Rapid Response Contract Termination. Included in revenues for the three months ended June 30, 2024, are closeout activities and charges of $263 thousand due to outside services for laboratory supply disposal, as compared to $25 thousand for supplies, $56 thousand for contract manufacturing, and $4 thousand for license fee income for the three months ended June 30, 2023.
Previous report — wording carried elsewhere
Expenses incurred in connection with research and development activities are expensed as incurred. These include licensing fees to use certain technology in our research and development projects, fees paid to consultants and various entities that perform certain research and testing on our behalf, and expenses related to animal care, research-use equipment depreciation, salaries, benefits, and stock-based compensation granted to employees in research and development functions.
Previous report — wording carried elsewhere
Our revenue is generated through grants from government and other (non-government) organizations.
Previous report — wording carried elsewhere
Grant revenue is recognized during the period that the research and development services occur, as qualifying expenses are incurred, or conditions of the grants are met. Deferred grant income represents grant proceeds received by us prior to the period in which the research and development services occur, as qualifying expenses are incurred, or conditions of the grants are met. We concluded that payments received under these grants represent conditional, nonreciprocal contributions, as described in ASC 958, Not-for-Profit Entities, and that the grants are not within the scope of ASC 606, Revenue from Contracts with Customers, as the organizations providing the grants do not meet the definition of a customer. Expenses for grants are tracked by using a project code specific to the grant, and the employees also track hours worked by using the project code.