ACHIEVE LIFE SCIENCES INC
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 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 2024-06-30; filed 2024-08-13.
0000950170-24-096193
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0000950170-24-123375
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 129 previous paragraphs and 146 current paragraphs.
101 unchanged; 25 reworded; 20 added; 3 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 (20)
Current report
Substantial doubt exists as to our ability to continue as a going concern. Our ability to continue as a going concern is subject to material uncertainty and dependent on our ability to obtain additional financing. We expect to incur significant expenses and increasing operating losses for at least the next several years as we continue our clinical development of, seek regulatory approval for, and commercialize, cytisinicline and add personnel necessary to operate as a commercial-stage public company. We expect that our operating losses will fluctuate significantly from quarter to quarter and year to year due to timing of clinical development programs and efforts to achieve regulatory approval. Without additional funds, we may be forced to delay, scale back or eliminate some of our research and development activities or other operations and potentially delay product development in an effort to provide sufficient funds to continue our operations. If any of these events occurs, our ability to achieve our development and commercialization goals would be adversely affected.
Current report
Our current resources are insufficient to fund our planned operations for the next 12 months. We will continue to require substantial additional capital to continue our clinical development activities. Accordingly, we will need to raise substantial additional capital from the sale of our securities, debt, partnering arrangements, non-dilutive fundraising or other financing transactions in order to continue to fund our operations and finance the remaining development and commercialization of our product candidate. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our clinical development efforts. The uncertainty with respect to our operations and the market generally may also make it challenging to raise additional capital on favorable terms, if at all. Failure to raise capital as and when needed, on favorable terms or at all, will have a negative impact on our financial condition and our ability to develop our product candidate. In addition, current macroeconomic conditions have caused turmoil in the banking sector. Failure to raise capital as and when needed, on favorable terms or at all, will have a negative impact on our financial condition and our ability to develop our product candidate.
Current report
Our accompanying financial statements have been prepared assuming we will continue to operate as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business. The financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern. Such adjustments could be material.
Current report
For the three and nine months ended September 30, 2024 and 2023
Current report
Interest Income
Current report
Interest Expense
Current report
Total interest expense for the three and nine months ended September 30, 2024 was $0.4 million and $2.0 million, respectively, compared to $0.8 million and $2.1 million for the three and nine months ended September 30, 2023, respectively. The decrease in interest expense for the three and nine months ended September 30, 2024 as compared to the same periods in 2023 was due to a lower principal balance on our New Convertible Term Loan, relative to the Convertible Term Loan, that bears only a monthly interest as a result of the debt refinancing under the New Debt Agreement (see "Liquidity and Capital Resources" below).
Current report
Change in fair value of contingent consideration
Current report
We determine the fair value of the contingent consideration using a probability based discounted cash flow model whereby we forecast the timing of the cash flow of the related future payment based on cytisinicline’s current clinical development phase and the remaining requirements for regulatory approval. Adjustments to the fair value of the contingent liabilities, other than payments, are recorded as a gain or loss in the Consolidated Statements of Loss and Comprehensive Loss (see Note 6 “Fair Value Measurements, Fair Value of Sopharma Share Purchase Agreement Contingent Consideration” in the accompanying consolidated Financial Statements).
Current report
For the three and nine months ended September 30, 2024 we recognized a loss of $0.1 million and $0.2 million, respectively.
Current report
Loss on extinguishment of 2023 SVB convertible term loan
Current report
The debt refinancing under the New Debt Agreement was recognized as an extinguishment of debt under ASU 470-50. The difference between the reacquisition price and carrying value was recognized on the Consolidated Statement of Loss as a loss on extinguishment of debt.
Current report
For each of the three and nine months ended September 30, 2024, we incurred a loss on extinguishment of debt of $0.3 million.
Current report
The financial results have been prepared assuming we will continue to operate as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business.
Current report
Substantial doubt exists as to our ability to continue as a going concern. Our ability to continue as a going concern is subject to material uncertainty and dependent on our ability to obtain additional financing. We have historically financed our operations through equity offerings and/or debt financings. There can be no assurance that financing from these or other sources will be available to us in the future. Without additional funds, we may be forced to delay, scale back or eliminate some of our research and development activities or other operations and potentially delay product development in an effort to provide sufficient funds to continue our operations. If any of these events occur, our ability to achieve our development and commercialization goals would be adversely affected.
Current report
Our current resources are insufficient to fund our planned operations for the next 12 months. We will continue to require substantial additional capital to continue our clinical development activities. Accordingly, we will need to raise substantial additional capital from the sale of our securities, debt, partnering arrangements, non-dilutive fundraising or other financing transactions in order to continue to fund our operations and finance the remaining development and commercialization of our product candidate. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our clinical development efforts. The uncertainty with respect to our operations and the market generally may also make it challenging to raise additional capital on favorable terms, if at all. In addition, current macroeconomic conditions have caused turmoil in the banking sector. Failure to raise capital as and when needed, on favorable terms or at all, will have a negative impact on our financial condition and our ability to develop our product candidate.
Current report
In addition, we expect to incur significant expenses and increasing operating losses for at least the next several years as we continue our clinical development of, seek regulatory approval for, and commercialize, cytisinicline and add personnel necessary to operate as a commercial-stage public company. We expect that our operating losses will fluctuate significantly from quarter to quarter and year to year due to timing of clinical development programs and efforts to achieve regulatory approval.
Current report
The consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern. Such adjustments could be material.
Current report
Jefferies Open Market Sales Agreement
Current report
On September 27, 2024, we entered into an Open Market Sale Agreement, or Sale Agreement, with Jefferies LLC, or Jefferies, as sales agent, to establish an at-the-market offering program through which we may sell shares of our common stock with an aggregate offering price of up to $50.0 million. During the three and nine months ended September 30, 2024, we did not sell any shares under the Sale Agreement. As of September 30, 2024, we had $50.0 million available under the Sale Agreement.
Removed paragraphs (3)
Previous report
For the three and six months ended June 30, 2024 and 2023
Previous report
Total Other Income/(Expense)
Previous report
Convertible Debt
Reworded paragraphs (25)
Previous 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.
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 2024, 1.6 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 $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.
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 $27.5 million for the nine months ended September 30, 2024. As of September 30, 2024, we had an accumulated deficit of $193.2 million, cash, cash equivalents and short-term investments balance of $42.9 million and a positive working capital balance of $38.8 million. For the nine months ended September 30, 2024, net cash used in operating activities was $20.6 million.
Previous wording
In the fourth quarter of 2023, we initiated our pre-NDA discussions with the FDA regarding the adequacy of our efficacy and safety information for proceeding with an NDA submission. The FDA expressed support for an NDA submission based on adequate data to assess for efficacy from our two completed randomized and controlled Phase 3 trials. In addition, the FDA advised that long-term exposure data to assess for safety beyond 12 weeks would be needed to adequately assess safety risks given that the FDA views smoking cessation drugs as products for chronic, repeated, and intermittent use as patients may relapse and require subsequent courses of treatment over a lifetime. In the first quarter of 2024, we reached agreement with the FDA that a single, open-label study evaluating the long-term safety effects of cytisinicline will be sufficient to complete the requirement and enable an NDA submission anticipated in the first half of 2025.
Current wording
In the fourth quarter of 2023, we initiated our pre-NDA discussions with the FDA regarding the adequacy of our efficacy and safety information for proceeding with an NDA submission. The FDA expressed support for an NDA submission based on adequate data to assess for efficacy from our two completed randomized and controlled Phase 3 trials. In addition, the FDA advised that long-term exposure data to assess for safety beyond 12 weeks would be needed to adequately assess safety risks given that the FDA views smoking cessation drugs as products for chronic, repeated, and intermittent use as patients may relapse and require subsequent courses of treatment over a lifetime. In the first quarter of 2024, we reached agreement with the FDA that a single, open-label study evaluating the long-term safety effects of cytisinicline will be sufficient to complete the requirement and enable an NDA submission anticipated in the second quarter of 2025.
Previous wording
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 wording
In May 2024 we initiated the ORCA-OL open label exposure trial. The trial is designed to 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.
Previous 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.
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. In October 2024, we announced that the trial completed enrollment of 479 subjects at 29 clinical trial sites across the United States. We enrolled subjects who had previously participated in the ORCA-program studies. Participants were contacted to enroll in the ORCA-OL study if they were 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 in the first quarter of 2025 to support an NDA submission in the second quarter of 2025.
Previous 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.
Current wording
As of September 30, 2024, the fair value of the contingent consideration was estimated to be $0.7 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 and $0.2 million for the three and nine months ended September 30, 2024.
Previous 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):
Current wording
Our R&D expenses for our clinical development program for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):
Previous 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.
Current wording
R&D expenses for the three months ended September 30, 2024 increased to $7.6 million as compared to $3.6 million for the three months ended September 30, 2023. For the nine months ended September 30, 2024, R&D expenses increased to $15.5 million as compared to $13.7 million for the nine months ended September 30, 2023. The increase in expenses for the three and nine months ended September 30, 2024 as compared to the same periods in 2023 was primarily due to the initiation, in May 2024, and ramp up of enrollment of our ORCA-OL open label safety trial. This increase was partially offset by a reduction in costs associated with our Phase 3 ORCA-3 trial and Phase 2 ORCA-V1 trial as both were completed in the second quarter of 2023.
Previous wording
Our general and administrative expenses for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):
Current wording
Our general and administrative expenses for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):
Previous 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.
Current wording
General and administrative expenses for the three and nine months ended September 30, 2024 increased to $4.9 million and $11.4 million, respectively, from $3.0 million and $9.2 million for the three and nine months ended September 30, 2023, respectively. The increase in expenses for the three and nine months ended September 30, 2024 as compared to the same periods in 2023 was primarily due to higher employee expenses, including severance costs, consulting costs, and legal expenses associated with patent activities and general corporate activities.
Previous 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.
Current wording
Total interest income for the three and nine months ended September 30, 2024 was $0.7 million and $1.9 million, respectively, compared to $0.3 million and $0.6 million for the three and nine months ended September 30, 2023, respectively. The increase in interest income for the three and nine months ended September 30, 2024 as compared to the same periods in 2023 was primarily due to higher average cash balances throughout 2024 and higher interest rates.
Previous 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.
Current wording
We have incurred an accumulated deficit of $193.2 million through September 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 September 30, 2024, we had a cash, cash equivalents and short-term investment balance of $42.9 million and a positive working capital balance of $38.8 million. For the nine months ended September 30, 2024, net cash used in operations was $20.6 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.
Previous wording
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 wording
The New Debt Agreement refinanced the Debt Agreement. 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.
Previous 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.
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, if (i) 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 (as defined in the New Debt Agreement) have been satisfied.
Previous wording
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 wording
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 at a conversion price equal to $7.00, subject to customary adjustment provisions. The Conversion Right 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.
Previous wording
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 wording
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 the Conversion Right Holders will not be permitted to convert part or all of the outstanding aggregate original principal amount of the New Convertible Term Loan 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 such voluntary conversion, divided by the aggregate of all debt that is then outstanding or that has been repaid other than by conversion exceeds 50%.
Previous wording
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 wording
Additionally, the outstanding principal of the New Convertible Term Loan, plus accrued and unpaid interest, will automatically be converted into shares of our common stock at the applicable 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 conversion price, in each case for the thirty consecutive trading days prior to such date, and the Liquidity Conditions (as defined in the New Debt Agreement) have been satisfied.
Previous wording
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 wording
The New Convertible Term Loan may be repaid at our election and upon notice to the Agent (as defined in the New Debt Agreement) 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.
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 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.
Current wording
The New 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 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
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 wording
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. 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.
Previous wording
At-the-Market Sales Agreement
Current wording
Virtu At-the-Market Sales 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 and six months ended June 30, 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 nine months ended September 30, 2024, we did not sell any shares of our common stock pursuant to the ATM.
Previous 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.
Current wording
For the nine months ended September 30, 2024, net cash used in operating activities was $20.6 million compared to $20.1 million for the nine months ended September 30, 2023. The increase in cash used in operations in the 2024 period as compared to the 2023 period was due to higher R&D expenses associated with initiation, in May 2024, and ramp up of enrollment of our ORCA-OL trial and timing of required upfront prepayments by our clinical vendors. This was partially offset by reduced costs associated with our Phase 3 ORCA-3 trial and Phase 2 ORCA-V1 trial as both were completed in the second quarter of 2023.
Previous 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.
Current wording
For the nine months ended September 30, 2024, net cash provided by financing activities was $47.8 million compared to $15.3 million for the nine months ended September 30, 2023. Net cash provided by financing activities in the nine months ended September 30, 2024 relates to proceeds received from the February 2024 registered direct offering, the New Convertible Term Loan associated with the refinancing transaction, and stock sales under our employee stock purchase plan. This was partially offset by repayment of our Convertible Term Loan associated with the refinancing transaction in July 2024. Net cash provided by financing activities in the nine months ended September 30, 2023, relates to proceeds received from the May 2023 registered direct offering and from warrant exercises.
Previous wording
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.
Current wording
For the nine months ended September 30, 2024, net cash used in investing activities increased to $33.3 million from $15,000 for the nine months ended September 30, 2023. Net cash used in investing activities in the nine months ended September 30, 2024 was due to transactions involving marketable securities in the normal course of business.