Eledon Pharmaceuticals Inc

Previous wording

The unaudited interim condensed consolidated financial statements and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with our audited condensed consolidated financial statements and accompanying notes for the year ended December 31, 2023 included in the Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 28, 2024, as amended on each of April 26, 2024 and August 19, 2024 (together, the “Amended Form 10-K”). In addition to historical information, this discussion and analysis contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please see Part II, Item 1A. Risk Factors in this Quarterly Report on Form 10-Q for a discussion of certain risk factors applicable to our business, financial condition, and results of operations. Operating results are not necessarily indicative of results that may occur for the full fiscal year or any other future period. See also “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q. Unless otherwise indicated, references to the terms “Eledon”, the “Company”, “we”, “our”, and “us” refer to Eledon Pharmaceuticals, Inc.

Current wording

The unaudited interim condensed consolidated financial statements and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with the Notes to Financial Statements included in this Quarterly Report on Form 10-Q and our audited condensed consolidated financial statements and accompanying notes for the year ended December 31, 2023 included in the Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 28, 2024, as amended on each of April 26, 2024 and August 19, 2024 (together, the “Amended Form 10-K”). In addition to historical information, this discussion and analysis contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please see Part II, Item 1A. Risk Factors in this Quarterly Report on Form 10-Q for a discussion of certain risk factors applicable to our business, financial condition, and results of operations. Operating results are not necessarily indicative of results that may occur for the full fiscal year or any other future period. See also “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q. Unless otherwise indicated, references to the terms “Eledon”, the “Company”, “we”, “our”, and “us” refer to Eledon Pharmaceuticals, Inc.

Previous wording

Eledon is a clinical stage biotechnology company using our immunology expertise in targeting the CD40 Ligand (“CD40L” or “CD154”) pathway to develop therapies to protect transplanted organs and prevent rejection, and to treat amyotrophic lateral sclerosis (“ALS”). Our lead compound in development is tegoprubart, an IgG1, anti-CD40L antibody with high affinity for the CD40 Ligand, a well-validated biological target that we believe has broad therapeutic potential.

Current wording

Eledon is a clinical stage biotechnology company using our immunology expertise in targeting the CD40 Ligand (“CD40L”) pathway to develop therapies to protect transplanted organs and prevent rejection, and to treat amyotrophic lateral sclerosis (“ALS”). Our lead compound in development is tegoprubart, an IgG1, anti-CD40L antibody with high affinity for the CD40 Ligand, a well-validated biological target that we believe has broad therapeutic potential. We believe the central role of CD40L signaling in both adaptive and innate immune cell activation and function positions it as an attractive target for non-lymphocyte depleting, immunomodulatory therapeutic intervention.

Previous wording

Our business strategy is to optimize the clinical and commercial value of tegoprubart and become a global biopharmaceutical company with a focused immunology franchise. Our strategy is to develop tegoprubart for the prevention of allograft and xenograft rejection, and for the treatment of autoimmune diseases such as ALS. We selected our indications based on preclinical and clinical data that was generated with either tegoprubart or historical anti-CD40L molecules. In January 2023, we announced our decision to prioritize resources on our kidney transplantation programs, and discontinue the Company funding of the islet cell transplantation program and the IgAN program. We remain committed to further progressing ALS clinical development and are working with key stakeholders on potential next steps to do so. However, as described below, we are unable to continue our clinical development of tegoprubart for people with ALS without additional financing.

Current wording

Our business strategy is to optimize the clinical and commercial value of tegoprubart and become a global biopharmaceutical company with a focused immunology franchise. Our strategy is to develop tegoprubart for the prevention of rejection of allograft (i.e., transplanting an organ from one human to another) and xenograft (i.e., transplanting an organ from an animal to a human) organs and cells, and for the treatment of autoimmune diseases such as ALS. We selected our indications based on preclinical and clinical data that was generated with either tegoprubart or historical anti-CD40L molecules. In January 2023, we announced plans to prioritize and focus resources on our kidney transplantation programs, discontinue our IgAN program and the funding of our islet cell transplantation program. We remain committed to further progressing ALS clinical development and are working with key stakeholders on potential next steps to do so. However, we are unable to continue our clinical development of tegoprubart for people with ALS without additional financing.

Previous wording

In January 2023, we announced plans to prioritize and focus resources on our kidney transplantation programs. We are first focusing on kidney transplantation as this is the most common type of solid organ transplantation in the U.S. with an estimated 255,000 Americans living with a transplanted kidney. In 2022, an estimated 25,000 kidneys were transplanted in the U.S., of which up to 15% were re-transplants in persons that had already received at least one other kidney. Over 90,000 people in the U.S. wait 3-5 years on average for a kidney transplant and about 5,000 people in need of a kidney transplant die each year while waiting for a suitable kidney. There remains a critical shortage of kidneys and other organs available for transplantation.

Current wording

In January 2023, we announced plans to prioritize and focus resources on our kidney transplantation programs. We are first focusing on kidney transplantation as this is the most common type of solid organ transplantation in the U.S. with an estimated 255,000 Americans living with a transplanted kidney. There are an estimated 25,000 kidneys transplanted annually in the U.S. Over 97,000 people in the U.S. wait 3-5 years on average for a kidney transplant and about 5,000 people in need of a kidney transplant die each year while waiting for a suitable kidney. Approximately 11% of U.S. people on the waiting list are waiting for a repeat transplant. There remains a critical shortage of kidneys and other organs available for transplantation.

Previous wording

We have received regulatory approvals in Canada, the United Kingdom and Australia, for a Phase 1b clinical trial of tegoprubart in up to 24 subjects, replacing tacrolimus as an immunosuppressive regimen component in patients undergoing de novo kidney transplantation. Each participant will receive rabbit antithymocyte globulin (ATG) induction and a maintenance regimen consisting of tegoprubart, mycophenolate mofetil, and corticosteroids. The primary endpoint of the study is safety. Other endpoints include glomerular filtration rate (eGFR), characterizing the pharmacokinetic profile of tegoprubart, and the incidence of biopsy proven rejection. The first subject in the Phase 1b study was dosed in July 2022.

Current wording

We have received regulatory approvals in the United States, Canada, the United Kingdom and Australia, for a Phase 1b clinical trial of tegoprubart in up to 24 subjects, replacing tacrolimus as an immunosuppressive regimen component in patients undergoing de novo kidney transplantation. Each participant will receive rabbit antithymocyte globulin (ATG) induction and a maintenance regimen consisting of tegoprubart, mycophenolate mofetil, and corticosteroids. The primary endpoint of the study is safety. Other endpoints include glomerular filtration rate (eGFR), characterizing the pharmacokinetic profile of tegoprubart, and the incidence of biopsy proven rejection. The first subject in the Phase 1b study was dosed in July 2022.

Previous wording

In July 2022, we received Investigational New Drug (IND) application clearance from the FDA for our controlled, Phase 2 BESTOW trial of tegoprubart for the prevention of transplant rejection in persons receiving a kidney transplant. The BESTOW study is a multi-center, two-arm, active comparator, head-to-head superiority clinical study, and will enroll 120 participants undergoing kidney transplantation in the U.S. and other countries to evaluate the safety, pharmacokinetics, and efficacy of tegoprubart compared to the calcineurin inhibitor tacrolimus. The study’s primary objective is to assess graft function as measured by estimated eGFR at 12 months post-transplant in participants treated with tegoprubart compared to tacrolimus. Secondary objectives will include assessment of graft survival, biopsy-proven acute rejection, and the incidence of new onset diabetes mellitus after transplant. The BESTOW study is running in parallel to the ongoing Phase 1b clinical trial of tegoprubart in kidney transplantation. The first subject in the BESTOW study was dosed in August 2023.

Current wording

In July 2022, we received Investigational New Drug (IND) application clearance from the FDA for our controlled, Phase 2 BESTOW trial of tegoprubart for the prevention of transplant rejection in persons receiving a kidney transplant. The BESTOW study is a multi-center, two-arm, active comparator, head-to-head superiority clinical study, and will enroll approximately 120 participants undergoing kidney transplantation in the U.S. and other countries to evaluate the safety, pharmacokinetics, and efficacy of tegoprubart compared to the calcineurin inhibitor tacrolimus. The study’s primary objective is to assess graft function as measured by estimated eGFR at 12 months post-transplant in participants treated with tegoprubart compared to tacrolimus. Secondary objectives will include assessment of graft survival, biopsy-proven acute rejection, and the incidence of new onset diabetes mellitus after transplant. The BESTOW study is running in parallel to the ongoing Phase 1b clinical trial of tegoprubart in kidney transplantation. The first subject in the BESTOW study was dosed in August 2023. On September 4, 2024, we announced the completion of enrollment in the BESTOW study.

Previous wording

In October 2023, the Company enrolled the first participant in a Phase 2 open-label extension (OLE) study which is designed to evaluate the long-term safety, pharmacokinetics, and efficacy of tegoprubart in participants who have completed one year of treatment in both the ongoing Phase 1b and BESTOW studies.

Current wording

In October 2023, we enrolled the first participant in a Phase 2 open-label extension (OLE) study which is designed to evaluate the long-term safety, pharmacokinetics, and efficacy of tegoprubart in participants who have completed one year of treatment in either the ongoing Phase 1b study or the Phase 2 BESTOW study.

Previous wording

Type 1 diabetes is a T cell mediated autoimmune disease with progressive loss of insulin producing pancreatic beta cells and affects over one million persons in the U.S. Of these individuals, an estimated 70,000 people have a particularly hard to control type 1 diabetes called Brittle Diabetes (“BT1D”) which is in part characterized by large swings in blood glucose levels and impaired awareness of hypoglycemia. Impaired awareness of hypoglycemia for people with type 1 diabetes is associated with severe hypoglycemic events which can lead to significant symptoms and even death. Pancreatic islet cell transplantation is gaining attention as a therapeutic option for type 1 diabetes because it can restore physiological insulin secretion, minimize the risk of hypoglycemic unawareness, and reduce the risk of death due to severe hypoglycemia. The advances made in this field over the past decade have improved patient outcomes, and the procedure has been evolving from an experimental treatment to a clinical treatment option.

Current wording

Type 1 diabetes ("T1D") is a T cell mediated autoimmune disease with progressive loss of insulin producing pancreatic beta cells and affects approximately 2 million persons in the United States. Approximately 33% of people with T1D report impaired awareness of hypoglycemia regardless of continuous glucose monitoring or automated insulin usage. Approximately 12% of people with T1D experience recurrent severe hypoglycemic events annually, putting them at higher risk for adverse outcomes. Approximately 5% to 8% of adults with T1D experience diabetic ketoacidosis annually, often as a result of poor glycemic control. ICT is gaining attention as a thera peutic option for T1D because it can restore physiological insulin secretion, minimize the risk of hypoglycemic unawareness, and reduce the risk of death due to severe hypoglycemia. The advances made in this field over the past decade have improved patient outcomes, and the procedure has been evolving from an experimental treatment to a clinical treatment option.

Previous wording

A number of issues are believed to continue to hamper the overall success of ICT and to need to be addressed in order for there to be widespread clinical acceptance. These include the acute loss of transplanted islets with current immunosuppressive treatments, particularly those with CNI-based therapies, due to islet cell toxicity and alloreactive immunologic responses to transplanted islets. Over time, the progressive loss of islet cells and decline in islet cell function often leads to the need for multiple donors in order for BTID patients to have optimal response to blood glucose levels and possibly achieve insulin independence. Tegoprubart seeks to address the challenges associated with current ICT immunosuppressive regimens using CNI-based therapies, by replacing the CNIs with tegoprubart. CD40L blockade may abolish many effector mechanisms of inflammation, prevent and intervene in the progression of autoimmunity, and instill transplant tolerance.

Current wording

A number of issues are believed to continue to hamper the overall success of ICT and to need to be addressed in order for there to be widespread clinical acceptance. These include the acute loss of transplanted islets with current immunosuppressive treatments, particularly those with CNI-based therapies, due to islet cell toxicity and alloreactive immunologic responses to transplanted islets. Over time, the progressive loss of islet cells and decline in islet cell function can lead to the need for multiple transplants in order for T1D patients to have optimal response to blood glucose levels and possibly achieve insulin independence. Tegoprubart seeks to address the challenges associated with current ICT immunosuppressive regimens using CNI-based therapies, by replacing the CNIs with tegoprubart to prevent rejection and protect the transplanted cells. We believe that tegoprubart may unlock the ICT market by potentially improving islet cell graft survival and reduce the side effects associated with standard of care regimens.

Previous wording

Historical studies in nonhuman primate models of ICT have demonstrated that treatment with anti-CD40L antibodies induces long term islet cell function and graft survival, even as a monotherapy. Tegoprubart has shown pre-clinical, proof-of-concept efficacy in a non-human primate model of type 1 diabetes, where animals undergoing ICT maintained glucose control and sustained levels of C-peptide with chronic tegoprubart treatment for up to a year. Compared to combination immunosuppressive therapy including CNIs, tegoprubart monotherapy was more effective in preventing long term islet cell rejection, associated with better graft function, and showed an improved safety profile.

Current wording

Historical studies in nonhuman primate models of ICT have demonstrated that treatment with anti-CD40L antibodies induces long term islet cell function and graft survival, even as a monotherapy. Tegoprubart has shown pre-clinical, proof-of-concept efficacy in a non-human primate model of T1D, where animals undergoing ICT maintained glucose control and sustained levels of C-peptide with chronic tegoprubart treatment for up to a year. Compared to combination immunosuppressive therapy including CNIs, tegoprubart monotherapy was more effective in preventing long term islet cell rejection, associated with better graft function, and showed an improved safety profile.

Previous wording

In January 2024, we announced that tegoprubart will be utilized in an investigator-initiated trial, at the University of Chicago Pancreatic and Islet Cell Transplant Program. This is a pilot study assessing the safety of using a monoclonal antibody against CD40 ligand to achieve a calcineurin inhibitor-free immunosuppression regimen in patients with type 1 diabetes mellitus undergoing islet cell transplantation. The Company is not funding this trial but is supplying tegoprubart. In May 2024, the University of Chicago's Pancreatic and Islet Cell Transplant Program announced the first participant was enrolled in this investigator-initiated trial.

Current wording

In January 2024, we announced that tegoprubart would be utilized in an investigator-initiated trial, conducted at the University of Chicago Medicine's Transplantation Institute. This pilot study is assessing the safety of using a monoclonal antibody against CD40 ligand to achieve a calcineurin inhibitor-free immunosuppression regimen in patients with T1D mellitus undergoing islet cell transplantation. The Company is not funding this trial but is providing tegoprubart for use in the study.

Previous wording

On May 5, 2023, the initial closing occurred and we received $35.0 million, or net proceeds of approximately $33.0 million after deducting offering costs, in exchange for 8,730,168 shares of common stock and Pre-Funded Warrants to purchase 6,421,350 shares of common stock. On July 8, 2024, the Second Closing occurred and we received gross proceeds of approximately $2.1 million, or net proceeds of approximately $2.0 million after deducting offering costs. We may receive an additional $58.3 million upon sale of the shares to be issued in the Third Closing, subject to satisfaction or waiver of specified conditions, including clinical development milestones and volume weighted average share price levels and trading volume conditions, and an additional $45.5 million assuming the exercise of all Common Warrants issued in the initial closing of the 2023 Private Placement.

Current wording

On May 5, 2023, the initial closing occurred and we received gross proceeds of $35.0 million, or net proceeds of approximately $33.0 million after deducting underwriting discounts and commissions and offering expenses, in exchange for 8,730,168 shares of common stock and Pre-Funded Warrants to purchase 6,421,350 shares of common stock.

Previous wording

In connection with the 2023 Private Placement, the Company filed a registration statement on Form S-3 with the SEC to register for resale the Shares and the shares of common stock issuable upon the exercise of the Warrants, which became effective on June 2, 2023.

Current wording

In connection with the 2023 Private Placement, the Company filed on May 18, 2023, a registration statement on Form S-3 (the “2023 Registration Statement”) with the SEC to register for resale the Shares and the shares of common stock issuable upon the exercise of the Warrants. The 2023 Registration Statement became effective on June 2, 2023.

Previous wording

In connection with the 2024 Private Placement, on May 24, 2024, we filed a registration statement on Form S-3 (“Registration Statement”) with the SEC to register for resale the Shares and the shares of common stock issuable upon the exercise of the Warrants. The Registration Statement became effective on June 5, 2024.

Current wording

In connection with the 2024 Private Placement, on May 24, 2024, we filed a registration statement on Form S-3 (the “2024 Registration Statement”) with the SEC to register for resale the Shares and the shares of common stock issuable upon the exercise of the Warrants. The 2024 Registration Statement became effective on June 5, 2024.

Previous wording

The global economy, including the financial and credit markets, has recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates, rising interest rates and uncertainty about economic stability. Likewise, the current conflicts in Ukraine and the Middle East have created extreme volatility in the global capital markets and global economic consequences, including disruptions of the global supply chain and energy markets. A severe or prolonged economic downturn or continued volatility in the financial and credit markets could negatively impact our ability to obtain necessary debt or equity financing in a timely manner or on favorable terms, if at all. The severity and duration of any such impacts cannot be predicted. Any such failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies or cause us to delay our clinical development plans, research and development programs or commercialization efforts, out-license intellectual property rights to our product candidates or sell unsecured assets, or a combination of the above. Any of these actions could materially harm our business.

Current wording

The global economy, including the financial and credit markets, has recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates, elevated interest rates and uncertainty about economic stability. Likewise, the current conflicts in Ukraine and the Middle East have created extreme volatility in the global capital markets and global economic consequences, including disruptions of the global supply chain and energy markets. A severe or prolonged economic downturn or continued volatility in the financial and credit markets could negatively impact our ability to obtain necessary debt or equity financing in a timely manner or on favorable terms, if at all. The severity and duration of any such impacts cannot be predicted. Any such failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies or cause us to delay our clinical development plans, research and development programs or commercialization efforts, out-license intellectual property rights to our product candidates or sell unsecured assets, or a combination of the above. Any of these actions could materially harm our business.

Previous wording

Our management’s discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities as of the date of the financial statements. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions. In Part II, Item 7 of our Amended Form 10-K, we disclosed our critical accounting estimates, which are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operation. There have been no significant changes in our critical accounting estimates during the six months ended June 30, 2024, as compared to those disclosed in the Amended Form 10-K.

Current wording

Our management’s discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities as of the date of the financial statements. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions. In Part II, Item 7 of our Amended Form 10-K, we disclosed our critical accounting estimates, which are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operation. There have been no significant changes in our critical accounting estimates during the nine months ended September 30, 2024, as compared to those disclosed in the Amended Form 10-K.

Previous wording

Research and development expenses increased $2.9 million, to $10.1 million for the three months ended June 30, 2024, as compared to $7.2 million for the three months ended June 30, 2023. The increase in research and development expenses was primarily driven by an increase in expenses related to the production of clinical trial materials of $1.6 million, an increase in clinical development expenses with external contract research organizations of $0.7 million, higher non-cash stock-based compensation expenses of $0.4 million and an increase employee compensation and benefit expense of $0.2 million.

Current wording

Research and development expenses increased $8.6 million to $16.5 million for the three months ended September 30, 2024, as compared to $7.9 million for the three months ended September 30, 2023. The increase was primarily driven by a $7.8 million rise in clinical development expenses with external contract research organizations, a $0.5 million increase in employee compensation and benefits, a $0.2 million increase in expenses related to the production of clinical trial materials, and a $0.1 million increase in non-cash stock-based compensation expenses.

Previous wording

General and administrative expenses increased $1.2 million to $4.4 million for the three months ended June 30, 2024, as compared to $3.2 million for the three months ended June 30, 2023. The increase in general and administrative expenses was primarily driven by higher non-cash stock-based compensation expenses of $1.0 million and an increase in professional services of $0.1 million and general operating expenses of $0.1 million.

Current wording

General and administrative expenses increased $0.7 million to $4.0 million for the three months ended September 30, 2024, compared to $3.3 million for the three months ended September 30, 2023. The increase was primarily due to a $0.5 million rise in professional services and a $0.2 million increase in general operating expenses.

Previous wording

The change in other income, net was primarily due to an increase in interest income attributable to favorable interest rates and higher cash equivalents and short-term investment balances for the three months ended June 30, 2024.

Current wording

The change in other income, net, was primarily due to an increase in interest income, driven by higher balances of cash equivalents and short-term investments for the three months ended September 30, 2024.

Previous wording

The following table provides comparative unaudited results of operations for the six months ended June 30, 2024, and 2023 (in thousands):

Current wording

The following table provides comparative unaudited results of operations for the nine months ended September 30, 2024, and 2023 (in thousands):

Previous wording

Research and development expenses increased $2.2 million, to $17.5 million for the six months ended June 30, 2024, as compared to $15.3 million for the six months ended June 30, 2023. The increase in research and development expenses was primarily driven by an increase in expenses related to the production of clinical trial materials of $0.8 million, an increase in employee compensation and benefit expense of $0.7 million, an increase of clinical development expenses with external contract research organizations of $0.4 million and higher non-cash stock-based compensation expenses of $0.3 million.

Current wording

Research and development expenses increased $10.8 million to $34.0 million for the nine months ended September 30, 2024, as compared to $23.2 million for the nine months ended September 30, 2023. The increase was primarily driven by an $8.2 million rise in clinical development expenses with external contract research organizations, a $1.1 million increase in employee compensation and benefits, a $1.1 million increase in expenses related to the production of clinical trial materials, and a $0.4 million increase in non-cash stock-based compensation expenses.

Previous wording

General and administrative expenses increased $1.7 million to $7.9 million for the six months ended June 30, 2024, as compared to $6.2 million for the six months ended June 30, 2023. The increase in general and administrative expenses was primarily driven by higher non-cash stock-based compensation expenses of $1.3 million, an increase in professional fees of $0.2 million and an increase in employee compensation and benefit expense of $0.1 million and an increase in general operating costs of $0.1 million.

Current wording

General and administrative expenses increased $2.4 million to $11.8 million for the nine months ended September 30, 2024, as compared to $9.4 million for the nine months ended September 30, 2023. The increase was primarily driven by a $1.3 million rise in non-cash stock-based compensation expenses, a $0.7 million increase in professional fees, a $0.2 million increase in employee compensation and benefits, and a $0.2 million increase in general operating costs.

Previous wording

The change in other income, net was primarily due to an increase in interest income attributable to favorable interest rates and higher cash equivalents and short-term investment balances for the six months ended June 30, 2024 and 2023.

Current wording

The change in other income, net, was primarily due to an increase in interest income, driven by higher interest rates and higher balances of cash equivalents and short-term investments for the nine months ended September 30, 2024 and 2023.

Previous wording

We do not have any approved products for commercial sale and have never generated revenue from product sales and have incurred significant net losses since our inception and expect to continue to incur net operating losses for the foreseeable future. We do not expect to receive any revenue from any product candidates that we develop unless and until we obtain regulatory approval and commercialize our product candidates or enter into collaborative arrangements with third parties. We currently have no credit facility or committed sources of capital.

Current wording

We do not have any approved products for commercial sale and have never generated revenue from product sales and have incurred significant net losses since our inception and expect to continue to incur net operating losses for the foreseeable future. We do not expect to receive any revenue from any product candidates that we develop unless and until we obtain regulatory approval and commercialize our product candidates or enter into collaborative arrangements with third parties. We currently have no credit facility or committed sources of capital. To date, our operations have been financed primarily by net proceeds from the sale of preferred and common stock, and the sale of warrants. Additionally, in view of our expectation to incur significant losses for the foreseeable future we will be required to raise additional capital resources in the future in order to fund our operations, although the availability of, and our access to, such resources is not assured.

Previous wording

As of June 30, 2024, we had cash and cash equivalents and short-term investments of approximately $83.6 million, and we received approximately $50.0 million of gross proceeds, or net proceeds of approximately $48.1 million after deducting offering costs, in connection with the May 6, 2024 private placement described in Note 9 of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q (the “2024 Private Placement”). The approximate $48.1 million of net proceeds received in conjunction with the 2024 Private Placement, in addition to existing cash and cash equivalents and short-term investments as of June 30, 2024, is expected to provide us with sufficient liquidity through approximately December 2025. To date, our operations have been financed primarily by net proceeds from the sale of preferred and common stock, and the sale of warrants. Additionally, in view of our expectation to incur significant losses for the foreseeable future we will be required to raise additional capital resources in the future in order to fund our operations, although the availability of, and the Company’s access to, such resources is not assured. Accordingly, management believes that there will be substantial doubt regarding our ability to continue operating as a going concern if we are unable to raise additional capital to finance our operations. We have based this estimate on assumptions that may prove to be incorrect, and we could exhaust our available resources sooner than we currently expect. In addition, we may receive up to an additional $58.3 million in tranche financing in the Third Closing of the 2023 Private Placement, subject to satisfaction or waiver of specified conditions, including clinical development milestones and volume weighted average share price levels and trading volume conditions, and an additional $45.5 million assuming the exercise of all Common Warrants issued in the initial closing of the 2023 Private Placement. There is no assurance that the milestones required for the Third Closing will be satisfied or waived or that the Common Warrants will be exercised. If these events do not occur or if we are unable to secure additional capital on acceptable terms or at all, we will be forced to significantly alter our business strategy, substantially curtail our current operations, or liquidate and cease operations altogether. Further, from time to time, our operating plans may change, and we may need additional funds to meet operational needs for clinical studies sooner than planned or to fund additional clinical studies. For example, we do not currently have sufficient liquidity to fund the continued clinical development of tegoprubart for people with ALS without additional financing, notwithstanding the positive topline results of our Phase 2a study of tegoprubart for adult subjects with ALS. We will continue to monitor our liquidity position in light of various financing alternatives and may pursue ad…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Based on our liquidity estimates and our current resources, we have concluded that we have sufficient cash resources to meet our anticipated cash needs through at least the next 12 months from the date of this report and for the foreseeable future. We have based this estimate on assumptions that may prove to be incorrect, and we could utilize our available resources sooner than we currently expect. To finance our operations beyond that point we will need to raise additional capital, which cannot be assured. Further, from time to time, our operating plans may change, and we may need additional funds to meet operational needs for clinical studies sooner than planned or to fund additional clinical studies. For example, we do not currently have sufficient liquidity to fund the continued clinical development of tegoprubart for people with ALS without additional financing. We will continue to monitor our liquidity position in light of various financing alternatives and may pursue additional financing or other alternatives to allow us to continue our product development. However, there can be no assurance such financing or other alternatives will be available to us on acceptable terms, or at all, which could force us to significantly alter our business strategy, substantially curtail our current operations, or liquidate and cease operations altogether

Previous wording

Conditions in the financial and credit markets may also limit the availability of funding or increase the cost of funding. As a result of any of the foregoing factors, adequate additional funding may not be available to us on acceptable terms on a timely basis, or at all. The severity and duration of any such impacts cannot be predicted. Any such failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies or cause us to delay our clinical development plans, research and development programs or commercialization efforts, out-license intellectual property rights to our product candidates or sell unsecured assets, or a combination of the above. Any of these actions could materially harm our business. As a result of the shares of our common stock issued in the 2023 Private Placement and the 2024 Private Placement or that may be issuable in the Third Closing of the 2023 Private Placement or upon the exercise of the Pre-Funded Warrants or the Common Warrants, our stockholders’ ownership interests will be diluted. To the extent that we raise additional capital through the sale of additional equity or convertible debt securities in the future, our stockholders’ ownership interests may be further diluted, and the terms of these securities may also include liquidation or other preferences that adversely affect our stockholders’ rights. Debt financing, if available, would result in fixed payment obligations and may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business. If we raise funds through collaborations, licenses and other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. Please see the section of this Quarterly Report titled “Risk Factors” for additional risks associated with our substantial capital requirements and the challenges we may face in raising capital.

Current wording

Conditions in the financial and credit markets may also limit the availability of funding or increase the cost of funding. As a result of any of the foregoing factors, adequate additional funding may not be available to us on acceptable terms on a timely basis, or at all. The severity and duration of any such impacts cannot be predicted. Any such failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies or cause us to delay our clinical development plans, research and development programs or commercialization efforts, out-license intellectual property rights to our product candidates or sell unsecured assets, or a combination of the above. Any of these actions could materially harm our business. The issuance of shares of common stock in the 2023 Private Placement, the 2024 Private Placement and the 2024 Underwriting Agreement diluted the ownership interests of our existing stockholders, and to the extent that we raise additional capital through the sale of additional equity or convertible debt securities in the future, our stockholders’ ownership interests may be further diluted, and the terms of these securities may also include liquidation or other preferences that adversely affect our stockholders’ rights. Debt financing, if available, would result in fixed payment obligations and may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business. If we raise funds through collaborations, licenses and other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. Please see the section of this Quarterly Report titled “Risk Factors” for additional risks associated with our substantial capital requirements and the challenges we may face in raising capital.

Previous wording

The following table provides a summary of our net cash flow activity for the six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table provides a summary of our net cash flow activity for the nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

For the six months ended June 30, 2023, operating activities used $18.1 million of cash, which primarily consisted of our net loss of $44.0 million. Operating activities include adjustments for certain non-cash charges including $23.2 million due to a change in warrant liabilities, $3.1 million of stock-based compensation, and $0.2 million of operating lease amortization, partially offset by accretion of investment discounts of $0.1 million. Net operating assets and liabilities changed by $1.0 million, primarily driven by a decrease in accounts payable and accrued expenses of $1.6 million, an increase in operating lease liability of $0.2 million and a decrease in prepaid expenses and other assets of $0.8 million.

Current wording

For the nine months ended September 30, 2024, operating activities used $28.3million in cash, primarily reflecting our net income of $8.4 million. Operating activities included adjustments for certain non-cash charges, including $51.8 million due to changes in warrant liabilities and fair value of financial instruments issued in excess of proceeds, and $1.9 million from accretion of investment discounts. These were partially offset by $6.5 million in stock-based compensation, and $0.3 million in operating lease amortization. Net operating assets and liabilities changed by $10.2 million, driven by an $8.8 million increase in accounts payable and accrued expenses, a $1.7 million decrease in prepaid expenses and other assets, and a $0.2 million increase in operating lease liabilities.

Previous wording

For the six months ended June 30, 2024, operating activities used $16.5 million of cash, which primarily consisted of our net loss of $68.5 million. Operating activities include adjustments for certain non-cash charges including $44.6 million due to a change in warrant liabilities and fair value of financial instruments issued in excess of proceeds, $4.8 million of stock-based compensation, and $0.2 million of operating lease amortization, partially offset by accretion of investment discounts of $1.0 million and gain on lease termination. Net operating assets and liabilities changed by $3.4 million, primarily driven by an increase in accounts payable and accrued expenses of $2.2 million, a decrease in prepaid expenses and other assets of $1.3 million and an increase in operating lease liability of $0.2 million.

Current wording

For the nine months ended September 30, 2023, operating activities used $30.4 million in cash, primarily reflecting our net loss of $86.4 million. Operating activities include adjustments for certain non-cash charges including $55.7 million due to changes in warrant liabilities and fair value of financial instruments issued in excess of proceeds, $4.8 million in stock-based compensation, and $0.3 million in operating lease amortization, partially offset by $0.6 million in accretion of investment discounts. Net operating assets and liabilities changed by $4.2 million, driven by a $3.6 million decrease in accounts payable and accrued expenses, a $0.3 million increase in operating lease liabilities, and a $0.4 million increase in prepaid expenses and other assets.

Previous wording

Net cash used in investing activities for the six months ended June 30, 2024 was $10.1 million. Cash used to purchase $49.2 million of available-for-sale short-term investments, were partially offset from proceeds from maturity of available-for-sale short-term investments of $39.1 million.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2024 was $22.9 million. This consisted of $83.4 million used to purchase available-for-sale short-term investments, partially offset by $60.4 million in proceeds from maturity of available-for-sale short-term investments.

Previous wording

Net cash provided by financing activities for the six months ended June 30, 2024 consisted of the 2024 Private Placement, totaling $48.1 million in net proceeds from the sale of 13.1 million shares of common stock and 8.0 million pre-funded warrants to purchase common stock.

Current wording

Net cash provided by financing activities for the nine months ended September 30, 2024, consisted of the following: $48.1 million in net proceeds from the 2024 Private Placement, involving the sale of 13.1 million shares of common stock and 8.0 million pre-funded warrants to purchase common stock; $2.0 million in net proceeds from the Second Closing, involving the sale of 909,088 shares of common stock; and $3.3 million in net proceeds from the Third Closing, involving the sale of 1.5 million shares of common stock.

Previous wording

Net cash provided by financing activities for the six months ended June 30, 2023 consisted of the 2023 Private Placement, totaling $33.0 million in net proceeds from the sale of 8.7 million shares of common stock and 6.4 million pre-funded warrants to purchase common stock.

Current wording

Net cash provided by financing activities for the nine months ended September 30, 2023, consisted of the 2023 Private Placement, totaling $33.0 million in net proceeds from the sale of 8.7 million shares of common stock and 6.4 million pre-funded warrants to purchase common stock.