Eledon Pharmaceuticals Inc

Previous wording

We have incurred significant annual net operating losses in every year since our inception. We have no products approved for commercial sale and have not generated any revenue from product sales to date, and we continue to incur significant research and development and other general and administrative expenses related to our ongoing operations. If tegoprubart or any future product candidates we develop are not successfully developed and approved, we may never generate any revenue from sales of products. The Company has experienced recurring net losses and negative cash flows from operating activities since its inception. The Company’s net loss for the six months ended June 30, 2024 is $68.5 million. As of June 30, 2024, the Company had cash and cash equivalents and short-term investments of $83.6 million, working capital of $81.2 million and an accumulated deficit of $387.9 million. We have not generated any revenues from product sales, have not completed the development of any product candidate and may never have a product candidate approved for commercialization. We expect it will be several years, if ever, before we have a product candidate ready for commercialization. We have financed our operations to date primarily through the sale of preferred and common stock, and the sale of warrants and have devoted substantially all of our financial resources and efforts to research and development, including preclinical studies and our clinical trials. Our net losses may fluctuate significantly from quarter to quarter and year to year and will depend, in part, on the rate at which we incur expenses and our ability to generate revenue. Net losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital.

Current wording

We have incurred significant annual net operating losses in every year since our inception. We have no products approved for commercial sale and have not generated any revenue from product sales to date, and we continue to incur significant research and development and other general and administrative expenses related to our ongoing operations. If tegoprubart or any future product candidates we develop are not successfully developed and approved, we may never generate any revenue from sales of products. The Company has experienced recurring net losses and negative cash flows from operating activities since its inception. As of September 30, 2024, the Company had cash and cash equivalents and short-term investments of $78.2 million, working capital of $69.0 million and an accumulated deficit of $311.0 million. We have not generated any revenues from product sales, have not completed the development of any product candidate and may never have a product candidate approved for commercialization. We expect it will be several years, if ever, before we have a product candidate ready for commercialization. We have financed our operations to date primarily through the sale of preferred and common stock, and the sale of warrants and have devoted substantially all of our financial resources and efforts to research and development, including preclinical studies and our clinical trials. Our net losses may fluctuate significantly from quarter to quarter and year to year and will depend, in part, on the rate at which we incur expenses and our ability to generate revenue. Net losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital.

Previous wording

As of June 30, 2024, there were 38,506,614 shares of our common stock outstanding. As a result of the first closing of the 2023 Private Placement on May 5, 2023, we issued 8,730,168 shares of our common stock, Pre-Funded Warrants to purchase 6,421,350 shares of common stock and Common Warrants to purchase 15,151,518 shares of our common stock to the investors therein. In connection with the closing of the 2024 Private Placement on May 9, 2024, we issued 13,110,484 shares of our common stock and 2024 Pre-Funded Warrants to purchase 7,989,516 shares of common stock to the investors therein. In connection with the completion of the Second Closing on July 8 2024, we issued 909,088 shares of our common stock to the investors therein. Our condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. As a result of the 2023 Private Placement described in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, we may also receive up to an additional $58.3 million in tranche financing in the Third Closing of the 2023 Private Placement, subject to the 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 to complete the Third Closing of the 2023 Private Placement will be satisfied or waived or that the Common Warrants will be exercised. 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. We can also provide no assurance that other funding will be available to us, will be obtained on terms favorable to us or will provide us with sufficient funds to meet our objectives. If we are unable to raise such capital, or if we are unable to do so on acceptable terms, we will be forced to significantly alter our business strategy, substantially curtail our current operations, or liquidate and cease operations altogether. For example, we are currently unable to continue our clinical development of tegoprubart for people with ALS without additional financing, and we can provide no assurances that we will be able to obtain financing on acceptable terms or at all.

Current wording

As of September 30, 2024, there were 41,183,102 shares of our common stock outstanding. In connection with the closing of the 2024 Private Placement on May 9, 2024, we issued 13,110,484 shares of our common stock and pre-funded warrants to purchase 7,989,516 shares of common stock to the investors therein. In connection with the completion of the Second Closing on July 8 2024, we issued 909,088 shares of our common stock and with the completion of the Third Closing on September 30, 2024 and October 1, 2024, we issued 1,727,400 shares of our common stock to the investors therein. In connection with the closing of the 2024 Underwriting Agreement on October 29, 2024, we issued 18,356,173 shares of our common stock and pre-funded warrants to purchase 4,931,507 shares of our common stock to the investors therein. 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. We can also provide no assurance that other funding will be available to us, will be obtained on terms favorable to us or will provide us with sufficient funds to meet our objectives. If we are unable to raise such capital, or if we are unable to do so on acceptable terms, we will be forced to significantly alter our business strategy, substantially curtail our current operations, or liquidate and cease operations altogether. For example, we are currently unable to continue our clinical development of tegoprubart for people with ALS without additional financing, and we can provide no assurances that we will be able to obtain financing on acceptable terms or at all.

Previous wording

In addition to the dilution of our current stockholders’ ownership as a result of the 2023 Private Placement and the 2024 Private Placement, we currently have a significant number of securities outstanding that are exercisable for our common stock, which could result in significant additional dilution and downward pressure on our stock price. Future issuances of our common stock, including common stock that may be issuable pursuant to outstanding warrants or other convertible securities, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.

Current wording

In addition to the dilution of our current stockholders’ ownership as a result of the 2023 Private Placement, the 2024 Private Placement and the 2024 Underwriting Agreement, we currently have a significant number of securities outstanding that are exercisable for our common stock, which could result in significant additional dilution and downward pressure on our stock price. Future issuances of our common stock, including common stock that may be issuable pursuant to outstanding warrants or other convertible securities, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.

Previous wording

As of June 30, 2024, there were 38,506,614 shares of our common stock outstanding. As a result of the first closing of the 2023 Private Placement on May 5, 2023, we issued 8,730,168 shares of our common stock, Pre-Funded Warrants to purchase 6,421,350 shares of common stock and Common Warrants to purchase 15,151,518 shares of our common stock to the investors therein. In connection with the closing of the 2024 Private Placement on May 9, 2024, we issued 13,110,484 shares of our common stock and Pre-Funded Warrants to purchase 7,989,516 shares of common stock to the investors therein. In connection with the completion of the Second Closing on July 8, 2024, we issued 909,088 shares of our common stock to the investors therein. Additionally, up to 25,252,530 shares of common stock or Pre-Funded Warrants may be issued in the Third Closing of the 2023 Private Placement, respectively, subject to satisfaction of achievement of certain milestones and conditions (which may be waived). The issuance of shares of common stock in the 2023 Private Placement and 2024 Private Placement diluted the ownership interests of our existing stockholders, and the issuance of shares of common stock upon exercise of the Pre-Funded Warrants or the Common Warrants issued in the initial closing of the 2023 Private Placement or the 2024 Private Placement or any additional shares of common stock that may be issued, including pursuant to the exercise of additional Pre-Funded Warrants, in the Third Closing of the 2023 Private Placement, would result in significant additional dilution to our current stockholders, which could adversely affect the price of our common stock and the terms on which we could raise additional capital. If we sell additional shares of common stock, convertible securities or other equity securities, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of our common stock.

Current wording

As of September 30, 2024, there were 41,183,102 shares of our common stock outstanding. In connection with the closing of the 2024 Private Placement on May 9, 2024, we issued 13,110,484 shares of our common stock and pre-funded warrants to purchase 7,989,516 shares of common stock to the investors therein. In connection with the completion of the Second Closing on July 8 2024, we issued 909,088 shares of our common stock and the completion of the Third Closing on September 30, 2024 and October 1, 2024, we issued 1,727,400 shares of our common stock to the investors therein. In connection with the closing of the 2024 Underwriting Agreement on October 29, 2024, we issued 18,356,173 shares of our common stock and pre-funded warrants to purchase 4,931,507 shares of our common stock to the investors therein. 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. The issuance of shares of common stock upon exercise of pre-funded warrants or common warrants issued in the initial closing of the 2023 Private Placement, the pre-funded warrants issued in the 2024 Private Placement and the pre-funded warrants issued in the 2024 Underwriting Agreement would result in significant additional dilution to our current stockholders, which could adversely affect the price of our common stock and the terms on which we could raise additional capital. If we sell additional shares of common stock, convertible securities or other equity securities, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of our common stock.

Previous wording

Healthcare providers, physicians and third-party payers will play a primary role in the recommendation and prescription of any product candidates for which we receive marketing approval. Our current and future arrangements may expose us to broadly applicable fraud and abuse and other healthcare laws that may constrain the business or financial arrangements and relationships through which we would market, sell and distribute the products for which we receive marketing approval. Even though we will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payers, federal and state healthcare laws are and will be applicable to our business. Such laws include, but are not limited to federal false claims, false statements and civil monetary penalties laws, including the federal civil False Claims Act (“FCA”), the federal Anti-Kickback Statute, the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), patient data privacy and security regulation, including, in the United States, HIPAA, as amended by the Health Information Technology for Clinical Health Act of 2009 (“HITECH”), the federal transparency requirements under the Physician Payments Sunshine Act, and analogous state, local or foreign law.

Current wording

Healthcare providers, physicians and third-party payers will play a primary role in the recommendation and prescription of any product candidates for which we receive marketing approval. Our current and future arrangements may expose us to broadly applicable fraud and abuse and other healthcare laws that may constrain the business or financial arrangements and relationships through which we would market, sell and distribute the products for which we receive marketing approval. Even though we will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payers, federal and state healthcare laws are and will be applicable to our business. Such laws include, but are not limited to federal false claims, false statements and civil monetary penalties laws, including the federal civil False

Previous wording

During the six months ended June 30, 2024, none of our officers or directors adopted orterminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or constituted a “non-Rule 10b5-1 trading arrangement.”

Current wording

During the nine months ended September 30, 2024, none of our officers or directors adopted orterminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or constituted a “non-Rule 10b5-1 trading arrangement.”