ARS Pharmaceuticals Inc

Previous wording

We are a biopharmaceutical company focused on the development of ARS-1 (brand name neffy), a proprietary product candidate for the needle-free intranasal delivery of epinephrine for the emergency treatment of Type I allergic reactions, including anaphylaxis. neffyis a proprietary composition of epinephrine with an innovative absorption enhancer called Intravail®, which allows neffyto provide intranasal delivery of epinephrine.

Current wording

We are a biopharmaceutical company focused on the commercialization and development ofneffy(previously referred to as ARS-1 and currently identified in the European Union (“EU”) by the trade name EURneffy) for the needle-free intranasal delivery of epinephrine for the emergency treatment of Type I allergic reactions, including anaphylaxis. neffyis the first and only U.S. Food and Drug Administration (“FDA”) and European Commission (“EC”)-approved needle-free epinephrine product, and the first new delivery method for epinephrine in more than 35 years. neffyis a proprietary composition of epinephrine with an innovative absorption enhancer called Intravail®, which allows neffyto safely provide intranasal delivery of epinephrine at a low dose within the exposures of approved injectable products across a range of dosing conditions (including repeat dosing and allergen challenge).

Previous wording

We believe neffy’s “no needle, no injection” approach will address a significant unmet need in the use of epinephrine, which is currently approved only in injectable formulations for the emergency treatment of Type I allergic reactions. There are approximately 40 million people in the United States who experience Type I allergic reactions. Of this group, over the last three years, approximately 20 million people have been diagnosed and experienced severe Type I allergic reactions that may lead to anaphylaxis, but (in 2023, for example) only 3.2 million filled their active epinephrine autoinjector prescription, and of those, only half consistently carry their prescribed autoinjector with them due to the many drawbacks of these devices. In aggregate, we estimate that up to 90% of patients prescribed an epinephrine device are not achieving an optimal treatment outcome today. These drawbacks include the use of needles in the devices, which can result in patient and caregiver injury as well as hesitation and delays in administration due principally to apprehension and pain of needles, allowing the allergic reaction to progress in severity leading to symptoms that seriously impact patient quality of life, to potential need for emergency services and/or hospitalizations, and to life-threatening symptoms or events. Intra-muscular injections also are subject to dosing errors and risk of accidental blood vessel injections, which can cause a significant spike in the intravascular delivery of epinephrine potentially leading to serious cardiovascular complications or events. We believe neffy’s “no needle, no injection” delivery that eliminates apprehension, pain and safety concerns, small size allowing for ease of portability, ease of use, and high reliability provide it with a user-friendly profile that will increase prescriptions for epinephrine and make it more likely for patients and caregivers to administer epinephrine sooner, achieve more rapid symptom relief and prevent the allergic reaction from progressing to a level of severity that could lead to hospitalization or even death.

Current wording

These drawbacks include the use of needles in the devices, which can result in patient and caregiver injury as well as hesitation and delays in administration due principally to apprehension and pain of needles, allowing the allergic reaction to progress in severity leading to symptoms that seriously impact patient quality of life, to potential need for emergency services and/or hospitalizations, and to life-threatening symptoms or events. Intra-muscular injections also are subject to dosing errors and risk of accidental blood vessel injections, which can cause a significant spike in the intravascular delivery of epinephrine potentially leading to serious cardiovascular complications or events. We believe neffy’s “no needle, no injection” delivery that eliminates apprehension, pain and safety concerns, small size allowing for ease of portability, ease of use, and high reliability provide it with a user-friendly profile that will increase prescriptions for epinephrine and make it more likely for patients and caregivers to administer epinephrine sooner, achieve more rapid symptom relief and prevent the allergic reaction from progressing to a level of severity that could lead to hospitalization or even death.

Previous wording

We reported positive topline results demonstrating statistically significant and clinically meaningful improvements in treatment-refractory chronic urticaria patients at the American Academy of Allergy and Immunology medical conference in February 2024, and anticipate initiating a Phase 2 clinical trial in the outpatient urticaria setting in the fourth quarter of 2024, followed by the potential initiation of a single pivotal efficacy study in 2025.

Current wording

We reported positive topline results demonstrating statistically significant and clinically meaningful improvements in treatment-refractory chronic urticaria patients at the American Academy of Allergy and Immunology medical conference in February 2024, and anticipate initiating a Phase 2b clinical trial in the outpatient urticaria setting in early 2025, followed by the potential initiation of a single pivotal efficacy study.

Previous wording

Since our inception in 2015 as ARS Pharmaceuticals, Inc., we have devoted substantially all of our efforts and financial resources to organizing and staffing our company, business planning, raising capital, performing research and development activities, pre-commercial activities, and providing general and administrative support for these operations. We do not have any products approved for sale and have not generated any product sales. We have funded our operations primarily with proceeds from the Merger (as more fully described below), private placement of convertible preferred stock, licensing, supply and distribution arrangements with our commercialization partners, and bank debt. From inception to June 30, 2024, we have raised $262.3 million in cash, cash equivalents and short-term investments, net of transaction costs, from the Merger; net proceeds of $76.3 million from the issuance of convertible preferred and common stock; $28.5 million from our collaboration, licensing, supply and distribution arrangements; and $10.0 million from bank debt. As of June 30, 2024, we had cash, cash equivalents, and short-term investments of $218.7 million.

Current wording

Since our inception in 2015 as ARS Pharmaceuticals, Inc., we have devoted substantially all of our efforts to developing intellectual property, conducting product development and clinical trials, organizing and staffing our company, business planning, raising capital, building infrastructure, pre-commercial and commercial activities, and providing general and administrative support for these operations. We began commercial operations in September 2024 and therefore have had limited net product sales. We have funded our operations primarily with proceeds from the Merger (see Note 1 to the notes to the condensed consolidated financial statements included in this report), private placement of convertible preferred stock, licensing, supply and distribution arrangements with our commercialization partners, and bank debt. From inception to September 30, 2024, we have raised $262.3 million in cash, cash equivalents and short-term investments, net of transaction costs, from the Merger; net proceeds of $76.3 million from the issuance of convertible preferred and common stock; $30.0 million from our collaboration, licensing, supply and distribution arrangements; and $10.0 million from bank debt. As of September 30, 2024, we had cash, cash equivalents, and short-term investments of $204.6 million.

Previous wording

We have incurred net losses from operations since our inception. Our net losses were $22.8 million and $32.3 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024 we had an accumulated deficit of $154.1 million. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials, our expenditures on other development activities, the cost for regulatory filings, expenses for pre-commercial activities to establish sales, marketing and distribution capabilities for our product candidates, and our ability to earn potential regulatory and commercial milestones under our collaboration arrangements. We expect our expenses and operating losses will increase substantially if our product candidate, neffy, is approved by the FDA and we commence commercialization efforts, we advance neffyfor additional indications, any future product candidates advance through clinical trials, and we expand our clinical, regulatory, quality, manufacturing and pre-commercial sales and marketing capabilities. If we obtain marketing approval forneffyor any of future product candidate, we will incur significant commercialization expenses for marketing, sales, manufacturing and distribution activities, and added expenditures to expand our operational, financial and management systems and increase personnel to support these operations.

Current wording

We have incurred net losses from operations since our inception. Our net losses were $41.9 million and $47.2 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, we had an accumulated deficit of $173.2 million. Until we consistently generate positive net income, if ever, our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials, our expenditures on other development activities, the cost for regulatory filings, expenses for commercial activities to establish, maintain and enhance sales, marketing and distribution capabilities forneffy, the timing and volume of our product sales, and our ability to earn potential regulatory and commercial milestones under our license and collaboration arrangements.

Previous wording

We do not expect to generate any revenues from product sales unless and until we successfully obtain regulatory approval for one or more product candidates, if ever. Until such time, if ever, as we can generate substantial product revenue, we may finance our operations through our existing cash, cash equivalents, short-term investments, equity offerings, debt financings and other capital sources which may include collaborations, strategic alliances, marketing, distribution or licensing arrangements or other arrangements with third parties. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. In addition, any future debt agreements may limit our ability to enter into certain debt financings without the consent of the lenders thereunder. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and may require us to delay, reduce or terminate our research and development programs or other operations, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Current wording

Until such time, if ever, that we can generate substantial product revenue, we may finance our operations through our existing cash, cash equivalents, short-term investments, equity offerings, debt financings and other capital sources which may include collaborations, strategic alliances, marketing, distribution or licensing arrangements or other arrangements with third parties. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. In addition, any future debt agreements may limit our ability to enter into certain debt financings without the consent of the lenders thereunder. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and may require us to delay or reduce our marketing and sales efforts, or delay, reduce or terminate our research and development programs or other operations, or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.

Previous wording

We do not own or operate manufacturing facilities. We currently rely on third-party manufacturers and suppliers forneffy, and we expect to continue to do so to meet our nonclinical, clinical and any commercial activities. Our third-party manufacturers are required to manufacture our product candidates under cGMP requirements and other applicable laws and regulations.

Current wording

We do not own or operate manufacturing facilities. We currently rely on third-party manufacturers and suppliers forneffy, and we expect to continue to do so to meet our nonclinical, clinical and commercial activities. Our third-party manufacturers are required to manufacture our product under cGMP requirements and other applicable laws and regulations.

Previous wording

Under the terms of the Seqirus Agreement, we received an upfront payment of $0.5 million in May 2024. In addition, we are eligible to receive up to $4.5 million of milestone payments upon achievement of certain event milestones. Subject to regulatory approval, we will also receive a per unit supply price for the sale of commercial supply to Seqirus. We recognized $0.5 million in revenue in the three and six months ended June 30, 2024.

Current wording

Under the Seqirus Agreement, we received an upfront payment of $0.5 million in May 2024. In August 2024, the first event milestone was met and we recorded a receivable for $1.5 million. We are also eligible to receive up to $3.0 million upon the achievement of the remaining event milestones. Subject to regulatory approval, we will also receive a per unit supply price for the sale of commercial supply to Seqirus. We recognized $1.5 million and $2.0 million in revenue in the three and nine months ended September 30, 2024, in the accompanying condensed consolidated statements of operations and comprehensive loss.

Previous wording

To date, we have not generated any revenues from the commercial sale of any products, and we may not generate revenues from the commercial sale of any products. We have signed collaboration and license agreements including supply and distribution forneffyin Japan and China. We have signed a license and distribution agreement including supply forneffyin Australia and New Zealand. The terms of these agreements may include payment to us of one or more of the following: non-refundable, up-front license fees; clinical, regulatory, and/or commercial milestone payments; clinical development fees; and royalties or a transfer price on net sales of licensed products ifneffy receives marketing approval in these regions. In addition, we previously entered into the Recordati License and Supply Agreement, which was terminated in February 2023. We expect revenues to fluctuate in future periods based on our ability to meet various regulatory milestones, and contingent on successfully obtaining regulatory approval forneffyin the US and the licensed regions, US product sales, commercial milestones, royalties or transfer price earned from our partner’s net sales and the supply of commercial product as set forth in the agreements described earlier.

Current wording

We have recognized limited net product sales in the United States since the commercial launch ofneffy in September 2024. We have signed collaboration and license agreements including supply and distribution forneffyfor all geographies outside of the United States, Australia and New Zealand. We have signed a license and distribution agreement including supply forneffyin Australia and New Zealand. The terms of these agreements may include payment to us of one or more of the following: non-refundable, up-front license fees; clinical, regulatory, and/or commercial milestone payments; clinical development fees; and royalties or a transfer price on net sales of licensed products ifneffy receives marketing approval in these regions. We expect product revenues to fluctuate in future periods as we continue with the commercial launch ofneffy. We expect revenues under collaboration agreements to fluctuate in future periods based on our ability to meet various regulatory milestones, and contingent on successfully obtaining regulatory approval forneffyin the licensed regions, commercial milestones, royalties or transfer price earned from our partner’s net sales and the supply of commercial product as set forth in the agreements described earlier.

Previous wording

To date, our research and development expenses have been related primarily to clinical development, process development and manufacturing costs of our product candidate. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

Current wording

To date, our research and development expenses have been related primarily to clinical development, process development and manufacturing costs ofneffy. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

Previous wording

Our external research and development expenses for our clinical stage product candidate consist primarily of fees, materials and other costs paid to CROs, CMOs, consultant and contractors. Our clinical, regulatory, manufacturing, and non-clinical development costs for the periods presented below reflect an allocation of expenses associated with personnel costs, equity-based compensation expense, and indirect costs incurred in support of overall research and development, such as facilities-related costs.

Current wording

Our external research and development expenses forneffy consist primarily of fees, materials and other costs paid to CROs, CMOs, consultant and contractors. Our clinical, regulatory, manufacturing, and non-clinical development costs for the periods presented below reflect an allocation of expenses associated with personnel costs, equity-based compensation expense, and indirect costs incurred in support of overall research and development, such as facilities-related costs.

Previous wording

We expect our research and development expenses to decrease in 2024 compared to 2023 based on our planned clinical development and manufacturing activities, as we plan to transition to commercialization efforts for the potential launch of our first product in the fourth quarter of 2024. However, the timing for regulatory approvals is outside our control, may be delayed and is uncertain. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future clinical trials and the manufacturing costs of our product candidates due to the inherently unpredictable nature of clinical development and manufacturing activities. Clinical development and manufacturing timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future clinical trials, regulatory developments and our ongoing assessments as to each product candidate’s commercial potential. In addition, we cannot forecast to what degree our licensing, supply and distribution arrangements would affect our development plans and capital requirements.

Current wording

We expect our research and development expenses to increase in 2024 compared to 2023 based on our planned clinical development and manufacturing activities. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future clinical trials and the manufacturing costs ofneffydue to the inherently unpredictable nature of clinical development and manufacturing activities. Clinical development and manufacturing timelines, the probability of success and development costs can differ materially from expectations. In addition, we cannot forecast to what degree our licensing, supply and distribution arrangements would affect our development plans and capital requirements.

Previous wording

The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors that include:

Current wording

The duration, costs and timing of clinical trials and development ofneffy for the treatment of additional indications will depend on a variety of factors that include:

Previous wording

A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. The process of conducting the necessary clinical research and manufacturing to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates or any future candidates may be affected by a variety of factors. We may never succeed in achieving regulatory approval for our product candidates or any future candidates. Further, a number of factors, including those outside of our control, could adversely impact the timing and duration of our product candidates’ or any future candidates’ development, which could increase our research and development expenses.

Current wording

A change in the outcome of any of these variables with respect to the development ofneffy could significantly change the costs and timing associated with the development of that future product candidate. The process of conducting the necessary clinical research and manufacturing to obtain regulatory approval is costly and time-consuming. The actual probability of success for any future candidates may be affected by a variety of factors. Further, a number of factors, including those outside of our control, could adversely impact the timing and duration of our product’s or any future candidates’ development, which could increase our research and development expenses.

Previous wording

General and administrative expenses consist primarily of salaries, benefits, equity-based compensation for personnel in executive, finance, business development, sales and marketing and other corporate administrative functions. General and administrative expenses also include pre-commercial launch activities, legal fees incurred relating to corporate and patent matters, professional fees incurred for accounting, auditing, tax and administrative consulting services, market research costs, and insurance costs.

Current wording

Selling, general and administrative expenses consist primarily of salaries, benefits, equity-based compensation for personnel in executive, finance, business development, sales and marketing and other corporate administrative functions. Selling, general and administrative expenses also include pre-commercial launch activities prior to product launch, the initiation of commercialization activities in September 2024, legal fees incurred relating to corporate and patent matters, professional fees incurred for accounting, auditing, tax and administrative consulting services, market research costs, and insurance costs.

Previous wording

We expect that our general and administrative expenses will remain consistent in 2024 compared to 2023. Pre-commercial investment related toneffy has been substantially decreased, however ifneffy receives marketing approval, we will add sales and marketing personnel, infrastructure and programs to support commercialization activities. We expect to continue to incur audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums, board of director fees, investor relations costs associated with operating as a public company, patent costs and defense, and general and administrative personnel.

Current wording

We expect that our selling, general and administrative expenses will increase substantially in 2024 compared to 2023. The increase in expenses is due to our sales force which was established in the third quarter of 2024, the development and commencement of our marketing campaigns and initiatives, the hiring of additional sales and marketing personnel to support full commercialization activities, and the addition of infrastructure and programs to support commercialization activities. We expect to continue to incur audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums, board of director fees, investor relations costs associated with operating as a public company, patent costs and defense, and general and administrative personnel.

Previous wording

General and Administrative Expenses. General and administrative expenses were $8.9 million and $13.3 million for the three months ended June 30, 2024 and 2023, respectively. The decrease of $4.4 million was primarily due to a $3.8 million decrease in pre-commercial launch activities related toneffy, a $0.7 million decrease in consulting fees, a $0.5 million decrease in legal fees, and a $0.4 million decrease in other operating expenses. These aggregated decreases were partially offset by a $1.0 million increase in stock-based compensation.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $19.3 million and $15.0 million for the three months ended September 30, 2024 and 2023, respectively. The increase of $4.3 million was primarily due to a $1.5 million increase in payroll-related expenses, a $1.5 million increase in pre-commercial launch activities related toneffy, a $0.9 million increase in stock-based compensation, a $0.7 million increase in legal fees, a $0.3 million increase in professional fees for accounting, auditing and tax, and a $0.3 million increase in other operating expenses. These aggregated increases were partially offset by a $0.6 million decrease in consulting fees and a $0.3 million decrease in general overhead expenses.

Previous wording

Other Income, Net. Other income, net was $2.8 million and $3.2 million for the three months ended June 30, 2024 and 2023, respectively. The decrease of $0.4 million was primarily due to a $0.5 million decrease in interest income from our cash, cash equivalents, and short-term investments, and a $0.1 million decrease in other items. These aggregated decreases were partially offset by a $0.2 million increase in net amortization and accretion associated with our short-term investments.

Current wording

Other Income, Net. Other income, net was $2.6 million and $3.1 million for the three months ended September 30, 2024 and 2023, respectively. The decrease of $0.5 million was primarily due to a $0.8 million decrease in interest income from our cash, cash equivalents, and short-term investments, and a $0.1 million decrease in other items, partially offset by a $0.4 million increase in net amortization and accretion associated with our short-term investments.

Previous wording

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023 (in thousands, except percentages):

Current wording

The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023 (in thousands, except percentages):

Previous wording

Revenues. There was $0.5 million in revenue under collaboration agreements for the six months ended June 30, 2024, and less than $0.1 million in revenues for the six months ended June 30, 2023. The revenues for the six months ended June 30, 2024 includes the recognition of revenue for the delivery of the license forneffyin the Seqirus Territory in combination with the transfer of know-how under our license and distribution agreement with Seqirus. The revenues for the six months ended June 30, 2023 includes the recognition of revenue for the portion of upfront and clinical and regulatory milestone payments under our collaboration agreement with Alfresa that have been allocated to research and development services provided for during that period. We expect revenues to fluctuate in future periods based on our ability to meet various regulatory milestones, and contingent on successfully obtaining regulatory approval forneffyin the licensed regions, commercial milestones, royalties or transfer price earned from our partner’s net sales and the supply of commercial product as set forth in these agreements.

Current wording

Revenues. There was $2.6 million in revenues for the nine months ended September 30, 2024, and less than $0.1 million in revenues for the nine months ended September 30, 2023. The revenues for the nine months ended September 30, 2024 includes $0.6 million in net product revenues for sales ofneffyand $2.0 million in revenues under the Seqirus Agreement. The revenues under the Seqirus Agreement consists of $1.5 million for the first event milestone and $0.5 million for the delivery of the license forneffyin the Seqirus Territory in combination with the transfer of know-how. The revenues for the nine months ended September 30, 2023 includes the recognition of revenue for the portion of upfront and clinical and regulatory milestone payments under our collaboration agreement with Alfresa that have been allocated to research and development services provided for during that period.

Previous wording

Research and Development Expenses. Research and development expenses were $12.1 million and $13.9 million for the six months ended June 30, 2024 and 2023, respectively. The decrease of $1.7 million was primarily due to a $3.9 million decrease in product development expenses, a $1.1 million decrease in consulting fees, and a $0.4 million decrease in other operating expenses. These aggregated decreases were partially offset by a $2.1 million increase in in-process research and development expense related to an EMA regulatory milestone liability under the Recordati Termination Agreement, a $1.0 million increase in clinical trial costs associated with neffy, and a $0.6 million increase in stock-based compensation.

Current wording

Research and Development Expenses. Research and development expenses were $16.6 million and $16.9 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease of $0.3 million was primarily due to a $2.0 million decrease in product development expenses, a $1.2 million decrease in consulting fees, and a $0.5 million decrease in other operating expenses. These aggregated decreases were partially offset by a $2.1 million increase in in-process research and development expense related to an EMA regulatory milestone liability under the Recordati Termination Agreement, a $0.6 million increase in stock-based compensation, a $0.4 million increase in outside services, and a $0.3 million increase in clinical trial costs associated with neffy.

Previous wording

The following table summarizes our research and development expenses for the six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table summarizes our research and development expenses for the nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

General and Administrative Expenses. General and administrative expenses were $16.9 million and $25.5 million for the six months ended June 30, 2024 and 2023, respectively. The decrease of $8.6 million was primarily due to a $7.2 million decrease in pre-commercial launch activities related toneffy, a $1.1 million decrease in consulting fees, a $0.7 million decrease in legal fees, a $0.5 million decrease in payroll-related expenses, a $0.4 million decrease in recruiting fees, a $0.3 million decrease in insurance costs, and a $0.2 million decrease in other operating expenses. These aggregated decreases were partially offset by a $1.8 million increase in stock-based compensation.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $36.2 million and $40.5 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease of $4.3 million was primarily due to a $5.7 million decrease in pre-commercial launch activities related toneffy, a $1.4 million decrease in consulting fees, a $0.5 million decrease in recruiting fees, a $0.5 million decrease in insurance costs, and a $0.3 million decrease in other operating expenses. These aggregated decreases were partially offset by a $2.7 million increase in stock-based compensation, a $1.1 million increase in payroll-related expenses, and a $0.3 million increase in legal fees.

Previous wording

Other Income, Net. Other income, net was $5.7 million and $7.0 million for the six months ended June 30, 2024 and 2023, respectively. The decrease of $1.3 million was primarily due to a $1.1 million decrease in interest income from our cash, cash equivalents, and short-term investments, $0.3 million from the sale of in-process research and development obtained in the Merger, which occurred in the six months ended June 30, 2023, and a $0.2 million decrease in other items. These aggregated decreases were partially offset by a $0.3 million increase in net amortization and accretion associated with our short-term investments.

Current wording

Other Income, Net. Other income, net was $8.3 million and $10.1 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease of $1.8 million was primarily due to a $1.9 million decrease in interest income from our cash, cash equivalents, and short-term investments, a $0.3 million decrease from the sale of in-process research and development obtained in the Merger, which occurred in the nine months ended September 30, 2023, and a $0.3 million decrease in other items. These aggregated decreases were partially offset by a $0.7 million increase in net amortization and accretion associated with our short-term investments.

Previous wording

Since our inception, we have not generated any revenue from any product sale and have incurred significant operating losses and negative cash flows from our operations. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates until the fourth quarter of 2024 or after, if at all. We have funded our operations to date primarily with proceeds from the Merger, the sale of preferred and common stock, revenue earned under collaboration, licensing, supply and distribution agreements and bank debt. From inception to June 30, 2024, we have raised $262.3 million in cash, cash equivalents and short-term investments, net of transaction costs, from the Merger, net proceeds of $76.3 million from the issuance of convertible preferred and common stock, $28.5 million from our collaboration, licensing, supply and distribution arrangements, and $10.0 million from bank debt. As of June 30, 2024, we had cash, cash equivalents, and short-term investments of $218.7 million.

Current wording

Since our inception, we have incurred significant operating losses and negative cash flows from our operations. We have recognized limited net product sales since the commercial launch ofneffyin September 2024. We have funded our operations to date primarily with proceeds from the Merger, the sale of preferred and common stock, revenue earned under collaboration, licensing, supply and distribution agreements and bank debt. From inception to September 30, 2024, we have raised $262.3 million in cash, cash equivalents and short-term investments, net of transaction costs, from the Merger, net proceeds of $76.3 million from the issuance of convertible preferred and common stock, $30.0 million from our collaboration, licensing, supply and distribution arrangements, and $10.0 million from bank debt. As of September 30, 2024, we had cash, cash equivalents, and short-term investments of $204.6 million.

Previous wording

The following table summarizes our cash flows for the six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table summarizes our cash flows for the nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

During the six months ended June 30, 2024, net cash used in operating activities was $14.0 million. This consisted primarily of a net loss of $22.8 million, an increase in our operating liabilities of $4.4 million, a decrease in our operating assets of $1.6 million, and non-cash charges of $2.8 million. The increase in our operating liabilities was primarily due to an increase in accounts payable and accrued liabilities of $4.4 million. The decrease in our operating assets was primarily due to a decrease in prepaid and other assets of $1.6 million. The non-cash charges consisted of non-cash stock-based compensation of $6.7 million, partially offset by $3.9 million in net amortization of discounts on short-term investments.

Current wording

During the nine months ended September 30, 2024, net cash used in operating activities was $28.5 million. This consisted primarily of a net loss of $41.9 million, an increase in our operating liabilities of $8.7 million, a decrease in our operating assets of $0.1 million, and non-cash charges of $4.6 million. The increase in our operating liabilities was primarily due to an increase in accounts payable and accrued liabilities of $8.7 million. The decrease in our operating assets was primarily due to a decrease in prepaid and other assets of $1.1 million, partially offset by an increase in accounts receivable of $0.8 million and an increase in inventories of $0.2 million. The non-cash charges consisted of non-cash stock-based compensation of $10.3 million, partially offset by $5.7 million in net amortization of discounts on short-term investments.

Previous wording

During the six months ended June 30, 2023, net cash used in operating activities was $29.1 million. This consisted primarily of a net loss of $32.3 million, an increase in our operating liabilities of $1.8 million, a decrease in our operating assets of $0.6 million, and non-cash charges of $0.8 million. The increase in our operating liabilities was primarily due to an increase in accounts payable and accrued liabilities of $5.0 million, partially offset by a decrease in contract liability of $3.1 million. The decrease in our operating assets was primarily due to a decrease in prepaid and other assets of $0.6 million. The non-cash charges consisted of non-cash stock-based compensation of $4.3 million, partially offset by $3.6 million in net amortization of discounts on short-term investments.

Current wording

During the nine months ended September 30, 2023, net cash used in operating activities was $41.9 million. This consisted primarily of a net loss of $47.2 million, an increase in our operating liabilities of $3.0 million, a decrease in our operating assets of $0.5 million, and non-cash charges of $1.9 million. The increase in our operating liabilities was primarily due to an increase in accounts payable and accrued liabilities of $6.1 million, partially offset by a decrease in contract liability of $3.1 million. The decrease in our operating assets was primarily due to a decrease in prepaid and other assets of $0.5 million. The non-cash charges consisted primarily of non-cash stock-based compensation of $7.0 million, partially offset by $5.1 million in net amortization of discounts on short-term investments.

Previous wording

During the six months ended June 30, 2024, the cash and cash equivalents used in investing activities was $21.2 million. This consisted primarily of purchases of short-term investments of $151.0 million, maturities of short-term investments of $130.0 million, and purchases of property and equipment of $0.1 million. During the six months ended June 30, 2023, the cash and cash equivalents used in investing activities was $66.6 million. This consisted primarily of purchases of short-term investments of $131.4 million, maturities of short-term investments of $65.0 million, and purchases of property and equipment of $0.2 million.

Current wording

During the nine months ended September 30, 2024, the cash and cash equivalents used in investing activities was $4.3 million. This consisted primarily of purchases of short-term investments of $192.6 million, maturities of short-term investments of $191.0 million, payments of milestone obligations under license agreements of $2.5 million, and purchases of property and equipment of $0.3 million.

Previous wording

During the six months ended June 30, 2024, the cash and cash equivalents provided by financing activities was $0.8 million, which consisted of proceeds from stock option exercises and the employee stock purchase plan. During the six months ended June 30, 2023, the cash and cash equivalents provided by financing activities was $4.2 million, which consisted of proceeds from stock option exercises and the employee stock purchase plan.

Current wording

During the nine months ended September 30, 2024, the cash and cash equivalents provided by financing activities was $1.5 million, which consisted of proceeds from stock option exercises and the employee stock purchase plan.

Previous wording

Based on our current operating plan, we believe that our existing cash and cash equivalents will be sufficient to meet our anticipated cash requirements through at least the next three years. In particular, we expect our cash, cash equivalents, and short-term investments will allow us to fund our expenses related to the FDA’s review of our NDA forneffy, fund proof of concept clinical trials ofneffyfor additional indications, fund pre-commercial manufacturing and sales and marketing activities, and if and when neffyis approved by the FDA, fund our commercial launch. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of testing product candidates in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain.

Current wording

Based on our current operating plan, we believe that our existing cash, cash equivalents, short-term investments, and revenues from product sales will be sufficient to meet our anticipated cash requirements through at least the next three years. In particular, we expect our existing cash, cash equivalents, short-term investments, and revenues from net product sales and collaboration and out-licensing agreements will allow us to fund proof of concept clinical trials ofneffyfor additional indications, fund commercial manufacturing and sales and marketing activities, and fund our U.S. commercial launch. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of testing product candidates in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain.

Previous wording

Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and disruptions to and volatility in the credit and financial markets in the US, including due to bank failures, and worldwide resulting from macroeconomic factors. Because of the numerous risks and uncertainties associated with product development, we cannot predict the timing or amount of increased expenses and cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Current wording

Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and disruptions to and volatility in the credit and financial markets in the United States, including due to bank failures, and worldwide resulting from macroeconomic factors. Because of the numerous risks and uncertainties associated with product development and commercialization, we cannot predict the timing or amount of increased expenses and cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Previous wording

There have been no material changes in our material cash requirements from those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K filed with the SEC on March 21, 2024.

Current wording

There have been no other material changes in our material cash requirements from those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K filed with the SEC on March 21, 2024.

Previous wording

During the six months ended June 30, 2024, there were no material changes to our critical accounting policies. Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K filed with the SEC on March 21, 2024 and Note 2 - Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

We believe the following critical accounting policies involve significant areas where management applies estimates, assumptions and judgments in the preparation of our condensed consolidated financial statements. See our other additional critical accounting policies under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K filed with the SEC on March 21, 2024 and Note 2 - Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.