Rani Therapeutics Holdings Inc

Previous wording

You should read the following management's discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes and other information included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission ("SEC"). Some of the information contained in this discussion and analysis or set forth elsewhere in this document, includes forward looking statements that involve risks, uncertainties, and assumptions. Our actual results could differ materially from those discussed in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023. Please also see the section titled “Forward Looking Statements.”

Current wording

You should read the following management's discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes and other information included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission ("SEC"). Some of the information contained in this discussion and analysis or set forth elsewhere in this document, includes forward looking statements that involve risks, uncertainties, and assumptions. Our actual results could differ materially from those discussed in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023. Please also see the section titled “Forward Looking Statements.”

Previous wording

The following discussion contains references to calendar year 2023 and the three and six months ended June 30, 2024 and 2023, respectively, which represents the condensed consolidated financial results of Rani Therapeutics Holdings, Inc. (the "Company") and its subsidiary, Rani Therapeutics, LLC (“Rani LLC”) for the year ended December 31, 2023 and the three and six months ended June 30, 2024 and 2023, respectively. Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our,” and “Rani” and similar references refers to the Company and its consolidated subsidiary.

Current wording

The following discussion contains references to calendar year 2023 and the three and nine months ended September 30, 2024 and 2023, respectively, which represents the condensed consolidated financial results of Rani Therapeutics Holdings, Inc. (the "Company") and its subsidiary, Rani Therapeutics, LLC (“Rani LLC”) for the year ended December 31, 2023 and the three and nine months ended September 30, 2024 and 2023, respectively. Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our,” and “Rani” and similar references refers to the Company and its consolidated subsidiary.

Previous wording

Our technology comprises a drug-agnostic oral delivery platform, the RaniPill capsule, which is designed to deliver a wide variety of drug substances, including antibodies, proteins, peptides, and oligonucleotides. We are currently developing two configurations of the platform – the RaniPill GO and the RaniPill HC. The RaniPill GO is designed to deliver up to a 3 mg dose of drug in microtablet form with high bioavailability. We have completed three Phase 1 clinical trials using the RaniPill GO. We are also developing a high-capacity version of the RaniPill capsule known as the RaniPill HC, which is intended to enable delivery of drug payloads up to 200µL in liquid form with high bioavailability. We have tested preclinically the RaniPill HC with multiple therapeutics, including antibodies and a peptide. We intend to initiate clinical testing of the RaniPill HC in the second half of 2024.

Current wording

Our technology comprises a drug-agnostic oral delivery platform, the RaniPill capsule, which is designed to deliver a wide variety of drug substances, including antibodies, proteins, peptides, and oligonucleotides. We are currently developing two configurations of the platform – the RaniPill GO and the RaniPill HC. The RaniPill GO is designed to deliver up to a 3 mg dose of drug in microtablet form with high bioavailability. We have completed three Phase 1 clinical trials using the RaniPill GO. We are also developing a high-capacity version of the RaniPill capsule known as the RaniPill HC, which is intended to enable delivery of drug payloads up to 200µL in liquid form with high bioavailability. We have tested preclinically the RaniPill HC with multiple therapeutics, including antibodies and a peptide. We intend to initiate clinical testing of the RaniPill HC in 2025.

Previous wording

As of June 30, 2024, our cash, cash equivalents and marketable securities totaled $30.9 million. In July 2024, we entered into a securities purchase agreement (the “Securities Purchase Agreement”) with an institutional investor relating to the issuance and sale of: (i) 2,800,000 shares of its Class A common stock, (ii) pre-funded warrants to purchase 446,753 shares of Class A common stock, (iii) Series A common warrants, which accompany the Class A common stock and pre-funded warrants, to purchase an aggregate of 3,246,753 shares of Class A common stock and (iv) Series B common warrants, which accompany the Class A common stock and pre-funded warrants, to purchase an aggregate of 3,246,753 shares of Class A common stock (the “Offering”). The aggregate gross proceeds from the Offering were approximately $10.0 million, before deducting placement agent fees and other offering expenses payable by us, and excluding potential proceeds, if any, from the exercise of the pre-funded warrants, Series A common warrants and Series B common warrants issued in the Offering.

Current wording

As of September 30, 2024, our cash, cash equivalents and marketable securities totaled $30.4 million. In July 2024, we entered into a securities purchase agreement (the “July Securities Purchase Agreement”) with an institutional investor relating to the issuance and sale of: (i) 2,800,000 shares of its Class A common stock, (ii) pre-funded warrants to purchase 446,753 shares of Class A common stock, (iii) Series A common warrants, which accompany the Class A common stock and pre-funded warrants, to purchase an aggregate of 3,246,753 shares of Class A common stock (the “Series A Warrants”) and (iv) Series B common warrants, which accompany the Class A common stock and pre-funded warrants, to purchase an aggregate of 3,246,753 shares of Class A common stock (the “July Offering”). The aggregate net proceeds from the July Offering totaled $8.9 million, after deducting placement agent fees and other offering expenses, and excluding potential proceeds, if any, from the exercise of the Series A common warrants and Series B common warrants issued in the July Offering. In August 2024, the pre-funded warrants were fully exercised for de minimis proceeds.

Previous wording

We expect to continue to incur losses for the foreseeable future, and our net losses may fluctuate significantly from period to period, depending on the timing of and expenditures on our planned research and development activities. Our existing capital resources, including the net proceeds from the recently completed Offering, our initial public offering in 2021 (“IPO”) and term loans we received under a loan and security agreement and related supplement (the “Loan Agreement”) with Avenue Venture Opportunities Fund, L.P (the “Lender”), will not be sufficient to enable us to initiate any pivotal clinical trials. We will need to raise substantial additional funds in the future in order to complete the development of the RaniPill platform, to complete the clinical development of our product candidates and seek regulatory approval thereof, to expand our manufacturing capabilities, to further develop the RaniPill HC device and to commercialize any of our product candidates. We may seek to raise capital through equity offerings or debt financings, collaboration agreements, or other arrangements with other companies, or through other sources of financing.

Current wording

We expect to continue to incur losses for the foreseeable future, and our net losses may fluctuate significantly from period to period, depending on the timing of and expenditures on our planned research and development activities. Our existing capital resources, including the net proceeds from the Offerings, our initial public offering in 2021 (“IPO”) and term loans we received under a loan and security agreement and related supplement (the “Loan Agreement”) with Avenue Venture Opportunities Fund, L.P (the “Lender”), will not be sufficient to enable us to initiate any pivotal clinical trials. We will need to raise substantial additional funds in the future in order to complete the development of the RaniPill platform, to complete the clinical development of our product candidates and seek regulatory approval thereof, to expand our manufacturing capabilities, to further develop the RaniPill HC device and to commercialize any of our product candidates. We may seek to raise capital through equity offerings or debt financings, collaboration agreements, or other arrangements with other companies, or through other sources of financing.

Previous wording

The decrease of $5.0 million in research and development expenses in the three months ended June 30, 2024, as compared to the same period in 2023, was primarily attributed to lower compensation costs of $2.9 million due to reduction in workforce, $1.6 million reduction in third-party services and $0.4 million reduction in materials and supplies due to the timing of certain preclinical and clinical studies.

Current wording

The decrease of $5.0 million in research and development expenses in the three months ended September 30, 2024, as compared to the same period in 2023, was primarily attributed to lower compensation costs of $1.9 million due to reduction in workforce, $2.7 million reduction in third-party services and $0.4 million reduction in materials and supplies due to the timing of certain preclinical and clinical studies.

Previous wording

The decrease of $1.2 million in general and administrative expenses in the six months ended June 30, 2024, as compared to the same period in 2023, was primarily attributed to lower compensation costs of $1.5 million due to reduction in workforce and $0.3 million reduction in other costs, offset by an increase in facility costs of $0.5 million due to the lease in Fremont, California.

Current wording

The decrease of $1.0 million in general and administrative expenses in the three months ended September 30, 2024, as compared to the same period in 2023, was primarily attributed to lower compensation costs of $0.5 million due to reduction in workforce, $0.4 million reduction in third-party services due to lower directors and officers insurance premiums and $0.3 million reduction in other costs, offset by an increase in facility costs of $0.2 million due to the lease in Fremont, California.

Previous wording

The increase of $0.5 million in other expense, net, in the three months ended June 30, 2024, as compared to the same period in 2023, was attributed to a decrease in interest income of $0.5 million from our investment in marketable securities.

Current wording

The increase of $0.4 million in other expense, net, in the three months ended September 30, 2024, as compared to the same period in 2023, was attributed to a decrease in interest income of $0.4 million from our investment in marketable securities.

Previous wording

The decrease of $7.1 million in research and development expenses in the six months ended June 30, 2024, as compared to the same period in 2023, was primarily attributed to lower compensation costs of $4.6 million due to reduction in workforce, $2.0 million reduction in third-party services and $0.4 million reduction in materials and supplies due to the timing of certain preclinical and clinical studies.

Current wording

The decrease of $12.1 million in research and development expenses in the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily attributed to lower compensation costs of $6.4 million due to reduction in workforce, $4.7 million reduction in third-party services and $0.9 million reduction in materials and supplies due to the timing of certain preclinical and clinical studies.

Previous wording

The decrease of $0.8 million in general and administrative expenses in the three months ended June 30, 2024, as compared to the same period in 2023, was primarily attributed to lower compensation costs of $1.3 million due to reduction in workforce, offset by an increase in facility costs of $0.4 million due to the lease in Fremont, California.

Current wording

The decrease of $2.2 million in general and administrative expenses in the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily attributed to lower compensation costs of $2.0 million due to reduction in workforce, $0.6 million reduction in other costs and $0.3 million reduction in third-party services due to lower directors and officers insurance premiums, offset by an increase in facility costs of $0.7 million due to the lease in Fremont, California.

Previous wording

The increase of $0.9 million in other expense, net, in the six months ended June 30, 2024, as compared to the same period in 2023, was primarily attributed to a decrease in interest income of $0.8 million from our investment in marketable securities and an increase interest expense of $0.1 million from our debt.

Current wording

The increase of $1.3 million in other expense, net, in the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily attributed to a decrease in interest income of $1.2 million from our investment in marketable securities and an increase interest expense of $0.1 million from our debt.

Previous wording

We have incurred recurring losses and negative cash flows from operations since inception, including net loss of $28.1 million for six months ended June 30, 2024. As of June 30, 2024, we had an accumulated deficit of $87.2 million and for six months ended June 30, 2024, had negative cash flows from operations of $18.4 million. As of June 30, 2024, our cash, cash equivalents and marketable securities totaled $30.9 million. We expect to continue to incur losses for the foreseeable future, and our net losses may fluctuate significantly from period to period, depending on the timing of and expenditures on our planned research and development activities. Our existing capital resources, including the net proceeds from our IPO and term loans we received under the Loan Agreement, will not be sufficient to enable us to initiate any pivotal clinical trials. Based on our available cash resources and current operating plan, there is substantial doubt regarding our ability to continue as a going concern for a period of one year after the date that our financial statements for the six months ended June 30, 2024 are issued. If we are unable to continue as a going concern, we may have to cease operations and liquidate our assets. We may receive less than the value at which those assets are carried on our condensed consolidated financial statements, and investors may lose all or a part of their investment.

Current wording

We have incurred recurring losses and negative cash flows from operations since inception, including net loss of $40.9 million for nine months ended September 30, 2024. As of September 30, 2024, we had an accumulated deficit of $94.0 million and for nine months ended September 30, 2024, had negative cash flows from operations of $26.8 million. As of September 30, 2024, our cash, cash equivalents and marketable securities totaled $30.4 million. We expect to continue to incur losses for the foreseeable future, and our net losses may fluctuate significantly from period to period, depending on the timing of and expenditures on our planned research and development activities. Our existing capital resources, including the net proceeds from our IPO and term loans we received under the Loan Agreement and the Offerings, will not be sufficient to enable us to initiate any pivotal clinical trials. Based on our available cash resources and current operating plan, there is substantial doubt regarding our ability to continue as a going concern for a period of one year after the date that our financial statements for the nine months ended September 30, 2024 are issued. If we are unable to continue as a going concern, we may have to cease operations and liquidate our assets. We may receive less than the value at which those assets are carried on our condensed consolidated financial statements, and investors may lose all or a part of their investment.

Previous wording

In July 2024, we entered into the Securities Purchase Agreement with an institutional investor relating to the Offering. The aggregate gross proceeds from the Offering were approximately $10.0 million, before deducting placement agent fees and other offering expenses payable by us, and excluding potential proceeds, if any, from the exercise of the pre-funded warrants, Series A common warrants and Series B common warrants issued in the Offering.

Current wording

In October 2024, we entered into the October Securities Purchase Agreement with an institutional investor relating to the October Offering. The aggregate gross proceeds from the October Offering were approximately $10.0 million, before deducting placement agent fees and other offering expenses payable by us, and excluding potential proceeds, if any, from the exercise of the Series C common warrants issued in the October Offering. In October 2024, the pre-funded warrants were fully exercised for de minimis proceeds.

Previous wording

In November 2023, our Board of Directors (the “Board”) approved a reduction in the annual salary of Talat Imran, our Chief Executive Officer, from $520,000 to $100,000, effective November 1, 2023 through December 31, 2024 or until such time as we receive gross proceeds of $50,000,000 or more, in the aggregate, from equity financing and/or one or more non-dilutive strategic, licensing or partnering transactions. The decreased base salary amends the Amended and Restated Employment Agreement, dated August 31, 2022, by and between Rani LLC and Mr. Imran.

Current wording

In November 2023, our Board of Directors (the “Board”) approved a reduction in the annual salary of Talat Imran, our Chief Executive Officer, from $520,000 to $100,000, effective November 1, 2023 through December 31, 2024 or until such time as we receive gross proceeds of $50,000,000 or more, in the aggregate, from equity financing and/or one or more non-dilutive strategic, licensing or partnering transactions (the “Financing Threshold”). In November 2024, the Board approved to extend the reduction in annual salary of Talat Imran through December 31, 2025 or until the Financing Threshold is met.

Previous wording

In August 2022, we entered into the Loan Agreement with the Lender. The Loan Agreement provides for term loans (the “Loans”) in an aggregate principal amount up to $45.0 million. A Loan of $30.0 million was committed at closing, with $15.0 million funded immediately and $15.0 million available to be drawn between October 1, 2022 and December 31, 2022, which was drawn in December 2022. The remaining $15.0 million of Loans is uncommitted and is subject to certain conditions, which may not occur, and approval by the Lender. The Loan Agreement also contains various covenants and restrictive provisions. There have been no material adverse events in connection with the Loan Agreement and the substantial doubt regarding our ability to continue as a going concern does not currently constitute a material adverse event under the terms of the Loan Agreement. The Loan principal is repayable in equal monthly installments beginning September 2024 extendable to March 2025 under certain conditions, which the Company has determined to be not probable as of June 30, 2024. As of June 30, 2024, we were in compliance with all applicable debt covenants under the Loan Agreement.

Current wording

In August 2022, we entered into the Loan Agreement with the Lender. The Loan Agreement provides for term loans (the “Loans”) in an aggregate principal amount up to $45.0 million. A Loan of $30.0 million was committed at closing, with $15.0 million funded immediately and $15.0 million available to be drawn between October 1, 2022 and December 31, 2022, which was drawn in December 2022. The remaining $15.0 million of Loans was uncommitted and subject to certain conditions and is no longer available under the Loan Agreement. The Loan Agreement also contains various covenants and restrictive provisions. There have been no material adverse events in connection with the Loan Agreement and the substantial doubt regarding our ability to continue as a going concern does not currently constitute a material adverse event under the terms of the Loan Agreement. The Loan principal is repayable in equal monthly installments beginning September 2024. As of September 30, 2024, we were in compliance with all applicable debt covenants under the Loan Agreement.

Previous wording

Notwithstanding the sharing of development costs for the RT-114 program under the ProGen Agreement, our existing capital resources, including the net proceeds from our IPO, Loans and the Offering, will not be sufficient to enable us to initiate any pivotal clinical trials with respect to any of our product candidates. We will need to raise substantial additional funds in the future in order to complete the development of the RaniPill platform, to complete the clinical development of our product candidates and seek regulatory approval thereof, to expand our manufacturing capabilities, to further develop the RaniPill HC device and to commercialize any of our product candidates.

Current wording

Notwithstanding the sharing of development costs for the RT-114 program under the ProGen Agreement, our existing capital resources, including the net proceeds from our IPO, the Loans and the Offerings, will not be sufficient to enable us to initiate any pivotal clinical trials with respect to any of our product candidates. We will need to raise substantial additional funds in the future in order to complete the development of the RaniPill platform, to complete the clinical development of our product candidates and seek regulatory approval thereof, to expand our manufacturing capabilities, to further develop the RaniPill HC device and to commercialize any of our product candidates.

Previous wording

Pursuant to the terms of the Securities Purchase Agreement, until 60 days following the closing of the Offering, we agreed not to issue, enter into any agreement to issue, or announce the issuance or proposed issuance of any shares of Class A common stock or common stock equivalents, or file or amend any registration statement or prospectus, other than as necessary to maintain the registration of the securities offered in the Offering. We further agreed not to enter into an agreement involving any new variable rate transactions until six months following the closing of the Offering, subject to certain exceptions. These restrictions could prevent us from raising additional capital that we might otherwise be able to raise.

Current wording

Pursuant to the terms of the October Securities Purchase Agreement, until 30 days following the closing of the October Offering, we agreed not to issue, enter into any agreement to issue, or announce the issuance or proposed issuance of any shares of Class A common stock or common stock equivalents, or file or amend any registration statement or prospectus, other than as necessary to maintain the registration of the securities offered in the October Offering. We further agreed not to enter into an agreement involving any new variable rate transactions until January 23, 2025, subject to certain exceptions. These restrictions could prevent us from raising additional capital that we might otherwise be able to raise.

Previous wording

As of June 30, 2024, we had cash and cash equivalents and marketable securities of $30.9 million, compared to $48.5 million as of December 31, 2023. Based on our available cash resources and current operating plan, there is substantial doubt regarding our ability to continue as a going concern for a period of one year after the date that our financial statements for the six months ended June 30, 2024 are issued. Our existing capital resources, including the net proceeds from our IPO and Loans, will not be sufficient to fund our projected operating requirements for a twelve-month period from the issuance of our financial statements.

Current wording

As of September 30, 2024, we had cash and cash equivalents and marketable securities of $30.4 million, compared to $48.5 million as of December 31, 2023. Based on our available cash resources and current operating plan, there is substantial doubt regarding our ability to continue as a going concern for a period of one year after the date that our financial statements for the nine months ended September 30, 2024 are issued. Our existing capital resources, including the net proceeds from our IPO, Loans and the Offerings, will not be sufficient to fund our projected operating requirements for a twelve-month period from the issuance of our financial statements.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2023 was $24.5 million, which was primarily attributable to a net loss of $35.5 million and net accretion and amortization of investments in marketable securities of $1.2 million, partially offset by stock-based compensation expense of $9.6 million and depreciation and amortization expense of $0.4 million. Additionally, there was an increase in accrued expenses and other current liabilities of $1.7 million and decreases in prepaid expenses and other current assets of $0.9 million and accounts payable of $0.4 million for the six months ended June 30, 2023.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2024 was $26.8 million, which was primarily attributable to a net loss of $40.9 million and net accretion and amortization of investments in marketable securities of $0.9 million, partially offset by stock-based compensation expense of $12.0 million and depreciation and amortization expense of $0.8 million. Additionally, there was an increase in accounts payable of $0.9 million, an increase in deferred revenue of $0.6 million and an increase of $0.3 million in prepaid expenses and other current assets for the nine months ended September 30, 2024.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2024 was $18.4 million, which was primarily attributable to a net loss of $28.1 million and net accretion and amortization of investments in marketable securities of $0.6 million, partially offset by the stock-based compensation expense of $8.0 million and depreciation and amortization expense of $0.5 million. Additionally, there was a decrease of $1.2 million in prepaid expenses and other current assets and an increase in accrued expenses and other current liabilities of $0.7 million for the six months ended June 30, 2024.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2023 was $38.8 million, which was primarily attributable to a net loss of $53.8 million and net accretion and amortization of investments in marketable securities of $1.9 million, partially offset by stock-based compensation expense of $14.5 million and depreciation and amortization expense of $0.6 million. Additionally, there was an increase in accrued expenses and other current liabilities of $1.6 million for the nine months ended September 30, 2023.

Previous wording

For the six months ended June 30, 2024, net cash provided by investing activities was $16.8 million, which primarily consisted of $38.6 million in proceeds from maturities of marketable securities partially offset by $21.6 million in purchases of marketable securities.

Current wording

For the nine months ended September 30, 2024, net cash provided by investing activities was $17.3 million, which primarily consisted of $57.3 million in proceeds from maturities of marketable securities partially offset by $39.7 million in purchases of marketable securities and $0.2 million in purchases of property and equipment.

Previous wording

For the six months ended June 30, 2023, net cash provided by investing activities was $4.9 million consisting of $58.0 million in proceeds from maturities of marketable securities partially offset by $52.5 million and $0.6 million in purchases of marketable securities and property and equipment, respectively.

Current wording

For the nine months ended September 30, 2023, net cash provided by investing activities was $16.6 million consisting of $81.5 million in proceeds from maturities of marketable securities partially offset by $63.9 million and $1.0 million in purchases of marketable securities and property and equipment, respectively.

Previous wording

For the six months ended June 30, 2024, net cash provided by financing activities was $0.3 million, which primarily consisted of the issuance of common stock under employee stock purchase plan.

Current wording

For the nine months ended September 30, 2024, net cash provided by financing activities was $8.0 million, which primarily consisted of net proceeds of $8.9 million from the July Offering and $0.2 million from the issuance of common stock under employee stock purchase plan, partially offset by $1.3 million repayment of debt.

Previous wording

For the six months ended June 30, 2023, net cash provided by financing activities was de minimis.

Current wording

For the nine months ended September 30, 2023, net cash provided by financing activities was de minimis.

Previous wording

This discussion and analysis of financial condition and results of operation is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the reporting period. On an ongoing basis, management evaluates its estimates and assumptions. Our estimates are based on our historical experience and on various other factors that we believe are 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 from these estimates under different assumptions or conditions.

Current wording

We prepare our condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.