OS Therapies Inc

Previous wording

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this report. Examples of risks and uncertainties that could cause actual results to differ materially from historical performance and any forward-looking statements include, but are not limited to, the risks described under the section below titled “Risk Factors” of our Registration Statement on Form S-1 initially filed with the Securities and Exchange Commission (the “SEC”) on May 30, 2024, as well as any subsequent filings with the SEC.

Current wording

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this report. Examples of risks and uncertainties that could cause actual results to differ materially from historical performance and any forward-looking statements include, but are not limited to, the risks described under the section below titled “Risk Factors” of our Registration Statements on Form S-1 initially filed with the Securities and Exchange Commission (the “SEC”) on May 30, 2024 and November 12, 2024, as well as any subsequent filings with the SEC.

Previous wording

We are a clinical stage biopharmaceutical company focused on the identification, development and commercialization of treatments for Osteosarcoma (OS) and other solid tumors. Our mission is to address the significant need for new treatments in cancers of the bone in children and young adults. Osteosarcoma is an extremely challenging and often aggressive cancer that has particular treatment challenges due to its location, changing genotypes and high recurrence rates. We are currently seeking to answer the call for new treatments with our lead core product candidate OST-HER2 (also known as OST31-164). We intend to expand our pipeline beyond Osteosarcoma with this product candidate into other solid tumors with the same recurrence mechanism of action, including breast, esophageal and lung cancers. With the addition of our OST-Tunable Drug Conjugate (OST-tADC) platform, which we consider to be a next generation antibody-drug conjugate (ADC) technology, we will be targeting ovarian, lung and pancreatic cancers. Furthering our founding mission, we also intend to investigate clinical indications for OST-tADC in Osteosarcoma.

Current wording

We are a clinical stage biopharmaceutical company focused on the identification, development and commercialization of treatments for Osteosarcoma (OS) and other solid tumors. Our mission is to address the significant need for new treatments in cancers of the bone in children and young adults. Osteosarcoma is an extremely challenging and often aggressive cancer that has particular treatment challenges due to its location, changing genotypes and high metastases rates. We are currently seeking to answer the call for new treatments that will prevent metastasis and the recurrence of metastases with our lead core product candidate OST-HER2 (also known as OST31-164), a cancer immunotherapy product candidate that produces a cellular immune response against the cancer antigen HER2. In 2021, we opened a clinical study to produce data for the U.S. Food and Drug Administration (FDA) to evaluate the safety and efficacy of OST-HER2 in patients after resection of recurrent Osteosarcoma, which achieved full enrollment of 41 patients in October 2023. We expect topline results from all 41 patients enrolled in the fourth quarter of 2024 and, if successful, intend to seek regulatory approval for OST-HER2 for the prevention of metastases in Osteosarcoma in 2025. Upon success in gaining regulatory approval from the FDA with OST-HER2 in Osteosarcoma, we intend to evaluate OST-HER2’s potential use, both alone and in combination with HER2 targeting antibodies such as Herceptin®, in other solid tumors including breast, esophageal and lung cancers. OST-HER2 has potential uses in both the prevention of metastases in solid tumors, and therapeutically against HER2-expressing solid tumors treated with HER targeting antibodies.

Previous wording

We believe that there have not been any new treatments approved by the U.S. Food and Drug Administration (FDA) for Osteosarcoma for more than 40 years. In humans, Osteosarcoma is an extremely rare cancer that primarily affects children, teenagers and young adults generally under 40 years of age. We are not aware of any competing adjuvant therapy for Osteosarcoma to be tested in children that is further along in the development process than OST-HER2. This disease is difficult to diagnose. The standard of care following first line therapies is simply to screen and wait for possible recurrence/metastasis. Studies published in the Journal of Clinical Oncology, “Osteosarcoma Relapse After Combined Modality Therapy: An Analysis of Unselected Patients in the Cooperative Osteosarcoma Study Group (COSS),” by Kempf-Bielack B., et al. (January 2005), and “Second and Subsequent Recurrences of Osteosarcoma: Presentation, Treatment, and Outcomes of 249 Consecutive Cooperative Osteosarcoma Study Group Patients,” by Bielack S., et al. (February 2009), reported that recurrence/metastasis happens in approximately half of all patients within 12 to 18 months following initial remittance. For those patients that experience recurrence, metastasis is typically to the lungs and brain, with survival rates of approximately 13% over the next year, according to these studies.

Current wording

No new treatments have been approved by the FDA for human Osteosarcoma for more than 40 years. In humans, Osteosarcoma is an extremely rare cancer that primarily affects children, teenagers and young adults generally under 40 years of age. We are not aware of any competing adjuvant therapy for Osteosarcoma to be tested in children that is further along in the development process than OST-HER2. This disease is difficult to diagnose. The standard of care following first line therapies is simply to screen and wait for possible recurrence/metastasis, or the development of secondary malignant growths at a distance from a primary site of cancer. Studies published in the Journal of Clinical Oncology, “Osteosarcoma Relapse After Combined Modality Therapy: An Analysis of Unselected Patients in the Cooperative Osteosarcoma Study Group (COSS),” by Kempf-Bielack B., et al. (January 2005), and “Second and Subsequent Recurrences of Osteosarcoma: Presentation, Treatment, and Outcomes of 249 Consecutive Cooperative Osteosarcoma Study Group Patients,” by Bielack S., et al. (February 2009), reported that recurrence/metastasis happens in approximately half of all patients within 12 to 18 months following initial remittance. For those patients that experience recurrence, metastasis is typically to the lungs and brain, with survival rates of approximately 13% over the next year, according to these studies.

Previous wording

The fair value of the redemption liability is calculated under Level 3 of the fair value hierarchy and is determined based upon a Probability-Weighted of Expected Returns Model (“PWERM”). This PWERM was determined to be the most appropriate method of estimating the value of possible redemption or conversion outcomes over time, since we have not entered into a priced equity round through June 30, 2024. The fair value of the redemption liability is calculated using the initial value of the Convertible Notes less the debt discount rate of 12.5% in Group A, 20% in Groups B and C, and 50% in Groups D, E and F. The redemption liability is then amortized over the remaining life of the note, utilizing the interest rates of 10% and 6% for the groups, respectively. The life of each note in Group A is for a set period of three years and is variable in Groups B, C, D, E and F, with a range of 12 months to three years. We retain the option to negotiate an extended maturity date for Groups B, C, D, E and F. The new embedded redemption values were $750,500 and $1,541,250 for the periods ended June 30, 2024 and December 31, 2023, respectively.

Current wording

The fair value of the redemption liability is calculated under Level 3 of the fair value hierarchy and is determined based upon a Probability-Weighted of Expected Returns Model (“PWERM”). This PWERM was determined to be the most appropriate method of estimating the value of possible redemption or conversion outcomes over time. The fair value of the redemption liability is calculated using the initial value of the Convertible Notes less the debt discount rate of 12.5% in Group A, 20% in Groups B and C, and 50% in Groups D, E and F. The redemption liability is then amortized over the remaining life of the note, utilizing the interest rates of 10% and 6% for the groups, respectively. The life of each note in Group A is for a set period of three years and is variable in Groups B, C, D, E and F, with a range of 12 months to three years. We retain the option to negotiate an extended maturity date for Groups B, C, D, E and F. The new embedded redemption values were $0 and $1,541,250 for the periods ended September 30, 2024 and December 31, 2023, respectively.

Previous wording

***Revenue.***We did not recognize revenues for the six months ended June 30, 2024 or the year ended December 31, 2023.

Current wording

***Revenue.***We did not recognize revenues for the nine months ended September 30, 2024 or the year ended December 31, 2023.

Previous wording

***Cumulative Series A Preferred Stock Dividend.***The Series A preferred stock dividend requirement represents the coupon dividends on our preferred stock and is identified as a separate component of our statement of operations to compute net income (loss) available to common shareholders. The coupon dividends are computed at 5% of the principal per annum and are recorded monthly. The cumulative accrued dividend at June 30, 2024 and 2023 was $375,000 and $250,000, respectively. The Series A preferred stock was converted into common stock on a 1:1 basis in February 2024, and the last coupon dividend was issued in the quarter ended March 31, 2024.

Current wording

***Cumulative Series A Preferred Stock Dividend.***The Series A preferred stock dividend requirement represents the coupon dividends on our preferred stock and is identified as a separate component of our statement of operations to compute net income (loss) available to common shareholders. The coupon dividends are computed at 5% of the principal per annum and are recorded monthly. The cumulative accrued dividend at September 30, 2024 and 2023 was $375,000 and $312,500, respectively. The Series A preferred stock was converted into common stock on a 1:1 basis in February 2024, and the last coupon dividend was issued in the quarter ended March 31, 2024.

Previous wording

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes our results of operations for the three months ended September 30, 2024 and 2023:

Previous wording

***Research and Development Expenses.***Research and development expenses were approximately $0.8 million for the six months ended June 30, 2024 compared to approximately $1.7 million for the six months ended June 30, 2023. This decrease was primarily due to a decrease in vendor expenses associated with our Phase IIb clinical trial and a decrease in vendor expenses associated with out OST-tADC platform technology. The following table summarizes our research and development expenses for the three months ended June 30, 2024 and 2023:

Current wording

***Research and Development Expenses.***Research and development expenses were approximately $1.2 million for the three months ended September 30, 2024 compared to approximately $0.5 million for the three months ended September 30, 2023. This decrease was primarily due to a decrease in vendor expenses associated with our Phase IIb clinical trial and a decrease in vendor expenses associated with out OST-tADC platform technology. The following table summarizes our research and development expenses for the three months ended September 30, 2024 and 2023:

Previous wording

***General and Administrative Expenses.***General and administrative expenses for the six months ended June 30, 2024 were approximately $0.7 million compared to $0.8 million for the six months ended June 30, 2023. These expenses were primarily attributed to marketing costs and accounting fees to consultants.

Current wording

***General and Administrative Expenses.***General and administrative expenses for the three months ended September 30, 2024 were approximately $1.2 million compared to $0.2 million for the three months ended September 30, 2023. These expenses were primarily attributed to marketing costs and accounting fees to consultants.

Previous wording

***Licensing Costs.***We did not have any licensing costs for the six months ended June 30, 2024 and 2023.

Current wording

***Licensing Costs.***We did not have any licensing costs for the three months ended September 30, 2024 and 2023.

Previous wording

***Interest Expense.***Interest expense for the six months ended June 30, 2024 was approximately $1.6 million compared to $1.8 million for the six months ended June 30, 2023. to the amounts of interest are comprised of accretion of debt discount being amortized in 2024 and 2023 from associated discounts related to convertible notes and placement agent warrants, together with interest expenses from the issuances of convertible notes.

Current wording

***Interest Expense.***Interest expense for the three months ended September 30, 2024 was approximately $0.4 million compared to $1.4 million for the three months ended September 30, 2023. The amounts of interest are comprised of accretion of debt discount being amortized in 2024 and 2023 from associated discounts related to convertible notes and placement agent warrants, together with interest expenses from the issuances of convertible notes.

Previous wording

For the six months ended June 30, 2024 and 2023, the direct research and development expenses related to OST-HER2 were primarily lab fees, vendor expenses and staff payroll fees. In 2024, such expenses were primarily lab fees and related clinical support of approximately $0.5 million attributed to our Phase IIb clinical trial preparation and CRO costs as we completed IND-enabling studies. OST-tADC related direct research and development expenses were approximately $0.0 million and $0.2 million for the six months ended June 30, 2024 and 2023, respectively.

Current wording

For the nine months ended September 30, 2024 and 2023, the direct research and development expenses related to OST-HER2 were primarily lab fees, vendor expenses and staff payroll fees. In 2024, such expenses were primarily lab fees and related clinical support of approximately $1.6 million attributed to our Phase IIb clinical trial preparation and CRO costs as we completed IND-enabling studies. OST-tADC related direct research and development expenses were approximately $0.0 million and $0.2 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Since our inception, we have incurred significant operating losses. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of our product candidates. For the six months ended June 30, 2024 and 2023, we reported a net loss of approximately $3.0 million and $4.4 million, respectively, and had an accumulated deficit of approximately $32.6 million and $23.5 million, respectively. We expect to incur significant expenses at an increasing rate and increasing operating losses for the foreseeable future.

Current wording

Since our inception, we have incurred significant operating losses. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of our product candidates. For the nine months ended September 30, 2024 and 2023, we reported a net loss of approximately $5.9 million and $6.4 million, respectively, and had an accumulated deficit of approximately $35.4 million and $28.0 million, respectively. We expect to incur significant expenses at an increasing rate and increasing operating losses for the foreseeable future.

Previous wording

As of June 30, 2024 and 2023, we had cash of approximately $0.1 million and $0.0 million, respectively. We have funded our operations to date primarily from the sale of our convertible notes in our private placements, which have provided total gross proceeds of $19.2 million as of June 30, 2024. We believe that the net proceeds from our private placements, together with our existing cash, will enable us to fund our operating expenses and capital expenditure requirements for the next three to six months.

Current wording

As of September 30, 2024 and 2023, we had cash of approximately $1.9 million and $0.02 million, respectively. We have funded our operations to date primarily from the sale of our convertible notes in our private placements, which have provided total gross proceeds of $19.2 million as of July 31, 2024. We believe that the net proceeds from our private placements, together with our existing cash, will enable us to fund our operating expenses and capital expenditure requirements for the next three to nine months.

Previous wording

During the six months ended June 30, 2024 and 2023, operating activities used approximately $1.5 million and $1.3 million of cash, respectively, resulting from our net loss of approximately $3.0 million and $4.4 million, respectively, offset by net non-cash charges of approximately $1.1 million and $1.6 million, respectively, partially offset by net cash provided by changes in our operating assets and liabilities of approximately $0.4 million and $1.5 million, respectively.

Current wording

During the nine months ended September 30, 2024 and 2023, operating activities used approximately $4.9 million and $2.1 million of cash, respectively, resulting from our net loss of approximately $5.9 million and $6.3 million, respectively, offset by net non-cash charges of approximately $1.4 million and $2.6 million, respectively, partially offset by net cash provided by changes in our operating assets and liabilities of approximately $(0.4) million and $1.6 million, respectively.

Previous wording

Net cash provided by changes in our operating assets and liabilities for the six months ended June 30, 2024 and 2023 consisted primarily of an increase in accounts payable of approximately $0.0 million and $1.3 million, respectively, an increase in accrued interest of approximately $0.5 million and $0.3 million, respectively, and a change in accrued payroll of approximately $(0.0) million and $(0.1) million, respectively.

Current wording

Net cash provided by changes in our operating assets and liabilities for the nine months ended September 30, 2024 and 2023 consisted primarily of an increase (decrease) in accounts payable of approximately $(0.9) million and $1.1 million, respectively, an increase in accrued interest of approximately $0.6 million and $0.7 million, respectively, and a change in accrued payroll of approximately $(0.1) million and $(0.1) million, respectively.

Previous wording

Non-cash charges for the six months ended June 30, 2024 and 2023 were primarily the result of the amortization of debt discount on our convertible debt of approximately $1.1 million and $1.5 million, respectively. Changes in accounts payable, accrued expenses and other current liabilities and prepaid expenses and other current assets in all periods were generally due to growth in our business, the advancement of our research programs and the timing of vendor invoicing and payments.

Current wording

Non-cash charges for the nine months ended September 30, 2024 and 2023 were primarily the result of the amortization of debt discount on our convertible debt of approximately $1.4 million and $2.4 million, respectively. Changes in accounts payable, accrued expenses and other current liabilities and prepaid expenses and other current assets in all periods were generally due to growth in our business, the advancement of our research programs and the timing of vendor invoicing and payments.

Previous wording

During the six months ended June 30, 2024 and 2023, net cash provided by investing activities was approximately $0.0 million and $0.0 million, respectively.

Current wording

During the nine months ended September 30, 2024 and 2023, net cash provided by investing activities was approximately $0.0 million and $0.0 million, respectively.

Previous wording

During the six months ended June 30, 2024 and 2023, net cash provided by financing activities was approximately $1.6 million and $1.1 million, respectively. The net cash provided by financing activities for the six months ended June 30, 2024 and 2023 consisted primarily of net proceeds from sales of convertible notes, reduced by capitalized deferred offering costs.

Current wording

During the nine months ended September 30, 2024 and 2023, net cash provided by financing activities was approximately $6.7 million and $2.0 million, respectively. The net cash provided by financing activities for the nine months ended September 30, 2024 and 2023 consisted of net proceeds from sales of convertible notes and our initial public offering, reduced by capitalized deferred offering costs.

Previous wording

The total accrued interest on the convertible notes listed in the table above was approximately $2.5 million and $2.0 million as of June 30, 2024 and December 31, 2023, respectively. The carrying amount and face amount of such convertible notes differ because of the unamortized debt issuance costs and the debt discount (which are amortized over the original term of the instrument) — see accounting policy discussion below. The material terms of each group of Convertible Notes are described below.

Current wording

The total accrued interest on the convertible notes listed in the table above was approximately $0.0 million and $2.0 million as of September 30, 2024 and December 31, 2023, respectively. The carrying amount and face amount of such convertible notes differ because of the unamortized debt issuance costs and the debt discount (which are amortized over the original term of the instrument) — see accounting policy discussion below. The material terms of each group of Convertible Notes are described below. The Convertible Notes, including interest accrued thereon, automatically converted into common stock upon consummation of our initial public offering on August 2, 2024.

Previous wording

***George Clinical.***In June 2020, we entered into a services agreement, as amended, with George Clinical, Inc., a clinical contract research organization. Pursuant to this agreement, we engaged George Clinical to use its clinical research services for our study entitled “An Open Label, Phase 2 Study of Maintenance Therapy with OST-HER2 after Resection of Recurrent Osteosarcoma.” Under the terms of the agreement, we are required to pay to George Clinical certain fees described in the fee schedule below. The total new budget under the agreement is approximately $2,436,928. For the six months ended June 30, 2024 and year ended December 31, 2023, we paid $219,200 and $921,300, respectively, to George Clinical. These payments have been recorded as research and development expenses in our Statement of Operations and Comprehensive Loss. The fee schedule for certain fees and corresponding payment amounts is set forth below.

Current wording

***George Clinical.***In June 2020, we entered into a services agreement, as amended, with George Clinical, Inc., a clinical contract research organization. Pursuant to this agreement, we engaged George Clinical to use its clinical research services for our study entitled “An Open Label, Phase 2 Study of Maintenance Therapy with OST-HER2 after Resection of Recurrent Osteosarcoma.” Under the terms of the agreement, we are required to pay to George Clinical certain fees described in the fee schedule below. The total new budget under the agreement is approximately $2,436,928. For the nine months ended September 30, 2024 and year ended December 31, 2023, we paid $345,836 and $921,300, respectively, to George Clinical. These payments have been recorded as research and development expenses in our Statement of Operations and Comprehensive Loss. The fee schedule for certain fees and corresponding payment amounts is set forth below.

Previous wording

George Clinical tracks and invoices us for the number of task units completed and pass-through costs are invoiced each month in arrears based on actual costs without mark-up. The PTC Fee Advance will be used to offset the first few months of invoices payable. As of June 30, 2024, the balance due to George Clinical was $663,622.

Current wording

George Clinical tracks and invoices us for the number of task units completed and pass-through costs are invoiced each month in arrears based on actual costs without mark-up. The PTC Fee Advance will be used to offset the first few months of invoices payable. As of September 30, 2024, the balance due to George Clinical was $295,082.