CERO THERAPEUTICS HOLDINGS INC
For the period ended Sep 30, 2024. Filed Nov 19, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 19, 2024
CERO$0.010.0%Stored close · as of Jul 8, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001213900-24-069055
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-19.
0001213900-24-100245
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 91 previous paragraphs and 94 current paragraphs.
65 unchanged; 16 reworded; 11 added; 10 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 34 previous and 35 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
February 2024 PIPE Financing
Current report
April 2024 PIPE Financing
Current report
September 2024 PIPE Financing
Current report
In September 2024, the Company consummated a private placement of 2,853 shares of the Series C Preferred Stock with common warrants to purchase 8,175,166 shares of Common Stock pursuant to the Securities Purchase Agreement, dated September 25, 2024, by and among certain accredited investors for aggregate cash proceeds to the Company of approximately $1.25 million.
Current report
The Company received the Hold Letter on July 26, 2024 and submitted a complete response letter to the FDA on October 21, 2024 in which the Company requested a meeting to address the FDA’s questions.
Current report
Each of the Bid Price Requirement and MVLS Requirement deficiencies results in the commencement of delisting proceedings. However, the Company has requested a hearing from Nasdaq and plans to submit a plan to regain compliance with the listing requirements at such hearing. Notwithstanding that applicable Nasdaq rules provide a 180-day compliance period to regain compliance with the MVPHS Requirement, the plan submitted by the Company in connection with such hearing will be required to demonstrate a pathway to compliance with all applicable deficiencies.
Current report
On November 11. 2024, the Company’s stockholders approved a reverse stock split ranging from 1:25 to 1:150. On November 15, 2024, the Board of Directors authorized a 1:40 reverse stock split, such split anticipated to be effective on or about November [●], 2024. Although such reverse stock split is expected to enable regaining compliance with the Bid Price Requirement, it is not intended to contribute to regaining compliance with the other Requirements.
Current report
Other Income
Current report
Other income was $0.2 million for the three-month period ended September 30, 2024 and 2023. The immaterial change was related to higher interest income and slightly lower gain from revaluation of liabilities in the three-month period ended September 30, 2024, versus the three-month period ended September 30, 2023.
Current report
Results of Operations for the nine-months ended September 30, 2024 and 2023
Removed paragraphs (10)
Previous report
On February 5, 2024, Predecessor, PBAX and PBCE Merger Sub, Inc. (“Merger Sub”) entered into Amendment No. 1 to the Business Combination Agreement (the “First BCA Amendment”) to, among other things, (i) remove the minimum cash condition, (ii) modify the stock-price based milestones such that (a) the trading price condition for the First Level Earnout Target (as defined in the First BCA Amendment) shall be reset from $12.50 to 125% of the Conversion Price (as defined in the First BCA Amendment) of the Company’s Series A convertible preferred stock, par value $0.0001 per share (“Series A Preferred Stock”) upon the reset of such Conversion Price as described below and (b) the trading price condition for the Second Level Earnout Target (as defined in the First BCA Amendment) shall be reset from $15.00 to 150% of the Conversion Price of the Series A Preferred Stock upon reset of such Conversion Price as described below, and (iii) increase the aggregate number of shares of PBAX Class A Common Stock, par value $0.0001 per share (“PBAX Class A Common Stock”) issuable to the stockholders of Predecessor in connection with Merger Sub merging with and into Predecessor, with Predecessor surviving as a wholly-owned subsidiary of the Company (the “Merger”), from 4,651,704 shares to 5,000,000 shares of PBAX Class A Common Stock. Such number of shares of PBAX Class A Common Stock is in addition to up to 1,200,000 shares of PBAX Class A Common Stock issuable upon satisfaction of certain earn-out conditions and 382,651 shares of PBAX Class A Common Stock issuable upon exercise of rollover options or warrants.
Previous report
On February 13, 2024, Predecessor, PBAX and Merger Sub entered into Amendment No. 2 to the Business Combination Agreement to create two additional pools of earnout shares (the “Earnout Shares”) of PBAX Class A Common Stock (one pool of which contains 875,000 shares, and one pool of which contains 1,000,000 shares of PBAX Class A Common Stock) and make certain other technical changes to the timing and process for issuance of the 1,200,000 shares of PBAX Class A Common Stock subject to the other earnout conditions set forth in the Business Combination Agreement.
Previous report
PIPE Financing
Previous report
Recent Developments
Previous report
The Letters are only notifications of deficiency, not of imminent delisting, and have no current effect on the listing or trading of the Company’s securities on Nasdaq.
Previous report
In accordance with Nasdaq listing rules 5810(c)(3)(C) and 5810(c)(3)(D), respectively, the Company has 180 calendar days, or until January 15, 2025, to regain compliance with the Requirements, except for the MVLS Requirement, with respect to which such deadline is October 29, 2024. To regain compliance with the Bid Price Requirement, the bid price of the Company’s common stock must close at $1.00 per share or more for a minimum of ten consecutive business days. To regain compliance with the MVPHS Requirement, the Company’s common stock must trade at or above a level such that the Company’s MVPHS closes at or above $15,000,000 for a minimum of ten consecutive business days. If the Company does not regain compliance with the Bid Price Requirement by January 15, 2025, the Company may be afforded a second 180 calendar day period to regain compliance. To qualify, the Company would be required to meet the MVPHS Requirement and all other initial listing standards for The Nasdaq Global Market, except for the Bid Price Requirement. In addition, the Company would be required to notify Nasdaq of its intent to cure the deficiency during the second compliance period. In order to regain compliance with the MVPHS Requirement, the Common Stock must trade at or above a level such that the Company’s MVLS closes at or above $50,000,000 for a minimum of ten consecutive business days during the compliance period. If the Company is unable to satisfy the MVLS requirement prior to such date, the Company may be eligible to transfer the listing of its securities to The Nasdaq Capital Market (provided that it then satisfies the requirements for continued listing on that market).
Previous report
Interest and Other Income, Net
Previous report
Interest and other income, net was $2.7 million for the three-month period ended June 30, 2024 compared to $0.3 million for the three-month period ended June 30, 2023, reflecting an increase of $2.4 million. The increase in the three-month period ended June 30, 2024, over the three-month period ended June 30, 2023, was predominantly due to the $2.9 million change in value of the Company’s Earnout Liability. Settlement of vendor liabilities in the three-month period ended June 30, 2024, resulted in a $0.4 million increase in income in the three-month period ended June 30, 2024 versus the three-month period ended June 30, 2023, offset by the $0.6 million other expense for the delayed S-1 penalty and a 0.3 million decrease in other income the three-month period ended June 30, 2024, related to the elimination of the gain on the revaluation of warrants in the three-month period ended June 30, 2023, and reduced interest income, net in the three-month period ended June 30, 2024.
Previous report
Results of Operations for the six-months ended June 30, 2024 and 2023
Previous report
Interest and Other Income, Net
Reworded paragraphs (16)
Previous wording
On February 14, 2024, the Merger between Predecessor and PBAX was consummated pursuant to the Business Combination Agreement, dated as of June 4, 2023, as amended from time to time (as amended, the “Business Combination Agreement”) by and among Predecessor, PBAX and Merger Sub. In connection with the consummation of the Merger, PBAX changed its corporate name to “CERo Therapeutics Holdings, Inc.”
Current wording
On June 4, 2023, Predecessor entered into a Business Combination Agreement (as amended by that certain Amendment No. 1 to the Business Combination Agreement, dated as of February 5, 2024 and Amendment No. 2 to the Business Combination Agreement, dated as of February 13, 2024, the “Business Combination Agreement”) by and among PBAX and PBCE Merger Sub, Inc. (“Merger Sub”), pursuant to which Merger Sub merged with and into Predecessor, with Predecessor surviving as a wholly-owned subsidiary of PBAX (the “Merger”). In connection with the consummation of the Business Combination on February 14, 2024, PBAX changed its corporate name to “CERo Therapeutics Holdings, Inc.”
Previous wording
In February 2024, the Company consummated the first tranche of a private placement of 10,039 shares of the Series A Preferred Stock, issuance of common warrants to purchase 612,746 shares of Common Stock and warrants to purchase 2,500 shares of Series A Preferred Stock, pursuant to the Amended and Restated Securities Purchase Agreement, dated February 14, 2024, by and among Predecessor, PBAX and certain accredited investors for aggregate cash proceeds to the Company of approximately $10.0 million. On April 1, 2024, the Company consummated a private placement of 626 shares of the Series B Preferred Stock, pursuant to the Securities Purchase Agreement, dated March 28, 2024, by and among the Company and certain accredited investors, for aggregate cash proceeds to the Company of approximately $0.5 million. A portion of the Series A Preferred Stock was issued as consideration for the cancellation of outstanding indebtedness or securities of Predecessor or PBAX, including a promissory note of PBAX and certain convertible bridge notes of Predecessor. Such transactions collectively are referred to as the “PIPE Financing.”
Current wording
In February 2024, the Company consummated the first tranche of a private placement of 10,039 shares of the Series A Preferred Stock, issuance of common warrants to purchase 612,746 shares of Common Stock and warrants to purchase 2,500 shares of Series A Preferred Stock, pursuant to the Amended and Restated Securities Purchase Agreement, dated February 14, 2024, by and among Predecessor, PBAX and certain accredited investors for aggregate cash proceeds to the Company of approximately $10.0 million, including cash previously received for bridge loan proceeds. A portion of the Series A Preferred Stock was issued as consideration for the cancellation of outstanding indebtedness or securities of Predecessor or PBAX, including a promissory note of PBAX and certain convertible bridge notes of Predecessor. Such transactions collectively are referred to as the “February 2024 PIPE Financing.”
Previous wording
On June 28, 2024, the Company submitted an Investigational New Drug Application (“IND”) for its product candidate, CER-1236, to the Food and Drug Administration (the “FDA”). On July 26, 2024, the Company was informed by the FDA that it has placed a clinical hold on the IND. The FDA indicated that the clinical hold has been placed as a result of insufficient data provided with regard to two issues within pharmacology and toxicology of CER-1236. The FDA indicated that, within 30 calendar days, it would provide a detailed official hold letter and requested that the Company hold its response until after receipt of such letter (the “Hold Letter”). The Company plans to work expeditiously to resolve this clinical hold so that CER-1236 may proceed to the clinic, including by beginning scientific experimental activities to address the two issues based upon the FDA communication, as well as earlier discussions with the FDA. Notwithstanding the FDA Communication and pending receipt of the Hold Letter, the Company continues to believe that it will be able to initiate the planned clinical trial by the end of 2024.
Current wording
On June 28, 2024, the Company submitted an Investigational New Drug Application (“IND”) for its product candidate, CER-1236, to FDA. On July 26, 2024, the Company was informed by the FDA that it has placed a clinical hold on the IND. The FDA indicated that the clinical hold has been placed as a result of insufficient data provided with regard to two issues within pharmacology and toxicology of CER-1236. The FDA indicated that, within 30 calendar days, it would provide a detailed official hold letter and requested that the Company hold its response until after receipt of such letter (the “Hold Letter”).
Previous wording
On July 19, 2024, the Company received a letter (the “Bid Price Requirement Letter”) from the staff at The Nasdaq Global Market (“Nasdaq”) notifying the Company that, for the 30 consecutive trading days prior to the date of the Bid Price Requirement Letter, the closing bid price for the Common Stock has been below the minimum $1.00 per share required for continued listing on Nasdaq set forth in Nasdaq Listing Rule 450(a)(1), which is required for continued listing of the Common Stock on Nasdaq (the “Bid Price Requirement”).
Current wording
On July 19, 2024, the Company received a letter (the “Bid Price Requirement Letter”) from the staff at The Nasdaq Global Market (“Nasdaq”) notifying the Company that, for the 30 consecutive trading days prior to the date of the Bid Price Requirement Letter, the closing bid price for the Common Stock has been below the minimum $1.00 per share required for continued listing on Nasdaq set forth in Nasdaq Listing Rule 450(a)(1), which is required for continued listing of the Common Stock on Nasdaq (the “Bid Price Requirement”). On October 23, 2024, the trading price for CERo common stock closed under $0.10 and was the tenth consecutive trading day to do so. On October 24, 2024, the Company received a letter from the staff at Nasdaq notifying the Company that, because its Common Stock had a closing bid price of $0.10 or less for ten consecutive trading days, it was no longer eligible to rely upon the 180-day cure period set forth in the Bid Price Requirement Letter.
Previous wording
Such letters are in addition to the letter from Nasdaq received by the Company on May 2, 2024 (the “MVLS Letter” and, together with the Bid Price Letter and the MVPHS Letter, the “Letters”) notifying the Company that, for the 30 consecutive trading days prior to the date of such MVLS Letter, the Common Stock had traded at a value below the minimum $50,000,000 “Market Value of Listed Securities” (“MVLS”) requirement set forth in Nasdaq Listing Rule 5450(b)(2)(A), which is required for continued listing of the Common Stock on Nasdaq (the “MVLS Requirement” and, together with the Bid Price Requirement and the MVPHS Requirement, the “Requirements”).
Current wording
Such letters are in addition to the letter from Nasdaq received by the Company on May 2, 2024 (the “MVLS Letter” and, together with the Bid Price Letter and the MVPHS Letter, the “Letters”) notifying the Company that, for the 30 consecutive trading days prior to the date of such MVLS Letter, the Common Stock had traded at a value below the minimum $50,000,000 “Market Value of Listed Securities” (“MVLS”) requirement set forth in Nasdaq Listing Rule 5450(b)(2)(A), which is required for continued listing of the Common Stock on Nasdaq (the “MVLS Requirement” and, together with the Bid Price Requirement and the MVPHS Requirement, the “Requirements”). On October 30, 2024, the Company received a letter from the staff at Nasdaq notifying the Company that it had not regained compliance with the MVLS Requirement within the 180-day compliance period set forth in the MVLS Letter.
Previous wording
The Company intends to actively monitor the closing bid price for its common stock, its MVPHS and its MVLS and may, if appropriate, evaluate available options to resolve these deficiencies and regain compliance with the Requirements. Such options may include seeking to qualify for continued listing under a different continued listing standard of the Nasdaq Global Market or Nasdaq Capital Market, in lieu of the MVPHS and MVLS requirements, including the Equity Standard, if the Company has sufficient stockholders’ equity at such time. While the Company is exercising diligent efforts to maintain the listing of its securities on Nasdaq, there can be no assurance that the Company will be able to regain or maintain compliance with Nasdaq listing standards.
Current wording
The Company intends to evaluate available options to resolve these deficiencies and regain compliance with the Requirements. Such options may include seeking to qualify for continued listing under a different continued listing standard of the Nasdaq Global Market or Nasdaq Capital Market, in lieu of the MVPHS and MVLS requirements, including the Equity Standard, if the Company has sufficient stockholders’ equity at such time. While the Company is exercising diligent efforts to maintain the listing of its securities on Nasdaq, there can be no assurance that the Company will be able to regain or maintain compliance with Nasdaq listing standards.
Previous wording
General and administrative expenses were $2.4 million for the three-month period ended June 30, 2024 compared to $1.2 million for the three-month period ended June 30, 2023, reflecting an increase of $1.3 million. The increase in the three-month period ended June 30, 2024, over the three-month period ended June 30, 2023, was predominantly due to the expenses associated with operating as a publicly traded company. The hiring of senior management in G&A resulted in an increase of $0.9 million the three-month period ended June 30, 2024, versus the three-month period ended June 30, 2023, while reduction of business consulting expense offset $0.2 million of the increase. Expenses related to services required for SEC compliance, such as printing and transfer agency fees, totaled $0.1 million and public company insurance coverage increased insurance expenses $0.1 million in the three-month period ended June 30, 2024, versus the three-month period ended June 30, 2023. Corporate communications and website development increased $0.1 million and legal expenses increased $0.1 million in the three-month period ended June 30, 2024, versus the three-month period ended June 30, 2023, due to increased requirements of a public company. Public company director fees were $0.1 million in the three-month period ended June 30, 2024, versus no fees as a private company in the three-month period ended June 30, 2023.
Current wording
General and administrative expenses were $2.6 million for the three-month period ended September 30, 2024 compared to $0.3 million for the three-month period ended September 30, 2023, reflecting an increase of $2.4 million. The increase in the three-month period ended September 30, 2024, over the three-month period ended September 30, 2023, was predominantly due to the expenses associated with operating as a publicly traded company. The hiring of senior management in G&A resulted in an increase of $0.4 million in the three-month period ended September 30, 2024, versus the three-month period ended September 30, 2023, and expenses associated with public company filings and financings increased legal expenses $1.0 million, and accounting and filing-associated expenses $0.2 million in the three-month period ended September 30, 2024, versus the three-month period ended September 30, 2023. Business consulting services and directors’ fees increased $0.5 million in the three-month period ended September 30, 2024, versus the three-month period ended September 30, 2023. Public company insurance coverage increased insurance expenses $0.1 million in the three-month period ended September 30, 2024, versus the three-month period ended September 30, 2023. Other expenses, including corporate communication expenses, recruiting expenses, IT expenses, and travel costs increased $0.2 million in the three-month period ended September 30, 2024, versus the three-month period ended September 30, 2023.
Previous wording
Research and development expenses were $2.7 million for the three-month period ended June 30, 2024 compared to $1.2 million for the three-month period ended June 30, 2023, reflecting an increase of $1.5 million. The increase was related to increased research and development activity as the Company prepared and filed the IND for CER-1236. Compensation increased $0.6 million in the three-month period ended June 30, 2024, over the three-month period ended June 30, 2023, due to increases in compensation, bonus accruals, and increased stock-based compensation expense for employees. Multiple manufacturing runs were necessary to complete the IND application, increasing manufacturing costs by $0.3 million in the three-month period ended June 30, 2024, over the three-month period ended June 30, 2023. Additionally, clinical and regulatory consultants were required to complete and file the IND application, resulting in an increase in scientific consulting of $0.5 million in the three-month period ended June 30, 2024, over the three-month period ended June 30, 2023. The remaining $0.1 million increase in the three-month period ended June 30, 2024, over the three-month period ended June 30, 2023, was related to lab supplies and expenses, additional pre-clinical work and facilities rent escalation.
Current wording
Research and development expenses were $1.8 million for the three-month period ended September 30, 2024 compared to $1.3 million for the three-month period ended September 30, 2023, reflecting an increase of $0.5 million. The increase was related to increased research and development activity as the Company addressed regulatory questions related to the IND for CER-1236 and prepared for the clinical trial, anticipated to start after the clinical hold for CER-1236 is lifted. Clinical expenses increased $0.2 million, manufacturing increased by $0.1 million and research and development consulting increased by $0.3 million, offset by a reduction of $0.2 million in compensation expenses and the scientific operations were conducted with more consulting and fewer employees in the three-month period ended September 30, 2024, versus the three-month period ended September 30, 2023. The remaining $0.1 million increase in the three-month period ended September 30, 2024, over the three-month period ended September 30, 2023, was related to lab supplies and expenses, additional pre-clinical work and facilities rent escalation.
Previous wording
The Company anticipates that its R&D expenses will significantly increase in the future as the Company increases headcount, compensation expense, and contracted services for preclinical and clinical development of its product candidates, as well as for manufacturing of clinical product to be used in clinical development.
Current wording
The Company anticipates that its R&D expenses will significantly increase in the future as the Company increases headcount, compensation expense, and contracted services for preclinical and clinical development of its product candidates, as well as for manufacturing of product to be used in clinical development.
Previous wording
The Results of Operations for the six-month period ended June 30, 2024 arepro forma as the period presented in the following table and discussion includes the Predecessor for the period from January 1, 2024 through February 13, 2024 and the Company for the period from February 14, 2024 through June 30, 2024. This pro forma period from January 1, 2024 to June 30, 2024 does not include the Merger transactions that occurred on-the-line.
Current wording
The Results of Operations for the nine-month period ended September 30, 2024 arepro forma as the period presented in the following table and discussion includes the Predecessor for the period from January 1, 2024 through February 13, 2024 and the Company for the period from February 14, 2024 through September 30, 2024. This pro forma period from January 1, 2024 to September 30, 2024 does not include the Merger transactions that occurred on-the-line.
Previous wording
General and administrative expenses were $5.3 million for the six-month period ended June 30, 2024, compared to $1.9 million for the six-month period ended June 30, 2023, reflecting an increase of $3.4 million. The increase in the six-month period ended June 30, 2024, over the six-month period ended June 30, 2023, was predominantly due to a $1.8 million expense consisting of the remaining underwriting fees from the PBAX initial public offering, which were earned on the consummation of the business combination. Additionally, the hiring of senior management in G&A resulted in an increase of $1.1 million, including recruiting fees, offset by $0.2 million less in business consulting as functions were brought in house in the six-month period ended June 30, 2024. Legal fees declined $0.1 million in the six-month period ended June 30, 2024, versus the six-month period ended June 30, 2023. Expenses related to services required for SEC compliance, such as printing and transfer agency fees, increased $0.3 million and public company insurance coverage increased insurance expenses $0.2 million in the six-month period ended June 30, 2024, compared to the six-month period ended June 30, 2023. Corporate communications and website development, accounting and director fees each increased $0.1 million in the six-month period ended June 30, 2024 compared to the six-month period ended June 30, 2023, for an aggregate $0.3 million due to increased requirements of a public company.
Current wording
General and administrative expenses were $7.9 million for the nine-month period ended September 30, 2024, compared to $2.3 million for the nine-month period ended September 30, 2023, reflecting an increase of $5.7 million. The increase in the nine-month period ended September 30, 2024, over the nine-month period ended September 30, 2023, was predominantly due to a $1.8 million expense consisting of the remaining underwriting fees from the PBAX initial public offering, which were earned on the consummation of the business combination. Additionally, the hiring of senior management in G&A resulted in an increase of $1.6 million, including recruiting fees. Legal fees increased $0.8 million and business consulting increased $0.3 million in the nine-month period ended September 30, 2024, versus the nine-month period ended September 30, 2023. Expenses related to services required for SEC compliance, such as printing and transfer agency fees, increased $0.4 million and public company insurance coverage increased insurance expenses $0.4 million in the nine-month period ended September 30, 2024, compared to the nine-month period ended September 30, 2023. Corporate communications and director fees each increased $0.2 million in the nine-month period ended September 30, 2024 compared to the nine-month period ended September 30, 2023. The additional expenses are all driven by the increased expenses of operational compliance as a public company.
Previous wording
Research and development expenses were $4.4 million for the six-month period ended June 30, 2024, compared to $3.0 million for the six-month period ended June 30, 2023, reflecting an increase of $1.4 million. The increase was related to increased R&D activity as the Company prepared and filed the IND for CER-1236. Compensation increased $0.3 million in the six-month period ended June 30, 2024, versus the six-month period ended June 30, 2023, due to increases in compensation, bonus accruals, and increased stock-based compensation expense for employees. To complete the IND application, multiple manufacturing runs were necessary, increasing manufacturing costs by $0.1 million in the six-month period ended June 30, 2024, versus the six-month period ended June 30, 2023. Additionally, clinical and regulatory consultants were required to complete and file the IND application, resulting in an increase in scientific consulting of $0.6 million in the six-month period ended June 30, 2024, versus the six-month period ended June 30, 2023. The remaining $0.4 million increase in the six-month period ended June 30, 2024, versus the six-month period ended June 30, 2023, was related to lab supplies and expenses, additional pre-clinical work and facilities rent escalation.
Current wording
Research and development expenses were $6.2 million for the nine-month period ended September 30, 2024, compared to $4.3 million for the nine-month period ended September 30, 2023, reflecting an increase of $1.9 million. The increase was related to increased R&D activity as the Company prepared and filed the IND for CER-1236, prepared for the clinical trial initiation, and conducted additional experiments in response to the FDA questions related to the IND. Compensation increased $0.1 million, clinical expenses increased $0.2 million, and consulting expenses increased $0.9 million in the nine-month period ended September 30, 2024, due to activities related to the preparation of the IND and responses to questions from FDA, and preparation for the anticipated clinical trial for CER-1236.. To complete the IND application, multiple manufacturing runs were necessary, increasing manufacturing costs by $0.2 million in the nine-month period ended September 30, 2024, versus the nine-month period ended September 30, 2023. Additional studies required to address FDA questions increased pre-clinical study costs by $0.3 million. The remaining $0.2 million increase in the nine-month period ended September 30, 2024, versus the nine-month period ended September 30, 2023, was predominantly related to lab supplies and expenses and facilities rent escalation.
Previous wording
Interest and other income, net was $5.0 million for the six-month period ended June 30, 2024, compared to $0.3 million for the six-month period ended June 30, 2023, reflecting an increase of $4.7 million. The increase in 2024 relative to 2023 was predominantly due to the $4.7 million change in value of the Company’s Earnout Liability in the six-month period ended June 30, 2024. Settlement of vendor liabilities in 2024 resulted in a $0.6 million increase in income in 2024, offset by the $0.6 million other expense for the delayed S-1 penalty.
Current wording
Other income was $5.1 million for the nine-month period ended September 30, 2024, compared to $0.5 million for the nine-month period ended September 30, 2023, reflecting an increase of $4.6 million. The increase in 2024 relative to 2023 was predominantly due to the $4.7 million change in value of the Company’s Earnout Liability in the nine-month period ended September 30, 2024. Settlement of vendor liabilities in 2024 resulted in a $0.6 million increase in income in 2024, offset by an additional $0.1 million less interest income and $0.6 million other expense for the delayed S-1 penalty.
Previous wording
The Company, therefore, anticipates that substantial additional funding will be needed in connection with its continuing operations. At June 30, 2024, the Company had $3.6 million in cash, restricted cash and cash equivalents. The Company intends to devote most of the available cash to the preclinical and clinical development of its product candidates and public company compliance costs. Based on current business plans, the Company believes that the cash available at June 30, 2024 will not fund its operating expenses and capital requirements for 12 months after the filing of the unaudited financial statements for the six-month period ended June 30, 2024. The Company has arranged two equity lines of credit, one providing for the sale of up to 25,000,000 newly issued shares of Common Stock and the other providing for the purchase of up to $25 million of Common Stock on the satisfaction of certain conditions. At June 30, 2024, the Company had 17.5 million shares remaining in the first ELOC and $25 million remaining in the second ELOC. The Company has no guarantee that the conditions will be satisfied to require the purchase of all, or any additional amount, of the Equity Line of Credit (“ELOC”) funds. Any estimate as to how long the Company expects the net proceeds from the ELOC funding may fund the Company’s operations is based on assumptions that may prove to be wrong, and the Company could use its available capital resources sooner than its current expectations. Changing circumstances, some of which may be beyond the Company’s control, could result in less cash and cash equivalents available to fund operations or cause the Company to consume capital significantly faster than currently anticipated, and the Company may need to seek additional funds from additional sources sooner than planned.
Current wording
The Company, therefore, anticipates that substantial additional funding will be needed in connection with its continuing operations. At September 30, 2024, the Company had $3.4 million in cash, restricted cash and cash equivalents. The Company intends to devote most of the available cash to the preclinical and clinical development of its product candidates and public company compliance costs. Based on current business plans, the Company believes that the cash available at September 30, 2024 will not fund its operations and capital requirements for 12 months after the filing of the unaudited financial statements for the nine-month period ended September 30, 2024. The Company has arranged two equity lines of credit, one providing for the sale of up to 25,000,000 newly issued shares of Common Stock and the other providing for the purchase of up to $25 million of Common Stock on the satisfaction of certain conditions. At September 30, 2024, the Company had 2.8 million shares remaining in the first ELOC, which was fully depleted on October 3, 2024, and $25 million remaining in the second ELOC, which was replaced with a second ELOC arranged with the investor in the first ELOC (see Note 14 – Subsequent Events). The Company has no guarantee that the conditions will be satisfied to require the purchase of all, or any additional amount, of the Equity Line of Credit (“ELOC”) funds. Any estimate as to how long the Company expects the net proceeds from the ELOC funding may fund the Company’s operations is based on assumptions that may prove to be wrong, and the Company could use its available capital resources sooner than its current expectations. Changing circumstances, some of which may be beyond the Company’s control, could result in less cash and cash equivalents available to fund operations or cause the Company to consume capital significantly faster than currently anticipated, and the Company may need to seek additional funds from additional sources sooner than planned.
Previous wording
Net cash used in operating activities increased $5.4 million from $3.5 million to $8.9 million in the six-month period ended June 30, 2023 and 2024 respectively. The increase in cash used was largely related to having a $4.8 million increase in the adjustment to net loss related to the gain on the revaluation of derivative liabilities. The difference in net loss reflected $0.3 million more cash being used in the six-month period ended June 30, 2024 versus 2023. The difference of $1.3 million of cash used to pay down accounts payable and accruals, $0.6 million in vendor settlements, and $0.4 more cash consumed on prepaid expenses in the six-month period ended June 30, 2024 versus 2023 was offset by $0.7 million in accrued expense addition, and $1.4 million less in cash adjustments due to stock-based compensation expense in the six-month period ended June 30, 2024 versus 2023. The remaining difference was an additional $0.1 million in adjustment to lease liability due to rent escalation.
Current wording
Net cash used in operating activities increased $6.6 million from $4.8 million to $11.4 million in the nine-month period ended September 30, 2023 and 2024 respectively. The increase in cash used was largely related to having a $4.8 million increase in the adjustment to net loss related to the gain on the revaluation of derivative liabilities. The difference in net loss reflected $3.0 million more cash being used, offset by a larger non-cash adjustment for stock-based compensation of $1.9 million in the nine-month period ended September 30, 2024 versus 2023. The difference of $0.1 million of cash resulting from increasing accounts payable and accruals was offset by $0.1 million increase in prepaid expenses and $0.6 million in vendor settlements in the nine-month period ended September 30, 2024 versus 2023. The remaining difference was an additional $0.1 million in adjustment to lease liability due to rent escalation.
Previous wording
Net cash provided by financing activities increased $9.1 million from $0.6 million in the three-month period ended June 30, 2023 to $9.7 million in the three-month period ended June 30, 2024. The increase was related to the net proceeds of $7.3 million from the issuance of Series A and B Preferred Stock, the net proceeds of $1.7 million for the sale of common stock under the ELOC, $0.8 million from the issuance of ELOC commitment shares to compensate the ELOC investor, and $0.2 million related to net insurance financing. These increases in cash were partially offset by the $0.6 million borrowing under the bridge loan in 2023, for which there was no equivalent in the six-month period ended June 30, 2024.
Current wording
Net cash provided by financing activities increased $11.7 million from $0.6 million in the nine-month period ended September 30, 2023 to $12.2 million in the nine-month period ended September 30, 2024. The increase was related to the net proceeds of $7.3 million from the issuance of Series A and B Preferred Stock, the net proceeds of $0.7 million from the issuance of Series C Preferred Stock and associated warrants, the gross proceeds of $4.3 million for the sale of common stock under the ELOC, and $0.1 million related to net insurance financing. These increases in cash were partially offset by the $0.6 million borrowing under the bridge loan in 2023, for which there was no equivalent in the nine-month period ended September 30, 2024.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
On April 1, 2024, the Company consummated a private placement of 626 shares of the Series B Preferred Stock, pursuant to the Securities Purchase Agreement, dated March 28, 2024, by and among the Company and certain accredited investors, for aggregate cash proceeds to the Company of approximately $0.5 million (the “April 2024 PIPE Financing”).
Current report — wording carried from elsewhere
On November 15, 2024, the Company received notice from the FDA that the IND for CER-1236 was cleared. The Company continues to believe that it will be able to initiate the planned clinical trial by early 2025.