KIORA PHARMACEUTICALS INC

Previous wording

KIO-301 is initially focused on patients with later stages of disease progression due to Retinitis Pigmentosa (any and all sub-forms). KIO-301 is a potential vision-restoring small molecule that acts as a “photoswitch” specifically designed to restore vision in patients with inherited and age-related degenerative retinal diseases. The molecule is specifically designed to restore the eyes’ ability to perceive and interpret light in visually impaired patients. It selectively enters viable downstream retinal ganglion cells (no longer receiving electrical input due to degenerated rods and cones) and is intended to turn them into light sensing cells, capable of signaling the brain as to the presence or absence of light. We have initiated a Phase 1b clinical trial in the third quarter of 2022. On March 17, 2022, we were granted Orphan Drug Designation by the United States (“U.S.”) Food and Drug Administration (“FDA”) for the Active Pharmaceutical Ingredient (“API”) in KIO-301. KIO-301 (formerly known as B-203) was acquired through the Bayon Therapeutics, Inc. ("Bayon") transaction that closed October 21, 2021. We initiated a Phase 1b clinical trial in the third quarter of 2022. The trial completed enrollment and the last patient last visit was completed in 2023. Topline data from this trial was presented at the American Academy of Ophthalmology annual meeting in November 2023. The complete data set will be presented at the Association for Research in Vision and Ophthalmology (ARVO) annual conference in May 2024.

Current wording

KIO-301 is initially focused on patients with later stages of disease progression due to Retinitis Pigmentosa (any and all sub-forms). KIO-301 is a potential vision-restoring small molecule that acts as a “photoswitch” specifically designed to restore vision in patients with inherited and age-related degenerative retinal diseases. The molecule is specifically designed to restore the eyes’ ability to perceive and interpret light in visually impaired patients. It selectively enters viable downstream retinal ganglion cells (no longer receiving electrical input due to degenerated rods and cones) and is intended to turn them into light sensing cells, capable of signaling the brain as to the presence or absence of light. We initiated a Phase 1b clinical trial in the third quarter of 2022 (ABACUS-1). On March 17, 2022, we were granted Orphan Drug Designation by the United States (“U.S.”) Food and Drug Administration (“FDA”) for the Active Pharmaceutical Ingredient (“API”) in KIO-301. KIO-301 (formerly known as B-203) was acquired through the Bayon Therapeutics, Inc. ("Bayon") transaction that closed October 21, 2021. We initiated a Phase 1b clinical trial in the third quarter of 2022. Topline data from this trial was presented at the American Academy of Ophthalmology annual meeting in November 2023. The complete data set was presented at the Association for Research in Vision and Ophthalmology ("ARVO") annual conference in May 2024 highlighting improvements in visual acuity, visual field and functional vision among clinical trial participants relative to baseline. We are currently finalizing the design and planning to initiate the Phase 2 trial of KIO-301 (ABACUS-2) later this year.

Previous wording

In January 2024, we entered into a strategic development and commercialization agreement ("License Agreement") with Théa Open Innovation ("TOI"), a sister company of the global ophthalmic specialty company Laboratoires Théa ("Théa"). Under the agreement, Kiora granted TOI exclusive worldwide development and commercialization rights, excluding Asia, to KIO-301 for the treatment of degenerative retinal diseases. In exchange, Kiora received an upfront, payment of $16 million; up to $285 million upon achievement of pre-specified clinical development, regulatory and commercial milestones; tiered royalties of up to low 20% on net sales; and reimbursement of KIO-301 research and development expenses.

Current wording

In January 2024, we entered into a strategic development and commercialization agreement ("License Agreement") with Théa Open Innovation ("TOI"), a sister company of the global ophthalmic specialty company Laboratoires Théa ("Théa"). Under the agreement, Kiora granted TOI exclusive worldwide development and commercialization rights, excluding Asia, to KIO-301 for the treatment of degenerative retinal diseases. In exchange, Kiora received an upfront, payment of $16 million; up to $285 million upon achievement of pre-specified clinical development, regulatory and commercial milestones; tiered royalties of up to low 20% on net sales; and reimbursement of all KIO-301 research and development expenses moving forward from the date of the execution of the License Agreement.

Previous wording

We are also planning to develop KIO-104 for the treatment of Posterior Non-Infectious Uveitis, a rare T cell-mediated, intraocular inflammatory disease. KIO-104 isa novel and potent small molecule inhibitor of dihydroorotate dehydrogenase ("DHODH"), formulated for intravitreal delivery and ideally suited to suppress overactive T-cell activity to treat the underlying condition. Data from a previous Phase 1/2a study, reported in October 2022, showed that a single injection of KIO-104 decreased intraocular inflammation and improved visual acuity significantly for the duration of the study. Further, there is evidence of reduced cystoid macular edema from baseline. We are currently designing a multi-dose, randomized, controlled Phase 2 clinical trial.

Current wording

We are also planning to develop KIO-104 for the treatment of Posterior Non-Infectious Uveitis, a rare T cell-mediated, intraocular inflammatory disease. KIO-104 isa novel and potent small molecule inhibitor of dihydroorotate dehydrogenase ("DHODH"), formulated for intravitreal delivery and ideally suited to suppress overactive T-cell activity to treat the underlying condition. Data from a previous Phase 1/2a study, reported in October 2022, showed that a single injection of KIO-104 decreased intraocular inflammation and improved visual acuity significantly for the duration of the study. Further, there is evidence of reduced cystoid macular edema from baseline. We are currently designing a Phase 2 clinical trial, expected to initiate in early 2025.

Previous wording

Throughout our history we have not generated significant revenue, however in January 2024 we entered into the License Agreement with TOI, whereby we recognized $16 million in collaboration revenue related to the upfront payment. We have never been profitable and from inception through March 31, 2024, our losses from operations have aggregated $133.5 million. We expect to incur significant expenses and increasing operating losses for the foreseeable future as we continue the development and clinical trials of and seek regulatory approval for our product candidates. If we obtain regulatory approval for our product candidates, we expect to incur significant expenses in order to create an infrastructure to support their commercialization including sales, marketing, and distribution functions.

Current wording

Throughout our history we have not generated significant revenue, however in January 2024 we entered into the License Agreement with TOI, whereby we recognized $16 million in collaboration revenue related to the upfront payment. We have never been profitable and from inception through June 30, 2024, our losses from operations have aggregated $135.7 million. We expect to incur significant expenses and increasing operating losses for the foreseeable future as we continue the development and clinical trials of and seek regulatory approval for our product candidates. If we obtain regulatory approval for our product candidates, we expect to incur significant expenses in order to create an infrastructure to support their commercialization including sales, marketing, and distribution functions.

Previous wording

We will need additional financing to support our continuing operations. We will seek to fund our operations through public or private equity, debt financings, license and development agreements, or other sources, which may include collaborations with third parties. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. Although historically we have been successful at raising capital, most recently raising net proceeds of approximately $13.8 million in a private placement offering that closed on February 5, 2024, additional capital may not be available on terms favorable to Kiora, if at all. We do not know if any future offerings will succeed. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. Kiora has incurred losses and negative cash flows since inception, and future losses are anticipated. However, based on the cash on hand at March 31, 2024 of approximately $31.3 million, we anticipate having sufficient cash to fund planned operations into 2026 and do not anticipate an immediate need to raise additional capital to fund operations.

Current wording

We will need additional financing to support our continuing operations. We will seek to fund our operations through a combination of public or private sales of equity, debt financings, license and development agreements, non-dilutive grants and other sources, which may include collaborations with third parties. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. Although historically we have been successful at raising capital, most recently raising net proceeds of approximately $13.8 million in a private placement offering that closed on February 5, 2024, additional capital may not be available on terms favorable to Kiora, if at all. We do not know if any future offerings will succeed. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. Kiora has incurred losses and negative cash flows since inception, and future losses are anticipated. However, based on the cash on hand and short-term investments at June 30, 2024 of approximately $6.6 million and $21.2 million, respectively, we anticipate having sufficient cash to fund currently planned operations into 2027.

Previous wording

On May 1, 2024, we held our 2024 Annual Meeting of Stockholders (the "Annual Meeting") where our stockholders voted to approve various proposals including (i) adoption of a new Equity Incentive Plan the "2024 Equity Incentive Plan", (ii) an amendment to our Restated Certificate of Incorporation to increase the number of authorized shares of Common Stock to 150,000,000, which we filed with the Secretary of State for the State of Delaware on May 1, 2024, and (iii) the approval, as contemplated by Nasdaq Listing Rule 5635, of the issuance of up to 49,374,590 shares of Common Stock upon the exercise of Tranche A Warrants and Tranche B Warrants issued in the private placement completed in February 2024.

Current wording

On May 1, 2024, we held our 2024 Annual Meeting of Stockholders (the "Annual Meeting") where our stockholders voted to approve various proposals including (i) adoption of a new Equity Incentive Plan the "2024 Equity Incentive Plan", (ii) an amendment to our Restated Certificate of Incorporation to increase the number of authorized shares of Common Stock to 150,000,000, which we filed with the Secretary of State for the State of Delaware on May 1, 2024, and (iii) the approval, as contemplated by Nasdaq Listing Rule 5635, of the issuance of up to 5,486,066 shares of Common Stock upon the exercise of Tranche A Warrants and Tranche B Warrants issued in the private placement completed in February 2024.

Previous wording

Our revenue has been derived from payments received under our license and research collaboration agreements, which for the quarter ended March 31, 2024, represented an upfront payment from our collaboration agreement with TOI. In the future, we anticipate our revenue to include additional milestone payments under our current and/or future collaboration agreements. We do not expect to generate any revenue from the sale of products unless and until such time that our product candidates have advanced through clinical development and regulatory approval, if ever. We expect that any revenue we generate, if at all, will fluctuate from quarter-to-quarter as a result of the timing and amount of payments relating to such services and milestones and the extent to which any of our products are approved and successfully commercialized. If we fail to complete clinical development of product candidates or obtain regulatory approval for our product candidates, our ability to generate future revenues and our results of operations and financial position would be adversely affected.

Current wording

Our revenue has been derived from payments received under our license and research collaboration agreements, which for the six months ended June 30, 2024, represented an upfront payment from our collaboration agreement with TOI. In the future, we anticipate our revenue to include additional milestone payments under our current and/or future collaboration agreements. We do not expect to generate any revenue from the sale of products unless and until such time that our product candidates have advanced through clinical development and regulatory approval, if ever. We expect that any revenue we generate, if at all, will fluctuate from quarter-to-quarter as a result of the timing and amount of payments relating to such services and milestones and the extent to which any of our products are approved and successfully commercialized. If we fail to complete clinical development of product candidates or obtain regulatory approval for our product candidates, our ability to generate future revenues and our results of operations and financial position would be adversely affected.

Previous wording

Research and Development Expenses. The increase of $1.1 million was primarily due a licensing payment made to UC related to the collaboration revenue received from the strategic development and commercialization agreement with TOI of $0.7 million, a decrease of $0.3 million for credits expected from Australian and Austrian government programs related to research and development activities, and expenses related to drug substance testing, post clinical trial activities and regulatory activities for KIO-301 of $0.3 million, offset by $0.2 million in expense credits related to reimbursable KIO-301 expenses.

Current wording

Research and Development Expenses. The decrease of $0.5 million was primarily due to a net decrease in KIO-301 related expenses of $0.5 million resulting from the expense reimbursement related to the strategic development and commercialization agreement with TOI, offset by a decrease of $0.4 million for credits expected from Australian and Austrian government programs related to research and development activities. Additionally there were reduced expenses related to drug substance testing and clinical trial activities for KIO-101 of $0.3 million and decreased facilities and other corporate expenses of $0.1 million.

Previous wording

Other Income, Net. The increase of $183.0 thousand was primarily due to increased net interest income of approximately $193.0 thousand resulting from funds raised in Q1 2024 and unrealized gains on foreign currency transactions of $12.5 thousand.

Current wording

Other Income, Net. The increase of $0.3 million was primarily due to increased net interest income of approximately $0.2 million resulting from funds raised in Q1 2024 and accrued interest on short term marketable securities of $0.1 million.

Previous wording

Revenue. The increase of $16.0 million was attributable to the revenue recognized from the upfront payment pursuant the strategic development and commercialization agreement with TOI.

Current wording

Revenue. The increase of $16.0 million was attributable to the revenue recognized from the upfront payment pursuant the strategic development and commercialization agreement with TOI and from a grant from the Choroideremia Research Foundation.

Previous wording

Change in Fair Value of Contingent Consideration. The decrease of $221.1 thousand was primarily due to the addition of disease indications increasing the probabilities of success, shifting of timelines affecting the discount factor and discount period, and the milestone payment made in Q4 2023 related to the KIO-301 Phase 1b data.

Current wording

Change in Fair Value of Contingent Consideration. The decrease of $0.2 million was primarily due to shifting of timelines affecting the discount factor and discount period, and the KIO-301 Phase 1b milestone payment made in Q4 2023.

Previous wording

Our principal liquidity needs have historically been for acquisitions, working capital, research and development, and capital expenditures. We expect these needs to continue as we develop and work toward commercialize new products. We will need additional financing to support our continuing operations. We will seek to fund our operations through public or private equity, debt financings, license and development agreements, or other sources, which may include collaborations with third parties.

Current wording

Our principal liquidity needs have historically been for acquisitions, working capital, research and development, and capital expenditures. While we anticipate having sufficient cash to fund currently planned operations into 2027, we will need additional financing to support our future operations as we develop and work toward the commercialization of new products. We will seek to fund our operations through a combination of public or private sales of equity, debt financings, license and development agreements, non-dilutive grants and other sources, which may include collaborations with third parties.

Previous wording

If we raise additional funds by issuing equity securities or convertible debt, our stockholders will experience dilution. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, or making capital expenditures. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our products, future revenue streams or product candidates, or to grant licenses on terms that may not be favorable to us. Although historically we have been successful at raising capital, most recently raising net proceeds of approximately $13.8 million in a private placement offering that closed on February 5, 2024, additional capital may not be available on terms favorable to us, if at all. We do not know if any future offerings will succeed. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We have incurred losses and negative cash flows since inception, and future losses are anticipated. However, based on the cash on hand at March 31, 2024 of approximately $31.3 million, we anticipate having sufficient cash to fund planned operations for at least 12 months after the date that these unaudited condensed financial statements are issued.

Current wording

If we raise additional funds by issuing equity securities or convertible debt, our stockholders will experience dilution. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, or making capital expenditures. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our products, future revenue streams or product candidates, or to grant licenses on terms that may not be favorable to us. Although historically we have been successful at raising capital, most recently raising net proceeds of approximately $13.8 million in a private placement offering that closed on February 5, 2024, additional capital may not be available on terms favorable to us, if at all. We do not know if any future offerings will succeed. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We have incurred losses and negative cash flows since inception, and future losses are anticipated. However, based on the cash on hand and short-term investments at June 30, 2024 of approximately $6.6 million and $21.2 million, respectively, we anticipate having sufficient cash to fund currently planned operations into 2027.

Previous wording

As of March 31, 2024, we had unrestricted cash and cash equivalents totaling $31.3 million and restricted cash totaling $4.1 thousand for a total of $31.3 million compared to $2.5 million at December 31, 2023. The following table sets forth the primary uses of cash for the three months ended March 31,:

Current wording

As of June 30, 2024, we had unrestricted cash and cash equivalents totaling $6.6 million and restricted cash totaling $4.2 thousand for a total of $6.6 million compared to $2.5 million at December 31, 2023. The following table sets forth the primary uses of cash for the six months ended June 30,:

Previous wording

Operating Activities. Net cash provided by operating activities increased $16.7 million primarily due to the collaboration revenue recognized from the TOI agreement and the timing of research and development activities.

Current wording

Operating Activities. Net cash provided by operating activities increased $14.3 million primarily due to the collaboration revenue recognized from the TOI agreement and the timing of research and development activities.

Previous wording

Financing Activities. The increase in cash from financing activities is due to receiving net proceeds of approximately $13.8 million in a private offering that closed on February 5, 2024 and proceeds of $1.4 million from warrant exercises.

Current wording

Financing Activities. The increase in cash from financing activities is due to receiving net proceeds of approximately $13.8 million in a private offering that closed on February 5, 2024 and proceeds of $1.7 million from warrant exercises, compared to net proceeds of approximately $0.4 million from equity line of credit share purchases and $5.6 million from a public offering that closed on June 6, 2023.

Previous wording

•seek partnership for our KIO-101 and KIO-201 products to continue their development activities;

Current wording

•seek partnerships for our KIO-101 and KIO-201 products to continue their development activities;

Previous wording

•seek marketing approval for our KIO-301 outside of the territory already partnered with TOI or KIO-104 products or any other products that we successfully develop;

Current wording

•seek marketing approval for our KIO-301 product outside of the territory already partnered with TOI;

Previous wording

•establish a sales and marketing infrastructure to commercialize our KIO-301 outside of the territory already partnered with TOI or KIO-104 products in the United States, if approved; and

Current wording

•establish a sales and marketing infrastructure to commercialize our KIO-301 product outside of the territory already partnered with TOI;

Previous wording

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of holders of common stock. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with pharmaceutical partners, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, including our KIO-301 (outside of the territory already partnered with TOI), KIO-101, KIO-104 and KIO-201 products, on terms that may not be favorable to us. We have currently paused development work on KIO-101 and KIO-201 and are seeking partnership for any further development of those programs. For our active programs, if we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market KIO-301 outside of the territory already partnered with TOI and KIO-104 products, or any other products that we would otherwise prefer to develop and market ourselves.

Current wording

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, grants and licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of holders of common stock. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with pharmaceutical partners, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, including our KIO-301 (outside of the territory already partnered with TOI), KIO-101, KIO-104 and KIO-201 products, on terms that may not be favorable to us. We have currently paused development work on KIO-101 and KIO-201 and are seeking partnership for any further development of those programs. For our active programs, if we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market KIO-301 outside of the territory already partnered with TOI and KIO-104 products, or any other products that we would otherwise prefer to develop and market ourselves.

Previous wording

We raised net proceeds of $13.8 million in a private placement offering that closed on February 5, 2024. Based on our cash on hand at March 31, 2024, we believe that we will have sufficient cash to fund planned operations through 2026. However, the acceleration or reduction of cash outflows by management can significantly impact the timing for raising additional capital to complete development of its products. To continue development, we will need to raise additional capital through debt and/or equity financing, or access additional funding through grants. Although historically we have been successful at raising capital, additional capital may not be available on terms favorable to us, if at all. We do not know if any future offerings will succeed. Accordingly, no assurances can be given that management will be successful in these endeavors. Our Condensed Consolidated Financial Statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to continue as a going concern.

Current wording

We raised net proceeds of $13.8 million in a private placement offering that closed on February 5, 2024. Based on our cash on hand and short-term investments at June 30, 2024, we believe that we will have sufficient cash to fund planned operations into 2027. However, the acceleration or reduction of cash outflows by management can significantly impact the timing for raising additional capital to complete development of our products. To continue development, we will need to raise additional capital through debt and/or equity financing, grants and other arrangements. Although historically we have been successful at raising capital, additional capital may not be available on terms favorable to us, if at all. We do not know if any future offerings will succeed. Accordingly, no assurances can be given that management will be successful in these endeavors. Our Condensed Consolidated Financial Statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to continue as a going concern.