Entero Therapeutics Inc
For the period ended Jun 30, 2024. Filed Oct 21, 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.
Jun 30, 2024 · Filed Oct 21, 2024
GRDX$4.92+5.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-14.
0001410578-24-000826
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-10-21.
0001410578-24-001685
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 56 previous paragraphs and 103 current paragraphs.
27 unchanged; 23 reworded; 47 added; 6 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 2 previous and 3 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 (47)
Current report
In May 2024, we changed our name from First Wave Biopharma, Inc. to Entero Therapeutics, Inc.
Current report
We have initiated a plan to dispose of certain assets and liabilities of IMGX, including Latiglutenase and CypCel, within 12 months of the date of the Merger with IMGX. As of June 30, 2024, these were reclassified as assets and liabilities held for sale and due to the short period of time since the close of the Merger, are reported at their fair value less cost to sell. We determined that the discontinued operations of IMGX represents a strategic shift that will have a major effect on our operations and financial statements.
Current report
July 2024 Inducement Offering
Current report
On July 10, 2024, we entered into a warrant exercise inducement offer letter (the “Inducement Letter”) with a holder (the “Holder”) of warrants to purchase shares of our Common Stock (the “Existing Warrants”) pursuant to which the Holder agreed to exercise for cash their Existing Warrants to purchase 1,762,674 shares of our Common Stock (the “Existing Warrant Shares”), in the aggregate, at a reduced exercised price of $1.09 per share, in exchange for our agreement to issue new warrants (the “Inducement Warrants”) on substantially the same terms as the Existing Warrants as described below, to purchase up to 3,525,348 shares of our Common Stock (the “Inducement Warrant Shares”). The Inducement Warrants will be exercisable upon the receipt of stockholder approval and may be exercised until the fifth anniversary of the date on which such stockholder approval is obtained. We received aggregate gross proceeds of approximately $1.9 million from the exercise of the Existing Warrants by the Holder and the sale of the Inducement Warrants. We engaged Roth Capital Partners, LLC (“Roth”) to act as our financial advisor in connection with the transactions summarized above and paid Roth approximately $96,000 for its services, in addition to reimbursement for certain expenses.
Current report
On August 7, 2024, we notified the Staff of Nasdaq that, as the result of the resignations of two of our directors, we were no longer in compliance with Nasdaq Rule 5605(c)(2) (the “Audit Committee Rule”), which requires a Nasdaq-listed company to have an audit committee of the Board comprised of at least three independent directors meeting the eligibility requirements of the Audit Committee Rule. On August 8, 2024, our Board, having determined that both individuals meet the eligibility requirements of the Audit Committee Rule, appointed Chaitan Khosla and Alastair Riddell to the audit committee of the Board (the “Audit Committee”) to fill the vacancies on the Audit Committee created by the aforementioned resignations. Additionally, the Board appointed the existing Audit Committee member, Edward J. Borkowski, as chair of the Audit Committee. As a result of the appointments, the Audit Committee now has three members, as required by the Audit Committee Rule.
Current report
On September 6, 2024, we received a letter from the Staff of Nasdaq indicating that, based upon the closing bid price of our Common Stock for the last 30 consecutive business days, we are not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Notice”. The Notice has no immediate effect on the continued listing status of our common stock on The Nasdaq Capital Market, and, therefore, our listing remains fully effective. We are provided a compliance period of 180 calendar days from the date of the Notice, or until March 5, 2025, to regain compliance with the minimum closing bid requirement, pursuant to Nasdaq Listing Rule 5810(c)(3)(A). If at any time before March 5, 2025, the closing bid price of our common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, subject to Nasdaq’s discretion to extend this period pursuant to Nasdaq Listing Rule 5810(c)(3)(H), Nasdaq will provide written notification that we have achieved compliance with the minimum bid price requirement, and the matter would be resolved. If we do not regain compliance during the compliance period ending March 5, 2025, then Nasdaq may grant us a second 180 calendar day period to regain compliance, provided we meet the continued listing requirement for market value of publicly-held shares and all other initial listing standards for The Nasdaq Capital Market, other than the minimum closing bid price requirement, and notifies Nasdaq of its intent to cure the deficiency.
Current report
Rationalization Activities and Developments
Current report
As of December 31, 2023, we had 9 employees, which increased to 15 employees in March 2024 following the IMGX Merger. In connection with certain cost reduction measures we have taken, on July 16, 2024, we reduced our headcount to 11 employees, and Dr. Syage agreed to reduce his annual base salary to $66,560, effective July 1, 2024. On August 1, 2024, in order to further reduce costs and conserve resources, we approved the termination of all non-essential employees and determined to vacate our Boca Raton office.
Current report
On August 2, 2024, in connection with the reduction in workforce, the Board approve the termination of (i) the employment agreement with our Chief Executive Officer, James Sapirstein (the “Sapirstein Employment Agreement”), and (ii) the offer letter between us and our President, Jack Syage. In connection with the termination of the Sapirstein Employment Agreement, on August 2, 2024, we entered into a consulting agreement with Mr. Sapirstein (the “Sapirstein Consulting Agreement”), whereby he will continue to serve as our Chief Executive Officer, and pursuant to which Mr. Sapirstein will be paid $400 an hour monthly for services rendered to us. The Sapirstein Consulting Agreement has an initial term of six months, subject to early termination by either party for any reason at any time, and may be extended on a month-to-month basis upon mutual agreement after the expiration of the initial six-month term.
Current report
Additionally, on August 2, 2024, as part of the reduction in workforce described above, the Board approved the payout of unused vacation time for all employees accrued through August 1, 2024, including Mr. Sapirstein, Dr. Syage, and our Chief Financial Officer, Sarah Romano. We paid Mr. Sapirstein, Dr. Syage, and Ms. Romano $69,230, $1,920, and $45,590, respectively, to compensate for their unused vacation time accrued through August 1, 2024.
Current report
As a result of the rationalization, we have paused development of Latiglutenase, Adrulipase, Niclosamide, Capeserod, and any other non-essential research and development activities. We are exploring strategic alternatives, including a sale or wind-down of the IMGX entity, as well as other potential strategic options, including a merger, reverse merger, sale, wind-down, liquidation and dissolution or other strategic transaction, however our board of directors has not yet approved any strategic transactions. We are dependent on obtaining, and are continuing to pursue, the necessary funding from outside sources, including obtaining additional funding from the sale of securities in order to continue our operations. We have no committed source of additional capital and if we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may be forced to delay, reduce or terminate our business activities.
Current report
Notice of Default and Acceleration
Current report
As previously disclosed in our Current Report on Form 8-K filed with the SEC on March 14, 2024, we acquired ImmunogenX in a merger transaction, the terms of which included, among other things, our wholly owned subsidiary, IMGX, assuming the debt of ImmunogenX. On August 2, 2024, IMGX received a Notice of Default and Acceleration (the “Notice”) relating to that certain Credit Agreement, dated as of October 3, 2022 (as amended, modified, supplemented or restated from time to time, the “Credit Agreement”) by and among Mattress Liquidators, Inc. (the “Lender”) and ImmunogenX.
Current report
The Notice informed IMGX that one or more events of default under the Credit Agreement (“Event of Defaults”) were existing and continuing. Such outstanding Events of Default include, among others, IMGX suffering an adverse change in its financial condition which would reasonably be expected to have a Material Adverse Effect (as defined in the Credit Agreement).
Current report
The Notice indicated that, as a result of the outstanding Events of Default, pursuant to the terms of Section 8.3 of the Credit Agreement, (a) the outstanding principal balance of the loan made under the Credit Agreement, all interest and fees related thereto, and all other outstanding obligations are accelerated and declared immediately due and payable, and that the Lender demands immediate payment of all obligations, and (b) the Lender is increasing the effective interest rate to the Default Rate (as defined in the Credit Agreement). The Credit Agreement affords IMGX thirty (30) days to cure Events of Default (the “Cure Period”), with a possible extension of an additional thirty (30) days, provided that in no event shall the Cure Period be greater than sixty (60) days in the aggregate. If IMGX is not able to cure the Events of Default within the Cure Period, IMGX may also be deemed to be in default of the stockholder notes ImmunogenX entered into with Jack Syage and Peter Felker as part of the acquisition of ImmunogenX by us (the “Stockholder Notes”), the entry into such notes having been previously disclosed by us on our Current Report on Form 8-K filed with the SEC on March 14, 2024. If IMGX is deemed to have defaulted under the Stockholder Notes, the holders of the Stockholder Notes may, at their option and upon notice to IMGX, declare the outstanding principal of, and all accrued interest on, the Stockholder Notes immediately due and payable.
Current report
As of the date of the Notice, the aggregate outstanding obligations under the Credit Agreement were $6,997,583 (comprised of (i) $5,360,000 in respect of outstanding principal, (ii) $1,637,583 of accrued and unpaid interest, and (iii) other, presently unliquidated, amounts for fees and expenses (including legal fees) payable in accordance with the Credit Agreement and related documents). This outstanding amount does not include any additional obligations incurred following the date of the Notice (including additional interest, which shall continue to accrue on the outstanding obligations following the date of the Notice).
Current report
As previously disclosed in our Current Report on Form 8-K filed with the SEC on September 3, 2024, on August 29, 2024, after discussions with the Lender, ImmunogenX received a letter (the “Letter”) from the Lender informing ImmunogenX that at this time, the Lender is suspending the MAE Default. The Letter additionally provided that the Lender’s suspension of the MAE Default is not, and shall not be construed as, a waiver of the MAE Default and the Lender expressly reserves all rights with respect to its enforcement of the MAE Default.
Current report
Letter of Intent with Data Vault Holdings, Inc.
Current report
On September 9, 2024, we entered into the Letter of Intent with Data Vault Holdings, Inc. (“DVHI”) for the licensing of certain clinical trial software owned by DVHI and associated intellectual property (the “Assets”). The Letter of Intent contemplates a worldwide exclusive license to the Assets with the right to grant sublicenses, and a right of first refusal for the Company to fully acquire the Assets in exchange for the issuance of $250,000 of shares of the Company’s junior convertible preferred stock (the “Preferred Shares”) priced at a price per preferred share equal to 180% of the five (5) trading day Volume-Weighted Average Price (“VWAP”) of the Company’s common stock (the “Common Share Price”), immediately preceding the closing of the Proposed Transaction multiplied by 1,000 (the “Preferred Share Price”), and single digit royalties on net sales (the “Proposed Transaction”). Entry into definitive documentation for the Proposed Transaction will be conditioned upon the Company receiving no less than $500,000 of strategic investment (the “Strategic Investment”), with a target of ultimately securing up to $3.0 million of strategic investment with the assistance of DVHI. There can be no assurance that the Proposed Transaction will be completed on the terms contemplated in the Letter of Intent or otherwise.
Current report
As of June 30, 2024, we had cash and cash equivalents of approximately $0.7 million and had sustained cumulative losses attributable to common stockholders of approximately $187.6 million. Subsequent to June 30, 2024, the Company raised aggregate gross proceeds of approximately $1.9 million from a July 2024 inducement offering. Based on our cash on hand at June 30, 2024, together with proceeds from the July 2024 exercise of warrants, we anticipate having sufficient cash to fund planned operations into November 2024. We believe that we will need to raise substantial additional capital in the near term to fund our continuing operations, satisfy existing and future obligations and liabilities, and otherwise support our working capital needs and business activities. The acceleration or reduction of cash outflows by management can significantly impact the timing for the need to raise additional capital to complete development of our products. In order to manage our operating costs, we have reduced headcount and paused development activities, and we are exploring strategic alternatives for the purpose of maximizing value of all of our stakeholders of the Company. We have been, and expect to continue to, explore various potential strategies available to us including but not limited to raising capital, restructuring our indebtedness and identifying and evaluating potential strategic alternatives but there can be no assurance that these efforts will be successful, that we will be able to raise necessary capital on acceptable terms, reach agreement with our lenders, or that the strategic review process will result in us pursuing any transaction or that any transaction, if pursued, will be completed on attractive terms or at all. We are evaluating all potential strategic options, including a merger, reverse merger, sale, wind-down, liquidation and dissolution or other strategic transactions. However, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased stakeholder value or that we will make any cash distributions to our stockholders. Any failure in these efforts could force us to delay, limit or terminate our operations, make reductions in our workforce, discontinue our research and development programs, liquidate all or a portion of our assets or pursue other strategic alternatives, and/or seek protection under the provisions of the U.S. Bankruptcy Code.
Current report
We evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. As described herein, if we are not able to obtain necessary capital, we may be required to terminate our operations, liquidate all or a portion of our assets and/or seek bankruptcy protection. As a result, management has concluded that its plans at this stage do not alleviate substantial doubt about our ability to continue as a going concern.
Current report
Debt Obligations
Current report
Revolving line of credit
Current report
In connection with the IMGX acquisition, we assumed a revolving line of credit. In October 2022, IMGX entered into a credit agreement, which allowed for a revolving line of credit (the “Revolver”) for borrowings up to $6.0 million, maturing on October 1, 2024, and bearing interest per annum of the prime rate plus 4.5%. The credit agreement was amended in September 2023 (the “First Amendment”) to increase the maximum borrowings of the Revolver to $7.5 million. The credit agreement was amended and restated on March 13, 2024 (the “Second Amendment”). Terms under the Second Amendment include a maturity date of September 13, 2025, interest per annum of the prime rate plus 6.0%, and no further draws on the line of credit after March 13, 2024. As of June 30, 2024, the Revolver and accrued interest has been reclassified to liabilities of the disposal group held for sale.
Current report
Promissory notes
Current report
In connection with the IMGX acquisition, we assumed two promissory notes, one of which is with a related party. The notes are each in the amount of $0.5 million, accrue interest at a rate of the prime rate plus 4.5% per annum, and have a maturity date of September 30, 2025. As of June 30, 2024, the promissory notes and all accrued interest has been reclassified to liabilities of the disposal group held for sale.
Current report
EIDL loan
Current report
In connection with the IMGX acquisition, we assumed an EIDL loan with a principal balance of $0.5 million bearing interest of 3.75% per annum, with interest payable monthly in arrears. All unpaid principal and interest are due at maturity on June 30, 2050. As of June 30, 2024, the EIDL loan and all accrued interest has been reclassified to liabilities of the disposal group held for sale.
Current report
Research and development expenses for the three months ended June 30, 2024 totaled approximately $0.2 million, a decrease of approximately $1.1 million, or 84%, over the approximately $1.3 million recorded for the three months ended June 30, 2023.
Current report
General and administrative expenses for the three months ended June 30, 2024 totaled approximately $3.2 million, an increase of approximately $0.4 million, or 13% over the approximately $2.8 million recorded for the three months ended June 30, 2023.
Current report
Other expenses for the three months ended June 30, 2024 and 2023 were insignificant.
Current report
Income tax expense
Current report
Income tax expense for the three months ended June 30, 2024 and 2023 was $4.3 million and $0, respectively. The income tax expense of $4.3 million recorded for the three months ended June 30, 2024 represents an increase in our valuation allowance related to the reclassification of the IMGX in-process research & development (“IPR&D”) assets to held for sale.
Current report
Loss from discontinued operations
Current report
Loss from discontinued operations for the three months ended June 30, 2024 and 2023 was $1.1 million and $0, respectively. The $1.1M of loss from discontinued operations recorded for the three months ended June 30, 2024 represents expenses related to the disposal group that was classified as held for sale as of June 30, 2024.
Current report
Net Loss
Current report
Consolidated Results of Operations for the Six Months Ended June 30, 2024 and 2023
Current report
Research and Development Expenses
Current report
Research and development expenses include expenses primarily relating to the development of our Adrulipase and Capeserod drug candidates.
Current report
General and Administrative Expenses
Showing the first 40 of 47 passages. Open the source sections for the rest.
Removed paragraphs (6)
Previous report
As of March 31, 2024, we had cash and cash equivalents of approximately $3.4 million, and had sustained cumulative losses attributable to common stockholders of approximately $178.8 million. Subsequent to March 31, 2024, we have raised aggregate gross proceeds of approximately $1.1 million from a May 2024 Registered Direct Offering. Based on our cash on hand at March 31, 2024, we anticipate having sufficient cash to fund planned operations into June 2024, however, the acceleration or reduction of cash outflows by management can significantly impact the timing for the need to raise additional capital to complete development of our products. We have not yet achieved profitability and anticipate that we will continue to incur net losses for the foreseeable future. We expect that our expenses will continue to grow and, as a result, we will need to generate significant product revenues to achieve profitability. We may never achieve profitability. As such, we are dependent on obtaining, and are continuing to pursue, the necessary funding from outside sources, including obtaining additional funding from the sale of securities in order to continue our operations. Without adequate funding, we may not be able to meet our obligations. We believe these conditions may raise substantial doubt about our ability to continue as a going concern.
Previous report
We have funded our operations to date primarily through the issuance of debt, convertible debt securities, preferred stock, as well as the issuance of Common Stock in various public offerings and private placement transactions. We expect to incur substantial expenditures in the foreseeable future for the development of adrulipase, niclosamide and any other drug candidates. We will require additional financing to develop our drug candidates, run clinical trials, prepare regulatory filings and obtain regulatory approvals, fund operating losses, and, if deemed appropriate, establish manufacturing, sales and marketing capabilities. Our current financial condition raises substantial doubt about our ability to continue as a going concern. Our failure to raise capital as and when needed would have a material adverse impact on our financial condition, our ability to meet our obligations, and our ability to pursue our business strategies. We will seek funds through additional equity and/or debt financings, collaborative or other arrangements with corporate sources, or through other sources of financing.
Previous report
Although, we are primarily focused on the development of our drug candidates, including adrulipase and niclosamide, we are also opportunely focused on expanding our product pipeline of clinical assets through collaborations, and also through acquisitions of products and companies. We are continually evaluating potential asset acquisitions business combinations, and other partnership opportunities. To finance such acquisitions, we might raise additional equity capital, incur additional debt, or both.
Previous report
Research and development expenses for the three months ended March 31, 2024 totaled approximately $0.6 million, a decrease of approximately $0.8 million, or 58%, over the approximately $1.4 million recorded for the three months ended March 31, 2023.
Previous report
Other expenses for the three months ended March 31, 2024 increased approximately $0.06 million over other expenses recorded for the three months ended March 31, 2023. The increase in other expenses was mainly due to interest expense related to the revolving line of credit and EIDL loan assumed with the IMGX acquisition.
Previous report
Net Income (Loss)
Reworded paragraphs (23)
Previous wording
References in this report to“First Wave,” “AzurRx,” “Company,” “we,” “us,” “our,”or similar references mean First Wave BioPharma, Inc. and its subsidiaries on a consolidated basis. References to“First Wave BioPharma”* refer to First Wave BioPharma, Inc. on an unconsolidated basis. References to*“AzurRx SAS”* refer to First Wave BioPharma*’s former wholly owned subsidiary through which we previously conducted our European operations. References to “FWB” refer to First Wave Bio, Inc. and references to “IMGX” refer to ImmunogenX, Inc., First Wave BioPharma’s wholly-owned subsidiaries. References to the“SEC”* refer to the U.S. Securities and Exchange Commission.*
Current wording
References in this report to “Entero,” “First Wave,” “AzurRx,” “Company,” “we,” “us,” “our,”or similar references mean Entero Therapeutics, Inc. and its subsidiaries on a consolidated basis. References to“AzurRx SAS”refer to Entero’s former wholly owned subsidiary through which we previously conducted our European operations. References to “FWB” refer to First Wave Bio, Inc. and references to “IMGX” refer to ImmunogenX, Inc., Entero’s wholly-owned subsidiaries. References to the“SEC”* refer to the U.S. Securities and Exchange Commission.*
Previous wording
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this interim report. Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the“Exchange Act”), including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words“expect,” “anticipate,” “intend,” “believe,”* or similar language. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our business and financial performance are subject to substantial risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. In evaluating our business, you should carefully consider the information set forth under the heading*“Risk Factors”* included in our Annual Report filed on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 29, 2024. Readers are cautioned not to place undue reliance on these forward-looking statements.*
Current wording
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this interim report. Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the“Exchange Act”), including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words“expect,” “anticipate,” “intend,” “believe,”or similar language. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our business and financial performance are subject to substantial risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. In evaluating our business, you should carefully consider the information set forth under the heading“Risk Factors”* included in this Report and in our Annual Report filed on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 29, 2024. Readers are cautioned not to place undue reliance on these forward-looking statements.*
Previous wording
We are currently focused on developing a therapeutic pipeline with multiple late-stage clinical programs built around four proprietary technologies – Latiglutenase, a targeted oral minimally absorbed recombinant enzyme designed to breakdown gluten into non-immunogenic peptides for the treatment of symptomatic celiac disease as an adjunct to the gluten free diet; the biologic Adrulipase, a recombinant lipase enzyme designed to enable the digestion of fats and other nutrients in cystic fibrosis and chronic pancreatitis patients with exocrine pancreatic insufficiency; Capeserod, a selective 5-HT4 receptor partial agonist which we are developing for the treatment of gastroparesis; and Niclosamide, an oral small molecule with anti-inflammatory properties for patients with inflammatory bowel diseases such as ulcerative colitis and Crohn’s disease.
Current wording
Our therapeutic pipeline primarily consists of multiple late-stage clinical programs built around three proprietary technologies – the biologic Adrulipase, a recombinant lipase enzyme designed to enable the digestion of fats and other nutrients in cystic fibrosis and chronic pancreatitis patients with exocrine pancreatic insufficiency; Capeserod, a selective 5-HT4 receptor partial agonist which we are developing for the treatment of gastroparesis; and Niclosamide, an oral small molecule with anti-inflammatory properties for patients with inflammatory bowel diseases such as ulcerative colitis and Crohn’s disease. We are currently focusing on our Adrulipase and Capeserod programs and are exploring strategic alternatives for our Niclosamide program.
Previous wording
In March 2024, we announced the closing of a merger with ImmunogenX, Inc. (“IMGX”), a private, clinical-stage biopharmaceutical company founded in 2013, which is developing the biologic, Latiglutenase, for celiac disease. IMGX is also developing CypCel, a metabolic marker compound that can measure the state of small-intestinal recovery of celiac patients undergoing gluten-free diets (“GFDs”).
Current wording
In March 2024, we announced the closing of a merger with ImmunogenX, Inc. (“IMGX”) (the Company’s acquisition of IMGX, the “Merger”), a private, clinical-stage biopharmaceutical company founded in 2013, which is developing the biologic Latiglutenase for the treatment of celiac disease. IMGX is also developing CypCel, a metabolic marker compound that can measure the state of small-intestinal recovery of celiac patients undergoing gluten-free diets (“GFDs”).
Previous wording
In December 2023, we announced that we have entered into a non-binding term sheet to sell our Niclosamide program. The non-binding term sheet includes a low seven-figure upfront payment to us for rights to Niclosamide, as well as economics related to future milestones and royalties. The transaction is expected to close in the first half of 2024.
Current wording
In December 2023, we announced that we have entered into a non-binding term sheet to sell our Niclosamide program. The non-binding term sheet includes a low seven-figure upfront payment to us for rights to Niclosamide, as well as economics related to future milestones and royalties. This transaction is not expected to move forward at this time.
Previous wording
On March 6, 2024, we completed the March 2024 Offering priced at market under Nasdaq rules, for an aggregate of (i) 173,100 shares of Common Stock, (ii) pre-funded warrants to purchase up to an aggregate of 352,525 shares of Common Stock and (iii) common warrants to purchase up to an aggregate of 525,625 shares of Common Stock. The public offering price for each share of Common Stock and accompanying March 2024 Warrant to purchase one share of Common Stock was $7.61 per share. The March 2024 Pre-Funded Warrants have an exercise price of $0.0001 per share, are exercisable immediately and will expire when exercised in full. The March 2024 Warrants have an exercise price of $7.48 per share, are exercisable immediately and will expire five years from the initial exercise date. We received gross proceeds of approximately $4.0 million less placement agent’s fees and other offering expenses of approximately $400,000. The March 2024 Offering included customary registration rights, for registration under the Securities Act, of the shares underlying the warrants in the March 2024 Offering.
Current wording
On March 6, 2024, we completed the March 2024 Offering priced at market under Nasdaq rules, for an aggregate of (i) 173,100 shares of Common Stock, (ii) pre-funded warrants to purchase up to an aggregate of 352,525 shares of Common Stock and (iii) common warrants to purchase up to an aggregate of 525,625 shares of Common Stock. The public offering price for each share of Common Stock and accompanying March 2024 Warrant to purchase one share of Common Stock was $7.61 per share. The March 2024 Pre-Funded Warrants have an exercise price of $0.0001 per share, are exercisable immediately and will expire when exercised in full. The March 2024 Warrants have an exercise price of $7.48 per share, are exercisable immediately and will expire five years from the initial exercise date. We received gross proceeds of approximately $4.0 million less placement agent’s fees and other offering expenses of approximately $0.4 million. The March 2024 Offering included customary registration rights, for registration under the Securities Act, of the shares underlying the warrants in the March 2024 Offering.
Previous wording
On August 17, 2023, we received a letter from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that we were not in compliance with the $2.5 million minimum stockholders’ equity requirement for continued listing of our common stock on Nasdaq as set forth in Nasdaq Listing Rule 5550(b)(1) (the “Minimum Stockholder’s Equity Rule”). In that regard, we reported stockholders’ equity of $881,960 in our Quarterly Report on Form 10-Q for the period ended June 30, 2023 (we did not then, and do not now, meet the alternative compliance standards relating to the market value of listed securities of $35 million or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years). On April 1, 2024, we received a determination from the Staff that we are back in compliance with the Minium Stockholder’s Equity Rule and that the matter is closed.
Current wording
On August 17, 2023, we received a letter from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that we were not in compliance with the $2.5 million minimum stockholders’ equity requirement for continued listing of our common stock on Nasdaq as set forth in Nasdaq Listing Rule 5550(b)(1) (the “Minimum Stockholder’s Equity Rule”). In that regard, we reported stockholders’ equity of $881,960 in our Quarterly Report on Form 10-Q for the period ended June 30, 2023 (we did not then, and do not now, meet the alternative compliance standards relating to the market value of listed securities of $35.0 million or net income from continuing operations of $0.5 million in the most recently completed fiscal year or in two of the last three most recently completed fiscal years). On April 1, 2024, we received a determination from the Staff that we are back in compliance with the Minium Stockholder’s Equity Rule and that the matter is closed.
Previous wording
We are able to sell securities on a shelf registration statement pursuant to the ATM Agreement with H.C. Wainwright & Co., LLC. Under current Securities and Exchange Commission regulations, because our public float was less than $75 million at the relevant measurement period pursuant to General Instruction I.B.6. to Form S-3, the amount we can raise through primary public offerings of securities in any subsequent twelve-month period under our shelf registration statement is limited to an aggregate of one-third of our public float until such time, if any, as our public float is $75 million or more.
Current wording
Under current Securities and Exchange Commission regulations, because our public float was less than $75.0 million at the relevant measurement period pursuant to General Instruction I.B.6. to Form S-3, the amount we can raise through primary public offerings of securities in any subsequent twelve-month period under our shelf registration statement is limited to an aggregate of one-third of our public float until such time, if any, as our public float is $75.0 million or more. Due to the late filing of our Form 10-Q for the quarter ended June 30, 2024, we are prohibited from registering shares under a Form S-3 for 12 months from the original filing due date, or August 14, 2025.
Previous wording
Research and development expenses include expenses primarily relating to the development of our Latiglutenase, Capeserod, Adrulipase and Niclosamide drug candidates.
Current wording
Research and development expenses include expenses primarily relating to the development of our Adrulipase and Capeserod drug candidates.
Previous wording
The approximately $0.8 million decrease in total research and development expenses was primarily attributable to decreases of approximately $0.9 million in clinical related expenses in connection with our Phase 2b Adrulipase SPAN clinical trial which occurred during the three months ended March 31, 2023.
Current wording
The approximately $1.1 million decrease in total research and development expenses was primarily attributable to a net decrease of approximately $1.0 million in clinical related expenses primarily due to our Phase 2b Adrulipase SPAN clinical trial which occurred during the three months ended June 30, 2023.
Previous wording
We expect research and development expenses to increase during the remainder of this fiscal year as we begin work on our Latiglutenase asset.
Current wording
We expect research and development expenses to decrease during the remainder of this fiscal year as we conserve cash.
Previous wording
We expect general and administrative expenses to decrease during the remainder of this fiscal year.
Current wording
We expect general and administrative expenses to decrease during the remainder of this fiscal year as we conserve cash.
Previous wording
As a result of the factors above, our net income for the three months ended March 31, 2024 totaled approximately $5.6 million, an increase of approximately $9.6 million, or 237%, over the net loss of approximately $4.1 million recorded for the three months ended March 31, 2023.
Current wording
As a result of the factors above, our net loss for the three months ended June 30, 2024 totaled approximately $8.8 million, an increase of approximately $4.6 million, or 110%, over the net loss of approximately $4.2 million recorded for the three months ended June 30, 2023.
Previous wording
General and administrative expenses for the three months ended March 31, 2024 totaled approximately $8.6 million, an increase of approximately $** **5.9 million, or 220% over the approximately $2.7 million recorded for the three months ended March 31, 2023.
Current wording
Research and development expenses for the six months ended June 30, 2024 totaled approximately $0.7 million, a decrease of approximately $2.0 million, or 75%, over the approximately $2.7 million recorded for the six months ended June 30, 2023.
Previous wording
The approximately $5.9 million increase in total general and administrative expenses was primarily attributable to $4.0 million of non-cash expense recorded for the Tungsten financial advisor fees and as well as increases of approximately $0.8 million in legal fees, $0.8 million in share-based compensation for consultants, $0.2 million in professional fees, and $0.1 million in personnel related costs.
Current wording
The increase in general and administrative expenses of $6.3 million was primarily due to $4.0 million of non-cash expense recorded for financial advisor fees related to the IMGX acquisition, $1.5 million in share-based compensation for consultants, as well as an increase of $0.9 million in legal fees and professional fees related to the IMGX acquisition.
Previous wording
A tax benefit of approximately $14.9 million was recorded in the three months ended March 31, 2024 due to the release of a portion of our valuation allowance that had previously been recorded against our deferred tax assets in connection with the IMGX Merger. The release of the valuation allowance was due to the acquisition of intangible assets which are considered definite lived for tax purposes.
Current wording
A tax benefit of approximately $10.6 million was recorded in the six months ended June 30, 2024 due to the release of a portion of our valuation allowance in connection with the IMGX Merger of $14.9 million, partially offset by an increase in our valuation allowance of $4.3 million related to the reclassification of the IMGX IPR&D to held for sale.
Previous wording
Cash Flows for the Three Months Ended March 31, 2024 and 2023
Current wording
Cash Flows for the Six Months Ended June 30, 2024 and 2023
Previous wording
Net cash used in operating activities during the three months ended March 31, 2024 of approximately $3.7 million was primarily attributable to our non-cash change in deferred tax valuation allowance of $14.9 million, partially offset by net income of $5.6 million and other non-cash expenses totaling approximately $5.5 million. Other non-cash expenses include stock issued to our financial advisors in connection with the IMGX acquisition of $4.0 million, common stock granted to consultants of $0.8 million, and stock-based compensation of $0.3 million; a decrease in prepaid expenses of $0.3 million and a net decrease in accounts payable and accrued expenses of $0.1 million.
Current wording
Net cash used in operating activities during the six months ended June 30, 2024 of approximately $7.2 million was primarily attributable to our non-cash change in deferred tax valuation allowance of $10.6 million and our net loss of $3.2 million, partially offset by other non-cash expenses totaling approximately $6.3 million, mainly related to stock issued to our financial advisors in connection with the IMGX acquisition of $4.0 million, common stock granted to consultants of $1.5 million, and stock-based compensation of $0.4 million, as well as a decrease in prepaid expenses of $0.7 million.
Previous wording
Net cash used in operating activities during the three months ended March 31, 2023 of approximately $2.8 million was primarily attributable to our net loss of approximately $4.1 million, partially offset by non-cash expenses of approximately $0.4 million, mainly related to stock-based compensation, as well as a decrease in prepaid expenses of $0.5 million and increases in accounts payable and accrued expense of approximately $0.3 million.
Current wording
Net cash used in operating activities during the six months ended June 30, 2023 of approximately $5.6 million was primarily attributable to our net loss of approximately $8.2 million, partially offset by non-cash expenses of approximately $0.7 million, mainly related to stock-based compensation, as well as a decrease in prepaid expenses of $0.9 million and increases in accounts payable and accrued expense of approximately $1.0 million.
Previous wording
Net cash provided by investing activities during the three months ended March 31, 2024 of approximately $0.1 million was due to the net cash acquired in the acquisition of IMGX.
Current wording
Net cash provided by investing activities during the six months ended June 30, 2024 of approximately $0.1 million was due to the net cash acquired in the acquisition of IMGX.
Previous wording
Net cash provided by financing activities of approximately $3.4 million for the three months ended March 31, 2024 was primarily due to net proceeds of approximately $3.6 million from the March 2024 registered direct offering, partially offset by approximately $0.2 million of cash repayments of the note payable financing for corporate insurances.
Current wording
Net cash provided by financing activities of approximately $4.1 million for the six months ended June 30, 2024 was primarily due to net proceeds of approximately $4.5 million from the March 2024 and May 2024 registered direct offerings, partially offset by approximately $0.5 million of cash repayments of the note payable financing for corporate insurances.
Previous wording
Net cash provided by financing activities of approximately $3.5 million for the three months ended March 31, 2023 was primarily due to net proceeds of approximately $3.8 million from the March 2023 private placement offering, partially offset by approximately $0.2 million of cash repayments of the note payable financing for corporate insurances.
Current wording
Net cash provided by financing activities of approximately $5.5 million for the six months ended June 30, 2023 was primarily due to the net proceeds of approximately $2.2 million from the exercise of warrants and $3.7 million from the March 2023 Offering, partially offset by approximately $0.4 million of cash repayments of the note payable financing for corporate insurances.
Previous wording
During the three months ended March 31, 2024, there were no material changes to matters discussed under the heading “Critical Accounting Policies and Significant Judgments and Estimates” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
During the six months ended June 30, 2024, there were no material changes to matters discussed under the heading “Critical Accounting Policies and Significant Judgments and Estimates” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
The approximately $0.4 million increase in total general and administrative expenses was primarily attributable to $0.8 million in share-based compensation for consultants, partially offset by a decrease of $0.3 million in public company costs and investor relations.
Current report — wording carried from elsewhere
The following table summarizes our consolidated results of operations for the periods indicated:
Current report — wording carried from elsewhere
The decrease in research and development expenses of $2.0 million was primarily attributable to decreases of approximately $2.0 million in clinical related expenses primarily related to our Phase 2b Adrulipase SPAN clinical trial which occurred during the six months ended June 30, 2023.
Current report — wording carried from elsewhere
We expect research and development expenses to decrease during the remainder of this fiscal year as we conserve cash.
Current report — wording carried from elsewhere
General and administrative expenses include expenses primarily relating to our overall operations and being a public company, including personnel, legal and financial professional services, insurance, corporate communication and investor relations, listing and compliance related costs, rent, and expenses associated with obtaining and maintaining intellectual property and patents, among others.
Current report — wording carried from elsewhere
We expect general and administrative expenses to decrease during the remainder of this fiscal year as we conserve cash.