iBio Inc

Previous wording

generating cash savings of approximately 64% from first quarter Fiscal year 2023 compared to the fourth quarter Fiscal year 2023. Potential options being considered to further increase liquidity include focusing product development on a select number of product candidates, the sale or out-licensing of certain product candidates, raising money from the capital markets, grant revenue or collaborations, or a combination thereof. However, we anticipate that our expenses will increase as we continue our research and development activities and conduct clinical trials.

Current wording

We are currently evaluating a number of potential options to expand our cash runway, the implementation of which will impact our liquidity. In an effort to improve liquidity and our runway, we have placed our CDMO business and Facility on the market for sale, reduced our work force and ceased operations of our CDMO, thereby reducing annual spend on expenses by approximately 58% and generating cash savings of approximately 46% when comparing the nine months ended March 31, 2024 to the nine moths ended March 31, 2023. Potential options being considered to further increase liquidity include focusing product development on a select number of product candidates, the sale or out-licensing of certain product candidates, raising money from the capital markets, grant revenue or collaborations, or a combination thereof. However, we anticipate that our expenses will increase as we continue our research and development activities and conduct clinical trials.

Previous wording

Our cash, cash equivalents and restricted cash of $4.1 million as of December 31, 2023, is not anticipated to be sufficient to support our operations beyond the third quarter of Fiscal 2024 unless we reduce our burn rate further, sublease all or a portion of the San Diego Lease, sell the Facility for amounts above its term note payable, or raise additional capital. Regardless of whether we are able to reduce our burn rate or sell or out-license certain assets or parts of the business, we will need to raise additional capital in order to fully execute our near and long-term business plans. In fact, our current cash, cash equivalents and restricted cash as of December 31, 2023, is not anticipated to be sufficient to support operations through the third quarter of Fiscal 2024.

Current wording

Despite the proceeds from the Private Placement, our cash, cash equivalents and restricted cash of $17.9 million as of May 13, 2024, is not anticipated to be sufficient to support our operations beyond the first quarter of Fiscal 2025 unless we sell the Facility for amounts near or above the term note outstanding payable balance or the Term Loan is restructured, we reduce our burn rate further, sublease all or a portion of the San Diego Lease, or raise additional capital. Regardless of whether we are able to reduce our burn rate or sell or out-license certain assets or parts of the business, we will need to raise additional capital in order to fully execute our near and long-term business plans.

Previous wording

We have incurred net losses and used significant cash in operating activities since inception, and we expect to continue to generate operating losses for the foreseeable future. As of December 31, 2023, we have an accumulated deficit of $302.9 million. As a result of our continued losses, our cash resources have not been sufficient to sustain our operations, and we have continued to depend on financing transactions to generate sufficient cash to stay in operation. We are currently incurring negative operating cash flows of approximately $1.6 million per month.

Current wording

We have incurred net losses and used significant cash in operating activities since inception, and we expect to continue to generate operating losses for the foreseeable future. As of March 31, 2024, we have an accumulated deficit of $306.1 million. As a result of our continued losses, our cash resources have not been sufficient to sustain our operations, and we have continued to depend on financing transactions to generate sufficient cash to stay in operation. During the nine months ended March 31, 2024, we used net cash in operating activities of $13.7 and we are currently incurring negative operating cash flows of approximately $1.5 million per month.

Previous wording

We held cash, cash equivalents and restricted cash of $4.1 million as of December 31, 2023. Based on current trends and activities, there is significant doubt that we can continue as a going concern beyond the third quarter of Fiscal 2024. We are currently evaluating a number of potential options to expand our cash runway, the implementation of which will impact our liquidity. Potential options being considered to increase liquidity include focusing product development on a select number of product candidates, the possible sale of the Facility, the sale or out-licensing of certain product candidates or parts of the business, raising money from capital markets, grant revenue or collaborations, or a combination thereof. Regardless of whether we are able to reduce our burn rate or sell or out-license certain assets or parts of the business, we will need to raise additional capital in order to fully execute our longer-term business plan. We believe based on input from expert advisors, that it is likely we will be able to implement one or more options that will extend our cash runway for 12 months or more from the date of the filing of this Report. However, there can be no assurance that we will be successful in implementing any of the options that we are evaluating.

Current wording

We held cash, cash equivalents and restricted cash of $17.9 million as of May 13, 2024. Based on current trends and activities, there is significant doubt that we can continue as a going concern beyond the first quarter of Fiscal 2025 if we do not sell the Facility for amounts near or above its Term Loan or the Term Loan is restructured. We are currently evaluating a number of potential options to expand our cash runway, the implementation of which will impact our liquidity. Potential options being considered to increase liquidity include focusing product development on a select number of product candidates, the possible sale of the Facility, the sale or out-licensing of certain product candidates or parts of the business, raising money from capital markets, grant revenue or collaborations, or a combination thereof. Regardless of whether we are able to reduce our burn rate or sell or out-license certain assets or parts of the business, we will need to raise additional capital in order to fully execute our longer-term business plan and based upon the current terms of the Term Loan, if the Facility is not sold at a price that allows for full or a significant portion of the outstanding Term Loan balance to be repaid, we will need to raise additional capital in order to fully execute our short-term business plan. However, there can be no assurance that we will be successful in implementing any of the options that we are evaluating.

Previous wording

Our condensed consolidated financial statements as of and for the year ended December 31, 2023 have been prepared under the assumption that we will continue as a going concern for the next 12 months. Our management concluded that our recurring losses from operations and the fact that we have not generated significant revenue or positive cash flows from operations raise substantial doubt about our ability to continue as a going concern for the next 12 months. In addition, the Term Loan with Woodforest, with an outstanding principal balance of which is $12,654,867 as of February 9, 2024, matures on March 29, 2024 and unless the Property is sold prior to the Term Loan maturity date at a price that will allow us to repay the outstanding amounts owed under the Term Loan in full we will not have sufficient funds to pay the Term Loan when due. In addition, if a sale of the Facility is not consummated at a price at or above the outstanding balance under the Term Loan we do not expect to have sufficient funds to repay the Term Loan upon its maturity. There can be no assurance that we will be able to sell the Facility or that we will be able to sell the Facility for an amount that will allow us to repay all outstanding amounts under the Term Loan. Our auditors also included an explanatory paragraph in its report on our financial statements as of and for the year ended June 30, 2023 with respect to this uncertainty. If we continue to experience operating losses, and we are not able to generate additional liquidity through a capital raise or other cash infusion, we might need to secure additional sources of funds, which may or may not be available to us. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to further scale back or discontinue the development of our product candidates or other research and development initiatives, restructure our Company including a further work force reduction, or initiate steps to cease operations or liquidate our assets.

Current wording

be no assurance that we will be able to sell the Facility or that we will be able to sell the Facility for an amount near or above the outstanding amounts under the Term Loan and not create a deficiency claim. We are evaluating a potential transaction based on current interest in the Facility which would minimize cash outlay and allow us to have a cash runway for at least 12 months from the date of the filing of this Quarterly Report. However, there can be no assurance that the Company will be successful in implementing. The report of our auditors on our financial statements as of and for the year ended June 30, 2023 also included an explanatory paragraph with respect to this uncertainty. If we continue to experience operating losses, and we are not able to generate additional liquidity through a capital raise or other cash infusion, we might need to secure additional sources of funds, which may or may not be available to us. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to further scale back or discontinue the development of our product candidates or other research and development initiatives, or restructure our Company including a further work force reduction.

Previous wording

which could curtail our business. Third, we may be subject to lawsuits from claimants relating to past due balances, if we cannot work out or continue to renegotiate payment terms. There is no assurance that we will be able to successfully defend against such claims, and our creditors or claimants may seek to seize our assets or assert other judicial remedies. Ultimately, any or all of the above factors could lead to a possible reduction or suspension of our operations, ultimately forcing us to declare bankruptcy, reorganize or go out of business. Should this occur, the value of any investment in our securities could be adversely affected, and an investor would likely lose all or a significant portion of their investment.

Current wording

Unless and until we are able to raise sufficient capital, for which there can be no assurance, our lack of cash will continue to constrain our business and subject us to significant risks, including the following. First, we may be unable to make the necessary investment in personnel, equipment or other resources to effectively pursue our business plan. Second, our suppliers, vendors and service providers could slow down or stop supplying components or services or could stop extending credit in connection with commercial transactions, which could curtail our business. Third, we may be subject to lawsuits from claimants relating to past due balances, if we cannot work out or continue to renegotiate payment terms. There is no assurance that we will be able to successfully defend against such claims, and our creditors or claimants may seek to seize our assets or assert other judicial remedies. Ultimately, any or all of the above factors could lead to a possible reduction or suspension of our operations, ultimately forcing us to declare bankruptcy, reorganize or go out of business. Should this occur, the value of any investment in our securities could be adversely affected, and an investor would likely lose all or a significant portion of their investment.

Previous wording

Since our 2008 spinoff from Integrated BioPharma, we have incurred operating losses and negative cash flows from operations. Our comprehensive net loss was approximately ($8.2) million and ($33.6) million for the three months ended December 31, 2023 and 2022, respectively. Our comprehensive net loss was approximately ($14.0) million and ($51.7) million for the six months ended December 31, 2023 and 2022, respectively. Our comprehensive net loss was approximately ($64.8) million and ($50.5) million for the years ended June 30, 2023 and 2022, respectively. As of December 31, 2023, we had an accumulated deficit of approximately ($302.9) million.

Current wording

Since our 2008 spinoff from Integrated BioPharma, we have incurred operating losses and negative cash flows from operations. Our comprehensive net loss was approximately ($3.2) million and ($7.3) million for the three months ended March 31, 2024 and 2023, respectively. Our comprehensive net loss was approximately ($17.1) million and ($58.8) million for the nine months ended March 31, 2024 and 2023, respectively. Our comprehensive net loss was approximately ($64.8) million and ($50.5) million for the years ended June 30, 2023 and 2022, respectively. As of March 31, 2024, we had an accumulated deficit of approximately ($306.1) million.

Previous wording

The uncertain financial markets, disruptions in supply chains, mobility restraints, and changing priorities as well as volatile asset values could impact our business in the future. We and our third-party contract manufacturers, contract research organizations, and any clinical sites that may conduct our clinical trials in the future may also face disruptions in procuring items that are essential to our research and development activities, including, for example, medical and laboratory supplies used in our clinical trials or preclinical studies, in each case, that are sourced from abroad or for which there are shortages because of ongoing efforts to address the outbreak. These minor disruptions have had an immaterial effect on business, which we have been able to address with minimal impact to our business operations to date. Further, although we have not experienced any material adverse effects on our business due to

Current wording

The uncertain financial markets, disruptions in supply chains, mobility restraints, and changing priorities as well as volatile asset values could impact our business in the future. We and our third-party contract manufacturers, contract research organizations, and any clinical sites that may conduct our clinical trials in the future may also face disruptions in procuring items that are essential to our research and development activities, including, for example, medical and laboratory supplies used in our clinical trials or preclinical studies, in each case, that are sourced from abroad or for which there are shortages because of ongoing efforts to address the outbreak. These minor disruptions have had an immaterial effect on business, which we have been able to address with minimal impact to our business operations to date. Further, although we have not experienced any material adverse effects on our business due to increasing inflation, it has raised operating costs for many businesses and, in the future, could impact demand or pricing manufacturing of our drug candidates or services providers, foreign exchange rates or employee wages. We are actively monitoring the effects these disruptions and increasing inflation could have on our operations.

Previous wording

If the Property is not sold prior to the March 29, 2024 Term Loan maturity date, iBio CDMO will not have sufficient funding to pay the Term Loan with Woodforest for which we are a guarantor.

Current wording

If the Property is not sold prior to the May 15, 2024 Term Loan maturity date, iBio CDMO will not have sufficient funding to pay the Term Loan with Woodforest for which we are a guarantor and support our operations through the first quarter of Fiscal 2025.

Previous wording

Although we have listed the Property for sale, we do not currently have a buyer for the Property. On November 7, 2023, we received written notice from Majestic Realty of its election to terminate the Purchase and Sale Agreement, dated as of September 15, 2023, between Majestic Realty and iBio CDMO LLC, pursuant to which iBio CDMO had agreed to sell to Majestic Realty the Property. There can be no assurance that we will find another buyer for the Property or that the sale of the Property will be completed in a timely manner. If the Property is not sold prior to the March 29, 2024 maturity date of the Term Loan, we will not have sufficient funds to repay the Term Loan on its maturity date, the outstanding principal balance of which is $12,654,867 as of February 9, 2024. In addition, if a sale of the Facility is not consummated at a price at or above the outstanding balance under the Term Loan we do not expect to have sufficient funds to repay the Term Loan upon its maturity. Our failure to make such payments when due could result in our loss of the Facility. Any action to proceed against our assets would likely have a serious disruptive effect on our business operations, especially if the Facility or our other assets were foreclosed upon or our guarantee were enforced.

Current wording

Although we have listed the Property for sale, we do not currently have a signed contract to sell the Property near or above the outstanding balance under the Term Loan. On November 7, 2023, we received written notice from Majestic Realty of its election to terminate the Purchase and Sale Agreement, dated as of September 15, 2023, between Majestic Realty and iBio CDMO LLC, pursuant to which iBio CDMO had agreed to sell to Majestic Realty the Property. There can be no assurance that we will complete a sale of the Property in a timely manner. If the Property is not sold prior to the May 15, 2024 maturity date of the Term Loan, we will not have sufficient funds to repay the Term Loan on its maturity date, the outstanding principal balance of which is $12.7 million as of March 31, 2024, and have sufficient funds to continue to support our operations through the first quarter of Fiscal 2025. In addition, if a sale of the Facility is not consummated at a price near or above the outstanding balance under the Term Loan based upon the current terms of the Term Loan, we will be required to pay the shortfall which could, depending upon such sale price, deplete our cash. Our failure to make such payments when due could result in our loss of the Facility. Any action to proceed against our assets would likely have a

Previous wording

deed of trust on our Facility, and (b) a first lien on all assets of iBio CDMO including the Facility. We have also guaranteed the payment of all iBio CDMO’s obligations under the Credit Agreement. The Term Loan matures the earlier of March 29, 2024, or the acceleration of maturity of the Term Loan pursuant to the Credit Agreement. If we or iBio CDMO fail to comply with the terms of the Term Loan and/or the related agreements, including the affirmative and negative covenants contained therein, Woodforest National Bank could declare a default and if the default were to remain uncured, Woodforest National Bank would have the right to proceed against any or all of the collateral securing their Term Loan. Our failure to make such payments when due could result in our loss of the Facility. In addition, we have guaranteed the repayment of the Term Loan and could be responsible for such payment. Any action to proceed against our assets would likely have a serious disruptive effect on our business operations, especially if the Facility or our other assets were foreclosed upon.

Current wording

There is no assurance that we will generate sufficient revenue or raise sufficient capital to be able to make the required principal payment under the Term Loan that iBio CDMO entered into with Woodforest and continue our operations as currently planned. The Term Loan with Woodforest is secured by (a) a leasehold deed of trust on our Facility, and (b) a first lien on all assets of iBio CDMO including the Facility. We have also guaranteed the payment of all iBio CDMO’s obligations under the Credit Agreement. The Term Loan matures the earlier of May 15, 2024, or the acceleration of maturity of the Term Loan pursuant to the Credit Agreement. If we or iBio CDMO fail to comply with the terms of the Term Loan and/or the related agreements, including the affirmative and negative covenants contained therein, Woodforest National Bank could declare a default and if the default were to remain uncured, Woodforest National Bank would have the right to proceed against any or all of the collateral securing their Term Loan. Our failure to make such payments when due could result in our loss of the Facility. In addition, we have guaranteed the repayment of the Term Loan and could be responsible for such payment. Any action to proceed against our assets would likely have a serious disruptive effect on our business operations, especially if the Facility or our other assets were foreclosed upon.