AVENUE THERAPEUTICS INC
For the period ended Jun 30, 2024. Filed Aug 9, 2024.
View on SEC.govAbout this filing
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 Aug 9, 2024
ATXI$0.42-50.7%Stored close · as of Mar 18, 2025
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001437749-24-017062
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0001437749-24-025880
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 69 previous paragraphs and 97 current paragraphs.
40 unchanged; 23 reworded; 25 added; 5 removed; 1 previous and 9 current paragraphs rearranged.
Tables are not compared: 26 previous and 27 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 (25)
Current report
In May 2024, we announced last patient last visit in the Phase 1b/2a trial and anticipate top-line data readout in the second half of 2024.
Current report
Recent Events
Current report
Reverse Stock Split
Current report
On April 25, 2024, we filed an amendment (the “Reverse Split Amendment”) to the Company’s Third Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a 1-for-75 reverse stock split of our shares of common stock ("Reverse Stock Split"). As a result of the Reverse Stock Split, every 75 shares of common stock outstanding immediately prior to effectiveness of the Reverse Stock Split were combined and converted into one share of common stock without any change in the par value per share. The Reverse Stock Split became effective on April 26, 2024, and the common stock was quoted on the Nasdaq Stock Market on a post-split basis at the open of business on April 26, 2024. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who would have otherwise been entitled to a fraction of one share of common stock as a result of the Reverse Stock Split instead received one whole share of common stock.
Current report
On May 21, 2024, we were formally notified by Nasdaq that we have evidenced compliance with the Bid Price Requirement and the Stockholders' Equity Requirement for continued listing on the Nasdaq, as set forth in Nasdaq Listing Rules 5550(a)(2) and 5550(b)(1), respectively. Notwithstanding the closing of the matter, the Company was also notified that it will remain subject to a “Panel Monitor,” as that term is defined in Nasdaq Listing Rule 5815(d)(4)(B), for a period of one year, through May 21, 2025. If, during the term of the Panel Monitor, the Company does not satisfy the Stockholders’ Equity Requirement, the Company will not be provided with the opportunity to submit a compliance plan for the Listing Qualifications Staff’s review. The Company will instead be required to request a hearing before the Nasdaq Hearings Panel to address the deficiency, with such request staying any further action with respect to the Company’s listing on Nasdaq pending completion of the hearing process.
Current report
Pursuant to the May 2024 Warrant Inducement, the May 2024 Holders agreed to exercise for cash the May 2024 Exercised Warrants at a reduced exercise price of $6.20 per share in partial consideration for our agreement to issue in a private placement (x) new Series C common stock purchase warrants (the “Series C Warrants”) to purchase up to 689,680 shares of common stock (the “Series C Warrant Shares”) and (y) new Series D common stock purchase warrants (the “Series D Warrants” and, together with the Series C Warrants, the “May 2024 Warrants”) to purchase up to 689,680 shares of common stock (the “Series D Warrant Shares” and, together with the Series C Warrant Shares, the “May 2024 Warrant Shares”). The May 2024 Holders also agreed to make a payment of $0.125 per May 2024 Warrant Share (the “Additional Warrant Consideration”).
Current report
The closing of May 2024 Warrant Inducement occurred on May 1, 2024. The Company received aggregate net proceeds of approximately $3.7 million from the exercise of the May 2024 Exercised Warrants by the May 2024 Holders and the payment of the Additional Warrant Consideration, after deducting placement agent fees and other expenses.
Current report
We engaged H.C. Wainwright & Co., LLC (“Wainwright”) to act as its exclusive agent in connection with the transactions summarized above and paid Wainwright a cash fee equal to 7.0% of the aggregate gross proceeds from the exercise of the May 2024 Exercised Warrants at the reduced exercise price and the Additional Warrant Consideration. In addition, we (i) reimbursed Wainwright for $50,000 of the fees and expenses of Wainwright’s legal counsel and other of its out-of-pocket expenses, (ii) reimbursed Wainwright for its non-accountable expenses in the amount of $35,000, and (iii) paid a management fee equal to 1.0% of the gross proceeds raised. We also issued to Wainwright or its designees placement agent warrants (the “Placement Agent Warrants”) to purchase up to 41,381 shares of common stock. The Placement Agent Warrants have the same terms as the Series C Warrants, except that the Placement Agent Warrants have an exercise price equal to $7.75 per share.
Current report
ATM Offering
Current report
On May 10, 2024, we entered into an At the Market Offering Agreement (the "ATM Agreement") with H.C. Wainwright & Co. LLC (the "ATM Manager") under which we may offer and sell, from time to time at our sole discretion, shares of our common stock, par value $0.0001 per share, through or to the ATM Manager. The offer and sales of the shares are made pursuant to a previously filed shelf registration statement on Form S-3 (File No. 333-261520), originally filed with the Securities and Exchange Commission (the "SEC") on December 7, 2021 and declared effective on December 10, 2021, and the related prospectus supplement dated May 10, 2024 (the "ATM Registration Statement") and filed with the SEC on such date. As a result of the limitations of General Instruction I.B.6 of Form S-3, we may currently sell up to a maximum of $3,850,000 of our shares under the ATM Agreement. We will pay the ATM Manager a commission of 3.0% of the gross proceeds from the sales of shares sold through the ATM Manager under the ATM Agreement. We will also reimburse the ATM Manager for certain expenses incurred in connection with the ATM Agreement. Both the Company and the ATM Manager may each terminate the ATM Agreement at any time upon specified prior written notice. For the three months ended June 30, 2024, the Company sold an aggregate of 87,683 shares of its common stock pursuant to the ATM Agreement, resulting in net proceeds of approximately $0.3 million after deducting underwriting discounts.
Current report
Accounting Pronouncements
Current report
Smaller Reporting Company Status
Current report
We are a “smaller reporting company,” meaning that either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) the market value of our shares held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700 million. As a smaller reporting company, we chose to present only the two most recent fiscal years of audited financial statements in the 2023 Form 10-K, have reduced disclosure obligations regarding executive compensation and certain other matters, and smaller reporting companies are permitted to delay adoption of certain recent accounting.
Current report
Basis of Presentation and Principles of Consolidation
Current report
The Company’s consolidated financial statements have been prepared in conformity with U.S. GAAP, include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented and are stated in U.S. dollars. The Company’s consolidated financial statements include the accounts of the Company and the accounts of the Company’s subsidiary, Baergic. All intercompany balances and transactions have been eliminated. Because the Company owns less than 100% of Baergic, the Company records net loss attributable to non-controlling interests in its consolidated statements of operations equal to the percentage of the economic or ownership interest retained in Baergic by the respective non-controlling parties. The Company continually assesses whether changes to existing relationships or future transactions may result in the consolidation or deconsolidation of its' subsidiary.
Current report
For the three months ended June 30, 2024 and 2023, research and development expenses were $1.4 million and $3.0 million, respectively. The decrease of $1.6 million was associated with a $1.6 million decrease in clinical development costs.
Current report
Interest income was $0.1 million and $0.1 million for the three months ended June 30, 2024 and 2023, respectively.
Current report
Comparison of the Six Months Ended June 30, 2024 and 2023
Current report
Research and Development Expenses
Current report
General and Administrative Expenses
Current report
For the six months ended June 30, 2024 and 2023, general and administrative expenses were $2.8 million and $1.9 million, respectively. The increase of $0.9 million is primarily related to an increase of $0.4 million in payments to InvaGen during the quarter ended June 30, 2024, $0.2 million personnel-related costs including salaries, benefits, and stock-based compensation, $0.2 million in professional fees and $0.1 million in common stock issued to Fortress.
Current report
Interest Income
Current report
Interest income was $0.1 million and $0.1 million for the six months ended June 30, 2024 and 2023, respectively.
Current report
Investing Activities
Current report
Net cash and cash equivalents used in investing activities was $2.0 million for the six months ended June 30, 2023, primarily comprised of the $2.0 million AJ201 license payment.
Removed paragraphs (5)
Previous report
In January 2024, we announced the completion of enrollment for the Phase 1b/2a trial and we currently expect topline data midyear 2024.
Previous report
Under the Contribution Agreement, Fortress also agreed to assign to us certain intercompany agreements existing between Fortress and Baergic, including a Founders Agreement and Management Services Agreement.
Previous report
Interest income was $49,000 and $37,000 for the three months ended March 31, 2024 and 2023, respectively. The increase was due to a larger cash and cash equivalent balance.
Previous report
Recently Adopted and Issued Accounting Pronouncements
Previous report
Subsequent to end of the first quarter, we received net proceeds of $3.9 million, after deducting placement agent fees and offering costs, pursuant to the May 2024 Warrant Inducement. See Note 9 - Subsequent Events to our unaudited condensed consolidated financial statements included herein.
Reworded paragraphs (23)
Previous wording
Our net loss for the three months ended March 31, 2024 and 2023 was approximately $4.3 million and $7.6 million, respectively. As of March 31, 2024, we had an accumulated deficit of approximately $95.3 million. Substantially all our net losses resulted from costs incurred for research and development, and general and administrative purposes.
Current wording
Our net loss for the six months ended June 30, 2024 and 2023 was approximately $7.1 million and $11.6 million, respectively. As of June 30, 2024, we had an accumulated deficit of approximately $98.0 million. Substantially all our net losses resulted from costs incurred for research and development, and general and administrative purposes.
Previous wording
In February 2023, we announced that we entered into a license agreement (the “AnnJi License Agreement”) with AnnJi Pharmaceutical Co., Ltd. (“AnnJi”) whereby the Company obtained an exclusive license from AnnJi to intellectual property rights pertaining to the molecule known as JM17, which activates Nrf1 and Nrf2, enhances androgen receptor degradation and underlies AJ201, a clinical product candidate currently in a Phase 1b/2a clinical trial in the United States (“U.S.”) for the treatment of SBMA, also known as Kennedy’s Disease.
Current wording
In February 2023, we announced that we entered into a license agreement (the “AnnJi License Agreement”) with AnnJi Pharmaceutical Co., Ltd. (“AnnJi”) whereby the Company obtained an exclusive license from AnnJi to intellectual property rights pertaining to the molecule known as JM17, which activates Nrf1 and Nrf2, enhances androgen receptor degradation and underlies AJ201, a clinical product candidate currently in a Phase 1b/2a clinical trial in the United States (“U.S.”) for the treatment of SBMA.
Previous wording
Under the AnnJi License Agreement, in exchange for exclusive rights to the intellectual property underlying the AJ201 product candidate, the Company paid an initial cash license fee of $3.0 million. The Company issued shares of its common stock, par value $0.0001 per share (the "common stock") under the Subscription Agreement (described below) and is obligated to make additional payments over the course of the AnnJi License Agreement including reimbursement payments of up to $10.8 million in connection with the product’s Phase 1b/2a clinical trial.
Current wording
Under the AnnJi License Agreement, in exchange for exclusive rights to the intellectual property underlying the AJ201 product candidate, the Company paid an initial cash license fee of $3.0 million. The Company issued shares of its common stock and is obligated to make additional payments over the course of the AnnJi License Agreement including reimbursement payments of up to $10.8 million in connection with the product’s Phase 1b/2a clinical trial.
Previous wording
The license provided under the AnnJi License Agreement is exclusive as to all oral forms of AJ201 for use in all indications (other than androgenetic alopecia and Alzheimer’s disease) in the United States, Canada, the European Union, the United Kingdom and Israel. The AnnJi License Agreement also contains customary representations and warranties and provisions related to confidentiality, diligence, indemnification and intellectual property protection. The Company will initially be obligated to obtain both clinical and commercial supply of AJ201 exclusively through AnnJi.
Current wording
The license provided under the AnnJi License Agreement is exclusive as to all oral forms of AJ201 for use in all indications (other than androgenetic alopecia and Alzheimer’s disease) in the United States, Canada, the European Union, the United Kingdom and Israel. The AnnJi License Agreement also contains customary representations and warranties and provisions related to confidentiality, diligence, indemnification and intellectual property protection. The Company is initially obligated to obtain both clinical and commercial supply of AJ201 exclusively through AnnJi.
Previous wording
Baergic is a clinical-stage pharmaceutical company founded in December 2019 that focuses on the development of pharmaceutical products for the treatment of neurologic disorders. Baergic was acquired by the Company pursuant to a stock contribution agreement (the “Contribution Agreement”) with Fortress, in order to strategically align with Avenue’s goals of building a rare and neurologic pipeline. Baergic’s pipeline currently consists of a single compound, BAER-101, a novel α2/3–subtype-selective GABA A positive allosteric modulator. BAER-101 (formally known as AZD7325) was originally developed by AstraZeneca and has an established safety profile in early clinical trials including over 700 patients.
Current wording
Baergic is a clinical-stage pharmaceutical company founded in December 2019 that focuses on the development of pharmaceutical products for the treatment of neurologic disorders. Baergic was acquired by the Company pursuant to a stock contribution agreement (the “Contribution Agreement”) with Fortress, in order to strategically align with Avenue’s goals of building a rare and neurologic pipeline. Baergic’s pipeline currently consists of a single compound, BAER-101, a novel α2/3–subtype-selective GABA A positive allosteric modulator. BAER-101 (formerly known as AZD7325) was originally developed by AstraZeneca and has an established safety profile in early clinical trials including over 700 patients.
Previous wording
On April 26, 2024, the Company effected a 1-for-75 reverse stock split of its common stock (the “Reverse Stock Split”) without any change in the par value per share of the common stock. All share and per share information has been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated.
Current wording
All share and per share information has been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated.
Previous wording
The Hearing before the Panel was held on February 15, 2024 and, by decision dated March 11, 2024, the Panel granted the Company's request for an extension through May 20, 2024 to demonstrate compliance with the Stockholders' Equity Requirement and Bid Price Requirement. In order to timely evidence compliance with the Bid Price Requirement in particular, we must evidence a closing bid price of at least $1.00 per share for a minimum of 10, though generally not more than 20, consecutive business days by May 20, 2024. The Company is considering all options available to it to regain compliance with the Stockholders’ Equity Requirement and the Bid Price Requirement; however, there can be no assurance that we will be able to do so.
Current wording
The Hearing before the Panel was held on February 15, 2024 and, by decision dated March 11, 2024, the Panel granted the Company's request for an extension through May 20, 2024 to demonstrate compliance with the Stockholders' Equity Requirement and Bid Price Requirement.
Previous wording
On January 5, 2024, we entered into (i) an inducement offer letter agreement (the “January 2023 Investor Inducement Letter”) with a certain investor (the “January 2023 Investor”) in connection with certain outstanding warrants to purchase up to an aggregate of 25,871 shares of common stock, originally issued to the January 2023 Investor on January 31, 2023 (the “January 2023 Warrants”) and (ii) an inducement offer letter agreement (the “November 2023 Investor Inducement Letter Agreement” and, together with the January 2023 Investor Inducement Letter, the “January 2024 Warrant Inducement”) with certain investors (the “November 2023 Investors” and, together with the January 2023 Investor, the “Holders”) in connection with certain outstanding warrants to purchase up to an aggregate of 194,667 shares of common stock, originally issued to the November 2023 Investors on November 2, 2023 (the “November 2023 Warrants” and, together with the January 2023 Warrants, the “Existing Warrants”). The January 2023 Warrants had an exercise price of $116.25 per share, and the November 2023 Warrants had an exercise price of $22.545 per share. Pursuant to the January 2024 Warrant Inducement, (i) the January 2023 Investor agreed to exercise its January 2023 Warrants for cash at a reduced exercise price of $22.545 per share and (ii) the November 2023 Investors agreed to exercise their November 2023 Warrants for cash at the existing exercise price of $22.545, in each case in consideration for the Company’s agreement to issue in a private placement (x) Series A Warrants to purchase up to 220,538 shares of common stock ("Series A Warrants") and (y) Series B Warrants to purchase up to 220,538 shares of common stock ("Series B Warrants"). The net proceeds to Avenue from the exercise of the warrants was approximately $4.5 million, after deducting placement agent fees and offering costs.
Current wording
On January 5, 2024, we entered into (i) an inducement offer letter agreement (the “January 2023 Investor Inducement Letter”) with a certain investor (the “January 2023 Investor”) in connection with certain outstanding warrants to purchase up to an aggregate of 25,871 shares of common stock, originally issued to the January 2023 Investor on January 31, 2023 (the “January 2023 Warrants”) and (ii) an inducement offer letter agreement (the “November 2023 Investor Inducement Letter Agreement” and, together with the January 2023 Investor Inducement Letter, the “January 2024 Warrant Inducement”) with certain investors (the “November 2023 Investors” and, together with the January 2023 Investor, the “January 2024 Holders”) in connection with certain outstanding warrants to purchase up to an aggregate of 194,667 shares of common stock, originally issued to the November 2023 Investors on November 2, 2023 (the “November 2023 Warrants” and, together with the January 2023 Warrants, the “January 2024 Exercised Warrants”). The January 2023 Warrants had an exercise price of $116.25 per share, and the November 2023 Warrants had an exercise price of $22.545 per share. Pursuant to the January 2024 Warrant Inducement, (i) the January 2023 Investor agreed to exercise its January 2023 Warrants for cash at a reduced exercise price of $22.545 per share and (ii) the November 2023 Investors agreed to exercise their November 2023 Warrants for cash at the existing exercise price of $22.545, in each case in consideration for the Company’s agreement to issue in a private placement (x) Series A Warrants to purchase up to 220,538 shares of common stock ("New Series A Warrants") and (y) Series B Warrants to purchase up to 220,538 shares of common stock ("New Series B Warrants"). The net proceeds to Avenue from the exercise of the warrants was approximately $4.5 million, after deducting placement agent fees and offering costs.
Previous wording
As a result of the January 2024 Warrant Inducement, the Company presents a deemed dividend for the issuance of the Series A Warrants and Series B Warrants of $4.3 million for the 3 months ending March 31, 2024. The deemed dividend was included in net loss attributable to common stockholders in the calculation of net loss per share in the condensed consolidated statements of operations.
Current wording
As a result of the January 2024 Warrant Inducement, the Company presented a deemed dividend for the issuance of the New Series A Warrants and New Series B Warrants of $4.3 million for the six months ended June 30, 2024. The deemed dividend was included in net loss attributable to common stockholders in the calculation of net loss per share in the condensed consolidated statements of operations.
Previous wording
For a discussion of our critical accounting estimates, see the Management’s Discussion and Analysis of the Results of Operations in the 2023 Form 10-K.
Current wording
For a discussion of our critical accounting estimates, see the Management’s Discussion and Analysis of the Results of Operations in the Company’s Annual Report on Form 10-K, which was filed with the United States Securities and Exchange Commission (“SEC”) on March 18, 2024 (the “2023 Form 10-K”). There were no material changes in our critical accounting estimates or accounting policies from December 31, 2023.
Previous wording
As of March 31, 2024, there were no new accounting pronouncements or updates to recently issued accounting pronouncements disclosed in the 2023 Form 10-K that would materially affect the Company's present or future results of operations, overall financial condition, liquidity, or disclosures upon adoption.
Current wording
As of June 30, 2024, there were no new accounting pronouncements or updates to recently issued accounting pronouncements disclosed in the 2023 Form 10-K that are expected to materially affect the Company’s present or future financial statements upon adoption.
Previous wording
At March 31, 2024, we had an accumulated deficit of $95.3 million, primarily as a result of expenditures for licenses acquired, for research and development and for general and administrative purposes. While we may in the future generate revenue from a variety of sources, including license fees, milestone payments, research and development payments in connection with strategic partnerships and/or product sales, our product candidate are still in development and may never be successfully developed or commercialized. Accordingly, we expect to continue to incur substantial losses from operations for the foreseeable future, and there can be no assurance that we will ever generate significant revenues.
Current wording
At June 30, 2024, we had an accumulated deficit of $98.0 million. While we may in the future generate revenue from a variety of sources, including license fees, milestone payments, research and development payments in connection with strategic partnerships and/or product sales, our product candidate are still in development and may never be successfully developed or commercialized. Accordingly, we expect to continue to incur substantial losses from operations for the foreseeable future, and there can be no assurance that we will ever generate significant revenues.
Previous wording
For the three months ended March 31, 2024 and 2023, general and administrative expenses were $1.3 million and $1.0 million, respectively. The increase of $0.3 million is primarily related to an increase of $0.2 million in professional fees and $0.1 million in non-cash stock compensation costs.
Current wording
For the three months ended June 30, 2024 and 2023, general and administrative expenses were $1.5 million and $0.9 million, respectively. The increase of $0.6 million is related to an increase of $0.3 million in payments to InvaGen, $0.2 million in common stock issued to Fortress, and $0.1 million in non-cash stock compensation costs, which was partially offset by a decrease of $0.1 million in professional fees.
Previous wording
The change in fair value of warrant liabilities was a loss of $0.1 million and $0.9 for the three months ended March 31, 2024 and 2023, respectively. Warrants to purchase common stock that are required to be classified as a liability are valued at fair market value at each reporting period. The change in the fair value of warrant liabilities was primarily due to the modification of the exercise price as part of a warrant inducement, the exercise of warrants classified as liabilities, and fluctuation in our stock price.
Current wording
The change in fair value of warrant liabilities was a gain of $0.3 million and loss of $0.2 for the three months ended June 30, 2024 and 2023, respectively. Warrants to purchase common stock that are required to be classified as a liability are valued at fair market value at each reporting period. The change in the fair value of warrant liabilities was primarily due to the modification of the exercise price as part of a warrant inducement, the exercise of warrants classified as liabilities, and fluctuation in our stock price.
Previous wording
For the three months ended March 31, 2024 and 2023, research and development expenses were $2.4 million and $1.2 million, respectively. The increase of $1.2 million is primarily associated with a $1.1 million increase in AJ201 clinical study expenses, and $0.1 million in non-cash stock compensation costs.
Current wording
For the six months ended June 30, 2024 and 2023, research and development expenses were $3.8 million and $4.2 million, respectively. The decrease of $0.4 million is primarily associated with a $0.6 million decrease in pre-clinical and clinical development costs, partially offset by a $0.2 million increase in personnel-related costs, including salaries, benefits, and stock-based compensation.
Previous wording
For the three months ended March 31, 2024 and 2023, research and development - licenses acquired expenses were $0 and $4.2 million, respectively. The decrease of $4.2 million is related to the AJ201 license acquisition in 2023.
Current wording
For the six months ended June 30, 2023, research and development - licenses acquired expenses were $4.2 million related to the AJ201 license acquisition, with no comparable expense in 2024.
Previous wording
The loss on common stock warrant liabilities was $0.6 million and $0 for the three months ended March 31, 2024 and 2023, respectively. The Series A Warrants and Series B Warrants had a fair value of $0.6 million allocated to the January 2023 warrants at the time of issuance as a cost of inducement, which was recorded as a loss on settlement of common stock warrant liabilities.
Current wording
The loss on common stock warrant liabilities was $0.8 million and $0 for the six months ended June 30, 2024 and 2023, respectively. The New Series A Warrants, New Series B Warrants, and May 2024 Warrants had a fair value of $0.8 million allocated to the liability classified October 2022 Warrants and January 2023 Warrants at the time of issuance as a cost of inducement, which was recorded as a loss on settlement of common stock warrant liabilities.
Previous wording
At March 31, 2024, we had $3.2 million in cash and cash equivalents. To date, we have funded our operations primarily with proceeds from various public and private offerings of our common and preferred stock. We expect that our expenses will increase substantially for the foreseeable future as we continue to execute on our product development plan and seek opportunities to license or acquire additional products. We will require additional financing to carry out our business plan and implement our strategy, and continue to analyze various alternatives, including potentially obtaining lines of credit, debt or equity financings, including through at-the-market program ("ATM") offerings, or other arrangements. We cannot be sure that any additional funding, if needed, will be available on terms favorable to us or at all. If we obtain funding through a strategic collaboration or licensing arrangement, we may be required to relinquish our rights to our product candidates or marketing territories. Without additional capital, we do not expect our cash will be sufficient to fund our projected operating requirements or allow us to fund our operating plan past the third quarter of 2024. We regularly evaluate market conditions, our liquidity profile, and various financing alternatives for opportunities to enhance our capital structure.
Current wording
At June 30, 2024, we had $4.9 million in cash and cash equivalents. To date, we have funded our operations primarily with proceeds from various public and private offerings of our common stock. We expect that our expenses will increase substantially for the foreseeable future as we continue to execute on our product development plan and seek opportunities to license or acquire additional products. We will require additional financing to carry out our business plan and implement our strategy, and continue to analyze various alternatives, including potentially obtaining lines of credit, debt or equity financings, including through at-the-market program offerings, or other arrangements. We cannot be sure that any additional funding, if needed, will be available on terms favorable to us or at all. If we obtain funding through a strategic collaboration or licensing arrangement, we may be required to relinquish our rights to our product candidates or marketing territories. Without additional capital, we do not expect our cash will be sufficient to fund our projected operating requirements or allow us to fund our operating plan past the first quarter of 2025. We regularly evaluate market conditions, our liquidity profile, and various financing alternatives for opportunities to enhance our capital structure.
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 and cash equivalents used in operating activities was $3.1 million for the three months ended March 31, 2024, primarily comprised of our $4.3 million net loss and $0.4 million reduction in common share issuable to Fortress, partially offset by a $0.6 million loss on settlement of common stock warrant liabilities, an increase of $0.3 million in operating assets and liabilities, $0.4 million for shares issued to Fortress, $0.1 million change in fair value of warrant liabilities and $0.2 million in share-based compensation.
Current wording
Net cash and cash equivalents used in operating activities was $5.4 million for the six months ended June 30, 2024, primarily comprised of our $7.1 million net loss, $0.4 million reduction in common shares issuable to Fortress and $0.1 million change in fair value of warrant liabilities, partially offset by a $0.8 million loss on settlement of common stock warrant liabilities, an increase of $0.5 million in operating assets and liabilities, $0.5 million for common shares issued to Fortress and $0.4 million in share-based compensation.
Previous wording
Net cash and cash equivalents used in operating activities was $1.6 million for the three months ended March 31, 2023, primarily comprised of our $7.6 million net loss partially offset by an increase in operating assets and liabilities of $3.8 million, $1.2 million in stock issuance for licenses acquired, $0.9 million change in fair value of warrant liability and $0.1 million in common share issuance to Fortress.
Current wording
Net cash and cash equivalents used in operating activities was $6.2 million for the six months ended June 30, 2023, primarily comprised of our $11.6 million net loss partially offset by an increase in operating assets and liabilities of $1.0 million, $2.0 million in research and development AJ201 license expense, $1.2 million in stock issuance for licenses acquired, $1.0 million change in fair value of warrant liability and $0.1 million in common share issuances to Fortress.
Previous wording
Net cash and cash equivalents provided by financing activities was $4.5 million for the three months ended March 31, 2024, primarily comprised of $4.5 million in net proceeds from the January 2024 Warrant Inducement.
Current wording
Net cash and cash equivalents provided by financing activities was $8.5 million for the six months ended June 30, 2024, primarily due to $8.2 million in net proceeds from the May 2024 Warrant Inducement and $0.3 million in net proceeds received from the sale of common stock pursuant to the ATM Agreement.
Previous wording
Net cash and cash equivalents provided by financing activities was $3.1 million for the three months ended March 31, 2023, primarily comprised of the $3.1 million Registered Direct and Private Placement on January 31, 2023.
Current wording
Net cash and cash equivalents provided by financing activities was $3.1 million for the six months ended June 30, 2023, primarily due to the $3.1 million raised in a registered direct offering and private placement offering from January 2023.
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
May 2024 Warrant Inducement and Private Placement
Current report — wording carried from elsewhere
On April 28, 2024, we entered into inducement offer letter agreements (the "May 2024 Warrant Inducement") with (i) certain investors (the "October 2022 Investors") that held certain outstanding warrants to purchase up to an aggregate of 27,271 shares of our common stock originally issued to the October 2022 Investors on October 11, 2022 (the "October 2022 Warrants"); (ii) certain investors (the “November 2023 Investors”) that held certain outstanding Series A and Series B warrants to purchase up to an aggregate of 221,333 shares of common stock, originally issued to the November 2023 Investors on November 2, 2023 (the “November 2023 Warrants”); and (iii) certain investors (the “January 2024 Investors” and, collectively with the October 2022 Investors and November 2023 Investors, the “May 2024 Holders”) that held certain outstanding New Series A and New Series B warrants to purchase up to an aggregate of 441,076 shares of common stock, originally issued to January 2024 Investors on January 5, 2024 (the “January 2024 Warrants,” and, collectively with the October 2022 Warrants and November 2023 Warrants, the “May 2024 Exercised Warrants”). The October 2022 Warrants had an exercise price of $116.25 per share, the November 2023 Warrants had an exercise price of $22.545 per share, and the January 2024 Warrants had an exercise price of $22.545 per share.
Current report — wording carried from elsewhere
As a result of the May 2024 Warrant Inducement, the Company presents a deemed dividend for the issuance of the Series C Warrants and Series D Warrants of $4.5 million for the quarter ended June 30, 2024. The deemed dividend was included in net loss attributable to common stockholders in the calculation of net loss per share in the condensed consolidated statements of operations.
Current report — wording carried from elsewhere
The loss on settlement of common stock warrant liabilities was $0.2 million for the three months ended June 30, 2024. The May 2024 Warrants had a fair value of $0.2 million allocated to the October 2022 Warrants at the time of issuance as a cost of inducement, which was recorded as a loss on settlement of common stock warrant liabilities.
Current report — wording carried from elsewhere
Research and development expenses primarily consist of personnel related expenses, including salaries, benefits, travel, and other related expenses, stock-based compensation, payments made to third parties for license and milestone costs related to in-licensed products and technology, payments made to third party contract research organizations for preclinical and clinical studies, investigative sites for clinical trials, consultants, the cost of acquiring and manufacturing clinical trial materials, costs associated with pre-commercialization validation manufacturing, costs associated with regulatory filings, laboratory costs and other supplies.
Current report — wording carried from elsewhere
General and administrative expenses consist principally of professional fees for legal and consulting services, market research, personnel-related costs, public reporting company related costs and other general operating expenses not otherwise included in research and development expenses. We expect our general and administrative costs to continue as we seek potential regulatory approval and commercialization of our product candidates.
Current report — wording carried from elsewhere
Loss on Settlement of Common Stock Warrant Liabilities
Current report — wording carried from elsewhere
Change in Fair Value of Warrant Liabilities
Current report — wording carried from elsewhere
The change in fair value of warrant liabilities was a gain of $0.1 million and a loss of $1.0 for the six months ended June 30, 2024 and 2023, respectively. Warrants to purchase common stock that are required to be classified as a liability are valued at fair market value at each reporting period. The change in the fair value of warrant liabilities was primarily due to the modification of the exercise price as part of a warrant inducement, the exercise of warrants classified as liabilities, and fluctuation in our stock price.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
There were no material changes in our critical accounting estimates or accounting policies from December 31, 2023.