ZyVersa Therapeutics Inc

Previous wording

The following discussion and analysis of the results of operations and financial condition of ZyVersa Therapeutics, Inc. (the “Company,” “we,” “us” or “our”) as of March 31, 2024 and for the three months ended March 31, 2024 and 2023 should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those financial statements that are included elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis should be read in conjunction with the Company’s audited financial statements and related disclosures as of December 31, 2023 and for the year then ended, which are included in the Form 10-K (the “Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on March 25, 2024. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risk, uncertainties and other factors. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Actual results could differ materially because of the factors discussed in “Risk Factors” in our Annual Report, and other factors that we may not know. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements above, to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

Current wording

The following discussion and analysis of the results of operations and financial condition of ZyVersa Therapeutics, Inc. (the “Company,” “we,” “us” or “our”) as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those financial statements that are included elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis should be read in conjunction with the Company’s audited financial statements and related disclosures as of December 31, 2023 and for the year then ended, which are included in the Form 10-K (the “Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on March 25, 2024, as amended on May 15, 2024. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risk, uncertainties and other factors. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Actual results could differ materially because of the factors discussed in “Risk Factors” in our Annual Report, and other factors that we may not know. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements above, to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

Previous wording

We are a clinical stage specialty biopharmaceutical company leveraging advanced proprietary technologies to develop first-in-class drugs for patients with renal or inflammatory diseases with high unmet medical needs.

Current wording

We are a clinical stage specialty biopharmaceutical company leveraging advanced proprietary technologies to develop first-in-class drugs for patients with inflammatory or kidney diseases with high unmet medical needs. We are well positioned in the rapidly emerging inflammasome space with a highly differentiated monoclonal antibody, Inflammasome ASC Inhibitor IC 100, and in kidney disease with phase 2 Cholesterol Efflux Mediator TMVAR 200. The lead indication for IC 100 is obesity and its associated metabolic complications, and for VAR 200, focal segmental glomerulosclerosis (FSGS). Each therapeutic area offers a “pipeline within a product,” with potential for numerous indications. The total accessible market is over $100 billion.

Previous wording

We have not generated any revenue to date and have incurred significant operating losses. Our net losses were $2,826,737 for the period from January 1, 2024 through March 31, 2024, compared to $3,543,950 for the period from January 1, 2023 through March 31, 2023. As of March 31, 2024, we had an accumulated deficit of approximately $106.0 million and cash of $2.0 million. We expect to continue to incur significant expenses for the foreseeable future and to incur operating losses. We expect our expenses will increase in connection with our ongoing activities as we:

Current wording

We have not generated any revenue to date and have incurred significant operating losses. Our net losses were $5.6 million for the period from January 1, 2024 through June 30, 2024, compared to $82.1 million for the period from January 1, 2023 through June 30, 2023. As of June 30, 2024, we had an accumulated deficit of approximately $108.8 million and cash of $0.1 million. We expect to continue to incur significant expenses for the foreseeable future and to incur operating losses. We expect our expenses will increase in connection with our ongoing activities as we:

Previous wording

We expect that our general and administrative expenses will increase in the future as we increase our general and administrative headcount to support our continued research and development and potential commercialization of our product candidates. We also expect to incur increased expenses associated with being a public company, including costs of accounting, audit, legal, regulatory and tax compliance services, director and officer insurance, and investor and public relations costs.

Current wording

We expect that our general and administrative expenses will increase in the future as we increase our general and administrative headcount to support our continued research and development and potential commercialization of our product candidates. We also expect to incur substantial expenses associated with being a public company, including costs of accounting, audit, legal, regulatory and tax compliance services, director and officer insurance, and investor and public relations costs.

Previous wording

General and administrative expenses were $2.3 million for the three months ended March 31, 2024, a decrease of $1.2 million or 34.6% from the three months ended March 31, 2023. The decrease is primarily attributable to a decrease of $0.4 million in payments for the Effectiveness Failure related to the PIPE shares, a decrease of $0.4 million for bonus accruals, a $0.2 million decrease in accounting fees and a $0.1 million decrease in director and officer insurance.

Current wording

Research and development expenses were approximately $0.7 million for the three months ended June 30, 2024, a decrease of approximately $0.5 million or 41.9% from the three months ended June 30, 2023. The decrease is primarily attributable to a decrease of $0.4 million in the costs of manufacturing of IC 100 and a decrease in payroll expenses due to employee attrition of $0.1 million.

Previous wording

The following table summarizes our cash flows from operating and financing activities for the three months ended March 31, 2024 and for the three months ended March 31, 2023:

Current wording

The following table summarizes our cash flows from operating and financing activities for the six months ended June 30, 2024 and for the six months ended June 30, 2023:

Previous wording

Net cash used in operating activities was $3.8 million and $4.6 million for the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024 and for the three months ended March 31, 2023, the net cash used in operating activities was primarily attributable to the net loss of approximately $2.8 million and $3.5 million, respectively, offset by $0.3 million and ($0.3) million, respectively, of net non-cash expenses, and approximately ($1.3) million and ($0.8) million, respectively, of cash used in the levels of operating assets and liabilities, respectively.

Current wording

Net cash used in operating activities was approximately $5.7 million and approximately $5.0 million for the six months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024 and for the six months ended June 30, 2023, the net cash used in operating activities was primarily attributable to the net loss of approximately $5.6 million and $82.1 million, respectively, offset by $0.5 million and $74.8 million, respectively, of net non-cash expenses, and approximately ($0.6) million and $2.3 million, respectively, of cash (used in) generated by the levels of operating assets and liabilities, respectively.

Previous wording

Net cash provided by (used in) financing activities was $2.7 million and ($35) thousand for the three months ended March 31, 2024 and 2023, respectively. Cash provided by financing activities during the three months ended March 31, 2024 represented proceeds from the exercise of warrants.

Current wording

Net cash provided by (used in) financing activities was $2.7 million and ($0.7) million for the six months ended June 30, 2024 and 2023, respectively. Cash provided by financing activities during the six months ended June 30, 2024 represented proceeds from the exercise of warrants. Cash used in financing activities during the six months ended June 30, 2023 primarily represented $10.5 million in cash paid for the redemption of Series A Preferred Stock and $1.2 million in registration and issuance costs associated with common stock issuances. This was partially offset by $11.0 million in proceeds from the issuance of common stock in a public offering.

Previous wording

Since our inception in 2014 through March 31, 2024, we have not generated any revenue and have incurred significant operating losses and negative cash flows from our operations. Based on our current operating plan, we expect our cash of $2.0 million as of March 31, 2024 will only be sufficient to fund our operating expenses and capital expenditure requirements on a month-to-month basis. However, it is difficult to predict our spending for our product candidates prior to obtaining FDA approval. Moreover, changing circumstances may cause us to expend cash significantly faster than we currently anticipate, and we may need to spend more cash than currently expected because of circumstances beyond our control.

Current wording

Since our inception in 2014 through June 30, 2024, we have not generated any revenue and have incurred significant operating losses and negative cash flows from our operations. Based on our current operating plan, we expect our cash of $0.1 million as of June 30, 2024 will only be sufficient to fund our operating expenses and capital expenditure requirements on a month-to-month basis. However, it is difficult to predict our spending for our product candidates prior to obtaining FDA approval. Moreover, changing circumstances may cause us to expend cash significantly faster than we currently anticipate, and we may need to spend more cash than currently expected because of circumstances beyond our control.

Previous wording

Since inception we have been engaged in organizational activities, including raising capital and research and development activities. We have not generated revenues and have not yet achieved profitable operations, nor have we ever generated positive cash flow from operations. There is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. We are subject to those risks associated with any pre-clinical stage pharmaceutical company that has substantial expenditures for research and development. There can be no assurance that our research and development projects will be successful, that products developed will obtain necessary regulatory approval, or that any approved product will be commercially viable. In addition, we operate in an environment of rapid technological change and are largely dependent on the services of our employees and consultants. Further, our future operations are dependent on the success of our efforts to raise additional capital. These uncertainties raise substantial doubt about our ability to continue as a going concern for 12 months after the issuance date of our financial statements. The accompanying financial statements have been prepared on a going concern basis. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of us to continue as a going concern, which contemplates the continuation of operations, realization of assets and liquidation of liabilities in the ordinary course of business. We incurred a net loss of $2.8 million for the three months ended March 31, 2024 and a net loss of $3.5 million for the three months ended March 31, 2023, and we had an accumulated deficit of $106.0 million at March 31, 2024. We anticipate incurring additional losses until such time, if ever, that we can generate significant revenue from our product candidates currently in development. Our primary source of capital has been the issuance of debt and equity securities. We believe that current cash is only sufficient to fund operations and capital requirements on a month-to-month basis. Additional financing will be needed by us to fund our operations, to complete development of and to commercially develop our product candidates. There is no assurance that such financing will be available when needed or on acceptable terms.

Current wording

Since inception we have been engaged in organizational activities, including raising capital and research and development activities. We have not generated revenues and have not yet achieved profitable operations, nor have we ever generated positive cash flow from operations. There is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. We are subject to those risks associated with any pre-revenue stage pharmaceutical company that has substantial expenditures for research and development. There can be no assurance that our research and development projects will be successful, that products developed will obtain necessary regulatory approval, or that any approved product will be commercially viable. In addition, we operate in an environment of rapid technological change and are largely dependent on the services of our employees and consultants. Further, our future operations are dependent on the success of our efforts to raise additional capital. These uncertainties raise substantial doubt about our ability to continue as a going concern for 12 months after the issuance date of our financial statements. The accompanying financial statements have been prepared on a going concern basis. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of us to continue as a going concern, which contemplates the continuation of operations, realization of assets and liquidation of liabilities in the ordinary course of business. We incurred a net loss of $5.6 million for the six months ended June 30, 2024 and a net loss of $82.1 million for the six months ended June 30, 2023, and we had an accumulated deficit of $108.8 million at June 30, 2024. We anticipate incurring additional losses until such time, if ever, that we can generate significant revenue from our product candidates currently in development. Our primary source of capital has been the issuance of debt and equity securities. We believe that current cash is only sufficient to fund operations and capital requirements on a month-to-month basis. Additional financing will be needed by us to fund our operations, to complete development of and to commercially develop our product candidates. There is no assurance that such financing will be available when needed or on acceptable terms.

Previous wording

Cash requirements for our current liabilities as of March 31, 2024 include approximately $9.6 million for accounts payable and accrued expenses.

Current wording

Cash requirements for our current liabilities as of June 30, 2024 include approximately $10.0 million for accounts payable and accrued expenses.

Previous wording

We expect our cash on hand will enable us to make investments in our continued development of VAR200 and IC100 on a month-to-month basis as cash is available. We intend to raise additional capital in the future to fund continued development.

Current wording

We intend to raise additional capital in the future to fund continued development of VAR200 and IC100.

Previous wording

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

Current wording

We prepare our condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.