Rezolute Inc

Previous wording

Rezolute is developing transformative therapies for devastating rare and chronic metabolic diseases. Our lead compound, RZ358, is a fully human monoclonal antibody for the treatment of hypoglycemia resulting from excessive pancreatic secretion of insulin (“hyperinsulinism” or “HI”). We have commenced a global Phase 3 study (“sunRIZE”) for congenital HI (“cHI”), an ultra-rare pediatric and genetic form of HI. In addition, through our expanded access program (“EAP”), U.S. physician-investigators have been administering RZ358 on a compassionate use basis for the management of their patients suffering with tumor-associated hyperinsulinism (“taHI”), due to pancreatic neuroendocrine tumors (“insulinomas”). We are also developing an oral plasma kallikrein inhibitor, RZ402, which is currently in a Phase 2 study in participants with diabetic macular edema (“DME”).

Current wording

Rezolute is developing transformative therapies for devastating rare and chronic metabolic diseases. Our lead compound, RZ358, is a fully human monoclonal antibody for the treatment of hypoglycemia resulting from excessive secretion of insulin or insulin-like substances such as IGF-2 (“hyperinsulinism” or “HI”). The antibody counteracts excess insulin receptor activation thereby improving hypoglycemia. We have commenced a global Phase 3 study (“sunRIZE”) for congenital HI, an ultra-rare pediatric and genetic form of HI. In addition, through our expanded access program (“EAP”), U.S. physician-investigators have been administering RZ358 on a compassionate use basis for the management of hypoglycemia resulting from hyperinsulinism associated with tumors (“tumor HI”). We are also developing RZ402, a small molecule selective and potent plasma kallikrein inhibitor (PKI), as a potential oral therapy for the chronic treatment of diabetic macular edema (DME), which is currently in a Phase 2 study.

Previous wording

Our primary objectives for the first half of 2024 are to complete the Phase 2 study for RZ402 to enable announcement of topline results in second quarter of 2024, as well as to initiate a majority of our global clinical trial sites and enroll patients into sunRIZE to support our goal of completing enrollment by the end of this calendar year.

Current wording

Our primary objectives for the first half of 2024 are to complete the Phase 2 study for RZ402 to enable announcement of topline results in May 2024, as well as to continue site activation and increase patient enrollment for sunRIZE to enable completion of enrollment by the end of this calendar year.

Previous wording

cHI is the most common cause of recurrent and persistent hypoglycemia in children. Individuals with cHI typically present with signs or symptoms of hypoglycemia within the first month of life. These episodes can result in significant brain injury and death if not recognized and managed appropriately. Additionally, recurrent, or cumulative, hypoglycemia can lead to progressive and irreversible damage over time, including serious and devastating brain injury, seizures, neuro-developmental problems, feeding difficulties, and significant impact on patient and family quality of life. In cases of cHI that are unresponsive to medical management, surgical removal of the pancreas may be required. In those with diffuse cHI where the whole pancreas is affected, a near-total pancreatectomy can be undertaken, although about half of these children will continue to have hypoglycemia and require medical treatment for cHI.

Current wording

cHI is the most common cause of recurrent and persistent hypoglycemia in children. Individuals with cHI typically present with signs or symptoms of hypoglycemia shortly after birth. Hypoglycemia can result in significant brain injury and death if not recognized and managed appropriately. Additionally, recurrent, or cumulative, hypoglycemia can lead to progressive and irreversible damage over time, including serious and devastating brain injury, seizures, neuro-developmental problems, feeding difficulties, and significant impact on patient and family quality of life. In cases that are unresponsive to medical management, surgical removal of the pancreas may be required. In those with diffuse disease where the whole pancreas is affected, a near-total pancreatectomy can be undertaken, although ongoing medical treatment of hypoglycemia is generally required for several years after surgery, before eventual insulin-dependent diabetes ensues. We estimate that in the U.S. alone the addressable market for cHI is more than 1,500 individuals.

Previous wording

In December 2023, we announced that we initiated sunRIZE, a randomized, double-blind, placebo-controlled, parallel arm evaluation of RZ358 in participants with cHI who are not adequately responding to standard of care medical therapies. We plan to enroll approximately 56 participants from up to approximately 20 clinical trial sites in more than 15 countries in Europe, the Middle East, Asia and North America, and to complete enrollment by the end of calendar year 2024, to enable announcement of topline results in mid-2025.

Current wording

In December 2023, we initiated sunRIZE, a randomized, double-blind, placebo-controlled, parallel arm evaluation of RZ358 in participants with cHI who are not adequately responding to standard-of-care medical therapies. We plan to enroll approximately 56 participants ages three months and above from up to approximately 20 clinical trial sites in more than 15 countries in Europe, the Middle East, Asia and North America, and to complete enrollment by the end of calendar year 2024, to enable announcement of topline results in mid-2025. In our Phase 2 RIZE study in patients with cHI ages two and older, nearly all participants achieved significant improvement in hypoglycemia across multiple endpoints, including the primary and key secondary endpoints planned for the sunRIZE study. At doses and exposures planned for sunRIZE, RZ358 was generally safe and well-tolerated, and resulted in median improvements in hypoglycemia of up to ~90% at top doses.

Previous wording

sunRIZE is currently not being studied in the U.S. because of partial clinical holds (“PCHs") imposed by the U.S. Food and Drug Administration’s (“FDA’s”) Office of Cardiology, Hematology, Endocrinology and Nephrology – Division of Diabetes, Lipid Disorders, and Obesity (“Division”). As part of the preclinical program for RZ358, Sprague Dawley rats (“SD rats”) demonstrated a microvascular injury in liver sinusoidal endothelial cells (“LSECs”) at potentially clinically relevant doses and exposures (“rat findings”). Consequently, the Division- mandated PCHs that prevent us from dosing participants under the age of 12 and restrict us from dosing participants above the lowest dose studied to date, 3mg/kg. We do not believe that the toxicity observed in SD rats is relevant to humans particularly since no adverse liver findings were observed in monkeys during the preclinical program at significantly higher RZ358 dose levels (up to 90 mg/kg tested) with drug levels that were more than 10 times higher than those that showed toxicity in SD rats. Moreover, in clinical studies conducted to date, human doses and exposures were more than four times higher than the SD rat and there have been no adverse human liver findings.

Current wording

sunRIZE is currently not being studied in the U.S. because of partial clinical holds (“PCHs") imposed by the FDA’s Office of Cardiology, Hematology, Endocrinology and Nephrology – Division of Diabetes, Lipid Disorders, and Obesity (“Division”). As part of the preclinical program for RZ358, Sprague Dawley rats (“SD rats”) demonstrated a microvascular injury in liver sinusoidal endothelial cells (“LSECs”) at potentially clinically relevant doses and exposures (“rat findings”). Consequently, the Division mandated PCHs that prevent us from dosing participants under the age of 12 and restrict us from dosing participants above the lowest dose studied to date, 3mg/kg.

Previous wording

We have been, and continue to be, actively engaged with the Division in the attempt to resolve the PCHs. To that end, in the attempt to understand the mechanism of toxicity in the SD rat, we have retained a former senior FDA pharmacology-toxicology official as a consultant and partnered with a research group with LSEC biology expertise. In the second half of 2023, we conducted additional in-vivo and in-vitro non-clinical studies to enhance our understanding of the mechanism of toxicity in SD rats and its potential relevance to humans, including experiments in SD rat LSECs studies and a toxicology study in another rodent species. We have been unable to reproduce or characterize the toxicity observed in SD rat toxicology studies in our LSEC experiments and we therefore believe that the mechanism of toxicity cannot be characterized in vitro. In addition, we conducted a CD-1 mice study to determine if we could reproduce the toxicity (rat findings) in a different rodent species. CD-1 mice were administered significantly higher dose levels of RZ358 (up to 120 mg/kg tested) with drug levels that were more than 20 times higher than those that caused the rat findings. No adverse liver findings were observed in this study at any dose level. We believe that the lack of findings in CD-1 mice further bolsters the hypothesis that such findings are specific to rats. While the precise mechanism of liver microvascular injury in SD rats remains unknown, we believe that the SD rat may be hypersensitive to exaggerated pharmacology and severe insulin resistance with RZ358, due to its baseline predisposition to obesity, metabolic syndrome, and insulin resistance. Notably, individuals who suffer with cHI are the opposite of insulin resistant – they have excessive insulin activity.

Current wording

As part of our effort to investigate the mechanism of toxicity in SD rats, we have retained advisement from a former senior FDA pharmacology-toxicology official and we have partnered with a research group with LSEC expertise. In the second half of 2023, we conducted additional in-vivo and in-vitro non-clinical studies to enhance our understanding of the mechanism of toxicity in SD rats and its potential relevance to humans, including experiments in SD rat LSECs and another toxicology study in an additional rodent species. We have been unable to reproduce or characterize the toxicity observed in SD rat toxicology studies in our LSEC experiments and we therefore believe that the mechanism of toxicity cannot be characterized in vitro. Importantly, we conducted a CD-1 mice toxicology study to determine if we could reproduce rat findings in a different rodent species. CD-1 mice were administered significantly higher dose levels of RZ358 (up to 120 mg/kg tested) with drug levels that were more than 20 times higher than those that caused the SD rat findings and substantially higher than human doses. No adverse liver findings were observed in this study at any dose level.

Previous wording

We plan to continue to work with the Division to explore strategies for lifting the PCHs and potentially enabling the inclusion of U.S. patients in the sunRIZE study. There can be no assurance that the Division will agree to remove the holds or that removal of the holds would be sufficiently timely to enable enrollment of patients in the U.S. To the extent the holds are not removed by the Division to allow for the inclusion of U.S. clinical sites, we believe if we generate positive data ex-U.S. in the sunRIZE study, this data could be supportive of a potential submission to FDA for approval for RZ358 for cHI should sunRIZE meet its efficacy objectives, with a good safety profile.

Current wording

Regardless of U.S. participation in our current Phase 3 study, we believe data from sunRIZE will be sufficient for a potential submission to FDA for approval for RZ358 for cHI should the study meet its efficacy objectives, with a good safety profile.

Previous wording

RZ358 has received Orphan Drug Designation in the U.S. and European Union for the treatment of cHI, as well as Pediatric Rare Disease Designation in the U.S., a prerequisite for a request for Rare Pediatric Disease Priority Review Voucher upon Biologics License Application (“BLA”) submission. In the Phase 2 RIZE study, participants with cHI ages 2 and older nearly universally achieved significant improvements in hypoglycemia across multiple endpoints, including the primary and key secondary endpoints planned for the sunRIZE study. At doses and exposures that are planned for the Phase 3 study, RZ358 was generally safe and well-tolerated, and resulted in median improvements in hypoglycemia exceeding 80%. Based on the RIZE clinical trial outcomes and the evidence of benefit in this serious condition with substantial unmet medical need, RZ358 was subsequently granted a priority medicines (“PRIME”) designation by the European Medicines Agency (“EMA”) and an Innovation Passport designation by the UK Innovative Licensing and Access Pathway (“ILAP”) Steering Group for the treatment of cHI.

Current wording

RZ358 has received Orphan Drug Designation in the U.S. and European Union for the treatment of c HI, as well as Pediatric Rare Disease Designation in the U.S., a prerequisite for a request for a Rare Pediatric Disease Priority Review Voucher upon Biologics License Application (“BLA”) submission. Based on the RIZE clinical trial outcomes and the evidence of benefit in this serious condition with substantial unmet medical need, RZ358 was subsequently granted a priority medicines (“PRIME”) designation by the European Medicines Agency (“EMA”) and an Innovation Passport designation by the UK Innovative Licensing and Access Pathway (“ILAP”) Steering Group for the treatment of cHI.

Previous wording

Insulinomas can cause hypoglycemia through the excessive secretion of insulin with subsequent activation of the insulin receptor (insulin-mediated HI). Insulinomas are the most common type of functional pancreatic neuroendocrine tumor and tend to be small and challenging to diagnose. Current therapies for insulinomas can be grouped into two main categories: (a) tumor directed therapies (e.g. surgery, chemotherapy, or radiotherapy), which may indirectly and/or eventually lead to improved control of taHI and related hypoglycemia as a result of tumor de-bulking; and/or (b) medical therapies that directly treat taHI and the associated hypoglycemia. Tumor-directed therapies do not directly target or treat the HI and resulting hypoglycemia caused by insulinomas. In many cases, tumor-directed therapies are administered concurrently with medical therapies for hypoglycemia and in other cases successful treatment of hypoglycemia often enables the initiation and/or continuation of tumor-directed therapies, as indicated. During the period from diagnosis to surgical treatment, or if surgery is contraindicated or refused, medical treatments are often necessary to directly manage the HI and hypoglycemia induced by the tumor. Additionally, chronic medical management of refractory hypoglycemia is often necessary for patients who cannot be cured by surgery, such as those with extensive disease of the pancreas, multi-focal insulinomas, inoperable or unresectable benign or malignant insulinomas, metastatic Insulinomas, or non-pancreatic insulinomas. There are approximately 10,000-15,000 patients in the U.S. living with Insulinoma, of which approximately 10 percent have malignant/unresectable tumors requiring chronic treatment to control their HI.

Current wording

associated hypoglycemia. Tumor-directed therapies do not directly treat hypoglycemia caused by insulinomas or NICTs. In many cases, tumor-directed therapies are administered concurrently with medical therapies for hypoglycemia and in other cases successful treatment of hypoglycemia often enables the initiation and/or continuation of tumor-directed therapies, as indicated. During the period from diagnosis to surgical treatment, or if surgery is contraindicated or refused, medical treatments are often necessary to directly manage the HI and hypoglycemia induced by the tumor. Additionally, chronic medical management of refractory hypoglycemia is often necessary for patients who cannot be cured by surgery, such as those with extensive disease of the pancreas, multi-focal insulinomas, inoperable or unresectable benign or malignant insulinomas, metastatic insulinomas, non-pancreatic insulinomas, or NICT hypoglycemia resulting from a variety of other tumors.

Previous wording

A significant unmet need exists for treatment options with improved efficacy and tolerability as normalization of glucose levels is crucial to ensure patients are fit to receive cancer treatment and to reduce mortality. Unfortunately, some patients are unresponsive to the current standard of care medical therapies for taHI and experience debilitating hypoglycemia that is otherwise untreatable. Currently available medical therapies are directed at reducing or eliminating insulin production and/or secretion from tumors, which may be challenging when the tumor is differentiated or dysregulated, and therefore not responding to usual control mechanisms for

Current wording

A significant unmet need exists for treatment options with improved efficacy and tolerability as normalization of glucose levels is crucial to ensure patients are fit to receive cancer treatment and to reduce mortality. Unfortunately, some patients are unresponsive to the current standard of care medical therapies for tumor HI and experience debilitating hypoglycemia that is otherwise untreatable. Currently available medical therapies are directed at reducing or eliminating insulin production and/or secretion from tumors, which may be challenging when the tumor is differentiated or dysregulated, and therefore not responding to usual control mechanisms for suppressing insulin production. In some cases, commonly utilized somatostatin analog therapies may even worsen hypoglycemia due to suppression of glucagon. Therefore, currently available medical therapies directed at suppressing insulin production may have limited effectiveness in tumor HI.

Previous wording

RZ358 has been shown to counteract excessive insulin action downstream, at the insulin-receptor on target organs. The unique mechanism of action of RZ358 makes the therapy a potential universal treatment for any form of hyperinsulinism, including taHI resulting from insulinoma.

Current wording

RZ358 has been shown to counteract excessive insulin action downstream, at the insulin-receptor on target organs. The unique mechanism of action of RZ358 makes the therapy a potential universal treatment for any form of hyperinsulinism, including tumor HI.

Previous wording

We maintain an EAP for a variety of HI indications for the purpose of making RZ358 available on a compassionate use basis when available therapeutic options have failed and an individual’s hypoglycemia is unmanageable. In the fourth quarter of 2022, we received and approved an EAP request from Dr. Mary Elizabeth Patti, Director of the Hypoglycemia Clinic at the Harvard Medical School and Beth Israel Medical Center-affiliated Joslin Diabetes Center, for a patient with intractable hypoglycemia caused by a metastatic insulinoma. Dr. Patti received a single patient investigational new drug (“IND”) approval from the Division to treat the patient with RZ358. Dr. Patti reported that the patient safely achieved correction of hypoglycemia with RZ358, enabling the patient to wean off continuous intravenous dextrose and several other medications for hypoglycemia, leave the hospital after a prolonged stay, and resume receiving concurrent treatment for his cancer with tumor-directed therapies. The patient remained on RZ358 for more than a year until he eventually passed away due to progression of his underlying malignant/metastatic insulinoma.

Current wording

We maintain an EAP for a variety of HI indications for the purpose of making RZ358 available on a compassionate use basis when available therapeutic options have failed, and an individual’s hypoglycemia is unmanageable. In the fourth quarter of 2022, we received and approved an EAP request from Dr. Mary Elizabeth Patti, Director of the Hypoglycemia Clinic at the Harvard Medical School and Beth Israel Medical Center-affiliated Joslin Diabetes Center, for a patient with intractable hypoglycemia caused by a metastatic insulinoma. Dr. Patti received a single patient IND approval from the Division to treat the patient with RZ358. Dr. Patti reported that the patient safely achieved correction of hypoglycemia with RZ358, enabling the patient to wean off continuous intravenous dextrose and several other medications for hypoglycemia, leave the hospital after a prolonged stay, and resume receiving concurrent treatment for his cancer with tumor-directed therapies. The patient remained on RZ358 for more than a year until he eventually passed away due to progression of his underlying malignant/metastatic insulinoma.

Previous wording

Following publication of Dr. Patti’s report, we have received and approved four additional requests for use of RZ358 in patients with taHI caused by metastatic insulinomas and other insulin secreting metastatic cancer (cervical). In the U.S., these requests have all been approved by the Division. These patients have been refractory to usual standard of care therapies for chronic management of hypoglycemia and required continuous high volume/concentration intravenous dextrose or nutritional infusion and were hospitalized and in life-threatening or hospice-bound condition because of uncontrollable hypoglycemia. Further treatment with tumor-directed therapies (e.g., embolization, radiotherapy, chemotherapy) had been deferred as a result of the debilitating hypoglycemia.

Current wording

We have received and approved four additional requests to date for use of RZ358 in patients with tumor HI caused by metastatic insulinomas and other insulin secreting metastatic cancer (cervical). In the U.S., these requests have all been approved by the Division. These patients have been refractory to usual standard of care therapies for chronic management of hypoglycemia and required continuous high volume/concentration intravenous dextrose or nutritional infusion and were hospitalized and in life-threatening or hospice-bound condition because of uncontrollable hypoglycemia. Further treatment with tumor-directed therapies (e.g., embolization, radiotherapy, chemotherapy) was often deferred as a result of the debilitating hypoglycemia.

Previous wording

Generally, dosing for taHI patients has been either 6 mg/kg or 9 mg/kg every 1-2 weeks. In all cases to date, RZ358 has led to substantial improvement in hypoglycemia and has been well tolerated. Within a relatively short period of time after administration of RZ358, continuous intravenous dextrose was discontinued and hospitalized patients were able to be discharged and receive maintenance RZ358 doses on an outpatient basis, with durable benefit. In most cases, other background medical therapies for hypoglycemia were able to be weaned or stopped, and patients were able to resume tumor-directed therapies for treatment of their underlying cancer. Patients with metastatic taHI often have underlying hepatic injury (abnormal enzymes) at baseline due to hepatic metastases or previous tumor-directed treatments (e.g., partial liver resection or embolization). The patients with hepatic injury that have been treated under the EAP have not exhibited any indication of hepatic toxicity with the use of RZ358.

Current wording

Generally, dosing for tumor HI patients has been either 6 mg/kg or 9 mg/kg every 1-2 weeks. In all cases to date, RZ358 has led to substantial improvement in hypoglycemia and has been well tolerated. Within a relatively short period of time after administration of RZ358, continuous intravenous dextrose was discontinued and hospitalized patients were able to be discharged and receive maintenance RZ358 doses on an outpatient basis, with durable benefit. In most cases, other background medical therapies for hypoglycemia were able to be weaned or stopped, and patients were able to resume tumor-directed therapies for treatment of their underlying cancer. Patients with metastatic tumor HI often have underlying hepatic injury (abnormal enzymes) at baseline due to hepatic metastases or previous tumor-directed treatments (e.g., partial liver resection or embolization). The patients with hepatic injury that have been treated under the EAP have not exhibited any indication of hepatic toxicity with the use of RZ358.

Previous wording

On January 11, 2024, we had a Type B pre-IND meeting with the Division to discuss a potential IND application and a clinical and regulatory development strategy for taHI. The Division acknowledged the unmet need in taHI as well as the potential therapeutic benefit of RZ358 as demonstrated by the cases under the EAP as well as the efficacy demonstrated in previous clinical experience in cHI. The Division is aligned with us that RZ358 could be next studied in an IND-opening late-stage (registrational) clinical trial, which we are currently evaluating as a development program and second rare disease indication for RZ358.

Current wording

In January 2024, we had a Type B pre-IND meeting with the Division to discuss a potential IND application and a clinical and regulatory development strategy for tumor HI. The Division acknowledged the unmet need as well as the potential therapeutic benefit of RZ358 as demonstrated by the cases under the EAP as well as the efficacy demonstrated in previous clinical experience in cHI. The Division is aligned with us that it would be warranted to study RZ358 in an IND-opening late-stage (registrational) clinical trial, which we are currently evaluating as a development program and second rare disease indication for RZ358. This study could simultaneously include both ICT and NICT patients with tumor HI.

Previous wording

In addition to other factors that impact a decision and timing of initiation of a new development program, we are not resourced to support an additional late stage registrational study. While we are optimistic about the positive impact RZ358 is already having on the lives of taHI patients, there can be no assurance that we will expand its pipeline to include taHI as a new indication for RZ358 nor can there be

Current wording

In addition to other factors that impact a decision and timing of initiation of a new development program, we are not resourced to support an additional late stage registrational study. While we are optimistic about the positive impact RZ358 is already having on the lives of tumor HI patients, there can be no assurance that we will expand its pipeline to include tumor HI as a new indication for RZ358 nor can there be any assurance that such a program will be successful in a registrational study to support commercial approval for use of RZ358 in tumor HI by FDA or other regulatory authorities worldwide.

Previous wording

In December 2022, we initiated a Phase 2 U.S. multi-center, randomized, double-masked, placebo-controlled, parallel-arm study to evaluate the safety, efficacy, and pharmacokinetics of RZ402 administered as a monotherapy over a 12-week treatment period in participants with DME who are naïve to, or have received limited anti-VEGF injections. The study population is comprised of DME patients with mild to moderate non-proliferative diabetic retinopathy. Eligible participants were randomized equally, to one of three RZ402 active treatment arms at doses of 50, 200, and 400 mg, or a placebo control arm, to receive study drug once daily for 12 weeks, before completing a four-week follow-up. We have completed enrollment of 94 participants in the study, and the study remains ongoing. The principal endpoints of the trial include (i) change in study eye macular central subfield thickness, as measured by Spectral Domain Ocular Coherence Tomography, (ii) change in study eye visual acuity as measured by the early treatment diabetic retinopathy scale, (iii) the repeat dose pharmacokinetics of RZ402 in patients with DME, and (iv) the safety and tolerability of RZ402. Since RZ402 is an oral therapy and achieves systemic exposure to the retinal blood vessels in both eyes, key endpoints will also incorporate the non-study eye. We are on track to announce topline results in second quarter of 2024.

Current wording

In December 2022, we initiated a Phase 2 U.S. multi-center, randomized, double-masked, placebo-controlled, parallel-arm study to evaluate the safety, efficacy, and pharmacokinetics of RZ402 administered as a monotherapy over a 12-week treatment period in participants with DME who are naïve to, or have received limited anti-VEGF injections. The study population is comprised of DME patients with mild to moderate non-proliferative DR, experiencing compromised vision. Eligible participants were randomized equally, to one of three RZ402 active treatment arms at doses of 50, 200, and 400 mg, or a placebo control arm, to receive study drug once daily for 12 weeks, before completing a four-week follow-up. We have completed dosing of 94 participants in the study, and the study is in its concluding phases. The principal endpoints of the trial include (i) stabilization of disease and/or change in study eye macular central subfield thickness, as measured by Spectral Domain Ocular Coherence Tomography, (ii) change in study eye visual acuity as measured by the early treatment diabetic retinopathy scale, (iii) the repeat dose pharmacokinetics of RZ402 in patients with DME, and (iv) the safety and tolerability of RZ402. Since RZ402 is an oral therapy and achieves systemic exposure to the retinal blood vessels in both eyes, key endpoints will also incorporate the non-study eye. We are on track to announce topline results in May of 2024.

Previous wording

On November 14, 2023, we entered into an Open Market Sale Agreement SM (the “Sales Agreement”) with Jefferies LLC (the “Agent) that provides for an “at the market” offering for the sale of up to $50.0 million in shares of our common stock (the “Placement Shares”) through the Agent. The Agent is acting as sales agent and is required to use commercially reasonable efforts to sell all of the Placement Shares requested to be sold by us, consistent with the Agent’s normal trading and sales practices, on mutually agreed terms between the us and the Agent. The Sales Agreement will terminate when all of the Placement Shares have been sold, or earlier upon the election of either us or the Agent.

Current wording

On November 14, 2023, we entered into an open market sale agreement (the “Sales Agreement”) with Jefferies LLC (the “Agent) that provides for an “at the market” offering for the sale of up to $50.0 million in shares of our common stock (the “Placement Shares”) through the Agent. The Agent is acting as sales agent and is required to use commercially reasonable efforts to sell all of the Placement Shares requested to be sold by us, consistent with the Agent’s normal trading and sales practices, on mutually agreed terms between us and the Agent. The Sales Agreement will terminate when all of the Placement Shares have been sold, or earlier upon the election of either us or the Agent.

Previous wording

Additionally, compensation and benefits for our R&D workforce increased by approximately $1.0 million. Cash-based compensation and benefits increased by approximately $0.9 million that was primarily attributable to an increase in the average number of R&D employees from an average of 34 employees for the six months ended December 31, 2022 to an average of 43 employees for the six months ended December 31, 2023.

Current wording

Compensation and benefits for our R&D workforce increased by approximately $1.2 million. Cash-based compensation and benefits increased by approximately $1.1 million that was primarily attributable to an increase in the average number of R&D employees from an average of 35 employees for the three months ended March 31, 2023, to an average of 39 employees for the three months ended March 31, 2024.

Previous wording

The decrease in G&A expenses of $0.3 million for the three months ended December 31, 2023 was primarily attributable to decrease in cash-based compensation expense related to reduced performance bonuses.

Current wording

The increase in G&A expenses of $0.9 million for the three months ended March 31, 2024, was primarily attributable to an increase in cash-based compensation expense related to reduced performance bonuses. This cash-based compensation increase is due to an increase in the average number of G&A employees from an average of 12 employees for the three months ended March 31, 2023, to an average of 16 employees for the three months ended March 31, 2024.

Previous wording

Revenue. As a clinical stage company, we did not generate any revenue for the six months ended December 31, 2023 and 2022. We are at an early stage of development and do not currently have any commercial products. Our existing product candidates will require extensive additional clinical evaluation, regulatory review, significant marketing efforts and substantial investment before they generate any revenues. We do not expect to be able to generate revenue from any of our product candidates for several years.

Current wording

Revenue. As a clinical stage company, we did not generate any revenue for the nine months ended March 31, 2024 and 2023. We are at an early stage of development and do not currently have any commercial products. Our existing product candidates will require extensive additional clinical evaluation, regulatory review, significant marketing efforts and substantial investment before they generate any revenues. We do not expect to be able to generate revenue from any of our product candidates for several years.

Previous wording

Research and development expenses. R&D expenses for the six months ended December 31, 2023 and 2022 were as follows (in thousands, except percentages):

Current wording

Research and development expenses. R&D expenses for the nine months ended March 31, 2024 and 2023 were as follows (in thousands, except percentages):

Previous wording

The increase in R&D expenses of $5.6 million for the six months ended December 31, 2023 was primarily attributable to an increase of RZ358 related program costs of approximately $4.1 million. The increased expense consisted of an increase in manufacturing and preclinical costs of $2.7 million and clinical trial expense of $1.8 million. RZ358 costs increased due to Phase 3 clinical readiness activities, which was initiated in December 2023. These increases were partially offset by a decrease of $0.4 million RZ358 related clinical development activities, as clinical feasibility studies were completed in the prior year in preparation for the Phase 3 study.

Current wording

The increase in R&D expenses of $3.8 million for the nine months ended March 31, 2024, was primarily attributable to an increase in RZ358 related program costs of approximately $3.4 million. This increase consisted of: (i) an increase in manufacturing and preclinical costs of $1.8 million, (ii) increase of clinical trial study expenses of $0.9 million and (iii) toxicology and other related costs of $0.7 million. RZ358 clinical and manufacturing costs increased due to Phase 3 clinical readiness activities, which were initiated in December 2023. RZ358 related toxicology costs increased due to ongoing preclinical studies being conducted in efforts to lift the partial clinical hold discussed above.

Previous wording

Costs related to RZ402 and other R&D costs increased by approximately $0.5 million for the six months ended December 31, 2023, which was primarily attributable to an increase in clinical costs related to the ongoing Phase 2 study, which completed enrollment in December 2022. The RZ402 Phase 2 study is ongoing with topline results expected to be available in the second quarter of calendar 2024.

Current wording

Costs related to RZ402 and other R&D costs increased by approximately $1.1 million for the nine months ended March 31, 2024, which was primarily attributable to an increase in clinical costs related to the ongoing Phase 2 study, which completed enrollment in December 2023. The RZ402 Phase 2 study is ongoing with topline results expected to be available by June 2024.

Previous wording

General and administrative expenses. G&A expenses for the six months ended December 31, 2023 and 2022 were as follows (in thousands, except percentages):

Current wording

General and administrative expenses. G&A expenses for the nine months ended March 31, 2024 and 2023 were as follows (in thousands, except percentages):

Previous wording

G&A expenses increased by approximately $0.9 million for the six months ended December 31, 2023. This increase was attributable to $0.4 million of increased professional fee due to higher market research costs, $0.3 million of increased information technology and other costs to support our growing organization. Additionally, compensation and benefits for our G&A workforce increased by approximately $0.2 million due to an increase in average number of G&A employees from 12 for the six months ended December 31, 2022 to an average of 14 employees for the six months ended December 31, 2023.

Current wording

G&A expenses increased by approximately $1.8 million for the nine months ended March 31, 2024. This increase was primarily attributable to increases of (i) professional fees of $0.8 million due to market research costs and investor relations expenses, and (ii) compensation and benefits for our G&A workforce of approximately $0.8 million due to an increase in the average number of G&A employees from 12 employees for the nine months ended March 31, 2023, to 14 employees for the nine months ended March 31, 2024.

Previous wording

Interest and Other Income. Interest and other income amounted to $2.7 million for the six months ended December 31, 2023, compared to $1.3 million for the six months ended December 31, 2022. This increase of $1.4 million was primarily due to our decision in January 2023 to invest an aggregate of approximately $115.0 million in marketable debt securities and an overnight money market mutual fund that bear interest at a weighted average effective rate of approximately 5.0%, whereas our temporary cash investments for the six months ended December 31, 2022 provided for earnings that were less than 3.0%. The impact of higher interest rates for the six months ended December 31, 2023 was partially offset by a reduction in the average funds that were invested. Investments in marketable debt securities are our primary source of liquidity to fund clinical expenditures and other operating expenses.

Current wording

Interest and Other Income. Interest and other income amounted to $3.8 million for the nine months ended March 31, 2024, compared to $2.7 million for the nine months ended March 31, 2023. This increase of $1.1 million was primarily due to our decision in January 2023 to invest an aggregate of approximately $115.0 million in marketable debt securities and an overnight money market mutual fund that bear interest at a weighted average effective rate of approximately 5.0%, whereas our temporary cash investments for the nine months ended March 31, 2023, resulted in an effective interest rate that was less than 3.0%. The impact of higher interest rates for the nine months ended March 31, 2024, was partially offset by a reduction in the average funds that were invested. Investments in marketable debt securities are our primary source of liquidity to fund clinical expenditures and other operating expenses.

Previous wording

Income Taxes. For the six months ended December 31, 2023 and 2022, we did not recognize any income tax benefit due to our net losses, and our determination that a valuation allowance was required for all of our deferred tax assets.

Current wording

Income Taxes. For the nine months ended March 31, 2024 and 2023, we did not recognize any income tax benefit due to our net losses, and our determination that a valuation allowance was required for all of our deferred tax assets.

Previous wording

As of December 31, 2023, we had cash and cash equivalents of $12.5 million, short-term marketable debt securities of $80.1 million and working capital was approximately $88.1 million. We have incurred cumulative net losses of $289.4 million since our inception and as a clinical stage company we have not generated any meaningful revenue to date. Our most significant contractual obligations consist of milestone payments pursuant to licensing agreements with XOMA Corporation (“XOMA”) and ActiveSite Pharmaceuticals, Inc. (“ActiveSite”) discussed below.

Current wording

As of March 31, 2024, we had cash and cash equivalents of $5.9 million, short-term marketable debt securities of $74.1 million and working capital was approximately $75.3 million. We have incurred cumulative net losses of $306.5 million since our inception and as a clinical stage company we have not generated any meaningful revenue to date. Our most significant contractual obligations consist of milestone payments pursuant to licensing agreements with XOMA Corporation (“XOMA”) and ActiveSite Pharmaceuticals, Inc. (“ActiveSite”) discussed below.

Previous wording

June 30, 2023, we received net proceeds from the issuance of equity securities of $11.6 million. During the fiscal year ended June 30, 2022, we completed several equity financings that generated aggregate net proceeds of approximately $149.0 million after repayment of our Loan Agreement. These equity financings have been our primary source of liquidity to enable our funding of ongoing clinical expenditures and other operating expenses.

Current wording

Our primary source of liquidity has historically been from the completion of private and public offerings of our debt and equity securities. For the nine months ended March 31, 2024, we did not receive any proceeds from financing activities. For the fiscal year ended June 30, 2023, we received net proceeds from the issuance of equity securities of $11.6 million. During the fiscal year ended June 30, 2022, we completed several equity financings that generated aggregate net proceeds of approximately $149.0 million after repayment of our Loan Agreement. The proceeds from these equity financings were invested in money market funds and marketable debt securities. As these investments mature, the proceeds have been our primary source of liquidity to enable our funding of ongoing clinical expenditures and other operating expenses.

Previous wording

Remaining cash payments related to existing contractual obligations for the 12-months ending December 31, 2024 include approximately (i) $0.7 million under all of our operating lease agreements, (ii) a milestone payment to XOMA of $5.0 million due upon dosing of the first patient in our planned Phase 3 clinical trial for RZ358 and (iii) and an additional payment to XOMA of $5.0 million due upon dosing of the last patient in our planned Phase 3 clinical trial for RZ358. Due to uncertainties in the timing associated with clinical trial activities, it is possible that the milestone payment due upon dosing of the last patient could be delayed beyond December 31, 2024.

Current wording

Remaining cash payments related to existing contractual obligations for the 12-months ending March 31, 2025 include approximately (i) $0.7 million under all of our operating lease agreements, (ii) a milestone payment to XOMA of $5.0 million that was incurred subsequent to March 31, 2024 upon dosing of the first patient in our planned Phase 3 clinical trial for RZ358 and (iii) and an additional payment to XOMA of $5.0 million due upon dosing of the last patient in our planned Phase 3 clinical trial for RZ358. Due to uncertainties in the timing associated with clinical trial activities, it is possible that the milestone payment due upon dosing of the last patient could be delayed beyond March 31, 2025.

Previous wording

Based on our cash and cash equivalents balance of $12.5 million and investments in short-term marketable debt securities balance of $80.1 million as of December 31, 2023, we believe we have adequate capital resources to meet all of our contractual obligations and conduct all planned activities to advance our clinical trials at least through the next 12 months.

Current wording

Based on our cash and cash equivalents balance of $5.9 million and investments in short-term marketable debt securities balance of $74.1 million as of March 31, 2024, we believe we have adequate capital resources to meet all of our contractual obligations and conduct all planned activities to advance our clinical trials at least through the next 12 months.

Previous wording

In addition to our licensing obligations, we also have long-term contractual obligations under existing operating lease agreements ranging between approximately $0.2 million to $0.8 million for each of the fiscal years ending June 30, 2025 through 2027. Based on our current forecast, we expect that our existing cash, cash equivalents and investments in marketable debt securities will be sufficient to fund our long-term contractual obligations and conduct all planned activities to advance our clinical trials at least through the third quarter of calendar year 2025.

Current wording

In addition to our licensing obligations, we also have long-term contractual obligations under existing operating lease agreements ranging between approximately $0.7 million to $0.8 million for each of the fiscal years ending June 30, 2025 through 2027. Based on our current forecast, we expect that our existing cash, cash equivalents and investments in marketable debt securities will be sufficient to fund our long-term contractual obligations and conduct all planned activities to advance our clinical trials at least through the third quarter of calendar year 2025.

Previous wording

As discussed above under the caption Recent Developments, in November 2023 we entered into the Sales Agreement that provides for an “at-the-market” offering for the sale of up to $50.0 million in shares of our common stock. The net proceeds under the Sales Agreement, if any, will be used to fund a portion of our long-term liquidity requirements including payments for general corporate purposes and to meet our working capital requirements. To date, we have not elected to sell any shares of our common stock pursuant to the Sales Agreement. Even if we elect to sell the entire $50.0 million of shares under the Sales Agreement, we will need to obtain additional equity or debt financing in order to fund all of our long-term liquidity requirements. Accordingly, no assurance can be provided that we will be able to obtain sufficient sources of equity and debt financing on terms that are acceptable to our Board of Directors and stockholders.

Current wording

As discussed above under the caption Recent Developments, in November 2023 we entered into the Sales Agreement that provides for an “at-the-market” offering for the sale of up to $50.0 million in shares of our common stock. The net proceeds under the Sales Agreement, if any, will be used to fund a portion of our long-term liquidity requirements including payments for general corporate purposes and to meet our working capital requirements. To date, we have not elected to sell any shares of our common stock pursuant to the Sales Agreement. Even if we elect to sell the entire $50.0 million of shares under the Sales Agreement, we will need to obtain additional equity or debt financing in order to fund all of our long-term liquidity requirements. Accordingly, no assurance can be given that we will be able to obtain sufficient sources of equity and debt financing on terms that are acceptable to our Board of Directors and stockholders.

Previous wording

Upon the achievement of certain clinical and regulatory events, we will be required to make up to $37.0 million in aggregate milestone payments to XOMA. The first such milestone payment of $2.0 million was triggered upon enrollment of the last patient in our ongoing phase 2 clinical study in January 2022. The next milestone payments of $5.0 million each, will be due upon the enrollment of the first patient in a Phase 3 study and the dosing of the last patient in a Phase 3 study, which we believe will occur in the next twelve months. Additionally, upon the future commercialization of RZ358, we will be required to pay royalties to XOMA based on the net sales of the related products, and milestone payments up to an additional $185.0 million if future annual sales related to RZ358 exceed targets ranging from $100.0 million to $1.0 billion. Through December 31, 2023, no events have occurred that would result in the requirement to make additional milestone payments and no royalties have been incurred.

Current wording

Upon the achievement of certain clinical and regulatory events, we will be required to make up to $37.0 million in aggregate milestone payments to XOMA. The first such milestone payment of $2.0 million was triggered upon enrollment of the last patient in our ongoing phase 2 clinical study in January 2022. The next milestone payment of $5.0 million was incurred subsequent to March 31, 2024 upon the enrollment of the first patient in a Phase 3 study. A milestone payment of $5.0 million, will be due upon the dosing of the last patient in a Phase 3 study, which we believe will occur in the next twelve months. Additionally, upon the future commercialization of RZ358, we will be required to pay royalties to XOMA based on the net sales of the related products, and milestone payments up to an additional $185.0 million if future annual sales related to RZ358 exceed targets ranging from $100.0 million to $1.0 billion. Through March 31, 2024, no events have occurred that would result in the requirement to make additional milestone payments and no royalties have been incurred.

Previous wording

In August 2017, we entered into a Development and License Agreement with ActiveSite (“ActiveSite License Agreement”) pursuant to which we acquired the rights to ActiveSite’s PKI portfolio. We are planning to use the PKI Program to develop, file, manufacture, market and sell products for diabetic macular edema and other therapeutic indications. The ActiveSite License Agreement requires various milestone payments ranging from $1.0 million to $10.0 million when milestone events occur, up to an aggregate of $46.5 million of aggregate milestone payments. The first milestone payment for $1.0 million was paid in December 2020 after completion of preclinical work and submission of an IND to the FDA for RZ402. The second milestone payment for $3.0 million became due upon dosing of the first patient in a Phase 2 study in February 2023. Remaining milestone payments under the ActiveSite License Agreement for various clinical and regulatory milestones amount to $25.0 million and milestones after commercial success or alternative indication approvals amount to $17.5 million. We will also be required to pay royalties equal to 2.0% of any sales of products that use the PKI Program. Through December 31, 2023, no events have occurred that would result in the requirement to make additional milestone payments and no royalties have been incurred.

Current wording

In August 2017, we entered into a Development and License Agreement with ActiveSite (“ActiveSite License Agreement”) pursuant to which we acquired the rights to ActiveSite’s PKI portfolio. We are planning to use the PKI Program to develop, file, manufacture, market and sell products for diabetic macular edema and other therapeutic indications. The ActiveSite License Agreement requires various milestone payments ranging from $1.0 million to $10.0 million when milestone events occur, up to an aggregate of $46.5 million of aggregate milestone payments. The first milestone payment for $1.0 million was paid in December 2020 after completion of preclinical work and submission of an IND to the FDA for RZ402. The second milestone payment for $3.0 million became due upon dosing of the first patient in a Phase 2 study in February 2023. Remaining milestone payments under the ActiveSite License Agreement for various clinical and regulatory milestones amount to $25.0 million and milestones after commercial success or alternative indication

Previous wording

Presented below is a summary of our operating, investing, and financing cash flows for the six months ended December 31, 2023 and 2022 (in thousands):

Current wording

Presented below is a summary of our operating, investing, and financing cash flows for the nine months ended March 31, 2024 and 2023 (in thousands):

Previous wording

For the six months ended December 31, 2023 and 2022, cash used in operating activities amounted to $23.6 million and $15.1 million, respectively. The key components in the calculation of our cash used in operating activities are as follows (in thousands):

Current wording

For the nine months ended March 31, 2024 and 2023, cash used in operating activities amounted to $38.8 million and $33.1 million, respectively. The key components in the calculation of our cash used in operating activities are as follows (in thousands):

Previous wording

For the six months ended December 31, 2023, our net loss was $28.4 million compared to $23.4 million for the six months ended December 31, 2022. For further discussion about changes in our operating results for the six months ended December 31, 2023 and 2022, please refer toResults of Operations above.

Current wording

For the nine months ended March 31, 2024, our net loss was $45.5 million compared to $39.1 million for the nine months ended March 31, 2023. For further discussion about changes in our operating results for the nine months ended March 31, 2024 and 2023, please refer toResults of Operations above.

Previous wording

For the six months ended December 31, 2023 and 2022, our non-cash expenses of $4.0 million and $3.8 million, respectively, were primarily attributable to share-based compensation expense. For the six months ended December 31, 2023, accretion of discounts and amortization of premiums on marketable debt securities amounted to $1.2 million and were due to our decision in January 2023 to generate higher interest income by investing in marketable debt securities. For the six months ended December 31, 2023, net changes in operating assets and liabilities increased operating cash flow by $2.0 million, primarily driven by an increase of $2.5 million in accounts payable and other accrued liabilities. This amount was partially offset by cash outflows resulting from an increase in prepaid expenses and other assets of $0.5 million.

Current wording

For the nine months ended March 31, 2024 and 2023, our non-cash expenses of $8.0 million and $5.8 million, respectively. For the Nine months ended March 31, 2024, non-cash expenses were primarily attributable to share-based compensation expense and loss in change of fair value of a warrant liability. For the nine months ended March 31, 2023, non-cash expenses were primarily attributable to share-based compensation expense. For the nine months ended March 31, 2024, accretion of discounts and amortization of premiums on marketable debt securities amounted to $2.1 million and $0.7 million, respectively, and were due to interest income as a result of investing in marketable debt securities. For the nine months ended March 31, 2024, net changes in operating assets and liabilities increased operating cash flow by $0.7 million, primarily driven by an increase of $1.3 million in accounts payable and other accrued liabilities. This amount was partially offset by cash outflows resulting from an increase in prepaid expenses and other assets of $0.6 million. For the nine months ended March 31, 2023, net changes in operating assets and liabilities increased operating cash flow by $0.9 million, primarily driven by an increase of $1.7 million in accounts payable and other accrued liabilities. This amount was partially offset by reduced cash flows resulting from an increase in prepaid expenses and other assets of $0.8 million for the nine months ended March 31, 2023.