Rezolute Inc

Previous wording

Our priority going into the end of 2024 and first half of 2025 is to execute across our two Phase 3 clinical trials. Our goals include (i) complete enrollment of ex-U.S. participants in the sunRIZE study, (ii) progress study start-up activities in the U.S. to enable U.S. participant enrollment in the sunRIZE study, and (iii) advance study start-up activities and begin enrollment for the Phase 3 registrational tumor HI study.

Current wording

Our priority in the first half of 2025 is to execute across our two Phase 3 clinical trials. Our goals include (i) complete enrollment of ex-U.S. participants in the sunRIZE study (as defined below), (ii) progress study start-up activities in the U.S. to enable U.S. participant enrollment in the sunRIZE study, and (iii) advance study start-up activities and begin enrollment for the Phase 3 registrational tumor HI study.

Previous wording

On September 4, 2024, FDA lifted the partial clinical holds on ersodetug. We are currently conducting study start-up activities at sites in the U.S. in anticipation of enrolling U.S. participants in the sunRIZE study in the first part of calendar 2025. Topline results from the study are anticipated to be available in the second half of calendar 2025.

Current wording

We are currently conducting study start-up activities at sites in the U.S. Topline results from the study are anticipated to be available in Q4 of calendar 2025, but the specific date of the availability of such results may vary.

Previous wording

Congenital HI is the most common cause of recurrent and persistent hypoglycemia in children. Individuals with congenital HI 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. There are no U.S. Food and Drug Administration (“FDA”) approved therapies for all forms of congenital HI and the current standard of care treatments are suboptimal. The current treatments used by physicians include glucagon, diazoxide, somatostatin analogues and pancreatectomy. We estimate that in the U.S. alone the immediately addressable market for congenital HI is more than 1,500 individuals.

Current wording

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. There are no U.S. FDA approved therapies for all forms of congenital HI and the current standard of care treatments are suboptimal. The current treatments used by physicians include glucagon, diazoxide, somatostatin analogues and pancreatectomy. We estimate that in the U.S. alone the immediately addressable market for congenital HI is more than 1,500 individuals.

Previous wording

Ersodetug has received Orphan Drug Designation in the U.S. and European Union for the treatment of congenital HI, as well as Rare Pediatric 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 multinational Phase 2b clinical trial (“RIZE”) outcomes and the evidence of benefit in this serious condition with substantial unmet medical need, ersodetug 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 congenital HI.

Current wording

Additionally, ersodetug has received PRIME and Innovation Passport (ILAP) designations in the European Union and U.K., respectively. Ersodetug also has Orphan Drug Designation in both regions, for the treatment of hypoglycemia due to congenital HI, as well as Rare Pediatric 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.

Previous wording

On August 5, 2024, we announced FDA clearance of our Investigational New Drug (“IND”) application for a Phase 3 registrational study of ersodetug for the treatment of hypoglycemia due to tumor HI. This is the second rare disease program with ersodetug in Phase 3 development. We are initiating start-up activities for the study, which will be primarily conducted in the U.S., and patient enrollment is planned to commence in the first half of calendar 2025. Topline results from the study are anticipated to be available in the second half of calendar 2026.

Current wording

We are initiating start-up activities for a Phase 3 registrational study of ersodetug for the treatment of hypoglycemia due to tumor HI, and patient enrollment is planned to commence in Q2 of calendar 2025. Topline results from the study are anticipated to be available in the second half of calendar 2026, but the specific date of the availability of such results may vary.

Previous wording

The Phase 3 registrational study is a double-blind, randomized, placebo-controlled trial of 24 participants who have inadequately controlled hypoglycemia because of tumor HI. Eligible participants will be randomized in 1:1 fashion (12 per treatment arm) to receive ersodetug 9 mg/kg per week or matched placebo, as an add-on to standard of care. Up to 24 additional participants may be enrolled into an open-label arm, in participants whose hypoglycemia is being managed by IV glucose in a hospital setting. Following a 6-week pivotal treatment period, all participants may receive ersodetug in open-label extension. The primary endpoint is the change in Level 2 (moderate) and Level 3 (severe) hypoglycemia events by self-monitored blood glucose. Additional endpoints include overall hypoglycemia events, time in hypoglycemia by continuous glucose monitor, patient reported quality of life, hospitalizations, and change in glucose requirements (for open-label hospitalized participants.

Current wording

The Phase 3 registrational study is a double-blind, randomized, placebo-controlled trial of 24 participants who have inadequately controlled hypoglycemia because of tumor HI. Eligible participants will be randomized in 1:1 fashion (12 per treatment arm) to receive ersodetug 9 mg/kg per week or matched placebo, as an add-on to standard of care. Up to 24 additional participants may be enrolled into an open-label arm, in participants whose hypoglycemia is being managed by IV glucose in a hospital setting. Following an 8-week pivotal treatment period, all participants may receive ersodetug in open-label extension. The primary endpoint is the change in Level 2 (moderate) and Level 3 (severe) hypoglycemia events by self-monitored blood glucose. Additional endpoints include overall hypoglycemia events, time in hypoglycemia by continuous glucose monitor, patient reported quality of life, hospitalizations, and change in glucose requirements (for open-label hospitalized participants.

Previous wording

A significant unmet need exists for treatment options with improved efficacy and tolerability as normalization of glucose levels is crucial to prevent serious signs and symptoms of hypoglycemia, improve patient quality of life and overall function, and even 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.

Current wording

A significant unmet need exists for treatment options with improved efficacy and tolerability as normalization of glucose levels is crucial to prevent serious signs and symptoms of hypoglycemia, improve patient quality of life and overall function, and even 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

Previous wording

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

Current wording

In clinical and real-world experience, ersodetug has been shown to counteract excessive insulin action downstream, at the insulin-receptor on target organs. The unique mechanism of action of ersodetug makes the therapy a potential universal treatment for any form of hyperinsulinism.

Previous wording

We maintain an EAP for a variety of HI indications for the purpose of making ersodetug 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 FDA's Office of Cardiology, Hematology, Endocrinology and Nephrology - Division of Diabetes, Lipid Disorders, and Obesity (“Division”) to treat the patient with ersodetug. Dr. Patti reported that the patient safely achieved correction of hypoglycemia with ersodetug, 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 ersodetug 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 ersodetug available on a compassionate use basis when available therapeutic options have failed, and an individual’s hypoglycemia is unmanageable.

Previous wording

We have received and approved several additional requests to date for use of ersodetug 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.

Current wording

To date, we have received over 25 unsolicited inbound physician inquiries regarding the use of ersodetug in patients with tumor HI caused by metastatic insulinomas or non-islet cell tumors, which has thus far resulted in the request, approval, and initiation of ersodetug in nine patients with tumor HI. In the U.S., these requests have all been indvidually approved by the Division. The tumor HI patients dosed have been refractory to the standard of care therapies for chronic management of hypoglycemia. They were generally requiring continuous intravenous dextrose or nutritional infusion in order to prevent severe hypoglycemia, and were typically hospitalized and in life-threatening or hospice-bound condition at the time of request. 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 tumor HI patients has been either 6 mg/kg or 9 mg/kg every 1-2 weeks. In all cases to date, ersodetug has led to substantial improvement in hypoglycemia and has been well tolerated. Within a relatively short period of time after administration of ersodetug, continuous intravenous dextrose was discontinued or substantially reduced and hospitalized patients were able to be discharged and receive maintenance ersodetug 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 ersodetug.

Current wording

Generally, dosing for tumor HI patients has been either 6 mg/kg or 9 mg/kg every 1-4 weeks. In all cases to date, ersodetug has led to substantial improvement in hypoglycemia and has been well tolerated. Within a relatively short period of time after administration of ersodetug, continuous intravenous dextrose was discontinued or substantially reduced and hospitalized patients were able to be discharged and receive maintenance ersodetug doses on an outpatient basis, with durable benefit. In several cases, other background medical therapies to prevent hypoglycemia were able to be weaned or stopped, and patients were able to resume tumor-directed therapies for treatment of their underlying cancer. No participants have discontinued the therapy due to lack of response or safety, and the duration of treatment has ranged from several months to more than 1 year in several instances, in this subset of tumor HI patients with significantly advanced and metastatic tumor burden. Presently, 5 patients are receiving ersodetug in an ongoing fashion, including one patient who has been successfully treated for 15 months, and several other patients have recently been brought to our attention and are currently under consideration for possible treatment.

Previous wording

shares of common stock at a public offering price of $3.999 per pre-funded warrant (the “2024 PFWs”) for gross proceeds of $15.0 million. The Company granted the underwriters a 30-day option to purchase up to an additional 2,250,000 shares of its common stock at a public offering price of $4.00 per share, less underwriting discounts of 6.0% of the gross proceeds. The underwriters’ option was partially exercised for 1,786,589 shares of common stock for gross proceeds of $7.1 million. Closing occurred on June 24, 2024, whereby the aggregate gross proceeds amounted to $67.1 million. The net proceeds of the 2024 Underwritten Offering amounted to approximately $62.6 million. In July 2024, we utilized approximately $59.7 million of the net proceeds from the 2024 Underwritten Offering to purchase investments in marketable debt securities with maturities that range from October 2024 through December 2025.

Current wording

On June 13, 2024, we entered into an underwriting agreement for the planned issuance and sale of equity securities in an underwritten public offering (the “2024 Underwritten Offering”). The 2024 Underwritten Offering provided for the issuance of (i) 11,250,000 shares of common stock at a price of $4.00 per share for gross proceeds of $45.0 million, and (ii) pre-funded warrants to purchase 3,750,000 shares of common stock at a public offering price of $3.999 per pre-funded warrant (the “2024 PFWs”) for gross proceeds of $15.0 million. The Company granted the underwriters a 30-day option to purchase up to an additional 2,250,000 shares of its common stock at a public offering price of $4.00 per share, less underwriting discounts of 6.0% of the gross proceeds. The underwriters’ option was partially exercised for 1,786,589 shares of common stock for gross proceeds of $7.1 million. Closing occurred on June 24, 2024, whereby the aggregate gross proceeds amounted to $67.1 million. The net proceeds of the 2024 Underwritten Offering amounted to approximately $62.6 million. In July 2024, we utilized approximately $59.7 million of the net proceeds from the 2024 Underwritten Offering to purchase investments in marketable debt securities with maturities that range from October 2024 through December 2025.

Previous wording

On July 23, 2024, an investor from our March 2024 Exchange Agreement provided notice of cashless exercise of their Exchange PFWs. We issued 610,273 shares of our common stock on July 24, 2024, and we did not receive any cash proceeds from the exercise. Subsequently, in October 2024, additional holders of Exchange PFWs provided notice of cashless exercise of their PFWs. We issued 2,389,111 shares of our common stock in October 2024 and did not receive any cash proceeds from the exercise.

Current wording

On July 23, 2024, an investor from our March 2024 Exchange Agreement provided notice of cashless exercise of their Exchange PFWs. We issued 610,273 shares of our common stock on July 24, 2024, and we did not receive any cash proceeds from this exercise. In October 2024, all the remaining holders of Exchange PFWs provided notice of cashless exercise of their PFWs. This resulted in the issuance of 2,389,111 shares of our common stock in October 2024. We did not receive any cash proceeds from this exercise.

Previous wording

Loss from change in fair value of derivative liability. We recognize liabilities for financial instruments that are required to be accounted for as derivatives, as well as embedded derivatives in our debt agreements. Derivative liabilities are adjusted to fair value at the end of

Current wording

Loss from change in fair value of derivative liability. We recognize liabilities for financial instruments that are required to be accounted for as derivatives, as well as embedded derivatives in our debt agreements. Derivative liabilities are adjusted to fair value at the end of each reporting period until the contracts are settled, expire, or otherwise meet the conditions for equity classification. Changes in fair value are reflected as a gain or loss in our unaudited condensed consolidated statements of operations and comprehensive loss.

Previous wording

We measure the fair value of services received in exchange for grants of stock options based on the fair value of the award as of the grant date. We compute the fair value of stock options with time-based vesting using the BSM option-pricing model and recognize the cost of the equity awards over the period that services are provided to earn the award. For awards that contain a graded vesting schedule, and the only condition for vesting is a service condition, compensation cost is recognized on a straight-line basis over the requisite service period as if the award was, in substance, a single award. We recognize the impact of forfeitures in the period that the forfeiture occurs, rather than estimating the number of awards that are not expected to vest in accounting for share-based compensation. For stock options that are voluntarily surrendered by employees, all unrecognized compensation is immediately recognized in the period the options are cancelled.

Current wording

cost of the equity awards over the period that services are provided to earn the award. For awards that contain a graded vesting schedule, and the only condition for vesting is a service condition, compensation cost is recognized on a straight-line basis over the requisite service period as if the award was, in substance, a single award. We recognize the impact of forfeitures in the period that the forfeiture occurs, rather than estimating the number of awards that are not expected to vest in accounting for share-based compensation. For stock options that are voluntarily surrendered by employees, all unrecognized compensation is immediately recognized in the period the options are cancelled.

Previous wording

Revenue. As a late-stage rare disease company, we did not generate any revenue for the three months ended September 30, 2024 and 2023. We are at a late stage of clinical 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 late-stage rare disease company, we did not generate any revenue for the three and six months ended December 31, 2024 and 2023. We are at a late stage of clinical 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

The increase in G&A expenses of $0.5 million for the three months ended September 30, 2024, was primarily attributable to an increase in consulting expenses of $0.3 million related to business development and an increase of $0.2 million in compensation and benefits for our G&A workforce.

Current wording

The increase in G&A expenses of $1.3 million for the three months ended December 31, 2024, was primarily attributable to an increase in consulting expenses of $0.8 million related to business development and market planning activities in preparation for future commercial activities, such as market research, and an increase of $0.5 million in compensation and benefits for our G&A workforce.

Previous wording

Cash-based compensation and benefits for our G&A workforce increased by approximately $0.5 million and was partially offset by a reduction of share-based compensation of $0.3 million. This $0.5 million increase in cash-based compensation was primarily attributable to an increase in the average number of G&A employees from 14 for the three months ended September 30, 2023, to 18 employees for the three months ended September 30, 2024. Share-based compensation for our G&A workforce decreased by $0.3 million from $1.0 million for the three months ended September 30, 2023 to $0.7 million for the three months ended September 30, 2024. This decrease in share-based compensation expense was primarily attributable to stock options that became fully vested during the fiscal year ended June 30, 2024.

Current wording

Cash-based compensationand benefits for our G&A workforce increased by approximately $1.4 million and was partially offset by a reduction of share-based compensation of $0.6 million. This $1.4 million increase in cash-based compensation was primarily attributable to an increase in the average number of G&A employees from 14 for the six months ended December 31, 2023, to 18 employees for the six months ended December 31, 2024. Share-based compensation for our G&A workforce decreased by $0.6 million from $2.0 million

Previous wording

Interest and other income. Interest and other income amounted to $1.6 million for the three months ended September 30, 2024, compared to $1.4 million for the three months ended September 30, 2023. This increase of $0.2 million was primarily due to an increase in the average value of money market funds and investments in marketable debt securities from $98.8 million at September 30, 2023 to $107.4 million as of September 30, 2024 as investment maturities were utilized to fund operating activities. 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 $2.9 million for the six months ended December 31, 2024, compared to $2.7 million for the six months ended December 31, 2023. This increase of $0.2 million was primarily due to an increase in the average value of money market funds and investments in marketable debt securities from $94.2 million at December 31, 2023 to $101.2 million as of December 31, 2024. Investment balances were higher due to proceeds from the 2024 Underwritten Offering and 2024 Private Placement, offset by investment maturities that were utilized to fund operating activities. Investments in marketable debt securities are our primary source of liquidity to fund clinical expenditures and other operating expenses.

Previous wording

As of September 30, 2024, we had cash and cash equivalents of $10.5 million, short-term marketable debt securities of $97.8 million and working capital was approximately $102.2 million. We have incurred cumulative net losses of $344.8 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 December 31, 2024, we had cash and cash equivalents of $8.9 million, short-term marketable debt securities of $87.6 million and working capital was approximately $88.1 million. We have incurred cumulative net losses of $360.6 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

Our primary source of liquidity has historically been from the completion of private placements and public offerings of our equity securities, as well as proceeds from the issuance of debt securities. For the three months ended September 30, 2024, we received proceeds of $6.0 million related to a private placement of 1.5 million shares of common stock. For further information about the key terms and results of our equity financing activities completed in the fourth quarter of fiscal year 2024 for net proceeds of $62.6 million and the first quarter of fiscal year 2025 for net proceeds of $6.0 million, please refer to the discussion above under the caption Recent Developments. The completion of equity financings between May 2022 and September 2024 is the primary source of our total cash, cash equivalents and short-term investments in marketable debt securities of $108.3 million as of September 30, 2024.

Current wording

Our primary source of liquidity has historically been from the completion of private placements and public offerings of our equity securities, as well as proceeds from the issuance of debt securities. For the six months ended December 31, 2024, we received proceeds of $6.0 million related to a private placement of 1.5 million shares of common stock. For further information about the key terms and results of our equity financing activities completed in June 2024 for net proceeds of $62.6 million and July 2024 for net proceeds of $6.0 million, please refer to the discussion above under the caption Recent Developments. The completion of equity financings between May 2022 and July 2024 is the primary source of our total cash, cash equivalents and short-term investments in marketable debt securities of $96.5 million as of December 31, 2024.

Previous wording

Remaining cash payments related to existing contractual obligations for the 12-months ending September 30, 2025 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 last patient in any of our Phase 3 clinical trials for ersodetug. 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 September 30, 2025.

Current wording

Remaining cash payments related to existing contractual obligations for the 12-months ending December 31, 2025 include approximately (i) $0.8 million under all of our operating lease agreements, (ii) a milestone payment to XOMA of $5.0 million due upon dosing of the last patient in any of our Phase 3 clinical trials for ersodetug. Due to uncertainties in the estimated 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, 2025.

Previous wording

Based on our cash and cash equivalents balance of $10.5 million and investments in short-term marketable debt securities balance of $97.8 million as of September 30, 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.

Current wording

Based on our cash and cash equivalents balance of $8.9 million and investments in short-term marketable debt securities balance of $87.6 million as of December 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

that $5.0 million will be payable to XOMA during the 12-month period ending September 30, 2025 as discussed above under the caption Short-term Liquidity Requirements. Up to $50.0 million of the remaining milestone payments that may become payable are considered a long-term liquidity requirement. Due to uncertainties in the timing associated with clinical trial activities and regulatory approvals, there is even greater uncertainty in forecasting the timing of future clinical and regulatory milestone payments to XOMA and ActiveSite that may extend beyond the next 12 months.

Current wording

Our most significant long-term contractual obligations consist of additional clinical and regulatory milestone payments up to $30.0 million payable to XOMA and additional milestone payments up to $25.0 million payable to ActiveSite. Of these amounts, we expect that $5.0 million will be payable to XOMA during the 12-month period ending December 31, 2025 as discussed above under the caption Short-term Liquidity Requirements. Up to $50.0 million of the remaining milestone payments that may become payable are considered a long-term liquidity requirement. Due to uncertainties in the timing associated with clinical trial activities and regulatory approvals,

Previous wording

In addition to the clinical and regulatory milestone payments discussed above, upon the future commercialization of ersodetug and RZ402 we will be obligated to pay additional milestone payments and royalties based on the net sales of the related products and alternative indication regulatory approvals to XOMA and ActiveSite for an aggregate up to $202.5 million. These future milestones include $185.0 million in potential payments to XOMA and $17.5 million to ActiveSite for various sales-based milestones and alternative indication regulatory approvals. No assurance can be provided that commercialization will ever be achieved for ersodetug and RZ402, in which case none of these future payments may ever be required.

Current wording

In addition to the clinical and regulatory milestone payments discussed above, upon the future commercialization of ersodetug and RZ402 we will be obligated to pay additional milestone payments and alternative indication regulatory approval payments to XOMA and ActiveSite for an aggregate up to $202.5 million and royalties based on the net sales of the related products. These future milestones include $185.0 million in potential payments to XOMA and $17.5 million to ActiveSite for various sales-based milestones and alternative indication regulatory approvals. No assurance can be provided that commercialization will ever be achieved for ersodetug or RZ402, in which case none of these future payments may ever be required.

Previous wording

In addition to our licensing obligations, we also have long-term contractual obligations under existing operating lease agreements of $0.8 million for each of the fiscal years ending June 30, 2026 and 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 of $0.8 million for each of the fiscal years ending June 30, 2026 and 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 into the second quarter of calendar year 2026.

Previous wording

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.

Current wording

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 shareholders.

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

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

Previous wording

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 September 30, 2024, no events have occurred that would result in the requirement to make additional milestone payments and no royalties have been incurred.

Current wording

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, 2024, no events have occurred that would result in the requirement to make additional milestone payments and no royalties have been incurred.

Previous wording

Presented below is a summary of our operating, investing, and financing cash flows for the three months ended September 30, 2024 and 2023 (in thousands):

Current wording

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

Previous wording

For the three months ended September 30, 2024 and 2023, cash used in operating activities amounted to $16.0 million and $10.6 million, respectively. The key components in the calculation of our cash used in operating activities are as follows (in thousands):

Current wording

For the six months ended December 31, 2024 and 2023, cash used in operating activities amounted to $29.7 million and $23.6 million, respectively. The key components in the calculation of our cash used in operating activities are as follows (in thousands):

Previous wording

For the three months ended September 30, 2024, our net loss was $15.4 million compared to $14.5 million for the three months ended September 30, 2023. For further discussion about changes in our operating results for the three months ended September 30, 2024 and 2023, please refer toResults of Operations above.

Current wording

For the six months ended December 31, 2024, our net loss was $31.1 million compared to $28.4 million for the six months ended December 31, 2023. For further discussion about changes in our operating results for the six months ended December 31, 2024 and 2023, please refer toResults of Operations above.

Previous wording

For the three months ended September 30, 2024 and 2023, our non-cash expenses of $1.6 million and $2.0 million, respectively, were primarily attributable to share-based compensation expense, and non-cash lease expense. For the three months ended September 30, 2024 and 2023, amortization of premiums exceeded accretion of discounts on marketable debt securities by $0.8 million. For the three months ended September 30, 2023, accretion of discounts exceeded amortization of premiums on marketable debt securities by $1.0 million. Accretion of discounts and amortization of premiums on marketable debt securities are a component of interest income that results from investing in marketable debt securities at premiums and discounts. For the three months ended September 30, 2024, net changes in operating assets and liabilities decreased operating cash flow by $1.4 million, primarily driven by a net decrease of $1.3 million in accounts payable and other accrued liabilities, and an increase in prepaid expenses and other assets of $0.1 million. For the three months ended September 30, 2023, net changes in operating assets and liabilities increased operating cash flow by $1.0 million, primarily driven by a net increase of $1.9 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 $0.9 million.

Current wording

For the six months ended December 31, 2024 and 2023, our non-cash expenses of $3.1 million and $4.0 million, respectively, were primarily attributable to share-based compensation expense, and non-cash lease expense. For the six months ended December 31, 2024 and 2023, accretion of discounts and amortization of premiums on marketable debt securities amounted to $1.6 million and $1.2 million, respectively. For the six months ended December 31, 2024, net changes in operating assets and liabilities decreased operating cash flow by $0.1 million, primarily driven by cash outflows resulting in a net increase in prepaid expense and other assets of $1.4 million. This amount was partially offset by a net increase of $1.3 million in accounts payable and other accrued liabilities. 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.

Previous wording

For the three months ended September 30, 2024, our net cash used in investing activities amounted to $49.4 million. For the three months ended September 30, 2024, we received proceeds of $23.8 million upon the maturity of certain marketable debt securities. These cash proceeds from maturities, along with certain proceeds from the 2024 Public Underwritten Offering in June 2024 and 2024 Private Placement in July 2024, were used to purchase a total of $73.2 million of marketable debt securities.

Current wording

For the six months ended December 31, 2024, our net cash used in investing activities amounted to $37.9 million. For the six months ended December 31, 2024, we received proceeds of $60.7 million upon the maturity of certain marketable debt securities. These cash proceeds from maturities, along with certain proceeds from the 2024 Underwritten Offering in June 2024 and 2024 Private Placement in July 2024, were used to purchase a total of $98.7 million of marketable debt securities.

Previous wording

For the three months ended September 30, 2023, our net cash provided by investing activities amounted to $2.6 million, primarily related to the maturity of marketable debt securities $18.6 million partially offset by $16.0 million of purchases of marketable debt securities.

Current wording

For the six months ended December 31, 2023, our net cash provided by investing activities amounted to $20.4 million, primarily related to the maturity of marketable debt securities of $60.5 million partially offset by cash outflows of $40.2 million to reinvest in marketable debt securities.

Previous wording

For the three months ended September 30, 2024, our net cash provided by financing activities was $5.5 million. Cash inflows amounted to $6.1 million consisting of $6.0 of proceeds from the 2024 Private Placement and proceeds of $0.1 million of proceeds the exercise of employee stock options. These amounts were partially offset by cash outflows related to the payments of offering costs of $0.6 million incurred in connection with the 2024 Public Underwritten Offering.

Current wording

For the six months ended December 31, 2024, our net cash provided by financing activities was $6.2 million. Cash inflows amounted to $6.8 million consisting of proceeds of $6.0 million from the 2024 Private Placement and $0.8 million from the exercise of employee stock options. These amounts were partially offset by cash outflows related to the payment of offering costs of $0.6 million incurred in connection with the 2024 Underwritten Offering.