Azitra Inc

Previous wording

As of August 12, 2024, we had 7,625,056 shares of our common stock issued and outstanding. Except as otherwise indicated, all share and share price this report gives effect to a reverse stock split effected on July 1, 2024 at a ratio of 30-for-1.

Current wording

As of November 12, 2024, we had 7,626,056 shares of our common stock issued and outstanding. Except as otherwise indicated, all share and share price this report gives effect to a reverse stock split effected on July 1, 2024 at a ratio of 30-for-1.

Previous wording

We focus on developing innovative therapies for precision dermatology using engineered proteins and topical live biotherapeutic products. We have built a proprietary platform that includes a microbial library comprised of approximately 1,500 unique bacterial strains that can be screened for unique therapeutic characteristics. The platform is augmented by an artificial intelligence and machine learning technology that analyzes, predicts and helps screen our library of strains for drug like molecules. The platform also utilizes a licensed genetic engineering technology, which can enable the transformation of previously genetically intractable strains. Our initial focus is on the development of genetically engineered strains of Staphylococcus epidermidis, or S. epidermidis, which we consider to be an optimal therapeutic candidate species for engineering of dermatologic therapies. The particular species demonstrates a number of well-described properties in the skin. As of the date of this report, we have identified among our microbial library over 60 distinct bacterial species that we believe are capable of being engineered to create living organisms or engineered proteins with significant therapeutic effect.

Current wording

We focus on developing innovative therapies for precision dermatology using engineered proteins and topical live biotherapeutic products. We have built a proprietary platform that includes a microbial library comprised of approximately 1,500 unique bacterial strains that can be screened for unique therapeutic characteristics. The platform is augmented by an artificial intelligence and machine learning technology that analyzes, predicts and helps screen our library of strains for drug like molecules. The platform also utilizes a licensed genetic engineering technology, which can enable the transformation of previously genetically intractable strains. Our initial focus is on the development of genetically engineered strains of Staphylococcus epidermidis, or S.

Previous wording

•ATR-12, a genetically modified strain of S. epidermidisfor treating the orphan disease, Netherton syndrome, a chronic and sometimes fatal disease of the skin estimated to affect approximately one in every 100,000, but its prevalence may be underestimated due to misdiagnosis caused by similarities to other skin diseases. We received Pediatric Rare Disease Designation for ATR-12 by the United States Food and Drug Administration, or FDA, in 2019. In December 2022, we submitted an investigational new drug application, or IND, for a Phase 1b clinical trial of ATR-12 in Netherton syndrome patients, and on January 27, 2023 we received notification from the FDA that the “study may proceed” with respect to the proposed Phase 1b clinical trial. After submitting post-IND manufacturing reports, we have commenced operating activities for our Phase 1b clinical trial in December 2023 and the trial has been opened for patient enrollment. We expect to report initial safety results by year-end 2024.

Current wording

•ATR-12, a genetically modified strain of S. epidermidisfor treating the orphan disease, Netherton syndrome, a chronic and sometimes fatal disease of the skin estimated to affect approximately one in every 100,000, but its prevalence may be underestimated due to misdiagnosis caused by similarities to other skin diseases. We received Pediatric Rare Disease Designation for ATR-12 by the United States Food and Drug Administration, or FDA, in 2019. In December 2022, we submitted an investigational new drug application, or IND, for a Phase 1b clinical trial of ATR-12 in Netherton syndrome patients, and on January 27, 2023 we received notification from the FDA that the “study may proceed” with respect to the proposed Phase 1b clinical trial. After submitting post-IND manufacturing reports, we have commenced operating activities for our Phase 1b clinical trial in December 2023, and we dosed our first patient in August 2024. We expect to report initial clinical safety results in the first quarter of 2025.

Previous wording

•ATR-04, a genetically modified strain of S. epidermidisfor treating the papulopustular rash experienced by cancer patients undergoing epidermal growth factor receptor inhibitor, or EGFRi, targeted therapy. We intend to submit an IND for a Phase 1b clinical trial in certain cancer patients undergoing EGFRi targeted therapy in the third quarter of 2024. Subject to FDA clearance of our IND, we expect to commence our Phase 1b clinical trial in the fourth quarter of 2024.

Current wording

•ATR-04, a genetically modified strain of S. epidermidisfor treating the papulopustular rash experienced by cancer patients undergoing epidermal growth factor receptor inhibitor, or EGFRi, targeted therapy. In August 2024, we obtained IND clearance from the FDA to commence a Phase 1/2 clinical trial in certain cancer patients undergoing EGFRi targeted therapy. In September 2024, we obtained Fast Track designation by the FDA in this indication. We expect to commence our Phase 1b clinical trial in the fourth quarter of 2024 and dose the first patient in the first quarter of 2025.

Previous wording

•ATR-01, a genetically modified strain of S. epidermidis that expresses an engineered recombinant human filaggrin protein for treating ichthyosis vulgaris, a chronic, xerotic (abnormally dry), scaly skin disease with an estimated incidence and prevalence of 1 in 250, which suggests a total patient population of 1.3 million in the United States. We are planning to perform lead optimization and IND-enabling studies in 2024 to support an IND filing targeted for the second half of 2025.

Current wording

•ATR-01, a genetically modified strain of S. epidermidis that expresses an engineered recombinant human filaggrin protein for treating ichthyosis vulgaris, a chronic, xerotic (abnormally dry), scaly skin disease with an estimated incidence and prevalence of 1 in 250, which suggests a total patient population of 1.3 million in the United States. We are planning to perform lead optimization and IND-enabling studies in 2024 to support an IND filing targeted for early 2026.

Previous wording

•Advance our lead product candidates, ATR-12 and ATR-04, through clinical trials. In 2022, we obtained pre-IND correspondence with the FDA for purposes of discussing our proposed regulatory pathway for ATR-12 and obtaining guidance from the FDA on the preclinical plan leading to the filing and acceptance of an IND for ATR-12. In December 2022, we filed an IND for a first-in-human trial of ATR-12 in Netherton syndrome patients. On January 27, 2023, we received notification from the FDA that the “study may proceed” with respect to the proposed Phase 1b clinical trial. In April 2024, we held a pre-IND meeting with the FDA to discuss an IND filing for a first-in-human Phase 1b/2a clinical trial in patients with EGFRi-associated rash. We expect to report initial safety results of our Phase 1b clinical trial for our ATR-12 in Netherton syndrome patients by year-end and are currently planning to commence a Phase 1b trial of our ATR-04 in certain cancer patients undergoing EGFRi therapy in the fourth quarter of 2024. We have a cleared IND for ATR-12 and expect to file an IND for ATR-04 in the third quarter of 2024.

Current wording

•Advance our lead product candidates, ATR-12 and ATR-04, through clinical trials. In December 2022, we filed an IND for a first-in-human trial of ATR-12 in Netherton syndrome patients. On January 27, 2023, we received notification from the FDA that the “study may proceed” with respect to the proposed Phase 1b clinical trial, and in August 2024 we initiated dosing the first patient in its Phase 1b clinical trial evaluating ATR-12. In April 2024, we held a pre-IND meeting with the FDA to discuss an IND filing for a first-in-human Phase 1b/2a clinical trial in patients with EGFRi-associated rash, and in September 2024 the FDA granted Fast Track designation for ATR-04. We expect to report initial safety results of the first patients dosed in our Phase 1b clinical trial for our ATR-12 in Netherton syndrome patients in early 2025 with full results anticipated in the second half of 2025, and are currently planning to commence a Phase 1b trial of our ATR-04 in certain cancer patients undergoing EGFRi therapy in the fourth quarter of 2024.

Previous wording

We generated $7,500 of service revenue under the Bayer JDA during the second quarter of fiscal 2024 compared to service revenue of $172,000 under the JDA for the comparable period in fiscal 2023. The decrease of $164,500 in service revenue is attributable to a decrease in the amount of reimbursable development costs incurred in 2024.

Current wording

We generated $0 of service revenue under the Bayer JDA during the third quarter of fiscal 2024 compared to service revenue of $310,700 under the JDA for the comparable period in fiscal 2023. The decrease of $310,700 in service revenue is attributable to a decrease in the amount of reimbursable development costs incurred in 2024. In the future, we expect to generate minimal service revenue, if any, under the Bayer JDA.

Previous wording

General and administrative costs during the second quarter of fiscal 2024 increased by $704,589, or 83%, to $1,549,228 from the comparable prior period. The increase was primarily related to the costs incurred following, and as a result of, our emergence as a public company in June 2023, including $157,000 of salaries and benefits primarily related to the hiring of our COO, an increase of $139,000 primarily related to the hiring of our CFO consultant, an increase of $257,000 primarily related to costs associated with listing on the NYSE, an increase of $89,000 primarily related to the cost of directors and officers insurance, an increase of $88,000 in public relations expenditures, an increase of $77,000 in legal costs, an increase of $18,000 in Board member costs, an increase of $18,000 in conference expense offset by a decrease of $136,000 in accounting and audit expenses and a net decrease of $2,409 in other overhead expenses.

Current wording

General and administrative costs during the third quarter of fiscal 2024 increased by $157,492, or 9%, to $1,913,400 from the comparable prior period. The increase was primarily related to the costs incurred following, and as a result of, our emergence as a public company in June 2023, including $165,000 of salaries and benefits, an increase of $168,000 primarily related to the hiring of our CFO, an increase of $110,000 primarily related to the achievement of a milestone for our CEO's performance based options, an increase of $47,000 in public relations costs offset by a decrease of $159,000 primarily related to the reduction in financing costs, a decrease of $190,000 in legal expenditures, and a net increase of $16,492 in other overhead expenses.

Previous wording

Research and development expenses include salaries and benefits of all research personnel, payments to contract research organizations, payments to research consultants, and the purchase of lab supplies. These expenses are offset by income earned from government grant payments and research and development tax credits. We generate grant revenue on contracts with various federal agencies and nonprofit research institutions for general research conducted by us. These grant arrangements also do not meet the criteria for revenue recognition and amounts earned under these grant contracts are recorded as a negative research and development expense.

Current wording

Research and development expenses include salaries and benefits of all research personnel, payments to contract research organizations, payments to research consultants, and the purchase of lab supplies. These expenses are offset by development tax credits.

Previous wording

During the second quarter of fiscal 2024, research and development expenses increased by $363,601, or 48%, to $1,118,552 from the comparable prior period. The increase was primarily related to an increase of $12,000 in research and development related costs attributable to our efforts in moving our ATR-12 program forward into the clinic, an increase of $149,000 attributable to the use of clinical consultants, an increase of $191,000 attributable to moving our ATR-04 program forward and a net increase of $11,601 in other costs. There was no government and nonprofit grant revenue received by us during the second quarter of fiscal 2024 and 2023. There were no refundable tax credits for the three-month periods ended June 30, 2024 and 2023.

Current wording

During the third quarter of fiscal 2024, research and development expenses increased by $467,283, or 85%, to $1,015,807 from the comparable prior period. The increase was primarily related to an increase of $180,000 in salaries and benefits, an increase of $130,000 in research and development related costs attributable to our efforts in moving our ATR-12 program forward into the clinic, an increase of $116,000 attributable to the use of clinical consultants, an increase of $59,000 attributable to moving our ATR-04 program forward and a net decrease of $17,717 in other costs. There was no government and nonprofit grant revenue received by us during the third quarter of fiscal 2024 and 2023. There were no refundable tax credits for the three-month periods ended September 30, 2024 and 2023.

Previous wording

Our other income (expense) consists valuation of warrants, loss on foreign currency translation, change in fair value of the convertible note and interest expense. During the second quarter of fiscal 2024, other income (expense) decreased by $3,030,225, or 101%, compared to the comparable period in fiscal 2023. The decrease was primarily related to a decrease of $2,830,100 attributable to the change in fair value of the convertible note, a decrease of $74,405 attributable to interest expense, a decrease of $98,504 in warrant value and a net decrease of $27,216 attributable to other income and expense.

Current wording

Our other income (expense) consists of interest income, changes in the valuation of warrants, loss on foreign currency translation, loss on issuance of stock, loss on disposal of equipment and interest expense. During the third quarter of fiscal 2024, other income (expense) increased by $1,869,273, or 3,706%, compared to the comparable period in fiscal 2023. The increase was primarily related to an increase of $3,903,408 in warrant value, a net decrease of $98,665 attributable to other income and expense, offset by a increase of $2,132,800 attributable to the loss on issuance of stock.

Previous wording

The following table summarizes our results of operations with respect to the items set forth below for the for the six months ended June 30, 2024 and 2023 together with the percentage change for those items.

Current wording

The following table summarizes our results of operations with respect to the items set forth below for the for the nine months ended September 30, 2024 and 2023 together with the percentage change for those items.

Previous wording

We generated $7,500 of service revenue under the Bayer JDA during the first six months of fiscal 2024 compared to service revenue of $285,300 under the JDA for the comparable period in fiscal 2023. The decrease of $277,800 in service revenue is attributable to a decrease in the amount of reimbursable development costs in 2024.

Current wording

We generated $7,500 of service revenue under the Bayer JDA during the first nine months of fiscal 2024 compared to service revenue of $596,000 under the JDA for the comparable period in fiscal 2023. The decrease of $588,500 in service revenue is attributable to a decrease in the amount of reimbursable development costs in 2024. In the future, we expect to generate minimal service revenue, if any, under the Bayer JDA.

Previous wording

General and administrative costs during the first six months of fiscal 2024 increased by $1,350,106, or 80%, to $3,037,755 from the prior year period. The increase was primarily related to the costs incurred following, and as a result of, our emergence as a public company in June 2023, including an increase of $299,000 of salaries and benefits primarily related to the hiring of or COO, an increase of $260,000 primarily related to the hiring of our CFO consultant, an increase of $342,000 primarily related to costs associated with listing on the NYSE, an increase of $204,000 primarily related to the cost of directors and officers insurance, an increase of $123,000 in public relations expenditures, an increase of $147,000 in legal costs, an increase of $48,000 in Board member costs, an increase of $32,000 in conference expense offset by a decrease of $142,000 in accounting and audit expenses and a net increase of $37,106 in other overhead expenses.

Current wording

General and administrative costs during the first nine months of fiscal 2024 increased by $1,507,596, or 44%, to $4,951,155 from the prior year period. The increase was primarily related to the costs incurred following, and as a result of, our emergence as a public company in June 2023, including an increase of $462,000 of salaries and benefits, an increase of $429,000 primarily related to the hiring of our CFO, an increase of $112,000 primarily related to the achievement of a milestone for our CEO's performance based options, an increase of $183,000 primarily related to costs associated with listing on the NYSE, an increase of $191,000 primarily related to the cost of directors and officers insurance, an increase of $170,000 in public relations expenditures, an increase of $59,000 in Board member costs, an increase of $32,000 in conference expense offset by a decrease of $25,000 in legal costs, a decrease of $141,000 in accounting and audit expenses and a net increase of $35,596 in other overhead expenses.

Previous wording

During the first six months of fiscal 2024, research and development expenses increased by $1,007,535, or 64%, to $2,591,522 from the prior year period. The increase was primarily related to a increase of $153,000 in research and development related costs attributable to our efforts in moving our ATR-12 program forward into the clinic, an increase of $272,000 attributable to the use of clinical consultants, an increase of $642,000 attributable to moving our ATR-04 program forward offset by a decrease of $56,000 related to the forgiveness of an accounts payable amount and a net decrease of $3,464 in other cost. There was $0 and $1,145 in government and nonprofit grant revenue received by us during the first six months of fiscal 2024 and 2023, respectively.

Current wording

During the first nine months of fiscal 2024, research and development expenses increased by $1,474,819, or 69%, to $3,607,329 from the prior year period. The increase was primarily related to an increase of $205,000 in salaries and benefits, an increase of $267,000 in research and development related costs attributable to our efforts in moving our ATR-12 program forward into the clinic, an increase of $388,000 attributable to the use of clinical consultants, an increase of $633,000 attributable to moving our ATR-04 program forward offset by a net decrease of $18,181 in other costs. There was $0 and $1,145 in government and nonprofit grant funds received by us during the first nine months of fiscal 2024 and 2023, respectively, and we do not anticipate any significant grants in the near term.

Previous wording

Our other income (expense) consists valuation of warrants, loss on foreign currency translation, change in fair value of the convertible note and interest expense. During the first six months of fiscal 2024, other income (expense) decreased by $3,947,565, or 101%, compared to the comparable period in fiscal 2023. The decrease was primarily related to an decrease of $3,630,100 attributable to the change in fair value of the convertible note, an decrease of $163,323 attributable to interest expense, an decrease of $121,138 in warrant value and a net decrease of $33,004 attributable to other income and expense.

Current wording

Our other income (expense) consists of interest income, loss on foreign currency translation, change in fair value of the convertible note, change in fair value of warrants, loss on the issuance of our common stock, and interest expense. During the first nine months of fiscal 2024, other income (expense) decreased by $5,816,837, or 151%, compared to the comparable period in fiscal 2023. The decrease was primarily related to a decrease of $3,630,100 attributable to the change in fair value of the convertible note, an decrease of $160,181 attributable to interest expense, a decrease of $4,024,546 in warrant value, an increase in loss on issuance of common stock of $2,132,800 and a net decrease of $134,810 attributable to other income and expense.

Previous wording

As of June 30, 2024, we had total assets of approximately $3.9 million and working capital of approximately $(0.4) million. As of June 30, 2024, our liquidity included approximately $0.8 million of cash and cash equivalents. Following the quarter end, in July 2024, we completed a follow-on offering of an aggregate of 6,665,000 shares of our common stock and Class A warrants to purchase up to 13,330,000 shares of common stock, at a combined public offering price of $1.50 per share and accompanying warrants, for the net proceeds of $8.95 million. After giving effect to the July 2024 offering we believe that our cash on-hand as of the date of this report may not be sufficient to cover our proposed plan of operations over the next twelve months. We intend to seek additional funds through various financing sources, including the sale of our equity and debt securities, federal grants, licensing fees for our technology and joint ventures with industry partners. In addition, we will consider alternatives to our current business plan that may enable us to achieve revenue producing operations and meaningful commercial success with a smaller amount of capital. However, there can be no guarantees that such funds will be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be unable to further pursue our business plan and we may be unable to continue operations.

Current wording

As of September 30, 2024, we had total assets of approximately $9.8 million and working capital of approximately $6.3 million. As of September 30, 2024, our liquidity included approximately $7.3 million of cash and cash equivalents. We believe that our cash on-hand as of the date of this report may not be sufficient to cover our proposed plan of operations over the next twelve months. We intend to seek additional funds through various financing sources, including the sale of our equity and debt securities, federal grants, licensing fees for our technology and joint ventures with industry partners. In addition, we will consider alternatives to our current business plan that may enable us to achieve revenue producing operations and meaningful commercial success with a smaller amount of capital. However, there can be no guarantees that such funds will be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be unable to further pursue our business plan and we may be unable to continue operations.

Previous wording

During the first six months of fiscal 2024, operating activities used $5.1 million of cash primarily driven by our net loss of $5.6 million offset by non-cash items of $0.5 million. During the comparable period of fiscal 2023, operating activities used $3.0 million of cash primarily driven by our net loss of $6.9 offset by non-cash items of $3.9 million.

Current wording

During the first nine months of fiscal 2024, operating activities used $7.6 million of cash primarily driven by our net loss of $6.6 million, and non-cash items of $1.0 million. During the comparable period of fiscal 2023, operating activities used $4.8 million of cash primarily driven by our net loss of $8.8 offset by non-cash items of $4.0 million.

Previous wording

During the first six months of fiscal 2024, investing activities used $155,826 of cash driven by $155,826 trademark and patent costs. During the comparable period of fiscal 2023, investing activities used $162,138 of cash driven by $129,297 of trademark and patent costs, $17,578 for the purchase of furniture and equipment, and $15,263 of license costs.

Current wording

During the first nine months of fiscal 2024, investing activities used $263,714 of cash driven by $255,145 trademark and deferred patent costs. During the comparable period of fiscal 2023, investing activities used $258,274 of cash driven by $208,723 of trademark and deferred patent costs, $22,882 for the purchase of furniture and equipment, and $26,669 of patent, trademark, and license costs.

Previous wording

During the first six months of fiscal 2024, financing activities provided $4.3 million in cash primarily driven by proceeds from our February 2024 follow-on public offering. During the comparable period of fiscal 2023, financing activities used $6.0 million in cash primarily driven by deferred offering costs for our June 2023 IPO.

Current wording

During the first nine months of fiscal 2024, financing activities provided $13.3 million in cash primarily driven by proceeds from our February and July 2024 follow-on public offerings. During the comparable period of fiscal 2023, financing activities provided $6.0 million in cash primarily driven by proceeds from our June 2023 IPO.

Previous wording

During the six months ended June 30, 2024, there were no material changes to our critical accounting policies previously disclosed in our Form 10-K dated December 31, 2023 and filed with the SEC on March 15, 2024.

Current wording

During the nine months ended September 30, 2024, there were no material changes to our critical accounting policies previously disclosed in our Form 10-K dated December 31, 2023 and filed with the SEC on March 15, 2024.