Rani Therapeutics Holdings, Inc. (NASDAQ:RANI) Q4 2023 Earnings Conference Call March 20, 2024 4:30 PM ET Company Participants Kiki Patel - Gilmartin Group LLC Talat Imran - Chief Executive Officer Arvinder Dhalla - Vice President, Clinical Development Svai Sanford - Chief Financial Officer Conference Call Participants Olivia Brayer - Cantor Fitzgerald Edward Nash - Canaccord Genuity Julian Harrison - BTIG John Vandermosten - Zacks Operator Welcome to the Rani Therapeutics Fourth Quarter and Full Year 2023 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 OR FORM 10-K ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) For the transition period from ________________ to ________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 Commission File Number: 001-40672 RANI THERAPEUTICS HOLDINGS, INC. (Exact Name of Registrant as Specified in its Charter) Delawa ...

Exhibit 99.1 Rani Therapeutics Reports Fourth Quarter and Full Year 2023 Financial Results; Provides Corporate Update - Announced Positive Topline Results from Phase 1 Study of an Oral Anti-Interleukin 12/23 Antibody (RT-111) - - Announced Preclinical Pharmacodynamic Data on Transenteric Delivery of GLP-1 Incretin Triagonist - - Cash runway extended into 2025 - - Conference call and webcast today at 4:30 p.m. ET / 1:30 p.m. PT - SAN JOSE, Calif., March 20, 2024 --Rani Therapeutics Holdings, Inc. ("Rani Ther ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission File Number: 001-40672 RANI THERAPEUTICS HOLDINGS, INC. (Exact Name of Registrant as Specified in its Charte ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission File Number: 001-40672 RANI THERAPEUTICS HOLDINGS, INC. (Exact Name of Registrant as Specified in its Charter) De ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission File Number: 001-40672 RANI THERAPEUTICS HOLDINGS, INC. (Exact Name of Registrant as Specified in its Charter) D ...

Rani Therapeutics Holdings, Inc. (NASDAQ:RANI) Q4 2022 Earnings Conference Call March 22, 2023 4:30 PM ET Company Participants Laurence Watts - Managing Director, Gilmartin Group LLC Talat Imran - CEO Svai Sanford - CFO Mir Hashim - Chief Scientific Officer Conference Call Participants Brandon Folkes - Cantor Fitzgerald Hao Shen - Bank of America Andreas Argyrides - Wedbush Annabel Samimy - Stifel Ashwani Verma - UBS Bert Hazlett - BTIG Mitchell Kapoor - H. C. Wainwright Operator Hello, and welcome to Rani ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | Delaware | 86-3114789 | | --- | --- | | (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | | 2051 Ringwood Avenue | | | San Jose, California | 95131 | | (Address of principal executive offices) | (Zip Code) | | | Registrant's telephone number, including area code: (408) 457-3700 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission File Number: 001-40672 RANI THERAPEUTICS HOLDINGS, INC. (Exact Name of Registrant as Specified in its Charte ...

```markdown [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=3&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section outlines the nature of forward-looking statements, their inherent risks, and the company's policy on updating them - This report contains **forward-looking statements** regarding future operations, financial position, business strategy, product candidates, clinical trials, research and development costs, manufacturing, regulatory approvals, and intellectual property[8](index=8&type=chunk)[9](index=9&type=chunk) - These statements involve known and unknown risks, uncertainties, and other important factors that may cause actual results to differ materially from those projected[8](index=8&type=chunk)[10](index=10&type=chunk) - The company does not plan to publicly update or revise any **forward-looking statements** unless required by applicable law[10](index=10&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Rani Therapeutics Holdings, Inc., including the balance sheets, statements of operations and comprehensive loss, statements of changes in stockholders' equity, and statements of cash flows, along with detailed notes explaining the company's accounting policies, financial instruments, related party transactions, leases, equity, and other financial commitments [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheet Data | Metric | Dec 31, 2021 (in thousands) | Jun 30, 2022 (in thousands) | Change (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Cash and cash equivalents | $117,453 | $97,181 | $(20,272) | | Total current assets | $119,595 | $97,993 | $(21,602) | | Total assets | $124,207 | $104,344 | $(19,863) | | Total current liabilities | $2,640 | $5,349 | $2,709 | | Total liabilities | $2,640 | $5,690 | $3,050 | | Total stockholders' equity | $121,567 | $98,654 | $(22,913) | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations and Comprehensive Loss Data | Metric (in thousands) | 3 Months Ended Jun 30, 2022 | 3 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Contract revenue | $0 | $1,961 | $0 | $2,717 | | R&D expenses | $9,528 | $3,759 | $17,118 | $7,106 | | G&A expenses | $6,319 | $3,460 | $12,509 | $6,067 | | Total operating expenses | $15,847 | $7,219 | $29,627 | $13,173 | | Loss from operations | $(15,847) | $(5,258) | $(29,627) | $(10,456) | | Net loss | $(15,966) | $(5,485) | $(29,794) | $(11,083) | | Net loss per Class A common share (basic & diluted) | $(0.31) | N/A | $(0.60) | N/A | [Condensed Consolidated Statements of Changes in Stockholders' Equity/Convertible Preferred Units and Members' Deficit](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%2FConvertible%20Preferred%20Units%20and%20Members'%20Deficit) This section tracks the changes in the company's equity accounts over time, reflecting net loss and other adjustments - **Total stockholders' equity decreased** by **$22.9 million** from December 31, 2021 (**$121.6 million**) to June 30, 2022 (**$98.7 million**), driven by **net loss** and non-controlling interest adjustments[16](index=16&type=chunk) Condensed Consolidated Statements of Changes in Stockholders' Equity Data | Metric (in thousands) | Dec 31, 2021 | Mar 31, 2022 | Jun 30, 2022 | | :-------------------- | :----------- | :----------- | :----------- | | Additional Paid In Capital | $55,737 | $67,933 | $69,986 | | Accumulated Deficit | $(8,331) | $(14,554) | $(22,178) | | Non-controlling interest | $74,156 | $57,260 | $50,841 | | Total Stockholders' Equity | $121,567 | $110,644 | $98,654 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flow Data | Metric (in thousands) | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(19,688) | $(9,676) | | Net cash used in investing activities | $(633) | $(235) | | Net cash provided by financing activities | $49 | $6,167 | | Net decrease in cash and cash equivalents | $(20,272) | $(3,744) | | Cash and cash equivalents, end of period | $97,181 | $69,314 | - The significant increase in **net cash used in operating activities** for the six months ended June 30, 2022, was primarily driven by a higher **net loss** of **$29.8 million**, partially offset by non-cash adjustments like **equity-based compensation**[18](index=18&type=chunk)[179](index=179&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies, financial instruments, related party transactions, leases, equity, and other financial commitments [1. Organization and Nature of Business](index=9&type=section&id=1.%20Organization%20and%20Nature%20of%20Business) This note describes the company's formation, business model, and financial viability as a clinical-stage biotherapeutics entity - Rani Holdings was formed in April 2021 to facilitate an **IPO** and operate Rani LLC, a clinical-stage biotherapeutics company focused on oral delivery technology (RaniPill capsule) for biologics and drugs[19](index=19&type=chunk) - The **IPO** in August 2021 generated approximately **$73.6 million** in net proceeds, used to purchase **Class A Units** of Rani LLC[20](index=20&type=chunk) - As of June 30, 2022, the company had an **accumulated deficit** of **$22.2 million** and negative **operating cash flows** of **$19.7 million** for the six months ended June 30, 2022, but expects existing **cash** (**$97.2 million**) to fund operations for at least **12 months**[22](index=22&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements - The financial statements are prepared in accordance with U.S. GAAP for interim financial information and consolidate Rani LLC, with a portion of **net loss** allocated to non-controlling interests[24](index=24&type=chunk)[25](index=25&type=chunk)[27](index=27&type=chunk) - The company adopted ASU 2016-02 (Leases) on January 1, 2022, recognizing **$1.3 million** in ROU assets and lease liabilities with no impact on operations or **cash flows**[37](index=37&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) - A **Tax Receivable Agreement** (TRA) was entered into in August 2021, obligating the company to pay **85%** of certain **tax benefits**, but no liability has been recorded as of June 30, 2022, as realization of **tax benefits** is not yet probable[40](index=40&type=chunk)[41](index=41&type=chunk) [3. Fair Value Measurements](index=14&type=section&id=3.%20Fair%20Value%20Measurements) This note details the valuation techniques and inputs used to measure financial assets and liabilities at fair value Fair Value of Financial Assets | Asset (in thousands) | As of Jun 30, 2022 (Level 1) | As of Dec 31, 2021 (Level 1) | | :------------------- | :--------------------------- | :--------------------------- | | Money market funds | $94,679 | $115,595 | | Total assets | $94,679 | $115,595 | - The company's Level 3 liability for preferred unit warrants was settled with **Class A common stock** during the **IPO** and Organizational Transactions, resulting in a balance of **$0** at June 30, 2022, compared to **$606 thousand** at June 30, 2021[51](index=51&type=chunk)[52](index=52&type=chunk) [4. Accrued Expenses](index=14&type=section&id=4.%20Accrued%20Expenses) This note provides a breakdown of the company's accrued liabilities at specific balance sheet dates Accrued Expenses Breakdown | Accrued Expense (in thousands) | Jun 30, 2022 | Dec 31, 2021 | | :----------------------------- | :----------- | :----------- | | Payroll and related | $2,037 | $202 | | Accrued preclinical and clinical trial costs | $464 | $621 | | Accrued taxes | $358 | $3 | | Accrued professional fees | $178 | $213 | | Other | $184 | $395 | | Total accrued expenses | $3,221 | $1,434 | [5. Evaluation Agreement](index=15&type=section&id=5.%20Evaluation%20Agreement) This note discusses the termination of a key evaluation agreement and its impact on contract revenue - Takeda terminated its evaluation agreement for the RaniPill capsule in May 2021, resulting in no **contract revenue** from this agreement for the six months ended June 30, 2022[54](index=54&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) [6. Related Party Transactions](index=15&type=section&id=6.%20Related%20Party%20Transactions) This note discloses financial and operational agreements between the company and its related entities, including InCube Labs - Rani LLC and InCube Labs, LLC (ICL), an entity wholly-owned by the company's founder, have service agreements for personnel and facility occupancy[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) Related Party Expenses | Expense (in thousands) | 3 Months Ended Jun 30, 2022 | 3 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2021 | | :--------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Research and development | $286 | $123 | $526 | $156 | | General and administrative | $53 | $184 | $116 | $366 | | Total | $339 | $307 | $642 | $522 | - The company holds a fully paid, exclusive license from ICL for RaniPill capsule technology patents and has the right to acquire four specific US patent families for up to **$1.0 million** after the fifth anniversary of the agreement[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) [7. Leases](index=18&type=section&id=7.%20Leases) This note describes the company's operating lease arrangements and associated right-of-use assets and liabilities - The company's leases are accounted for as operating leases, primarily through service agreements with ICL for facilities in San Jose, Milpitas, and San Antonio[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) Operating Lease Liabilities | Metric (in thousands) | Jun 30, 2022 | | :-------------------- | :----------- | | Operating lease right-of-use assets | $999 | | Operating lease liability, current portion | $658 | | Operating lease liability, net current portion | $341 | | Total operating lease liability | $999 | - Future undiscounted minimum lease payments total **$1.035 million** as of June 30, 2022, with an additional **$0.4 million** from a July 2022 renewal for Milpitas facilities[80](index=80&type=chunk)[97](index=97&type=chunk) [8. Stockholders' Equity / Members' Deficit](index=19&type=section&id=8.%20Stockholders'%20Equity%20%2F%20Members'%20Deficit) This note explains the structure and changes in the company's equity, including common stock and non-controlling interests - Prior to the **IPO**, Rani LLC had authorized common and preferred units, with members not liable for debts and no obligation for capital contributions[81](index=81&type=chunk)[82](index=82&type=chunk) - For the six months ended June 30, 2022, **4,626,639 Paired Interests** and **158,051 Class A Units** were exchanged for **Class A common stock**, resulting in the cancellation of Class B common stock[84](index=84&type=chunk) [9. Equity-Based Compensation](index=19&type=section&id=9.%20Equity-Based%20Compensation) This note details the types of equity awards granted and the associated compensation expense recognized Unrecognized Equity-Based Compensation Expense | Equity Instrument | Unrecognized Compensation Expense (in thousands) | Weighted-Average Recognition Period (years) | | :---------------- | :--------------------------------------------- | :------------------------------------------ | | Stock Options | $27,700 | 2.9 | | RSUs | $11,600 | 2.3 | | RSAs | $200 | 1.3 | | ESPP | $100 | 0.4 | Equity-Based Compensation Expense by Category | Expense Category (in thousands) | 3 Months Ended Jun 30, 2022 | 3 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2021 | | :------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- |\ | Research and development | $1,638 | $61 | $2,886 | $287 | | General and administrative | $2,338 | $221 | $3,995 | $448 | | Total equity-based compensation | $3,976 | $282 | $6,881 | $735 | [10. Commitments and Contingencies](index=21&type=section&id=10.%20Commitments%20and%20Contingencies) This note outlines potential future obligations and legal challenges, including patent oppositions and tax receivable agreement liabilities - The company is involved in multiple European Patent Office opposition proceedings initiated by Novo Nordisk AS, challenging four European patents, which could impact commercialization in Europe[90](index=90&type=chunk)[198](index=198&type=chunk)[202](index=202&type=chunk) - No liability has been recorded under the **Tax Receivable Agreement** as of June 30, 2022, due to the uncertainty of realizing **tax benefits**, but potential future payments could be up to **$20.4 million**[91](index=91&type=chunk)[92](index=92&type=chunk) [11. Income Taxes](index=21&type=section&id=11.%20Income%20Taxes) This note explains the company's tax structure, effective tax rate, and deferred tax assets and valuation allowances - Rani Holdings consolidates Rani LLC (pass-through) and RMS (taxable corporation), paying corporate taxes on its allocable share of Rani LLC income[93](index=93&type=chunk) - For the six months ended June 30, 2022, the effective income tax rate was **(0.51%)**. A **$18.3 million** deferred tax asset was recognized but fully offset by a valuation allowance due to a history of operating losses[94](index=94&type=chunk) [12. Net Loss Per Share](index=22&type=section&id=12.%20Net%20Loss%20Per%20Share) This note presents the calculation of basic and diluted net loss per share, including the impact of potentially dilutive securities Net Loss Per Class A Common Share | Metric | 3 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2022 | | :---------------------------------------------------- | :-------------------------- | :-------------------------- | | Net loss attributable to Rani Therapeutics Holdings, Inc. (in thousands) | $(7,624) | $(13,847) | | Weighted average Class A common share outstanding (in thousands) | 24,371 | 22,930 | | Net loss per Class A common share (basic and diluted) | $(0.31) | $(0.60) | - Over **30 million** potentially dilutive securities, including **Paired Interests**, stock options, and RSUs, were excluded from diluted EPS calculations because their inclusion would be anti-dilutive due to the company's **net loss**[96](index=96&type=chunk) [13. Subsequent Events](index=22&type=section&id=13.%20Subsequent%20Events) This note discloses significant events that occurred after the balance sheet date, such as lease renewals and new loan agreements - In July 2022, a lease extension for Milpitas facilities was approved, adding **$0.4 million** in future lease payments[97](index=97&type=chunk) - In August 2022, the company secured a **Loan Agreement** for up to **$45.0 million**, with **$15.0 million** funded immediately and another **$15.0 million** available by year-end 2022[98](index=98&type=chunk) - The loan matures in August 2026, has a **variable interest rate**, and includes a **financial covenant** requiring at least two drug products in clinical development (unless market cap exceeds **$650 million**)[99](index=99&type=chunk)[100](index=100&type=chunk) - **Warrants** to purchase **76,336 Class A common shares** were issued to the lender in connection with the **Loan Agreement**[101](index=101&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting its status as a clinical-stage biotherapeutics company developing the RaniPill oral delivery platform. It discusses clinical updates for RT-102, recent financing activities, and detailed analysis of revenue, operating expenses, and liquidity, emphasizing increased R&D costs and future funding needs [Overview](index=24&type=section&id=Overview) This section introduces Rani Therapeutics as a clinical-stage biotherapeutics company and its proprietary RaniPill oral delivery platform - Rani Therapeutics is a clinical-stage biotherapeutics company focused on oral delivery of biologics and drugs via its proprietary RaniPill capsule technology[104](index=104&type=chunk) - The RaniPill capsule delivers up to **3mg** doses, with a high-capacity RaniPill HC under development for up to **20mg**, aiming to deliver most market biologics orally[105](index=105&type=chunk) - Operations have been financed primarily through an **IPO**, private placements, and evaluation agreements, with significant resources devoted to **R&D**, manufacturing automation, and intellectual property[106](index=106&type=chunk) [Clinical Update](index=25&type=section&id=Clinical%20Update) This section provides an update on the clinical development of RT-102, including Phase 1 study results and bioavailability data - Part 1 of the Phase 1 clinical study for RT-102 (oral PTH analog for osteoporosis) achieved all endpoints, demonstrating general tolerability and **high oral bioavailability**[109](index=109&type=chunk) - Oral RT-102 (**20μg** and **80μg**) delivered PTH with **300%-400% greater bioavailability** than Forteo® SC (**20μg**)[115](index=115&type=chunk) RT-102 Bioavailability Comparison | Metric | Forteo SC 20μg | RT-102 20μg | RT-102 80μg | | :----- | :------------- | :---------- | :---------- | | Cmax (pg/mL) | 128 ± 20 | 98 ± 10 | 971 ± 223 | | Tmax (hr) | 0.217 | 1.13 | 0.994 | | AUC (h*pg/mL) | 126 ± 64 | 342 ± 36 | 2600 ± 649 | | Relative BA (%) | N/A | ~300% | ~400% | - A new RaniPill Version D demonstrated a **higher drug delivery success rate** (**95%**) compared to Version C (**75%**) in Study Part 1[120](index=120&type=chunk) - Part 2 of the RT-102 clinical study, involving **7-day** repeat dosing, is ongoing[119](index=119&type=chunk) [Organizational Transactions](index=27&type=section&id=Organizational%20Transactions) This section explains the post-IPO corporate structure and the implications of Paired Interest exchanges on tax and ownership - Rani Holdings became the sole managing member of Rani LLC post-**IPO**, consolidating its financial results and being subject to corporate taxes on its allocable share of Rani LLC's taxable income[122](index=122&type=chunk)[123](index=123&type=chunk) - Continuing LLC Owners can exchange **Paired Interests** for **Class A common stock**, potentially leading to tax basis increases and payments under the **Tax Receivable Agreement**, which could be substantial if the company becomes profitable[123](index=123&type=chunk) [Recent Developments](index=27&type=section&id=Recent%20Developments) This section highlights recent financial activities, including a new loan agreement and the issuance of warrants - In August 2022, the company secured a **Loan Agreement** for up to **$45.0 million**, with **$15.0 million** funded immediately and another **$15.0 million** available by year-end 2022[124](index=124&type=chunk) - The loan matures in August 2026, has a **variable interest rate**, and includes a **financial covenant** requiring at least two drug products in clinical development (unless market cap exceeds **$650 million**)[125](index=125&type=chunk)[126](index=126&type=chunk) - **Warrants** to purchase **76,336 Class A common shares** were issued to the lender in connection with the **Loan Agreement**, strengthening the company's financial position for platform and pipeline advancement[127](index=127&type=chunk)[128](index=128&type=chunk) [Components of Results of Operations](index=28&type=section&id=Components%20of%20Results%20of%20Operations) This section breaks down the key elements contributing to the company's financial performance, including revenue and expenses [Contract Revenue](index=28&type=section&id=Contract%20Revenue) This section discusses the company's past and future revenue sources, primarily from evaluation agreements and product commercialization - No commercial product sales revenue to date; all past revenue from evaluation agreements, none active as of June 30, 2022[129](index=129&type=chunk) - Future revenue is entirely dependent on successful development, regulatory approval, and commercialization of the RaniPill capsule and RaniPill HC[130](index=130&type=chunk) [Operating Expenses](index=28&type=section&id=Operating%20Expenses) This section categorizes and explains the company's research and development and general and administrative expenditures [Research and Development Expense](index=28&type=section&id=Research%20and%20Development%20Expense) This section details the costs associated with the company's R&D activities and expected future increases - **R&D expenses** include external costs (CROs, supplies, preclinical studies, consulting) and internal costs (personnel, equipment, facilities)[132](index=132&type=chunk) - **R&D expenses** are expected to increase significantly as product candidates advance into later stages of development, requiring larger clinical trials and additional personnel[134](index=134&type=chunk) [General and Administrative Expenses](index=29&type=section&id=General%20and%20Administrative%20Expenses) This section outlines the administrative and overhead costs, including personnel and public company expenses - **G&A expenses** include personnel costs (salaries, **equity-based compensation**), legal, accounting, consulting fees, insurance, travel, and facility costs[135](index=135&type=chunk) - **G&A expenses** are expected to increase significantly due to additional administrative personnel and services, and costs associated with operating as a public company[136](index=136&type=chunk) [Other Income (Expense), Net](index=29&type=section&id=Other%20Income%20(Expense),%20Net) This section describes the non-operating income and expenses, primarily interest income - Other income (expense), **net**, is mainly comprised of interest income from **cash and cash equivalents**[137](index=137&type=chunk) [Non-Controlling Interest](index=29&type=section&id=Non-Controlling%20Interest) This section defines the portion of Rani LLC's financial results not attributable to Rani Holdings and its impact on ownership - **Non-controlling interest** (NCI) represents the portion of Rani LLC's income or **loss** and net assets not attributable to Rani Holdings, which held approximately **48%** of **Class A Units** as of June 30, 2022[138](index=138&type=chunk)[139](index=139&type=chunk) - Future exchanges of **Paired Interests** and non-corresponding **Class A Units** of Rani LLC will change ownership and impact NCI and additional paid-in-capital[140](index=140&type=chunk) [Tax Receivable Agreement](index=29&type=section&id=Tax%20Receivable%20Agreement) This section explains the company's obligation to pay tax benefits arising from asset tax basis increases - The **Tax Receivable Agreement** (TRA) requires the company to pay **85%** of realized **tax benefits** from increases in Rani LLC's asset tax basis due to exchanges of **Paired Interests**[141](index=141&type=chunk) - A TRA liability is accrued when an exchange occurs and the realization of associated **tax benefits** is deemed probable[142](index=142&type=chunk) [Relationship with InCube Labs, LLC](index=30&type=section&id=Relationship%20with%20InCube%20Labs,%20LLC) This section details the various agreements and financial interactions between the company and InCube Labs, a related party [Services Agreements](index=30&type=section&id=Services%20Agreements) This section describes the agreements for personnel and facility services provided by InCube Labs - Rani LLC has service agreements with ICL for personnel and facility occupancy in Milpitas, CA, San Antonio, TX, and San Jose, CA, with costs billed monthly[143](index=143&type=chunk)[144](index=144&type=chunk) Related Party Service Agreement Expenses | Expense (in thousands) | 3 Months Ended Jun 30, 2022 | 3 Months Ended Jun 30, 2021 | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2021 | | :--------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Research and development | $286 | $123 | $526 | $156 | | General and administrative | $53 | $184 | $116 | $366 | | Total | $339 | $307 | $642 | $522 | [Financing activity](index=30&type=section&id=Financing%20activity) This section reports on past financing transactions involving InCube Labs - In March 2021, ICL fully repaid an outstanding notes receivable balance of **$1.7 million**, including accrued interest[147](index=147&type=chunk) [Exclusive License Agreement](index=30&type=section&id=Exclusive%20License%20Agreement) This section outlines the company's exclusive license for RaniPill capsule technology patents from InCube Labs - The company has a fully paid, exclusive license from ICL for RaniPill capsule technology patents, covering oral delivery of sensors, small molecule drugs, and biologics[148](index=148&type=chunk) - The company has the right to acquire four specified US patent families from ICL for up to **$1.0 million**, payable after the fifth anniversary of the agreement[149](index=149&type=chunk) [Non-Exclusive License Agreement between Rani and ICL](index=31&type=section&id=Non-Exclusive%20License%20Agreement%20between%20Rani%20and%20ICL) This section describes the non-exclusive patent license granted by the company to InCube Labs - The company granted ICL a non-exclusive, fully-paid license under specified patents, with restrictions on third-party licensing in certain fields if ICL is actively developing a product[150](index=150&type=chunk) [Intellectual Property Agreement with Mir Imran](index=31&type=section&id=Intellectual%20Property%20Agreement%20with%20Mir%20Imran) This section clarifies the ownership of intellectual property developed by the company and Mir Imran - The company and Mir Imran agreed that the company owns all IP conceived using its resources or within the field of oral drug delivery[151](index=151&type=chunk) [Tax Receivable Agreement](index=31&type=section&id=Tax%20Receivable%20Agreement) This section reiterates InCube Labs' involvement in the Tax Receivable Agreement and related exchanges - ICL is a party to the **Tax Receivable Agreement** (TRA), which requires the company to pay **85%** of **tax benefits** from **Paired Interest** exchanges[152](index=152&type=chunk) - **2,309,490 Paired Interests** were exchanged during the six months ended June 30, 2022, generating **tax benefits** subject to the TRA[152](index=152&type=chunk) [Registration Rights Agreement](index=31&type=section&id=Registration%20Rights%20Agreement) This section details the rights granted to certain shareholders, including InCube Labs, to register their Class A common stock - The Registration Rights Agreement grants ICL and other Continuing LLC Owners the right to require the company to register their **Class A common stock** and provides piggyback registration rights[153](index=153&type=chunk) [Rani LLC Agreement](index=31&type=section&id=Rani%20LLC%20Agreement) This section describes the governing agreement for Rani LLC's operations and the exchange mechanism for Paired Interests - The Rani LLC Agreement governs the company's operations through Rani LLC and allows Continuing LLC Owners, including ICL, to exchange **Paired Interests** for **Class A common stock** or cash[154](index=154&type=chunk) - During the six months ended June 30, 2022, **2,309,490 Paired Interests** were exchanged for **Class A common stock**[155](index=155&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the company's financial performance across different reporting periods [Comparison of the three months ended June 30, 2022 and 2021](index=32&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030,%202022%20and%202021) This section analyzes the financial performance for the second quarter of 2022 compared to the same period in the prior year Three Months Ended June 30, 2022 vs 2021 Financial Summary | Metric (in thousands) | 3 Months Ended Jun 30, 2022 | 3 Months Ended Jun 30, 2021 | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | | Contract revenue | $0 | $1,961 | * | | R&D expenses | $9,528 | $3,759 | 153.5% | | G&A expenses | $6,319 | $3,460 | 82.6% | | Total operating expenses | $15,847 | $7,219 | 119.5% | | Loss from operations | $(15,847) | $(5,258) | 201.4% | | Net loss | $(15,966) | $(5,485) | 191.1% | [Contract Revenue](index=32&type=section&id=Contract%20Revenue_3M) This section specifically discusses the contract revenue trends for the three-month period - **Contract revenue** was **$0** for the three months ended June 30, 2022, down from **$2.0 million** in the prior year due to the termination of the Takeda agreement[158](index=158&type=chunk) [Research and Development Expenses](index=32&type=section&id=Research%20and%20Development%20Expenses_3M) This section details the changes in R&D expenditures for the three-month period Research and Development Expenses (Three Months) | Expense Category (in thousands) | 3 Months Ended Jun 30, 2022 | 3 Months Ended Jun 30, 2021 | Change (in thousands) | | :------------------------------ | :-------------------------- | :-------------------------- | :-------------------- | | Payroll, equity-based compensation and related benefits | $6,206 | $2,679 | $3,527 | | Third-party services | $1,667 | $173 | $1,494 | | Facilities, materials and supplies | $1,547 | $853 | $694 | | Other | $108 | $54 | $54 | | Total R&D expenses | $9,528 | $3,759 | $5,769 | [General and Administrative Expenses](index=32&type=section&id=General%20and%20Administrative%20Expenses_3M) This section analyzes the changes in G&A expenses for the three-month period - **G&A expenses** increased by **$2.8 million** to **$6.3 million** for the three months ended June 30, 2022, primarily due to higher payroll (**$2.7 million**, including **$2.1 million equity-based compensation**) and facility costs (**$0.6 million**), partially offset by a **$0.9 million** decrease in professional fees from non-recurring **IPO** costs[160](index=160&type=chunk)[161](index=161&type=chunk) [Other Income (Expense), Net](index=33&type=section&id=Other%20Income%20(Expense),%20Net_3M) This section reviews the non-operating income and expenses for the three-month period - Other expense, **net**, was not significant for Q2 2022, compared to **$0.2 million** in Q2 2021, which included interest expense and fair value changes of preferred unit warrants[162](index=162&type=chunk) [Comparison of the six months ended June 30, 2022 and 2021](index=33&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030,%202022%20and%202021) This section analyzes the financial performance for the first half of 2022 compared to the same period in the prior year Six Months Ended June 30, 2022 vs 2021 Financial Summary | Metric (in thousands) | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2021 | Change (%) | | :-------------------- | :-------------------------- | :-------------------------- | :--------- | | Contract revenue | $0 | $2,717 | * | | R&D expenses | $17,118 | $7,106 | 140.9% | | G&A expenses | $12,509 | $6,067 | 106.2% | | Total operating expenses | $29,627 | $13,173 | 124.9% | | Loss from operations | $(29,627) | $(10,456) | 183.3% | | Net loss | $(29,794) | $(11,083) | 168.8% | [Contract Revenue](index=33&type=section&id=Contract%20Revenue_6M) This section specifically discusses the contract revenue trends for the six-month period - **Contract revenue** was **$0** for the six months ended June 30, 2022, down from **$2.7 million** in the prior year due to the termination of the Takeda agreement[164](index=164&type=chunk) [Research and Development Expenses](index=33&type=section&id=Research%20and%20Development%20Expenses_6M) This section details the changes in R&D expenditures for the six-month period Research and Development Expenses (Six Months) | Expense Category (in thousands) | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2021 | Change (in thousands) | | :------------------------------ | :-------------------------- | :-------------------------- | :-------------------- | | Payroll, equity-based compensation and related benefits | $11,629 | $4,874 | $6,755 | | Third-party services | $2,734 | $359 | $2,375 | | Facilities, materials and supplies | $2,509 | $1,536 | $973 | | Other | $246 | $337 | $(91) | | Total R&D expenses | $17,118 | $7,106 | $10,012 | [General and Administrative Expenses](index=34&type=section&id=General%20and%20Administrative%20Expenses_6M) This section analyzes the changes in G&A expenses for the six-month period - **G&A expenses** increased by **$6.4 million** to **$12.5 million** for the six months ended June 30, 2022, primarily due to higher payroll (**$5.1 million**, including **$3.5 million equity-based compensation**) and facility costs (**$1.3 million**), partially offset by a **$0.5 million** decrease in professional fees from non-recurring **IPO** costs[166](index=166&type=chunk) [Other Income (Expense), Net](index=34&type=section&id=Other%20Income%20(Expense),%20Net_6M) This section reviews the non-operating income and expenses for the six-month period - Other expense, **net**, was **$0.1 million** for H1 2022 (primarily interest income), compared to **$0.6 million** in H1 2021 (due to interest expense and preferred unit warrant fair value changes)[167](index=167&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations and its funding strategies [Source of Liquidity](index=34&type=section&id=Source%20of%20Liquidity) This section identifies the primary means by which the company has financed its operations and its current cash position - The company has financed operations through an **IPO** (**$73.6 million** net proceeds), private placements, and evaluation agreements[168](index=168&type=chunk) - As of June 30, 2022, **cash and cash equivalents** were **$97.2 million**. In August 2022, a **$45.0 million Loan Agreement** was secured, with **$15.0 million** immediately funded[168](index=168&type=chunk) - The company expects continued **losses** and will require additional financing through **equity**, debt, or collaborations, with no guarantee of favorable terms[169](index=169&type=chunk) [Tax Receivable Agreement](index=34&type=section&id=Tax%20Receivable%20Agreement_Liquidity) This section discusses the potential impact of the Tax Receivable Agreement on the company's future liquidity - The **Tax Receivable Agreement** (TRA) obligates the company to pay **85%** of **tax benefits** realized from increases in Rani LLC's asset tax basis due to exchanges of LLC Interests[170](index=170&type=chunk) - No TRA liability recorded as of June 30, 2022, due to uncertain **tax benefit** realization, but potential payments could be up to **$20.4 million**[171](index=171&type=chunk) [Future Funding Requirements](index=35&type=section&id=Future%20Funding%20Requirements) This section outlines the company's anticipated capital needs for ongoing operations and future development - Existing **cash and cash equivalents** are estimated to fund operations for at least the next **12 months**, but substantial additional capital is required for future development and commercialization[173](index=173&type=chunk)[174](index=174&type=chunk) - Future funding needs are highly uncertain, dependent on clinical trial progress, regulatory approvals, manufacturing, and the ability to secure additional financing[173](index=173&type=chunk)[175](index=175&type=chunk) - Failure to raise additional capital could lead to delays, reductions, or termination of development programs and clinical trials[177](index=177&type=chunk) [Cash Flows](index=36&type=section&id=Cash%20Flows) This section provides a summary of cash movements across operating, investing, and financing activities Summary of Cash Flows | Metric (in thousands) | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(19,688) | $(9,676) | | Net cash used in investing activities | $(633) | $(235) | | Net cash provided by financing activities | $49 | $6,167 | | Net decrease in cash and cash equivalents | $(20,272) | $(3,744) | [Operating Activities](index=36&type=section&id=Operating%20Activities) This section details the cash generated or used by the company's core business operations - **Net cash used in operating activities** increased to **$19.7 million** for H1 2022 (from **$9.7 million** in H1 2021), primarily due to a **$29.8 million net loss**, partially offset by **$6.9 million** in **equity-based compensation**[179](index=179&type=chunk)[180](index=180&type=chunk) [Investing Activities](index=36&type=section&id=Investing%20Activities) This section describes the cash flows related to the acquisition and disposal of long-term assets - **Net cash used in investing activities** was **$0.6 million** for H1 2022 and **$0.2 million** for H1 2021, exclusively for property and equipment purchases[181](index=181&type=chunk) [Financing Activities](index=36&type=section&id=Financing%20Activities) This section reports the cash flows from debt, equity, and dividend transactions - **Financing activities** provided **$0.05 million** in H1 2022, a significant decrease from **$6.2 million** in H1 2021, which included proceeds from preferred unit issuance and related party note repayment[182](index=182&type=chunk) [Contractual Obligations and Other Commitments](index=37&type=section&id=Contractual%20Obligations%20and%20Other%20Commitments) This section lists the company's significant contractual liabilities and other financial commitments - As of June 30, 2022, minimum lease payments were **$0.6 million** for H2 2022 and **$0.7 million** for 2023, with an additional **$0.4 million** committed in July 2022 for lease renewals[183](index=183&type=chunk) - The company also has cancelable agreements with CROs and vendors for clinical trials and operating purposes[184](index=184&type=chunk) [Critical Accounting Policies and Estimates](index=37&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights the accounting policies that require significant management judgment and estimation - Financial statement preparation involves management estimates and judgments, which are based on current facts and historical experience, but actual results may differ materially[186](index=186&type=chunk) [Other Information](index=37&type=section&id=Other%20Information) This section includes additional disclosures relevant to the financial discussion [JOBS Act Accounting Election](index=37&type=section&id=JOBS%20Act%20Accounting%20Election) This section explains the company's status as an emerging growth company and its election regarding accounting standards - The company is an "emerging growth company" and has elected an extended transition period for new accounting standards, which may impact comparability[189](index=189&type=chunk) - Emerging growth company status will be maintained until the earliest of December 31, 2026, **$1.07 billion** in annual gross revenue, becoming a large accelerated filer, or issuing over **$1.0 billion** in non-convertible debt[190](index=190&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Rani Therapeutics is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the company is **exempt from providing** quantitative and qualitative disclosures about market risk[191](index=191&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2022, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting occurred during the quarter. The section acknowledges inherent limitations in control systems, providing only reasonable, not absolute, assurance - Management concluded that disclosure controls and procedures were **effective at a reasonable assurance level** as of June 30, 2022[192](index=192&type=chunk) - **No material changes** in internal control over financial reporting occurred during the three months ended June 30, 2022[193](index=193&type=chunk) - Control systems have **inherent limitations**, providing only reasonable assurance, and may not prevent or detect all errors or fraud[194](index=194&type=chunk) [PART II. OTHER INFORMATION](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part contains disclosures on legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any litigation or legal proceedings deemed to have a material adverse effect on its business. However, it acknowledges that litigation, regardless of outcome, can negatively impact the company due to costs and diversion of management resources - The company is not currently involved in legal proceedings likely to have a **material adverse effect** on its business[196](index=196&type=chunk) - Litigation can **adversely impact** the company due to defense and settlement costs, and diversion of management resources[196](index=196&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, primarily focusing on challenges to the company's European patents and restrictions imposed by its new indebtedness. Several European patents are currently under opposition proceedings by Novo Nordisk AS, which could lead to revocation or amendment and materially impact commercialization in Europe. The August 2022 Loan Agreement contains various covenants limiting the company's flexibility in operations, debt, dividends, and asset transactions, with a breach potentially leading to immediate repayment and collateral seizure - The company's European patents are being challenged by Novo Nordisk AS in opposition proceedings, which could result in revocation or amendment and materially impact commercialization in Europe[198](index=198&type=chunk)[202](index=202&type=chunk) - The August 2022 **Loan Agreement** contains **restrictive covenants** limiting the company's ability to incur debt, pay dividends, make investments, and dispose of assets[204](index=204&type=chunk) - A breach of loan covenants could lead to an **event of default**, requiring immediate repayment and potential **collateral seizure** (substantially all company assets)[206](index=206&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report - No unregistered sales of equity securities or use of proceeds to report[209](index=209&type=chunk) [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report - No defaults upon senior securities to report[210](index=210&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable[210](index=210&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) No other information to report - No other information to report[211](index=211&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished as part of the report, including the Amended and Restated Certificate of Incorporation, Bylaws, Specimen Class A common stock certificate, Description of Securities, Loan and Security Agreement, Supplement to Loan and Security Agreement, Form of Warrant, and various certifications (e.g., CEO/CFO certifications) - The report includes exhibits such as the Amended and Restated Certificate of Incorporation, Bylaws, **Loan and Security Agreement**, and CEO/CFO certifications[212](index=212&type=chunk) [SIGNATURES](index=42&type=section&id=Signatures) This section confirms the official signing and submission of the report by the company's executive officers - The report was signed by Talat Imran (Chief Executive Officer) and Svai Sanford (Chief Financial Officer) on August 10, 2022[217](index=217&type=chunk) ```