Clinical Development - TransCode received FDA's IND Study May Proceed notification for TTX-MC138, allowing a Phase 0 clinical trial with one patient treated [155]. - The Phase I/II clinical trial for TTX-MC138 is expected to commence in mid-2024 following FDA approval [155]. - Preliminary results from imaging studies indicated TTX-MC138's accumulation in metastatic lesions, a circulation half-life of approximately 20 hours, and drug stability in circulation [181]. - TransCode's TTX delivery platform aims to overcome delivery challenges of RNA therapeutics, enhancing targeting and accumulation in tumors [163]. - The company is developing multiple therapeutic candidates, including TTX-siPDL1 and TTX-RIGA, targeting various cancer mechanisms [156]. - The TTX platform has undergone approximately 20 years of R&D, including 12 years at Harvard Medical School and Massachusetts General Hospital [165]. - The company entered into a collaboration agreement with Debiopharm to develop targeted nucleic acid delivery modalities for cancer treatment [186]. - The company signed a five-year strategic collaboration agreement with The University of Texas M. D. Anderson Cancer Center, committing up to $10 million for Phase I and II clinical trials [209][211]. Financial Performance - The company reported net losses of approximately $3.3 million for the three months ended March 31, 2024, and $18.5 million for the year ended December 31, 2023, with an accumulated deficit of approximately $49.7 million as of March 31, 2024 [194]. - The company has not generated any revenue from product sales to date and does not expect to do so in the foreseeable future [202]. - The company received approximately $51.7 million in net proceeds from its IPO and other financing activities since its inception [193]. - The company had cash of approximately $4.9 million as of March 31, 2024, which is expected to fund operations into the third quarter of 2024 [198]. - Cash used in operating activities was $3,937 thousand for the three months ended March 31, 2024, compared to $4,514 thousand in the same period in 2023 [231]. - Grant income decreased by $52 thousand to $27 thousand for the three months ended March 31, 2024, compared to the same period in 2023 [226]. - The company incurred interest expense of $10 thousand for the three months ended March 31, 2024, down from $13 thousand in the same period in 2023 [227]. - The company anticipates significant increases in research and development expenses as it progresses with clinical trials for its product candidates [207]. - The company anticipates significant increases in general and administrative expenses as it prepares for potential commercial activities and regulatory approvals [218]. Operational Changes - The company reduced its headcount from 19 employees at December 31, 2022, to 11 employees by December 31, 2023, following a restructuring initiative [184]. - The company is subject to a mandatory panel monitor through January 26, 2025, following its compliance with Nasdaq's equity rule [189]. - The company regained compliance with Nasdaq's minimum stockholders' equity requirement of $2,500,000 after completing a January offering [189]. - The company may need to seek additional capital to support its operations and business strategy, which could include equity sales or debt financing [196]. - The company may need to raise additional funds through various means, including equity offerings and collaborations, which could dilute ownership interests [242][243]. - The company has no assurance that funding from governmental sources or collaborations will be available on acceptable terms [242]. - The company may need to consider cost reduction strategies if unable to raise additional funds, which could include limiting or terminating development programs [244]. Internal Controls and Compliance - The company has identified material weaknesses in its internal control over financial reporting, which remain unremediated, potentially affecting the accuracy of financial reporting [268]. - Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2024, due to identified material weaknesses [281]. - The company is engaged in ongoing remediation efforts to address internal control deficiencies, including hiring additional finance and accounting personnel [283]. - There were no material changes in the company's internal control over financial reporting during the three months ended March 31, 2024 [287]. - The company plans to continue establishing more robust accounting policies and procedures to improve its internal controls [282]. Market and Industry Insights - The global mRNA therapeutics market was estimated at approximately $33.8 billion in 2023, projected to grow at nearly 25% CAGR, reaching approximately $158 billion by 2030 [165]. - The company relies on third parties for preclinical studies and clinical trial services, with accrued research and development expenses estimated based on progress towards completion of related projects [252][253]. - The company recognized that fluctuations in foreign currency exchange rates could adversely affect its results of operations as it continues to develop its business [278]. Cybersecurity and Risk Management - The company is currently enhancing its cybersecurity defenses to mitigate risks from cyberattacks, including phishing and ransomware [274]. - An immediate 10% change in U.S. interest rates would not materially affect the fair market value of the company's investments due to the short-term nature of its holdings [275]. - The company has not entered into any foreign currency hedging contracts to mitigate exposure to foreign currency exchange risk [278]. - The company experienced a loss of $55 thousand from foreign currency transactions for the three months ended March 31, 2024 [277]. - As of March 31, 2024, the company had no debt outstanding, indicating no exposure to interest rate risk related to debt [276].

FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Date of Report (Date of earliest event reported): April 3, 2024 TRANSCODE THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) Delaware 001-40363 81-1065054 (State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer Identification No.) TransCode Therapeutics, Inc. 6 Liberty Square, #2382 Bosto ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 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: 001-40363 TRANSCODE THERAPEUTICS, INC. (Exact Name of Registrant as Specified in Its Charter) ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________ FORM 10-Q ____________________________________________ ☒ 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 001-403 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________ FORM 10-Q ____________________________________________ ☒ 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 001-40363 TR ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Unaudited Q1 2023 financial statements detail a $4.8 million net loss, $1.6 million cash, a $0.2 million stockholders' deficit, and going concern uncertainty [Balance Sheets](index=5&type=section&id=BALANCE%20SHEETS) The balance sheet as of March 31, 2023, shows reduced cash and assets, increased liabilities, and a $236,792 stockholders' deficit, down from $3.2 million equity Balance Sheet Summary (Unaudited) | Account | March 31, 2023 (USD) | December 31, 2022 (USD) | | :--- | :--- | :--- | | **Assets** | | | | Cash | $1,622,657 | $4,968,418 | | Total Current Assets | $4,346,623 | $7,379,405 | | Total Assets | $5,590,510 | $7,587,986 | | **Liabilities & Equity** | | | | Total Current Liabilities | $5,449,489 | $4,347,290 | | Total Liabilities | $5,827,302 | $4,347,290 | | Total Stockholders' Equity (Deficit) | ($236,792) | $3,240,696 | [Statements of Operations](index=6&type=section&id=STATEMENTS%20OF%20OPERATIONS) Q1 2023 net loss increased to $4.8 million ($0.33/share) from $3.5 million ($0.27/share) in Q1 2022, driven by higher R&D and G&A expenses Statements of Operations Summary (Unaudited) | Account | Three Months Ended March 31, 2023 (USD) | Three Months Ended March 31, 2022 (USD) | | :--- | :--- | :--- | | Research and development | $2,591,350 | $1,881,576 | | General and administrative | $2,309,763 | $1,595,926 | | **Operating loss** | **($4,901,113)** | **($3,477,502)** | | **Net loss** | **($4,816,934)** | **($3,470,070)** | | Net loss per share | ($0.33) | ($0.27) | [Statements of Stockholders' Equity (Deficit)](index=7&type=section&id=STATEMENTS%20OF%20STOCKHOLDERS%27%20EQUITY%20%28DEFICIT%29) Stockholders' equity shifted from $3.2 million at year-end 2022 to a $0.2 million deficit by March 31, 2023, due to a $4.8 million net loss, partially offset by $1.2 million from stock issuance - Stockholders' equity decreased from **$3,240,696** at the end of 2022 to a deficit of **($236,792)** at March 31, 2023[24](index=24&type=chunk) - This was mainly due to the net loss of **$4,816,934**, which was partially offset by **$1,180,686** from the net issuance of common stock and **$158,760** in share-based compensation[24](index=24&type=chunk) [Statements of Cash Flows](index=8&type=section&id=STATEMENTS%20OF%20CASH%20FLOWS) Q1 2023 saw $4.5 million net cash used in operations, a $3.3 million decrease in cash to $1.6 million, partially offset by $1.2 million from financing activities Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2023 (USD) | Three Months Ended March 31, 2022 (USD) | | :--- | :--- | :--- | | Net cash used in operating activities | ($4,513,551) | ($3,948,566) | | Net cash used in investing activities | ($12,896) | ($30,657) | | Net cash provided by financing activities | $1,180,686 | $5,989 | | **Net change in cash** | **($3,345,761)** | **($3,973,234)** | | Cash, end of period | $1,622,657 | $16,852,626 | [Notes to Financial Statements (Unaudited)](index=9&type=section&id=NOTES%20TO%20FINANCIAL%20STATEMENTS%20%28UNAUDITED%29) Notes detail substantial doubt about going concern due to recurring losses and insufficient cash, alongside accounting policies, collaboration commitments, stock-based compensation, and recent equity financing - The company has concluded there is substantial doubt about its ability to continue as a going concern[34](index=34&type=chunk) - Current cash is sufficient to fund operations into the second quarter of 2023, but not for a full 12 months from the financial statement issuance date[34](index=34&type=chunk)[38](index=38&type=chunk) - In February 2023, the company completed a registered direct offering (RDO) of **2,846,300** shares of common stock at **$0.527** per share, generating net proceeds of approximately **$1.2 million**[104](index=104&type=chunk) - The company has a five-year strategic collaboration agreement with The University of Texas M. D. Anderson Cancer Center, with a commitment to fund up to **$10 million** over the term[95](index=95&type=chunk) - Subsequent to the quarter end, in April 2023, the company entered into a Common Stock Purchase Agreement with White Lion Capital to sell up to **$1,081,307** in common stock[130](index=130&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the TTX oncology platform and TTX-MC138's FDA Phase 0 authorization, highlighting increased operating expenses and critical liquidity, with $1.6 million cash only sufficient into Q2 2023, raising going concern doubt - The company's lead therapeutic candidate, TTX-MC138, received authorization from the FDA in December 2022 to conduct a Phase 0 clinical trial[133](index=133&type=chunk) - The company received IRB approval in April 2023 to commence the trial[133](index=133&type=chunk) - Management states that cash of approximately **$1.6 million** at March 31, 2023, plus subsequent receipts, will be sufficient to fund operations into but not through the second quarter of 2023, raising substantial doubt about the company's ability to continue as a going concern[164](index=164&type=chunk)[191](index=191&type=chunk) Comparison of Operating Expenses (Q1 2023 vs Q1 2022) | Expense Category | Q1 2023 (in thousands USD) | Q1 2022 (in thousands USD) | Change (in thousands USD) | | :--- | :--- | :--- | :--- | | Research and development | $2,591 | $1,882 | $709 | | General and administrative | $2,310 | $1,596 | $714 | | **Total operating expenses** | **$4,901** | **$3,478** | **$1,423** | - The increase in R&D expenses was primarily due to increased consulting, purchased services, and personnel costs[184](index=184&type=chunk) - The increase in G&A expenses was mainly from higher personnel costs, legal and accounting services, and other public company costs[185](index=185&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Primary market risks are interest rate sensitivity on cash and Euro-denominated foreign currency exchange, neither of which is expected to materially affect financial results due to current scale - The company's primary market risk exposures are interest rate sensitivity on cash holdings and foreign currency exchange risk, mainly from the Euro[223](index=223&type=chunk)[225](index=225&type=chunk) - Management states that an immediate **10%** change in interest rates or a **5%** change in the Euro exchange rate would not materially affect the company's financial results[223](index=223&type=chunk)[225](index=225&type=chunk) [Controls and Procedures](index=41&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Disclosure controls and procedures were ineffective as of March 31, 2023, due to material weaknesses, with ongoing remediation efforts including hiring finance personnel and engaging consultants - Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2023, due to an existing material weakness[229](index=229&type=chunk) - Ongoing remediation efforts include hiring more finance and accounting personnel, documenting policies and procedures, and assessing significant accounting transactions with the help of an independent consulting firm engaged in September 2022[230](index=230&type=chunk)[231](index=231&type=chunk)[233](index=233&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=43&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not currently a party to any material legal proceedings, nor is it aware of any pending or threatened litigation with a material adverse effect - As of the reporting date, the company is not a party to any material legal proceedings[235](index=235&type=chunk) [Risk Factors](index=43&type=section&id=ITEM%201A.%20RISK%20FACTORS) As a smaller reporting company, TransCode is not required to update its risk factors in this quarterly report on Form 10-Q - The company is not required to disclose information under this item as it qualifies as a smaller reporting company[236](index=236&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) In Q1 2023, the company issued unregistered warrants to a consultant for up to 250,000 common shares at $0.50 per share, exempt under Section 4(a)(2) - In Q1 2023, the company issued warrants to a consultant to purchase up to **250,000** shares of common stock at **$0.50** per share[237](index=237&type=chunk) - The issuance was exempt from registration requirements[237](index=237&type=chunk) [Defaults Upon Senior Securities](index=43&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) No defaults upon senior securities were reported during the period - None[240](index=240&type=chunk) [Mine Safety Disclosures](index=43&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company's business - Not applicable[241](index=241&type=chunk) [Other Information](index=43&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No other information required to be disclosed under this item was reported - None[242](index=242&type=chunk) [Exhibits](index=43&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with Form 10-Q, including various agreements like the Placement Agent Warrant, Securities Purchase Agreement, Common Stock Purchase Agreement, and officer certifications - Exhibits filed with the report include the Form of Placement Agent Warrant, a Securities Purchase Agreement, the Common Stock Purchase Agreement with White Lion Capital LLC, and officer certifications[243](index=243&type=chunk)[244](index=244&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________ TO ___________ | Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | | --- | --- | --- | | Common S ...

RNA Delivery and Therapeutics - The company has developed the TTX platform, an RNA delivery system utilizing an iron oxide nanoparticle, aimed at improving the delivery of RNA therapeutics to tumors [121]. - The lead therapeutic candidate, TTX-MC138, targets microRNA-10b and is expected to enter a Phase 0 clinical trial to demonstrate delivery to metastatic lesions in patients with advanced solid tumors [124]. - The company received orphan drug designation for TTX-siPDL1 for pancreatic cancer, which provides seven years of marketing exclusivity upon FDA approval, along with tax credits and fee exemptions estimated to save over $3 million [133]. - The company plans to conduct a microdosing Phase 0 trial with TTX-MC138, enrolling up to 12 patients to measure drug delivery using PET-MRI [132]. - The TTX platform is designed to overcome stability, efficiency, and immunogenicity issues faced by existing delivery systems, optimizing accumulation in tumor cells [123]. - The proprietary delivery mechanism aims to significantly improve outcomes for cancer patients by enhancing the effectiveness of RNA-based therapies [126]. - The company intends to optimize a diagnostic test for detecting miR-10b in blood samples, potentially leading to FDA approval for screening metastasis in various tumor types [128]. - The research published in Cancer Nanotechnology supports the efficacy of the TTX platform in delivering therapeutic candidates to metastatic lesions, indicating a promising path for clinical evaluation [129]. Financial Performance and Projections - As of September 30, 2022, the company had cash of approximately $8.8 million and expects to receive up to an additional $1.8 million under the SBIR Award [142]. - The net losses for the nine months ended September 30, 2022, were approximately $12.4 million, with an accumulated deficit of approximately $22.7 million [138]. - The company has not generated any revenue from product sales and does not expect to do so in the foreseeable future [146]. - The company anticipates incurring significant operating expenses as it transitions to a public company, including legal, accounting, and investor relations costs [139]. - The company has received gross proceeds of approximately $31.5 million from its IPO and borrowings under convertible promissory notes [137]. - The company may need to raise additional capital to support ongoing operations and business strategy, which cannot be assured [140]. - The company has incurred significant operating losses and does not expect to generate revenue from product sales for several years [171]. - The company expects to require additional capital for research, development, and clinical trials, as well as for operations and potential acquisitions [175]. Research and Development Expenses - Research and development expenses are expected to increase substantially as the company commences planned clinical trials for TTX-MC138 and other product candidates [150]. - Research and development expenses increased by $2,051 thousand (approximately 206% increase) for the three months ended September 30, 2022, and by $6,077 thousand (approximately 414% increase) for the nine months ended September 30, 2022, compared to the same periods in 2021 [164]. - The company anticipates significant increases in expenses related to ongoing and planned activities, particularly for clinical trials of TTX-MC138 [173]. Collaboration and Funding - A Fast-Track Small Business Innovation Research award from the National Cancer Institute is expected to provide up to $2,392,845 for a research partnership with Massachusetts General Hospital, with funding milestones achieved in previous years [134]. - The company has committed to fund up to $10 million over five years for a strategic collaboration with MD Anderson, with $500,000 payable in the first year [152]. - The company has budgeted funds for research and development to meet future payment obligations under the collaboration agreement, which do not represent additional spending [187]. - The agreement with MD Anderson is for a term of five years or until the studies are completed, whichever is later, unless terminated for a material breach [187]. Operational Challenges - The impact of the COVID-19 pandemic has affected the timeline for preclinical studies and planned clinical trials [145]. - The company relies significantly on third parties for preclinical studies and clinical trial services, with accrued research and development expenses estimated based on progress towards project completion [191]. - The company has not completed any clinical trials or obtained regulatory approvals for its product candidates [137]. Expenses and Losses - General and administrative expenses rose by $543 thousand (approximately 40% increase) for the three months ended September 30, 2022, and by $3,897 thousand (approximately 229% increase) for the nine months ended September 30, 2022, compared to the same periods in 2021 [165]. - The net loss for the three months ended September 30, 2022, was $4,290 thousand, compared to a net loss of $2,329 thousand for the same period in 2021, representing an increase of $1,961 thousand (approximately 84% increase) [163]. - Cash used in operating activities was $11,743 thousand for the nine months ended September 30, 2022, compared to $3,666 thousand for the same period in 2021, reflecting an increase of $8,077 thousand (approximately 220% increase) [181]. - The total cash decrease for the nine months ended September 30, 2022, was $12,036 thousand, compared to an increase of $21,672 thousand for the same period in 2021 [180]. Market and Risk Factors - The company is classified as an "emerging growth company" and a "smaller reporting company," with annual revenue less than $100 million during the most recently completed fiscal year [202][204]. - The company has identified material weaknesses in its internal control over financial reporting prior to its IPO, which remain unremediated [201]. - The company has taken steps to enhance cybersecurity defenses in response to increasing threats, including phishing attacks [205]. - The company’s primary exposure to market risk is foreign exchange rate sensitivity to the Euro, impacting major purchases [208]. - The company has not recognized foreign currency transaction losses for the nine months ended September 30, 2022, and an immediate 5% change in the Euro exchange rate would not materially affect results [208]. - The company has not entered into any foreign currency hedging contracts to mitigate exposure to foreign currency exchange risk [209]. - An immediate 10% change in U.S. interest rates would not materially affect the fair market value of the company's investments [206]. - The company’s cash is held in checking and savings accounts at major U.S. banks [206].

[Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This report contains forward-looking statements subject to risks and uncertainties, covered under safe harbor provisions - The report contains forward-looking statements covered by safe harbor provisions, identifiable by terms like **'may,' 'will,' 'expects,' 'plans,' 'intends,' 'anticipates,' 'believes,' 'estimates,' 'predicts,' 'potential,' or 'continue'**[7](index=7&type=chunk) - These statements include estimates and expectations regarding capital requirements, R&D activities, regulatory approvals, and reliance on third parties[8](index=8&type=chunk)[12](index=12&type=chunk) - Readers are cautioned not to place undue reliance on these statements due to inherent risks detailed in the 'Risk Factors' section[10](index=10&type=chunk) [PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the unaudited interim financial statements and management's analysis of the company's financial condition and results of operations [ITEM 1. FINANCIAL STATEMENTS](index=7&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents unaudited interim financial statements, highlighting operating losses and liquidity challenges that raise going concern doubts [Balance Sheets](index=7&type=section&id=BALANCE%20SHEETS%20AS%20OF%20JUNE%2030%2C%202022%2C%20(UNAUDITED)%20AND%20DECEMBER%2031%2C%202021) The balance sheets show a significant decrease in cash, total assets, and stockholders' equity during the first half of 2022 Balance Sheet Summary | Metric | June 30, 2022 (Unaudited) | December 31, 2021 | | :-------------------------------- | :-------------------------- | :------------------ | | **Assets** | | | | Cash | $13,438,385 | $20,825,860 | | Total current assets | $13,920,783 | $22,732,175 | | Total assets | $14,155,456 | $22,938,443 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $1,727,251 | $2,534,097 | | Total liabilities | $1,727,251 | $2,534,097 | | Total stockholders' equity (deficit) | $12,428,205 | $20,404,346 | | Accumulated deficit | $(18,446,583) | $(10,305,281) | - Cash decreased by approximately **$7.39 million** from December 31, 2021, to June 30, 2022[14](index=14&type=chunk) - Total assets decreased by approximately **$8.78 million**, and total stockholders' equity decreased by approximately **$7.98 million** during the six-month period[14](index=14&type=chunk) [Statements of Operations](index=8&type=section&id=STATEMENTS%20OF%20OPERATIONS%20FOR%20THE%20THREE%20AND%20SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202022%20AND%202021%20(UNAUDITED)) The company's net loss widened significantly due to substantial increases in R&D and G&A expenses Statement of Operations Summary | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $2,620,028 | $211,752 | $4,501,604 | $475,511 | | General and administrative | $2,087,265 | $143,776 | $3,683,191 | $329,482 | | Total operating expenses | $4,707,293 | $355,528 | $8,184,795 | $804,993 | | Operating loss | $(4,707,293) | $(355,528) | $(8,184,795) | $(804,993) | | Net income (loss) | $(4,671,232) | $2,770,904 | $(8,141,302) | $(1,714,434) | | Basic earnings (loss) per share | $(0.36) | $0.60 | $(0.63) | $(0.37) | | Diluted earnings (loss) per share | $(0.36) | $0.51 | $(0.63) | $(0.37) | - **Net loss significantly increased** for the three and six months ended June 30, 2022, compared to the prior year, primarily due to substantial increases in R&D and G&A expenses[17](index=17&type=chunk) - Research and development expenses increased by **$2.41 million** (YoY for Q2) and **$4.03 million** (YoY for H1), reflecting expanded R&D activities[17](index=17&type=chunk)[162](index=162&type=chunk) - General and administrative expenses increased by **$1.94 million** (YoY for Q2) and **$3.35 million** (YoY for H1), driven by public company costs and personnel expenses[17](index=17&type=chunk)[163](index=163&type=chunk) [Statements of Stockholders' Equity (Deficit)](index=9&type=section&id=STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY%20(DEFICIT)%20FOR%20THE%20THREE%20AND%20SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202022%20AND%202021%20(UNAUDITED)) Stockholders' equity decreased substantially, driven by a growing accumulated deficit from ongoing net losses Stockholders' Equity Summary | Metric | December 31, 2021 | June 30, 2022 | | :-------------------------------- | :------------------ | :------------------ | | Common Stock Shares | 12,904,574 | 12,977,234 | | Common Stock Amount | $1,291 | $1,298 | | Additional Paid-In Capital | $30,708,336 | $30,873,490 | | Accumulated Deficit | $(10,305,281) | $(18,446,583) | | Total Stockholders' Equity (Deficit) | $20,404,346 | $12,428,205 | - The accumulated deficit increased significantly from **$10.31 million** at December 31, 2021, to **$18.45 million** at June 30, 2022, reflecting ongoing net losses[20](index=20&type=chunk) - Total stockholders' equity decreased by approximately **$7.98 million** during the six months ended June 30, 2022, primarily due to the net loss[20](index=20&type=chunk) - Share-based compensation contributed **$159,172** to additional paid-in capital for the six months ended June 30, 2022[20](index=20&type=chunk)[104](index=104&type=chunk) [Statements of Cash Flows](index=10&type=section&id=STATEMENTS%20OF%20CASH%20FLOWS%20FOR%20THE%20SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202022%20AND%202021%20(UNAUDITED)) Cash used in operating activities increased dramatically, leading to a significant reduction in the company's cash position Cash Flow Summary | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(7,320,760) | $(598,152) | | Net cash used in investing activities | $(72,704) | $(97,541) | | Net cash provided by (used in) financing activities | $5,989 | $(52,756) | | Net change in cash | $(7,387,475) | $(748,449) | | Cash, beginning of period | $20,825,860 | $828,016 | | Cash, end of period | $13,438,385 | $79,567 | - Net cash used in operating activities increased significantly to **$7.32 million** for the six months ended June 30, 2022, from $0.60 million in the prior year, primarily due to increased net loss and changes in working capital[23](index=23&type=chunk)[177](index=177&type=chunk) - Cash at the end of the period decreased to **$13.44 million** as of June 30, 2022, from $20.83 million at the beginning of the period[23](index=23&type=chunk) [Notes to Financial Statements](index=11&type=section&id=NOTES%20TO%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) The notes detail the company's early-stage operations, going concern uncertainty, and key agreements and accounting policies - The company is an early-stage biopharmaceutical company focused on developing drugs and diagnostics for metastatic disease, with its lead candidate **TTX-MC138** targeting microRNA-10b[26](index=26&type=chunk)[123](index=123&type=chunk) - TransCode has not generated revenue, incurred substantial losses, and has negative cash flows from operations, leading to **substantial doubt about its ability to continue as a going concern** without additional capital[28](index=28&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - Current cash is projected to fund operations only into the **first quarter of 2023**, necessitating additional financing[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - Research and development expenses are expensed as incurred; R&D payables to CROs/CMOs were **$752,067** at June 30, 2022, up from $386,057 at December 31, 2021[44](index=44&type=chunk) - Grant income is recognized as earned from awards like the National Cancer Institute's SBIR Award, which is expected to provide **$2,392,845** over three years[48](index=48&type=chunk)[70](index=70&type=chunk) - The company has license agreements with Massachusetts General Hospital for intellectual property, including minimum annual fees and potential milestone payments up to **$1,550,000**[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk)[79](index=79&type=chunk) - Share-based compensation expense for the six months ended June 30, 2022, was **$159,172**, with approximately **$2,044,859** remaining to be recognized over 2.3 years[104](index=104&type=chunk) - A strategic collaboration agreement was signed with The University of Texas M. D. Anderson Cancer Center on July 29, 2022, committing up to **$10 million** over five years[114](index=114&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=28&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses operational results, the TTX delivery platform, significant operating losses, and the critical need for additional funding [Company Overview](index=28&type=section&id=Company%20Overview) The company is an RNA oncology firm developing therapeutics with its proprietary TTX delivery platform, led by candidate TTX-MC138 - TransCode Therapeutics is an RNA oncology company developing RNA therapeutics using its proprietary **TTX delivery platform**, which leverages an iron oxide nanoparticle[120](index=120&type=chunk)[121](index=121&type=chunk) - The TTX platform is **modular**, allowing for adaptation to various therapeutic loads and is designed to overcome stability and efficiency issues[122](index=122&type=chunk) - The lead therapeutic candidate, **TTX-MC138**, targets microRNA-10b, a regulator of metastatic cell viability in various cancers[123](index=123&type=chunk) - Other preclinical programs include **TTX-siPDL1**, **TTX-siLIN28B**, **TTX-RIGA**, **TTX-CRISPR**, and **TTX-mRNA**[124](index=124&type=chunk) - Research published in Cancer Nanotechnology demonstrated that radiolabeled TTX-MC138 **accumulates in metastatic lesions** in murine models, supporting a microdosing PET-MRI approach for human trials[128](index=128&type=chunk)[129](index=129&type=chunk) [Orphan Drug Designation](index=32&type=section&id=Orphan%20Drug%20Designation) The FDA granted Orphan Drug Designation for TTX-siPDL1, providing potential marketing exclusivity and financial benefits - In June 2022, the FDA granted **Orphan Drug Designation (ODD)** for TTX-siPDL1 for the treatment of pancreatic cancer[132](index=132&type=chunk) - ODD status provides potential benefits including **seven years of marketing exclusivity**, tax credits for R&D, and exemption from the PDUFA filing fee[132](index=132&type=chunk) [SBIR Award](index=32&type=section&id=SBIR%20Award) The company received a multi-year SBIR Award from the National Cancer Institute to fund IND-enabling studies for TTX-MC138 - The company received a Fast-Track Small Business Innovation Research (SBIR) Award from the National Cancer Institute, expected to provide **$2,392,845** over three years[133](index=133&type=chunk) - First-year funding of **$308,861** was received in May 2021, and second-year funding of **$1,129,316** was made available in May 2022[133](index=133&type=chunk) - The SBIR Award aims to fund **IND-enabling studies** and imaging studies for TTX-MC138[134](index=134&type=chunk)[135](index=135&type=chunk) [Financial Operations Overview](index=32&type=section&id=Financial%20Operations%20Overview) The company has a history of net losses and requires substantial additional funding, with current cash lasting only into Q1 2023 - The company has not generated product revenue and incurred net losses of **$8.1 million** for the six months ended June 30, 2022, with an accumulated deficit of **$18.4 million**[137](index=137&type=chunk) - **Substantial additional funding is required** to support ongoing operations, preclinical and clinical trials, and public company costs[138](index=138&type=chunk)[139](index=139&type=chunk) - As of June 30, 2022, cash was **$13.4 million**, expected to fund operations into **Q1 2023**, raising substantial doubt about going concern[141](index=141&type=chunk)[172](index=172&type=chunk) [Impact of the Novel Coronavirus (COVID-19) Pandemic](index=35&type=section&id=Impact%20of%20the%20Novel%20Coronavirus%20(COVID-19)%20Pandemic) The COVID-19 pandemic has caused and may continue to cause disruptions and delays to the company's development timelines - The COVID-19 pandemic has caused global disruptions which have affected and are expected to continue to affect the timeline for **preclinical studies and planned clinical trials**[142](index=142&type=chunk) - The full extent of the pandemic's impact on operations, expenses, and development timelines **remains uncertain**[142](index=142&type=chunk) [Components of our results of operations](index=35&type=section&id=Components%20of%20our%20results%20of%20operations) The company's financial results are primarily driven by R&D and G&A expenses, with no product revenue to date - The company has not generated any revenue from product sales and does not expect to in the foreseeable future[143](index=143&type=chunk) - **Research and development expenses** include costs for drug discovery, preclinical/clinical development, CROs/CMOs, materials, and personnel[144](index=144&type=chunk) - **General and administrative expenses** cover staffing, insurance, professional fees, and corporate costs, expected to increase as a public company[154](index=154&type=chunk)[155](index=155&type=chunk) - Other income (expense) includes interest income on cash balances and grant income from government programs[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20operations) Operating expenses and net loss increased significantly year-over-year due to expanded R&D and public company costs Comparison of Operating Results (in thousands) | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | Change (3 Months) | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | Change (6 Months) | | :-------------------------------- | :--------------------------- | :--------------------------- | :------------------ | :--------------------------- | :--------------------------- | :------------------ | | Research and Development | $2,620 | $212 | $2,408 | $4,502 | $476 | $4,026 | | General and Administrative | $2,087 | $144 | $1,943 | $3,683 | $329 | $3,354 | | Total Operating Expenses | $4,707 | $356 | $4,351 | $8,185 | $805 | $7,380 | | Operating Loss | $(4,707) | $(356) | $(4,351) | $(8,185) | $(805) | $(7,380) | | Net income (loss) | $(4,671) | $2,771 | $(7,442) | $(8,141) | $(1,714) | $(6,427) | - R&D expenses increased by **$2.41 million** (QoQ) and **$4.03 million** (YoY H1) due to material purchases, compensation, and regulatory/purchased services[162](index=162&type=chunk) - G&A expenses increased by **$1.94 million** (QoQ) and **$3.35 million** (YoY H1) due to D&O insurance, personnel costs, and public company expenses[163](index=163&type=chunk) - Grant income decreased by **$22 thousand** (QoQ) and **$15 thousand** (YoY H1) as recognition was tied to work completion under the NIH grant[164](index=164&type=chunk) - Derivative and warrant liabilities, and interest expense, were **$0** for the three and six months ended June 30, 2022, as these were extinguished or converted in connection with the IPO[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20capital%20resources) Operations are funded by IPO proceeds and grants, but current cash is only sufficient into Q1 2023, necessitating future financing - The company has funded operations primarily through convertible promissory notes, IPO proceeds, and SBIR Award funds, totaling approximately **$31 million** in gross cash proceeds through June 30, 2022[168](index=168&type=chunk) - As of June 30, 2022, cash was **$13.4 million**, with an expected additional $2 million from the SBIR Award, projected to fund operations into **Q1 2023**[169](index=169&type=chunk)[172](index=172&type=chunk) - Future funding requirements are **substantial** and depend on the progress of clinical development, manufacturing, regulatory approvals, and commercialization efforts[171](index=171&type=chunk)[173](index=173&type=chunk) - The company anticipates financing future operations through **equity offerings, debt financings, governmental funding, collaborations, and strategic partnerships**[173](index=173&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(7,321) | $(598) | | Net cash used in investing activities | $(73) | $(98) | | Net cash provided by (used in) financing activities | $6 | $(53) | | Net decrease in cash | $(7,388) | $(749) | - Net cash used in operating activities increased to **$7.32 million** in H1 2022, primarily due to the net loss and changes in working capital[177](index=177&type=chunk) - A strategic collaboration with MD Anderson, signed July 29, 2022, commits up to **$10 million** over five years for clinical and preclinical work[182](index=182&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=47&type=section&id=Critical%20accounting%20policies%20and%20significant%20judgments%20and%20estimates) Management makes significant estimates for accrued R&D expenses, share-based compensation, and historical common stock valuations - The preparation of financial statements requires management to make estimates and assumptions, particularly for **accrued R&D expenses, share-based compensation, and the fair value of common stock**[183](index=183&type=chunk)[185](index=185&type=chunk) - Accrued R&D expenses are estimated based on progress towards completion of tasks by third-party service providers (CROs, CMOs)[186](index=186&type=chunk)[187](index=187&type=chunk) - Share-based compensation expense is measured at grant-date fair value and recognized over the vesting period[190](index=190&type=chunk)[191](index=191&type=chunk) - Prior to IPO, the fair value of common stock was determined by the Board with input from third-party appraisals[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) [Factors that May Affect Future Results](index=51&type=section&id=Factors%20that%20May%20Affect%20Future%20Results) Important factors that could affect future results are detailed in the 'Risk Factors' section of the Annual Report on Form 10-K - Readers are directed to the **'Risk Factors' section** in the Annual Report on Form 10-K for a discussion of important factors that may affect future results[198](index=198&type=chunk) [Off-Balance Sheet Arrangements](index=51&type=section&id=Off-balance%20sheet%20arrangements) The company had no off-balance sheet arrangements during the reporting periods - The company did not have any **off-balance sheet arrangements** during the periods presented[199](index=199&type=chunk) [Recently Issued Accounting Pronouncements](index=51&type=section&id=Recently%20issued%20accounting%20pronouncements) A description of recently issued accounting pronouncements can be found in Note 2 to the financial statements - A description of recently issued accounting pronouncements is provided in **Note 2** to the financial statements[200](index=200&type=chunk) [Internal Control Over Financial Reporting](index=51&type=section&id=Internal%20control%20over%20financial%20reporting) Material weaknesses in internal control over financial reporting identified prior to the IPO have not yet been remediated - **Material weaknesses** in internal control over financial reporting existed prior to the IPO and remain unremediated, as detailed in the Annual Report on Form 10-K[201](index=201&type=chunk) [Emerging Growth Company and Smaller Reporting Company Status](index=51&type=section&id=Emerging%20Growth%20Company%20and%20Smaller%20Reporting%20Company%20Status) The company qualifies as an emerging growth and smaller reporting company, allowing for reduced reporting requirements - The company is an **'emerging growth company' (EGC)** and **'smaller reporting company,'** allowing it to take advantage of certain exemptions from reporting requirements[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) [Information Technology Risks](index=53&type=section&id=Information%20Technology%20Risks) The company faces cybersecurity risks, evidenced by a 2021 phishing attack, and is implementing mitigation measures - The company's systems are subject to cyber-attacks; a phishing attack in July 2021 resulted in a temporary loss of **$526,435**, which was subsequently recovered[88](index=88&type=chunk)[205](index=205&type=chunk) - Steps are being taken to mitigate cyberattack risks, including enhanced email screening, computer support, and security protocols[205](index=205&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=53&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's exposure to interest rate and foreign currency risks is currently immaterial but may increase with business development - The company's primary market risk exposure is **interest income sensitivity**, but an immediate 10% change in interest rates would not materially affect its financial position[206](index=206&type=chunk) - As of June 30, 2022, there was **no outstanding debt**, eliminating interest rate risk related to debt[207](index=207&type=chunk) - **Foreign currency exchange risk** primarily relates to the Euro for certain major purchases but is not currently material[208](index=208&type=chunk) - The company has not entered into foreign currency hedging contracts but expects foreign currency fluctuations to have a greater impact as the business develops[209](index=209&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=55&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls were ineffective as of June 30, 2022, due to unremediated material weaknesses - Management concluded that the company's disclosure controls and procedures were **not effective** as of June 30, 2022, due to material weaknesses in internal control over financial reporting[213](index=213&type=chunk) - No material changes in internal control over financial reporting occurred during the six months ended June 30, 2022[215](index=215&type=chunk) [PART II. OTHER INFORMATION](index=56&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, securities sales, and other required disclosures [ITEM 1. LEGAL PROCEEDINGS](index=56&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not currently party to any material legal proceedings - The company is not currently involved in any legal proceedings and is unaware of any pending or threatened legal actions that could have a material adverse effect[218](index=218&type=chunk) [ITEM 1A. RISK FACTORS](index=56&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section highlights risks from current economic uncertainty, rising inflation, and interest rate hikes - Current economic circumstances, including **increased economic uncertainty**, reduced credit availability, and volatility in financial markets, may adversely affect the business[220](index=220&type=chunk) - **Rising inflation rates** have increased operating costs and could negatively impact liquidity and access to capital[221](index=221&type=chunk) - Increases in interest rates by the Federal Reserve, coupled with economic uncertainty, may further heighten these risks[221](index=221&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=57&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company reports no unregistered sales of equity securities or use of IPO proceeds during the period - There were **no unregistered sales** of equity securities during the period[222](index=222&type=chunk) - There was **no use of proceeds** from the initial public offering of common stock during the period[223](index=223&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=57&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reports no defaults upon senior securities - There were **no defaults** upon senior securities[225](index=225&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=57&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Mine safety disclosures are **not applicable** to the company[226](index=226&type=chunk) [ITEM 5. OTHER INFORMATION](index=57&type=section&id=ITEM%205.%20OTHER%20INFORMATION) The company reports no other information required under this item - There is **no other information** to report under this item[227](index=227&type=chunk) [ITEM 6. EXHIBITS](index=58&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the report, including officer certifications and XBRL documents - Exhibits include certifications of principal executive and financial officers (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents[230](index=230&type=chunk) [SIGNATURES](index=59&type=section&id=SIGNATURES) The report is duly signed by the CEO and CFO on August 15, 2022 - The report is signed by R. Michael Dudley, Chief Executive Officer, and Thomas A. Fitzgerald, Chief Financial Officer, on **August 15, 2022**[234](index=234&type=chunk)

RNA Delivery Platform and Therapeutics - The company has developed an RNA delivery platform, the TTX platform, utilizing an iron oxide nanoparticle approved for clinical use, aimed at improving the delivery of RNA therapeutics to tumors [125]. - The lead therapeutic candidate, TTX-MC138, targets microRNA-10b and aims to submit an exploratory IND application for a Phase 0 clinical trial in patients with Stage IV breast cancer [128]. - The TTX platform is designed to overcome stability, efficiency, and immunogenicity issues faced by existing delivery systems, optimizing accumulation in tumor cells [127]. - The TTX platform allows for a modular approach, enabling the adaptation of therapeutic loads for various RNA-based therapies, including RNAi and CRISPR technologies [127]. - The company is exploring LIN28B as a potential target for pancreatic cancer and plans to negotiate licensing if evaluation results meet criteria [131]. - The TTX-MC138 study results suggest effective delivery to metastatic lesions, supporting further clinical evaluation and potential FDA authorization for additional studies [133]. - The company plans to conduct a microdosing Phase 0 trial with TTX-MC138, enrolling 10 patients to measure delivery to metastatic lesions using PET-MRI [137]. - The SBIR Phase II milestone includes the development of a qRT-PCR test for measuring miR-10b expression, which is critical for patient inclusion in the Phase 0 study [142]. - The company plans to continue preclinical studies and initiate clinical trials for TTX-MC138 and other product candidates [145]. - The company aims to expand its proprietary TTX platform to identify additional product candidates and acquire new intellectual property [151]. Financial Performance and Funding - As of March 31, 2022, the company had received gross proceeds of $31.0 million primarily from its IPO and convertible promissory notes, with no products approved for sale or revenue generated from product sales [143]. - The company incurred net losses of $3.5 million and $6.8 million for the three months ended March 31, 2022, and the year ended December 31, 2021, respectively, with an accumulated deficit of $13.8 million as of March 31, 2022 [144]. - The company has not generated any revenue from product sales to date and does not expect to do so in the foreseeable future [153]. - The company expects to receive an additional $2 million under the SBIR Award, although there is no guarantee of receipt, and believes current cash of $16.9 million will fund operations into Q1 2023 [150]. - The company may need substantial additional funding to support ongoing operations and pursue its business strategy, relying on equity sales, debt financing, or collaborations [148]. - The company expects to require additional capital for research, development, and commercialization efforts, raising substantial doubt about its ability to continue as a going concern [183]. - The company has incurred significant operating losses and does not expect to generate revenue from product sales for several years [178]. Expenses and Operational Costs - Research and development expenses are anticipated to increase significantly as the company commences planned clinical trials for TTX-MC138 and other product candidates [158]. - General and administrative expenses are expected to rise as the company increases headcount and prepares for potential commercial activities, including partnerships for product development [165]. - Research and development expenses increased by $1,618 thousand for the three months ended March 31, 2022, compared to the same period in 2021, primarily due to purchases of materials and personnel costs [172]. - General and administrative expenses rose by $1,410 thousand for the three months ended March 31, 2022, compared to the same period in 2021, mainly due to increased costs for liability insurance and personnel [173]. - The company anticipates substantial increases in expenses related to ongoing and planned activities, particularly for clinical trials of TTX-MC138 [180]. Operational Challenges and Impact - The COVID-19 pandemic has impacted the timeline for preclinical studies and clinical trials, contributing to operational disruptions [152]. - The company has engaged a European CMO for the manufacturing of TTX-MC138 and a CRO for IND-enabling studies, indicating progress in product development [159]. Internal Controls and Compliance - The company has identified material weaknesses in its internal control over financial reporting prior to its IPO, which remain unremediated [214]. - The company is classified as an "emerging growth company" and will remain so until it exceeds $1.07 billion in annual revenue or meets other specified criteria [215]. Cash Flow and Investments - Cash used in operating activities was $3,949 thousand for the three months ended March 31, 2022, compared to $522 thousand in the same period of 2021 [190]. - The net cash used in investing activities was $31 thousand for the three months ended March 31, 2022, a decrease from $75 thousand in the same period of 2021 [192]. - As of March 31, 2022, all shares of restricted stock have vested, resulting in no further compensation expense related to restricted stock [203]. Market and Risk Factors - The fair value of derivative liabilities was $0 for the three months ended March 31, 2022, compared to $3,936 thousand in the same period of 2021, as these liabilities were extinguished at the IPO [175]. - The company had no debt outstanding as of March 31, 2022, and therefore is not subject to interest rate risk related to outstanding debt [223]. - There were no foreign currency transaction gains or losses recognized for the three months ended March 31, 2022, and 2021 [224]. - An immediate 10% change in U.S. interest rates would not materially affect the fair market value of the company's investments [222]. - The company has not entered into any foreign currency hedging contracts to mitigate exposure to foreign currency exchange risk [225]. - The company intends to enhance its cybersecurity defenses in response to increasing threats from cyber-attacks [221]. - The company’s financial position and results of operations may be affected by fluctuations in foreign currency exchange rates as it continues to develop its business [225].