NKGen Biotech(NKGN) - 2024 Q2 - Quarterly Report

Financial Performance - The company reported net losses of $16.1 million for the three months ended June 30, 2024, and an accumulated deficit of$183.6 million as of the same date[176]. - The company has no products approved for sale and recognized no revenue during the three and six months ended June 30, 2024, and 2023[179]. - Net loss for the three months ended June 30, 2024, was $16.1 million, representing an increase of$8.2 million, or 105%, compared to a net loss of $7.8 million in the same period in 2023[191]. - Net loss for the six months ended June 30, 2024, was$21.5 million, an increase of $5.3 million, or 33$16.2 million in the same period in 2023[192]. - The company reported net cash used in operating activities of $10.0 million for the six months ended June 30, 2024, compared to$10.4 million for the same period in 2023, indicating a decrease of approximately 3.8%[238][239]. Research and Development - The company received IND clearance from the FDA for SNK01 in Alzheimer's disease on October 20, 2023, and began dosing participants in the clinical trial on December 28, 2023[172]. - In a Phase I clinical trial for SNK01, 30% of patients showed clinical improvement on the ADCOMS score compared to baseline, and 60% showed stable scores[173]. - The company plans to conduct a Phase 2 trial for SNK01 involving 30 patients with moderate Alzheimer's disease, following clearance from an Independent Review Board[174]. - Research and development expenses are expected to increase as the company continues to develop its product candidates and platform[181]. - Research and development expenses decreased by $1.0 million, or 24$15.1 million, an increase of $1.7 million, or 12$13.4 million in the same period in 2023[192]. Expenses and Costs - General and administrative expenses increased by $1.8 million, or 71$7.5 million, an increase of $0.8 million, or 13$6.6 million in the same period in 2023[190]. - Interest expense for the three months ended June 30, 2024, was $0.6 million, an increase of$0.9 million, or 944%, compared to $0.06 million in the same period in 2023[191]. - General and administrative expenses increased by$3.0 million, or 52%, for the six months ended June 30, 2024, primarily due to a $2.6 million increase in professional fees[202]. - The company incurred significant transaction costs related to the Business Combination and issued several financial instruments, including Senior Convertible Notes[171]. Funding and Capital - The company expressed substantial doubt about its ability to continue as a going concern without securing additional funding[178]. - The company expects to finance its cash needs through a combination of equity and debt financings, which may dilute existing stockholders' ownership[213]. - The company raised total proceeds of$10.2 million from the issuance of 10,209,994 PIPE warrants at a purchase price of $1.00 per warrant[231]. - The company raised$1.5 million from private placement agreements during the six months ended June 30, 2024[228]. - The company issued additional debts of $3.2 million in July and August 2024, including$3.0 million in 2024 Convertible Notes[215]. Debt and Liabilities - As of June 30, 2024, the company had cash and cash equivalents of $0.1 million and a working capital deficit of approximately$50.2 million[214]. - The company had outstanding debts of $35.8 million as of June 30, 2024, which included a revolving line of credit with East West Bank[215]. - The company incurred approximately$15.1 million in accounts payable and accrued expenses related to transaction expenses from the Business Combination as of June 30, 2024[215]. - The company experienced an increase in accounts payable and accrued expenses, contributing to the net cash used in operating activities[238]. Fair Value Measurements - The company determined that the Public Warrants and Deferred Founder Shares are classified as equity instruments, while various convertible notes and warrants, including Senior Convertible Notes and PIPE Warrants, are classified as liabilities[257]. - The fair value of liability-classified instruments, such as Private Warrants and Working Capital Warrants, is measured using Level 3 inputs and accounting estimates, which can significantly affect reported financial positions[262]. - The estimated fair value of the liability classified warrants was determined using a Black-Scholes model, incorporating assumptions related to expected stock-price volatility and risk-free interest rates[263]. - The fair value of the 2024 Convertible Notes will be measured using a probability weighted scenario model starting April 1, 2024, reflecting changes in entity-specific assumptions and the diversity of expected behaviors[266]. Company Classification - The company qualifies as an emerging growth company and may remain so for up to five years, allowing it to rely on certain exemptions from public company reporting requirements[271]. - The company qualifies as a "smaller reporting company" with a market value of common stock held by non-affiliates plus proposed gross proceeds from the Business Combination being less than $700.0 million[273]. - The company's annual revenue is less than$100.0 million during the most recently completed fiscal year[273]. - Smaller reporting companies have reduced disclosure obligations regarding executive compensation[273].