Workflow
Adagio Medical Holdings, Inc.(ADGM) - 2024 Q3 - Quarterly Report
ADGMAdagio Medical Holdings, Inc.(ADGM)2024-11-14 21:19

Financial Performance - As of September 30, 2024, the company had an accumulated deficit of 13.2million,comparedto13.2 million, compared to 133.6 million as of December 31, 2023[294]. - The net loss for the period from July 31, 2024, to September 30, 2024, was 3.6million,whilethelossforthepredecessorperiodfromJanuary1,2024,toJuly30,2024,was3.6 million, while the loss for the predecessor period from January 1, 2024, to July 30, 2024, was (21.3) million[294]. - The company incurred net cash used in operating activities of 6.4millionfortheperiodfromJuly31,2024,toSeptember30,2024[294].−Thecompanyhascashof6.4 million for the period from July 31, 2024, to September 30, 2024[294]. - The company has cash of 28.3 million as of September 30, 2024, compared to 1.4millionasofDecember31,2023[294].−RevenueforthethreemonthsendedSeptember30,2024,was1.4 million as of December 31, 2023[294]. - Revenue for the three months ended September 30, 2024, was 0.1 million, an increase of 0.1millionor3510.1 million or 351% compared to 0.041 million for the same period in 2023, driven by increased consumable sales[335]. - For the nine months ended September 30, 2024, revenue was 0.3million,reflectinga0.3 million, reflecting a 0.2 million increase or 109% from 0.2millioninthesameperiodof2023,alsoattributedtohigherconsumablesales[336].−Thecompanyreportedacomprehensiveincomeof0.2 million in the same period of 2023, also attributed to higher consumable sales[336]. - The company reported a comprehensive income of 3.597 million for the three months ended September 30, 2024, compared to a comprehensive loss of 8.237millioninthesameperiodof2023[335].−TheincreaseinrevenueanddecreaseinresearchanddevelopmentexpensesareattributedtothereceiptofCEMarkingonVTCryoablationinMarch2024,whichhaspositivelyimpactedthecompany′sfinancials[340].ResearchandDevelopment−Thecompanyisfocusedonthedevelopmentandcommercializationofablationtechnologiesfortreatingcardiacarrhythmias[291].−Thecompanyplanstoincreaseresearchanddevelopmentexpenditurestosupportgrowthstrategies,focusingoninnovativeproductdevelopmentandpotentialtechnologyacquisitions[315].−Thecompanyexpectsresearchanddevelopmentexpensestoincreaseduetoongoingclinicaltrialsandproductcandidatesinlaterstagesofdevelopment,whichgenerallyincurhighercosts[324].−ResearchanddevelopmentexpensesforthethreemonthsendedSeptember30,2024,were8.237 million in the same period of 2023[335]. - The increase in revenue and decrease in research and development expenses are attributed to the receipt of CE Marking on VT Cryoablation in March 2024, which has positively impacted the company's financials[340]. Research and Development - The company is focused on the development and commercialization of ablation technologies for treating cardiac arrhythmias[291]. - The company plans to increase research and development expenditures to support growth strategies, focusing on innovative product development and potential technology acquisitions[315]. - The company expects research and development expenses to increase due to ongoing clinical trials and product candidates in later stages of development, which generally incur higher costs[324]. - Research and development expenses for the three months ended September 30, 2024, were 1.2 million, a decrease of 2.0millionor442.0 million or 44% from 4.4 million in the same period of 2023, due to reduced clinical trial and manufacturing costs[339]. Financing and Capital Structure - The PIPE Financing raised a total of 64.5million,includingcommitmentsfrominvestorstopurchase64.5 million, including commitments from investors to purchase 2.5 million in Class A shares and an additional cash investment of 15.9millionfromthePerceptivePIPEInvestor[308][311].−Thecompanyplanstofinanceitsoperationsthroughequityordebtsales,borrowings,orpotentialcollaborations[296].−Thecompanyanticipatesneedingtoraiseadditionalfundsthroughdebtand/orequityissuancestofinanceoperationsuntilitcangeneratesufficientrevenueforprofitability[360].−Thecompanydrewatotalof15.9 million from the Perceptive PIPE Investor[308][311]. - The company plans to finance its operations through equity or debt sales, borrowings, or potential collaborations[296]. - The company anticipates needing to raise additional funds through debt and/or equity issuances to finance operations until it can generate sufficient revenue for profitability[360]. - The company drew a total of 6.0 million from the November 2023 Convertible Notes, with amounts of 1.0millionand1.0 million and 2.0 million drawn in December 2023[368]. - The outstanding 29.5millionprincipaloftheBridgeFinancingNoteswasconvertedinto4,372,607sharesoftheCompany′sCommonStockand3,540,000BaseWarrants[372].−TheCompanyissueda29.5 million principal of the Bridge Financing Notes was converted into 4,372,607 shares of the Company's Common Stock and 3,540,000 Base Warrants[372]. - The Company issued a 5.0 million convertible promissory note in April 2023, maturing on January 5, 2024, with an interest rate of 8.0% per annum[365]. - The total of 20.0millionConvertibleSecuritiesNoteswillbeconvertibleintosharesoftheCompany′sCommonStockataconversionpriceof20.0 million Convertible Securities Notes will be convertible into shares of the Company's Common Stock at a conversion price of 10.00 per share[377]. Expenses and Cost Management - Selling, general and administrative expenses include costs related to executive salaries, legal fees, and transaction costs associated with the Business Combination, all expensed as incurred[325]. - Selling, general, and administrative expenses for the three months ended September 30, 2024, were 2.9million,anincreaseof2.9 million, an increase of 3.3 million or 75% compared to 4.5millioninthesameperiodof2023,primarilyduetohigherprofessionalfeesandpayrollexpenses[344].−Selling,generalandadministrativeexpensesincreasedby4.5 million in the same period of 2023, primarily due to higher professional fees and payroll expenses[344]. - Selling, general and administrative expenses increased by 7.7 million, or 94%, primarily due to a 5.7millionriseinprofessionalfeesanda5.7 million rise in professional fees and a 1.9 million increase in payroll and personnel expenses[345]. Market and Competitive Landscape - The company competes by developing innovative products that meet significant clinical needs, relying on regulatory approvals and effective marketing strategies to increase market share[314][318]. - The company emphasizes the importance of adequate reimbursement from third-party payors for successful commercialization of its products, which varies significantly across markets[319]. - The company aims to expand its sales and marketing infrastructure to grow its customer base, requiring significant investment in training and marketing efforts[317]. Strategic Initiatives - A strategic realignment of resources and corporate restructuring was approved on December 1, 2023, reallocating capital for the next two years[426]. - The workforce was reduced by 20 employees, approximately 19% of total employees, with no severance or retention bonuses paid[427]. Risk Factors - The company is exposed to market risks, including potential inflationary pressures that could impact financial conditions[432]. - Revenue generated in Europe and costs in Euro expose the company to foreign currency exchange rate fluctuations against the U.S. dollar[433]. Valuation and Fair Value Adjustments - The company recorded fair value adjustments for convertible notes and warrant liabilities, impacting the consolidated statements of operations and comprehensive income[326][327]. - The fair value of convertible notes decreased by $3.3 million for the period from July 31, 2024 to September 30, 2024, attributed to a decrease in the fair value of Convertible Securities Notes[346]. - The company measures the Convertible Securities Notes at fair value based on significant inputs not observable in the market, classified as Level 3 measurements within the fair value hierarchy[411]. - The company utilized the Black-Scholes option pricing model to determine the fair value of stock-based compensation, which is recognized over the requisite service period[392].