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CERo Therapeutics(CERO) - 2024 Q3 - Quarterly Report
CEROCERo Therapeutics(CERO)2024-11-19 22:16

Stock Issuance and Financing Activities - The company issued an aggregate of 7,597,638 shares of Common Stock as consideration for the Merger, including 2,200,000 Earnout Shares and 382,651 shares issuable upon exercise of rollover options or warrants[174] - In February 2024, the company completed the first tranche of a private placement, raising approximately 10.0millionthroughtheissuanceofSeriesAPreferredStockandwarrants[175]−InApril2024,thecompanyraisedapproximately10.0 million through the issuance of Series A Preferred Stock and warrants[175] - In April 2024, the company raised approximately 0.5 million through a private placement of Series B Preferred Stock[176] - In September 2024, the company raised approximately 1.25millionthroughaprivateplacementofSeriesCPreferredStockandcommonwarrants[177]−Netcashprovidedbyfinancingactivitiesincreasedby1.25 million through a private placement of Series C Preferred Stock and common warrants[177] - Net cash provided by financing activities increased by 11.7 million from 0.6millioninthenine−monthperiodendedSeptember30,2023to0.6 million in the nine-month period ended September 30, 2023 to 12.2 million in the nine-month period ended September 30, 2024[223] - The increase in cash provided by financing activities was related to the net proceeds of 7.3millionfromtheissuanceofSeriesAandBPreferredStock,7.3 million from the issuance of Series A and B Preferred Stock, 0.7 million from the issuance of Series C Preferred Stock and associated warrants, and 4.3 million for the sale of common stock under the ELOC[223] Clinical Development and Regulatory Progress - The company submitted an Investigational New Drug Application (IND) for CER-1236 on June 28, 2024, and received FDA clearance on November 15, 2024, with plans to initiate clinical trials by early 2025[178][179] Financial Performance and Expenses - The company has not recognized any revenue and does not expect to generate revenue from product sales in the foreseeable future[190] - R&D expenses are expected to increase significantly as the company advances its product candidates through clinical development[194] - General and administrative expenses are anticipated to rise due to increased headcount, operational support, and compliance costs associated with being a public company[196] - Research and development expenses increased to 1.8 million for the three-month period ended September 30, 2024, up from 1.3millioninthesameperiodin2023,reflectinga1.3 million in the same period in 2023, reflecting a 0.5 million increase[202] - General and administrative expenses rose to 2.6millionforthethree−monthperiodendedSeptember30,2024,comparedto2.6 million for the three-month period ended September 30, 2024, compared to 0.3 million in the same period in 2023, a 2.4millionincreaseprimarilyduetopubliccompanyoperationalcosts[201]−Netlossforthethree−monthperiodendedSeptember30,2024,was2.4 million increase primarily due to public company operational costs[201] - Net loss for the three-month period ended September 30, 2024, was 4.2 million, compared to 1.3millioninthesameperiodin2023,reflectinga1.3 million in the same period in 2023, reflecting a 2.9 million increase in losses[200] - Research and development expenses for the nine-month period ended September 30, 2024, were 6.2million,upfrom6.2 million, up from 4.3 million in the same period in 2023, a 1.9millionincrease[211]−Generalandadministrativeexpensesforthenine−monthperiodendedSeptember30,2024,were1.9 million increase[211] - General and administrative expenses for the nine-month period ended September 30, 2024, were 7.9 million, compared to 2.3millioninthesameperiodin2023,a2.3 million in the same period in 2023, a 5.7 million increase driven by public company compliance costs[209] - Net loss for the nine-month period ended September 30, 2024, was 9.0million,comparedto9.0 million, compared to 6.0 million in the same period in 2023, reflecting a 3.0 million increase in losses[208] - The company anticipates significant future increases in R&D expenses due to expanded headcount, compensation, and contracted services for preclinical and clinical development[203][212] - Other income for the nine-month period ended September 30, 2024, was 5.1 million, compared to 0.5millioninthesameperiodin2023,primarilyduetoa0.5 million in the same period in 2023, primarily due to a 4.7 million change in the value of the company's Earnout Liability[213] - Net cash used in operating activities increased by 6.6millionfrom6.6 million from 4.8 million to 11.4millioninthenine−monthperiodendedSeptember30,2023and2024respectively[221]−Theincreaseincashusedinoperatingactivitieswaslargelyrelatedtoa11.4 million in the nine-month period ended September 30, 2023 and 2024 respectively[221] - The increase in cash used in operating activities was largely related to a 4.8 million increase in the adjustment to net loss related to the gain on the revaluation of derivative liabilities[221] Cash Position and Funding Needs - The company had 3.4millionincash,restrictedcash,andcashequivalentsasofSeptember30,2024,andexpectstoneedsubstantialadditionalfundingtosupportoperations[216]−Thecompanydoesnotexpecttogeneraterevenueforatleastthenextfewyearsandreliesonadditionalfinancingtoachieveitsbusinessobjectives[214][219]MarketandRegulatoryRisks−ThecompanyreceivedNasdaqnoticesofnon−complianceduetotheCommonStock′sbidpricefallingbelow3.4 million in cash, restricted cash, and cash equivalents as of September 30, 2024, and expects to need substantial additional funding to support operations[216] - The company does not expect to generate revenue for at least the next few years and relies on additional financing to achieve its business objectives[214][219] Market and Regulatory Risks - The company received Nasdaq notices of non-compliance due to the Common Stock's bid price falling below 1.00 and the Market Value of Publicly Held Shares (MVPHS) falling below 15,000,000[180][182]−Thecompany′sstockholdersapprovedareversestocksplitrangingfrom1:25to1:150,withtheBoardofDirectorsauthorizinga1:40reversestocksplitexpectedtobeeffectivearoundNovember2024[186]−Thecompany′sprimaryexposuretomarketriskisinterestratesensitivity,whichisaffectedbychangesinthegenerallevelofU.S.interestrates[239]−Thecompanymaybesubjecttofluctuationsinforeigncurrencyratesinthefutureifitcontractswithvendorsinvoicinginaforeigndenominatedcurrency[240]−Inflationmaymateriallyimpactthecompanyinlaterperiodsof2024andbeyondbyincreasingthecostoflaborandcostsassociatedwithpreclinicalandclinicaltrialsandfuturemanufacturingandcommercializationactivities[241]EmergingGrowthCompanyStatus−Thecompanyisanemerginggrowthcompanyandmaytakeadvantageofreduceddisclosureandotherrequirementsapplicabletopubliccompanies[243]−Thecompanyexpectstocontinuetotakeadvantageofthebenefitsoftheextendedtransitionperiodforcomplyingwithneworrevisedaccountingstandards[243]−Thecompanymayceasetoqualifyasanemerginggrowthcompanyifitexceeds15,000,000[180][182] - The company's stockholders approved a reverse stock split ranging from 1:25 to 1:150, with the Board of Directors authorizing a 1:40 reverse stock split expected to be effective around November 2024[186] - The company's primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates[239] - The company may be subject to fluctuations in foreign currency rates in the future if it contracts with vendors invoicing in a foreign denominated currency[240] - Inflation may materially impact the company in later periods of 2024 and beyond by increasing the cost of labor and costs associated with preclinical and clinical trials and future manufacturing and commercialization activities[241] Emerging Growth Company Status - The company is an emerging growth company and may take advantage of reduced disclosure and other requirements applicable to public companies[243] - The company expects to continue to take advantage of the benefits of the extended transition period for complying with new or revised accounting standards[243] - The company may cease to qualify as an emerging growth company if it exceeds 1.07 billion in total annual gross revenues or if the market value of its Common Stock held by non-affiliates exceeds $700.0 million[245]