Cadrenal Therapeutics(CVKD) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited financial statements, management's discussion and analysis, and related financial disclosures Item 1. Financial Statements (Unaudited) Unaudited H1 2024 financials report a $4.1 million net loss, increased operating expenses, and $5.0 million cash, raising going concern doubts Balance Sheets Balance sheets show decreased cash and total assets, increased liabilities and accumulated deficit by June 30, 2024 Balance Sheet Summary (as of June 30, 2024 vs. December 31, 2023) | Metric | June 30, 2024 (Unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $5,037,174 | $8,402,500 | | Total current assets | $5,443,504 | $8,492,173 | | Total assets | $5,457,171 | $8,519,250 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $1,464,917 | $826,875 | | Total liabilities | $1,464,917 | $826,875 | | Accumulated deficit | $(19,127,685) | $(15,071,415) | | Total stockholders' equity | $3,992,254 | $7,692,375 | Statements of Operations and Comprehensive Loss Operating results show increased G&A expenses, fluctuating R&D costs, and significant net losses for Q2 and H1 2024 Operating Results Summary (Unaudited) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | General & administrative expenses | $1,212,437 | $784,623 | $2,338,430 | $1,749,356 | | Research & development expenses | $1,253,711 | $240,957 | $1,882,736 | $3,476,274 | | Loss from operations | $(2,466,618) | $(1,026,177) | $(4,222,233) | $(5,226,416) | | Net loss | $(2,392,982) | $(1,003,001) | $(4,056,270) | $(6,176,575) | | Net loss per share (basic & diluted) | $(0.15) | $(0.09) | $(0.25) | $(0.55) | Statements of Changes in Stockholders' Equity Stockholders' equity decreased in H1 2024 due to net loss, partially offset by equity compensation and warrant exercises - For the six months ended June 30, 2024, total stockholders' equity decreased from $7.7 million to $4.0 million, primarily due to a net loss of $4.1 million This was partially offset by equity-based compensation of $355,851 and the issuance of 2,985,715 common shares from the exercise of pre-funded warrants[7] Statements of Cash Flows Cash flow statements show significant cash used in operating activities and a substantial net decrease in cash for H1 2024 Cash Flow Summary for the Six Months Ended June 30 (Unaudited) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,365,624) | $(2,208,102) | | Net cash provided by financing activities | $298 | $5,408,575 | | Net change in cash | $(3,365,326) | $3,197,220 | | Cash and cash equivalents – end of period | $5,037,174 | $3,229,806 | Notes to Financial Statements Notes detail drug development, going concern risks, recent financing, and post-quarter equity plan amendments - The company is developing tecarfarin, an oral anticoagulant with orphan drug and fast-track designations from the FDA for specific cardiovascular conditions[10] - The company has incurred significant operating losses and negative cash flows since inception, leading to substantial doubt about its ability to continue as a going concern for at least one year Management plans to raise additional funds, but there is no assurance of success[13][14][15] - In January 2023, the company completed its IPO, raising net proceeds of $5.4 million In July 2023, it raised an additional $7.5 million in gross proceeds through a private placement[52][53][54] - Subsequent to the quarter end, on July 29, 2024, stockholders approved an amendment to the 2022 Equity Incentive Plan, increasing the available shares by 2,000,000 to 4,604,550[67] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses increased operating expenses (R&D, G&A) and critical liquidity, with $5.0 million cash insufficient for twelve months, reinforcing going concern uncertainty Company Overview The company focuses on developing tecarfarin, an oral anticoagulant with FDA orphan drug and fast-track designations for rare cardiovascular conditions - The company is focused on developing tecarfarin, a new-generation oral anticoagulant designed for patients with rare cardiovascular conditions requiring lifelong anticoagulation Tecarfarin has received orphan drug and fast-track designations from the FDA[71] - Tecarfarin is designed to use a different metabolic pathway than warfarin, potentially reducing drug-drug interactions and being more suitable for patients with impaired kidney function[71][73] Results of Operations Operating results show increased G&A expenses from personnel and public company costs, and surging R&D expenses driven by CMC activities - General and administrative expenses increased by 55% to $1.2 million for Q2 2024 compared to Q2 2023, driven by increased personnel-related expenses from hiring a Chief Operating Officer, higher public company costs, and professional fees[80] - Research and development expenses surged by 420% to $1.3 million for Q2 2024 compared to Q2 2023, primarily due to a $671,300 increase in chemistry, manufacturing, and controls (CMC) activities[83] - For the six months ended June 30, 2024, R&D expenses decreased to $1.9 million from $3.5 million in the prior year period The 2023 period included a one-time $3.0 million non-cash expense for stock issued pursuant to an asset purchase agreement[86] Liquidity and Capital Resources The company's liquidity is critical with $5.0 million cash, insufficient for twelve months, necessitating additional funding to address going concern uncertainty - As of June 30, 2024, the company had cash and cash equivalents of approximately $5.0 million and no debt The cash balance decreased to approximately $4.2 million by August 7, 2024[91] - The company projects that its current cash is not sufficient to fund operations for the next twelve months, raising substantial doubt about its ability to continue as a going concern It intends to raise additional funds through partnering, equity, or debt financings[91] Cash Flow Summary for Six Months Ended June 30 | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Cash used in operating activities | $(3,365,624) | $(2,208,102) | | Cash provided by financing activities | $298 | $5,408,575 | Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Cadrenal Therapeutics is not required to provide the information for this item - The company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item[101] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of June 30, 2024 There were no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of June 30, 2024, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[102] - There were no changes in internal control over financial reporting during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, internal controls[103] PART II. OTHER INFORMATION This section covers legal proceedings, key risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings The company reports that it is not currently subject to any material legal proceedings - The company is not currently subject to any material legal proceedings[103] Item 1A. Risk Factors The company faces going concern risk (insufficient funds) and Nasdaq delisting risk ($1.00 minimum bid price), despite an extension and approved reverse stock split - The company's financial statements include a going concern qualification, as existing cash is not sufficient to meet anticipated cash requirements for the next twelve months, raising substantial doubt about its ability to continue operations[105] - The company is not in compliance with Nasdaq's minimum bid price rule of $1.00 per share and received an extension until September 3, 2024, to regain compliance Failure to do so could result in delisting[107] - Shareholders approved a potential reverse stock split to address the Nasdaq compliance issue, but there is no guarantee it will be effective or that it won't adversely affect the stock's liquidity[108][111] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company states that it did not sell any unregistered equity securities during the quarter ended June 30, 2024, other than what has been previously disclosed in SEC filings - No unregistered sales of equity securities occurred during the quarter ended June 30, 2024, other than as previously disclosed[112] Item 3. Defaults Upon Senior Securities This item is not applicable to the company - Not applicable[112] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[113] Item 5. Other Information During the second quarter of 2024, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - During the three months ended June 30, 2024, no director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement'[113] Item 6. Exhibits This section provides an index of the exhibits filed with the Quarterly Report on Form 10-Q, which includes corporate governance documents, officer certifications required by the Sarbanes-Oxley Act, and interactive data files (XBRL) - The report includes several exhibits, such as CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and Inline XBRL files for financial data[115]