Pieris Pharmaceuticals(PIRS) - 2024 Q2 - Quarterly Report

Financial Performance - Total revenue for the three months ended June 30, 2024, was $0, compared to $20,055,000 for the same period in 2023, representing a decrease of 100%[15] - Customer revenue for the six months ended June 30, 2024, was $6,000, compared to $22,096,000 for the same period in 2023, a decline of 99.73%[15] - Net loss for the three months ended June 30, 2024, was $3,590,000, compared to a net income of $3,976,000 for the same period in 2023[15] - Basic net loss per share for the three months ended June 30, 2024, was $(2.76), compared to earnings of $3.63 per share for the same period in 2023[15] - The company experienced a comprehensive loss of $3,680,000 for the three months ended June 30, 2024, compared to a comprehensive income of $4,265,000 for the same period in 2023[15] - For the six months ended June 30, 2024, the net loss was $8.482 million, compared to a net loss of $9.207 million for the same period in 2023, indicating a 7.9% improvement in losses[22] - The company has an accumulated deficit of $323.4 million as of June 30, 2024, and expects to continue incurring operating losses for the foreseeable future[30] Operating Expenses - Total operating expenses for the three months ended June 30, 2024, were $4,177,000, down from $17,992,000 in the same period in 2023, a reduction of 76.8%[15] - Research and development expenses for the three months ended June 30, 2024, were $751,000, significantly lower than $14,328,000 for the same period in 2023, a decrease of 94.76%[15] - General and administrative expenses for the three months ended June 30, 2024, were $3,426,000, slightly down from $3,664,000 in the same period in 2023, a decrease of 6.5%[15] - Stock-based compensation expense for the six months ended June 30, 2024, was $893,000, down from $1.932 million for the same period in 2023[22] - The company reported a total lease cost of $30,000 for the six months ended June 30, 2024, compared to $962,000 for the same period in 2023[110] Cash and Investments - Cash and cash equivalents at the end of the period were $19.731 million, down from $44.938 million at the end of June 30, 2023[22] - The company reported a net cash used in operating activities of $8.476 million for the six months ended June 30, 2024, compared to $24.427 million for the same period in 2023, reflecting a significant reduction in cash burn[22] - As of June 30, 2024, cash, cash equivalents, and investments totaled $14.1 million, an increase from $13.2 million as of December 31, 2023[92] - The company had $19.7 million in cash, cash equivalents, and investments, with a total accumulated deficit of $323.4 million[177] Strategic Initiatives - The company expects to extend its cash runway into at least 2027 with new strategies and cost-saving measures, aiming to maximize potential milestones from partnered assets[27] - The company has discontinued all research and development efforts and is reducing discretionary expenditures to maximize potential milestones from partnered programs with Pfizer and Boston Pharmaceuticals[31] - The company engaged Stifel, Nicolaus & Company, Incorporated to explore strategic transactions, including mergers and acquisitions, following the discontinuation of a key study[25] - The company announced a new strategy on March 27, 2024, aimed at extending its cash runway into at least 2027 while maximizing potential milestones from partnered assets, with potential aggregate milestones of up to $55 million[176] Mergers and Acquisitions - On July 23, 2024, the company entered into a merger agreement with Palvella Therapeutics, with Palvella becoming a wholly-owned subsidiary of the company[28] - The merger agreement includes a termination fee of $1.0 million payable by Pieris and $2.0 million payable by Palvella under specified circumstances[121] - The merger values Palvella at $95 million and Pieris at $21 million, with adjustments based on Pieris' net cash at closing[135] - Upon closing of the merger, pre-merger Pieris stockholders are expected to own approximately 18% of the combined company, while pre-merger Palvella stockholders are expected to own approximately 82%[116] Revenue Recognition - The company has not generated revenue from product sales but has generated revenue from contracts with customers, including upfront payments and milestone payments[70] - The Company recognized revenue of approximately $10.1 million for the delivery on its performance obligations related to two programs for the year ended December 31, 2023[79] - The Company received a $2.5 million milestone payment in August 2023 for the first patient dosed in the Phase 1/2 study of PRS-342/BOS-342[76] - Potential milestone payments from existing strategic partnerships total $844 million for research, development, regulatory, and commercial milestones, and $715 million for sales milestones[71] Workforce and Cost Management - The company incurred approximately $7.5 million in severance costs and related termination benefits in 2023 due to a workforce reduction of approximately 70%[26] - The company incurred severance and benefits costs totaling $3.63 million for the three months ended June 30, 2024, with cash payments of $801,000 during the same period[98] - The company has taken measures to preserve cash, including significant workforce reductions and terminating all research and development activities[177][187] Regulatory and Compliance - The company is currently subject to SEC regulations limiting the amount of funds it can raise through primary public offerings, which is capped at one-third of the aggregate market value of its non-affiliate shares[106] - The company is focused on maintaining its Nasdaq listing and ensuring shares issued in connection with the merger are approved for listing prior to closing[28]