Tevogen Bio(TVGN) - 2024 Q2 - Quarterly Report

Part I – Financial Information This section covers the company's unaudited financial statements, management's analysis, market risk, and internal controls Item 1. Financial Statements (Unaudited) This section presents Tevogen Bio Holdings Inc.'s unaudited consolidated financial statements and related notes as of June 30, 2024 Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | June 30, 2024 ($) | Dec 31, 2023 ($) | | :--- | :--- | :--- | | Cash | 1,135,390 | 1,052,397 | | Total Assets | 3,310,259 | 5,505,503 | | Accounts Payable | 6,666,229 | 3,418,378 | | Total Liabilities | 10,944,156 | 99,934,400 | | Total Stockholders' Deficit | (7,633,897) | (94,428,897) | Consolidated Statement of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2024 ($) | Three Months Ended June 30, 2023 ($) | Six Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2023 ($) | | :--- | :--- | :--- | :--- | :--- | | Research and Development | 4,124,450 | 1,031,393 | 24,936,032 | 2,378,566 | | General and Administrative | 4,474,577 | 1,153,073 | 13,179,719 | 2,130,182 | | Loss from Operations | (8,599,027) | (2,184,466) | (38,115,751) | (4,508,748) | | Net Income (Loss) | (9,663,447) | (22,184,353) | 1,601,395 | (52,940,497) | | Net Income (Loss) Per Share, Basic | (0.04) | (0.18) | 0.03 | (0.44) | Consolidated Statement of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2023 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (5,146,335) | (4,394,654) | | Net cash used in investing activities | — | (133,000) | | Net cash provided by financing activities | 5,229,328 | 2,500,000 | | Net increase (decrease) in cash | 82,993 | (2,027,654) | Note 1. Nature of Business Tevogen is a clinical-stage immunotherapy company focused on developing off-the-shelf T cell therapies, which completed a reverse recapitalization merger on February 14, 2024 - The company's lead product, TVGN 489 for COVID-19, has completed a Phase 1 proof-of-concept trial[13] - On February 14, 2024, Tevogen Bio Inc. merged with Semper Paratus Acquisition Corporation, with Tevogen Bio as the accounting acquirer in a reverse recapitalization, forming Tevogen Bio Holdings Inc[14][15] Note 2. Development-Stage Risks and Liquidity The company has an accumulated deficit of $98.1 million as of June 30, 2024, but a new $36 million loan agreement is expected to provide liquidity for the next 12 months - The company had an accumulated deficit of $98,056,342 as of June 30, 2024, and anticipates incurring additional losses[17] - A Loan Agreement in June 2024 allows the company to draw $1 million per month for 36 months, totaling $36 million, providing adequate liquidity for the next 12 months[17] Note 7. Debt The company secured a $36 million unsecured line of credit from a related party and is in default on $1.65 million in merger-assumed notes payable - The company secured an unsecured line of credit for up to $36 million, drawable in $1 million monthly increments over 36 months, with interest payable in common stock at $1.50 per share[42] - The company is in default on $1.65 million of notes payable to Polar Multi-Strategy Master Fund, assumed in the merger and due within five business days of the transaction[46] Note 8. Stock-Based Compensation Following the merger, the company adopted a new incentive plan, recognizing substantial stock-based compensation, including an $87.3 million RSU grant to the CEO Stock-Based Compensation Expense | Period | Research and Development ($) | General and Administrative ($) | Total ($) | | :--- | :--- | :--- | :--- | | Three months ended June 30, 2024 | 3,010,944 | 1,131,276 | 4,142,220 | | Six months ended June 30, 2024 | 22,746,840 | 7,728,629 | 30,475,469 | - As of June 30, 2024, $83,988,402 of unrecognized compensation cost related to the CEO's Restricted Stock remains, to be expensed over 9.6 years[50] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operating results, liquidity, and capital resources, including the ExacTcell platform and TVGN 489 Overview Tevogen is a clinical-stage immunotherapy company developing off-the-shelf T cell therapies, with its lead product TVGN 489 for COVID-19 showing positive Phase 1 results - The company's ExacTcell platform develops allogeneic, precision T cell therapies for virology, oncology, and neurology[76] - The Phase 1 trial for TVGN 489 showed no dose-limiting toxicities, rapid viral load reduction, and cell persistence for at least six months, with a pivotal trial planned for COVID-19 patients with B cell malignancies[78] Results of Operations Operating expenses significantly increased due to non-cash stock-based compensation and merger-related fees, while net income for the six-month period was driven by a non-cash gain on convertible notes - For Q2 2024, R&D expenses increased to $4.1 million from $1.0 million in Q2 2023, largely due to $3.0 million in stock-based compensation[100] - For Q2 2024, G&A expenses rose to $4.5 million from $1.2 million in Q2 2023, driven by a $2.0 million increase in legal/professional fees and $1.1 million in stock-based compensation[101] - For the six months ended June 30, 2024, the company reported net income of $1.6 million, primarily due to a $48.5 million non-cash gain on convertible promissory notes, offsetting a $38.1 million operating loss and $7.5 million in merger costs[105][109] Liquidity and Capital Resources As of June 30, 2024, the company had $1.1 million in cash, with a new $36 million loan agreement providing liquidity for the next 12 months, though additional funding is needed for new clinical trials - As of June 30, 2024, the company had $1.1 million in cash and an accumulated deficit of $98.1 million[111] - The company entered a Loan Agreement in June 2024 for an unsecured line of credit of up to $36 million, drawable monthly, serving as a primary source of near-term liquidity[117] - Management concluded there is adequate cash for at least the next 12 months, but new clinical trials will not commence until additional funding is secured[122] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Tevogen is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Tevogen is exempt from providing quantitative and qualitative disclosures about market risk[135] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were not effective as of June 30, 2024, due to material weaknesses in internal control over financial reporting - The principal executive and financial officers concluded that disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting[136] Part II – Other Information This section provides updates on legal proceedings, risk factors, other information, and exhibits filed with the report Item 1. Legal Proceedings The company reports no material legal proceedings currently pending - As of the report date, the company is not involved in any material legal proceedings[139] Item 1A. Risk Factors This section updates risk factors, including Nasdaq non-compliance for minimum bid price and risks associated with untimely SEC filings - On June 14, 2024, the company received a Nasdaq notification for non-compliance with the minimum bid price requirement, as its common stock closed below $1.00 for 35 consecutive business days[141] - The company has until December 11, 2024, to regain compliance with Nasdaq's minimum bid price rule[142] - The company previously failed to timely file its Annual Report on Form 10-K for FY 2023 and Form 10-Q for Q1 2024, potentially impairing financing access and leading to SEC enforcement[145] Item 5. Other Information No Rule 10b5-1 trading arrangements were adopted or terminated, and the company filed a Certificate of Elimination for Series B Preferred Stock on August 9, 2024 - On August 9, 2024, the Company filed a Certificate of Elimination to remove the designation of Series B Preferred Stock, as no shares were outstanding[147] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including the Certificate of Elimination of Series B Preferred Stock and CEO/CFO certifications - Key exhibits filed include the Certificate of Elimination of Series B Preferred Stock, the Loan Agreement with The Patel Family, LLP, and Sarbanes-Oxley Act certifications by the CEO and CFO[150] Signatures This section contains the required signatures for the report