Estrella Immunopharma(US:ESLA)2024-09-26 23:50Financial Performance - The company reported a net loss of approximately $7.3 million for the year ended June 30, 2024, compared to a net loss of $11.1 million for the same period in 2023, indicating a reduction in losses by approximately 34%[618]. - As of June 30, 2024, the company had an accumulated deficit of approximately $19.5 million and cash reserves of approximately $4.2 million[608][619]. - The company has not generated any revenue to date and does not expect to do so for at least the next few years until product candidates receive regulatory approval[620]. - Net cash used in operating activities was approximately $16.1 million for the year ended June 30, 2024, primarily due to a net loss of approximately $7.3 million and a $9.3 million decrease in accounts payable[631]. - Net cash provided by financing activities was approximately $12.8 million for the year ended June 30, 2024, primarily from $20 million net proceeds received from the Business Combination[633]. Research and Development - Research and development expenses decreased to approximately $4.1 million for the year ended June 30, 2024, from $10.5 million in 2023, primarily due to lower service fees with Eureka[615]. - The company anticipates significant increases in expenses as it continues research and development and seeks marketing approval for its product candidates[621]. - The company has entered into a Statement of Work with Eureka for clinical trial services, with total fees of $33 million for achieving specified milestones[605]. - As of June 30, 2024, the company had expensed $3.5 million to Eureka for milestone achievements related to the Phase I/II clinical trial of EB103, with total fees of $33 million for all milestones[624]. Capital and Financing - The company raised net proceeds of approximately $20.1 million from the Business Combination on September 29, 2023, after deducting transaction-related expenses[622]. - The company has funded its operations primarily through the issuance of Series A Preferred Stock and proceeds from the Business Combination, with a focus on advancing clinical development[606]. - The company plans to raise additional capital in the future to continue research and development programs, but there is no assurance that financing will be available on acceptable terms[630]. - The common stock purchase agreement with White Lion allows the company to direct purchases of up to $50 million in common stock, subject to stockholder approval for issuances equaling 20% or more of outstanding shares[628]. Operating Expenses - The company incurred general and administrative expenses of approximately $3.2 million for the year ended June 30, 2024, up from $0.7 million in 2023, largely due to increased professional fees and stock-based compensation[618]. - The company expects to incur additional costs associated with operating as a public company following the Business Combination, including increased audit and legal fees[612]. - The company remitted approximately $9.3 million to Eureka upon the consummation of the Business Combination, with expectations to use remaining net proceeds for preclinical and clinical development and compliance costs[623]. - The company incurred approximately $5.1 million in cash released from the trust account due to the Business Combination, offset by a $0.1 million loan to UPTD[633]. Stock-Based Compensation - Stock-based compensation costs are recognized as an expense over the requisite service period based on fair value measurements using the Black-Scholes-Merton option-pricing model[135]. - The fair value of stock options is estimated at the grant date, considering factors such as expected life, volatility, and risk-free interest rate[135]. - Compensation expense for awards with graded vesting is recognized using the straight-line method over the vesting term[643]. - Forfeitures of stock-based awards are recognized when realized, impacting future compensation expense calculations[643]. - The company accounts for equity instruments issued to non-employees based on the more reliable fair value of services received or the equity instrument itself[643]. - Different assumptions in future grants could materially affect stock-based compensation expense in future periods[643]. Market Risks - The company is subject to various risks and uncertainties that could impact its ability to raise capital and the success of its research and development programs[626]. - The company does not provide quantitative and qualitative disclosures about market risk as it is not required for smaller reporting companies[645]. Stock Performance - The closing price of the company's common stock was $1.05 per share as of June 30, 2024, significantly lower than the warrant exercise price of $11.50 per share, making warrant exercise unlikely[627].