AEON Biopharma(US:AEON)2024-11-13 21:07Financial Performance - As of September 30, 2024, AEON reported an accumulated deficit of $433.7 million and cash and cash equivalents of $0.5 million, raising substantial doubt about its ability to continue as a going concern [165][170]. - Losses from operations for the three months ended September 30, 2024, were $4.0 million, while consolidated net loss for the same period was $(6.2) million [165][166]. - SG&A expenses for the three months ended September 30, 2024, were $3.0 million, a decrease of $3.3 million, or 52%, compared to $5.3 million for the prior period [197]. - R&D expenses for the three months ended September 30, 2024, were $1.0 million, a decrease of $7.0 million, or 88%, compared to $6.4 million for the prior period [199]. - The company recognized a gain of $75.9 million related to the change in the fair value of contingent consideration for the nine months ended September 30, 2024 [201]. - Other loss, net was $2.2 million for the three months ended September 30, 2024, compared to a loss of $25.0 million for the prior period [202]. - Other loss, net for the nine months ended September 30, 2024, was $35.4 million, mainly due to a loss of $19.9 million on forward purchase agreements and derivative liabilities [204]. - SG&A expenses for the nine months ended September 30, 2024, were $11.0 million, a decrease of $4.1 million, or 27%, compared to $15.1 million for the prior period [198]. - R&D expenses for the nine months ended September 30, 2024, were $11.1 million, a decrease of $15.0 million, or 57%, compared to $19.8 million for the prior period [200]. - Net cash used in operating activities for the nine months ended September 30, 2024 was $19.7 million, primarily due to a net income of $39.9 million and non-cash charges of $(57.0) million [221]. - The company incurred net cash used in operating activities of $21.7 million and $15.1 million for the periods from January 1, 2023 to July 21, 2023 and July 22, 2023 to September 30, 2023 respectively [222]. - Net cash provided by financing activities for the nine months ended September 30, 2024 was $15.1 million, primarily from the issuance of convertible notes [225]. Research and Development - R&D expenses are primarily focused on the development of ABP-450 for migraine, cervical dystonia, and gastroparesis, with expected increases as the company advances clinical studies [185]. - The company expects significant R&D expenses over the next several years as it prepares for regulatory approval of ABP-450 [186]. - The Phase 2 clinical trials for episodic and chronic migraine were discontinued in May 2024 due to not meeting primary endpoints, leading to a strategic shift towards a 351(k) biosimilar regulatory pathway [159]. - AEON has completed a Phase 2 study for cervical dystonia, with plans to potentially commence a Phase 3 study pending capital resources and FDA discussions [164]. - The company plans to pursue a 351(k) biosimilar regulatory pathway for ABP-450, using AbbVie Inc.'s product Botox as a proposed reference product [206]. - The company has recorded acquired in-process research and development (IPR&D) costs, which were written off due to the technology not reaching feasibility [187]. Capital and Financing - The company entered into a Subscription Agreement with Daewoong for the sale of Convertible Notes totaling up to $15.0 million, with an annual interest rate of 15.79% and a maturity date three years from the funding date [177]. - The company issued a Convertible Note of $5.0 million on March 24, 2024, and an additional $10.0 million Convertible Note on April 12, 2024, to Daewoong [177]. - The Forward Purchase Agreements with ACM and Polar involved a total cash amount of $66.7 million, which was not accessible post-merger, potentially affecting liquidity [172][175]. - The company may need to raise additional capital through equity or debt financing, which could dilute existing shareholders [216]. - The company expects to have sufficient cash to fund operations into Q4 2024 but is actively seeking additional capital [214]. - Significant operating losses are expected to continue, with cash primarily used for R&D and SG&A expenditures [215]. Company Structure and Regulatory Status - The merger with Priveterra Acquisition Corp. was completed on July 21, 2023, with Old AEON's historical financial statements becoming those of the combined company [157]. - AEON has exclusive development and distribution rights for ABP-450 in the U.S., Canada, EU, UK, and other territories [158]. - The company is classified as an emerging growth company and intends to rely on exemptions from various public company reporting requirements [227]. - The company will remain an emerging growth company until the earliest of December 31, 2026, or achieving total annual gross revenue of at least $1.235 billion [227]. - The market value of the company's common stock held by non-affiliates must exceed $700 million to cease being an emerging growth company [227]. - The company is also a smaller reporting company, with a market value of common stock held by non-affiliates and annual revenue both below specified thresholds [227]. - The company may present only the two most recent fiscal years of audited financial statements in its Annual Report on Form 10-K [227]. - Reduced disclosure obligations regarding executive compensation apply to the company as a smaller reporting company [227]. - If the company remains a smaller reporting company, it may continue to rely on certain disclosure exemptions [227]. - Investors may find the company's common stock less attractive due to reliance on these exemptions, potentially leading to a less active trading market [227]. - The company is not required to provide quantitative and qualitative disclosures about market risk due to its smaller reporting company status [230]. Management and Future Outlook - Management has expressed substantial doubt about the company's ability to continue as a going concern within one year of the financial statements issuance [220]. - The company anticipates increased SG&A expenses to support R&D activities and compliance with public company requirements, with significant costs expected if ABP-450 receives regulatory approval [184]. - A strategic reprioritization to pursue a Section 351(k) biosimilar regulatory pathway for ABP-450 was announced, with comparative studies anticipated to start in Q4 2024 [213].