Financial Performance - The company reported a net loss of $6.6 million for the three months ended September 30, 2024, compared to a loss of $33.2 million for the same period in 2023, with an accumulated deficit of $177.0 million as of September 30, 2024[240]. - Total net income (loss) for the nine months ended September 30, 2024 was a loss of $14,872,000, an improvement of $34,476,000 compared to a loss of $49,348,000 in the same period of 2023[268]. - The company experienced a $34.5 million increase in net loss during the nine months ended September 30, 2024, compared to the previous year[327]. Revenue and Product Development - No revenue was recognized during the three and nine months ended September 30, 2024 and 2023, as the company does not currently have any products approved for sale[244]. - The company received IND clearance from the FDA for SNK01 in Alzheimer's disease on October 20, 2023, and began dosing participants in the clinical trial on December 28, 2023[236]. - In a Phase I clinical trial for SNK01, 30% of patients showed clinical improvement on the ADCOMS score compared to baseline, and 60% showed stable scores one week after the last dose[237]. - The Phase 2 trial for SNK01 in moderate Alzheimer's disease will involve 30 patients, with 20 receiving SNK01 and 10 receiving a placebo[238]. - The company presented Phase I clinical interim trial data for SNK02, showing 100% of patients demonstrated stable disease after eight cycles of treatment[239]. Expenses - Research and development expenses are expected to increase as the company continues to develop its platform and product candidates[246]. - General and administrative expenses are anticipated to rise due to ongoing costs of operating as a public company and establishing sales and marketing functions[253]. - Research and development expenses for Q3 2024 were $2,778,000, a decrease of $1,151,000 or 29% compared to Q3 2023[267]. - General and administrative expenses increased by $1,036,000 or 35% to $4,010,000 in Q3 2024 compared to Q3 2023[267]. - Total expenses for Q3 2024 were $6,788,000, a slight decrease of $115,000 or 2% from $6,903,000 in Q3 2023[267]. - General and administrative expenses increased by $4.0 million, or 46%, for the nine months ended September 30, 2024, mainly due to a $3.8 million increase in professional fees[281]. Cash Flow and Financing - As of September 30, 2024, the company had cash and cash equivalents of $8 thousand and a working capital deficit of approximately $36.2 million[295]. - The company raised total proceeds of $2.6 million from Private Placement Agreements during the nine months ended September 30, 2024[313]. - The company drew down $4.9 million from a $5.0 million revolving line of credit agreement, which is secured by all of its assets[307]. - For the nine months ended September 30, 2024, net cash used in operating activities was $13.9 million, a decrease of $1.1 million compared to $15.0 million for the same period in 2023[326][328][329]. - Net cash provided by financing activities for the nine months ended September 30, 2024, was $13.9 million, a decrease of $10.1 million from $24.0 million in the same period in 2023[333][334][335]. Debt and Liabilities - The company incurred significant transaction costs related to the Business Combination and issued various financial instruments, including Senior Convertible Notes and warrants[235]. - The company had outstanding debts of $19.9 million as of September 30, 2024, which included a revolving line of credit with East West Bank[296]. - Interest expense for the nine months ended September 30, 2024 was $2,188,000, an increase of $1,881,000 or 613% compared to $307,000 in the same period of 2023[268]. - Loss on issuance of financial instruments totaled $17.9 million for the nine months ended September 30, 2024, primarily due to additional issuances made during 2024[287]. Going Concern and Future Outlook - The company expressed substantial doubt about its ability to continue as a going concern without securing additional funding[242]. - The company has expressed substantial doubt regarding its ability to continue as a going concern due to ongoing net losses and the need for potential debt or equity financing[302]. - The company prioritized AD trials in 2024, leading to a significant reduction in overall research and development costs[269]. Fair Value and Financial Instruments - The fair value of the company's common shares was based on publicly listed share prices beginning October 2, 2023[349]. - The Public Warrants, SPA Warrants, and Deferred Founder Shares were classified as equity instruments, while the Senior Convertible Notes and various warrants were classified as liabilities[356]. - The fair value of liability-classified instruments includes Private Warrants, Working Capital Warrants, and 2024 Convertible Notes, which are measured at fair value on a recurring basis[362]. - The estimated fair value of liability-classified warrants was determined using a Black-Scholes model, incorporating assumptions related to stock-price volatility and risk-free interest rates[364]. - The fair value of the 2024 Convertible Notes will be measured using a probability weighted scenario model starting April 1, 2024, reflecting changes in entity-specific assumptions[367]. Company Classification - The company qualifies as an emerging growth company and may rely on certain exemptions from public company reporting requirements for up to five years following its IPO[374]. - The company is classified as an emerging growth company until certain conditions are met, including achieving total annual gross revenue of at least $1.235 billion[375]. - The company qualifies as a "smaller reporting company" with a market value of common stock held by non-affiliates plus gross proceeds from the Business Combination being less than $700 million[376]. - Annual revenue for the most recently completed fiscal year is less than $100 million, allowing the company to maintain its smaller reporting company status[376].
NKGen Biotech(NKGN) - 2024 Q3 - Quarterly Report