Rallybio(RLYB) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Rallybio Corporation's unaudited condensed consolidated financial statements for the period ended March 31, 2025 Unaudited Condensed Consolidated Balance Sheets Total assets decreased to $58.0 million from $68.1 million by March 31, 2025, mainly due to reduced marketable securities Condensed Consolidated Balance Sheet Data (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $14,779 | $13,903 | | Marketable securities | $39,716 | $51,608 | | Total current assets | $57,381 | $67,841 | | Total assets | $57,983 | $68,108 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $3,910 | $6,242 | | Total liabilities | $3,910 | $6,454 | | Total stockholders' equity | $54,073 | $61,654 | - The company's cash, cash equivalents, and marketable securities totaled $54.5 million as of March 31, 2025[28] Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss improved to $9.4 million in Q1 2025 from $19.0 million in Q1 2024, reflecting lower operating expenses and new collaboration revenue Statement of Operations Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Collaboration and license revenue | $212 | $0 | | Research and development expense | $5,725 | $12,936 | | General and administrative expense | $4,157 | $6,851 | | Loss from operations | $(9,670) | $(19,787) | | Net loss | $(9,439) | $(19,029) | | Net loss per common share, basic and diluted | $(0.21) | $(0.47) | Unaudited Condensed Consolidated Statements of Cash Flows Net cash used in operating activities decreased to $10.2 million in Q1 2025, while investing activities provided $11.1 million, resulting in an ending cash balance of $14.8 million Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(10,205) | $(15,457) | | Net cash provided by investing activities | $11,081 | $10,264 | | Net cash provided by financing activities | $0 | $0 | | Net increase (decrease) in cash | $876 | $(5,193) | | Cash and cash equivalents - end of period | $14,779 | $19,301 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail business operations, liquidity, and accounting policies, including the RLYB212 program discontinuation, Johnson & Johnson collaboration, and workforce reductions - In April 2025, the company announced the discontinuation of its RLYB212 program for the prevention of fetal and neonatal alloimmune thrombocytopenia (FNAIT)[27] - The company expects its cash, cash equivalents, and marketable securities of $54.5 million (as of March 31, 2025) to be sufficient to fund operations for more than 12 months from the report's issuance date[28] - In February 2024, the company initiated a workforce reduction of approximately 45%, incurring charges of about $3.3 million, which were recognized in Q1 2024[59][60] - In April 2024, the company entered into a two-year collaboration with Johnson & Johnson for FNAIT research, receiving a $0.5 million upfront payment, and also sold $6.6 million of common stock to JJDC, a J&J affiliate[39][62] - A subsequent workforce reduction of approximately 40% was approved on May 2, 2025, with expected charges of $1.7 million to be recognized in Q2 2025[72][73] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses business strategy, financial results, and liquidity, highlighting the shift to lead program RLYB116, reduced Q1 2025 net loss, and the need for substantial additional capital Business Overview Rallybio, a clinical-stage biotech, focuses on rare diseases with lead program RLYB116, following the discontinuation of RLYB212, and advancing preclinical programs REV102 and RLYB332 - The company's lead program, RLYB116, is a C5 inhibitor, with a confirmatory PK/PD study in healthy volunteers planned for Q2 2025, expecting data in Q3 and Q4 2025[75] - The RLYB212 program for FNAIT was discontinued in April 2025 after Phase 2 PK data indicated the dose regimen could not achieve the minimum target concentration for efficacy[75][84] - Preclinical programs include REV102, an ENPP1 inhibitor for hypophosphatasia, and RLYB332, a long-acting MTP-2 antibody for iron overload diseases[75][81][82] Results of Operations Total operating expenses decreased by $9.9 million in Q1 2025, driven by reduced R&D and G&A costs, while collaboration revenue of $0.2 million was recognized Comparison of Operating Results (in thousands) | Item | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $212 | $0 | $212 | | Research and development | $5,725 | $12,936 | $(7,211) | | General and administrative | $4,157 | $6,851 | $(2,694) | | Loss from operations | $(9,670) | $(19,787) | $10,117 | - R&D expenses decreased by $7.2 million, primarily due to a $3.2 million reduction in RLYB212 development costs and a $2.6 million decrease in personnel-related expenses following the March 2024 workforce reduction[111] - G&A expenses decreased by $2.7 million, mainly due to a $2.3 million reduction in payroll and personnel-related costs from the workforce reduction[112] Liquidity and Capital Resources As of March 31, 2025, the company held $54.5 million in cash and equivalents, projected to fund operations into H1 2027, but substantial additional capital is required for product development - The company believes its existing cash, cash equivalents, and marketable securities of $54.5 million will fund operating expenses and capital requirements into the first half of 2027[90][121] - The company will need to raise substantial additional capital to complete the development and commercialization of its product candidates[90][91] - The company has an effective Shelf Registration Statement on Form S-3 for up to $300.0 million, subject to limitations restricting fundraising capacity to one-third of its public float in a 12-month period[115] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Rallybio is exempt from providing quantitative and qualitative disclosures about market risk - The company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide information under this item[140] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective at the reasonable assurance level[143] - There were no changes in internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[144] PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business - Rallybio is not currently a party to any litigation or legal proceedings that, in management's opinion, are probable to have a material adverse effect on the business[146] Risk Factors This section outlines key risks including historical losses, capital requirements, dependence on RLYB116, clinical development uncertainties, competition, reliance on third parties, and potential stock price volatility and delisting - The company has a history of significant losses ($9.4 million in Q1 2025) and an accumulated deficit of $302.5 million as of March 31, 2025, expecting continued losses and potential unprofitability[148] - The company is heavily dependent on the success of RLYB116, an early-stage clinical candidate, with the recent RLYB212 program failure highlighting high clinical development risks[12][166][167] - Significant additional capital is required to fund operations and complete development, as existing cash, expected to last into H1 2027, is insufficient to bring any product to market[151][152] - The company faces Nasdaq delisting risk due to its stock price falling below the $1.00 minimum bid requirement, with a compliance deadline of August 25, 2025[353][354] - Rallybio relies on third-party contract manufacturing organizations (CMOs) for manufacturing, increasing risks related to supply, quality control (cGMP compliance), and regulatory approval of manufacturing sites[255][256] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered equity sales during Q1 2025 and confirmed full utilization of its 2021 Initial Public Offering proceeds as of March 31, 2025 - The company has not issued any unregistered equity securities during the quarter ended March 31, 2025[387] - As of March 31, 2025, the proceeds from the company's IPO have been fully utilized[390] Other Information No directors or officers entered into, modified, or terminated Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers entered into, modified, or terminated a Rule 10b5-1 trading plan or non-Rule 10b5-1 trading arrangement during the first quarter of 2025[391] Exhibits This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and an amendment to the Sales Agreement with TD Securities - Exhibits filed include CEO and CFO certifications under Sarbanes-Oxley Act Sections 302 and 906[392] - An amendment to the Sales Agreement with TD Securities (USA) LLC, dated March 13, 2025, was filed as an exhibit[392]