Rani Therapeutics (RANI) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The company reported its first revenue and a reduced net loss in Q1 2025 but faces a stockholders' deficit and a going concern qualification Condensed Consolidated Balance Sheets Total assets decreased while liabilities remained stable, shifting the company from stockholders' equity to a deficit position by March 31, 2025 Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $10,111 | $3,762 | | Marketable securities | $5,742 | $23,877 | | Total Assets | $24,125 | $36,634 | | Total current liabilities | $20,130 | $19,891 | | Total Liabilities | $29,474 | $33,141 | | Total stockholders' (deficit)/equity | ($5,349) | $3,493 | Condensed Consolidated Statements of Operations The company generated its first contract revenue in Q1 2025, and reduced operating expenses led to a smaller net loss compared to the prior year Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share amounts) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Contract revenue | $172 | $0 | | Research and development | $6,570 | $7,586 | | General and administrative | $5,615 | $6,448 | | Total operating expenses | $12,185 | $14,034 | | Loss from operations | ($12,013) | ($14,034) | | Net loss | ($12,738) | ($14,779) | | Net loss per Class A share | ($0.22) | ($0.29) | Condensed Consolidated Statements of Comprehensive Loss The comprehensive loss for Q1 2025 decreased year-over-year, primarily reflecting the lower net loss for the period Comprehensive Loss Summary (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net loss | $(12,738) | $(14,779) | | Comprehensive loss | $(12,744) | $(14,778) | Condensed Consolidated Statements of Changes in Stockholders' (Deficit)/Equity Stockholders' equity turned into a deficit during Q1 2025, driven primarily by the quarterly net loss - The company's equity position shifted from a positive $3.5 million at the end of 2024 to a deficit of $5.3 million by the end of Q1 2025, mainly due to the quarterly net loss[20] Condensed Consolidated Statements of Cash Flows The company saw improved operating cash flow and a net cash increase in Q1 2025, largely due to proceeds from maturing marketable securities Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,149) | $(9,402) | | Net cash provided by investing activities | $18,229 | $10,294 | | Net cash (used in)/provided by financing activities | $(3,731) | $121 | | Net increase in cash | $6,349 | $1,013 | Notes to Unaudited Condensed Consolidated Financial Statements Key notes disclose a going concern doubt, the company's first revenue contract, a new collaboration, and total long-term debt - The company has incurred recurring losses, with a net loss of $12.7 million for Q1 2025 and an accumulated deficit of $110.2 million, leading management to conclude there is substantial doubt about the company's ability to continue as a going concern for the next year[27] - In August 2024, the company entered into an evaluation services contract with a customer for a total of $1.2 million, recognizing $0.2 million in revenue for the period ended March 31, 2025[44] - In June 2024, the company entered into a collaboration agreement with ProGen Co, Ltd to develop and commercialize a product combining ProGen's PG-102 with the RaniPill HC, with development costs and operating profits/losses to be shared equally[45][46] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses positive preclinical data, reiterates substantial going concern doubt, and attributes the lower net loss to reduced compensation costs Overview The company is a clinical-stage biotherapeutics firm developing its RaniPill oral delivery platform, with recent positive preclinical data for two candidates - The company is developing two versions of its oral delivery platform: the RaniPill GO for microtablets and the high-capacity RaniPill HC for liquid payloads, with clinical testing for the HC version planned for mid-2025[82] - Preclinical data for RT-114 (oral PG-102) demonstrated 111% relative bioavailability compared to subcutaneous injection, with comparable pharmacokinetics and weight loss[89] - Preclinical data for RT-116 (oral semaglutide) showed comparable bioavailability, pharmacokinetics, and weight loss to subcutaneous administration[90] Results of Operations The company recognized its first revenue in Q1 2025, while both R&D and G&A expenses decreased due to lower compensation costs Comparison of Operating Results (in thousands) | | Three Months Ended March 31, | | | |---|---|---|---| | | 2025 | 2024 | Change | | Contract revenue | $172 | $— | * % | | Research and development | $6,570 | $7,586 | (13.4)% | | General and administrative | $5,615 | $6,448 | (12.9)% | | Total operating expenses | $12,185 | $14,034 | (13.2)% | - The $1.0 million decrease in R&D expenses was primarily attributed to lower compensation costs[95] - The $0.8 million decrease in G&A expenses was mainly due to lower compensation costs ($0.4 million) and a reduction in third-party services ($0.5 million)[96] Liquidity and Capital Resources The company faces a critical liquidity shortage with substantial going concern doubt, as current cash is insufficient to fund operations beyond early August 2025 - There is substantial doubt about the company's ability to continue as a going concern, as existing capital resources of $15.9 million are not sufficient to fund operations for one year[98] - The company raised aggregate net proceeds of $9.4 million in October 2024 and $8.9 million in July 2024 through securities purchase agreements[99][100] - The company will need to raise substantial additional funds to complete development of the RaniPill platform, advance product candidates, and expand manufacturing[105] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Rani Therapeutics is not required to provide the information for this item - The company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information under this item[123] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of the quarter's end, with no material changes to internal controls - Based on their evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2025[124] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[125] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any legal proceedings that are expected to have a material adverse effect on its business - The company is not currently involved in any litigation or legal proceedings that management believes are likely to have a material adverse effect on the business[128] Risk Factors Key risks include substantial going concern doubt, a Nasdaq delisting notice, and reliance on international suppliers - There is substantial doubt about the company's ability to continue as a going concern, as existing cash of $15.9 million is not sufficient to meet operating needs beyond early August 2025[132][133] - On May 1, 2025, the company received a notice from Nasdaq for non-compliance with the minimum market value of listed securities ($50 million) requirement, with a deadline of October 28, 2025, to regain compliance[142] - The company faces risks from international trade policies, tariffs, and sanctions, as it sources drug substances and raw materials from suppliers in Korea and China[144][146] Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None[150] Defaults Upon Senior Securities There were no defaults upon senior securities during the period - None[151] Mine Safety Disclosures This item is not applicable to the company - Not applicable[152] Other Information There was no other information to report for the period - None[153] Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications