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TransCode Therapeutics(RNAZ) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents the unaudited consolidated financial statements for TransCode Therapeutics, Inc. for the quarter ended March 31, 2025, reflecting a significant net loss and reliance on equity financing Balance Sheets As of March 31, 2025, the company's total assets increased to approximately $13.2 million from $7.3 million at year-end 2024, primarily due to a rise in cash from financing activities, leading to a positive stockholders' equity of $10.3 million from a $2.0 million deficit Balance Sheet Summary (Unaudited) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash | $11,569,154 | $5,811,064 | | Total current assets | $13,044,388 | $7,093,338 | | Total assets | $13,194,375 | $7,294,499 | | Liabilities & Equity | | | | Total current liabilities | $2,509,677 | $2,771,836 | | Total liabilities | $2,901,677 | $9,313,233 | | Total stockholders' equity (deficit) | $10,292,698 | $(2,018,734) | | Total liabilities and stockholders' equity (deficit) | $13,194,375 | $7,294,499 | Statements of Operations For the three months ended March 31, 2025, the company reported a net loss of $12.1 million, a significant increase from the $3.3 million net loss in the same period of 2024, primarily driven by a $9.2 million non-cash charge related to the change in fair value of warrant liability Statement of Operations Summary (Unaudited, in thousands) | Line Item | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Research and development | $2,219.5 | $1,759.0 | | General and administrative | $951.7 | $1,530.0 | | Total operating expenses | $3,171.2 | $3,289.0 | | Operating loss | $(3,171.2) | $(3,289.0) | | Change in fair value of warrant liability | $(9,234.9) | $0 | | Grant income | $347.8 | $27.1 | | Net loss | $(12,085.4) | $(3,326.8) | | Net loss per share | $(2.51) | $(21.35) | Statements of Stockholders' Equity (Deficit) During the first quarter of 2025, stockholders' equity increased from a deficit of $2.0 million to a positive $10.3 million, primarily due to $8.9 million in net proceeds from common stock issuance and a $15.4 million non-cash contribution from warrant exercises, offsetting the $12.1 million net loss - The company transitioned from a stockholders' deficit of ($2,018,734) at the end of 2024 to a positive equity of $10,292,698 by March 31, 202522 - Key activities impacting equity in Q1 2025 included a net loss of ($12,085,413), offset by $8,854,797 from common stock issuances and a $15,384,319 non-cash impact from the exercise of Series D warrants22 Statements of Cash Flows For the first quarter of 2025, net cash used in operating activities was $3.1 million, with $8.9 million generated from financing activities, resulting in a net increase in cash of $5.8 million and a period-end balance of $11.6 million Cash Flow Summary (Unaudited, in thousands) | Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,097) | $(3,937) | | Net cash used in investing activities | $0 | $(4) | | Net cash provided by financing activities | $8,855 | $6,087 | | Net change in cash | $5,758 | $2,146 | | Cash, end of period | $11,569 | $4,914 | Notes to Financial Statements The notes provide critical context to the financial statements, detailing the company's business, liquidity challenges, significant accounting policies, recent equity financings, and subsequent events including a planned reverse stock split and Nasdaq delisting notice - The company has concluded there is substantial doubt about its ability to continue as a going concern, as existing cash is not sufficient to fund operations for a full 12 months from the financial statement issuance date33 - In March 2025, the company raised approximately $8.9 million in net proceeds through a best efforts public offering of common stock and warrants116 - Subsequent to the quarter end, the company received a delisting notice from Nasdaq for failing to meet the minimum bid price requirement and approved a 1-for-28 reverse stock split expected to be effective May 15, 2025156157 - During Q1 2025, all Series D warrants were exercised, resulting in the issuance of 11,925,041 shares after reset adjustments and a non-cash charge of $9.2 million to the change in fair value of warrant liability80134212 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's business strategy, focusing on its RNA therapeutic delivery platform and lead candidate TTX-MC138, detailing recent developments, financial results, and liquidity challenges, concluding there is substantial doubt about its ability to continue as a going concern Company and Technology Overview TransCode is a biopharmaceutical company focused on defeating cancer through RNA therapeutics, with its proprietary TTX delivery platform and lead candidate TTX-MC138, currently in a Phase I/II clinical trial - The company's lead therapeutic candidate, TTX-MC138, targets miRNA-10b, a key regulator of metastasis in various cancers159 - The proprietary TTX delivery platform is designed to improve stability, efficiency, and tumor targeting of RNA therapeutics compared to existing lipid-based systems164 - A Phase I/II clinical trial for TTX-MC138 commenced in the third quarter of 2024 after receiving an IND 'Study May Proceed' notification from the FDA159 Recent Developments and Financial Overview Key recent events include advancing the Phase I/II clinical trial for TTX-MC138, securing approximately $10 million in equity financing, and receiving a Nasdaq delisting notice, with the company facing an accumulated deficit of $75.3 million - The Phase 1a clinical trial is progressing, with the Safety Review Committee (SRC) approving dose escalation up to the fourth cohort and noting no drug-related serious adverse effects or dose-limiting toxicities in the first three cohorts179 - In March 2025, the company closed a registered direct offering, raising gross proceeds of approximately $10 million180 - On May 7, 2025, the company received a delisting notice from Nasdaq for not meeting the $1.00 minimum bid price requirement and intends to appeal the determination182 Results of Operations Comparing Q1 2025 to 2024, R&D expenses increased by $0.5 million due to clinical trial costs, G&A expenses decreased by $0.6 million, and the net loss surged to $12.1 million from $3.3 million, primarily due to a $9.2 million non-cash loss from warrant liability Comparison of Results of Operations (in thousands) | | Three Months Ended March 31, | Change | | :--- | :--- | :--- | :--- | | | 2025 | 2024 | ($) | | Research and development | $2,220 | $1,759 | $461 | | General and administrative | $952 | $1,530 | $(578) | | Operating loss | $(3,172) | $(3,289) | $117 | | Change in fair value of warrant liability | $(9,235) | $— | $(9,235) | | Net loss | $(12,085) | $(3,327) | $(8,759) | - The increase in R&D expenses was primarily due to start-up costs for the clinical trial210 - The significant increase in net loss was mainly due to a $9.2 million non-cash loss on the change in fair value of warrant liability, resulting from the exercise of Series D warrants212 Liquidity and Capital Resources The company, historically funded by equity and grants, held $11.6 million in cash as of March 31, 2025, but estimates this is sufficient only into Q4 2025, raising substantial doubt about its going concern ability and necessitating additional capital - As of March 31, 2025, the company had approximately $11.6 million in cash189224 - Existing cash is projected to fund operating expenses and capital requirements only into the fourth quarter of 2025189226 - These conditions raise substantial doubt about the company's ability to continue as a going concern, and failure to raise additional capital may force it to delay, reduce, or terminate programs and potentially seek restructuring226231 Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure is limited, with minimal interest rate risk due to cash holdings in non-interest-bearing accounts and foreign currency exchange risk from Euro-denominated vendor payments, without hedging instruments - The company's primary market risk exposure is foreign exchange rate sensitivity to the Euro for certain vendor purchases, which resulted in a loss of $27,188 in Q1 2025263 - Interest rate risk is considered minimal as cash is held in short-term bank deposits and the company has no significant debt261262 Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2025, due to identified material weaknesses in internal control over financial reporting, with ongoing remediation efforts - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were not effective due to existing material weaknesses267 - The company is continuing remediation efforts, which include implementing robust accounting policies, engaging additional finance personnel and consultants, implementing new software, and formally documenting and assessing procedures268269 PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings, with the exception of a disputed claim from an investment bank asserting entitlement to fees, which the company rigorously disputes - The company is not involved in any material legal proceedings, with the exception of a disputed claim for fees by an investment bank275 Risk Factors This section highlights critical risks facing the company, including potential Nasdaq delisting due to minimum bid price non-compliance and substantial doubt about its ability to continue as a going concern, which could lead to restructuring and total loss for security holders - The company is at risk of being delisted from the Nasdaq Capital Market for failing to meet the minimum $1.00 bid price requirement. A delisting would severely impact stock liquidity and the ability to raise capital277279280 - There is substantial doubt about the company's ability to continue as a going concern. Failure to secure additional funding may lead to a restructuring of liabilities, where holders of common stock would likely suffer a total loss of their investment282 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the reporting period - None284 Defaults upon Senior Securities The company reported no defaults upon senior securities - None287 Mine Safety Disclosures This item is not applicable to the company's business - Not applicable288 Other Information The company did not report any other information for the period - None289 Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, financing agreements, and officer certifications - The report includes exhibits such as corporate governance documents, financing agreements, and officer certifications required by the SEC290291