Actuate Therapeutics,Inc(ACTU) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The company reported a net loss of $6.3 million for the quarter ended March 31, 2025, a decrease from the $8.3 million loss in the prior year period, with cash and cash equivalents significantly decreasing to $3.9 million from $8.6 million at the end of 2024, leading to a working capital deficit of $4.9 million Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $3,889,405 | $8,641,622 | | Total current assets | $4,248,564 | $9,207,900 | | Total assets | $4,483,039 | $9,318,448 | | Total current liabilities | $9,153,954 | $8,802,503 | | Total liabilities | $9,570,776 | $9,214,262 | | Total stockholders' equity (deficit) | $(5,087,737) | $104,186 | Condensed Consolidated Statements of Operations (Unaudited) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Research and development | $3,220,319 | $6,860,430 | | General and administrative | $3,145,265 | $912,824 | | Total operating expenses | $6,365,584 | $7,773,254 | | Loss from operations | $(6,365,584) | $(7,773,254) | | Net loss | $(6,317,024) | $(8,296,059) | | Net loss per share, basic and diluted | $(0.32) | $(5.40) | Condensed Consolidated Statements of Cash Flows (Unaudited) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,618,740) | $(5,247,582) | | Net cash provided by (used in) financing activities | $(133,477) | $4,357,230 | | Net change in cash and cash equivalents | $(4,752,217) | $(890,352) | | Cash and cash equivalents, end of period | $3,889,405 | $2,068,307 | Notes to Financial Statements The notes detail the company's critical financial situation, emphasizing the 'going concern' issue due to recurring losses and insufficient cash reserves - The company is a clinical-stage biopharmaceutical firm focused on developing elraglusib, a GSK-3 inhibitor for cancer treatment[33] - There is substantial doubt about the Company's ability to continue as a going concern, with cash and cash equivalents of $3.9 million as of March 31, 2025, not expected to satisfy operational requirements beyond the second quarter of fiscal year 2025[37][38] - On March 27, 2025, the Company entered into a Committed Equity Facility with B. Riley, allowing it to sell up to $50 million of its common stock over 36 months, subject to conditions[39][63] - Subsequent to March 31, 2025, the company issued 72,082 shares to B. Riley under the Committed Equity Facility for net proceeds of approximately $597,000[89] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on developing its sole product candidate, elraglusib, for cancer treatment, highlighting a significant decrease in R&D expenses and a sharp increase in G&A expenses, while addressing critical liquidity issues and the $50 million Committed Equity Facility as a primary means to address near-term capital requirements Business Overview Actuate is a clinical-stage biopharmaceutical company developing elraglusib, a GSK-3β inhibitor, for difficult-to-treat cancers, with its lead program, Actuate-1801, in a Phase 2 trial for metastatic pancreatic cancer (mPDAC) - The company's lead investigational product is elraglusib, a small molecule GSK-3β inhibitor for cancer treatment[92] - The most advanced clinical program is a Phase 2 trial (Actuate-1801) evaluating elraglusib for metastatic pancreatic ductal adenocarcinoma (mPDAC)[93][95] - The company has incurred significant operating losses since inception, with a net loss of $6.3 million for Q1 2025 and an accumulated deficit of $138.7 million as of March 31, 2025[98] Results of Operations For Q1 2025, total operating expenses decreased to $6.4 million from $7.8 million in Q1 2024, driven by a $3.6 million reduction in R&D expenses, offset by a $2.2 million rise in G&A expenses Comparison of Results of Operations (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $3,220 | $6,860 | $(3,640) | | General and administrative | $3,145 | $913 | $2,232 | | Total operating expenses | $6,366 | $7,773 | $(1,407) | | Net loss | $(6,317) | $(8,296) | $1,979 | - R&D expenses decreased by $3.6 million, mainly due to a $3.3 million reduction in external clinical trial expenses related to fewer patients on study in the randomized Phase 2 mPDAC trial (Actuate-1801 Part 3B)[116] - G&A expenses increased by $2.2 million, primarily due to a $1.2 million increase in personnel-related expenses (including $920,917 in non-cash stock-based compensation) and higher costs for D&O insurance, board fees, and legal fees from operating as a public company[117] Liquidity and Capital Resources The company's financial position is critical, with only $3.9 million in cash and cash equivalents as of March 31, 2025, insufficient to support operations beyond the second quarter of 2025, necessitating substantial additional capital - As of March 31, 2025, the company had cash and cash equivalents of $3,889,405[119] - Existing cash and cash equivalents are not sufficient to fund operations beyond the second quarter of fiscal year 2025[121][100] - The company entered into a Committed Equity Facility with B. Riley, providing the right to sell up to $50 million in common stock over 36 months to raise capital[124] - Failure to raise additional funds may require the company to delay, limit, reduce, or terminate its product development programs or even cease operations[123] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company," Actuate Therapeutics, Inc. is not required to provide the information for this item - The company is not required to provide quantitative and qualitative disclosures about market risk because it qualifies as a "smaller reporting company" under SEC rules[144] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of March 31, 2025, concluding they were effective at a reasonable assurance level - Based on an evaluation as of March 31, 2025, the company's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective at a reasonable assurance level[146] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently subject to any pending legal proceedings that are considered significant - To the company's knowledge, it is not subject to any pending legal proceedings[57][148] Item 1A. Risk Factors This section reiterates and expands upon the significant risks facing the company, including its critical financial condition, reliance on a single drug substance manufacturer in China, and uncertainties associated with the Committed Equity Facility Risks Related to Our Financial Condition and Capital Requirements The company's financial condition raises substantial doubt about its ability to continue as a going concern, requiring immediate and substantial additional capital to finance operations beyond Q2 2025 - The company's financial condition raises substantial doubt about its ability to continue as a going concern, a conclusion also noted by its independent registered public accounting firm[152][154] - Existing cash and cash equivalents are not sufficient to fund operations beyond the second quarter of fiscal year 2025[157] - The company requires substantial additional capital in the near term to finance operations, and failure to obtain it could force a delay, reduction, or termination of development programs or a cessation of operations[156][162] Risks Related to Our Reliance on Third Parties The company faces risks due to its reliance on a single manufacturer located in China for the drug substance (DS) of its sole product candidate, elraglusib, exposing it to geopolitical and trade policy vulnerabilities - The company relies on a single manufacturer in China for the drug substance (DS) of elraglusib, making it vulnerable to geopolitical and trade policy changes[163] - Unfavorable tariffs or other trade actions could increase the cost of the drug substance, adversely affecting the company's financial condition and results of operations[163][165] Risks Related to the Committed Equity Facility The company cannot predict the actual number of shares it will sell or the proceeds it will receive from the Committed Equity Facility, and sales under this facility could cause substantial dilution to existing stockholders and depress the market price of the common stock - It is not possible to predict the actual number of shares that will be sold or the gross proceeds that will be received under the $50 million Committed Equity Facility with B. Riley[166][168] - Sales of a substantial number of shares to B. Riley could depress the market price of the company's common stock and cause significant dilution to other stockholders[172] - Management will have broad discretion over the use of any net proceeds from the facility, and investors will be relying on their judgment[171] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company completed its Initial Public Offering (IPO) on August 14, 2024, raising net proceeds of approximately $22 million, with no material change in the planned use of these proceeds - On August 14, 2024, the company completed its IPO, receiving net proceeds of approximately $22 million after expenses[173] - There has been no material change in the planned use of proceeds from the IPO[173] Item 5. Other Information During the quarter ended March 31, 2025, no director or officer of the company adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the first quarter of 2025[176] Item 6. Exhibits This section lists the exhibits filed with the quarterly report, including the Securities Purchase Agreement and Registration Rights Agreement with B. Riley, amendments to employment agreements, and standard SEC certification filings - Exhibits filed include agreements related to the B. Riley Committed Equity Facility, amendments to executive employment agreements, and CEO/CFO certifications[178]