Ocuphire Pharma(OCUP) - 2025 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION This part details Opus Genetics, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, income, and cash flow statements, with explanatory notes Item 1. Financial Statements This section presents Opus Genetics, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, income, and cash flow statements, with detailed notes Condensed Consolidated Balance Sheets This table presents the Company's financial position, detailing assets, liabilities, and equity as of March 31, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (in thousands) | Metric | March 31, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :-------------------------- | :------------------ | | Assets | | | | Cash and cash equivalents | $41,792 | $30,321 | | Total current assets | $47,928 | $36,610 | | Total assets | $48,167 | $36,862 | | Liabilities and Stockholders' Equity | | | | Warrant liabilities | $12,715 | — | | Total current liabilities | $24,251 | $11,295 | | Total liabilities | $24,251 | $11,295 | | Series A preferred stock | $18,843 | $18,843 | | Total stockholders' equity | $5,073 | $6,724 | | Total liabilities, series A preferred stock, and stockholders' equity | $48,167 | $36,862 | - Cash and cash equivalents increased by $11.5 million from December 31, 2024, to March 31, 2025[11] - Total current liabilities significantly increased from $11.3 million to $24.3 million, primarily due to the introduction of $12.7 million in warrant liabilities[11] Condensed Consolidated Statements of Comprehensive Loss This table details the Company's financial performance, including revenue, expenses, and net loss for the three months ended March 31, 2025, and 2024 Condensed Consolidated Statements of Comprehensive Loss (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | License and collaborations revenue | $4,370 | $1,711 | | General and administrative expenses | $6,346 | $4,670 | | Research and development expenses | $7,953 | $4,749 | | Total operating expenses | $14,299 | $9,419 | | Loss from operations | $(9,929) | $(7,708) | | Financing costs | $(1,372) | — | | Fair value change in warrant liabilities | $2,805 | — | | Other income, net | $302 | $602 | | Net loss | $(8,194) | $(7,106) | | Basic and diluted net loss per share | $(0.24) | $(0.29) | | Number of shares used in per share calculations (Basic and Diluted) | 33,884,920 | 24,520,475 | - License and collaborations revenue increased by $2.7 million (155.4%) from $1.7 million in Q1 2024 to $4.4 million in Q1 2025[13] - Net loss increased by $1.1 million (15.3%) from $(7.1 million) in Q1 2024 to $(8.2 million) in Q1 2025[13] - Basic and diluted net loss per share improved from $(0.29) in Q1 2024 to $(0.24) in Q1 2025, despite a higher net loss, due to an increase in the number of shares outstanding[13] Condensed Consolidated Statements of Changes in Series A Preferred Stock and Stockholders' Equity This table outlines changes in Series A Preferred Stock and stockholders' equity, reflecting issuances, repurchases, stock-based compensation, and net loss Changes in Stockholders' Equity (in thousands) | Metric | Balance at Dec 31, 2024 | Issuance of Common Stock & Warrants | Issuance Costs | Stock-based Compensation | Share Repurchases | Exercise of Stock Options | Net Loss | Balance at Mar 31, 2025 | | :-------------------------- | :---------------------- | :---------------------------------- | :------------- | :----------------------- | :------------------ | :----------------------- | :--------- | :---------------------- | | Series A Preferred Stock Amount | $18,843 | — | — | — | — | — | — | $18,843 | | Common Stock Shares | 31,574,657 | 13,749,160 | — | 186,919 | (31,913) | 5,000 | — | 45,483,823 | | Common Stock Amount | $3 | $2 | — | — | — | — | — | $5 | | Additional Paid-In Capital | $145,719 | $6,387 | $(728) | $913 | $(36) | $5 | — | $152,260 | | Accumulated Deficit | $(138,998) | — | — | — | — | — | $(8,194) | $(147,192) | | Total Stockholders' Equity | $6,724 | $5,980 | $(728) | $913 | $(36) | $5 | $(8,194) | $5,073 | - Total stockholders' equity decreased from $6.7 million at December 31, 2024, to $5.1 million at March 31, 2025, primarily due to the net loss of $8.2 million, partially offset by proceeds from common stock and warrant issuances[16] - Common stock shares outstanding increased significantly from 31,574,657 to 45,483,823, largely due to the issuance of common stock and pre-funded warrants in connection with the March 2025 offering and private placement[16] Condensed Consolidated Statements of Cash Flows This table summarizes the Company's cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2025, and 2024 Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(8,994) | $(5,716) | | Net cash used in investing activities | — | — | | Net cash provided by financing activities | $20,465 | $2,376 | | Net increase (decrease) in cash and cash equivalents | $11,471 | $(3,340) | | Cash and cash equivalents at beginning of period | $30,321 | $50,501 | | Cash and cash equivalents at end of period | $41,792 | $47,161 | - Net cash used in operating activities increased from $(5.7 million) in Q1 2024 to $(9.0 million) in Q1 2025[19] - Net cash provided by financing activities significantly increased from $2.4 million in Q1 2024 to $20.5 million in Q1 2025, primarily due to proceeds from the March 2025 offering and private placement[19] - The company experienced a net increase in cash and cash equivalents of $11.5 million in Q1 2025, a reversal from a net decrease of $(3.3 million) in Q1 2024[19] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of significant accounting policies, mergers, commitments, financings, and other financial details 1. Company Description and Summary of Significant Accounting Policies Opus Genetics, Inc. is a clinical-stage ophthalmic biotechnology company focused on gene therapies for inherited retinal diseases (IRDs) and other ophthalmic disorders. The company completed the Opus Acquisition in October 2024, integrating Private Opus's AAV-based gene therapy portfolio. Key accounting policies include revenue recognition for license and collaboration agreements, fair value measurements for financial instruments, and the treatment of warrant liabilities - Opus Genetics, Inc. is a clinical-stage ophthalmic biotechnology company developing gene therapies for inherited retinal diseases (IRDs) and other ophthalmic disorders[20] - On October 22, 2024, the Company acquired Private Opus, integrating its adeno-associated virus (AAV) based gene therapy portfolio[21][22] - The company's pipeline includes OPGx-LCA5 for LCA5-associated IRD (Phase 1/2 ongoing) and OPGx-BEST1 for BEST1 gene mutations (preclinical)[22] - Phentolamine Ophthalmic Solution 0.75% (RYZUMVI®) was approved by the FDA in September 2023 and commercially launched in April 2024 through a license agreement with Viatris[23] - As of March 31, 2025, the Company had $41.8 million in cash and cash equivalents, believed to be sufficient for at least twelve months[29] Fair Value Measurements (in thousands) | Description | As of March 31, 2025 (Total) | Level 1 | Level 2 | Level 3 | | :------------------------ | :--------------------------- | :------ | :------ | :------ | | Assets: | | | | | | Short-term investments | $1 | $1 | — | — | | Liabilities: | | | | | | Warrant liabilities | $12,715 | — | — | $12,715 | | Other derivative liabilities | $2 | — | — | $2 | | Description | As of December 31, 2024 (Total) | Level 1 | Level 2 | Level 3 | | Assets: | | | | | | Short-term investments | $2 | $2 | — | — | | Liabilities: | | | | | | Other derivative liabilities | $2 | — | — | $2 | 2. Mergers This section details the Opus Acquisition completed on October 22, 2024, where the Company issued common and Series A preferred stock as consideration. It also references the prior Rexahn Merger from November 2020, which included a Contingent Value Rights (CVR) Agreement for former Rexahn stockholders, with no new payments or probable milestones accrued as of March 31, 2025 - On October 22, 2024, the Company completed the Opus Acquisition, issuing 5,237,063 shares of common stock and 14,145.374 shares of Series A Preferred Stock to Private Opus security holders for a total consideration of $25.8 million[61] - The transaction was accounted for as an asset acquisition, with intellectual property associated with IRD therapies comprising over 90% of Private Opus's assets[61] - The Rexahn Merger, completed on November 5, 2020, included a Contingent Value Rights (CVR) Agreement entitling former Rexahn stockholders to future payments based on BioSense, HaiChang, and Parent IP Deal revenues[63][64][68] - As of March 31, 2025, no payments subject to the CVR Agreement had been received beyond those reported in Q2 and Q3 2021, and no new milestones were considered probable[64] 3. Commitments and Contingencies This section outlines various contractual obligations and potential liabilities, primarily stemming from license agreements for intellectual property and facility leases. Most future milestone and royalty payments under these agreements were not deemed probable as of March 31, 2025, and thus no liabilities were recorded, except for a de minimis payment for the LCA5 VR License and $800,000 for the FFB strategic partnership - The Company has various license agreements (Apexian, Penn LCA5/RDH12, Iveric BEST1/RHO, Penn/UF BEST1, LCA5 VR, Penn/UF RHO, MEEI) with potential milestone and royalty payments, but none were deemed probable as of March 31, 2025, except for de minimis payments[65][66][67][69][70][71][72][73] - The maximum potential aggregate milestone payments under the Iveric Agreement (BEST1 and RHO programs) are $111.7 million, and under the Penn and University of Florida BEST1 License Agreement are $76.4 million[67][70] - The Company relocated its headquarters to Durham, NC, on January 1, 2025, with a monthly base rent of approximately $3 thousand, expiring September 30, 2025[74] - Rent expense for all leases amounted to $67 thousand for the three months ended March 31, 2025, significantly up from $9 thousand in the prior year period[76] - The Company is required to fund two additional installments totaling $0.8 million for the FFB strategic partnership, reflected in accrued expenses and other liabilities[86] 4. Supplemental Balance Sheet Information This section provides a breakdown of accrued expenses and other liabilities, showing changes in payroll, professional services, research and development services and supplies, and other categories between December 31, 2024, and March 31, 2025 Accrued Expenses and Other Liabilities (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Payroll | $515 | $1,481 | | Professional services | $4,070 | $1,608 | | Research and development services and supplies | $4,141 | $4,452 | | Other | $380 | $606 | | Total | $9,106 | $8,147 | - Total accrued expenses and other liabilities increased by $1.0 million from $8.1 million at December 31, 2024, to $9.1 million at March 31, 2025[79] - Professional services accrued expenses more than doubled, increasing from $1.6 million to $4.1 million[79] 5. Related Party Transactions This section details consulting agreements with Dr. Jay Pepose and Dr. Jean Bennett, including compensation and stock-based awards. It also notes subscription agreements with the CEO and Chairman in connection with a private offering and a strategic partnership with FFB for natural history studies - Consulting expenses for Dr. Jay Pepose amounted to $119 thousand for Q1 2025, up from $99 thousand in Q1 2024[82] - Dr. Jean Bennett was granted a restricted stock unit award for 100,000 shares vesting on October 22, 2025, in connection with her Board appointment and consulting agreement[84] - The Company's CEO, Dr. George Magrath, and Chairman, Cam Gallagher, entered into subscription agreements for shares of common stock and warrants in a March 2025 private offering[83][89] - The Company is obligated to provide $2.0 million in funding to FFB for natural history studies, with $0.8 million remaining to be funded as of March 31, 2025[85][86] 6. Series A Preferred Stock This section describes the Series A Non-Voting Convertible Preferred Stock issued during the Opus Acquisition. It highlights that stockholders approved the conversion of these shares into common stock on April 30, 2025, leading to the conversion of all Series A Preferred Stock into 14,145,374 shares of common stock on May 5, 2025 - 14,145.374 shares of Series A Preferred Stock were issued during the Opus Acquisition on October 22, 2024[87] - Stockholders approved the conversion of each Series A Preferred Stock share into 1,000 shares of common stock on April 30, 2025[87] - All Series A Preferred Stock was converted into 14,145,374 shares of common stock on May 5, 2025[87] 7. Financings This section details the Company's financing activities, including the March 2025 Offering and Private Placement which raised $21.5 million gross proceeds and involved the issuance of common stock, March 2025 Warrants, March 2025 Private Placement Warrants, and Pre-Funded Warrants. It also covers the termination of the Lincoln Park Purchase Agreement, ongoing At-The-Market (ATM) programs, a Registered Direct Offering (RDO), and pre-merger financings - The March 2025 Offering and Private Placement, closed on March 24, 2025, generated approximately $21.5 million in combined gross proceeds[90] - The March 2025 Financings included the issuance of 12,219,736 shares of common stock, 8,832,895 pre-funded warrants, and 22,239,102 warrants (March 2025 Warrants and Private Placement Warrants)[88][89] - The fair value of March 2025 Warrants at issuance was $14.7 million, and March 2025 Private Placement Warrants was $0.8 million, both classified as warrant liabilities[95][98] - The Lincoln Park Purchase Agreement, which allowed the Company to sell up to $50 million of common stock, was terminated effective April 3, 2025[101][106] - A new At-The-Market (ATM) program with Leerink Partners LLC was established on January 13, 2025, for up to $40 million in common stock sales, replacing a prior ATM program[107][108] Warrant Activity Summary (in thousands, except share amounts) | Metric | Warrants (Shares) | Weighted Average Exercise Price | | :-------------------------------- | :---------------- | :------------------------------ | | Outstanding and exercisable at Dec 31, 2024 | 7,204,299 | $4.82 | | Issued (Q1 2025) | 22,229,102 | $0.96 | | Outstanding and exercisable at Mar 31, 2025 | 29,433,401 | $1.91 | 8. Stock-based Compensation This section details the Company's stock-based compensation expenses and equity incentive plans. It covers the Inducement Plan and the 2020 Equity Incentive Plan, outlining the grants of stock options, restricted stock units (RSUs), and common stock for services, along with their associated expenses and vesting schedules Stock-based Compensation Expense (in thousands) | Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | General and administrative | $628 | $775 | | Research and development | $285 | $210 | | Total stock-based compensation | $913 | $985 | - Total stock-based compensation decreased from $0.99 million in Q1 2024 to $0.91 million in Q1 2025[116] - The 2020 Equity Incentive Plan automatically increased by 1,578,733 shares on January 1, 2025, due to its evergreen provision[118] - Stock options granted in Q1 2025 totaled 1,262,685 with a weighted average fair value of $0.65 per share, compared to 762,080 options at $2.16 per share in Q1 2024[120][121] - RSUs granted in Q1 2025 totaled 748,833 with a weighted average fair value of $0.95 per unit, compared to 313,364 RSUs at $2.69 per unit in Q1 2024[124] - Unrecognized stock-based compensation cost was $6.8 million as of March 31, 2025, expected to be recognized over a weighted average period of 2.0 years[129] 9. Apexian Sublicense Agreement This section details the Apexian Sublicense Agreement, under which the Company obtained exclusive worldwide patent and intellectual property rights for a Ref-1 Inhibitor program, including APX3330. The agreement includes potential milestone payments up to $11 million for development/regulatory and $20 million for sales, plus single-digit royalties on net sales. As of March 31, 2025, none of these payments were triggered or deemed probable - The Apexian Sublicense Agreement grants exclusive worldwide rights for a Ref-1 Inhibitor program, including APX3330, for ophthalmic and diabetes mellitus conditions[130] - Potential milestone payments include up to $11 million for development/regulatory achievements and up to $20 million for sales milestones, plus single-digit percentage royalties on net sales[131] - As of March 31, 2025, none of the milestone or royalty payments under this agreement were triggered or considered probable[132] 10. License and Collaboration Agreements This section outlines key license and collaboration agreements, primarily focusing on the Viatris License Agreement for PS Products (RYZUMVI®), which generated $4.4 million in revenue in Q1 2025. It also covers agreements with BioSense and Processa for RX-3117, and an SBIR grant for the RHO product, noting that most future milestone payments under these agreements are constrained due to uncertainty - The Viatris License Agreement grants Viatris exclusive rights to develop and commercialize PS Products (including RYZUMVI®) in the Viatris Territory, with the Company eligible for up to $130 million in additional milestone payments and tiered royalties[133][135] - Revenue recognized under the Viatris License Agreement was $4.4 million for Q1 2025, up from $1.7 million in Q1 2024, primarily from reimbursement of ongoing research and development services[138][142] - The Company has agreements with BioSense and Processa for the RX-3117 drug compound, with potential milestone payments up to $84.5 million and tiered royalties, but none were deemed probable as of March 31, 2025[144][147] - A Small Business Innovation Research (SBIR) grant of $0.9 million was received in September 2024 for the RHO product development, with $24 thousand recognized as other income in Q1 2025[149] 11. Net Loss per Share This section explains the calculation of basic and diluted net loss per share, noting that Series A Preferred Stock, warrants, stock options, and RSUs were considered common stock equivalents. However, no incremental common stock equivalents were included in diluted loss per share calculations for the periods presented because their inclusion would have been anti-dilutive due to the net loss - Basic and diluted net loss per share are calculated by dividing net loss by the weighted average number of common shares outstanding, with common stock equivalents (Series A Preferred Stock, warrants, stock options, RSUs) considered for dilution[150] - No incremental common stock equivalents were included in diluted loss per share for the periods presented because their effect would have been anti-dilutive due to the net loss[150] Potential Common Shares Not Included in Diluted EPS (Anti-Dilutive) | Instrument | March 31, 2025 | March 31, 2024 | | :---------------- | :------------- | :------------- | | Warrants | 29,433,401 | 7,204,299 | | Stock options | 6,294,455 | 4,827,433 | | RSUs | 2,039,387 | 993,112 | 12. Income Taxes This section states that the effective tax rate for the three months ended March 31, 2025, and 2024 was zero percent. A full valuation allowance has been established against the Company's net deferred income tax assets due to the uncertainty of future taxable income, resulting in no tax benefit recognized for the pre-tax loss - The effective tax rate was zero percent for the three months ended March 31, 2025, and 2024[154] - A full valuation allowance has been established to reduce the Company's net deferred income tax assets, meaning no tax benefit was recognized for the pre-tax loss[154] 13. Deferred Compensation Plan This section describes the Company's 401(k) plan, which became effective October 1, 2021. The Company makes matching contributions of 100% on the first 3% of deferred compensation and an additional 50% on the next 2%. Contributions for Q1 2025 and Q1 2024 were $0.1 million each - The Company offers a 401(k) plan to employees, effective October 1, 2021[156] - Company matching contributions are 100% on the first 3% deferred and an additional 50% on the next 2%[156] - The Company contributed $0.1 million to the 401(k) plan during each of the three months ended March 31, 2025, and 2024[156] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and operational results for the three months ended March 31, 2025, compared to the prior year. It covers the strategic shift following the Opus Acquisition, pipeline updates, recent financing activities, and a detailed analysis of revenue, expenses, and cash flows, along with liquidity outlook and critical accounting policies Forward-Looking Statements This section highlights that the report contains forward-looking statements subject to various risks and uncertainties, which the Company does not commit to update - The report contains forward-looking statements regarding strategic business plans, product candidate applications, FDA discussions, and drug development/commercialization[160] - These statements are subject to risks and uncertainties, including preliminary clinical data, integration challenges from the Opus Acquisition, difficulties in gene therapy development/manufacturing, clinical trial delays, regulatory changes, and dependence on strategic partners[161][162][168] - The Company does not undertake to publicly update any forward-looking statements unless required by law[165] Overview This section provides an overview of Opus Genetics, Inc.'s business, focusing on its clinical-stage gene therapy pipeline for inherited retinal diseases and recent product developments - Opus Genetics, Inc. is a clinical-stage ophthalmic biotechnology company focused on gene therapies for inherited retinal diseases (IRDs) and other ophthalmic disorders[166] - The Opus Acquisition on October 22, 2024, expanded the pipeline to include AAV-based gene therapies for Leber congenital amaurosis (LCA), bestrophinopathy, and retinitis pigmentosa[167][169][170] - The most advanced gene therapy program, OPGx-LCA5, is in an ongoing Phase 1/2 clinical trial, showing visual improvement in adult patients and enrolling its first pediatric patient in Q1 2025[172] - OPGx-LCA5 received Regenerative Medicine Advanced Therapy (RMAT) designation from the FDA on May 6, 2025, which may expedite development and review[177] - RYZUMVI® (Phentolamine Ophthalmic Solution 0.75%) was FDA-approved in September 2023 and commercialized in April 2024 by Viatris, triggering a $10 million milestone payment[173] - The Company is seeking a strategic partner for APX3330, a small-molecule inhibitor for diabetic retinopathy, to redirect resources to gene therapy programs[175] Strategic Outlook This section outlines the Company's future plans, including pipeline advancement, capital raising strategies, and anticipated increases in operational expenses - The Company plans to advance its current pipeline and explore out-licensing or in-licensing opportunities[178] - Primary activities have been R&D, business/financial planning, personnel recruitment, and capital raising[178] - Significant revenues are not expected until FDA approval and successful commercialization of LCA5, BEST1, other assets, or PS for additional indications[178] - Future cash needs are expected to be financed through equity, debt, alternative financings, collaborations, strategic alliances, and licensing arrangements[178] - Net loss for Q1 2025 was $8.2 million, increasing from $7.1 million in Q1 2024, with an accumulated deficit of $147.2 million as of March 31, 2025[181] - Expenses are anticipated to increase due to ongoing clinical trials, nonclinical studies, development of new candidates, regulatory approvals, manufacturing, intellectual property, and public company operations[181][185] Financial Operations Overview This section provides an overview of the Company's revenue sources, expense categories, financing costs, and other income, along with its income tax policy - License and collaborations revenue is primarily derived from the Viatris License Agreement (license transfer, milestone, R&D expense reimbursement, royalties) and, to a lesser extent, from BioSense and Processa agreements[182] - General and administrative expenses include personnel costs, insurance, legal fees, business development, and professional fees[185][186] - Research and development expenses cover compensation, clinical trials, regulatory activities, manufacturing, and license fees; budgeted PS development expenses are fully reimbursed by Viatris[187][189] - R&D expenses are expected to increase in later stages of clinical development due to larger and longer trials[190] - Financing costs consist of issuance costs for March 2025 Warrants and Private Placement Warrants[191] - Fair value changes in warrant liabilities are due to fluctuations in common stock fair value, volatility, expected term, and interest rates[192] - Other income, net, includes interest income, gains/losses from equity investments, and grant reimbursements[193] - A full valuation allowance is maintained on net deferred tax assets due to uncertainty of future taxable income, resulting in no income tax provision[194] Results of Operations This section provides a comparative analysis of the Company's revenue, expenses, and net loss for the three months ended March 31, 2025, and 2024 Operating Results Comparison (in thousands) | Metric | March 31, 2025 | March 31, 2024 | Change | | :-------------------------------- | :------------- | :------------- | :----- | | License and collaborations revenue | $4,370 | $1,711 | $2,659 | | General and administrative | $6,346 | $4,670 | $1,676 | | Research and development | $7,953 | $4,749 | $3,204 | | Total operating expenses | $14,299 | $9,419 | $4,880 | | Loss from operations | $(9,929) | $(7,708) | $(2,221) | | Financing costs | $(1,372) | — | $(1,372) | | Fair value change in warrant liabilities | $2,805 | — | $2,805 | | Other income, net | $302 | $602 | $(300) | | Net loss | $(8,194) | $(7,106) | $(1,088) | - License and collaborations revenue increased by $2.7 million, driven by higher reimbursable R&D activity under the Viatris License Agreement[198] - General and administrative expenses increased by $1.7 million, primarily due to higher professional services, corporate legal support, intellectual property legal fees, and investor relations costs[199] Research and Development Expenses Components (in thousands) | Category | March 31, 2025 | March 31, 2024 | Change | | :-------------------------------- | :------------- | :------------- | :----- | | Phentolamine Ophthalmic Solution 0.75% ("PS") | $4,035 | $1,065 | $2,970 | | IRD programs | $1,923 | — | $1,923 | | APX 3330 | $393 | $2,663 | $(2,270) | | Employee related expenses | $1,409 | $937 | $472 | | Total research and development expenses | $7,953 | $4,749 | $3,204 | - Research and development expenses increased by $3.2 million, mainly due to higher clinical costs for PS and IRD programs, and increased payroll, partially offset by reduced APX3330 expenses[200] - Financing costs of $1.4 million in Q1 2025 were due to issuance costs for March 2025 Warrants and Private Placement Warrants, with no comparable costs in Q1 2024[201] - A $2.8 million benefit from fair value change in warrant liabilities was recognized in Q1 2025, reflecting fluctuations in common stock fair value and other market factors[202] - Other income, net, decreased from $0.6 million in Q1 2024 to $0.3 million in Q1 2025, primarily due to lower interest income[203][204] Liquidity and Capital Resources This section discusses the Company's cash position, historical capital sources, recent financing activities, and future capital requirements to fund operations and R&D - As of March 31, 2025, the Company had $41.8 million in cash and cash equivalents, expected to fund operations for at least twelve months[205] - Historical capital sources include $89.7 million from equity offerings, $8.5 million from convertible notes, and $45 million in license/milestone payments from the Viatris License Agreement[206] - The March 2025 Offering and Private Placement generated approximately $21.5 million in gross proceeds[209] - The Lincoln Park Purchase Agreement, which provided for up to $50 million in equity line financing, was terminated effective April 3, 2025[219][245] - The At-The-Market (ATM) program has sold 8,006,791 shares for $26.8 million in gross proceeds since inception[220][243] Cash Flows Summary (in thousands) | Activity | March 31, 2025 | March 31, 2024 | | :-------------------------------- | :------------- | :------------- | | Net cash used in operating activities | $(8,994) | $(5,716) | | Net cash provided by investing activities | — | — | | Net cash provided by financing activities | $20,465 | $2,376 | | Net increase (decrease) in cash and cash equivalents | $11,471 | $(3,340) | - Operating cash outflow increased due to higher net loss and changes in operating assets/liabilities[235][236] - Financing cash inflow significantly increased due to the March 2025 financings and ATM proceeds[238][239] - Future capital requirements include funding R&D for gene therapy candidates, potential milestone/royalty obligations, and operational expenses, with reliance on cash on hand, future financings, and collaboration payments[247][266][267] Critical Accounting Policies and Estimates This section outlines the Company's critical accounting policies and estimates, particularly for revenue recognition and income tax assets and liabilities - Critical accounting policies involve significant estimates and judgments, including license and collaborations revenue recognition and income tax assets and liabilities[268][269] - Revenue from license and collaboration agreements is recognized by allocating transaction price to performance obligations based on fair value, using discounted cash flow approach and probability assessments[270] - A full valuation allowance is applied to net deferred tax assets due to uncertainty of future taxable income[271] Recent Accounting Pronouncements This section refers to Note 1 for a discussion of recently issued accounting pronouncements relevant to the Company's financial statements - Refer to Note 1 for a discussion of recently issued accounting pronouncements[272] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that quantitative and qualitative disclosures about market risk are not applicable for smaller reporting companies - Quantitative and qualitative disclosures about market risk are not applicable for smaller reporting companies[273] Item 4. Controls and Procedures This section confirms that the Company's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2025. It also states that there were no material changes in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were evaluated and concluded to be effective as of March 31, 2025[277] - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2025[278] PART II – OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings This section states that the Company is not currently a party to any legal proceedings that are likely to materially affect its business or financial results, while acknowledging that litigation can have an adverse impact - The Company is not currently a party to any legal proceedings likely to materially affect its business or financial results[280] - Litigation, regardless of outcome, can adversely impact the Company due to defense and settlement costs and diversion of management resources[280] Item 1A. Risk Factors This section highlights a new material risk factor related to the Company's common stock potentially being delisted from the Nasdaq Capital Market due to failure to comply with the Minimum Bid Price Requirement. Such delisting could negatively impact liquidity, volatility, reputation, and access to capital - No material changes to risk factors were disclosed other than those related to Nasdaq listing standards[281] - The Company's common stock has recently traded below the Nasdaq Minimum Bid Price Requirement of $1.00 per share, risking delisting[282] - Potential delisting could lead to decreased liquidity, increased volatility, reputational damage, and impaired ability to raise capital or pursue strategic plans[284] - The Company may consider a reverse stock split to regain compliance, which could also negatively affect the stock price[283][284] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section indicates that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[286] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred[287] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[288] Item 5. Other Information This section reports that none of the Company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended March 31, 2025 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during Q1 2025[289] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including various agreements, bylaws, warrants, certifications, and XBRL documents - Exhibits include the Sales Agreement, Amended and Restated Bylaws, Forms of Warrant and Pre-Funded Warrant, Amended and Restated Employment Agreements, and Sarbanes-Oxley Act certifications[290] SIGNATURES This section contains the official signatures of the Company's Chief Executive Officer and Chief Financial Officer - The report was signed on May 15, 2025, by George Magrath, Chief Executive Officer and Director, and Nirav Jhaveri, Chief Financial Officer[294][295]