Eledon Pharmaceuticals(ELDN) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) Unaudited financials for Q2 2025 show decreased assets, continued operating losses, and a restatement of prior period financials - The company restated 2024 financial statements due to reclassification of Series X and X1 preferred stock and a change in EPS calculation method[31][32][134] Condensed Consolidated Balance Sheets Balance Sheet Summary (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $5,741 | $20,549 | | Short-term investments | $101,829 | $119,629 | | Total Assets | $144,909 | $177,405 | | Warrant liabilities | $22,512 | $44,865 | | Total Liabilities | $38,881 | $59,265 | | Convertible preferred stock | $55,694 | $55,694 | | Total Stockholders' Equity | $50,334 | $62,446 | Condensed Consolidated Statements of Operations and Comprehensive Loss Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $20,276 | $10,106 | $33,807 | $17,516 | | General and administrative | $4,457 | $4,396 | $8,890 | $7,855 | | Loss from operations | $(24,733) | $(14,502) | $(42,697) | $(25,371) | | Change in fair value of warrant liabilities | $12,293 | $(31,274) | $22,353 | $(44,610) | | Net loss | $(11,216) | $(44,907) | $(17,711) | $(68,538) | | Basic and diluted EPS (common stock) | $(0.13) | $(0.92) | $(0.21) | $(1.61) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(33,773) | $(16,515) | | Net cash provided by (used in) investing activities | $18,850 | $(10,130) | | Net cash provided by financing activities | $115 | $48,072 | | Net change in cash and cash equivalents | $(14,808) | $21,427 | | Cash and cash equivalents at end of period | $5,741 | $26,039 | Notes to Condensed Consolidated Financial Statements - Existing cash, cash equivalents, and marketable securities are deemed sufficient to fund operations for at least the next 12 months from the filing date[44] - As of June 30, 2025, non-cancelable manufacturing purchase obligations total $6.6 million[69] - Milestone payment obligations to ALS TDI include $6.0 million for the first licensed product, plus potential one-time payments of $15.0 million and $30.0 million upon reaching annual net sales of $500.0 million and $1.0 billion, respectively[82][84] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A covers the company's focus on tegoprubart for kidney transplantation, increased R&D, and liquidity for the next 12 months Overview and Strategy - Eledon is a clinical-stage biotech company focused on its lead compound, tegoprubart, an anti-CD40L antibody for organ transplant rejection and ALS[139] - The company prioritizes kidney transplantation programs, discontinuing islet cell and IgAN programs, while the ALS program requires additional financing[142] Clinical Development of Tegoprubart - Phase 1b kidney transplant trial showed mean eGFR above 60 mL/min/1.73m² after day 30, with an overall mean of 70.5 mL/min/1.73m², favorable compared to historical 53 mL/min/1.73m²[152] - Enrollment for the Phase 2 BESTOW kidney transplant study concluded in September 2024, with topline results expected in November 2025[153] - In an islet cell transplant trial, the first three patients treated with tegoprubart achieved insulin independence and stable graft function without tacrolimus[163] Results of Operations Comparison of Operating Results (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research & Development | $20,276 | $10,106 | $33,807 | $17,516 | | General & Administrative | $4,457 | $4,396 | $8,890 | $7,855 | | Loss from Operations | $(24,733) | $(14,502) | $(42,697) | $(25,371) | | Net Loss | $(11,216) | $(44,907) | $(17,711) | $(68,538) | - Increased R&D expenses for Q2 and H1 2025 were primarily due to higher external CRO costs for kidney transplantation trials and increased manufacturing expenses[194][201] - Net loss decreased significantly for Q2 and H1 2025, primarily due to a positive change in the fair value of warrant liabilities, reflecting a decline in stock price[197][204] Liquidity and Capital Resources - As of June 30, 2025, the company held $107.6 million in cash, cash equivalents, and short-term investments, with $97.7 million in working capital[206] - Existing cash resources are deemed sufficient to meet anticipated cash needs for at least the next 12 months from the report's filing date[209] - Insufficient liquidity exists to fund continued clinical development of tegoprubart for ALS without additional financing[209] Quantitative and Qualitative Disclosures About Market Risk As a Smaller Reporting Company, Eledon Pharmaceuticals, Inc. is exempt from providing market risk disclosures - The company, as a Smaller Reporting Company, is not required to provide the disclosures for this Item[220] Controls and Procedures Management concluded disclosure controls were ineffective as of June 30, 2025, due to a material weakness in internal control over financial reporting - Disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting[222] - The material weakness led to the restatement of financial statements for the quarter ended June 30, 2024, within this Form 10-Q[222] - Remediation efforts to address the identified material weakness are ongoing[223] PART II. OTHER INFORMATION Legal Proceedings The company is not a party to any material legal proceedings - The company and its subsidiaries are not party to any material legal proceedings[227] Risk Factors Significant risks include operating losses, critical need for additional funding, drug development uncertainties, competition, and internal control weaknesses - The company has a history of significant operating losses, totaling $17.7 million for the six months ended June 30, 2025, and may never achieve profitability[231] - Additional funding is critical to complete lead drug candidate development; without it, the company may alter or cease operations, especially for the ALS program[233] - Substantial competition exists from major pharmaceutical companies like Novartis, Sanofi, UCB, and Amgen, possessing significantly greater resources[300] - A material weakness in internal control over financial reporting could adversely affect financial reporting accuracy and timing, and the company's stock price[341] Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the current reporting period Other Information No officers or directors adopted or terminated Rule 10b5-1 trading plans during Q2 2025 - No officers or directors adopted or terminated any Rule 10b5-1 trading plans during the quarter ended June 30, 2025[349]