AcelRx Pharmaceuticals(ACRX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The company's unaudited condensed consolidated financial statements detail its financial position, operations, equity changes, and cash flows Condensed Consolidated Balance Sheets | (In thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Assets | | | | Cash and cash equivalents | $6,791 | $8,863 | | Total current assets | $7,696 | $9,417 | | Total assets | $16,515 | $18,236 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $2,630 | $2,647 | | Warrant liability | $759 | $1,061 | | Liability related to sale of future payments | $6,499 | $6,527 | | Total liabilities | $9,888 | $10,235 | | Total stockholders' equity | $6,627 | $8,001 | | Total Liabilities and Stockholders' Equity | $16,515 | $18,236 | Condensed Consolidated Statements of Operations | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $— | $— | $27 | $— | | Research and development | $1,500 | $1,909 | $2,669 | $3,342 | | Selling, general and administrative | $2,193 | $2,361 | $3,967 | $5,165 | | Total operating costs and expenses | $3,693 | $4,270 | $6,636 | $8,507 | | Loss from operations | $(3,693) | $(4,270) | $(6,609) | $(8,507) | | Total other income, net | $204 | $443 | $454 | $726 | | Net loss from continuing operations | $(3,489) | $(3,827) | $(6,155) | $(7,781) | | Net income from discontinued operations | $— | $— | $73 | $— | | Net loss | $(3,489) | $(3,827) | $(6,082) | $(7,781) | | Basic and diluted loss per share | $(0.10) | $(0.15) | $(0.20) | $(0.31) | Condensed Consolidated Statements of Stockholders' Equity | (In thousands, except share data) | Balance as of January 1, 2025 | Stock-based compensation | Issuance of common stock upon vesting of restricted stock units, net of shares withheld for employee taxes | Issuance of common stock upon ESPP purchase | Net proceeds from issuance of common stock and pre-funded warrants in connection with equity financing | Net loss | Balance as of June 30, 2025 | | :-------------------------------- | :---------------------------- | :----------------------- | :------------------------------------------------------------------------------------------------ | :-------------------------- | :------------------------------------------------------------------------------------------------------- | :------- | :-------------------------- | | Common Stock Shares | 17,029,469 | — | 61,715 | 26,353 | 3,405,118 | — | 20,522,655 | | Common Stock Amount | $17 | $— | $— | $— | $3 | $— | $20 | | Additional Paid-in Capital | $465,214 | $362 | $(21) | $13 | $4,351 | $— | $469,919 | | Accumulated Deficit | $(457,230) | $— | $— | $— | $— | $(6,082) | $(463,312) | | Total Stockholders' Equity | $8,001 | $362 | $(21) | $13 | $4,354 | $(6,082) | $6,627 | Condensed Consolidated Statements of Cash Flows | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(6,418) | $(7,493) | | Net cash provided by investing activities | $— | $3,181 | | Net cash provided by financing activities | $4,346 | $12,014 | | Net change in cash and cash equivalents | $(2,072) | $7,702 | | Cash and cash equivalents—End of period | $6,791 | $13,423 | Notes to Condensed Consolidated Financial Statements 1. Organization and Summary of Significant Accounting Policies The company, a specialty pharmaceutical firm, faces going concern doubts due to recurring losses while developing its key therapies - Talphera, Inc is a specialty pharmaceutical company focused on developing and commercializing innovative therapies for medically supervised settings, including Niyad™ (regional anticoagulant for dialysis) and LTX-608 (nafamostat formulation for direct IV infusion)[26][27] - The company has incurred recurring operating losses and negative cash flows since inception, raising substantial doubt about its ability to continue as a going concern, and expects to need additional capital within the next twelve months[28] - The company adopted ASU 2023-09 (Income Taxes) for the period beginning January 1, 2025, which will not have a material impact on its condensed consolidated financial statements[35] 2. Investments and Fair Value Measurement The company's warrant liability, a Level III fair value measurement, decreased to $0.759 million as of June 30, 2025 Cash and Cash Equivalents | (In thousands) | As of June 30, 2025 | As of December 31, 2024 | | :-------------------------- | :------------------ | :---------------------- | | Cash | $615 | $364 | | Money market funds | $404 | $2,632 | | U.S. government agency securities | $5,772 | $5,867 | | Total cash and cash equivalents | $6,791 | $8,863 | Warrant Liability | (In thousands) | As of June 30, 2025 | As of December 31, 2024 | | :-------------------------- | :------------------ | :---------------------- | | Warrant liability | $759 | $1,061 | - The fair value of the Level III warrant liability decreased by $0.302 million for the six months ended June 30, 2025, from $1.061 million to $0.759 million[42] 3. Discontinued Operations The company recognized net income of $73 thousand from discontinued DSUVIA-related operations for the six months ended June 30, 2025 - The company acquired all assets related to DSUVIA by Alora Pharmaceuticals, LLC on April 3, 2023[44] Net Income from Discontinued Operations | (In thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net income from discontinued operations | $73 | $— | Current Liabilities of Discontinued Operations | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total current liabilities of discontinued operations | $650 | $723 | 4. Sale of Future Payments The company recognized no non-cash interest expense in 2025 related to the sale of future DSUVIA payments - In January 2024, the company sold its rights to certain DSUVIA payments to XOMA (US) LLC for $8.0 million, recognizing $1.2 million in other income from the sale of future commercial sales payments[47][48] - Due to Alora Pharmaceuticals, LLC discontinuing DSUVIA sales efforts to non-DoD customers, the company estimates future payments under the Purchase Agreement will be less than the proceeds received, leading to no recognition of non-cash interest expense for the three and six months ended June 30, 2025[50][51] Non-cash Interest Expense | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Non-cash interest expense on liability related to sale of future payments | $— | $(213) | $— | $(394) | 5. Commitments and Contingencies The company is defending against ongoing litigation, including an appealed securities class action and stayed shareholder derivative complaints - A securities class action complaint, alleging violations related to DSUVIA marketing, was dismissed with prejudice on May 7, 2024, but plaintiffs filed a notice of appeal on June 5, 2024, with oral argument held on June 12, 2025[52] - Multiple shareholder derivative complaints, based on the same alleged misstatements as the securities class action, have been consolidated and stayed pending the outcome of the securities class action[53][54] - The company believes these lawsuits are without merit and intends to vigorously defend against them, but cannot estimate the reasonably possible loss or range of loss due to the uncertainty of litigation[54] 6. Stockholders' Equity A private placement in April 2025 generated approximately $4.9 million in gross proceeds, with two subsequent tranches contingent on milestones - On April 2, 2025, the first closing of the 2025 Private Placement resulted in the issuance of 3,405,118 shares of common stock and pre-funded warrants to purchase up to 4,999,316 shares, generating approximately $4.9 million in gross proceeds[56] - The second and third closings of the 2025 Private Placement are contingent on Niyad NEPHRO CRRT study enrollment milestones (17 and 35 patients, respectively) and the common stock's average volume weighted average price reaching at least $0.7325 per share for five trading days[57] - Each of the second and third closings is expected to generate approximately $4.9 million in gross proceeds, totaling approximately $9.8 million in aggregate[57] 7. Warrants As of June 30, 2025, the company had 34.5 million common stock warrants outstanding with a weighted average exercise price of $0.82 Common Stock Warrants Activity | | Common Stock Warrants | Weighted average Exercise Price (per share) | | :---------------------------------- | :-------------------- | :---------------------------------------- | | Outstanding at December 31, 2024 | 29,474,257 | $0.96 | | Granted | 4,999,316 | $0.001 | | Outstanding and exercisable at June 30, 2025 | 34,473,573 | $0.82 | - The 2025 Pre-Funded Warrants, issued in April 2025, allow purchasers to buy up to 4,999,316 shares of common stock at an exercise price of $0.001 per share, are immediately exercisable, have an unlimited term, and are classified as a component of permanent equity[63][64] 8. Stock-Based Compensation Total stock-based compensation expense decreased to $0.362 million for the six months ended June 30, 2025 Stock-Based Compensation Expense | (In thousands) | 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 | $55 | $85 | $132 | $192 | | Selling, general and administrative | $111 | $138 | $230 | $333 | | Total stock-based compensation expense | $166 | $223 | $362 | $525 | Restricted Stock Units Activity | | Number of Restricted Stock Units | Weighted Average Grant Date Fair Value | | :---------------------------------- | :------------------------------- | :------------------------------------- | | Restricted stock units outstanding, January 1, 2025 | 212,923 | $1.59 | | Granted | 126,967 | $0.58 | | Vested | (93,606) | $2.18 | | Forfeited | (5,088) | $0.80 | | Restricted stock units outstanding, June 30, 2025 | 241,196 | $0.85 | Stock Options Activity | | Number of Stock Options Outstanding | Weighted Average Exercise Price | | :---------------------------------- | :------------------------------ | :------------------------------ | | January 1, 2025 | 1,786,900 | $12.48 | | Granted | 727,800 | $0.58 | | Forfeited | (32,490) | $0.91 | | Expired | (23,000) | $64.66 | | June 30, 2025 | 2,459,210 | $8.62 | - As of June 30, 2025, total stock-based compensation expense related to unvested options to be recognized in future periods was $1.1 million, expected to be recognized over a weighted-average period of 2.7 years[68] 9. Net Loss per Share of Common Stock Basic and diluted loss per share for the six months ended June 30, 2025 was $(0.20), with antidilutive securities excluded Basic and Diluted Loss Per Share | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic and diluted loss per share | $(0.10) | $(0.15) | $(0.20) | $(0.31) | Antidilutive Securities Excluded from Diluted EPS | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | RSUs, stock options and ESPP to purchase common stock | 2,700,406 | 2,155,522 | 2,700,406 | 2,155,522 | | Common stock warrants | 20,265,576 | 20,265,576 | 20,265,576 | 20,265,576 | - Potential common shares from pre-funded warrants with de minimis exercise prices are considered outstanding common shares and are included in the calculation of basic and diluted net loss per share in all circumstances[69] 10. Segment Information The company operates as a single reportable segment, with a net loss of $(6.1) million for the six months ended June 30, 2025 - Talphera has one reportable segment: the development and commercialization of innovative therapies for use in medically supervised settings[71] Segment Net Loss | (In thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Segment and condensed consolidated net loss | $(3,489) | $(3,827) | $(6,082) | $(7,781) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, liquidity, and capital resources for the periods ended June 30, 2025 About Talphera, Inc. - Talphera, Inc is a specialty pharmaceutical company focused on developing and commercializing innovative therapies for medically supervised settings, including Niyad (regional anticoagulant), LTX-608 (nafamostat formulation for IV infusion), and two ready-to-use pre-filled syringe product candidates (Fedsyra and phenylephrine)[78] - The company's strategy is focused on developing, obtaining approval, and commercializing Niyad, with intentions to expand its portfolio to include additional acute care therapies[79] General Trends and Outlook - The company does not believe inflation has materially impacted its business or operating results to date, but acknowledges potential future adverse effects from inflation and increased interest rates[80] - In March 2025, the FDA agreed to reduce the size of the Niyad registrational study (NEPHRO CRRT) from 166 to 70 patients and broaden clinical study inclusion criteria to allow enrollment of patients already on CRRT beyond 48 hours and heparin-tolerant patients[81][82] Financial Overview Key Financial Metrics | Financial 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 | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(3.5) million | $(3.8) million | $(6.1) million | $(7.8) million | | Financial Metric | As of June 30, 2025 | As of December 31, 2024 | | :----------------- | :------------------ | :---------------------- | | Accumulated deficit | $(463.3) million | $(457.2) million | | Cash and cash equivalents | $6.8 million | $8.9 million | Critical Accounting Estimates - There have been no significant changes to the company's critical accounting policies or significant judgments and estimates for the three and six months ended June 30, 2025, from those previously disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024[86] Recently Adopted Accounting Pronouncements - The company adopted ASU 2023-09, 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures,' for the period beginning January 1, 2025, which will be applied prospectively and is not expected to have a material impact on its condensed consolidated financial statements[87] Recently Issued Accounting Pronouncements - The FASB issued ASU 2024-03, 'Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,' effective for the company's annual disclosures for 2027 and interim periods beginning in 2028 The company is currently evaluating its impact[88] Results of Operations Research and Development Expenses R&D expenses decreased by $0.7 million (20%) for the six months ended June 30, 2025, primarily due to reduced employee compensation Three-Month Period Comparison | (In thousands, except percentages) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change 2025 vs. 2024 | % Change 2025 vs. 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :--------------------- | :--------------------- | | Research and development expenses | $1,500 | $1,909 | $(409) | (21)% | Six-Month Period Comparison | (In thousands, except percentages) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change 2025 vs. 2024 | % Change 2025 vs. 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | :--------------------- | :--------------------- | | Research and development expenses | $2,669 | $3,342 | $(673) | (20)% | - The decrease in R&D expenses was primarily due to a reduction in employee compensation and related expenses resulting from a reduction in headcount[93] Selling, General and Administrative Expenses SG&A expenses decreased by $1.2 million (23%) for the six months ended June 30, 2025, due to lower consulting and employee costs Three-Month Period Comparison | (In thousands, except percentages) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change 2025 vs. 2024 | % Change 2025 vs. 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :--------------------- | :--------------------- | | Selling, general and administrative expenses | $2,193 | $2,361 | $(168) | (7)% | Six-Month Period Comparison | (In thousands, except percentages) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change 2025 vs. 2024 | % Change 2025 vs. 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :--------------------- | :--------------------- | | Selling, general and administrative expenses | $3,967 | $5,165 | $(1,198) | (23)% | - The decrease in SG&A expenses for the three months was primarily due to a $0.2 million reduction in consulting fees and a $0.1 million reduction in board of director expenses, partially offset by a $0.3 million increase in legal fees For the six months, the decrease was mainly due to a $0.5 million reduction in employee compensation (headcount), $0.4 million in consulting fees, and $0.2 million in board of director expenses, partially offset by a $0.2 million increase in legal fees[95][96] Other Income (Expense) Total other income decreased primarily due to lower interest income and the non-recurrence of a gain on sale of future payments Three-Month Period Comparison | (In thousands, except percentages) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change 2025 vs. 2024 | % Change 2025 vs. 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :--------------------- | :--------------------- | | Total other income (expense), net | $204 | $443 | $(239) | (54)% | Six-Month Period Comparison | (In thousands, except percentages) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change 2025 vs. 2024 | % Change 2025 vs. 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :--------------------- | :--------------------- | | Total other income (expense), net | $454 | $726 | $(272) | (37)% | - Interest income decreased primarily due to lower average cash balances in 2025 The gain on sale of future payments of $1.2 million was recognized in January 2024 and did not recur in 2025 The gain on change in fair value of warrant liability was $0.1 million and $0.3 million for the three and six months ended June 30, 2025, respectively, compared to a $0.5 million decrease and a $0.5 million increase in 2024[98][99][100] Liquidity and Capital Resources Liquidity and Going Concern The company has substantial doubt about its ability to continue as a going concern and expects to need additional capital within twelve months Key Liquidity Metrics | Financial Metric | As of June 30, 2025 | As of December 31, 2024 | | :------------------------------------ | :------------------ | :---------------------- | | Cash, cash equivalents and investments | $6.8 million | $8.9 million | - The company has incurred losses and generated negative cash flows from operations, raising substantial doubt about its ability to continue as a going concern, and expects to need additional capital within the next twelve months[103] - Additional capital may be sought through public or private equity offerings, debt securities, a new debt facility, monetizing assets, or entering into product development, license, or distribution agreements[104] 2025 Private Placement A private placement in April 2025 generated $4.9 million, with two additional tranches contingent on clinical and stock price milestones - The first closing of the 2025 Private Placement on April 2, 2025, involved the issuance of 3,405,118 shares of common stock and pre-funded warrants for 4,999,316 shares, yielding approximately $4.9 million in gross proceeds[108] - The second and third closings, each expected to generate approximately $4.9 million, are contingent on Niyad NEPHRO CRRT study enrollment of at least 17 and 35 patients, respectively, and the common stock's average volume weighted average price reaching at least $0.7325 per share for five trading days[109] Nasdaq Compliance The company has until December 1, 2025, to regain compliance with Nasdaq's $1.00 minimum bid price requirement - On June 5, 2025, Talphera received a notice from Nasdaq granting an additional 180 days, until December 1, 2025, to regain compliance with the $1.00 minimum bid price requirement[111] - The company's common stock was transferred to The Nasdaq Capital Market on May 30, 2025, to be eligible for the second 180-day grace period[112] - Talphera intends to monitor its bid price and has provided written notice to Nasdaq of its intention to cure the deficiency by effecting a reverse stock split, if necessary[113] Cash Flows Net cash used in operations was $6.4 million for the six months ended June 30, 2025, while financing activities provided $4.3 million Cash Flow Summary | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(6,418) | $(7,493) | | Net cash provided by investing activities | $— | $3,181 | | Net cash provided by financing activities | $4,346 | $12,014 | - Cash used in operating activities decreased by $1.075 million (14.3%) from $7.5 million in 2024 to $6.4 million in 2025, reflecting a lower net loss and changes in operating assets and liabilities[114][117][118] - Cash provided by financing activities in 2025 was primarily due to net proceeds from the 2025 Private Placement ($4.354 million), while 2024 included net proceeds from the XOMA Purchase Agreement ($6.1 million) and the January 2024 private placement ($5.9 million)[120][121] Capital Commitments and Capital Resources Existing capital is insufficient for long-term operations, necessitating additional funding for product development and other expenditures - The company's current operating plan includes expenditures related to the development and supply of its nafamostat product candidates[122] - Existing capital resources are not sufficient to fund operations until the company can generate sufficient revenues, requiring additional funds through equity securities, asset monetization, debt, or development and licensing arrangements[124] - Future capital requirements are highly variable and depend on factors such as the timely completion of the Niyad clinical trial, costs of other nafamostat candidates, regulatory application expenses, commercialization efforts, and potential litigation[123][127] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Talphera, Inc is not required to provide these disclosures - Talphera, Inc is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[125] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - Management, including the Chief Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[128] - There have been no changes in the company's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q[129] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company refers to Note 5 in Part I, Item 1 for information regarding its legal proceedings - The company refers to Note 5, 'Commitments and Contingencies—Litigation,' in Part I, Item 1 for information on legal proceedings[130] Item 1A. Risk Factors The company faces significant risks including going concern uncertainty, potential Nasdaq delisting, clinical trial delays, and reliance on third parties Summary Risk Factors - There is substantial doubt regarding the company's ability to continue as a going concern, requiring additional capital that may be difficult to raise, potentially forcing delays or elimination of product development programs[133] - The common stock may be delisted from The Nasdaq Capital Market if the company cannot regain compliance with Nasdaq's $1.00 minimum bid price requirement, which could limit future capital raising and investor transactions[133] - Delays in clinical trials are common and could increase costs, jeopardize regulatory approval, and delay product sales, particularly for the lead Niyad product candidate[133] - The company relies on third-party manufacturers and suppliers for product candidates, including single sources in Asia, and any disruptions could delay development[133] Risks Related to Our Financial Condition and Need for Additional Capital - Talphera has incurred significant net losses and negative cash flows since inception and expects to continue incurring losses, raising substantial doubt about its ability to continue as a going concern[135][139] - The company requires significant additional capital to fund operations and product development, which may be sought through equity offerings (potentially diluting stockholders), debt securities (imposing restrictions), or strategic agreements, with no assurance of availability on acceptable terms[137][138][144] - Talphera has not generated significant product revenue and may never be profitable, with future revenue heavily dependent on successful development, regulatory approval, and commercialization of product candidates[145][147] - Future sales of DSUVIA to the Department of Defense are unpredictable and may not meet expectations due to U.S government-related factors beyond the company's control, especially after Alora Pharmaceuticals discontinued sales to non-DoD customers[149] Risks Related to Drug Development and Commercialization - Failure to realize anticipated benefits from the Lowell Therapeutics acquisition, including difficulties integrating new markets and product candidates like Niyad and LTX-608, could adversely affect the stock price[150] - Clinical trials, such as the Niyad NEPHRO CRRT study, are prone to delays (e.g., slow patient enrollment, regulatory hurdles, manufacturing issues), which can increase costs and jeopardize regulatory approval and product sales[152][153][155] - If product candidates fail to demonstrate safety and efficacy in clinical trials, or if serious adverse effects are identified, the company may incur additional costs, experience delays, or be unable to complete development and commercialization[158][160][164] - The process for obtaining FDA approval (PMA or NDA) is time-consuming, costly, and subject to delays, with no guarantee of approval, especially given the company's lack of prior PMA approval experience[167][168] - Establishing and maintaining collaborative relationships for international sales and development is difficult and uncertain, as partners may terminate agreements, pursue alternatives, or fail to devote sufficient resources, limiting the company's commercialization ability[170][171] - The U.S biotechnology and pharmaceutical industries are intensely competitive, with many competitors possessing greater resources and experience, potentially rendering Talphera's products obsolete or non-competitive[173][174] - Commercialization success depends on obtaining adequate coverage and reimbursement from government and private payers, which is uncertain and subject to cost containment trends and healthcare reform measures, potentially making profitable sales difficult[176][177][178][179] - Improper promotion of off-label uses of products could lead to significant liability, regulatory actions, fines, and reputational harm, adversely affecting business and financial results[181] - Inability to establish and maintain relationships with Group Purchasing Organizations (GPOs) could negatively impact sales and revenues, as GPOs significantly influence purchasing decisions of end-users[182] Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance Matters - Existing and future legislation, such as the Affordable Care Act and the Inflation Reduction Act (IRA), may increase the difficulty and cost of commercializing products and affect pricing, potentially impacting reimbursement and profitability[183][185][187][189] - The IRA's Medicare Drug Price Negotiation Program and inflation-based rebates, along with state-level pricing controls, could significantly reduce revenue from product sales[187] - Changes in FDA regulations, guidance, or interpretations, or failure to adapt to new requirements, could delay or prevent marketing approvals and adversely affect business[188][189] Risks Related to Our Reliance on Third Parties - Reliance on third-party manufacturers for clinical and commercial supplies of product candidates entails risks such as inability to meet specifications, regulatory standards, procure raw materials, or expand manufacturing capacity, potentially leading to stock-outs, delays, or regulatory actions[190][191][194] - The company relies on single sources of supply for the active pharmaceutical ingredient (API) and finished product of its nafamostat-based candidates, with the CDMO for finished goods located in China, exposing it to supply disruptions, trade restrictions, and increased costs[192][193] - Manufacturing issues during scale-up or failure of third-party facilities to meet FDA or foreign regulatory requirements (cGMP, QSR) could delay product development, regulatory approval, and increase operating expenses[195][196][197][198] - Reliance on Contract Research Organizations (CROs) for clinical trials means limited influence over their performance, and their failure to comply with cGCPs or meet contractual obligations could lead to delays, unreliable data, and increased costs[199][200][201] Risks Related to Our Business Operations and Industry - Relationships with healthcare professionals and partners are subject to anti-kickback, fraud and abuse, and other healthcare laws, and non-compliance could result in substantial fines, business interruptions, and exclusion from government healthcare programs[202][203][204] - Significant disruptions of information technology systems or data security incidents, including those involving third-party vendors, could lead to financial, legal, regulatory, business, and reputational harm, and loss of sensitive information[205][206][207] - Business interruptions from natural disasters (e.g., earthquakes in the San Francisco Bay Area), pandemics, or man-made incidents could severely disrupt operations and sales efforts, and the company may not have sufficient insurance coverage[208][209] - The company's future success depends on retaining key executives and attracting qualified personnel, and the inability to do so, or workforce reductions, could impede research, development, and commercialization objectives[210] - Potential product liability claims, especially from past DSUVIA sales, could result in substantial liability, costs, and reputational damage, and current insurance coverage may be insufficient or contain exclusions[213][214] - Misconduct by employees, contractors, or partners, including non-compliance with regulatory standards or fraud and abuse laws, could lead to significant civil, criminal, and administrative penalties, impacting business operations and financial results[215] Risks Related to Our Intellectual Property - The company's commercial success depends on defending existing patents and expanding its portfolio, but there's no assurance of success against third-party challenges or that pending applications will issue, especially given the uncertain and evolving nature of pharmaceutical patent law[217][219][220][221] - Intellectual property litigation is expensive and time-consuming; claims of infringement or misappropriation by competitors could delay market entry, require substantial damages or licensing fees, or force the development of alternative technologies[222][223][224][225][227] - Protecting proprietary rights is difficult and costly, with no guarantee that patents will provide competitive advantages or withstand challenges, and failure to adequately protect IP could erode competitive advantage[228][229][230][232] - Reliance on trade secrets is risky as they are difficult to protect, and confidentiality agreements may not prevent disclosure or provide adequate remedies, potentially allowing competitors to use proprietary information[233] - Failure to pay periodic maintenance fees or comply with procedural requirements for patents and applications could result in the loss of patent rights, enabling competitors to enter the market[234] - Enforcing intellectual property rights globally is challenging due to varying laws and less robust legal systems in some foreign countries, potentially leading to substantial costs and inadequate protection[235][236] - Failure to secure trademark registrations in all potential markets, or challenges to existing marks, could adversely affect the business[238] Risks Related to Ownership of Our Common Stock - The market price of Talphera's common stock has historically been, and is likely to remain, highly volatile due to factors such as clinical trial results, funding needs, regulatory decisions, competition, and broader market fluctuations[239][240][244] - The company received a Nasdaq notice for non-compliance with the $1.00 minimum bid price rule and has until December 1, 2025, to regain compliance, potentially requiring a reverse stock split; failure to comply could lead to delisting, reduced liquidity, and difficulty raising capital[241][242][243][245] - Future sales of additional equity securities to fund operations will likely result in dilution to existing stockholders and could depress the common stock's market price[246] - Talphera does not intend to pay dividends on its common stock, and any returns will be limited to stock value, as all available funds are expected to be retained for operations and growth[247] - Provisions in the company's charter documents and Delaware law, such as authorized 'blank check' preferred stock, limited director removal, and a staggered Board, could make it more difficult or costly for a third party to acquire the company[248][249] Risks of a General Nature - Litigation, including securities-related class action and derivative lawsuits, can substantially increase costs, divert management's attention, and harm the business, with no assurance of successful defense or adequate insurance coverage[250][251][253] - International trade policies, including tariffs, sanctions, and trade barriers, particularly affecting suppliers in China and Japan, may adversely impact the business by increasing R&D expenses, disrupting supply chains, and creating regulatory compliance risks[254][255][256][257][258] - The ability to use net operating loss carryforwards (NOLs) and other tax attributes may be limited by future taxable income generation, expiration dates, and ownership changes under Sections 382 and 383 of the Internal Revenue Code[260] - The effective tax rate may fluctuate due to changes in profitability mix, tax audits, new tax laws (e.g., Inflation Reduction Act's excise tax on share buybacks, R&D capitalization), or changes in interpretation of existing laws, potentially leading to higher tax obligations[261] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or use of proceeds for the period - There were no unregistered sales of equity securities or use of proceeds[262] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities for the period - There were no defaults upon senior securities[263] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to Talphera, Inc[264] Item 5. Other Information The company reports no other information for the period - There is no other information to report[265] Item 6. Exhibits This section lists all exhibits filed with the company's Quarterly Report on Form 10-Q - The exhibits include amended and restated certificates of incorporation and bylaws, forms of securities purchase and registration rights agreements, pre-funded warrants, and certifications from the Principal Executive Officer and Principal Financial and Accounting Officer[266]