NKGen Biotech(US:NKGN)2026-01-20 12:07Financial Performance - The company reported a net income of $15.4 million for the three months ended March 31, 2025, compared to a net loss of $5.4 million for the same period in 2024[222]. - Net income for the three months ended March 31, 2025, was $15.35 million, compared to a net loss of $5.38 million for the same period in 2024, representing a change of $20.73 million[246]. - The company incurred zero other income (loss), net for the three months ended March 31, 2025, compared to a loss of $19 thousand for the same period in 2024[263]. - Total costs and expenses decreased by $2.96 million, or 39%, for the three months ended March 31, 2025, compared to the same period in 2024[246]. - Net cash used in operating activities decreased by $1.2 million to $2.8 million for the three months ended March 31, 2025, compared to $4.0 million in the same period of 2024, primarily due to a $20.7 million increase in net income[287]. - The company reported a net loss of $5.4 million for the three months ended March 31, 2024, which was partially offset by $2.3 million in changes related to operating assets and liabilities[289]. Financial Position - As of March 31, 2025, the company's accumulated deficit was $191.1 million[222]. - As of March 31, 2025, the company had cash and cash equivalents of $6 thousand and a working capital deficit of approximately $41.5 million[266]. - The company incurred approximately $16.7 million in accounts payable and accrued expenses, including transaction expenses from the Business Combination[267]. - The company had $37.8 million in outstanding debts, including $26.8 million due within less than one year and $11.1 million of senior convertible promissory notes due to related parties[267]. - The company has long-term debt maturing in 2027, indicating ongoing financial commitments[296]. Clinical Trials and Development - The company received IND clearance from the FDA for SNK01 in Alzheimer's disease on October 20, 2023, and began dosing participants in the clinical trial on December 28, 2023[218]. - In a Phase I clinical trial for SNK01, 30% of patients showed clinical improvement on the ADCOMS score compared to baseline, and 60% showed stable scores[219]. - The company plans to conduct a Phase 2 trial for SNK01 involving 30 patients with moderate Alzheimer's disease[220]. - SNK02 demonstrated a best objective response of Stable Disease in 100% of patients who completed eight cycles of treatment[221]. - Research and development expenses are expected to increase as the company continues to develop its platform and product candidates[228]. - The company is expected to continue incurring significant expenses and operating losses for the foreseeable future as it advances its clinical trials and product development[264]. Expenses and Cost Management - Research and development expenses decreased by $1.4 million, or 43%, for the three months ended March 31, 2025, compared to the same period in 2024[246]. - General and administrative expenses decreased by $1.6 million, or 36%, for the three months ended March 31, 2025, compared to the same period in 2024[254]. - Interest expense decreased by $0.6 million, or 52%, for the three months ended March 31, 2025, compared to the same period in 2024[255]. - Loss on issuance of financial instruments decreased by $0.3 million, or 44%, during the three months ended March 31, 2025, compared to the same period in 2024[257]. - Changes in fair value of financial instruments increased by $17.8 million, or 472%, during the three months ended March 31, 2025, compared to the same period in 2024[261]. Going Concern and Funding - The company expressed substantial doubt about its ability to continue as a going concern without securing additional funding[224]. - The company has expressed substantial doubt about its ability to continue as a going concern due to insufficient funds to meet operational needs[271]. - The company has accrued substantial transaction expenses and continues to seek additional funding through various financing arrangements[272]. - The company may be required to delay or curtail operations if additional capital is not secured when required[270]. - The company issued multiple convertible notes for total proceeds of $17.9 million during 2024 and 2025[285]. - The company has outstanding related party loans totaling $4.0 million as of March 31, 2025, which are past due[280]. Financing Activities - The company entered into a $5.0 million revolving line of credit agreement with East West Bank, which was secured by all assets and had an interest rate of 7.5% as of March 31, 2025[276]. - The revolving line of credit maturity date was extended to January 15, 2027, with an increased interest rate of 10% per annum[278]. - Net cash provided by financing activities decreased by $1.4 million to $2.6 million for the three months ended March 31, 2025, compared to $4.0 million in Q1 2024, mainly due to reduced proceeds from various financing agreements[292]. - The net cash provided by financing activities in Q1 2025 included $1.7 million from capital contributions and $1.8 million from convertible promissory notes[293]. Fair Value Measurements - The company evaluates its financial instruments to determine their classification as liabilities or equity, which significantly impacts reported financial position and results[310]. - The company classifies its Public Warrants and SPA Warrants as equity instruments, while Senior Convertible Notes and various other warrants are classified as liabilities[314]. - Fair value measurements are based on US GAAP, with a hierarchy of inputs categorized into Level 1, Level 2, and Level 3, where Level 1 includes quoted prices in active markets[315][316]. - The fair value of liability-classified instruments includes Private Warrants, Working Capital Warrants, and Convertible Notes, which require significant judgment and assumptions[320][321]. - The estimated fair value of liability-classified warrants was determined using a Black-Scholes model, incorporating expected stock-price volatility and risk-free interest rates[322]. - The fair value of Convertible Notes was measured using a binomial lattice model prior to April 1, 2024, and a probability-weighted scenario model thereafter[326][327]. Regulatory and Reporting Status - The company adopted ASU 2023-09 in December 2023, which requires expanded disclosures related to income taxes, effective for fiscal years beginning after December 15, 2024[333]. - The company qualifies as an emerging growth company and may rely on certain exemptions from public company reporting requirements for up to five years following its IPO[336][337]. - The company is classified as a smaller reporting company, with a market value of common stock held by non-affiliates below $700 million and annual revenue under $100 million[338]. - The company is not required to provide quantitative and qualitative disclosures about market risk due to its status as a smaller reporting company[339].