Eledon Pharmaceuticals(ELDN) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Eledon Pharmaceuticals, Inc.'s unaudited condensed consolidated financial statements and management's discussion for Q1 2023, including financial position, operations, cash flows, and critical accounting policies Item 1. Condensed Consolidated Financial Statements - Unaudited Presents Eledon Pharmaceuticals, Inc.'s unaudited condensed consolidated financial statements and detailed notes for the periods ended March 31, 2023, and December 31, 2022 Condensed Consolidated Balance Sheets Provides a snapshot of the company's financial position, including assets, liabilities, and equity, as of March 31, 2023, and December 31, 2022 Condensed Consolidated Balance Sheets (In thousands) | Item | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $46,485 | $56,409 | | Total current assets | $48,904 | $59,518 | | Total assets | $82,306 | $92,793 | | Total current liabilities | $5,478 | $6,475 | | Total liabilities | $7,514 | $8,610 | | Total stockholders' equity | $74,792 | $84,183 | Condensed Consolidated Statements of Operations and Comprehensive Loss Details the company's revenues, expenses, and net loss for the three months ended March 31, 2023, and 2022 Condensed Consolidated Statements of Operations and Comprehensive Loss (In thousands, except per share data) | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $8,113 | $6,635 | | General and administrative | $2,997 | $3,224 | | Total operating expenses | $11,110 | $9,859 | | Loss from operations | $(11,110) | $(9,859) | | Other income (expense), net | $338 | $(5) | | Net loss and comprehensive loss | $(10,772) | $(9,864) | | Net loss per share, basic and diluted | $(0.75) | $(0.69) | | Weighted-average common shares outstanding | 14,285,905 | 14,330,693 | Condensed Consolidated Statements of Stockholders' Equity Outlines changes in the company's stockholders' equity, including additional paid-in capital and accumulated deficit, for the three months ended March 31, 2023, and 2022 Changes in Stockholders' Equity (In thousands) | Item | Balance as of Dec 31, 2022 | Stock-based Compensation | Net Loss | Balance as of Mar 31, 2023 | | :------------------------- | :------------------------- | :----------------------- | :--------- | :------------------------- | | Additional Paid-In Capital | $287,034 | $1,381 | — | $288,415 | | Accumulated Deficit | $(202,865) | — | $(10,772) | $(213,637) | | Total Stockholders' Equity | $84,183 | $1,381 | $(10,772) | $74,792 | Condensed Consolidated Statements of Cash Flows Presents the cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2023, and 2022 Condensed Consolidated Statements of Cash Flows (In thousands) | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(9,924) | $(8,156) | | Net change in cash and cash equivalents | $(9,924) | $(8,156) | | Cash and cash equivalents at beginning of period | $56,409 | $84,833 | | Cash and cash equivalents at end of period | $46,485 | $76,677 | Notes to Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering business description, accounting policies, and specific financial items Note 1. Description of Business Describes Eledon Pharmaceuticals, Inc.'s core business as a clinical-stage biotechnology company focused on developing therapies targeting the CD40 Ligand pathway - Eledon Pharmaceuticals, Inc. is a clinical-stage biotechnology company focused on developing therapies by targeting the CD40 Ligand (CD40L) pathway, with its lead compound, tegoprubart, being an IgG1, anti-CD40L antibody with broad therapeutic potential[28] - The company acquired Anelixis Therapeutics, Inc. on September 14, 2020, which brought the next-generation anti-CD40L antibody into its pipeline[29] Note 2. Going Concern and Management's Plans Addresses the company's going concern status due to recurring losses and outlines management's plans to secure additional financing - The company incurred a net loss of $10.8 million for the three months ended March 31, 2023, and has an accumulated deficit of $213.6 million, raising substantial doubt about its ability to continue as a going concern[31][33] - On May 5, 2023, the company received $35.0 million from an initial closing of a private placement, issuing common stock and pre-funded warrants, with potential for up to an additional $105.0 million in tranche financing and $45.5 million from warrant exercises, subject to clinical milestones and market conditions[32] - Management believes additional capital resources are required to fund operations, and if unable to secure capital on acceptable terms, the company may be forced to alter its business strategy, curtail operations, or cease altogether[32][33] Note 3. Summary of Significant Accounting Policies Outlines the key accounting principles and methods used in preparing the condensed consolidated financial statements - The financial statements are prepared in accordance with GAAP and SEC requirements for interim financial information, reflecting normal and recurring adjustments[34] - Eledon consolidates its wholly-owned subsidiaries, Anelixis Therapeutics, LLC, and Otic Pharma, Ltd., with all significant intercompany accounts and transactions eliminated[36][38] - Research and development expenses, including personnel, contracted services, manufacturing, and stock-based compensation, are expensed as incurred[46] - Basic and diluted net loss per share were the same due to the company's net loss position, with anti-dilutive securities excluded from the diluted EPS calculation[48][50] Note 4. Prepaid Expenses and Other Current Assets Details the composition of prepaid expenses and other current assets as of March 31, 2023, and December 31, 2022 Prepaid Expenses and Other Current Assets (In thousands) | Item | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | Prepaid insurance | $534 | $823 | | Prepaid clinical | $1,580 | $2,115 | | Prepaid other | $258 | $143 | | Other current assets | $47 | $28 | | Total prepaid expenses and other current assets | $2,419 | $3,109 | Note 5. Accrued Expenses and Other Liabilities Provides a breakdown of accrued expenses and other liabilities as of March 31, 2023, and December 31, 2022 Accrued Expenses and Other Liabilities (In thousands) | Item | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | Accrued compensation and related expenses | $845 | $1,909 | | Accrued clinical | $1,141 | $1,826 | | Accrued professional services | $206 | $65 | | Accrued other | $50 | $112 | | Total accrued expenses and other liabilities | $2,242 | $3,912 | Note 6. Commitments and Contingencies Discloses the company's contractual obligations, including lease agreements, license agreements, and potential grant repayments - The company leases office space in Irvine, California (extended through December 31, 2024) and Burlington, Massachusetts (expires November 20, 2024), with total rent expense of $0.1 million for both three-month periods ended March 31, 2023 and 2022[59][60][66] Future Operating Lease Payments (In thousands) | Year | Amount | | :---------------- | :----- | | 2023 (remainder) | $295 | | 2024 | $388 | | Total minimum lease payments | $683 | | Less imputed interest | $(15) | | Present value of lease liabilities | $668 | | Less current portion | $(384) | | Non-current operating lease liabilities | $284 | - The company has license agreements with ALS Therapy Development Foundation, Inc. (milestone payments up to $6.0 million for first product, $2.5 million for second, plus annual maintenance fees and low single-digit royalties on net sales) and Lonza Sales AG Inc. (low single-digit royalties on net sales of tegoprubart)[67][69][70][71][72] - A collaborative research agreement with eGenesis, Inc. grants eGenesis access to tegoprubart for preclinical xenotransplant studies, with eGenesis paying for supplies based on study days per animal[73] - The company received approximately $0.5 million in grants from the Israeli Innovation Authority (2012-2015), repayable from royalties on product sales, with no liability recorded as of March 31, 2023, due to no sales generated[74] Note 7. Stockholders' Equity Details changes in stockholders' equity, including common stock, warrants, and stock-based compensation, for the reporting periods - As of March 31, 2023, the company was permitted to sell up to $13.2 million of common stock under its ATM Program due to SEC 'baby shelf rules,' but no shares have been sold, and sales are restricted until at least August 28, 2023, or 90 days post-registration statement effectiveness from the Private Placement[78][130] Warrant Activity (Shares) | Type | Balance as of Dec 31, 2022 | Balance as of Mar 31, 2023 | | :-------------------------------- | :------------------------- | :------------------------- | | Common Stock Warrants | 1,145,631 | 1,145,631 | | Preferred Stock Warrants (convertible to common) | 50,207.419 (2,789,301 common) | 50,207.419 (2,789,301 common) | Stock-Based Compensation Expense (In thousands) | Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $397 | $880 | | General and administrative | $984 | $1,306 | | Total stock-based compensation | $1,381 | $2,186 | Note 8. Subsequent Events Reports significant events occurring after the balance sheet date, specifically a private placement financing agreement - On April 28, 2023, the company entered into a Securities Purchase Agreement for a private placement, with the initial closing on May 5, 2023, generating $35.0 million by issuing 8,730,168 shares of common stock and pre-funded warrants for 6,421,350 shares[85][86] - The private placement includes potential for an additional $105.0 million in tranche financing (second and third closings) and $45.5 million from the exercise of common warrants, all subject to specific clinical development milestones and market conditions[85][86] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's perspective on the company's financial condition, operational results, liquidity, capital resources, and risks for the three months ended March 31, 2023 ABOUT ELEDON PHARMACEUTICALS Provides an overview of Eledon Pharmaceuticals, its strategic focus, lead product candidate, and development pipeline Overview Introduces Eledon Pharmaceuticals as a clinical-stage biotechnology company focused on the CD40 Ligand pathway and its lead compound, tegoprubart - Eledon Pharmaceuticals is a clinical-stage biotechnology company focused on the CD40 Ligand (CD40L) pathway to develop therapies for transplanted organ protection, rejection prevention, and Amyotrophic Lateral Sclerosis (ALS)[89] - The lead compound, tegoprubart, is an IgG1, anti-CD40L antibody designed for improved safety and pharmacokinetic advantages, inhibiting both CD40 and CD11 costimulatory signaling pathways[89][91] - The company's strategy prioritizes kidney transplantation programs, discontinues islet cell transplantation, and deprioritizes the IgA Nephropathy (IgAN) program, with ALS clinical development requiring additional financing[93] Kidney transplantation: prevention of allograft rejection Details the development of tegoprubart for preventing kidney transplant rejection, including clinical trial results and future plans - Tegoprubart aims to prevent acute and chronic kidney transplant rejection without calcineurin inhibitors (CNIs), which are associated with significant side effects like nephrotoxicity and cardiotoxicity[95][96] - The company reported safety and efficacy results from a Phase 1b clinical trial in March 2023, where tegoprubart replaced tacrolimus in de novo kidney transplantation patients[97] - An IND application for a Phase 2 trial of tegoprubart for kidney transplant rejection prevention was cleared by the FDA in July 2022, with patient enrollment planned for Q3 2023, enrolling approximately 120 participants[98] Amyotrophic Lateral Sclerosis Discusses the company's efforts to develop tegoprubart for Amyotrophic Lateral Sclerosis (ALS), including preclinical and clinical study outcomes and financing needs - ALS is a progressive paralytic disorder with an estimated 30,000 cases in the U.S., characterized by motor neuron degeneration and neuroinflammation[99][100] - Tegoprubart is designed to block CD40L binding to CD40, potentially inhibiting neuroinflammatory pathways in ALS, with preclinical studies showing prolonged survival and delayed disease progression in mouse models[101] - A Phase 2a study in adult ALS subjects completed in May 2022 met primary endpoints of safety and tolerability, with no drug-related serious adverse events and dose-dependent target engagement and reduction in pro-inflammatory biomarkers[104] - Continued clinical development for ALS requires additional financing, which the company cannot assure will be obtained on acceptable terms[105] IgA Nephropathy Provides an update on the deprioritized IgA Nephropathy (IgAN) program, including disease prevalence and study status - The IgAN program has been deprioritized; IgAN is a leading cause of chronic glomerulonephritis, affecting approximately 150,000 persons in the U.S., with 30-40% progressing to end-stage renal disease[106] - An IND for tegoprubart in IgAN was cleared in August 2022, and a global Phase 2a study was initiated, with safety data from the high-dose cohort reported in March 2023, but the low-dose cohort will not be initiated[108] Collaboration Agreement with eGenesis for Xenotransplantation Studies Describes the collaborative research agreement with eGenesis, Inc. for preclinical xenotransplantation studies using tegoprubart - In January 2023, Eledon entered a collaborative research agreement with eGenesis, Inc., providing access to tegoprubart for preclinical xenotransplantation studies in kidney, heart, and islet cell programs[109] Financing Activities Summarizes recent and potential future financing activities, including a private placement and contingent funding - On April 28, 2023, the company entered a Securities Purchase Agreement for a private placement, with the initial closing on May 5, 2023, yielding $35.0 million from the sale of 8,730,168 common shares and pre-funded warrants for 6,421,350 shares[111][112] - Potential additional funding of $105.0 million from second and third closings and $45.5 million from common warrant exercises is contingent on achieving specified clinical development milestones and market conditions[111][112] Market Trends and Uncertainties Discusses the impact of macroeconomic trends, the COVID-19 pandemic, and financing contingencies on the company's operations and development - The company faces risks from the COVID-19 pandemic and broader macroeconomic trends, including extreme volatility in financial markets, diminished liquidity, inflation, and rising interest rates, which could delay product development or impact financing[113] - The second and third closings of the Securities Purchase Agreement are subject to clinical development milestones and market conditions, with no assurance of satisfaction, potentially forcing the company to alter strategy or cease operations if capital is not raised[114] CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES Confirms no material changes in critical accounting policies or significant judgments and estimates during the three months ended March 31, 2023 - There have been no significant and material changes in the company's critical accounting policies and significant judgments and estimates during the three months ended March 31, 2023, compared to those disclosed in the 2022 Annual Report on Form 10-K[117] RESULTS OF OPERATIONS Analyzes the company's financial performance, including changes in operating expenses and net loss, for the three months ended March 31, 2023, compared to 2022 Comparison of the Three Months Ended March 31, 2023 and 2022 Provides a comparative overview of key operating results for the three months ended March 31, 2023, and 2022 Operating Results Comparison (In thousands) | Item | 2023 | 2022 | $ Variance | | :-------------------------- | :----- | :----- | :--------- | | Research and development | $8,113 | $6,635 | $1,478 | | General and administrative | $2,997 | $3,224 | $(227) | | Total operating expenses | $11,110 | $9,859 | $1,251 | | Loss from operations | $(11,110) | $(9,859) | $(1,251) | | Other income (expense), net | $338 | $(5) | $343 | | Net loss | $(10,772) | $(9,864) | $(908) | Research and Development Expenses Explains the increase in research and development expenses for Q1 2023, primarily driven by clinical development and personnel costs - Research and development expenses increased by $1.5 million to $8.1 million for Q1 2023, primarily due to higher clinical development expenses ($2.1 million) and increased personnel costs ($0.4 million)[119] - This increase was partially offset by decreases in stock-based compensation ($0.5 million), manufacturing costs ($0.3 million), and consulting expenses ($0.2 million)[119] General and Administrative Expenses Details the decrease in general and administrative expenses for Q1 2023, mainly due to lower stock-based compensation - General and administrative expenses decreased by $0.2 million to $3.0 million for Q1 2023, mainly due to lower stock-based compensation costs ($0.3 million), partially offset by a $0.1 million increase in personnel expenses[120] Other Income (expense), Net Attributes the change in other income (expense), net, to increased interest income from higher interest rates on cash and cash equivalents - The change in other income (expense), net, was primarily driven by an increase in interest income due to higher interest rates on cash and cash equivalents for Q1 2023[121] LIQUIDITY AND CAPITAL RESOURCES Assesses the company's cash position, funding needs, and ability to meet future material cash requirements Sources of Liquidity Identifies the company's cash and cash equivalents and highlights the ongoing need for additional capital due to recurring losses - As of March 31, 2023, the company had $46.5 million in cash and cash equivalents, excluding the $35.0 million from the initial private placement funding received in May 2023[122][124] - The company has incurred significant net losses since inception and expects continued losses, leading to substantial doubt about its ability to continue as a going concern without additional capital[123][124] - Future tranche financing and warrant exercises from the private placement are contingent on clinical milestones and market conditions, with no assurance of realization[124] Material Cash Requirements Outlines the primary uses of cash for operating expenses and the factors influencing future funding needs - Primary cash use is for operating expenses, including clinical R&D, manufacturing, legal, compensation, and general overhead, with no material changes in contractual obligations as of March 31, 2023[125] - Expenses are expected to increase with the expansion of the tegoprubart clinical program and potential commercialization, necessitating additional financing through equity, debt, or collaborations[126][127] - Factors influencing funding needs include clinical trial progress, macroeconomic conditions, scope of indications, manufacturing costs, regulatory review, intellectual property, and commercialization expenses[128][131] Cash Flows Analyzes the net cash used in operating activities for Q1 2023 and notes the absence of investing or financing cash flows Net Cash Flow Activity (In thousands) | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(9,924) | $(8,156) | | Net change in cash and cash equivalents | $(9,924) | $(8,156) | - Net cash used in operating activities for Q1 2023 was $9.9 million, primarily due to a net loss of $10.8 million, partially offset by non-cash items like stock-based compensation and amortization[133] - There were no cash flows from investing or financing activities for the three months ended March 31, 2023 and 2022[135] Item 3. Quantitative and Qualitative Disclosures About Market Risk States that Eledon Pharmaceuticals, Inc., as a Smaller Reporting Company, is exempt from providing quantitative and qualitative market risk disclosures - The company is designated as a Smaller Reporting Company and is therefore not required to provide disclosures about market risk[137] Item 4. Controls and Procedures Confirms the effectiveness of the company's disclosure controls and procedures as of March 31, 2023, with no material changes in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2023[138] - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2023[139] PART II. OTHER INFORMATION Provides additional information beyond the financial statements, including legal proceedings, risk factors, and other required disclosures Item 1. Legal Proceedings States that Eledon Pharmaceuticals, Inc. is not currently involved in any material legal proceedings expected to significantly impact its operations or financial condition - Neither the company nor its subsidiaries are party to any material legal proceedings expected to significantly impact results of operations, financial condition, or cash flows[141] Item 1A. Risk Factors Outlines significant risks that could adversely affect Eledon Pharmaceuticals, Inc.'s business, financial condition, results of operations, and growth prospects Risks Related to Our Operations Discusses operational risks, including the company's limited operating history, going concern doubts, need for funding, and early-stage product development - The company's short operating history and the Anelixis acquisition make it difficult to evaluate future viability, as it has not yet demonstrated commercial-scale manufacturing, pivotal clinical trial execution, or successful sales and marketing[144][145] - Substantial doubt exists about the company's ability to continue as a going concern due to recurring losses and the need for additional capital, with no assurance that contingent private placement funds or other funding will be secured[146][147] - The company has incurred significant operating losses since inception ($10.8 million net loss for Q1 2023, $213.6 million accumulated deficit) and expects continued losses, requiring substantial additional funding to complete drug development and achieve profitability[148][149][151] - Issuances of common stock, including those from the recent private placement and outstanding warrants, could result in significant dilution for existing stockholders and downward pressure on the stock price[153][154] - Product candidates are in early clinical development, and there is a high risk of failure, with no guarantee of successful development, regulatory approval, or commercialization, which would materially harm the business[155][156] - The COVID-19 pandemic and other public health crises, as well as unfavorable global economic conditions (e.g., inflation, rising interest rates), could adversely affect business operations, delay development, and impact the ability to obtain financing[158][159][160][161][162] - Adverse conditions in financial markets, including bank failures (e.g., Silicon Valley Bank), could impact liquidity and financial performance, as the company maintains deposits exceeding FDIC insurance limits[163] - Drug development is a lengthy, expensive, and uncertain process, with risks of delays, additional studies, or failure to demonstrate safety and efficacy, which could prevent marketing approval and increase costs[164][165][167] - Delays or difficulties in patient enrollment for clinical trials, influenced by factors like eligibility criteria, perceived risks/benefits, and competition, could delay regulatory approvals and increase development expenses[168][169] - Conducting clinical trials outside the U.S. is subject to unique risks, including regulatory differences, compliance burdens, and geopolitical instability (e.g., Ukraine/Russia conflict), which could cause disruptions or delays[170][171][172][173] - Identification of serious adverse events or unacceptable side effects during development could force the company to abandon or limit product candidate development, significantly harming its business and prospects[174][175] - Future success depends on retaining executives and key employees and attracting qualified personnel, with recent program deprioritizations and financial uncertainties potentially increasing employee turnover risk[176][177][178] Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance Matters Addresses risks associated with obtaining regulatory approvals, post-marketing compliance, healthcare legislation, data security, and environmental regulations - Failure or delays in obtaining required regulatory approvals (FDA, international) for product candidates, or approvals for narrow indications, could materially impair the ability to commercialize products and generate revenue[179][180][181][182] - Approved products will be subject to extensive post-marketing regulatory requirements, and non-compliance or later discovery of adverse events could lead to restrictions, withdrawal from the market, or penalties[183][184][185][186] - Legislation regulating the pharmaceutical and healthcare industries, such as the Inflation Reduction Act of 2022, could increase development costs, delay approvals, and reduce product prices and reimbursement, negatively impacting profitability[187][188][189][190][191][192] - Business operations and relationships with healthcare providers are subject to anti-kickback, fraud and abuse, and other healthcare laws (e.g., FCA, Anti-Kickback Statute, HIPAA), with potential for significant civil/criminal penalties, program exclusion, and reputational harm for non-compliance[193][194][195][196] - Reliance on information technology systems and third-party collaborators exposes the company to risks of security breaches, disruptions, or incidents, which could lead to data loss, compromise sensitive information, and materially harm reputation, business, and financial condition[197][198][199][200] - European data collection is governed by restrictive regulations like GDPR, imposing significant responsibilities and potential fines for non-compliance, which could materially adversely affect business and financial results[201][202] - Failure to comply with environmental, health, and safety laws and regulations could result in substantial fines, penalties, or costs, impairing development or production efforts[203] Risks Related to the Commercialization of Our Product Candidates Covers challenges in achieving market acceptance, potential post-approval issues, lack of sales infrastructure, competitive landscape, and reimbursement uncertainties - Even with marketing approval, product candidates may fail to achieve sufficient market acceptance by physicians, patients, and third-party payers, impacting revenue generation and profitability[204][206] - If approved products are later found to be less effective or cause undesirable side effects, marketing ability could be compromised, leading to regulatory actions, decreased demand, and significant financial and reputational harm[207][208] - The company currently lacks a marketing and sales force; failure to establish effective capabilities or secure third-party agreements could prevent successful commercialization and revenue generation[209] - The drug development and commercialization market is highly competitive, with larger pharmaceutical and biotechnology companies possessing greater resources, potentially leading to competitors developing and commercializing products more successfully[210][211][212][213][214][215][216][217][218] - Uncertainty regarding insurance coverage and reimbursement for newly approved products, both domestically and internationally, could limit market access and decrease the ability to generate revenue, especially with increasing cost-containment initiatives[219][220][221][222][223] - Product liability lawsuits related to clinical trials or commercial sales could result in substantial liabilities, decreased demand, reputational damage, and significant costs, potentially exceeding current insurance coverage[224][225] Risks Related to Our Dependence on Third Parties Highlights risks stemming from reliance on third parties for manufacturing, clinical testing, and other critical development activities - Reliance on third parties for manufacturing product candidates for clinical trials and commercialization increases the risk of insufficient quantities, unacceptable cost/quality, and delays, as the company lacks internal manufacturing facilities[226][227][228] - Third-party manufacturers are subject to regulatory review, and their non-compliance with cGMP or performance failures could lead to sanctions, delays, and adverse impacts on product supply[231] - Dependence on Contract Research Organizations (CROs) and other third parties for nonclinical and clinical testing means outcomes are partially beyond the company's direct control, and their inadequate or untimely performance could significantly delay development and commercialization[235] Risks Related to Our Intellectual Property Addresses challenges in obtaining and maintaining intellectual property protection, potential litigation, licensing needs, and trade secret confidentiality - Inability to obtain and maintain broad intellectual property protection (patents, trade secrets) for technology and products could allow competitors to commercialize similar products, impairing the company's ability to compete[236][237][238][239][240][241] - The company may become involved in expensive, time-consuming, and potentially unsuccessful lawsuits to protect or enforce its patents or other intellectual property, risking invalidation of patents or liability for infringement[244][245][246][247] - The company may need to license intellectual property from third parties, and if such licenses are unavailable or not on commercially reasonable terms, its business could be materially harmed[248] - Failure to protect the confidentiality of trade secrets, including through breaches of non-disclosure agreements or independent development by competitors, would harm the company's business and competitive position[249] - The company may be subject to claims of misappropriation of trade secrets from former employers of its personnel, leading to costly litigation, potential loss of intellectual property rights, or distraction of management[250] Risks Related to Our Common Stock Discusses factors influencing stock price volatility, internal control deficiencies, anti-takeover provisions, and the company's dividend policy - The company's stock price is expected to be volatile due to factors such as financial condition uncertainties, regulatory approval delays, clinical trial results, competition, and macroeconomic conditions, potentially leading to unexpected drops[251][252][253] - Failure to establish and maintain proper internal control over financial reporting could adversely affect financial reporting accuracy and timing, stock price, and compliance with listing requirements, incurring substantial costs and management distraction[255][256][257] - Provisions in the corporate charter and Delaware law could make an acquisition of the company more difficult and may prevent stockholders from replacing or removing current management, potentially limiting stockholder value[258][264] - The company does not expect to pay cash dividends in the foreseeable future, meaning capital appreciation will be the sole source of gain for stockholders[259] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds States that this item is not applicable to the company for the reporting period - This item is not applicable[260] Item 3. Defaults Upon Senior Securities Reports no defaults upon senior securities for the reporting period - There are no defaults upon senior securities[261] Item 4. Mine Safety Disclosures States that this item is not applicable to the company for the reporting period - This item is not applicable[262] Item 5. Other Information Reports no other information required for this item - There is no other information to report[263] Item 6. Exhibits Lists all exhibits filed as part of the Form 10-Q, including key agreements, corporate documents, and certifications - Key exhibits include the Agreement and Plan of Merger (2.1), Restated Certificate of Incorporation (3.1), various Certificates of Amendment (3.2-3.5), Certificates of Designations for Preferred Stock (3.6-3.7), Amended and Restated Bylaws (3.8), Form of Pre-Funded Warrant (4.1), Form of Tranche A Warrant (4.2), Securities Purchase Agreement (10.1), Registration Rights Agreement (10.2), Letter Agreements (10.3-10.4), and Officer Certifications (31.1, 31.2, 32.1, 32.2)[265][266] Signatures Confirms the official signing of the report by the Chief Executive Officer and Chief Financial Officer on May 11, 2023 - The report is duly signed on May 11, 2023, by David-Alexandre C. Gros, M.D., Chief Executive Officer and Director, and Paul Little, Chief Financial Officer[268][270]