Atossa Therapeutics(ATOS) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's financial position, performance, and accounting policies for the periods ended June 30, 2023, and December 31, 2022 Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of specific dates | Assets/Liabilities & Equity (in thousands) | As of June 30, 2023 | As of December 31, 2022 | | :----------------------------------------- | :------------------ | :---------------------- | | Cash and cash equivalents | $99,390 | $110,890 | | Total current assets | $106,003 | $118,197 | | Total Assets | $108,355 | $123,532 | | Total current liabilities | $3,478 | $5,568 | | Total Liabilities | $3,478 | $5,568 | | Total Stockholders' Equity | $104,877 | $117,964 | | Total Liabilities and Stockholders' Equity | $108,355 | $123,532 | Condensed Consolidated Statements of Operations This section outlines the company's financial performance over specific periods, detailing revenues, expenses, and net loss | Operating Expenses (in thousands) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $3,705 | $3,433 | $7,213 | $4,937 | | General and administrative | $4,088 | $3,162 | $7,678 | $6,411 | | Total operating expenses | $7,793 | $6,595 | $14,891 | $11,348 | | Operating loss | $(7,793) | $(6,595) | $(14,891) | $(11,348) | | Impairment charge | $(2,990) | $- | $(2,990) | $- | | Interest income | $983 | $11 | $1,833 | $13 | | Net loss | $(9,830) | $(6,672) | $(16,111) | $(11,457) | | Loss per share (basic and diluted)| $(0.08) | $(0.05) | $(0.13) | $(0.09) | Condensed Consolidated Statements of Stockholders' Equity This section details changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit | Stockholders' Equity (in thousands) | Balance at December 31, 2022 | Balance at June 30, 2023 | | :---------------------------------- | :--------------------------- | :----------------------- | | Common Stock Amount | $22,792 | $22,792 | | Additional Paid-in Capital | $250,784 | $253,960 | | Treasury Stock | $- | $(152) | | Accumulated Deficit | $(156,194) | $(172,305) | | Total Stockholders' Equity | $117,964 | $104,877 | - The company repurchased 119 shares of common stock for $152 thousand as of June 30, 2023, which are recorded as treasury stock[11][45] - Stock-based compensation cost for stock options granted totaled $1,603 thousand for the three months ended June 30, 2023, and $3,176 thousand for the six months ended June 30, 2023[11] Condensed Consolidated Statements of Cash Flows This section presents the cash inflows and outflows from operating, investing, and financing activities over specific periods | Cash Flows (in thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------ | :----------------------------- | :----------------------------- | | Net loss | $(16,111) | $(11,457) | | Net cash used in operating activities | $(11,487) | $(10,827) | | Net cash used in investing activities | $(13) | $(13) | | Net cash used in financing activities | $- | $- | | Net decrease in cash | $(11,500) | $(10,840) | | Ending cash, cash equivalents and restricted cash | $99,500 | $125,647 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements NOTE 1: NATURE OF OPERATIONS This note describes the company's primary business activities as a clinical-stage biopharmaceutical company focused on oncology - Atossa Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing proprietary innovative medicines in oncology, specifically breast cancer and other breast conditions[16] NOTE 2: LIQUIDITY AND CAPITAL RESOURCES This note discusses the company's financial liquidity, cash position, and future capital funding requirements - The company has incurred net losses and negative operating cash flows since inception, with a net loss of $16,111 thousand and $11,487 thousand cash used in operating activities for the six months ended June 30, 2023[17] - As of June 30, 2023, the company had $99,390 thousand in unrestricted cash and cash equivalents and working capital of $102,525 thousand[17] - Management believes current cash and cash equivalents are sufficient to finance operations for at least one year, but the company will need to raise substantial additional capital for its business plan[17] NOTE 3: SUMMARY OF ACCOUNTING POLICIES This note outlines the significant accounting principles and methods used in preparing the financial statements - The financial statements are prepared in accordance with GAAP for interim information, with all amounts presented in thousands except for par value and per share data[19] - The company operates as a single segment and measures non-marketable equity investments at cost less impairment, performing assessments for impairment at each reporting period[21] - Research and development costs are generally expensed as incurred, including manufacturing, preclinical studies, clinical trials, and associated compensation[25] NOTE 4: INVESTMENT IN EQUITY SECURITIES This note details the company's investment in Dynamic Cell Therapies, Inc. and related impairment charges - On December 23, 2022, the company invested $4,700 thousand in Dynamic Cell Therapies, Inc. (DCT), a preclinical CAR T-cell therapy developer, acquiring approximately 19% of its outstanding shares[30] - An impairment charge of $2,990 thousand was recorded as of June 30, 2023, due to adverse market conditions and concerns about DCT's going concern ability, reducing the investment's value to $1,710 thousand[31][33] NOTE 5: RESTRICTED CASH This note explains the nature and amount of cash held for specific purposes, such as security for credit cards - Restricted cash remained at $110 thousand as of June 30, 2023, and December 31, 2022, serving as security for commercial credit cards[34] NOTE 6: PREPAID EXPENSES This note provides a breakdown of various prepaid expenses, including research and development and insurance | Prepaid Expenses (in thousands) | As of June 30, 2023 | As of December 31, 2022 | | :------------------------------ | :------------------ | :---------------------- | | Prepaid research and development| $4,918 | $3,480 | | Prepaid insurance | $509 | $387 | | Professional services | $191 | $130 | | Other | $141 | $34 | | Total prepaid expenses | $5,759 | $4,031 | NOTE 7: RESEARCH AND DEVELOPMENT REBATE RECEIVABLE This note details the R&D rebate received by the Australian subsidiary and the total rebate receivable - The company's Australian subsidiary incurred $34 thousand and $86 thousand in qualified R&D expenses for the three and six months ended June 30, 2023, respectively, receiving a rebate that reduced R&D expense by $10 thousand and $37 thousand for the same periods[37] - Total R&D rebate receivables were $737 thousand as of June 30, 2023, down from $743 thousand at December 31, 2022[37] NOTE 8: ACCRUED EXPENSES This note presents a breakdown of accrued liabilities, including research and development and professional services | Accrued Expenses (in thousands) | As of June 30, 2023 | As of December 31, 2022 | | :------------------------------ | :------------------ | :---------------------- | | Research and development | $559 | $1,038 | | Professional Services | $244 | $21 | | Total accrued liabilities | $803 | $1,059 | NOTE 9: PAYROLL LIABILITIES This note details the company's payroll-related liabilities, such as accrued bonuses and vacation | Payroll Liabilities (in thousands) | As of June 30, 2023 | As of December 31, 2022 | | :--------------------------------- | :------------------ | :---------------------- | | Accrued bonuses | $50 | $1,060 | | Accrued vacation | $23 | $224 | | Accrued payroll liabilities | $1,382 | $241 | | Total payroll liabilities | $1,455 | $1,525 | NOTE 10: FAIR VALUE OF FINANCIAL INSTRUMENTS This note provides information on the fair value measurements of financial assets, specifically money market accounts | Financial Assets (in thousands) | As of June 30, 2023 (Level 1) | As of December 31, 2022 (Level 1) | | :------------------------------ | :---------------------------- | :-------------------------------- | | Money market account | $97,182 | $102,681 | - The company had no financial liabilities subject to fair value measurements on a recurring basis as of June 30, 2023, and December 31, 2022[42] NOTE 11: STOCKHOLDERS' EQUITY This note details the components of stockholders' equity, including authorized shares, repurchase programs, and outstanding warrants - The company is authorized to issue 175,000 shares of common stock ($0.18 par value) and 10,000 shares of preferred stock ($0.001 par value)[43] - A share repurchase program was authorized on June 27, 2023, to repurchase up to $10,000 thousand of common stock, expiring December 31, 2023. As of June 30, 2023, 119 shares were purchased for $152 thousand[45] | Warrants Outstanding (shares) | Exercise Price Per Share | Expiration Date | | :---------------------------- | :----------------------- | :-------------- | | December 2020 warrants (6,490)| $1.00 | Dec 11, 2024 - Jun 21, 2025 | | January 2021 warrants (4,500) | $1.055 | July 8, 2025 | | March 2021 warrants (10,525) | $2.88 | Sep 22, 2025 | | Total (21,515) | | | NOTE 12: NET LOSS PER SHARE This note explains the calculation of basic and diluted net loss per share and the impact of anti-dilutive securities - Basic and diluted net loss per share are the same due to the anti-dilutive effect of potential common shares from stock options, Series B convertible preferred stock, and warrants[59][60] | Common Share Equivalents Excluded (in thousands) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Options to purchase common stock | 17,828 | 13,337 | 16,294 | 12,219 | | Series B convertible preferred stock | 165 | 165 | 165 | 165 | | Warrants to purchase common stock | 21,515 | 22,009 | 21,515 | 22,142 | | Total | 39,508 | 35,511 | 37,974 | 34,526 | NOTE 13: INCOME TAXES This note discusses the company's income tax position, including deferred tax assets and valuation allowances - A full valuation allowance is provided against net deferred tax assets due to cumulative losses, and no income tax liabilities existed as of June 30, 2023, and December 31, 2022[63] NOTE 14: CONCENTRATION OF CREDIT RISK This note highlights the company's exposure to credit risk, particularly regarding cash and cash equivalents exceeding insured limits - The company had $99,208 thousand and $110,647 thousand in cash and cash equivalents exceeding FDIC insured limits as of June 30, 2023, and December 31, 2022, respectively[64] NOTE 15: COMMITMENTS AND CONTINGENCIES This note outlines the company's contractual obligations, including lease agreements and CRO contracts - The company terminated its existing office lease and entered a new 12-month operating lease for $3 thousand monthly rent, commencing July 1, 2023[65] - Lease expense for the three and six months ended June 30, 2023, was $3 thousand and $7 thousand, respectively[66] - As of June 30, 2023, the company had an estimated non-cancellable contractual commitment of $908 thousand related to a CRO contract[67] NOTE 16: STOCK-BASED COMPENSATION This note details the stock options granted and the associated compensation expense recognized by the company - The company granted 4,230 and 6,691 options to purchase common stock during the three and six months ended June 30, 2023, respectively, with weighted average grant date fair values of $0.74 and $0.69[69] | Stock-Based Compensation Expense (in thousands) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative | $1,156 | $1,140 | $2,211 | $2,323 | | Research and development | $447 | $631 | $965 | $1,254 | | Total stock compensation expense | $1,603 | $1,771 | $3,176 | $3,577 | - The company recorded $320 thousand in compensation expense related to accelerated unvested options for the former CFO and is obligated to pay an additional $554 thousand for salary and bonus severance[72] NOTE 17: SUBSEQUENT EVENT This note reports on significant events occurring after the reporting period, specifically further share repurchases - From July 1, 2023, to August 10, 2023, 720 shares were purchased for a total cost of $868 thousand under the share repurchase program[76] 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, highlighting key developments in its clinical programs, investment activities, and financial performance for the three and six months ended June 30, 2023, compared to the prior year. It also discusses liquidity, capital resources, and critical accounting policies Forward-Looking Statements This section cautions readers about statements regarding future business, clinical, and financial performance, which are subject to inherent risks - The report contains forward-looking statements regarding future business, clinical and commercialization activities, operating costs, supply chain, regulatory approvals, and financial performance, which are subject to risks and uncertainties[77][78] Company Overview This section introduces Atossa Therapeutics as a clinical-stage biopharmaceutical company focused on breast cancer and related conditions - Atossa Therapeutics is a clinical-stage biopharmaceutical company focused on developing innovative medicines for breast cancer and other breast conditions[81] - The lead drug candidate is oral (Z)-endoxifen, being developed for ER+ HER2- breast cancer treatment prior to surgery and for reducing dense breast tissue[81] - The company holds two U.S. patents and one international patent for (Z)-endoxifen, with protection through November 17, 2038, and numerous pending applications[82] Summary of Leading Programs This section provides an overview of the company's key drug development programs, including (Z)-endoxifen and AT-H201 (Z)-endoxifen This subsection describes (Z)-endoxifen as a proprietary oral SERM under development for breast cancer and breast density reduction - (Z)-endoxifen is a proprietary oral Selective Estrogen Receptor Modulator (SERM) being developed for breast cancer and breast density reduction, having completed four Phase 1 and two Phase 2 clinical studies[84] (Z)-endoxifen for Women with Breast Density This subsection details the Phase 2 Karisma-(Z)-endoxifen study for reducing breast density in premenopausal women - A Phase 2, randomized, double-blind, placebo-controlled Karisma-(Z)-endoxifen study in premenopausal women with measurable breast density commenced in December 2021 in Stockholm, Sweden, aiming to enroll approximately 240 participants[86] - The primary objective is to determine the dose-response relationship of daily (Z)-endoxifen on breast density reduction, with secondary endpoints assessing safety and tolerability[86] - FDA input suggests that MBD reduction may require demonstration of breast cancer incidence reduction for approval, potentially necessitating additional studies[87] (Z)-endoxifen for Neoadjuvant Treatment of Breast Cancer This subsection outlines the Phase 2 EVANGELINE and I-SPY 2 studies for (Z)-endoxifen in neoadjuvant breast cancer treatment - The company received FDA IND authorization in October 2022 and Health Canada authorization in June 2023 for the Phase 2 EVANGELINE study of oral (Z)-endoxifen for neoadjuvant treatment of premenopausal women with ER+/HER2- breast cancer[88] - The first PK Run-in Cohort of the EVANGELINE study was fully enrolled in June 2023, with six patients treated at 40 mg/day. The 80 mg/day dose level will commence as the initial dose did not achieve optimal plasma concentrations[91] - A second Phase 2 trial investigating oral (Z)-endoxifen as a neoadjuvant treatment for locally advanced ER+ breast cancer was initiated in March 2023 as part of the I-SPY 2 clinical trial, with six patients dosed as of June 30, 2023[92] Inhaled HNAC(AT-H201) This subsection discusses the shift in focus for AT-H201 development and its current status after a healthy volunteer study - Development of AT-H201 for COVID-19 was shifted in late 2022 to focus on lung function compromised by cancer treatment, and the program is not expected to advance further after concluding a healthy volunteer study in Q1 2023[93] Investment in CAR-T Company This section details the company's strategic investment in Dynamic Cell Therapies, Inc., a preclinical CAR-T therapy developer - On December 23, 2022, the company invested in Dynamic Cell Therapies, Inc. (DCT), a preclinical CAR-T therapy developer, acquiring approximately 19% of its outstanding capital stock[94] Research and Development Phase This section clarifies that the company is in the R&D phase and does not anticipate generating revenue until product launch - The company is currently in the research and development phase and does not anticipate generating revenue until its pharmaceutical programs are developed and launched[95] Commercial Lease Agreements This section describes the termination of an old office lease and the commencement of a new 12-month operating lease - On June 26, 2023, the company terminated its existing office lease and entered a new 12-month operating lease for a larger office space at the same location for $3 thousand monthly rent, commencing July 1, 2023[96] Critical Accounting Policies and Significant Estimates This section highlights key accounting policies and estimates, including investment impairment and R&D expense recognition - The company's investment in DCT Series Seed Preferred Stock is measured at cost less impairment, with a $2,990 thousand impairment charge recorded for the three and six months ended June 30, 2023, due to adverse market conditions and going concern concerns[99] - Research and development expenses are estimated based on open contracts, work orders, and communication with personnel, with costs generally expensed as incurred[101] - Stock option awards are measured at fair value on the grant date using the Black-Scholes model and recognized as compensation expense over the vesting period[104][105] Results of Operations This section analyzes the company's financial performance, comparing operating expenses and net loss for current and prior periods Comparison of the Three Months Ended June 30, 2023 and 2022 This subsection compares the company's operating expenses and financial results for the three-month periods - Total operating expenses increased by $1,198 thousand (18%) to $7,793 thousand for the three months ended June 30, 2023, compared to $6,595 thousand in the prior year[108] | Expense Category (in thousands) | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | Change ($) | Change (%) | | :------------------------------ | :--------------------------- | :--------------------------- | :--------- | :--------- | | Research and Development | $3,705 | $3,433 | $272 | 8% | | General and Administrative | $4,088 | $3,162 | $926 | 29% | | Clinical and non-clinical trials| $2,538 | $1,821 | $717 | 39% | | G&A Compensation | $2,534 | $1,826 | $708 | 39% | | Legal and professional fees | $964 | $676 | $288 | 43% | | Interest income | $983 | $11 | $972 | 8836% | | Impairment charge | $2,990 | $- | $2,990 | N/A | - G&A compensation increased due to $554 thousand in severance costs for the CFO and $138 thousand for new employees, partially offset by a decrease in non-cash stock-based compensation[110] Comparison of the Six Months Ended June 30, 2023 and 2022 This subsection compares the company's operating expenses and financial results for the six-month periods - Total operating expenses increased by $3,543 thousand (31%) to $14,891 thousand for the six months ended June 30, 2023, compared to $11,348 thousand in the prior year[114] | Expense Category (in thousands) | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | Change ($) | Change (%) | | :------------------------------ | :--------------------------- | :--------------------------- | :--------- | :--------- | | Research and Development | $7,213 | $4,937 | $2,276 | 46% | | General and Administrative | $7,678 | $6,411 | $1,267 | 20% | | Clinical trials | $4,874 | $3,109 | $1,765 | 57% | | G&A Compensation | $4,619 | $3,831 | $788 | 21% | | Legal and professional fees | $1,891 | $1,346 | $545 | 40% | | Interest income | $1,833 | $13 | $1,820 | 14000% | | Impairment charge | $2,990 | $- | $2,990 | N/A | - R&D expense increased primarily due to $1,765 thousand higher spending on clinical and non-clinical trials, API, and drug product formulation[115] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term financial obligations and funding needs - As of June 30, 2023, the company had $99,390 thousand in unrestricted cash and cash equivalents and working capital of $102,525 thousand, believing it has sufficient funds for at least the next 12 months[119] - The company incurred a net loss of $16,111 thousand and used $11,487 thousand in operating activities for the six months ended June 30, 2023[119] Cash Flows This section analyzes the sources and uses of cash from operating, investing, and financing activities - Net cash used in operating activities increased by $660 thousand (6.1%) to $11,487 thousand for the six months ended June 30, 2023, primarily due to increased clinical trial activity[120] - Net cash used in investing activities remained consistent at $13 thousand for both periods, mainly for computer purchases[120] - No cash was used in financing activities during the six months ended June 30, 2023, or June 30, 2022[121] Funding Requirements This section discusses the company's anticipated need for additional capital to support ongoing operations and development - The company expects ongoing operating losses and will need to raise additional capital through equity offerings, debt financings, or collaborations, which may not be available on acceptable terms[122][124] - Stockholders have not approved proposals to increase authorized common stock, which may limit the company's ability to raise capital when needed[126] Contractual Obligation This section outlines the company's significant non-cancellable contractual commitments, such as CRO contracts - As of June 30, 2023, the company had an estimated non-cancellable commitment of $903 thousand related to one CRO contract[128] Share Repurchase Program This section details the board-authorized program for repurchasing common stock and its terms - The Board authorized a share repurchase program in June 2023 to buy back up to $10,000 thousand of common stock, expiring December 31, 2023[129] - The program does not obligate the company to acquire a specific number of shares, with timing, manner, price, and amount determined at the company's discretion[129] Off-Balance Sheet Arrangements This section confirms the absence of any off-balance sheet arrangements or relationships with unconsolidated entities - The company does not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships[130] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, Atossa Therapeutics is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Atossa Therapeutics is exempt from providing quantitative and qualitative disclosures about market risk[131] ITEM 4. CONTROLS AND PROCEDURES This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section confirms management's conclusion on the effectiveness of disclosure controls and procedures - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2023[132][134] Changes in Internal Control Over Financial Reporting This section reports on the absence of material changes in internal control over financial reporting during the quarter - There have been no material changes in internal control over financial reporting during the quarter ended June 30, 2023[134] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and other required disclosures not included in the financial statements ITEM 1. LEGAL PROCEEDINGS The company is not currently a party to any material legal proceedings and believes that any existing claims will not have a material adverse effect on its financial position or operations - The company is not currently a party to any material legal proceedings and believes that existing claims will not materially affect its financial position, results of operations, or cash flows[135] ITEM 1A. RISK FACTORS This section outlines various risks that could adversely affect the company's business, including operational losses, funding challenges, clinical trial failures, regulatory hurdles, intellectual property issues, industry competition, and risks related to its securities and market listing Summary of Risk Factors This section provides a concise overview of the key risks impacting the company's business, operations, and financial performance - The company's business is subject to risks including operating losses, funding needs, clinical trial success, regulatory approvals, intellectual property protection, third-party dependencies, competition, and stock market volatility[136][137][138][139][140][141] Risks Relating to our Business This section details operational and financial risks, including historical losses, funding needs, and dependencies on third parties - The company has a history of operating losses and has not established ongoing revenue sources, requiring substantial additional capital to fund future operations, which may not be available on acceptable terms[144][146][147][148] - Successful development and commercial market acceptance of products are uncertain, with potential delays or failures in clinical trials due to safety, efficacy, regulatory approvals, manufacturing, or patient enrollment issues[152][159][160][161] - The company is highly dependent on third-party service providers for manufacturing, testing, supply chain, and clinical trial activities, and any failure or delay by these parties could harm the business[167][168][169][172][173] Risks Related to our Intellectual Property This section addresses challenges in protecting proprietary technology, potential infringement claims, and reliance on trade secrets - The company's commercial success depends on protecting its proprietary technology through patents and licenses, but obtaining and enforcing patents is uncertain, costly, and subject to challenges and changes in patent law[189][190][192][193][199] - Third-party claims of intellectual property infringement could prevent or delay drug development, incur substantial costs, and require licenses that may not be available on commercially reasonable terms[204][206][207] - The company relies on trade secret protection and confidentiality agreements, but cannot guarantee prevention of disclosure or independent development by competitors, which could impair its competitive position[210] Risks Related to Our Industry This section covers risks from legislative changes, regulatory compliance, and intense competition within the biopharmaceutical industry - Legislative or regulatory reforms, including changes in FDA policies or healthcare initiatives, could increase costs, lengthen review times, or make it more difficult to obtain approvals and commercialize products[211][212][213][227] - Failure to comply with complex government regulations concerning patient privacy (HIPAA, GDPR, UK GDPR) could result in significant fines, penalties, litigation, and reputational harm[215][216][217][218][219][220][221] - The company faces intense competition from larger biotechnology and pharmaceutical companies with greater resources and experience, which could limit market share, pricing, and commercial opportunities[228][229] Risks Related to the Securities Markets and Investment in our Securities. This section discusses risks associated with stock market volatility, Nasdaq listing compliance, and anti-takeover provisions - The company faces risks of not satisfying Nasdaq listing standards, including minimum bid price and independent director requirements, which could lead to delisting and adverse consequences for its stock[233][234][235][236] - The trading price of the common stock is highly volatile due to various factors, and substantial sales of shares could cause dilution and price decline[237][238][240] - Anti-takeover provisions in governing documents and Delaware law, along with a concentrated ownership, could delay or prevent a change in control or influence management and operations[243][244] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section reports on the company's share repurchase activities for the three months ended June 30, 2023, detailing the number of shares purchased and the remaining value under the authorized program | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :--------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :--------------------------------------------------------------------------------------- | | April 1, 2023 to April 30, 2023 | — | — | — | $10,000,000 | | May 1, 2023 to May 31, 2023 | — | — | — | $10,000,000 | | June 1, 2023 to June 30, 2023| 119,382 | $1.27 | 119,382 | $9,847,597 | | Total | 119,382 | | 119,382 | | - All repurchases were made pursuant to the publicly announced Share Repurchase Program, authorized in June 2023 for up to $10.0 million of common stock, expiring December 31, 2023[248] ITEM 3. DEFAULTS UPON SENIOR SECURITIES The company reported no defaults upon senior securities for the period - There were no defaults upon senior securities[250] ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[250] ITEM 5. OTHER INFORMATION The company reported no other information for the period - No other information was reported[250] ITEM 6. EXHIBITS This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO, and XBRL-related documents - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[252] - The filing also includes Inline XBRL Instance Document, Taxonomy Extension Schema Document, Calculation Linkbase Document, Definition Linkbase Document, Labels Linkbase Document, Presentation Linkbase Document, and Cover Page Interactive Data File[252] SIGNATURES The report is duly signed on behalf of the registrant by the President and Chief Executive Officer, Steven C. Quay, and the Executive Vice President, Chief Financial Officer, and Secretary, Greg Weaver - The report was signed on August 14, 2023, by Steven C. Quay, President and Chief Executive Officer, and Greg Weaver, Executive Vice President, Chief Financial Officer, and Secretary[253]