Jaguar Health(JAGX) - 2024 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION This section provides the company's unaudited interim financial information, including consolidated statements, management's discussion, market risk disclosures, and internal controls Item 1. Condensed Consolidated Financial Statements This section presents Jaguar Health, Inc.'s unaudited interim financial statements, including balance sheets, income statements, and cash flows, with notes detailing accounting policies and a going concern warning Condensed Consolidated Balance Sheets The balance sheet as of March 31, 2024, shows increased total assets and stockholders' equity, while total liabilities decreased Condensed Consolidated Balance Sheets (In thousands) | (In thousands) | March 31, 2024 (unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $33,714 | $27,963 | | Total Assets | $55,389 | $50,763 | | Total Current Liabilities | $17,814 | $13,987 | | Total Liabilities | $41,086 | $45,866 | | Total Stockholders' Equity | $11,818 | $4,897 | Condensed Consolidated Statements Of Operations Net loss improved to $9.4 million in Q1 2024 due to increased product revenue and reduced operating expenses Condensed Consolidated Statements of Operations (In thousands, except per share data) | (In thousands, except per share data) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Product revenue, net | $2,351 | $1,972 | | Total operating expenses | $10,566 | $11,817 | | Loss from operations | $(8,215) | $(9,845) | | Net loss | $(9,368) | $(12,397) | | Net loss per share, basic & diluted | $(0.06) | $(2.39) | Condensed Consolidated Statements of Cash Flows Net cash used in operations was $7.0 million, offset by $12.3 million from financing activities, resulting in a $5.2 million cash increase Condensed Consolidated Statements of Cash Flows (In thousands) | (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total cash used in operating activities | $(7,047) | $(9,945) | | Total cash provided by financing activities | $12,268 | $18,811 | | Net increase in cash | $5,202 | $8,898 | | Cash at end of the year | $11,671 | $14,367 | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, a going concern warning, customer concentration, and specifics on debt, equity, and segment performance - The company has incurred recurring operating losses and has an accumulated deficit of $317.2 million as of March 31, 2024, raising substantial doubt about its ability to continue as a going concern[31] - The company faces significant customer concentration risk, with two specialty pharmacy customers accounting for 54% and 31% of total revenue for the three months ended March 31, 2024[49] - The company manages its operations through two segments: human health, focused on crofelemer (Mytesi), and animal health[29] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2024 financial performance, highlighting revenue growth and reduced net loss, while acknowledging insufficient capital for future operations Results of Operations Q1 2024 saw a 19.2% increase in net product revenue and a 10.6% decrease in operating expenses, leading to a reduced net loss Results of Operations (In thousands) | (in thousands) | Q1 2024 | Q1 2023 | Variance | Variance % | | :--- | :--- | :--- | :--- | :--- | | Product revenue, net | $2,351 | $1,972 | $379 | 19.2% | | Total operating expenses | $10,566 | $11,817 | $(1,251) | (10.6)% | | Loss from operations | $(8,215) | $(9,845) | $1,630 | (16.6)% | | Net loss | $(9,368) | $(12,397) | $3,029 | (24.4)% | - Research and Development (R&D) expenses decreased by 9.7% to $4.3 million, mainly due to lower clinical trial activities for CTD and other indications[362] - Sales and Marketing (S&M) expenses decreased by 23.4% to $1.4 million, driven by savings from a more cost-effective patient support service and lower sales commissions[365] Liquidity and Capital Resources The company has an accumulated deficit of $317.2 million and insufficient cash for future operations, relying on debt and equity financing - The company had cash of $11.7 million as of March 31, 2024, and management does not believe this is sufficient to fund the operating plan for the next twelve months[373] - In Q1 2024, the company generated $12.3 million in cash from financing activities, primarily through the issuance of 130.9 million shares under its ATM Agreement for net proceeds of $11.3 million[374][382] - Net cash used in operating activities decreased to $7.9 million in Q1 2024 from $9.9 million in Q1 2023[378][379][380] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that quantitative and qualitative disclosures about market risk are not applicable - The company states that quantitative and qualitative disclosures about market risk are not applicable[385] Item 4. Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of March 31, 2024 - Based on an evaluation as of March 31, 2024, the Chief Executive Officer and Principal Financial and Accounting Officer concluded that the company's disclosure controls and procedures were effective[387] - Management concluded that as of March 31, 2024, the company's internal control over financial reporting was effective. There were no material changes during the quarter[388][389] PART II — OTHER INFORMATION This section covers other information including legal proceedings, risk factors related to royalty agreements, and details on unregistered equity sales Item 1. Legal Proceedings The company is not currently subject to any material legal proceedings - As of the filing date, the company is not subject to any material legal proceedings[391] Item 1A. Risk Factors Key financial risks include minimum royalty payment obligations that could strain cash resources, reaching $27.0 million by 2026 - The company's royalty interest agreements require minimum royalty payments even if product sales are insufficient to cover them. The total minimum royalty payments are expected to be $27.0 million in 2026, which may strain cash resources[394][395] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company engaged in unregistered equity sales in Q1 2024, primarily debt-for-equity exchanges and share issuances for licensing agreements - In Q1 2024, the company issued shares of common stock and Series J Preferred Stock in multiple private transactions to extinguish debt and royalty obligations with Streeterville and Iliad[396][397][400] - On February 27, 2024, the company exchanged PIPE Warrants to purchase 7.5 million shares for 18.8 million shares of common stock[399] - On March 18, 2024, the company issued 16.7 million shares of common stock for gross proceeds of approximately $2.0 million in connection with a licensing agreement[403]