UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2022~~2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission File Number: 001-40672

RANI THERAPEUTICS HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware	86-3114789
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2051 Ringwood Avenue San Jose, California	95131
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (408) 457-3700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Class A common stock, par value $0.0001 per share

RANI

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 8, ~~2022,~~2023, the registrant had ~~24,492,016~~25,531,772 shares of Class A common stock, $0.0001 par value per share, outstanding, ~~24,663,752~~24,116,444 shares of Class B common stock, $0.0001 par value per share, outstanding and 0no shares of Class C common stock, $0.0001 par value per share, outstanding. Certain holders of units of the registrant’s consolidated subsidiary, Rani Therapeutics, LLC, who do not hold shares of the registrant’s Class B common stock can exchange their units of Rani Therapeutics, LLC for ~~1,387,471~~1,376,851 shares of the registrant’s Class A common stock.

Table of Contents


		Page
Special Note Regarding Forward-Looking Statements		3

PART I.	FINANCIAL INFORMATION

	RANI THERAPEUTICS HOLDINGS, INC.
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations ~~and Comprehensive Loss~~	6
	Condensed Consolidated Statements of Comprehensive Loss	7
	Condensed Consolidated Statements of Changes in Stockholders’ ~~Equity/Convertible Preferred Units and Members' Deficit~~Equity	78
	Condensed Consolidated Statements of Cash Flows	89
	Notes to Unaudited Condensed Consolidated Financial Statements	910
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2422
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3834
Item 4.	Controls and Procedures	3834

PART II.	OTHER INFORMATION	3935

Item 1.	Legal Proceedings	3935
Item 1A.	Risk Factors	3935
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	41
Signatures		42

Unless otherwise stated or the context otherwise requires, the terms “we,” “us,” and “our,” and similar references refer to Rani Therapeutics Holdings, Inc. (“Rani Holdings”) and its consolidated ~~subsidiaries,~~subsidiary, Rani Therapeutics, LLC (“Rani LLC”) and, prior to December 15, 2022, Rani Management Systems, Inc. (“RMS”). RMS was dissolved as of December 15, 2022.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations," contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and consolidated financial position, business strategy, product candidates, planned preclinical studies and clinical trials, results of clinical trials, research and development costs, manufacturing costs, regulatory approvals, development and advancement of our oral delivery technology, timing and likelihood of success, potential partnering activities as well as plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that are in some cases beyond our control and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “believe,” “estimate,” “predict,” “potential,” “seek,” “aim,” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•

the progress and focus of our current and future clinical trials in the United States and abroad, and the reporting of data from those trials;

•

our ability to advance product candidates into and successfully complete clinical trials;

•

the beneficial characteristics, safety, efficacy, and therapeutic effects of our product candidates;

•

our potential and ability to successfully manufacture and supply our product candidates for clinical trials and for commercial use, if approved;

•

our ability to complete development of the RaniPill HC or any redesign and conduct additional preclinical and clinical studies of the RaniPill HC or any future design of the RaniPill capsule to accommodate target payloads that are larger than the payload capacity of the RaniPill GO capsule currently used for our product candidates;

•

our ability to further develop and expand our platform technology;

•

our ability to utilize our technology platform to generate and advance additional product candidates;

•

the accuracy of our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing;

•

our financial performance;

•

our plans relating to commercializing our product candidates, if approved;

•

our ability to selectively enter into strategic partnership and the expected potential benefits thereof;

•

the implementation of our strategic plans for our business and product candidates;

•

our ability to continue to scale and optimize our manufacturing processes by expanding our use of automation;

•

our estimates of the number of patients in the United States who suffer from the indications we target and the number of patients that will enroll in our clinical trials;

•

the size of the market opportunity for our product candidates in each of the indications we target;

•

our ability to continue to innovate and expand our intellectual property by developing novel formulations and new applications of the RaniPill capsule;

•

our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available;

•

the scope of protection we are able to establish and maintain for intellectual property rights, including our technology platform and product candidates;

•

the sufficiency of our existing cash and cash equivalents to fund our future operating expenses and capital expenditure requirements;

•

~~our expectations regarding the impact of the COVID-19 pandemic and the conflict between Ukraine and Russia on our business;~~

•

developments relating to our competitors and our industry, including competing product candidates and therapies;

•

our realization of any benefit from our organizational structure, taking into account our obligations under the Tax Receivable Agreement (defined herein) and the impact of any payments required to be made thereunder on our liquidity and financial condition; and

•

our expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions described in the section titled “Risk Factors” and elsewhere in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March ~~31, 2022.~~22, 2023. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

RANI THERAPEUTICS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)


	June 30,			December 31,			June 30,			December 31,
	2022			2021			2023			2022
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	97,181		$	117,453		$	7,552		$	27,007
Prepaid expenses		812			2,142
Marketable securities								67,054			71,475
Prepaid expenses and other current assets								1,768			2,442
Total current assets		97,993			119,595			76,374			100,924
Property and equipment, net		5,352			4,612			5,939			6,038
Operating lease right-of-use asset		999			0			1,194			1,065
Total assets	$	104,344		$	124,207		$	83,507		$	108,027
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,440		$	1,080		$	1,037		$	1,460
Related party payable		30			126
Accrued expenses		3,221			1,434
Accrued expenses and other current liabilities								3,842			2,349
Operating lease liability, current portion		658			0			856			1,006
Total current liabilities		5,349			2,640			5,735			4,815
Operating lease liability, net current portion		341			0
Operating lease liability, less current portion								338			59
Long-term debt								29,265			29,149
Total liabilities		5,690			2,640			35,338			34,023
Commitments and contingencies (Note 10)
Stockholders' equity:
Preferred stock, $0.0001 par value - 20,000 shares authorized; NaN issued and outstanding as of June 30, 2022 and December 31, 2021		0			0
Class A common stock, $0.0001 par value - 800,000 shares authorized; 24,494 and 19,712 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		2			2
Class B common stock, $0.0001 par value - 40,000 shares authorized; 24,663 and 29,290 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		3			3
Class C common stock, $0.0001 par value - 20,000 shares authorized; NaN issued and outstanding as of June 30, 2022 and December 31, 2021		0			0
Preferred stock, $0.0001 par value - 20,000 shares authorized; none issued and outstanding as of June 30, 2023 and December 31, 2022								—			—
Class A common stock, $0.0001 par value - 800,000 shares authorized; 25,517 and 25,295 issued and outstanding as of June 30, 2023 and December 31, 2022, respectively								3			3
Class B common stock, $0.0001 par value - 40,000 shares authorized; 24,116 issued and outstanding as of June 30, 2023 and December 31, 2022								2			2
Class C common stock, $0.0001 par value - 20,000 shares authorized; none issued and outstanding as of June 30, 2023 and December 31, 2022								—			—
Additional paid-in capital		69,986			55,737			80,746			75,842
Accumulated other comprehensive loss								(63	)		(73	)
Accumulated deficit		(22,178	)		(8,331	)		(56,594	)		(38,919	)
Total stockholders' equity attributable to Rani Therapeutics Holdings, Inc.		47,813			47,411			24,094			36,855
Non-controlling interest		50,841			74,156			24,075			37,149
Total stockholders' equity		98,654			121,567			48,169			74,004
Total liabilities and stockholders' equity	$	104,344		$	124,207		$	83,507		$	108,027

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

RANI THERAPEUTICS HOLDINGS, INC.

CONDENSED Consolidated Statements of Operations ~~and Comprehensive Loss~~

(in thousands, except per share amounts)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
Contract revenue	$	0		$	1,961		$	0		$	2,717
Operating expenses
Research and development		9,528			3,759			17,118			7,106			11,086			9,528		$	20,798		$	17,118
General and administrative		6,319			3,460			12,509			6,067			7,208			6,319			14,012			12,509
Total operating expenses	$	15,847		$	7,219		$	29,627		$	13,173		$	18,294		$	15,847		$	34,810		$	29,627
Loss from operations		(15,847	)		(5,258	)		(29,627	)		(10,456	)		(18,294	)		(15,847	)		(34,810	)		(29,627	)
Other income (expense), net
Interest income and other, net		35			13			50			60			896			35			1,787			50
Interest expense and other, net		—			(169	)		—			(357	)		(1,266	)		—			(2,473	)		—
Change in estimated fair value of preferred unit warrant		0			(70	)		0			(286	)
Loss before income taxes		(15,812	)		(5,484	)		(29,577	)		(11,039	)		(18,664	)		(15,812	)		(35,496	)		(29,577	)
Income tax expense		(154	)		(1	)		(217	)		(44	)		—			(154	)		—			(217	)
Net loss and comprehensive loss	$	(15,966	)	$	(5,485	)	$	(29,794	)	$	(11,083	)
Net loss													$	(18,664	)	$	(15,966	)	$	(35,496	)	$	(29,794	)
Net loss attributable to non-controlling interest		(8,342	)		(5,485	)		(15,947	)		(11,083	)		(9,361	)		(8,342	)		(17,821	)		(15,947	)
Net loss attributable to Rani Therapeutics Holdings, Inc.	$	(7,624	)	$	—		$	(13,847	)	$	—		$	(9,303	)	$	(7,624	)	$	(17,675	)	$	(13,847	)
Net loss per Class A common share attributable to Rani Therapeutics Holdings, Inc., basic and diluted	$	(0.31	)				$	(0.60	)				$	(0.37	)	$	(0.31	)	$	(0.70	)	$	(0.60	)
Weighted-average Class A common shares outstanding—basic and diluted		24,371						22,930						25,345			24,371			25,293			22,930

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

RANI THERAPEUTICS HOLDINGS, INC.

CONDENSED Consolidated Statements of ~~Changes in STOCKHOLDERS’ Equity/CONVERTIBLE PREFERRED UNITS AND MEMBERS' Deficit~~Comprehensive Loss

(in thousands)

(Unaudited)

Class A Common Stock

Class B Common Stock

Shares

Amount

Shares

Amount

Additional Paid In Capital

Accumulated Deficit

Non-Controlling Interest

Total Stockholders' Equity

Balance at December 31, 2021

19,712

$
2

29,290

$
3

$
55,737

$
(8,331
)

$
74,156

$
121,567

Effect of exchanges of Paired Interests and non-corresponding Class A Units of Rani LLC

4,675

—

(4,517
)

—

—

—

—

—

Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC

—

—

—

—

10,928

—

(10,928
)

—

Equity-based compensation

—

—

—

—

1,268

—

1,637

2,905

Net loss

—

—

—

—

—

(6,223
)

(7,605
)

(13,828
)
Balance at March 31, 2022

24,387

$
2

24,773

$
3

$
67,933

$
(14,554
)

$
57,260

$
110,644

Forfeiture of restricted stock awards

(3
)

—

—

—

(3
)

—

(3
)

(6
)
Effect of exchanges of Paired Interests and non-corresponding Class A Units of Rani LLC

110

—

(110
)

—

—

—

—

—

Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC

—

—

—

—

126

—

(126
)

—

Equity-based compensation

—

—

—

—

1,930

—

2,052

3,982

Net loss

—

—

—

—

—

(7,624
)

(8,342
)

(15,966
)
Balance at June 30, 2022

24,494

$
2

24,663

$
3

$
69,986

$
(22,178
)

$
50,841

$
98,654


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Net loss	$	(18,664	)	$	(15,966	)	$	(35,496	)	$	(29,794	)
Other comprehensive loss
Net unrealized (loss) gain on marketable securities		(107	)		—			19			—
Comprehensive loss	$	(18,771	)	$	(15,966	)	$	(35,477	)	$	(29,794	)
Comprehensive loss attributable to non-controlling interest		(9,415	)		(8,342	)		(17,811	)		(15,947	)
Comprehensive loss attributable to Rani Therapeutics Holdings, Inc.	$	(9,356	)	$	(7,624	)	$	(17,666	)	$	(13,847	)

Convertible Preferred

Common

Units

Amount

Units

Amount

Accumulated
Deficit

Total Members’
Deficit

Balance at December 31, 2020

26,746

$
184,714

46,890

$
664

$
(114,003
)

$
(113,339
)
Issuance of Series E preferred units

884

6,320

—

—

—

—

Exercise of warrant for common units

—

—

6

13

—

13

Equity-based compensation

—

—

—

453

—

453

Net loss

—

—

—

—

(5,598
)

(5,598
)
Balance at March 31, 2021

27,630

$
191,034

46,896

$
1,130

$
(119,601
)

$
(118,471
)
Equity-based compensation

—

—

—

282

—

282

Net loss

—

—

—

—

(5,485
)

(5,485
)
Balance at June 30, 2021

27,630

$
191,034

46,896

$
1,412

$
(125,086
)

$
(123,674
)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

RANI THERAPEUTICS HOLDINGS, INC.

CONDENSED Consolidated Statements of Changes in STOCKHOLDERS’ Equity

(in thousands)

(Unaudited)


	Class A Common Stock				Class B Common Stock
	Shares		Amount		Shares		Amount		Additional Paid In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Non-Controlling Interest			Total Stockholders' Equity
Balance at December 31, 2022		25,295	$	3		24,116	$	2	$	75,842		$	(73	)	$	(38,919	)	$	37,149		$	74,004
Issuance of common stock under employee equity plans, net of shares withheld for tax settlement		81		—		—		—		(124	)		—			—			—			(124	)
Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC		—		—		—		—		98			—			—			(98	)		—
Stock-based compensation		—		—		—		—		2,202			—			—			2,213			4,415
Net loss		—		—		—		—		—			—			(8,372	)		(8,460	)		(16,832	)
Other comprehensive loss		—		—		—		—		—			63			—			63			126
Balance at March 31, 2023		25,376	$	3		24,116	$	2	$	78,018		$	(10	)	$	(47,291	)	$	30,867		$	61,589
Issuance of common stock under employee stock purchase plan		63		—		—		—		219			—			—			—			219
Issuance of common stock under employee equity plans, net of shares withheld for tax settlement		78		—		—		—		(9	)		—			—			—			(9	)
Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC		—		—		—		—		(54	)		—			—			54			—
Equity-based compensation		—		—		—		—		2,572			—			—			2,569			5,141
Net loss		—		—		—		—		—			—			(9,303	)		(9,361	)		(18,664	)
Other comprehensive loss		—		—		—		—		—			(53	)		—			(54	)		(107	)
Balance at June 30, 2023		25,517	$	3		24,116	$	2	$	80,746		$	(63	)	$	(56,594	)	$	24,075		$	48,169


	Class A Common Stock					Class B Common Stock
	Shares			Amount		Shares			Amount		Additional Paid In Capital			Accumulated Deficit			Non-Controlling Interest			Total Stockholders' Equity
Balance at December 31, 2021		19,712		$	2		29,290		$	3	$	55,737		$	(8,331	)	$	74,156		$	121,567
Effect of exchanges of Paired Interests and non-corresponding Class A Units of Rani LLC		4,675			—		(4,517	)		—		—			—			—			—
Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC		—			—		—			—		10,928			—			(10,928	)		—
Equity-based compensation		—			—		—			—		1,268			—			1,637			2,905
Net loss		—			—		—			—		—			(6,223	)		(7,605	)		(13,828	)
Balance at March 31, 2022		24,387		$	2		24,773		$	3	$	67,933		$	(14,554	)	$	57,260		$	110,644
Forfeiture of restricted stock awards		(3	)		—		—			—		(3	)		—			(3	)		(6	)
Effect of exchanges of Paired Interests and non-corresponding Class A Units of Rani LLC		110			—		(110	)		—		—			—			—			—
Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC		—			—		—			—		126			—			(126	)		—
Equity-based compensation		—			—		—			—		1,930			—			2,052			3,982
Net loss		—			—		—			—		—			(7,624	)		(8,342	)		(15,966	)
Balance at June 30, 2022		24,494		$	2		24,663		$	3	$	69,986		$	(22,178	)	$	50,841		$	98,654

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

RANI THERAPEUTICS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

Six Months Ended June 30,

2022

2021

Cash flows from operating activities

Net loss

$
(29,794
)

$
(11,083
)
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

233

264

Equity-based compensation expense

6,881

735

Change in fair value of preferred unit warrant liability

0

286

Non-cash operating lease expense

317

0

Other

0

124

Changes in operating assets and liabilities:

Prepaid expenses and other assets

1,330

2

Accounts payable

209

421

Accrued expenses

1,549

1,554

Operating lease liabilities

(317
)

0

Related party payable

(96
)

738

Deferred revenue

0

(2,717
)
Net cash used in operating activities

(19,688
)

(9,676
)
Cash flows from investing activities

Purchases of property and equipment

(633
)

(235
)
Net cash used in investing activities

(633
)

(235
)
Cash flows from financing activities

Proceeds from employee stock purchase plan

49

0

Proceeds from issuance of preferred units, net of issuance costs

0

6,320

Proceeds from exercise of warrants for common units

0

13

Payment of deferred offering costs

0

(1,886
)
Principal and interest repayments from related party for note receivable

0

1,720

Net cash provided by financing activities

49

6,167

Net decrease in cash and cash equivalents

(20,272
)

(3,744
)
Cash and cash equivalents, beginning of period

117,453

73,058

Cash and cash equivalents, end of period

$
97,181

$
69,314

Supplemental disclosures of non-cash investing and financing activities

Property and equipment purchases included in accounts payable and accrued expenses

$
340

$
0

Exchanges of Paired Interests and non-corresponding Class A Units of Rani LLC

$
74,567

$
0

Deferred financing costs included in accounts payable and accrued expenses

$
0

$
1,527


	Six Months Ended June 30,
	2023			2022
Cash flows from operating activities
Net loss	$	(35,496	)	$	(29,794	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		9,556			6,881
Depreciation and amortization		377			233
Non-cash operating lease expense		520			317
Amortization of debt discount and issuance costs		116			—
Net accretion and amortization of investments in marketable securities		(1,242	)		—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		860			1,330
Accounts payable		(332	)		209
Accrued expenses and other current liabilities		1,707			1,453
Operating lease liabilities		(521	)		(317	)
Net cash used in operating activities		(24,455	)		(19,688	)
Cash flows from investing activities
Purchases of marketable securities		(52,505	)		—
Proceeds from maturities of marketable securities		58,000			—
Purchases of property and equipment		(583	)		(633	)
Net cash provided by (used in) investing activities		4,912			(633	)
Cash flows from financing activities
Issuance of common stock under employee stock purchase plan		219			—
Proceeds from employee stock purchase plan		2			49
Tax withholdings paid on behalf of employees for net share settlement		(133	)		—
Net cash provided by financing activities		88			49
Net decrease in cash, cash equivalents and restricted cash equivalents		(19,455	)		(20,272	)
Cash, cash equivalents and restricted cash equivalents, beginning of period		27,507			117,453
Cash, cash equivalents and restricted cash equivalents, end of period	$	8,052		$	97,181
Supplemental disclosures of non-cash investing and financing activities
Right-of-use assets obtained in exchange for new operating lease liabilities	$	578		$	—
Interest income receivable included in prepaid expenses	$	186		$	—
Property and equipment purchases included in accounts payable and accrued expenses and other current liabilities	$	38		$	340
Exchanges of Paired Interests and non-corresponding Class A Units of Rani LLC	$	—		$	74,567

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

RANI THERAPEUTICS HOLDINGS, INC.

Notes to THE UNAUDITED CONDENSED Consolidated Financial Statements

1. Organization and Nature of Business

Description of Business

Rani Therapeutics Holdings, Inc. (“Rani Holdings”) was formed as a Delaware corporation in April 2021 for the purpose of facilitating an initial public offering (“IPO”) of its Class A common stock, and to facilitate certain organizational transactions and to operate the business of Rani Therapeutics, LLC (“Rani LLC”) and its consolidated subsidiary, Rani Management Services, Inc. (“RMS”). Rani Holdings and its consolidated subsidiaries, Rani LLC and RMS (prior to December 15, 2022), are collectively referred to herein as “Rani” or the “Company.” RMS was dissolved on December 15, 2022.

The Company is a clinical stage biotherapeutics company focusing on advancing technologies to enable the administration of biologics and drugs orally, to provide patients, physicians, and healthcare systems with a convenient alternative to painful injections. The Company is advancing a portfolio of oral therapeutics using its proprietary delivery technology, the RaniPill capsule. The Company is headquartered in San Jose, California and operates in 1one segment.

~~Initial Public Offering and~~ Organizational Transactions

~~In August 2021, the Company closed its IPO and sold~~ ~~7,666,667~~ ~~shares of its Class A common stock, including shares issued pursuant to the exercise in full of the underwriters’ option, for cash consideration of $11.00~~ ~~per share and received approximately $73.6~~ ~~million in net proceeds, after deducting underwriting discounts, offering costs and commissions. The Company used the proceeds from the IPO to purchase~~ ~~7,666,667~~ ~~newly issued economic nonvoting Class A units (“Class A Units”) of Rani LLC.~~

In connection with the IPO, the Company was party to the following organizational transactions (the “Organizational Transactions”):

•

Amended and restated Rani LLC’s operating agreement (the “Rani LLC Agreement”) to appoint the Company as the sole managing member of Rani LLC and effectuated an exchange of all outstanding (i) convertible preferred units, automatic or net exercised warrants to purchase preferred units and common units, and common units of Rani LLC, into economic nonvoting Class A ~~Units~~units (“Class A Units”) and an equal number of voting noneconomic Class B units (“Class B Units”) and (ii) all non-vested incentive units (“Profits ~~Interests~~Interests”) into Class A Units. In connection with the closing of the IPO, each LLC interest was exchanged 1 for 0.5282 as determined and predicated on the initial public offering price of the Company’s Class A common stock;

•

Amended and restated the Company’s certificate of incorporation in July 2021, to provide for the issuance of (i) Class A common stock, each share of which entitles its holders to one vote per share, (ii) Class B common stock, each share of which entitles its holders to 10 votes per share on all matters presented to the Company's stockholders, (iii) Class C common stock, which has no voting rights, except as otherwise required by law and (iv) preferred stock;

•

Exchanged 12,047,925 shares of Class A common stock for existing Class A Units of Rani LLC held by certain individuals and entities (the “Former LLC Owners”) on a one-for-one basis;

•

Issued 29,290,391 shares of Class B common stock to certain individuals and entities that continued to hold Class A Units in Rani LLC after the IPO (the “Continuing LLC Owners”) in return for an equal amount of Rani LLC Class B Units;

•

Entered into a Registration Rights Agreement with certain of the Continuing LLC Owners.

The Continuing LLC Owners are entitled to exchange, subject to the terms of the Rani LLC Agreement, the Class A Units they hold in Rani LLC, together with the shares they hold of the Company Class B common stock (together referred to as a "Paired Interest"), in return for shares of the Company’s Class A common stock on a one-for-one basis provided that, at the Company’s election, the Company has the ability to effect a direct exchange of such Class A common stock or make a cash payment equal to a volume weighted average market price of one share of Class A common stock for each Paired Interest redeemed. Any shares of Class B common stock will be cancelled on a one-for-one basis if, at the election of the Continuing LLC Owners, the Company redeems or exchanges such Paired Interest pursuant to the terms of the Rani LLC Agreement. As of June 30, ~~2022,~~2023, certain individuals who continue to own interests in Rani LLC but do not hold shares of the Company’s Class B common stock (“non-corresponding Class A Units”) have the ability to exchange their non-corresponding Class A Units of Rani LLC for 1,387,471 shares of the Company’s Class A common stock.

Liquidity

The Company has incurred recurring losses since its inception, including net losses of $~~29.8~~35.5 million for the six months ended June 30, ~~2022.~~2023. As of June 30, ~~2022,~~2023, the Company had an accumulated deficit of $~~22.2~~56.6 million and for the six months ended June 30, ~~2022~~2023 had negative cash flows from operations of $~~19.7~~24.5 million. The Company expects to continue to generate operating losses and negative operating cash flows for the foreseeable future as it continues to develop the RaniPill capsule. The Company

expects that its cash, ~~and~~ cash equivalents and marketable securities of $~~97.2~~74.6 million as of June 30, ~~2022~~2023 will be sufficient to fund its operations through at least twelve months from the date the condensed consolidated financial statements are issued. The Company expects to finance its future operations with its existing cash and through strategic financing opportunities that could include, but are not limited to, future offerings of its equity, such as “at the market offerings” as defined in Rule 415(a)(4) under the Securities Act, collaboration or licensing agreements, or the incurrence of debt. However, there is no guarantee that any of these strategic or financing opportunities will be executed or realized on favorable terms, if at all, and some could be dilutive to existing stockholders and holders of interests in the Company. The Company will not generate any revenue from product sales unless, and until, it successfully completes clinical development and obtains regulatory approval ~~for the RaniPill capsule.~~of its product candidates. If the Company obtains regulatory approval for the RaniPill capsule, it expects to incur significant expenses related to developing its internal commercialization capability to support manufacturing, product sales, marketing, and distribution.

The Company’s ability to raise additional capital through either the issuance of equity or debt, is dependent on a number of factors including, but not limited to, the market interest of the Company, which itself is subject to a number of development and business risks and uncertainties, as well as the uncertainty that the Company would be able to raise such additional capital at a price or on terms that are favorable to the Company. ~~Market volatility resulting from the novel coronavirus disease (“COVID-19”) pandemic~~Current global economic conditions or other factors could also adversely impact the Company’s ability to access capital when and as needed.

2. Summary of Significant Accounting Policies

Basis of Presentation

These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain prior period amounts have been reclassified to be consistent with current period presentation.

The Company operates and controls all of the business and affairs of Rani LLC and, through Rani LLC ~~and its subsidiary,~~ conducts its business. Because the Company manages and operates the business and controls the strategic decisions and day-to-day operations of Rani LLC and also has a substantial financial interest in Rani LLC, the Company consolidates the financial results of Rani LLC, and a portion of its net loss is allocated to the non-controlling interests in Rani LLC held by the Continuing LLC Owners. All intercompany accounts and transactions have been eliminated in consolidation.

The Organizational Transactions were considered transactions between entities under common control. As a result, the condensed consolidated financial statements for periods prior to the IPO and the Organizational Transactions have been adjusted to combine the previously separate entities for presentation purposes.

Unaudited Interim Condensed Consolidated Financial Statements

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and pursuant to Form 10-Q of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements include all adjustments necessary to fairly state the financial position and the results of the Company's operations and cash flows for interim periods in accordance with U.S. GAAP. All such adjustments are of a normal, recurring ~~nature except for the adoption of the new lease accounting standard.~~nature. Operating results for the three and six months ended June 30, ~~2022~~2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2022~~2023 or for any future period.

The consolidated balance sheet as of December 31, ~~2021~~2022 included herein was derived from the audited consolidated financial statements as of that date. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the ~~2021~~2022 consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K filed with the SEC on March ~~31, 2022.~~22, 2023.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the Company’s condensed consolidated financial statements and accompanying notes. ~~These~~The Company evaluates its estimates ~~and assumptions are based~~ on ~~current facts,~~an ongoing basis. The Company bases its estimates on its historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expensesalso on assumptions that we believe are not readily apparent from other sources. Estimates include, but are not limited to equity-based compensation expense, accrued research and development costs and, until the occurrence of the Company's IPO, the fair value of Profits Interests and preferred unit warrants. Actualreasonable; however, actual results may differ materially and adversely from these estimates.

Significant Accounting Policies

A description of the Company’s significant accounting policies is included in the audited consolidated financial statements within its Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. Except as noted below, there have been no material changes in the Company’s significant accounting policies during the six months ended June 30, ~~2022.~~2023.

Concentrations of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains accounts in federally insured financial institutions in excess of federally insured limits. The Company also holds money market funds that are not federally insured. However, management believes the Company is not exposed to significant credit risk due to the financial strength of the depository institutions in which these deposits are held and of the money market funds and other entities in which these investments are made.

~~In March 2020,~~Cash, Cash Equivalents and Restricted Cash Equivalents

The following table provides a reconciliation of cash and cash equivalents and restricted cash equivalents reported as a component of prepaid expenses and other current assets on the ~~World Health Organization declared~~condensed consolidated balance sheet which, in aggregate, represents the ~~COVID-19 outbreak~~amount reported in the condensed consolidated statements of cash flows for the six months ended June 30, 2023 and 2022:


	Six Months Ended June 30,
	2023		2022
End of Period:
Cash and cash equivalents	$	7,552	$	97,181
Restricted cash equivalents		500		—
Total cash, cash equivalents and restricted cash equivalents	$	8,052	$	97,181

Marketable Securities

The Company regularly reviews its investments for declines in fair value below their amortized cost basis to determine whether the impairment is due to credit-related factors or noncredit-related factors. The Company's review includes the creditworthiness of the security issuers, the severity of the unrealized losses, whether the Company has the intent to sell the securities and whether it is more likely than not that the Company will be required to sell the securities before the recovery of its amortized cost bases. When the Company determines that a ~~pandemic.~~portion of the unrealized loss is due to an expected credit loss, the Company recognizes the loss amount in Other income (expense), net, with a corresponding allowance against the carrying value of the security the Company holds. The ~~extent~~portion of the unrealized loss related to ~~which the COVID-19 pandemic will further directly or indirectly impact the Company's results of operation and financial condition~~factors other than credit losses is recognized in Accumulated other comprehensive loss. The Company has ~~been~~made an accounting policy election to not measure an allowance for credit loss for accrued interest receivables and will ~~continue to be driven by many factors, most~~recognize a credit loss for accrued interest receivables when the loss becomes probable and estimable. As of ~~which are beyond~~June 30, 2023, interest income receivable recorded as a component of prepaid expenses and other current assets on the ~~Company's control and ability to forecast. Because of these uncertainties, the Company cannot estimate how long or to what extent COVID-19 will impact the Company's operations.~~condensed consolidated balance sheet totaled $0.2 million.

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

~~The~~12

As of June 30, 2023 and 2022, the carrying values of ~~the Company’s cash equivalents, prepaid expenses, accounts payable,~~current assets and ~~accruals approximate their~~liabilities approximates fair value due to their short-term ~~nature.~~nature, respectively. The fair value of the Company’s long-term debt approximated its carrying value based on borrowing rates currently available to the Company for debt with similar terms and maturities (Level 2 inputs).

~~Leases~~

~~Prior to January 1, 2022,~~To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgement exercised by the Company ~~had one cancelable operating lease agreement~~in determining fair value is greatest for ~~its corporate headquarters and recognized related rent expense on a straight-line basis over~~instruments categorized in Level 3. A financial instrument’s level within the term of the lease. The Company’s lease agreement contained termination and renewal options. The Company did not assume termination nor renewals options in its determination of the lease term unless they were deemed to be reasonably certain at the renewal of the lease. The Company began recognizing rent expense on the date that it obtained the legal right to use and control the leased space.

~~Subsequent to the adoption of the new leasing standard on January 1, 2022, the Company determines whether the arrangement~~fair value hierarchy is ~~or contains a lease~~ based on the ~~unique facts and circumstances present at~~lowest level of any input that is significant to the ~~inception~~fair value of the arrangement and if such a lease is classified as a financing lease or operating lease. The Company has elected not to recognize on the balance sheet leases with terms of one year or less. For any arrangement that is considered to be a lease with a term greater than one year, the Company recognizes a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. Operating leases are included in operating lease right-of-use ("ROU") assets and operating lease liabilities in the Company’s condensed consolidated balance sheet as of June 30, 2022.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease contract. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the expected lease term. In determining the net present value of lease payments, the interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate (“IBR”), which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the ROU asset may be required for items such as initial direct costs paid or incentives received and impairment charges if we determine the ROU asset is impaired. The Company considers a lease term to be the noncancelable period during which it has the right to use the underlying asset, including any periods where it is reasonably certain the Company will exercise the option to extend the contract. Periods covered by an option to extend are included in the lease term if the lessor controls the exercise of that option.

The operating lease ROU assets also include any lease payments made and exclude lease incentives. Lease expense is recognized on a straight-line basis over the expected lease term. The Company has elected to not separate lease and non-lease components for its leased assets and accounts for all lease and non-lease components of its agreements as a single lease component. The lease components resulting in a ROU asset have been recorded on the condensed consolidated balance sheet and amortized as lease expense on a straight-line basis over the lease term.instrument.

Tax Receivable Agreement

In August 2021, in connection with the IPO and Organizational Transactions, the Company entered into a tax receivable agreement ("TRA") with certain of the Continuing LLC Owners. The TRA provides that the Company pay to such Continuing LLC Owners 85% of the amount of tax benefits, if any, it is deemed to realize (calculated using certain assumptions) as a result of (i) increases in the tax basis of assets of Rani LLC resulting from (a) any future redemptions or exchanges of Paired Interests or non-corresponding Class A Units of Rani LLC and (b) payments under the TRA and (ii) certain other benefits arising from payments under the TRA (collectively the “Tax Attributes”).

A liability for the payable to parties subject to the TRA, and a reduction to stockholders’ equity, is accrued when (i) an exchange of a Paired Interest or non-corresponding Class A Units of Rani LLC has occurred and (ii) when it is deemed probable that the Tax Attributes associated with the exchange will be used to reduce the Company’s taxable income based on the contractual percentage of the benefit of Tax Attributes that the Company expects to receive over a period of time (Note ~~10)~~12).

Comprehensive Loss

Comprehensive loss is defined as a change in equity of a business enterprise during a period, resulting from transactions and other events and/or circumstances from non-owner sources. ~~The Company did not have any other~~Other comprehensive loss ~~for any~~represents changes in fair value of the ~~periods presented, and therefore comprehensive loss was the same as the Company’s net loss.~~Company's available-for-sale marketable securities.

Net Loss Per Class A Common Share Attributable to Rani Holdings

Basic net loss per Class A common share attributable to Rani Holdings is computed by dividing net loss attributable to the Company by the weighted average number of Class A common shares outstanding during the period, without consideration of potential dilutive securities. Diluted net loss per Class A common share is computed giving effect to all potentially dilutive shares. Diluted net loss per Class A common share for all periods presented is the same as basic loss per share as the inclusion of potentially issuable shares would be antidilutive. Net loss per share is not presented for the three and six months ended June 30, 2021 as the Company did not have any economic interests prior to the date of the IPO and Organizational Transactions through which it was given ownership in Rani LLC. Losses prior to the IPO and Organizational Transactions would have been allocated to the original members of Rani LLC. The basic and diluted net loss per Class A common share attributable to Rani Holdings is applicable only for the periods following the IPO and Organizational Transactions and represents the periods that the Company had Class A common shares outstanding.

Non-Controlling Interest

Non-controlling interest ("NCI") represents the portion of income or loss, net assets and comprehensive loss of the Company's consolidated subsidiary that is not allocable to Rani Holdings based on the Company's percentage of ownership of Rani LLC.

In August 2021, based on the Organizational Transactions, Rani Holdings became the sole managing member of Rani LLC. As of June 30, ~~2022,~~2023, Rani Holdings held approximately 48%50% of the Class A Units of Rani LLC, and approximately 5250% of the outstanding Class A Units of Rani LLC are held by the Continuing LLC Owners. Therefore, the Company reports NCI based on the Class A Units of Rani LLC held by the Continuing LLC Owners on its condensed consolidated balance sheet as of June 30, ~~2022.~~2023. Income or loss attributed to the NCI in Rani LLC is based on the Class A Units outstanding during the period for which the income or loss is generated and is presented on the condensed consolidated statements of operations and comprehensive ~~income or~~ loss.

Future exchanges of Paired Interests and non-corresponding Class A Units of Rani LLC will result in a change in ownership and reduce or increase the amount recorded as NCI and increase or decrease additional paid-in-capital when Rani LLC has positive or negative net assets, respectively. From the date of the Organizational Transactions to June 30, ~~2022,~~2023, there were ~~4,626,639~~5,173,947 exchanges of Paired Interests and 158,051 exchanges of non-corresponding Class A Units of Rani LLC for an equal number of shares of the Company's Class A common stock.

~~Recently Adopted Accounting Pronouncements~~

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, Leases (“Topic 842”), as subsequently amended, to improve financial reporting and disclosures about leasing transactions. The Company adopted this standard on January 1, 2022 using the modified retrospective approach and elected the package of practical expedients permitted under transition guidance, which allowed the Company to carry forward its historical assessments of: 1) whether contracts are or contain leases, 2) lease classification and 3) initial direct costs, where applicable. The Company did not elect the practical expedient allowing the use-of-hindsight which would require the Company to reassess the lease term of its leases based on all facts and circumstances through the effective date and did not elect the practical expedient pertaining to land easements as this is not applicable to the current contract portfolio. The Company elected the post-transition practical expedient to not separate lease components from non-lease components for all existing lease classes. The Company also elected a policy of not recording leases on its condensed balance sheets when the leases have a term of twelve months or less and the Company is not reasonably certain to elect an option to purchase the leased asset.

~~The adoption of this standard resulted in the recognition of a ROU asset and lease liabilities of $1.3~~ million, respectively. The adoption of the standard had no impact on the Company’s condensed consolidated statements of operations and comprehensive loss or to its cash flows from or used in operating, financing, or investing activities on its condensed consolidated statements of cash flows. No cumulative-effect adjustment within accumulated deficit was required to be recorded as a result of adopting this standard.

~~Recently Issued Accounting Pronouncements~~3. Cash Equivalents, Restricted Cash Equivalents and Marketable Securities

The following tables summarizes the amortized cost and fair value of the Company's cash equivalents, restricted cash equivalents and marketable securities by major investment category (in thousands):


	As of June 30, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Current assets:
Cash equivalents:
Money market funds	$	2,660	$	—	$	—		$	2,660
U.S. Treasuries		3,992		1		—			3,993
Total cash equivalents		6,652		1		—			6,653
Restricted cash equivalents:
Money market funds		500		—		—			500
Total cash equivalents and restricted cash equivalents		7,152		1		—			7,153
Marketable securities:
U.S. Treasuries and agencies		52,339		—		(95	)		52,244
Commercial paper		6,934		—		(9	)		6,925
Corporate debt securities		7,912		—		(27	)		7,885
Total marketable securities		67,185		—		(131	)		67,054
Total cash equivalents, restricted cash equivalents and marketable securities	$	74,337	$	1	$	(131	)	$	74,207


	As of December 31, 2022
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Current assets:
Cash equivalents:
Money market funds	$	25,313	$	—	$	—		$	25,313
Total cash equivalents		25,313		—		—			25,313
Restricted cash equivalents:
Money market funds		500		—		—			500
Total cash equivalents and restricted cash equivalents		25,813		—		—			25,813
Marketable securities:
U.S. Treasuries and agencies		36,563		—		(107	)		36,456
Commercial paper		26,631		—		—			26,631
Corporate debt securities		6,939		—		(39	)		6,900
International government		1,491		—		(3	)		1,488
Total marketable securities		71,624		—		(149	)		71,475
Total cash equivalents, restricted cash equivalents and marketable securities	$	97,437	$	—	$	(149	)	$	97,288

As of June ~~2016,~~30, 2023, all marketable securities are classified as short-term. The Company regularly reviews its available-for-sale marketable securities in an unrealized loss position and evaluates the ~~FASB issued ASU 2016-13,~~ ~~Financial Instruments—Credit Losses~~ ~~(“ASU 2016-13”) to require~~current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, and current economic conditions. As of June 30, 2023, the ~~measurement~~aggregate difference between the amortized cost and fair value of each security in an unrealized loss position was de minimis. Since any provision for expected credit losses for ~~financial instruments~~a security held atis limited to the ~~reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of ASU 2016-13~~amount the fair value is ~~to provide financial statement users with more decision-useful information about the~~less than its amortized cost, no allowance for expected credit ~~losses on financial instruments and other commitments to extend credit held by a reporting entity~~loss was deemed necessary at each reporting date. As a result of the Company having elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, and assuming the Company continues to be considered an emerging growth company, ASU 2016-13 will be effective for the Company on January 1,June 30, 2023. ~~The Company has not yet determined the potential effects of ASU 2016-13 on its condensed consolidated financial statements and disclosures.~~

3.4. Fair Value Measurements

The following ~~table~~tables presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicates the level of inputs used in such measurements (in thousands):


	As of June 30, 2022								As of June 30, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	94,679	$	0	$	0	$	94,679	$	2,660	$	—	$	—	$	2,660
U.S. Treasuries										3,993		—		—		3,993
Restricted cash equivalents:
Money market funds										500		—		—		500
Marketable securities
U.S. Treasuries and agencies										52,244		—		—		52,244
Commercial paper										—		6,925		—		6,925
Corporate debt securities										—		7,885		—		7,885
Total assets	$	94,679	$	0	$	0	$	94,679	$	59,397	$	14,810	$	—	$	74,207

	As of December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	115,595	$	0	$	0	$	115,595
Total assets	$	115,595	$	0	$	0	$	115,595


	As of December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	25,313	$	—	$	—	$	25,313
Restricted cash equivalents:
Money market funds		500		—		—		500
Marketable securities
U.S. Treasuries and agencies		36,456		—		—		36,456
Commercial paper		—		26,631		—		26,631
Corporate debt securities		—		6,900		—		6,900
International government		—		1,488		—		1,488
Total assets	$	62,269	$	35,019	$	—	$	97,288

~~Money~~Level 1 and Level 2 financial instruments are comprised of investments in money market funds and fixed-income securities. The Company estimates the fair value of its Level 2 financial instruments by taking into consideration valuations obtained from third-party pricing services. The third-party pricing services utilize industry standard valuation models, for which all significant inputs are ~~highly liquid and actively traded marketable securities that generally transact at a stable $1.00~~ ~~net asset value representing its estimated~~observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities; issuer credit spreads; benchmark securities; and other observable inputs.

There were no transfers between Level 1, Level 2 and Level 3 of the fair value hierarchy for any of the periods presented.

The Company held a Level 3 liability associated with preferred unit warrants that were issued in conjunction with a loan and security Agreement. These preferred unit warrants were settled with Class A common stock as part of the IPO and Organizational Transactions.

~~The following tables set forth a summary of the changes in the fair value of the Company’s liability measured using Level 3 inputs (in thousands):~~

Three Months Ended
June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

Balance at beginning of period

$
0

$
536

$
0

$
320

Change in estimated fair value of Series E warrants

0

70

0

286

Balance at end of period

$
0

$
606

$
0

$
606

~~Operating lease in~~expected dividend yield. Such assumptions represent management’s best estimates and involve inherent uncertainties and the ~~table above includes future minimum lease payments for the RMS-ICL Service Agreement. Future minimum lease payments~~application of ~~the Rani LLC-ICL Service Agreement for fiscal years 2022 (remaining six months) and 2023 totaled $~~management’s judgment.~~0.3~~ ~~million and $0.1~~ ~~million, respectively.~~

~~The following table sets forth the computation of basic and diluted net loss per Class A common share attributable to Rani Holdings (in thousands, except per share data):~~

Shares of Class B common stock do not share in the Company’s earnings and are not participating securities. Accordingly, separate presentation of loss per share of Class B common stock under the two-class method has not been provided. The outstanding shares of Class B common stock were determined to be anti-dilutive for the six months ended June 30, 2022. Therefore, they are not included in the computation of net loss per Class A common share attributable to Rani Holdings.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following management's discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes and other information included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, as filed with the Securities and Exchange Commission ("SEC"). Some of the information contained in this discussion and analysis or set forth elsewhere in this document, includes forward looking statements that involve risks, uncertainties, and assumptions. Our actual results could differ materially from those discussed in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. Please also see the section titled “Forward Looking Statements.”

The following discussion contains references to calendar year ~~2021~~2022 and the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, which represents the condensed consolidated financial results of Rani Therapeutics Holdings, Inc. (the "Company") and its ~~subsidiaries~~subsidiary, Rani Therapeutics, LLC and, prior to December 15, 2022, Rani Management Systems, Inc., for the year ended December 31, ~~2021~~2022 and the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our,” and “Rani” and similar references refers to the Company and its consolidated subsidiaries.

We are a ~~clinical stage~~clinical-stage biotherapeutics company focusing on advancing technologies to enable the administration of biologics and drugs orally, to provide patients, physicians, and healthcare systems with a convenient alternative to painful injections. We are advancing a portfolio of oral therapeutics using our proprietary delivery technology.

We are developing and clinically testing a drug-agnostic oral delivery platform, the RaniPill capsule, which is designed to deliver a wide variety of ~~drugs,~~drug substances, including large molecules such as peptides, proteins, and antibodies. The current RaniPill capsule, the RaniPill GO, is designed to deliver up to a 3 mg dose of drug with high bioavailability. We are also developing a high-capacity version known as the RaniPill HC, which is in preclinical stage and which is intended to enable delivery of drug payloads up to 20 mg with high bioavailability. ~~Our current~~The RaniPill ~~capsule~~GO is optimized to orally deliver a variety of therapeutics, and we are advancing development of the RaniPill HC to address biologics and drugs with higher dosing requirements. ~~Together, we believe that the current RaniPill capsule and RaniPill HC could enable us to deliver most biologics currently on the market via a convenient, oral daily dose.~~

Since our inception in 2012, we have devoted the majority of our resources to research and development, manufacturing automation and scaleup, and establishing our intellectual property portfolio. To date, we have financed our operations primarily through an initial public offering ("IPO"), private placements of Rani LLC preferred units, the issuance of convertible promissory notes, long-term debt, and contract revenue generated from our evaluation agreements.

We do not have any products approved for sale, and we have not yet generated any revenue from sales of a commercial product. Our ability to generate product revenue sufficient to achieve profitability, if ever, will depend on the successful development of the RaniPill capsule, which we expect will take a number of years. Given our stage of development, we have not yet established a commercial organization or distribution capabilities, and we have no experience as a company in marketing drugs or a drug-delivery platform. When, and if, any of our product candidates are approved for commercialization, we plan to develop a commercialization infrastructure or engage commercial sales organizations or distributors for those products in the United States, Europe, Asia, and potentially in certain other key markets. We may also rely on partnerships to provide commercialization infrastructure, including sales, marketing, and commercial distribution.

As is common with biotechnology companies, we rely on third-party suppliers for the supply of raw materials and active pharmaceutical ingredients ("APIs") and drug substances required for the production of our product candidates. In addition, we work with third parties to manufacture and develop biologics and drugs for inclusion in the current RaniPill capsule and RaniPill HC. Design work, prototyping and pilot manufacturing are performed ~~in-house,~~in house, and we have utilized third-party engineering firms to assist with the design of manufacturing lines that support our supply of the current RaniPill capsule and RaniPill HC. Certain of our suppliers of components and materials are single source suppliers. We believe our vertically integrated manufacturing strategy will offer significant advantages, including rapid product iteration, control over our product quality and the ability to rapidly scale our manufacturing capacity. This capability also allows us to develop future generations of products while maintaining the confidentiality of our intellectual property. Our vertically integrated manufacturing strategy will result in material future capital outlays and fixed costs related to constructing and operating a manufacturing facility. We have invested and plan to continue to invest in automated

manufacturing production lines for the current RaniPill capsule and RaniPill HC. Those assets deemed to have an alternative future use have been capitalized as property and equipment while those projects related to our assets determined to not have an alternative future use have been expensed as research and development costs.

In June 2023, we entered into a License and Supply Agreement with Celltrion, Inc. (“Celltrion”) under which we receive an exclusive license and supply of ~~our~~Celltrion’s adalimumab biosimilar for development and commercialization of RT-105 worldwide, subject to a right of first negotiation for Celltrion following completion of a Phase 1 clinical ~~study of RT-102, a~~trial that meets its primary endpoint(s) (the “Celltrion Agreement”). RT-105 is the RaniPill capsule containing ~~a proprietary formulation of human parathyroid hormone (PTH) analog PTH (1-34)~~an adalimumab biosimlar, which we are developing for the ~~potential~~ treatment of ~~osteoporosis (“Study Part 1”~~inflammatory conditions.

In August 2022, we entered into a loan and security agreement and related supplement (the “Loan Agreement”) with Avenue Venture Opportunities Fund, L.P (the “Lender”). The ~~Study Part~~Loan Agreement provides for term loans (the “Loans”) in an aggregate principal amount up to $45.0 million. A Loan of $30.0 million was committed at closing, with $15.0 million funded immediately and $15.0 million available to be drawn between October 1, ~~achieved all~~2022 and December 31, 2022, which was drawn in December 2022. The remaining $15.0 million of ~~its endpoints, with RT-102 being generally well-tolerated~~Loans is uncommitted and ~~demonstrating high oral bioavailability of our PTH analog. We have also initiated part 2~~is subject to certain conditions and approval by the Lender. The purpose of the ~~clinical study which will involve 7-day repeat dosing~~Loans is for general corporate purposes. The Loan Agreement also contains various covenants and restrictive provisions. As of ~~RT-102~~June 30, 2023, we were in ~~healthy volunteers.~~

The single-center, open label, Study Part 1 of RT-102 was conducted in Australia, and evaluated the safety, tolerability, and pharmacokinetics (PK) of RT-102 in healthy adult female volunteers. Of the 39 participants, 15 were administered RT-102 containing a single 20μg dose of PTH and 14 were administered RT-102 containing a single 80μg dose of PTH, while a control group of 10 participants received a single 20μg subcutaneous (SC) injection of Forteo® (teriparatide), a commercial formulation of PTH for SC administration.

~~The endpoints of the Study Part 1 were safety and tolerability, and measurements of serum concentrations of RT-102 in healthy adult female volunteers.~~

Per protocol, in instances where the RaniPill capsule did not exit the stomach within 7 hours, participants were excluded from the study. Based on the exclusion criteria, three participants were excluded from Study Part 1, one of whom experienced bloating, and one additional subject was excluded due to vomiting the capsule intact. The two events were assessed as probably related and possibly related to the RaniPill, respectively. In all ~~instances, the capsule remnants passed from all participants who ingested the RaniPill capsule.~~

Across our two clinical studies of the RaniPill platform (Phase 1 clinical study of RT-101, a RaniPill capsule containing ocreotide, and Study Part 1 of RT-102), 81 subjects have received the RaniPill capsule and no RaniPill-related AEs were observed in participants included in the studies.

~~The device performance analysis does not include participants excluded from the study per protocol, as drug delivery was not measured in such participants.~~

In addition, in August 2022, we entered into a Controlled EquitySM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC (collectively, the “Agents”), pursuant to ~~Study Part 1~~which we may offer and sell from time to time through the Agents up to $150 million of ~~RT-102,~~shares of our Class A common stock, in such share amounts as we ~~also conducted a 6-week pharmacodynamic (PD) study~~may specify by notice to the Agents, in accordance with the terms and conditions set forth in the Sales Agreement (“ATM Sales”). As of June 30, 2023, we had not delivered any placement notices to either of the RT-102 drug substance (DS) PTH (1-34) to evaluate the effect of daily RT-102 DS intraperitoneal (IP) injections on bone mineral density (BMD) in a rodent model of osteoporosis. The study compared two control groups of rodents undergoing sham surgery (N=10)Agents and ~~ovariectomy (OVX) (N=10) receiving~~there had been no ~~drug, to three OVX groups each dosed with 5 mcg/kg per day of either RT-102 DS (N=10), teriparatide (N=10), or abaloparatide (N=10).~~ATM Sales.

Part 2 of our Phase 1 clinical study of RT-102 is ongoing and will evaluate the safety, tolerability and PK of RT-102 in healthy women, 18-65 years of age, or healthy post-menopausal or surgically sterile with bilateral oophorectomy women, with once-a-day repeat dosing with 20µg dose of RT-102 for 7 days.

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. We believe that, as a result of the COVID-19 pandemic, we have experienced delays due to the unavailability of vendors or delays in their availability with respect to research and development activities due to high demand or disruption to their business, delays in certain shipments of materials for our manufacturing, increases in prices charged by third parties for goods and services due to additional processes or costs resulting from COVID-19 procedures, disruption to travel which affects our ability to establish and maintain business relationships, and disruption to employee work schedules. While we have not experienced material impacts through June 30, 2022, the extent to which the COVID-19 pandemic will further directly or indirectly impact our results of operation and financial condition has been and will continue to be driven by many factors, most of which are beyond our control and ability to forecast. Because of these uncertainties, we cannot estimate how long or to what extent COVID-19 will impact our operations.

The Company was incorporated in April 2021 and formed for the purpose of facilitating an IPO of its Class A common stock, and to facilitate certain organizational transactions (“Organizational Transactions”) and to operate the business of Rani Therapeutics, LLC (“Rani LLC”) and its consolidated ~~subsidiary.~~subsidiary at such time, Rani Management Services, Inc. (“RMS”). In connection with the IPO, we established a holding company structure with the Company as the holding company and its principal asset being the Class A common units (“Class A Units”) of Rani LLC that it owns. As the sole managing member of Rani LLC, the Company operates and controls all of Rani LLC’s operations, and through Rani LLC, ~~and its subsidiary,~~ conducts all of Rani LLC’s business and the financial results of Rani LLC and ~~its consolidated subsidiary~~RMS (prior to December 15, 2022) are included in the ~~condensed~~ consolidated financial statements of the Company. RMS was dissolved as of December 15, 2022.

Rani LLC has been, and after the IPO continues to be, treated as a pass-through entity for U.S. federal and state income tax purposes and accordingly has not been subject to U.S. federal or state income tax. The wholly owned subsidiary of Rani LLC, ~~Rani Management Services, Inc. (“RMS”),~~RMS, which was incorporated in 2019 isand dissolved in December 2022, was taxed as a corporation for U.S. federal and most applicable state, local income tax and foreign tax purposes. As a result of its ownership of interests in Rani LLC ("LLC Interests"), the Company is subject to U.S. federal, state and local income taxes with respect to its allocable share of any taxable income of Rani LLC and will be taxed at the prevailing corporate tax rates. In addition to tax expenses, we also incur expenses related to our operations and may be required to make payments under the Tax Receivable Agreement with certain of the individuals and entities that continue to hold interests in Rani LLC after the IPO (the "Continuing LLC Owners"). The Continuing LLC Owners are entitled to exchange, subject to the terms of the Rani LLC Agreement, the Class A Units they hold in Rani LLC, together with the shares they hold of our Class B common stock (together referred to as a "Paired Interest"), in return for shares of our Class A common stock on a one-for-one basis provided that, at our election, we may effect a direct exchange of such Class A common stock or make a cash payment equal to a volume weighted average market price of one share of Class A common stock for each Paired Interest redeemed. Any shares of Class B common stock will be cancelled on a one-for-one basis if, at the election of the Continuing LLC Owners, we redeem or exchange such Paired Interest pursuant to the terms of the Rani LLC Agreement. These exchanges and redemptions may result in increases in the tax basis of the assets of Rani LLC that otherwise would not have been available. Increases in tax basis resulting from such exchanges may reduce the amount of income tax that the Company would otherwise be required to pay in the future. This tax basis may also decrease the gains (or increase the losses) on future dispositions of certain assets to the extent tax basis is allocated to those

assets. Due to the uncertainty of various factors, we cannot estimate the likely tax benefits we will realize as a result of exchanges, and the resulting amounts we will likely pay out to the Continuing LLC Owners pursuant to the Tax Receivable Agreement; however, we estimate that such payments may be substantial in the event we are profitable. Certain individuals who continue to own interests in Rani LLC but do not hold shares of the Company’s Class B common stock (“non-corresponding Class A Units”) have the ability to exchange their non-corresponding Class A Units of Rani LLC for 1,387,471 shares of the Company’s Class A common stock.

In August 2022, we entered into a loan and security agreement and related supplement (the “Loan Agreement”) with Avenue Venture Opportunities Fund, L.P (the “Lender”). The Loan Agreement provides for term loans (the “Loans”) in an aggregate principal amount up to $45.0 million. A Loan of $30.0 million is committed at closing, with $15.0 million funded immediately and $15.0 million available to be drawn between October 1, 2022 and December 31, 2022. The remaining $15.0 million of Loans (“Tranche 2”) is uncommitted and is subject to certain conditions and approval by the Lender. The purpose of the Loans is for general corporate purposes.

Pursuant to the Loan Agreement, the maturity date for the Loans is August 1, 2026 (the “Maturity Date”). The Loan principal is repayable in equal monthly installments beginning September 2024 (extendable to March 2025 under certain conditions. The Loans bear interest at a variable rate per annum equal to the greater of (A) the prime rate, as published by the Wall Street Journal from time to time plus 5.60% or (B) 10.35%.

Pursuant to the Loan Agreement, beginning on the first anniversary of the closing, the Company is subject to a financial covenant that requires the Company to have at least two drug products utilizing its oral delivery technology in clinical development at all times. The financial covenant does not apply if the Company has a market capitalization above $650.0 million. The Loan Agreement also contains various covenants and restrictive provisions that, among other things, limit the Company’s ability to (i) incur additional debt, guarantees or liens; (ii) pay any dividends; (iii) enter into certain change of control transactions; (iv) sell, transfer, lease, license, or otherwise dispose of certain assets; (v) make certain investments or loans; and (vi) engage in certain transactions with related persons. The Loan Agreement is collateralized by substantially all of the Company’s assets, in which the Lender is granted continuing security interests.

In connection with the Loan Agreement, the Company issued to the Lender warrants to purchase 76,336 shares of its Class A common stock, as may be adjusted for certain anti-dilution adjustments, dividends, stock splits, and reverse stock splits, at an exercise price per share equal to $11.79.

The additional capital provided by the Loans strengthens our financial position and balances our near-term capital requirements to support the continued advancement of the RaniPill platform, including the RaniPill HC (high-capacity) device, and ongoing development of RT-102 and the Company’s product pipeline.

To date, we have not generated any revenue from commercial product sales and do not expect to generate any revenue from the sale of commercial products in the foreseeable future. Our only revenue to date has been derived from evaluation agreements, which has been recorded as contract revenue. As of June 30, 2022, we had no active evaluation agreements, and therefore we expect that our revenue for the next several years will be derived from any new agreements that may be executed in the future.

Our ability to generate commercial product revenue and to become profitable will depend upon our ability to successfully develop, obtain regulatory approval for and commercialize the RaniPill capsule and RaniPill HC. Because of the numerous risks and uncertainties associated with product development, regulatory approval and commercialization, we are unable to predict the amount, timing or whether we will be able to generate any commercial product revenue.

Our operating expenses consisted of research and development and general and administrative activities.

Research and development expense consists primarily of direct and indirect costs incurred in connection with our research and development activities to develop the RaniPill ~~capsule~~GO and RaniPill HC. These expenses include:

We expense research and development costs as incurred. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid or accrued research and development expenses. Nonrefundable advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered. Until future commercialization is considered probable and the future economic benefit is expected to be realized, we do not capitalize pre-launch inventory costs.

Costs of property and equipment related to scaling-up our manufacturing capacity for clinical trials and to support commercialization are capitalized as property and equipment unless the related asset does not have an alternative future use.

The historical focus of our research and development has been on the RaniPill delivery platform and not tracked costs on a project-by-project basis associated with different drug compounds.

At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete development of the RaniPill GO and RaniPill HC and complete the development of, and obtain regulatory approval for, ~~the RaniPill capsule and RaniPill HC.~~our product candidates. We expect our research and development expenses to increase significantly in the foreseeable future as we continue to invest in activities related to testing and developing the RaniPill ~~capsule~~GO and RaniPill HC and the development of our product candidates, as our product candidates advance into later stages of development, as we begin to conduct larger clinical trials, as we seek regulatory approvals for ~~the RaniPill capsule and RaniPill HC~~our product candidates upon successful completion of clinical trials, and incur expenses associated with hiring additional personnel to support the research and development efforts. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, the successful development of the RaniPill ~~capsule~~GO and

RaniPill HC and our product candidates is highly uncertain, and we may never succeed in ~~achieving~~successfully developing the RaniPill GO and/or RaniPill HC or achieve the development of, and regulatory approval for, ~~the RaniPill capsule and RaniPill HC.~~our product candidates.

General and administrative expenses consist primarily of personnel-related costs (including salaries, bonuses, ~~equity-based~~stock-based compensation, and benefits) for personnel in executive, finance, accounting, legal, corporate and business development, and other administrative functions. General and administrative expenses also include legal fees relating to corporate matters, professional fees paid for accounting, auditing, consulting, tax, and administrative consulting services, insurance costs, travel, and facilities, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.

We anticipate that our general and administrative expenses will increase significantly in the foreseeable future as additional administrative personnel and services are required to manage and support the development of the RaniPill ~~capsule~~GO and RaniPill ~~HC.~~HC and our product candidates. We also anticipate that we will incur increased expenses associated with operating as a public company, including costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer liability insurance, and investor and public relations.

Other income (expense), net primarily consists of interest income earned on our cash equivalents and ~~cash equivalents.~~marketable securities and interest expense from our long-term debt and amortization of debt discount and issuance costs.

Non-controlling interest ("NCI") represents the portion of income or loss, net assets and comprehensive loss of our consolidated subsidiary that is not allocable to the Company based on its percentage of ownership of Rani LLC.

In August 2021, based on the Organizational Transactions, the Company became the sole managing member of Rani LLC. As of June 30, ~~2022,~~2023, the Company held approximately ~~48%~~50% of the Class A Units of Rani LLC, and approximately ~~52%~~50% of the outstanding Class A Units of Rani LLC are held by the Continuing LLC Owners. Therefore, we report NCI based on the Class A Units of Rani LLC held by the Continuing LLC Owners on our condensed consolidated balance sheet as of June 30, ~~2022.~~2023. Income or loss attributed to the NCI in Rani LLC is based on the Class A Units outstanding during the period for which the income or loss is generated and is presented on the condensed consolidated statements of operations and comprehensive income or loss.

In August 2021, in connection with the IPO and Organizational Transactions, we entered into a tax receivable agreement ("TRA") with certain of the Continuing LLC Owners. The TRA provides that we pay to such Continuing LLC Owners, 85% of the amount of tax benefits, if any, it is deemed to realize (calculated using certain assumptions) as a result of (i) increases in the tax basis of assets of Rani LLC resulting from (a) any future redemptions or exchanges of Paired Interests or non-corresponding Class A Units of Rani LLC and (b) payments under the TRA and (ii) certain other benefits arising from payments under the TRA (collectively the “Tax Attributes”).

A liability for the payable to parties subject to the TRA, and a reduction to stockholders’ equity, is accrued when (i) an exchange of a Paired Interest or non-corresponding Class A Units of Rani LLC has occurred and (ii) when it is deemed probable that the Tax Attributes associated with the exchange will be used to reduce our taxable income based on the contractual percentage of the benefit of Tax Attributes that we expect to receive over a period of time.

In June 2021, Rani LLC entered into a service agreement with InCube Labs, LLC (“ICL”) effective retrospectively to January 1, 2021, and subsequently amended such agreement in March 2022 (as amended, the "Rani LLC-ICL Service Agreement"), pursuant to which Rani LLC and ICL agreed to provide personnel services to the other upon requests. Under the amendment in March 2022, Rani LLC has a right to occupy certain facilities leased by ICL in Milpitas, California and San Antonio, Texas (“Occupancy Services”) for general office, research and development, and light manufacturing. The Rani LLC-ICL Service Agreement has a twelve-month term and will automatically renew for a successive twelve-month periods unless terminated; except that the Occupancy Services in Milpitas, California have a term until February ~~2023,~~2024, following an extension granted in July 2022, with the potential for ~~two~~one additional annual ~~renewals,~~renewal, subject to approval by the landlord upon a nine months’ notice of renewal prior to the end of the lease term, and the Occupancy Services in San Antonio, Texas continue until either party gives six months’ notice of termination. Except for the Occupancy Services, Rani LLC or ICL may terminate services under the Rani LLC-ICL Service Agreement upon 60 days' notice to the other party. The Rani LLC-ICL Service Agreement specifies the scope of services to be provided as well as the methods for determining the costs of services. Costs are billed or charged on a monthly basis by ICL or Rani LLC, respectively.

In June 2021, RMS entered into a service agreement with ICL (the “RMS-ICL Service Agreement”) effective retrospectively to January 1, 2021, pursuant to which ICL agreed to rent a specified portion of its facility in San Jose, California to RMS. Additionally, RMS and ICL agreed to provide personnel services to the other upon requests based on rates specified in the RMS-ICL Service Agreement. In April 2022, RMS assigned the RMS-ICL Service Agreement to Rani LLC. The RMS-ICL Service Agreement has a twelve-month term and will automatically renew for successive twelve-month periods unless terminated. Rani LLC or ICL may terminate services under the RMS-ICL Service Agreement upon 60 days' notice to the other party, except for occupancy which requires six months’ notice. The RMS-ICL Service Agreement specifies the scope of services to be provided as well as the methods for determining the costs of services. Costs are billed or charged on a monthly basis by ICL or Rani LLC, respectively, as well as allocations of expenses based upon Rani LLC’s utilization of ICL’s facilities and equipment.

The table below details the amounts charged by ICL for services and rent, net of the amount charged to ICL under the RMS-ICL Service Agreement, which is included in the condensed consolidated statements of operations and comprehensive loss (in thousands):

Prior to April 2022, our eligible employees were permitted to participate in ICL’s 401(k) Plan (“401(k) Plan”). Participation in the 401(k) Plan was offered for the benefit of our employees, including our named executive officers, who satisfied certain eligibility requirements. In April 2022, the Company established its own 401(k) Plan, with participation offered for the benefit of the employees, including the Company’s named executive officers, who satisfy certain eligibility requirements.

As of June 30, ~~2022,~~2023, all of our facilities are owned or leased by an entity affiliated with our Chairman. Rani LLC pays for the use of these facilities through our services agreements with ICL.

~~In March 2021, an outstanding notes receivable balance totaling $1.7 million, including all accrued interest, was fully repaid by ICL.~~

In June 2021, we and ICL entered into an Amended and Restated Exclusive License Agreement which replaces the 2012 Exclusive License Agreement, as amended in 2013, and terminates the Intellectual Property Agreement, as amended in June 2013. Under the Amended and Restated Exclusive License Agreement, we have a fully paid, exclusive license under certain scheduled patents related to optional features of the device and certain other scheduled patents to exploit products covered by those patents in the field of oral delivery of sensors, small molecule drugs or biologic drugs including, any peptide, antibody, protein, cell therapy, gene therapy or vaccine. We will cover patent-related expenses and, after a certain period, we will have the right to acquire four specified

United States patent families from ICL by making a one-time payment of $0.3 million to ICL for each United States patent family that we desire to acquire, up to $1.0 million in the aggregate. This payment will not become an obligation until the fifth anniversary of the Amended and Restated Exclusive License Agreement. The Amended and Restated Exclusive License Agreement will terminate when there are no remaining valid claims of the patents licensed under the Amended and Restated Exclusive License Agreement.

Additionally, we may terminate the Amended and Restated Exclusive License Agreement in its entirety or as to any particular licensed patent upon notification to ICL of such intent to terminate.

Non-Exclusive License Agreement between Rani and ICL (“Non-Exclusive License Agreement”)

In June 2021, we entered into the Non-Exclusive License Agreement with ICL, pursuant to which we granted ICL a non-exclusive, fully-paid license under specified patents that were assigned from ICL to us. Additionally, we agreed not to license these patents to a third party in a specific field outside the field of oral delivery of sensors, small molecule drugs or biologic drugs including, any peptide, antibody, protein, cell therapy, gene therapy or vaccine, if ICL can prove that it or its sublicensee has been in active development of a product covered by such patents in that specific field. ICL may grant sublicenses under this license to third parties only with our prior approval. The Non-Exclusive License Agreement will continue in perpetuity unless terminated.

In June 2021, we entered into the Mir Agreement, pursuant to which we and Mir Imran agreed that we would own all intellectual property conceived ~~(a)~~(i) using any of our people, equipment, or facilities or ~~(b)~~(ii) that is within the field of oral delivery of sensors, small molecule drugs or biologic drugs including, any peptide, antibody, protein, cell therapy, gene therapy or vaccine. Neither us nor Mir Imran may assign the Mir Agreement to any third party without the prior written consent of the other party. The initial term of the Mir Agreement is three years, which can be extended upon mutual consent of the parties. The Mir Agreement may be terminated by either party for any reason within the initial ~~three year~~three-year term upon providing three months’ notice to the other party.

ICL is party to the TRA, entered into in August 2021 pursuant to the IPO and Organizational Transactions. The TRA provides that we pay to such entities and individuals 85% of the amount of tax benefits, if any, it is deemed to realize from exchanges of Paired Interests. During the six months ended June 30, 2023 and 2022, these parties to the TRA exchanged zero and 2,309,490 Paired Interests, respectively, that resulted in tax benefits subject to the TRA.

In connection with the IPO, we entered into a Registration Rights Agreement with the Continuing LLC Owners, including ICL. The Registration Rights Agreement provides the Continuing LLC Owners certain registration rights whereby, at any time following the IPO and the expiration of any related lock-up period, the Continuing LLC Owners can require us to register under the Securities Act shares of Class A common stock issuable to them upon, at our election, redemption or exchange of their LLC Interests. The Registration Rights Agreement also provides for piggyback registration rights for the Continuing LLC Owners. As a result of certain stockholders exercising their registration rights under the Registration Rights Agreement, in December 2022 we filed a registration statement on Form S-3 to register 6,009,542 shares of our Class A common stock held by certain of our stockholders.

We operate our business through Rani LLC and, prior to December 15, 2022, its ~~subsidiary.~~subsidiary, RMS. RMS was dissolved on December 15, 2022. In connection with the IPO, we and the Continuing LLC Owners, including ICL, entered into the Fifth Amended and Restated LLC Agreement of Rani LLC (the “Rani LLC Agreement”). The governance of Rani LLC, and the rights and obligations of the holders of LLC Interests, are set forth in the Rani LLC Agreement. As a Continuing LLC Owner, ICL is entitled to exchange, subject to the terms of the Rani LLC Agreement, Paired Interests for our Class A common stock; provided that, at our election, we may effect a direct exchange of such Class A common stock or make a cash payment equal to a volume weighted average market price of one share of Class A common stock for each Paired Interest redeemed.

During the six months ended June 30, 2023 and 2022, these parties to the Rani LLC Agreement exchanged zero and 2,309,490 Paired Interests, respectively, for the Company's Class A common stock.

The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and notes included elsewhere in this Quarterly Report on Form 10-Q. For information with respect to recent accounting pronouncements that are of significance or potential significance to us, see “Note 2. Summary of Significant Accounting Policies” in the “Notes to the Unaudited Condensed Consolidated Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

For the three months ended June 30, 2022, the Company did not have any contract revenue. For three months ended June 30, 2021, the Company recognized contract revenue related to the Takeda agreement of $2.0 million.

The following table reflects our research and development costs by nature of expense (in thousands):

Research and development expenses were $11.1 million for the three months ended June 30, 2023, compared to $9.5 million for the three months ended June 30, ~~2022, compared~~2022. The increase was primarily attributed to ~~$3.8~~higher compensation costs of $1.4 million, ~~for the three months ended June 30, 2021. The change in research and development expense was attributed to~~which includes an increase of ~~$3.5~~$0.2 million in ~~salaries and related benefit costs~~stock-based compensation, due to ~~higher~~ headcount ~~which includes $1.6 million of equity-based compensation an increase in third-party services of $1.5 million, facility costs of $0.7 million and materials and laboratory supplies of $0.1 million.~~growth.

General and administrative expenses were $7.2 million for the three months ended June 30, 2023, compared to $6.3 million for the three months ended June 30, ~~2022, compared~~2022. The increase was primarily attributed to ~~$3.5~~higher compensation costs of $1.2 million, ~~for the three months ended June 30, 2021. During the three months ended June 30, 2022, the change in general and administrative expenses was attributed to~~which includes an increase of ~~$2.7~~$0.9 million in ~~salaries and related benefit costs~~stock-based compensation, due to ~~higher~~ headcount

~~which includes $2.1 million~~ growth, partially offset by a decrease in third-party services of ~~equity-based compensation. Additionally, facility costs increased $0.6 million attributable to property insurance, other costs increased $0.5~~$0.3 million due to ~~patent litigation~~non-recurring public company related ~~costs, and professional and consulting services expense decreased by $0.9 million attributable to non-recurring costs associated with the Company's IPO and Organizational Transactions.~~costs.

Other expense, net, was ~~not significant~~$0.4 million for the three months ended June 30, 2023, compared to other income, net, which was de minimis for the three months ended June 30, 2022. ~~Other expense, net, was $0.2 million for the three months ended June 30, 2021, which~~The increase was primarily ~~due~~attributed to ~~$0.1~~an increase in interest income of $0.9 million from our investment in marketable securities offset by an increase in interest expense ~~on debt incurred and $0.1~~of $1.2 million ~~due to the increase in the estimated fair value of the Series E preferred unit warrants.~~from our long-term debt.

For the six months ended June 30, 2022, the Company did not have any contract revenue. For six months ended June 30, 2021, the Company recognized contract revenue related to the Takeda agreement of $2.7 million.

The following table reflects our research and development costs by nature of expense (in thousands):

Research and development expenses were $20.8 million for the six months ended June 30, 2023, compared to $17.1 million for the six months ended June 30, ~~2022, compared~~2022. The increase was primarily attributed to ~~$7.1~~higher compensation costs of $3.4 million, ~~for the six months ended June 30, 2021. The change in research and development expense was attributed to~~which includes an increase of ~~$6.8~~$0.7 million in ~~salaries and related benefit costs~~stock-based compensation, due to ~~higher~~ headcount ~~which includes $2.9 million of equity-based compensation,~~growth, and an increase of $0.5 million in ~~third-party services of $2.4 million, facility costs of $0.7 million and~~facilities, materials and ~~laboratory~~ supplies ~~of $0.2 million.~~expense related to preclinical and clinical development activities.

General and administrative expenses were $14.0 million for the six months ended June 30, 2023, compared to $12.5 million for the six months ended June 30, ~~2022, compared~~2022. The increase was primarily attributed to ~~$6.1~~higher compensation costs of $2.3 million, ~~for the six months ended June 30, 2021. During the six months ended June 30, 2022, the change in general and administrative expenses was attributed to~~which includes an increase of ~~$5.1~~$2.0 million in ~~salaries and related benefit costs~~stock-based compensation, due to ~~higher~~ headcount ~~which includes $3.5 million~~growth, partially offset by a decrease in third-party services of ~~equity-based compensation. Additionally, facility costs increased $1.3 million attributable to property insurance, other costs increased $0.5~~$0.8 million due to ~~patent litigation~~non-recurring public company related ~~costs, and professional and consulting services expense decreased by $0.5 million attributable to non-recurring costs associated with the Company's IPO and Organizational Transactions.~~costs.

Other expense, net, was ~~$0.1~~$0.7 million for the six months ended June 30, ~~2022,~~2023, compared to other income, net, which was ~~primarily due to interest income earned. Other expense, net, was $0.6 million~~de minimis for the six months ended June 30, ~~2021, which~~2022. The increase was primarily ~~due~~attributed to ~~$0.4~~an increase in interest income of $1.8 million from our investment in marketable securities offset by an increase in interest expense ~~on debt incurred and $0.3~~of $2.4 million ~~due to the increase in the estimated fair value of the Series E preferred unit warrants.~~from our long-term debt.

We have not generated any revenue from commercial product sales and have incurred significant operating losses and negative cash flows from operations. We have not yet commercialized any products, and we do not expect to generate revenue from

sales of commercial products for several years, if at all. We anticipate that we will continue to incur net losses for the foreseeable future. Since our inception, we have devoted substantially all of our resources on organizing and staffing our company, business planning, research and development activities, including the RaniPill platform design, drug formulation, preclinical studies, clinical trials, manufacturing automation and scale up, establishing our intellectual property portfolio, and providing general and administrative support for these operations. To date, we have financed our operations primarily through an IPO, private placements of Rani LLC preferred units, ~~and~~ the issuance of convertible promissory notes, ~~with aggregate gross proceeds of $282.4 million,~~and long-term debt, as well as contract revenue generated from evaluation agreements. ~~In August 2021, we raised net proceeds of $73.6 million from the IPO. As of June 30, 2022, we had cash and cash equivalents of $97.2 million.~~

In August 2022, we entered into the Loan Agreement with the ~~Lender~~Lender. The Loan Agreement provides for ~~the~~ Loans in an aggregate principal amount up to $45.0 million. A Loan of $30.0 million ~~(See “—Recent Developments” above for a discussion~~was committed at closing, with $15.0 million funded immediately and $15.0 million available to be drawn between October 1, 2022 and December 31, 2022, which was drawn in December 2022. The remaining $15.0 million of Loans is uncommitted and is subject to certain conditions and approval by the Lender. The purpose of the Loans is for general corporate purposes. The Loan ~~Agreement).~~Agreement also contains various covenants and restrictive provisions. As of June 30, 2023, we were in compliance with all applicable debt covenants under the Loan Agreement and had cash, cash equivalents and marketable securities totaling $74.6 million.

In August 2022, we entered into the Sales Agreement with the Agents, pursuant to which we may offer and sell from time to time through the Agents up to $150.0 million of shares of our Class A common stock in ATM Sales. As of June 30, 2023, we had not delivered any placement notices to either of the Agents and there had been no ATM Sales.

Since our inception, we have incurred significant losses and negative cash flows from operations. Our net losses were ~~$29.8~~$35.5 million and ~~$11.1~~$29.8 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. As of June 30, ~~2022,~~2023, we had an accumulated deficit of ~~$22.2~~$56.6 million. We expect to continue to incur significant losses for the foreseeable future, and our net losses may fluctuate significantly from period to period, depending on the timing of and expenditures on our planned research and development activities. Until such time as we can generate sufficient revenue from commercial product sales, if ever, we expect to finance our operations through a combination of equity offerings and debt financings, which may include ATM Sales, or other capital sources, which may include strategic collaborations or other arrangements with third parties. We may be unable to raise additional funds or to enter into such agreements or arrangements on favorable terms, or at all. If we are unable to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates. Insufficient liquidity may also require us to relinquish rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose.

We entered into a Tax Receivable Agreement with certain of the Continuing LLC Owners in August 2021 in connection with the IPO. The Tax Receivable Agreement provides for our payment to certain of the Continuing LLC Owners of 85% of the amount of tax benefits, if any, that we are deemed to realize as a result of any basis adjustments and certain other tax benefits arising from payments under the Tax Receivable Agreement. We will have in effect an election under Section 754 of the Code effective for each taxable year in which a redemption or exchange (including deemed exchange) of LLC Interests for shares of our Class A common stock or cash occurs. These Tax Receivable Agreement payments are not conditioned upon any continued ownership interest in either the Company or Rani LLC by such Continuing LLC Owners. The rights of such Continuing LLC Owners under the Tax Receivable Agreement are assignable to transferees of their LLC Interests (other than us as transferee pursuant to subsequent redemptions (or exchanges) of the transferred LLC Interests). We expect to benefit from the remaining 15% of tax benefits, if any, that we may realize.

As of June 30, ~~2022,~~2023, we have not recorded a liability under the TRA related to the income tax benefits originating from the exchanges of Paired Interest or non-corresponding Class A Units of Rani LLC as it is not probable that the Company will realize such tax benefits. To the extent the Company is able to realize the income tax benefits associated with the exchanges of Paired Interest or non-corresponding Class A Units of Rani LLC subject to the TRA, the TRA payable would range from zero to ~~$20.4~~$22.9 million at June 30, ~~2022.~~2023.

The amounts payable under the TRA will vary depending upon a number of factors, including the amount, character, and timing of the taxable income of the Company in the future. Should the Company determine that the payment of the TRA liability becomes probable at a future date based on new information, any changes will be recorded on the Company's condensed consolidated statement of operations and comprehensive loss at that time.

Based on our current operating plan, we estimate that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements through at least twelve months from the ~~next twelve months.~~date of issuance of these condensed consolidated financial statements. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with the development of the RaniPill ~~capsule~~GO, RaniPill HC and ~~RaniPill HC~~our product candidates and because the extent to which we may enter into strategic collaborations or other arrangements with third parties for development of the RaniPill ~~capsule and~~GO, RaniPill HC and/or our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates.

To date, we have not generated any commercial product revenue. We do not expect to generate any commercial product revenue unless and until we obtain regulatory approval and commercialize any of our commercial product candidates, and we do not know when, or if at all, that will occur. We will continue to require additional capital to develop our product candidates and fund operations for the foreseeable future. Our primary uses of cash are to fund our operations, which consist primarily of research and development expenses related to our programs, manufacturing automation and scaleup, and general and administrative expenses. We expect our expenses to continue to increase in connection with our ongoing activities as we continue to advance the RaniPill ~~capsule~~GO, RaniPill HC and ~~RaniPill HC.~~our product candidates. In addition, we expect to incur additional costs operating as a public company.

We may seek to raise capital through equity offerings or debt financings, which may include ATM Sales, collaboration agreements, or other arrangements with other companies, or through other sources of financing. Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our consolidated financial condition and our ability to pursue our business strategies. We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including:

If we raise additional capital through debt financing, we may be subject to covenants that restrict our operations including limitations on our ability to incur liens or additional debt, pay dividends, make certain investments, and engage in certain merger, consolidation, or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us. If we raise funds through collaborations, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, reduce, or terminate some or all of our development programs and clinical ~~trials.~~trials or delay investments in our manufacturing scale-up and automation. In addition, our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to and volatility in the credit and financial markets inglobally.

The following table summarizes our cash, cash equivalents and marketable securities:

As of June 30, 2023, we had cash, cash equivalents and marketable securities of $74.6 million, compared to $98.5 million as of December 31, 2022. We believe our cash, cash equivalents and marketable securities will be sufficient to meet our anticipated operating requirements for at least the ~~United States and worldwide resulting from~~next twelve months following the ~~ongoing COVID-19 pandemic.~~date of issuance of these condensed consolidated financial statements.

The following table summarizes our cash flows for the periods presented (in thousands):

Net cash used in operating activities for the six months ended June 30, 2023 was $24.5 million, which was primarily attributable to a net loss of $35.5 million, partially offset by stock-based compensation expense of $9.6 million, net accretion and amortization of investments in marketable securities of $1.2 million, and non-cash depreciation and amortization expense of $0.4 million. Additionally, there was an increase in accrued expenses and other current liabilities of $1.7 million and decreases in prepaid expenses and other current assets of $0.9 million and accounts payable of $0.4 million for the six months ended June 30, 2023.

Net cash used in operating activities for the six months ended June 30, 2022 was $19.7 million, which was primarily attributable to a net loss of $29.8 million, partially offset by the equity-based compensation expense of $6.9 million and non-cash operating lease expense of $0.3 million. Additionally there was a decrease of $1.3 million in prepaid expenses and other assets due to amortization of director and officer liability insurance, as a result of becoming a publicly traded company, and an increase in accrued expenses of $1.5 million.

Net cash used in operating activities for the six months ended June 30, 2021 was $9.7 million, which was primarily attributable to a net loss of $11.1 million, non-cash depreciation and amortization of $0.3 million, change in the fair value of preferred unit warrant liability of $0.3 million, and equity-based compensation expense of $0.7 million.

For the six months ended June 30, ~~2022~~2023, net cash provided by investing activities was $4.9 million consisting of $58.0 million in proceeds from maturities of marketable securities partially offset by $52.5 million and ~~2021,~~$0.6 million in purchases of marketable securities and property and equipment, respectively.

For the six months ended June 30, 2022, net cash used in investing activities was $0.6 million ~~and $0.2 million, respectively,~~ consisting solely of purchases of property and equipment.

For the six months ended June 30, 2023 and 2022, there were no significant financing activities.

For the six months ended June 30, 2021, cash provided by financing activities was approximately $6.2 million, consisting of the proceeds from the sale and issuance of our Series E Preferred Units for net proceeds of $6.3 million, and $1.7 million of principal payments received from our related party note receivable, partially offset by deferred offering costs of $1.9 million.

~~Rani LLC pays for the use of~~Except as discussed below, there have been no material changes to our ~~facilities through the Rani LLC-ICL Service Agreement~~contractual obligations and ~~RMS-ICL Service Agreement. As~~other commitments as of June 30, ~~2022,~~2023, as compared to those disclosed in our Annual Report on Form 10-K.

The following table summarizes our contractual obligations and commitments as of June 30, 2023 (in thousands):

(1) Represents operating lease payments. See Note 7 to the ~~future~~condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

(2) Represents long-term debt principal maturities and final payment equal to 5.5% of aggregate ~~minimum lease payments associated with our service agreements with ICL~~amount funded, excluding interest. See Note 11 to the condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q for fiscal years 2022 (remaining six months) and 2023 totaled $0.6 million and $0.7 million, respectively. Subsequently, in July 2022, the Company's notice of renewal was approved by the landlord for Occupancy Services in Milpitas, California, for an additional ~~twelve month lease term. The future aggregate minimum lease payments associated with the additional Occupancy Services total $0.4 million.~~information.

In addition, we enter into agreements in the normal course of business with contract research organizations for clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are generally cancelable upon written notice.

~~See “—Recent Developments” above for a discussion of the Loan Agreement, which we entered into in August 2022.~~

This discussion and analysis of financial condition and results of operation is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the reporting period. On an ongoing basis, management evaluates its estimates and assumptions. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

For further information on our significant accounting policies, refer to our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, filed with the SEC on March ~~31, 2022.~~22, 2023.

For a description of the expected impact of recent accounting pronouncements, see “Note 2. Summary of Significant Accounting Policies” in the “Notes to the Unaudited Condensed Consolidated Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.None.

We are an “emerging growth company” within the meaning of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). The JOBS Act permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are electing to use this extended transition period and we will therefore comply with new or revised accounting standards on the earlier of (i) when they apply to private companies; or (ii) when we lose our emerging growth company status. As a result, our financial statements may not be comparable

with companies that comply with public company effective dates for accounting standards. We also rely on other exemptions provided by the JOBS Act, including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act unless we cease to be an emerging growth company.

We will remain an emerging growth company until the earliest of (1) December 31, 2026 (the last day of the fiscal year following the fifth anniversary of the closing of our initial public offering), (2) the last day of the fiscal year in which we have total annual gross revenue of at least ~~$1.07~~$1.235 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our Class A common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15(d)-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of June 30, ~~2022.~~2023.

There have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the three months ended June 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost–effective control system, misstatements due to error or fraud may occur and not be detected.

From time to time, we may become involved in litigation or other legal proceedings. We are not currently a party to any litigation or legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Other than as described below, management believes that there have been no significant changes to the risk factors associated with our business as compared to those disclosed in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, which is incorporated by reference herein.

Any inability to develop, or difficulties or delays in developing, formulations of drugs for our product candidates could prevent or delay our ability to advance our existing product candidates or develop new product candidates, which could adversely affect our commercial prospects and ability to generate revenues.

We develop microtablets of drugs for use in the RaniPill GO and may need to develop or modify formulations of drugs for use in the RaniPill HC. Drug formulation work is difficult and the outcomes are uncertain. If we are not able to develop a drug formulation suitable for use with our RaniPill capsule, it could prevent, limit or delay our ability to pursue or advance product candidates. Even if we are successful in developing drug formulations of product candidates that are suitable for the RaniPill capsule, such formulations may cause the drug to perform differently than another formulation of the drug and could result in our product candidates having a safety or efficacy profile different or worse than other formulations of the drug. If we are unable to develop, or have difficulties or delays in developing, suitable formulations of drugs for the RaniPill capsule, our ability to develop and commercialize product candidates, to expand use of the RaniPill oral delivery technology and to generate revenues could be adversely affected.

Any difficulties or delays in the commencement or completion, or termination or suspension, of our current or planned clinical trials could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects.

Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. We are in the early stages of our development efforts and have a limited number of product candidates in early clinical development. Other product candidates are still in the formulation or preclinical stages. While we intend to advance our product candidates into initial and later stages of clinical development, we have not, to date, submitted an IND for any of our product candidates. We will be required to submit applicable equivalent regulatory filings to foreign regulatory authorities to the extent we initiate clinical trials outside of the United States.

We do not know whether our planned clinical trials will begin on time or be completed on schedule, if at all. The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to:

Regulatory authorities may require that filings related to the commencement, continuation or termination of a clinical trial be submitted through specific electronic systems or in a specific manner (e.g. format), which may differ from one jurisdiction to another. We may seek to conduct a clinical trial in multiple jurisdictions in an effort to enroll sufficient numbers of patients or to do so in a timely manner or for other reasons. Meeting the requirements of various regulatory agencies could be costly and any delay in meeting, or inability to meet, the regulatory requirements of different jurisdictions regarding submissions could delay or negatively impact our ability to initiate or complete our clinical trials as planned. For example, the European Medicines Agency maintains an electronic Clinical Trial Information System (CTIS) to support interactions between clinical trial sponsors and regulatory agencies for various European Union member states and European Economic Area countries. Clinical trial sponsors can use the CTIS system to apply for authorization to conduct a clinical trial in one or more of such countries. The CTIS system has experienced certain technical issues delaying or preventing sponsors from submitting clinical trial applications. Any failure or inability by us to submit required regulatory documents for our planned or future clinical trials or any failure or inability to do so in the required manner could delay or prevent us from initiating or completing our planned or future clinical trials when we are otherwise ready or at all.

We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are being conducted, by a Data Safety Monitoring Board for such trial or by the FDA or comparable foreign regulatory authorities. Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or comparable foreign regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. In addition, changes in regulatory requirements and policies may occur, and we may need to amend clinical trial protocols to comply with these changes. Amendments may require us to resubmit our clinical protocols to IRBs for reexamination, which may impact the costs, timing or successful completion of a clinical trial.

Further, conducting clinical trials in foreign countries, as we may do for our product candidates, presents additional risks that may delay completion of our clinical trials. These risks include the failure of enrolled participants in foreign countries to adhere to clinical protocol as a result of differences in healthcare services or cultural customs, managing additional administrative burdens associated with foreign regulatory schemes and data protection regulations, as well as political and economic risks relevant to such foreign countries.

Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of

these relationships to the FDA or comparable foreign regulatory authorities. The FDA or comparable foreign regulatory authorities may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the study. The FDA or comparable foreign regulatory authorities may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA or comparable foreign regulatory authorities, as the case may be, and may ultimately lead to the denial of marketing approval of one or more of our product candidates.

In addition, we work with third parties to manufacture, develop, and supply the drug payloads for inclusion in the RaniPill capsule, a development process that is lengthy and expensive. Some of the active ingredients we are utilizing in our development are used by other sponsors to make biosimilars in the United States, and others are not. We and our third-party manufacturers may discover, even late in the process, that a particular drug payload does not demonstrate the necessary characteristics or is unacceptable to the FDA or other regulatory authorities, and we may be forced to abandon such manufacturing and development efforts for such compound and pursue alternative sourcing, or conduct additional, more involved development work to be able to use such compound, which could have an adverse effect on our operations.

If we experience delays in the completion of, or termination of, any clinical trial of our product candidates, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenues from any of these product candidates will be delayed. Moreover, any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval process and jeopardize our ability to commence product sales and generate revenues.

In addition, many of the factors that cause, or lead to, termination or suspension of, or a delay in the commencement or completion of, clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate. We may make formulation or manufacturing changes to our product candidates, in which case we may need to conduct additional preclinical studies or clinical trials to bridge our modified product candidates to earlier versions. Any delays to our clinical trials that occur as a result could shorten any period during which we may have the exclusive right to commercialize our product candidates and our competitors may be able to bring products to market before we do, and the commercial viability of our product candidates could be significantly reduced. Any of these occurrences may harm our business, financial condition and prospects significantly.

We may not be successful in maintaining or obtaining formulation and manufacturing collaborations, and any potential partner may not devote sufficient resources to the formulation and manufacturing of our product candidates or may otherwise fail in formulation and manufacturing efforts, which could adversely affect our ability to develop certain of our product candidates and adversely affect our financial condition and operating results.

In the past, we have entered into evaluation agreements with Takeda and certain other pharmaceutical companies concerning the formulation and manufacture of oral versions of Factor VIII and other molecules. In January 2023, we entered into a License and Supply Agreement with Celltrion, under which we receive supply of ustekinumab biosimilar from Celltrion for RT-111 and Celltrion has a right of first negotiation to obtain development and commercialization rights for RT-111 after completion of a Phase 1 clinical trial that meets its primary endpoint(s). In May 2023, we entered into another License and Supply Agreement with Celltrion, under which we receive supply of adalimumab biosimilar from Celltrion for RT-105 and Celltrion has a right of first negotiation to obtain development and commercialization rights for RT-105 after completion of a Phase 1 clinical trial that meets its primary endpoint(s). If we complete such a clinical trial for RT-111 or RT-105, Celltrion exercises its right of first negotiation, and the parties enter into an agreement granting Celltrion development and commercialization rights, we may be reliant on Celltrion to develop and commercialize the applicable product in certain countries or worldwide.

Future evaluation agreements, supply agreements or collaborations entered into, may not ultimately be successful, which could have a negative impact on our business, results of operations, financial condition and growth prospects. While we plan to expand our reach by selectively entering into strategic partnerships, we may not be able to enter into such partnerships, and if we do, we may not be able to maintain significant rights or control of future development and commercialization of our product candidates. Accordingly, if we collaborate with a third party for development and commercialization of a product candidate, we may relinquish some or all of the control over the future success of that product candidate to the third party, and that partner may not devote sufficient resources to the formulation and manufacture of our product candidate or may otherwise fail in these efforts, in which event the formulation and manufacture of the product candidate in the collaboration could be delayed or terminated and our business could be substantially harmed.

We believe our product candidates are biologic-device combination products that we anticipate will be regulated under the biologic regulations of the FDA based on their primary mode of action as a biologic. Third-party manufacturers may not be able to comply with the regulatory requirements, known as cGMP, applicable to biologic-device combination products, including applicable provisions of the FDA’s drug and biologics cGMP regulations, device cGMP requirements embodied in the medical device Quality System Regulations ("QSRs"), or similar regulatory requirements outside the United States. Our failure, or the failure of our

third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates, operating restrictions and criminal prosecutions, any of which could significantly affect supplies of our product candidates. The facilities used by our contract manufacturers to manufacture our product candidates must be approved by the FDA pursuant to inspections that will be conducted after we submit any BLA or NDA to the FDA.

In addition, the terms of any potential collaboration or other arrangement that we may establish may not be favorable to us or may not be perceived as favorable, which may negatively impact the price of our Class A common stock. In some cases, we may be responsible for continuing formulation and manufacture of a product candidate under a collaboration, and the payments we receive from our partner may be insufficient to cover the cost of this work or may result in a dispute between the parties. Moreover, collaborations and sales and marketing arrangements are complex and time consuming to negotiate, document and implement and they may require substantial resources to maintain, which may be detrimental to the development of our other product candidates.

We are subject to a number of additional risks associated with our dependence on collaborations with third parties, the occurrence of which could cause our collaboration arrangements to fail. Conflicts may arise between us and partners, such as conflicts concerning the implementation of development plans, efforts and resources dedicated to the product candidate, interpretation of clinical data, the achievement of milestones, the interpretation of financial provisions or the ownership of intellectual property developed during the collaboration. If any such conflicts arise, a collaborator could act in its own self-interest, which may be adverse to our interests. Any such disagreement between us and a partner could result in one or more of the following, each of which could delay or prevent the development or commercialization of our product candidates, and in turn prevent us from generating sufficient revenue to achieve or maintain profitability:

In addition, the termination of a collaboration may limit our ability to obtain rights to the product or intellectual property developed by our collaborator under terms that would be sufficiently favorable for us to consider further development or investment in the terminated collaboration product candidate, even if it were returned to us.

We may seek to enter into collaborations, licenses and other similar arrangements and may not be successful in doing so, and even if we are, we may not realize the benefits of such relationships.

We may seek to enter into, and have entered into, collaborations, joint ventures, licenses and other similar arrangements for the development or commercialization of our product candidates, due to capital costs required to develop or commercialize the product candidate or manufacturing constraints. We may not be successful in our efforts to establish or maintain such collaborations for our product candidates because our research and development pipeline may be insufficient, our product candidates may be deemed to be at too early of a stage of development for collaborative effort or third parties may not view our product candidates as having the requisite potential to demonstrate safety and efficacy or significant commercial opportunity. In addition, we face significant competition in seeking appropriate strategic partners, and the negotiation process can be time consuming and complex. Further, any future collaboration agreements may restrict us from entering into additional agreements with potential collaborators. Following a strategic transaction or license, we may not achieve an economic benefit that justifies such transaction.

In January 2023, we entered into a License and Supply Agreement with Celltrion, under which Celltrion has a right of first negotiation to obtain development and commercialization rights for RT-111 after completion of a Phase 1 clinical trial that meets its primary endpoint(s). In May 2023, we entered into another License and Supply Agreement with Celltrion, under which we receive supply of adalimumab biosimilar from Celltrion for RT-105 and Celltrion has a right of first negotiation to obtain development and commercialization rights for RT-105 after completion of a Phase 1 clinical trial that meets its primary endpoint(s). Even if we complete such a clinical trial for RT-111 or RT-105, Celltrion may not exercise its right of first negotiation, or if it does exercise such right we may not be able to agree on terms favorable to us or acceptable to us or Celltrion. Accordingly, there can be no assurance that we will complete the required development of RT-111 or RT-105, that Celltrion will exercise its right of first negotiation if we do, or that the parties will enter into an agreement granting Celltrion development and commercialization rights for the applicable product following any such exercise of the right of first negotiation.

Even if we are successful in our efforts to establish a collaboration with Celltrion or collaborations with other third parties, the terms that we agree upon may not be favorable to us, and we may not be able to maintain such collaborations if, for example, development or approval of a product candidate is delayed, the safety of a product candidate is questioned or sales of an approved product candidate are unsatisfactory.

In addition, any potential future collaborations may be terminable by our strategic partners, and we may not be able to adequately protect our rights under these agreements. Furthermore, strategic partners may negotiate for certain rights to control decisions regarding the development and commercialization of our product candidates, if approved, and may not conduct those activities in the same manner as we do. Any termination of collaborations that we may enter into in the future, or any delay in entering into collaborations related to our product candidates, could delay the development and commercialization of our product candidates and reduce their competitiveness if they reach the market, which could have a material adverse effect on our business, financial condition and results of operations.

Our European patents are presently being challenged in Europe, and if one or more of such challenges is successful it could encourage such party or other parties to challenge additional patents of ours in Europe or other jurisdictions.

Our patent portfolio includes numerous issued European patents and pending European patent applications directed to various technical aspects of our business. The European Patent Office ~~(“EPO”)~~(EPO) provides for an opposition proceeding that could result in revocation of or amendment to a European patent. We are presently involved in opposition proceedings involving four of our European patents at the EPO, all of which opposition proceedings were asserted against us by Novo Nordisk AS.

The first opposition proceeding involves European Patent No. 2515992, which is generally directed to an ingestible device. In July 2021, the EPO issued a decision resulting in an amendment to the claims of the patent. We subsequently filed a notice of appeal with the EPO Appeal Board and we are awaiting a final decision.

The second opposition proceeding involves European Patent No. 2544668, which is generally directed to a therapeutic agent preparation. In December 2021, the EPO issued a decision resulting in revocation of the patent. We subsequently filed a notice of appeal with the EPO Appeal Board and we are awaiting a final decision.

The third opposition proceeding involves European Patent No. 3461478, which is in the same family as European Patent No. 2515992 noted above. In April 2022, the EPO issued a decision resulting in an amendment to the claims of the patent. We ~~plan to file~~subsequently filed a notice of appeal with the EPO Appeal ~~Board.~~Board and we are awaiting a final decision.

The fourth opposition proceeding involves European Patent No. 3653223, which is generally directed to a swallowable device. ~~We are preparing an initial response~~In January 2023, the EPO issued a summons to ~~the EPO.~~oral proceedings, which proceedings have been scheduled for October 2023.

While we own numerous issued European patents and pending European patent applications, including several in the same patent families as the four patents noted above and which are not currently the subject of opposition proceedings, there is a risk that one or more of our issued European patents will be revoked, or have its claims amended, through an opposition process. If this were to happen to one of our European patents, the corresponding national patent in each European country in which the European patent was validated would similarly be revoked or have its claims amended. We believe that our current patent portfolio provides us with meaningful protection of the RaniPill technology in Europe even apart from the four European patents which are the subject of the current opposition proceedings. However, if any of the current oppositions results in a revocation or reduction in our patent protection, it could encourage Novo Nordisk As or other parties to seek to invalidate or reduce additional patents in Europe or other jurisdictions. If current or future opposition proceedings result in the revocation or amendment of one or more of our ~~European~~ patents that cover important aspects of our technology, it could have a material adverse impact on our ability to commercialize ~~in Europe~~ and/or ~~a material adverse impact on~~ our ability to defend against potential competitors in ~~Europe.~~Europe or the applicable jurisdiction(s).

There is a risk that we may face additional oppositions in Europe as additional European patents ~~grant.~~

Our existing indebtedness contains restrictions that limit our flexibility in operating our business. In addition, we may be required to make a prepayment or repay our outstanding indebtedness earlier than we expect.

In August 2022, we entered into a Loan and Security Agreement and related Supplement (collectively, the “Loan Agreement”) with the lenders party thereto from time to time (the “Lenders”), and Avenue Capital Management II, L.P., as administrative agent and collateral agent for the Lenders (the “Agent”), which provides for term loans of up to $45.0 million in the aggregate available in two tranches. The Loan Agreement contains various covenants that limit our ability to engage in specified types of transactions. These covenants limit our ability to, among other things:are granted.

~~The restrictive covenants in the Loan Agreement could prevent us from pursuing business opportunities that we or our stockholders may consider beneficial.~~

A breach of any of these covenants could result in an event of default under the Loan Agreement. An event of default will also occur if, among other things, a material adverse effect in our business, operations, or condition occurs, which could potentially include a material impairment of the prospect of our repayment of any portion of the amounts we owe under the Loan Agreement. In the case of a continuing event of default under the Loan Agreement, the Lenders could elect to declare all amounts outstanding to be immediately due and payable, proceed against the collateral in which we granted the Lenders a security interest under the Loan Agreement, or otherwise exercise the rights of a secured creditor. Amounts outstanding under the Loan Agreement are secured by substantially all of our existing and future assets, including intellectual property.

At closing, we drew on $15.0 million of the $30.0 million available to us as part of the first tranche. The Loan Agreement also gives us the ability to access an additional $15.0 million, which may be drawn in an additional tranche with the approval of the Agent and the Lenders and subject to the other terms and conditions set forth in the Loan Agreement. If we are unable to satisfy these or other required conditions, or if the Agent and Lenders do not consent, as applicable, we would not be able to draw down the remaining tranche of financing and may not be able to obtain alternative financing on commercially reasonable terms or at all, which could adversely impact our business.

We may not have enough available cash or be able to raise additional funds on satisfactory terms, if at all, through equity or debt financings to repay or refinance our indebtedness at the time any such repayment is required. In such an event, we may be required to delay, limit, reduce, or terminate our product development or commercialization efforts. Our business, financial condition, and results of operations could be materially adversely affected as a result.

The following is a list of all exhibits filed or furnished as part of this report:

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Year ending December 31,
2023 (remaining six months)	$	523
2024		749
Total undiscounted future minimum lease payments	$	1,272
Less: Imputed interest		(78	)
Total operating lease liability	$	1,194
Less: Operating lease liability, current portion		856
Operating lease liability, less current portion	$	338


	Number of Stock Option Awards			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Balance at December 31, 2021		2,300,819		$	14.12		9.55	$	976
Granted		1,427,285		$	12.80		9.75	$	0
Forfeited		(40,290	)	$	17.08
Balance at June 30, 2022		3,687,814		$	13.57		9.33	$	1,079
Exercisable at June 30, 2022		596,276		$	12.93		9.09	$	315
Nonvested at June 30, 2022		3,091,538		$	13.70		9.37	$	764


	Number of Restricted Stock Units			Weighted Average Grant-Date Fair Value per Share
Balance at December 31, 2021		596,500		$	19.56
Granted		443,400		$	13.21
Forfeited		(69,800	)	$	18.20
Balance at June 30, 2022		970,100		$	16.76


	Number of Restricted Stock Awards			Weighted Average Grant-Date Fair Value per Share
Balance at December 31, 2021		113,173		$	6.15
Vested		(25,170	)	$	6.16
Forfeited		(2,374	)	$	6.36
Balance at June 30, 2022		85,629		$	6.14


	Three Months Ended June 30,		Six Months Ended June 30,
	2022		2022
Paired Interests		24,663,752		24,663,752
Stock options		3,687,814		3,687,814
Class A Units of Rani LLC exchangeable for Class A common stock		1,387,471		1,387,471
Restricted stock units		970,100		970,100
Restricted stock awards		85,629		85,629
Shares issuable pursuant to the ESPP		30,558		30,558
		30,825,324		30,825,324


	Convertible Preferred				Common
	Units		Amount		Units		Amount		Accumulated Deficit			Total Members’ Deficit
Balance at December 31, 2020		26,746	$	184,714		46,890	$	664	$	(114,003	)	$	(113,339	)
Issuance of Series E preferred units		884		6,320		—		—		—			—
Exercise of warrant for common units		—		—		6		13		—			13
Equity-based compensation		—		—		—		453		—			453
Net loss		—		—		—		—		(5,598	)		(5,598	)
Balance at March 31, 2021		27,630	$	191,034		46,896	$	1,130	$	(119,601	)	$	(118,471	)
Equity-based compensation		—		—		—		282		—			282
Net loss		—		—		—		—		(5,485	)		(5,485	)
Balance at June 30, 2021		27,630	$	191,034		46,896	$	1,412	$	(125,086	)	$	(123,674	)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Balance at beginning of period	$	0	$	536	$	0	$	320
Change in estimated fair value of Series E warrants		0		70		0		286
Balance at end of period	$	0	$	606	$	0	$	606


	June 30,
	2022
Balance sheet
Operating lease right-of-use assets	$	999

Operating lease liability, current portion	$	658
Operating lease liability, net current portion		341
Total operating lease liability	$	999


	June 30,
	2022
Cash flows
Cash paid for amounts included in lease liabilities:
Operating cash flows used for operating leases	$	345


Year ending December 31,
2022 (remaining six months)	$	345
2023		690
Total undiscounted future minimum lease payments	$	1,035
Less: Imputed interest		(36	)
Total operating lease liability	$	999
Less: Operating lease liability, current portion		658
Operating lease liability, net current portion	$	341


	As of June 30,
	2023		2022
Paired Interests		24,116		24,664
Stock options		6,414		3,688
Restricted stock units		1,756		970
Non-corresponding Class A Units		1,387		1,387
Shares issuable pursuant to the ESPP		82		30
Warrants		76		—
Restricted stock awards		51		86
		33,882		30,825


	Forteo SC 20μg	RT-102 20μg	RT-102 80μg
Cmax (pg/mL)	128 ± 20	98 ± 10	971 ± 223
Tmax (hr)	0.217	1.13	0.994
AUC (h*pg/mL)	126 ± 64	342 ± 36	2600 ± 649
Relative BA (5)	N/A	~300%	~400%


	As of June 30, 2023
	Total		Short-term		Long-term
Operating leases (1)	$	1,194	$	856	$	338
Debt obligations (2)		31,650		—		31,650
Total	$	32,844	$	856	$	31,988


Exhibit Number		Description
3.1		Amended and Restated Certificate of Incorporation of the Registrant as currently in effect (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1, as amended, filed with the SEC on July 26, 2021).
3.2		Amended and Restated Bylaws of the Registrant as currently in effect (incorporated by reference to Exhibit 3.4 to the Registrant’s Registration Statement on Form S-1, as amended, filed with the SEC on July 9, 2021).
~~4.1~~10.1x*		~~Specimen Class A common stock certificate of the Registrant (incorporated~~License and Supply Agreement by ~~reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1, as amended, filed with the SEC on July~~and between Rani Therapeutics, LLC and Celltrion, Inc. dated May 26, ~~2021).~~2023.
4.2*		~~Description of Securities~~
10.110.2x+		~~Loan and Security~~Employment Agreement, dated ~~August 8, 2022,~~May 17, 2023, by and ~~among the Registrant, its subsidiaries~~between Rani Therapeutics, LLC and ~~Rani Management Services, Inc., and Avenue Venture Opportunities Fund, L.P.~~
~~10.2*+~~		Supplement to the Loan and Security Agreement, dated August 8, 2022, by and among the Registrant, its subsidiaries Rani Therapeutics, LLC and Rani Management Services, Inc., and Avenue Venture Opportunities Fund, L.P.
10.3*		~~Form of Warrant to purchase shares of Class A common stock of Registrant, issued to Avenue Venture Opportunities Fund, L.P.~~Kate McKinley.
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*†		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


*	Filed herewith.
+	Management contract.
†	The certifications attached as Exhibit 32.1 which accompanies this Quarterly Report on Form 10-Q, are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of this Quarterly Report on Form 10-Q), irrespective of any general incorporation language contained in such filing.
+x	~~Schedules~~Portions of this exhibit have been omitted as the Registrant has determined that (i) the omitted information is not material and ~~certain portions~~(ii) the omitted material is of the ~~exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of such schedules,~~type that the Registrant treats as private or ~~any section thereof, to the SEC upon request.~~confidential.


	Rani Therapeutics Holdings, Inc.

Date: August ~~10, 2022~~11, 2023	By:	/s/ Talat Imran
		Talat Imran
		Chief Executive Officer
		(Principal Executive Officer)

Date: August ~~10, 2022~~11, 2023	By:	/s/ Svai Sanford
		Svai Sanford
		Chief Financial Officer
		(Principal Financial and Accounting Officer)