UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended September 30, 2022 OR ☐ | ||
| ||
| ||
| 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: 001-39683
REZOLUTE, INC.
(Exact Name of Registrant as Specified in its Charter)
| | |
Nevada | | 27-3440894 |
(State | | (I.R.S. Employer Identification No.) |
| | | |
| | 94065 | |
(Address of | | (Zip Code) |
(650) 206-4507
(Registrant’s Telephone Number,telephone number, including Area Code)area code)
Not Applicable201 Redwood Shores Parkway, Suite 315, Redwood City, California 94065
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
Common Stock, par value $0.001 per share | | RZLT | | Nasdaq Capital Market |
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, a smaller reporting company, and 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 |
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 17(a)(2)(B) of the Securities Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐ Yes ☒ No
The registrant had 15,440,25036,827,567 shares of its $0.001 par value common stock outstanding as of November 10, 2021.7, 2022.
Table of Contents
2i
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Report”) contains statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements included or incorporated by reference in this Report, other than statements of historical fact, that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. These statements appear in a number of places, including, but not limited to “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements represent our reasonable judgment of the future based on various factors and using numerous assumptions and are subject to known and unknown risks, uncertainties and other factors that could cause our actual results and financial position to differ materially from those contemplated by the statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts, and use words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “may,” “should,” “plan,” “project” and other words of similar meaning. In particular, these include, but are not limited to, statements relating to the following:
| our projected operating or financial results, including anticipated cash flows used in operations; |
| our expectations regarding capital expenditures, research and development |
| our expectation |
| our beliefs and assumptions relating to our liquidity position, including our ability to obtain additional financing; |
| our ability to obtain regulatory approvals for our pharmaceutical drugs and diagnostics; and |
| our future dependence on third party manufacturers or strategic partners to manufacture any of our pharmaceutical drugs and diagnostics that receive regulatory approval, and our ability to identify strategic partners and enter into license, co-development, collaboration or similar arrangements. |
Any or all of our forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known orand unknown risks, uncertainties and other factors including, but not limited to, the risks described in Part II, Item 1.A Risk factors, as well as “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 20212022 (the “2021“2022 Form 10-K”), filed with the Securities and Exchange Commission (“SEC”) on September 15, 2021 and as amended on September 27, 2021.2022.
In addition, there may be other factors that could cause our actual results to be materially different from the results referenced in the forward-looking statements, some of which are included elsewhere in this Report, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Many of these factors will be important in determining our actual future results. Consequently, no forward-looking statement can be guaranteed. Our actual future results may vary materially from those expressed or implied in any forward-looking statements. All forward-looking statements contained in this Report are qualified in their entirety by this cautionary statement. Forward-looking statements speak only as of the date they are made, and we disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of this Report, except as otherwise required by applicable law.
Special Note About COVID-19
We have been actively monitoring the COVID-19 situation and its impact. Our primary objectives have remained the same throughout the pandemic: to support the safety of our team members and their families and continue to support our preclinical studies and clinical trials. Currently, with respect to the operation of our facilities, we are closely adhering to applicable guidelines and orders. Essential operations in research and maintenance that occur within our facilities are continuing in accordance with the permissions granted under government ordinances. Across all our locations, we have instituted a temporary work from home policy for all office personnel who do not need to work on site to maintain productivity. We have recently allowed these employees to voluntarily return to work on site with appropriate health and safety measures.
3
While our financial results for the fiscal quarter ended September 30, 2021 and the fiscal year ended June 30, 2021 were not significantly impacted by COVID-19, we cannot predict the impact of the progression of the COVID-19 pandemic on future results due to a variety of factors, including the ongoing challenges associated with the pandemic, including the emergence of new variants of the coronavirus, such as the Delta variant, resurgences in number of rates of infections, the continued good health of our employees, the ability of us to maintain operations, access to healthcare facilities and patient willingness to participate in our clinical trials, any further government and/or public actions taken in response to the pandemic and ultimately the length of the pandemic. The ultimate impact of the COVID-19 pandemic on our business operations, our ability to raise capital, as well as our preclinical studies and clinical trial timeliness remains uncertain and subject to change and will depend on future developments, which cannot be accurately predicted. Any prolonged material disruption of our employees, suppliers, or manufacturing may negatively impact our consolidated financial position, results of operations and cash flows. We will continue to monitor the situation closely.
4ii
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Rezolute, Inc.
Unaudited Condensed Consolidated Balance Sheets
(inIn thousands, except per share amounts)
| | | | | | | | | | | | |
| | September 30, | | June 30, |
| September 30, | | June 30, | ||||
|
| 2021 |
| 2021 |
| 2022 |
| 2022 | ||||
Assets |
| |
|
| |
| | | | | | |
| | | | | | | ||||||
Current assets: |
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents | | $ | 37,292 | | $ | 41,047 | | $ | 154,322 | | $ | 150,410 |
Prepaid expenses and other | | | 1,053 | | | 946 | | | 1,305 | | | 1,694 |
Total current assets | |
| 38,345 | |
| 41,993 | |
| 155,627 | |
| 152,104 |
| | | | | | | | | | | | |
Long-term assets: | | | | | | | | | | | | |
Right-of-use assets, net | | | 317 | | | 396 | ||||||
Deferred offering costs and other | | | 72 | | | 191 | ||||||
Deposits and other | | | 148 | | | 148 | ||||||
Right-of-use assets | |
| 130 | |
| 152 | ||||||
Property and equipment, net | |
| 26 | |
| 29 | |
| 83 | |
| 16 |
Total assets | | $ | 38,760 | | $ | 42,609 | | $ | 155,988 | | $ | 152,420 |
| | | | | | | | | | | | |
Liabilities and Shareholders' Equity | |
|
| |
|
| |
|
| |
|
|
Current liabilities: | |
|
| |
|
| |
|
| |
|
|
Accounts payable | | $ | 1,592 | | $ | 1,035 | | $ | 1,110 | | $ | 1,132 |
Accrued liabilities: | | | | | | | |
| | |
| |
Compensation and benefits | | | — | | | 77 | ||||||
Insurance premiums | | | 121 | | | 242 | | | 122 | | | 243 |
Other | | | 679 | | | 349 | ||||||
Accrued clinical and other | | | 1,085 | | | 979 | ||||||
Current portion of operating lease liabilities | | | 206 | | | 265 | | | 112 | | | 108 |
Total current liabilities | |
| 2,598 | |
| 1,968 | |
| 2,429 | |
| 2,462 |
| | | | | | | | | | | | |
Long-term liabilities: | | | | | | | ||||||
Long term debt, net of discount | | | 14,071 | | | 13,968 | ||||||
Long term liabilities: | | | | | | | ||||||
Operating lease liabilities, net of current portion | |
| 49 | |
| 80 | ||||||
Embedded derivative liabilities | | | 371 | | | 387 | | | 420 | | | 407 |
Operating lease liabilities, net of current portion | | | 161 | | | 187 | ||||||
Total liabilities | |
| 17,201 | |
| 16,510 | |
| 2,898 | |
| 2,949 |
| | | | | | | | | | | | |
Commitments and contingencies (Notes 4 and 8) | |
|
| |
|
| ||||||
Commitments and contingencies (Notes 3, 4, 8 and 9) | |
|
| |
|
| ||||||
| | | | | | | | | | | | |
Shareholders' equity: | |
|
| |
|
| |
|
| |
|
|
Preferred Stock, $0.001 par value; 400 shares shares authorized as of September 30, 2021 and June 30, 2021; 0 shares issued and outstanding | |
| — | |
| — | ||||||
Common Stock, $0.001 par value, 40,000 shares authorized as of September 30, 2021 and June 30, 2021; 8,640 and 8,352 shares issued and outstanding as of September 30, 2021 and June 30, 2021, respectively | |
| 9 | |
| 8 | ||||||
Preferred stock, $0.001 par value; 400 shares authorized; no shares issued and outstanding | |
| — | |
| — | ||||||
Common stock, $0.001 par value; 100,000 shares authorized; issued and outstanding 36,827 and 33,582 shares as of September 30, 2022 and June 30, 2022, respectively | |
| 37 | |
| 34 | ||||||
Additional paid-in capital | |
| 197,524 | |
| 194,229 | |
| 372,082 | |
| 358,635 |
Accumulated deficit | |
| (175,974) | |
| (168,138) | |
| (219,029) | |
| (209,198) |
Total shareholders' equity | |
| 21,559 | |
| 26,099 | ||||||
Total liabilities and shareholders' equity | | $ | 38,760 | | $ | 42,609 | ||||||
Total shareholders’ equity | |
| 153,090 | |
| 149,471 | ||||||
Total liabilities and shareholders’ equity | | $ | 155,988 | | $ | 152,420 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
53
Rezolute, Inc.
Unaudited Condensed Consolidated Statements of Operations
(inIn thousands, except per share amounts)
| | | | | | | |
| | Three Months Ended | | ||||
| | September 30, | | ||||
|
| 2021 |
| 2020 |
| ||
Operating expenses: |
| |
|
| |
|
|
Research and development |
| $ | 5,774 |
| $ | 2,344 |
|
General and administrative | |
| 1,866 | |
| 1,279 | |
Total operating expenses | | | 7,640 | | | 3,623 | |
Operating loss | |
| (7,640) | |
| (3,623) | |
Non-operating income (expense): | | | | |
| | |
Employee retention credit | | | 231 | | | — | |
Gain on change in fair value of embedded derivative liability | | | 16 | | | — | |
Interest expense, net | | | (443) | | | 3 | |
Total non-operating income (expense), net | | | (196) | | | 3 | |
Net loss | | $ | (7,836) | | $ | (3,620) | |
| | | | | | | |
Net loss per common share - basic and diluted | | $ | (0.92) | | $ | (0.62) | |
Weighted average number of common shares outstanding - basic and diluted | |
| 8,513 | |
| 5,867 | |
| | | | | | | |
| | Three Months Ended | | ||||
| | September 30, | | ||||
|
| 2022 |
| 2021 | | ||
Operating expenses: |
| |
|
| |
| |
Research and development |
| $ | 7,704 |
| $ | 5,774 | |
General and administrative |
| | 2,514 | |
| 1,866 | |
Total operating expenses |
| | 10,218 | |
| 7,640 | |
Operating loss |
| | (10,218) | |
| (7,640) | |
Non-operating income (expense): |
| |
| |
|
| |
Interest and other income | | | 400 | | | — | |
Gain (loss) from change in fair value of derivative liabilities, net | | | (13) | | | 16 | |
Employee retention credit | | | — | | | 231 | |
Interest expense |
| | — | |
| (443) | |
Total non-operating income (expense), net |
| | 387 | |
| (196) | |
| | | | | | | |
Net loss | | $ | (9,831) | | $ | (7,836) | |
| | | | | | | |
Net loss per common share: | | | | | | | |
Basic and diluted | | $ | (0.19) | | $ | (0.92) | |
| | | | | | | |
Weighted average number of common shares outstanding: | |
| | | | | |
Basic and diluted | | | 50,528 | | | 8,513 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
64
Rezolute, Inc.
Unaudited Condensed Consolidated Statements of Shareholders’ Equity
Three Months Ended September 30, 2022 and 2021
(in thousands, except per share amounts)In thousands)
| | | | | | | | | | | | | | |
| | | | | | | Additional | | | | | Total | ||
| | Common Stock | | Paid-in | | Accumulated | | Shareholders' | ||||||
|
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity | ||||
Three Months Ended September 30, 2021: | | | | | | | | | | | | | | |
Balances as of June 30, 2021 |
| 8,352 | | $ | 8 | | $ | 194,229 | | $ | (168,138) | | $ | 26,099 |
Share-based compensation |
| — | |
| — | |
| 842 | |
| — | |
| 842 |
Issuance of common stock for cash | | 254 | | | 1 | | | 2,689 | | | — | | | 2,690 |
Advisory fees and other offering costs | | — | | | — | | | (686) | | | — | | | (686) |
Issuance of commitment shares | | 34 | | | — | | | 450 | | | — | | | 450 |
Net loss |
| — | |
| — | |
| — | |
| (7,836) | |
| (7,836) |
Balances as of September 30, 2021 |
| 8,640 | | $ | 9 | | $ | 197,524 | | $ | (175,974) | | $ | 21,559 |
| | | | | | | | | | | | | | |
Three Months Ended September 30, 2020: | | | | | | | | | | | | | | |
Balances as of June 30, 2020 |
| 5,867 | | $ | 6 | | $ | 154,595 | | $ | (147,236) | | $ | 7,365 |
Share-based compensation |
| — | |
| — | |
| 634 | |
| — | |
| 634 |
Fair value of warrants issued to consultants for services | | — | | | — | | | 3 | | | — | | | 3 |
Net loss |
| — | | | — | | | — | | | (3,620) | | | (3,620) |
Balances as of September 30, 2020 |
| 5,867 | | $ | 6 | | $ | 155,232 | | $ | (150,856) | | $ | 4,382 |
| | | | | | | | | | | | | | |
| | | | | | | Additional | | | | | Total | ||
| | Common Stock | | Paid-in | | Accumulated | | Shareholders' | ||||||
|
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity | ||||
Three Months Ended September 30, 2022: | | | | | | | | | | | | | | |
Balances, June 30, 2022 |
| 33,582 | | $ | 34 | | $ | 358,635 | | $ | (209,198) | | $ | 149,471 |
Gross proceeds from issuance of common stock for cash: | | | | | | | | | | | | | | |
In 2022 Private Placement | | 3,245 | | | 3 | | | 12,327 | | | — | | | 12,330 |
Underwriting commissions and other equity offering costs | | — | | | — | | | (759) | | | — | | | (759) |
Share-based compensation | | — | | | — | | | 1,879 | | | — | | | 1,879 |
Net loss |
| — | |
| — | |
| — | |
| (9,831) | |
| (9,831) |
Balances, September 30, 2022 | | 36,827 | | $ | 37 | | $ | 372,082 | | $ | (219,029) | | $ | 153,090 |
| | | | | | | | | | | | | | |
Three Months Ended September 30, 2021: | | | | | | | | | | | | | | |
Balances, June 30, 2021 | | 8,352 | | $ | 8 | | $ | 194,229 | | $ | (168,138) | | $ | 26,099 |
Share-based compensation | | — | | | — | | | 842 | | | — | | | 842 |
Issuance of common stock for cash | | 254 | | | 1 | | | 2,689 | | | — | | | 2,690 |
Advisory fees and other offering costs | | — | | | — | | | (686) | | | — | | | (686) |
Issuance of commitment shares | | 34 | | | — | | | 450 | | | — | | | 450 |
Net loss | | — | | | — | | | — | | | (7,836) | | | (7,836) |
Balances, September 30, 2021 |
| 8,640 | | $ | 9 | | $ | 197,524 | | $ | (175,974) | | $ | 21,559 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
75
Rezolute, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(inIn thousands)
| | | | | | |
| | Three Months Ended | ||||
| | September 30, | ||||
|
| 2021 |
| 2020 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
| |
|
| |
|
Net loss | | $ | (7,836) | | $ | (3,620) |
Share-based compensation expense | |
| 842 | |
| 634 |
Accretion of debt discount and issuance costs | | | 104 | | | 0 |
Non-cash lease expense | | | 78 | | | 59 |
Depreciation and amortization expense | | | 4 | | | 3 |
Fair value of warrants issued for services | |
| — | |
| 3 |
Change in fair value of derivative liability | | | (16) | | | 0 |
Changes in operating assets and liabilities: | |
| | |
| |
(Increase) Decrease in prepaid expenses and other assets | |
| (96) | | | 72 |
Increase (decrease) in accounts payable | |
| 555 | | | (107) |
Increase (decrease) in other accrued liabilities | | | 24 | | | (195) |
Decrease in license fees payable to Xoma | |
| — | | | (400) |
Net Cash Used In Operating Activities | |
| (6,341) | |
| (3,551) |
| | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | |
| — | |
| 0 |
| | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | |
Proceeds from issuance of common stock | |
| 2,690 | |
| 0 |
Cash payments for debt discount and issuance costs | | | (104) | | | 0 |
Net Cash Provided by Financing Activities | | | 2,586 | | | 0 |
Net decrease in cash, cash equivalents and restricted cash | | | (3,755) | | | (3,551) |
Cash, cash equivalents and restricted cash at beginning of period | | | 41,047 | | | 9,955 |
Cash, cash equivalents and restricted cash at end of period | | $ | 37,292 | | $ | 6,404 |
| | | | | | |
SUPPLEMENTARY CASH FLOW INFORMATION: | |
| | |
| |
Cash paid for interest | | $ | 340 | | $ | 0 |
Cash paid for income taxes | | | — | | | 0 |
Cash paid for amounts included in the measurement of operating lease liabilities | | | 92 | | | 70 |
| | | | | | |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | | | | | | |
Issuance of commitment shares for deferred offering costs subsequently charged to equity | | $ | 450 | | $ | 0 |
Increase in payables for deferred offering costs | | | 24 | | | 0 |
| | | | | | |
|
| Three Months Ended | ||||
| | September 30, | ||||
|
| 2022 |
| 2021 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
| |
|
| |
|
Net loss | | $ | (9,831) | | $ | (7,836) |
Share-based compensation expense | | | 1,879 | | | 842 |
Non-cash lease expense | | | 23 | | | 78 |
Loss (Gain) from change in fair value of derivative liabilities, net | | | 13 | | | (16) |
Depreciation and amortization expense | | | 3 | | | 4 |
Accretion of debt discount and issuance costs | | | — | | | 104 |
Changes in operating assets and liabilities: | |
|
| |
|
|
Decrease (increase) in prepaid expenses and other assets | |
| 388 | |
| (96) |
Increase (decrease) in accounts payable | |
| (22) | |
| 555 |
Increase (decrease) in other accrued liabilities | | | (42) | | | 24 |
Net Cash Used in Operating Activities | |
| (7,589) | |
| (6,341) |
| | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | |
| | | | |
Purchase of property and equipment | | | (70) | |
| — |
| | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
|
| | |
|
Gross proceeds from issuance of common stock for cash: | | | | | | |
2022 Private Placement | | | 12,330 | | | — |
Under Equity Distribution Agreement | | | — | | | 1,519 |
Under LPC Purchase Agreement | | | — | | | 1,171 |
Payment of commissions and other deferred offering costs | |
| (759) | | | — |
Payment of debt discount and issuance costs | |
| — | |
| (104) |
Net Cash Provided by Financing Activities | |
| 11,571 | |
| 2,586 |
| | | | | | |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | 3,912 | | | (3,755) |
Cash, cash equivalents and restricted cash at beginning of period | |
| 150,410 | |
| 41,047 |
Cash, cash equivalents and restricted cash at end of period | | $ | 154,322 | | $ | 37,292 |
| | | | | | |
SUPPLEMENTARY CASH FLOW INFORMATION: | |
|
| |
|
|
Cash paid for interest | | $ | — | | $ | 340 |
Cash paid for income taxes | | | — | | | — |
Cash paid for amounts included in the measurement of operating lease liabilities | | | 29 | | | 92 |
| | | | | | |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | |
|
| |
|
|
Issuance of commitment shares for deferred offering costs subsequently charged to additional paid-in capital | | $ | — | | $ | 450 |
Payables for deferred offering costs subsequently charged to additional paid-in capital | | | — | | | 24 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
86
NOTE 1 — NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Rezolute, Inc. (the “Company”) is a clinical stage biopharmaceutical company developing transformative therapies for metabolic diseases related to chronic glucose imbalance.
Change in Domicile
In June 2021, the Company merged with and into its wholly owned subsidiary, Rezolute Nevada Merger Corporation, The Company’s primary clinical assets consist of (i) RZ358, which is a Nevada corporation (“Merger Sub”), pursuant topotential treatment for congenital hyperinsulinism, an Agreement and Planultra-rare pediatric genetic disorder characterized by excessive production of Merger, dated as of June 18, 2021 (the “Reincorporation Merger Agreement”), between the Company and Merger Sub, with Merger Sub as the surviving corporation (the “Reincorporation Merger”). At the effective time of the Reincorporation Merger (the “Effective Time”), the Merger Sub was renamed “Rezolute, Inc.” and succeeded to the assets, continued its business and assumed its rights and obligations by operation of law. The Reincorporation Merger Agreement was approvedinsulin by the Company’s shareholders atpancreas, and (ii) RZ402, which is an oral plasma kallikrein inhibitor (“PKI”) being developed as a potential therapy for the 2021 annual meetingchronic treatment of its shareholders held on May 26, 2021.diabetic macular edema.
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and, the rules and regulations of the SEC for interim financial information, and with the instructions to Form 10-Q and Article 8 of Regulation S-X.
The condensed consolidated balance sheet as of June 30, 2021,2022, has been derived from the Company’s audited consolidated financial statements. The unaudited interim financial statements should be read in conjunction with the Company’s 20212022 Form 10-K, which contains the Company’s audited financial statements and notes thereto, together with the Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended June 30, 2021.2022.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnote disclosures necessary for a comprehensive presentation of financial position, results of operations, and cash flows. It is management'smanagement’s opinion, however, that all material adjustments (consisting of normal recurring adjustments) that are necessary for a fair financial statement presentation have been made. The interim results for the three months ended September 30, 20212022 are not necessarily indicative of the financial condition and results of operations that may be expected for any future interim period or for the fiscal year ending June 30, 2022.2023.
Consolidation
The Company has 2two wholly owned subsidiaries consisting of Rezolute (Bio) Ireland Limited, and Rezolute Bio UK, Ltd. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
9
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in the unaudited condensed consolidated financial statements and the accompanying notes. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes are reasonable under the circumstances, to determine the carrying values of assets and liabilities that are not readily apparent from other sources. The Company’s significant accounting estimates include, but are not necessarily limited to, the fair value of the embedded derivatives,derivative liabilities, fair value of share-based payments, management’s assessment of going concern, and clinical trial accrued liabilities. Actual results could differ from those estimates.
Risks and Uncertainties
The Company'sCompany’s operations may be subject to significant risks and uncertainties including financial, operational, regulatory and other risks associated with a clinical stage company, including the potential risk of business failure, as discussed further in Note 2, and the future impact of COVID-19 as discussed in Note 8.COVID-19.
7
Rezolute, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Significant Accounting Policies
The Company’s significant accounting policies are described in Note 1 to the financial statements in Item 8 of the 20212022 Form 10-K. For
Recent Accounting Pronouncements
Recently Adopted Standard. The following standard was adopted during the three months ended September 30, 20212022:
In August 2020, the FASB issued ASU 2020-06, ,Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity). ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock, which results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Additionally, ASU 2020-06 affects the diluted earnings per share calculation for instruments that may be settled in cash or shares and for convertible instruments and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity. ASU 2020-06 allows entities to use a modified or full retrospective transition method. The Company adopted this standard using the full retrospective transition method effective July 1, 2022. The adoption did not adopthave any new accounting policies.
Recent Accounting Pronouncementsimpact on the Company’s financial statements.
StandardsStandard Required to be Adopted in Future Years.Periods. The following accounting standards arestandard is not yet effective; management has not completed its evaluation to determine the impact that adoption of this standard will have on the Company’s consolidated financial statements.
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends the guidance on the impairment of financial instruments. This update adds an impairment model (known as the current expected credit losses model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes, as an allowance, its estimate of expected credit losses. In November 2019, ASU 2016-13 was amended by ASU 2019-10, Financial Instruments- Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) whereby the effective date for ASU 2016-13 for smaller reporting companies is now required for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company does not expect the adoption of ASU 2016-13 will have a material impact on its consolidated financial statements as credit losses are not expected to be significant.
In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity). ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock, which results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Additionally, ASU 2020-06 affects the diluted earnings per share calculation for instruments that may be settled in cash or shares and for convertible instruments and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity. ASU 2020-06 allows entities to use a modified or full retrospective transition method and is effective for smaller reporting companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.statements.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not currently expected to have a material impact on the Company’s financial statements upon adoption.
10
NOTE 2 — LIQUIDITY
The Company is in the clinical stage and has not yet generated any revenues. For the three months ended September 30, 2021,2022, the Company incurred a net loss of $7.8$9.8 million and net cash used in operating activities amounted to $6.3$7.6 million. For the fiscal year ended June 30, 2021,2022, the Company incurred a net loss of $20.9$41.1 million and net cash used in operating activities amounted to $20.4$39.6 million. As of September 30, 2021,2022, the Company had an accumulated deficit of $176.0$219.0 million, cash and cash equivalents of $37.3$154.3 million, and total current liabilities of $2.6$2.4 million.
As discussed in Note 13, in October 20214, the Company completed an underwritten public offeringis subject to license agreements that provide for net proceedsfuture contractual payments upon achievement of $46.7various milestone events. Pursuant to the ActiveSite License Agreement (as defined below), a $3.0 million andmilestone payment will be due upon dosing of the first patient in a registered direct offeringPhase 2 clinical trial for net proceeds ofRZ402. Additionally, pursuant to the XOMA License Agreement (as defined below), a $5.0 million resultingmilestone payment will be due upon dosing of the first patient in total net proceeds of approximately $51.7 million. If additional capital resourcesa Phase 3 clinical trial for RZ358. First patient dosing milestones for the RZ402 Phase 2 clinical trial and RZ358 Phase 3 clinical trial are required inexpected to occur within the future, the Company has the ability to raise (i) additional debt financing proceeds up to $15.0 million if certain conditions are satisfied as discussed in Note 5, and additional equity financing proceeds as discussed in Note 6 under the captions Equity Distribution Agreement and LPC Purchase Agreement.next 12 months.
Management believes the Company’s existing cash and cash equivalents balance of $37.3$154.3 million combined with the net offering proceedsas of $51.7 million received in October 2021September 30, 2022, will be adequate to meet the Company’s contractual obligations and carry out currentlyongoing clinical trials and other planned activities intoat least through November 2022.2023.
8
Rezolute, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 3 — OPERATING LEASES
The carrying value of right-of-use (“ROU”) assets and operating lease liabilities are as follows (in thousands):
| | | | | | | | | | | | |
| | September 30, | | June 30, | | September 30, | | June 30, | ||||
|
| 2021 |
| 2021 |
| 2022 |
| 2022 | ||||
Right-of-Use Assets, net | | $ | 317 | | $ | 396 | ||||||
| |
|
| |
|
| | | | | | |
Operating Lease Liabilities: | |
|
| |
|
| ||||||
Right-of-use assets | | $ | 130 | | $ | 152 | ||||||
| | | | | | | ||||||
Operating lease liabilities: | |
|
| |
|
| ||||||
Current | | $ | 206 | | $ | 265 | | $ | 112 | | $ | 108 |
Long-term | |
| 161 | |
| 187 | |
| 49 | |
| 80 |
Total | | $ | 367 | | $ | 452 | | $ | 161 | | $ | 188 |
For the three months ended September 30, 20212022 and 2020,2021, operating lease expense was as followsis included under the following captions in the accompanying condensed consolidated statements of operations (in thousands):
| | | | | | | | |||||||
| | Three Months Ended | | | | | | | | | ||||
| | September 30, | | | 2022 |
| 2021 | | ||||||
|
| 2021 |
| 2020 | | | | | | | | | ||
Research and development |
| $ | 79 |
| $ | 49 |
| | $ | 77 | | $ | 79 | |
General and administrative | |
| 23 | |
| 24 | | |
| 23 | |
| 23 | |
| | | | | | | | |||||||
Total | | $ | 102 | | $ | 73 | | | $ | 100 | | $ | 102 | |
As of September 30, 2021,2022, the weighted average remaining lease term under operating leases was 1.81.4 years, and the weighted average discount rate for operating lease liabilities was 7.1%6.0%. For the three months endedFuture payments under all operating lease agreements that had commenced as of September 30, 20212022 are as follows (in thousands):
| | | |
Fiscal year ending June 30, |
|
| |
Remainder of fiscal year 2023 | | $ | 88 |
2024 | | | 79 |
Total lease payments | | | 167 |
Less imputed interest | |
| (6) |
Present value of operating lease liabilities | | $ | 161 |
Headquarters Lease
In April 2022, the Company entered into a lease agreement for a new corporate headquarters in Redwood City, California. The space consists of approximately 9,300 square feet and 2020,provides for total base rent payments of approximately $2.9 million through the expected expiration of the lease in November 2027. The landlord was required to make improvements to the facility before the Company could occupy the space, which were completed in October 2022, triggering the commencement of the lease. The lease provides for a six-month rent abatement period beginning upon commencement of the lease term which occurred on October 18, 2022. In addition, the lease provides an allowance of approximately $0.1 million that may be utilized by the Company for the purchase of furniture and equipment. The average base rent payable in cash paidover the 60-month lease term is approximately $48,000 per month. Upon commencement of the lease, the Company expects to recognize a right-of-use asset and a related operating lease liability for amounts included in the measurement of operating lease liabilities was $0.1approximately $2.3 million. These cash payments were included in the determination of net cash used in operating activities in the condensed consolidated statements of cash flows.
119
FutureThe future payments under allthis operating lease agreements as of September 30, 2021agreement are as follows (in thousands):
| | | | | | |
Fiscal year ending June 30, |
|
| |
|
| |
Remainder of fiscal year 2022 | | $ | 192 | |||
2023 | |
| 117 | |||
Remainder of fiscal year 2023 | | $ | 50 | |||
2024 | |
| 79 | | | 609 |
2025 | | | 627 | |||
2026 | | | 646 | |||
2027 | | | 666 | |||
Thereafter | | | 224 | |||
Total lease payments | |
| 388 | | $ | 2,822 |
Less imputed interest | |
| (21) | |||
Present value of operating lease liabilities | | $ | 367 |
NOTE 4 — LICENSE AGREEMENTS
XomaXOMA License Agreement
In December 2017, the Company entered into a license agreement (“(the “XOMA License Agreement”) with XOMA Corporation (“Xoma”XOMA”), through its wholly-owned subsidiary, XOMA (US) LLC, pursuant to which XomaXOMA granted an exclusive global license to the Company to develop and commercialize XomaXOMA 358 (formerly X358, now RZ358) for all indications. In January 2019, the XOMA License Agreement was amended.amended with an updated payment schedule, as well as revising the amount the Company was required to expend on development of RZ358 and related licensed products, and revised provisions with respect to the Company’s diligence efforts in conducting clinical studies.
In January 2022, the Company was required to make a milestone payment under the XOMA License Agreement of $2.0 million that became due upon the dosing of the last patient in the Company’s ongoing Phase 2b Clinical Trial for RZ358. Upon the achievement of certain clinical and regulatory events under the XOMA License Agreement, the Company will be required to make up to $37.0 million in aggregateadditional milestone payments to Xoma.XOMA up to $35.0 million. After the clinical and regulatory milestones, the Company will be required, upon the future commercialization of RZ358, to pay royalties to XOMA based on the net sales of the related products and additional milestone payments to XOMA up to $185.0 million related to annual net sales amounts. The next milestone payment of $5.0 million will be due upon dosing of the first patient in a Phase 3 clinical trial for RZ358.
ActiveSite License Agreement
On August 4, 2017, the Company entered into a Development and License Agreement (the “ActiveSite License Agreement”) with ActiveSite Pharmaceuticals, Inc. (“ActiveSite”) pursuant to which the Company acquired the rights to ActiveSite’s Plasma Kallikrein Inhibitor program (“PKI Portfolio”). The Company is initially using the PKI Portfolio to develop an oral PKI therapeutic for diabetic macular edema (RZ402) and may use the PKI Portfolio to develop other therapeutics for different indications. The ActiveSite Development and License Agreement requires various milestone payments up to $46.5 million.million, if all milestones are achieved. The first milestone payment for $1.0 million was paid in December 2020 after clearance was received for an Initial Drug Application, or IND, filed with the U.S. Food and Drug Administration (“FDA”). The Companynext milestone payment of $3.0 million will be due upon dosing of the first patient in a Phase 2 clinical trial for RZ402. The company is also required to pay royalties equal to 2.0% of any sales of products that use the PKI Portfolio. There have been no events that would result in any royalty payments owed under the ActiveSite Development and License Agreement to date.
NOTE 5 — LOAN AND SECRUITY AGREEMENTEMBEDDED DERIVATIVE LIABILTY
On April 14, 2021, the Company entered into a $30.0 million Loan and Security Agreement (the “Loan Agreement”) with SLR Investment Corp. and certain other lenders (the “Lenders”). The Lenders agreed to loan up to $30.0 million in three tranches consisting of (i) a $15.0 million term A loan that was funded on April 14, 2021, (ii) a $7.5 million term B loan to be funded upon request by the Company no later than January 25, 2022, and (iii) a $7.5 million term C loan to be funded upon request by the Company no later than September 25, 2022. Fundingloans for an aggregate of the term B loan is$15.0 million, which were subject to the Company’s ability to obtain at least $35.0 millionprescribed amounts of equity or subordinated debt financing by January 2022 and the achievement of certain clinical milestones. The Company did not achieve the initial clinical milestones related to RZ358by January 2022 and, RZ402. Funding of the term C loan is subject to the Company’s ability to (i) meet the conditions for fundingaccordingly, the term B and term C loans were no longer a source of liquidity. The term A loan and (ii) obtaining an additional $35.0 million of equity or subordinated debt financing, and the achievement of certain additional clinical milestones related to RZ358 and RZ402 by September 2022. Each term loan hashad a maturity date of April 1, 2026 (the “Maturity Date”). As discussed, but was repaid in Note 13, in October 2021 the Company completed an underwritten public offering for net proceeds of $46.7 million and a registered direct offering for net proceeds of $5.0 million, resulting in total net proceeds of approximately $51.7 million. As a result of the completion of these offerings, as well as equity issuances under the EDA and LPC Purchase Agreement during the three months ended Septemberfull on June 30, 2021, we have met the financing threshold to qualify for the term B loan but will need to raise an additional $12.3 million to qualify for the term C loan. To date we have not achieved the clinical milestones to qualify for the term B and term C loans.2022.
1210
In addition, the Company’s cash and cash equivalents became subject to a blocked account control agreement (“BACA”) in favor of the Lenders whereby a cash balance of at least $5.0 million must be maintained beginning on the earlier of (i) December 31, 2021, and (ii) the date the term B loan is funded. In the event of a default under the Loan Agreement, the BACA would enable the Lenders to prevent the release of funds from the Company’s cash accounts.
Outstanding borrowings bear interest at a floating rate equal to (a) 8.75% per annum plus (b) the greater of (i) the rate per annum published by the Intercontinental Exchange Benchmark Administration Ltd. (“IEBA”) for a term of one month and (ii) 0.12% per annum. For the period from April 14, 2021 through September 30, 2021, the IEBA rate for a term of one month was approximately 0.12% per annum. Therefore, the contractual rate was 8.87% as of September 30, 2021 and June 30, 2021. The Company is permitted to make interest-only payments on each term loan through May 1, 2023. At the Company’s request, the interest-only period can be extended until May 1, 2024, if the Company obtains at least $70.0 million of equity or subordinated debt financing by September 2022 and no event of default shall have occurred. The Company will be required to make monthly payments of principal and interest commencing at the end of the interest-only period.
The Company is obligated to pay the Lenders (i) a non-refundable facility fee in the amount of 1.00% of each term loan that is funded (the “Facility Fee”), and (ii) a final fee equal to 4.75% of the aggregate amount of the term loans funded (the “Final Fee”). As of September 30, 2021, the Company incurred debt discounts for an aggregate of $1.7 million that consisted of $0.5 million for financial advisory and legal fees, an aggregate of $0.8 million for the Facility Fee and the Final Fee, and an aggregate of $0.4 million as an exit fee as discussed below. The Final Fee is payable upon the earliest to occur of (i) the Maturity Date, (ii) the acceleration of the term loans, and (iii) the prepayment of the term loans. The total debt discount of $1.7 million related to the term A loan is being accreted to interest expense using the effective interest method which results in an overall current effective interest rate of 12.6% as of September 30, 2021 and June 30, 2021.
Concurrently with the execution of the Loan Agreement, the Company entered into an exit fee agreement (the “Exit Fee Agreement”) that provides for a fee of 4.00% of the funded principal balance of each term loan in the event certain transactions (defined as “Exit Events”) occur prior to April 13, 2031. Exit Events include, but are not limited to, sales of substantially all assets, certain mergers, change of control transactions, and issuances of common stock that result in new investors owning more than 35% of the Company’s shares. As of April 14, 2021, the Company allocated a portion of the proceeds from the term A loan to recognize a liability for the fair value of this embedded derivative for approximately $354,000.derivatives. Fair value was determined primarily based on the Company’s strategic corporate development plans and management has performed a detailed evaluation of the different types of Exit Events that could occur and using a discounted rate equivalent to the effective rate for the term A loan. Fair value of this embedded derivativederivatives is assessed at the end of each reporting period with changes in fair value recognized as a nonoperating gain or loss.
The Company has the option to prepay all, but not less than all, of the outstanding principal balance of the term loans. In the event of a voluntary or mandatory prepayment prior to the Maturity Date, the Company will incur a prepayment fee ranging from 1.00% to 3.00% of the outstanding principal balance.
The Company’s obligations under the Loan Agreement are secured by a first-priority security interest in substantially all the Company’s assets, including its intellectual property. This security interest will not be released until all obligations are repaid, including the requirement to pay an Exit Fee of $0.6 million for certain fundamental transactions that may occur through April 13, 2031. The Loan Agreement contains customary representations, warranties and covenants and also includes customary events of default, including payment defaults, breaches of covenants, and a default upon the occurrence of a material adverse change affecting the Company. Upon the occurrence of an event of default, a default interest rate of an additional 5.00% per annum may be applied to the outstanding loan balance, and the Lenders may declare all outstanding obligations immediately due and payable and exercise all their rights and remedies as set forth in the Loan Agreement.
13
As of September 30, 2021, the Company had outstanding contractual obligations under the Loan Agreement consisting of the principal balance of $15.0 million and the Final Fee of $0.7 million for a total of $15.7 million. After deducting the unaccreted discount of $1.6 million, the net carrying value was $14.1 million as of September 30, 2021. Future minimum principal payments and the net carrying value of the term A loan are as follows as of September 30, 2021 (in thousands):
| | | |
Fiscal year ending June 30, |
| | |
2022 | | $ | 0 |
2023 | |
| 833 |
2024 | |
| 5,000 |
2025 | |
| 5,000 |
2026 | | | 4,880 |
Total contractual payments | |
| 15,713 |
Less unaccreted debt discount | | | (1,642) |
Net carrying value | | $ | 14,071 |
NOTE 6 — SHAREHOLDERS’ EQUITY
July 2022 Financing
In May 2022, the Company entered into securities purchase agreements (“SPAs”) with Handok, Inc. (“Handok”) and certain of its affiliates. Handok is an affiliate of a member of the Company’s Board of Directors. In July 2022, the Company entered into amended SPAs for a private placement of common stock (the “2022 Private Placement”). The 2022 Private Placement resulted in gross proceeds of $12.3 million in exchange for the issuance of approximately 3.2 million shares of common stock. The Company incurred approximately $0.8 million for underwriting commissions and other offering costs, resulting in net proceeds of $11.5 million.
Equity Distribution Agreement
OnIn December 18, 2020, the Company and Oppenheimer & Co. Inc. (the “Agent”) entered into an Equity Distribution Agreement (the “EDA”) that provides for an “at the market offering” for the sale of up to $50.0 million in shares of the Company’s common stock (the “Placement Shares”) through the Agent. The Agent iswas acting as sales agent and iswas required to use commercially reasonable efforts to sell all of the Placement Shares requested to be sold by the Company, consistent with the Agent’s normal trading and sales practices, on mutually agreed terms between the Agent and the Company. The EDA willwas scheduled to terminate when all of the Placement Shares havehad been sold, or earlier upon the election of either the Company or the Agent.
The In May 2022, the Company has no obligation to sell anyprovided the Agent with notice of termination of the Placement SharesEDA and no further shares will be issued under the EDA. The Company intends to use the net proceeds, if any, from amounts sold under the EDA for general corporate purposes, including working capital. this agreement.
Under the terms of the EDA, the Company agreed to pay the Agent a commission equal to 3.0% of the gross sales price of the Placement Shares plus certain expenses incurred by the Agent in connection with the offering. ThroughFor the three months ended September 30, 2021, the Company sold 138,388 shares of its common stock pursuant to the EDA for net proceeds of approximately $1.5 million. Accordingly, the maximum amount remaining for sale under the EDA amounts to approximately $48.5 million as of September 30, 2021.
LPC Purchase Agreement
In August 2021, the Company entered into a purchase agreement (the “Purchase Agreement”) and a registration rights agreement (the “RRA”��RRA”) with Lincoln Park Capital Fund, LLC (“LPC”), which provides that the Company may sell to LPC up to an aggregate of $20.0 million of shares (the “Purchase Shares”) of its common stock. The Company concurrently filed a prospectus supplement with the SEC to register the shares issuable under the Purchase Agreement. The aggregate number of shares that the Company cancould sell to LPC under the Purchase Agreement may not exceedwas 1,669,620 shares of common stock, subject to certain exceptions set forth in the Purchase Agreement.
LPC’s initial purchase consisted of 95,708 Purchase Shares at a purchase price of approximately $10.45 per share for a total purchase price of $1.0 million. Concurrently, the Company issued 33,799 shares of common stock to LPC as an initial fee for its commitment to purchase shares of our common stock under the Purchase Agreement. Subject to the terms of the Purchase Agreement, the Company hashad the right, in its sole discretion, to present LPC with a purchase notice (a “Regular Purchase Notice”), directing LPC to purchase up to 25,000 Purchase Shares (a “Regular Purchase”), which amounts may be increased under certain circumstances.. LPC’s committed obligation under any single Regular Purchase generally willcould not exceed $2.0 million. The Purchase Agreement providesprovided for a purchase price per Purchase Sharesshare for each Regular Purchase (the “Purchase Price”) equal to the lesser of (i) the lowest sale price of the common stock on the Nasdaq Capital Market (“NCM”) on the purchase date of such shares; and (ii) the average of the three lowest closing sale
14
prices for the common stock traded on the NCM during the ten consecutive business days ending on the business day immediately preceding the purchase date of such shares.
In addition, on any date on which the Company submits a Regular Purchase Notice for the maximum amount allowed for such a Regular Purchase11
Rezolute, Inc.
Notes to LPC, the Company also has the right, in its sole discretion, to present LPC with an accelerated purchase notice (an “Accelerated Purchase Notice”), directing LPC to purchase an amount of Purchase Shares (an “Accelerated Purchase”), which number of Purchase Shares will not exceed the lesser of (i) 300% of the number of shares purchased pursuant to such Regular Purchase Notice and (ii) 30% of the total volume of shares of the common stock traded on the NCM during the Accelerated Purchase period. The Purchase Price per Purchase Share for each such Accelerated Purchase will be equal to the lesser of 97% of (i) the volume-weighted average price of the common stock on the NCM during the applicable Accelerated Purchase period on the applicable Accelerated Purchase date; and (ii) the closing sale price of the common stock on the NCM on the applicable Accelerated Purchase date.Unaudited Condensed Consolidated Financial Statements
On September 17, 2021, the Company submitted a regular purchase notice,Regular Purchase Notice, resulting in the sale of 20,000 Purchase Shares to LPC for net proceeds of approximately $0.2 million. Accordingly,In May 2022, the Company provided LPC is obligated to purchase up to a maximumwith notice of $18.8 million undertermination of the Purchase Agreement as of September 30, 2021.
Pursuant to the RRA, the Company agreed to use its reasonable best efforts to maintain effectiveness of the registration statement and the related prospectus supplement within prescribed deadlines set forth in the RRA. In addition, the Company is required to use its reasonable best efforts to secure and maintain its listing of the Purchase Shares on the NCM. LPC haswhereby no obligation to purchasefurther shares are issuable under the Purchase Agreement unless the Company complies with the terms of the RRA.this agreement.
NOTE 7 — SHARE-BASED COMPENSATION AND WARRANTS
Stock Option Plans
Presented below is a summary of the number of shares authorized, outstanding, and available for future grants under each of the Company’s stock option plans as of September 30, 20212022 (in thousands):
| | | | | | | | |
| | Termination | | Number of Shares | ||||
Description |
| Date |
| Authorized |
| Outstanding |
| Available |
2015 Plan |
| February 2020 |
| 50 |
| 50 |
| — |
2016 Plan |
| October 2021 |
| 313 |
| 313 |
| — |
2019 Plan |
| July 2029 |
| 200 |
| 200 |
| — |
2021 Plan |
| March 2030 |
| 1,200 |
| 766 |
| 434 |
Total |
|
|
| 1,763 |
| 1,329 |
| 434 |
| | | | | | | | |
|
| Plan Termination |
| Number of Shares | ||||
Description |
| Date |
| Authorized |
| Outstanding |
| Available |
| | | | | | | | |
2015 Plan |
| February 2020 |
| 35 |
| 35 |
| — |
2016 Plan |
| October 2021 |
| 250 |
| 250 |
| — |
2019 Plan |
| July 2029 |
| 200 |
| 200 |
| — |
2021 Plan | | March 2031 | | 10,700 | | 7,998 | | 2,702 |
Total |
|
|
| 11,185 |
| 8,483 |
| 2,702 |
June 2021 Grants
2022 Employee Stock Purchase Plan
On June 14, 2021,16, 2022, the BoardCompany’s shareholders approved the adoption of Directors granted stock optionsthe 2022 Employee Stock Purchase Plan (the “2022 ESPP”). The 2022 ESPP provides an opportunity for an aggregate of approximately 0.7 million shares ofemployees to purchase the Company’s common stock to certain officers, employeesthrough accumulated payroll deductions.
The 2022 ESPP has consecutive offering periods that begin approximately every 6 months commencing on the first trading day on or after July 1 and independent directors at an exercise priceterminating on the last trading day of $12.28 per share (the “June 2021 Grants”). Stock options for an aggregatethe offering period ending on December 31 and commencing on the first trading day on or after January 1 and terminating on the last trading day of approximatelythe offering period ending on June 30. The 2022 ESPP reserves 0.5 million shares were granted to the Company’s chief executive officer, independent directors and employees with less than one year of service that provide for vesting of 1/36th of the total award each month commencingpurchases. The first offering period began on July 1, 2021, and stock options for approximately 0.2 million shares granted to employees with more than one year2022. As of service that provided for vesting of 25% of the award on grant date with the remainder of the award vesting for approximately 2.1% the total award each month until full vesting occurs. The aggregate fair value of the June 2021 Grants was $7.3 million, of which $0.6 million was recognized in June 2021, $0.6 million was recognized for the three months ended September 30, 2021, and2022, no purchases have been made under the remaining $6.1 million will be recognized over the future vesting periods.
15
Table of Contents2022 ESPP.
Rezolute, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Stock Options Outstanding
The following table sets forth a summary of the stock option activity under all of the Company’s stock option plans for the three months ended September 30, 20212022 (shares in thousands):
| | | | | | | |
|
| Shares |
| Price (1) |
| Term (2) | |
Outstanding, June 30, 2021 |
| 1,285 | | $ | 16.35 |
| 8.7 |
Granted |
| 75 | |
| 8.96 |
| |
Forfeited | | (31) | | | 22.67 | | |
Outstanding, September 30, 2021 |
| 1,329 | |
| 15.78 |
| 8.5 |
Vested, September 30, 2021 |
| 507 | |
| 21.07 |
| 7.2 |
| | | | | | | |
|
| Shares |
| Price (1) |
| Term (2) | |
| | | | | | | |
Outstanding, June 30, 2022 |
| 8,506 | | $ | 5.24 | | 9.7 |
Grants to employees | | 85 | | | 2.99 | | |
Forfeited | | (108) | | | 4.87 | | |
Outstanding, September 30, 2022 |
| 8,483 | |
| 5.22 |
| 9.4 |
Vested, September 30, 2022 |
| 794 | |
| 17.31 |
| 7.45 |
(1) | Represents the weighted average exercise price. |
(2) | Represents the weighted average remaining contractual term for the number of years until the stock options expire. |
12
Rezolute, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
For the three months ended September 30, 2021,2022, the aggregate fair value of stock options granted for approximately 0.1 million shares of common stock, that provide solely for time-based vesting, amounted to $0.5$0.2 million or approximately $6.73$2.28 per share as of the grant dates. There were 0 stock options granted in the three months ended September 30, 2020. Fair value was computed using the BSMBlack-Scholes-Merton (“BSM”) option-pricing model and will result in the recognition of compensation cost ratably over the expected vesting period of the stock options.
For the three months ended September 30, 2021,2022, the fair value of stock options that provide for time-based vesting was estimated on the date of grant, using the BSM option-pricing model, with the following weighted-average assumptions:
| | | | | ||||
|
| 2022 | | |||||
| | | | | | | | |
Market price of common stock on grant date |
| $ | 8.96 | | | $ | 2.99 | |
Expected volatility | |
| 92 | % |
| | 91 | % |
Risk free interest rate | |
| 0.97 | % |
| | 3.2 | % |
Expected term (years) | |
| 6.0 | |
| | 6.1 | |
Dividend yield | |
| 0 | % |
| | 0 | % |
Share-based compensation expense for the three months ended September 30, 20212022 and 20202021 is included under the following captions in the unaudited condensed consolidated statements of operations (in thousands):
| | | | | | | | ||||||
| | | | | | | | 2022 |
| 2021 | | ||
|
| 2021 |
| 2020 | | | | | | | | ||
Research and development | | $ | 309 | | $ | 321 | | $ | 870 | | $ | 309 | |
General and administrative | |
| 533 | |
| 313 | |
| 1,009 | |
| 533 | |
Total | | $ | 842 | | $ | 634 | | $ | 1,879 | | $ | 842 | |
Unrecognized share-based compensation expense is approximately $8.6$22.2 million as of September 30, 2021.2022. This amount is expected to be recognized over a remaining weighted average period of 2.53.5 years.
Warrants
In connection with an underwritten offering in October 2021, the Company issued 1,661,461 pre-funded warrants (“PFWs”) to purchase 1,661,461 shares of common stock at an issuance price of $6.49 per warrant for gross proceeds of $10.8 million (the “2021 PFWs”). The 2021 PFWs may be exercised at any time by paying the exercise price of $0.01 per share, subject to certain ownership restrictions.
In connection with a registered direct offering in May 2022, the Company issued 1,973,684 Class A PFWs and 10,947,371 Class B PFWs to purchase an aggregate of 12,921,055 shares of common stock at an issuance price of $3.799 per warrant (collectively, the “2022 PFWs”). As of September 30, 2022 all of the 2022 PFWs may be exercised at any time by paying the exercise price of $0.001 per share, subject to certain ownership restrictions.
In addition, the Company has issued warrants in conjunction with various debt and equity financings and for services. TheAs of September 30, 2022, all of the warrants were vested.
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Rezolute, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
For the three months ended September 30, 2022, no warrants were granted or exercised. Excluding the PWFs discussed above, the following table sets forth a summary of the warrant activityall other warrants for the three months ended September 30, 20212022 (shares in thousands):
| | | | | | | |
|
| Shares |
| Price(1) |
| Term(2) | |
Outstanding, June 30, 2021 |
| 1,252 | | $ | 28.91 |
| 4.8 |
Warrants expired | | (28) | | | 82.50 | | |
Outstanding, September 30, 2021 |
| 1,224 | |
| 27.66 |
| 4.6 |
| | | | | | | |
|
| Shares |
| Price (1) |
| Term (2) | |
| | | | | | | |
Outstanding, June 30, 2022 |
| 1,150 |
| $ | 22.83 |
| 4.2 |
Warrants granted |
| — | |
| — |
|
|
Warrant expirations |
| — |
|
| — |
|
|
Outstanding, September 30, 2022 |
| 1,150 |
|
| 22.83 |
| 3.9 |
(1) | Represents the weighted average exercise price. |
(2) | Represents the weighted average remaining contractual term for the number of years until the warrants expire. |
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NOTE 8 — COMMITMENTS AND CONTINGENCIES
Licensing Commitments
Please refer to Note 4 for further discussion of commitments to make milestone payments and to pay royalties under license agreements with XomaXOMA and ActiveSite.
COVID-19
The current COVID-19 pandemic, which is impacting worldwide economic activity, poses risks that the Company or its employees, contractors, suppliers, and other partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities. The extent to which COVID-19 impacts the Company’s business, including its clinical trials and financial condition, will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. As COVID-19 continues to spread around the globe, including the spread of more contagious and virulent variants, we could experience disruptions, including delays or difficulties in enrolling patients in our clinical trials, delays or difficulties in clinical site initiation, interruption of key clinical trial activities, delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials and delays in necessary interactions with local regulatory authorities. COVID-19 may also impact the Company’s ability to raise additional capital on a timely basis or at all, which could negatively impact short-term and long-term liquidity.
Registration Rights Agreement
In connection with the Purchase Agreement further discussed in Note 6, the Company entered into a Registration Rights Agreement whereby it agreed to register all the shares issuable under the facility. The Company filed a prospectus supplement to meet this obligation in August 2021 and is required to maintain the effectiveness of the prospectus supplement on a reasonable best-efforts basis.
Legal Matters
From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. As of September 30, 2021,2022, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the Company’s results of operations. At each reporting period, the Company evaluates known claims to determine whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, Contingencies. Legal fees are expensed as incurred.
NOTE 9 — RELATED PARTY TRANSACTIONS
Related Party Licensing Agreement
On September 15, 2020, the Company and Handok entered into an exclusive license agreement with Handok, Inc. (the “Handok License”) for the territory of the Republic of Korea. The Handok License relates to pharmaceutical products in final dosage form containing the pharmaceutical compounds developed or to be developed by the Company, including those related to RZ358 and RZ402. The Handok License is in effect for a period of 20 years after the first commercial sale of each product and requires (i) milestone payments to the Company of $0.5 million upon approval of a New Drug Application (“NDA”) for each product in the territory, and (ii) the Company will sell products ordered by Handok at a transfer price equal to 70% of the net selling price of the products. To date, 0no milestone payments have been earned by the Company.
Investors in 2022 Private Placement
Handok and certain of its affiliates were the sole investors in the 2022 Private Placement discussed in Note 6.
NOTE 10 — INCOME TAXES
Income tax expense during interim periods is based on applying an estimated annualannualized effective income tax rate applied to year-to-date operating results, plus any significant unusual or infrequently occurringthe respective quarterly periods, adjusted for discrete tax items which are recorded in the interim period.period in which they occur. The computation of the
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annual annualized estimated effective tax rate atfor each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating results for the year, projections of the proportion of income earned and taxed in various jurisdictions, permanent and temporary differences, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used
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Rezolute, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes.
For the three months ended September 30, 20212022 and 2020,2021, the Company did not record any income tax benefit due to a full valuation allowance on its deferred tax assets. The Company did not have any material changes to its conclusions regarding valuation allowances for deferred income tax assets or uncertain tax positions for the three months ended September 30, 20212022 and 2020.2021.
NOTE 11 — NET LOSS PER SHARE
Basic net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares, 2021 PFWs and 2022 PFWs outstanding during the period. Forperiod, without consideration for potentially dilutive securities. PFWs are included in the computation of basic and diluted net loss per share since the exercise price is negligible and all of the PFWs are fully vested and exercisable. Accordingly, the weighted average number of shares outstanding is computed as follows for the three months ended September 30, 2022 and 2021 (in thousands):
| | | | | | |
| | 2022 |
| 2021 | ||
| | | | | | |
Common Stock | | | 35,946 | | | 7,445 |
2021 PFWs | | | 1,661 | | | — |
Class A PFWs | | | 1,974 | | | — |
Class B PFWs | | | 10,947 | | | — |
Total | | | 50,528 | | | 7,445 |
For the three ended September 30, 2022 and 2020,2021, basic and diluted net loss per share were the same since all other common stock equivalents were anti-dilutive.
As of September 30, 20212022 and 2020,2021, the following outstanding potential common stock equivalents were excluded from the computation of diluted net loss per share since the impact of inclusion was anti-dilutive (in thousands):
| | | | | ||||
| | | | | | 2022 | | 2021 |
|
| 2021 |
| 2020 | | | | |
Stock options |
| 1,329 |
| 944 | | 8,482 | | 1,329 |
Warrants |
| 1,224 |
| 618 | | 1,150 | | 1,224 |
Total |
| 2,553 |
| 1,562 | | 9,632 | | 2,553 |
NOTE 12 — FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS
Fair Value Measurements
Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts and considers assumptions that market participants would use when pricing the asset or liability. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1—Quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
Level 2—Other than quoted prices included in Level 1 that are observable for the asset and liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability.
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Rezolute, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Level 3—Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any market activity for the asset or liability at the measurement date.
The Company’s embedded derivative liabilities discussed in Note 5 wereare classified under Level 3 of the hierarchy and wereare required to be measured and recorded at fair value on a recurring basis beginning on April 14, 2021.basis. Fair value wasis determined based on management’s assessment of the probability and timing of occurrence for the events that give rise to embedded derivativesExit Events discussed in Note 5 using a discounteddiscount rate equal to the effective interest rate for the term A loan.
The following tables settable sets forth a summary of changes in the fair value of the Company’s embedded derivative liabilityliabilities for which fair value was determined by Level 3 inputsthe three months ended September 30, 2022 and 2021 (in thousands):
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| | | | | | | | | |
| | Embedded | | | | | | ||
|
| Derivatives | | 2022 |
| 2021 | |||
Balance, June 30, 2021 | | $ | 387 | ||||||
Changes in fair value of embedded derivative liabilities |
| | (16) | ||||||
Balance, September 30, 2021 | | $ | 371 | ||||||
| | | | | | ||||
Fair value, beginning of period | | $ | 407 | | $ | 387 | |||
Loss from change in fair value | | | 13 | | | (16) | |||
Fair value, end of period | | $ | 420 | | $ | 371 |
Except for the embedded derivative liability,liabilities, the Company did not have any other assets or liabilities measured at fair value on a recurring basis as of September 30, 20212022 and June 30, 2021.2022.
Due to the relatively short maturity of the respective instruments, the fair value of cash and cash equivalents, accounts payable, and accrued liabilities approximated their carrying values as of September 30, 20212022 and June 30, 2021. 2022.
The Company’s policy is to recognize asset or liability transfers among Level 1, Level 2 and Level 3 as of the actual date of the events or change in circumstances that caused the transfer. During the three months ended September 30, 20212022 and 2010,2021, the Company did not have any transfers of its assets or liabilities between levels of the fair value hierarchy.
Significant Concentrations
Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash and cash equivalents at high-quality financial institutions. For the three months ended September 30, 2021,2022, cash deposits have exceeded the amount of federal insurance provided on such deposits. As of September 30, 20212022 and June 30, 2021,2022, the Company had cash and cash equivalents with a single financial institution with an aggregate balance of $37.3$154.3 million and $41.0$150.4 million, respectively. The Company has never experienced any losses related to its investments in cash and cash equivalents.
NOTE 13 — SUBSEQUENT EVENTS
Underwritten Public Offering
On October 12, 2021, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Oppenheimer & Co., Inc., as representative of the underwriters listed therein (the “Underwriters”) for the planned issuance and sale of equity securities in an underwritten public offering (the “Underwritten Offering”). On October 15, 2021, closing occurred for the Underwritten Offering resulting in the issuance of (i) 6,030,847 shares of common stock at $6.50 per share for gross proceeds of $39.2 million, and (ii) 1,661,461 pre-funded warrants to purchase 1,661,461 shares of common stock at $6.49 per the Pre-Funded Warrants for gross proceeds of $10.8 million. The aggregate gross proceeds from the Underwritten Offering amounted to $50.0 million before deductions for underwriting discounts and commissions of 6.0% of the gross proceeds and other offering costs of approximately $0.3 million. After deducting total offering costs of $3.3 million, the net proceeds of the Underwritten Offering amounted to approximately $46.7 million.
The Company granted the Underwriters a 30-day option to purchase up to an additional 1,153,845 shares of its common stock in the Underwritten Offering at a public offering price of $6.50 per share, less underwriting discounts and commissions (the “Underwriters’ Option”).
In connection with the Underwritten Offering, certain of the Company’s officers and directors agreed not to sell or otherwise dispose of any common stock held by them through January 10, 2022 (the “Lock-Up Period”). In addition, the Company is prohibited from selling any shares of its common stock under the LPC Purchase Agreement or the EDA discussed in Note 6.
The Pre-Funded Warrants have an exercise price of $0.01 per share, which is subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock. Each Pre-Funded Warrant is exercisable at any time and from time to time after issuance. In the event of certain corporate transactions, the holders of the Pre-Funded Warrants will be entitled to receive, upon exercise of the Pre-Funded Warrants, the kind and amount of securities, cash or other property that the holders would have received had they exercised the Pre-Funded Warrants immediately prior to such transaction.
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The Pre-Funded Warrants do not entitle the holders thereof to any voting rights or any of the other rights or privileges to which holders of Common Stock are entitled.
Registered Direct Offering
Concurrently with the Underwritten Offering, a large shareholder (the “Purchaser”) entered into a subscription agreement for a registered direct offering, pursuant to which the Company agreed to sell to the Purchaser an aggregate of 769,231 shares of the Company’s common stock at a purchase price of $6.50 per share. The closing for the registered direct offering occurred on October 27, 2021 whereby the Company received gross proceeds of $5.0 million.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Certain figures, such as interest rates and other percentages included in this section have been rounded for ease of presentation. Percentage figures included in this section have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in our unaudited condensed consolidated financial statements or in the associated text. Certain other amounts that appear in this section may similarly not sum due to rounding.
Recent Developments
Lincoln Park Capital
In August 2021, we entered into the Purchase Agreement with LPC, which provides that we may sell to LPC up to $20.0 million of Purchase Shares. The aggregate number of shares that we can sell to LPC under the Purchase Agreement may not exceed 1,669,620 shares of our common stock, subject to certain exceptions set forth As used in the Purchase Agreement. Through September 30, 2021, we have issued an aggregate of 149,507 shares under the Purchase Agreement and have received gross proceeds of approximately $1.2 million.
Equity Offerings
On October 12, 2021, we entered into the Underwriting Agreement with the Underwriters for the planned issuance and sale of equity securities in the Underwritten Offering. On October 15, 2021, closing occurred for the Underwritten Offering resulting in the issuance of (i) 6,030,847 shares of common stock at $6.50 per share for gross proceeds of $39.2 million, and (ii) 1,661,461 pre-funded warrants to purchase 1,661,461 shares of common stock at $6.49 per the Pre-Funded Warrants for gross proceeds of $10.8 million. The aggregate gross proceeds from the Underwritten Offering amounted to $50.0 million. We paid underwriting discounts and commissions of 6.0% of the gross proceeds or a total of approximately $3.0 million and other offering costs amount to $0.3 million. After deduction of all offering costs, the net proceeds of the Underwritten Offering amounted to approximately $46.7 million.
Concurrently with the Underwritten Offering, a large shareholder (the “Purchaser”) entered into a subscription agreement for a registered direct offering, pursuant to which we agreed to sell to the Purchaser an aggregate of 769,231 shares of our common stock at a purchase price of $6.50 per share. The closing for the registered direct offering occurred on October 27, 2021 whereby we received gross proceeds of $5.0 million.
Please refer to our discussion under Liquidity and Capital Resourcesbelow, and in Notes 6 and 13 to our unaudited condensed consolidated financial statements for further discussion of the LPC Purchase Agreement“we,” “our,” “us,” and the Underwritten Offering.“Company” refers to Rezolute, Inc.
Special Note About COVID-19
We have been actively monitoring the COVID-19 situationpandemic and its impact.impact on our business activities. Our primary objectives have remained the same throughout the pandemic: to support the safety of our team members and their families and continue to support our preclinical studies and clinical trials. Currently, with respect to the operation of our facilities, we are closely adhering to applicable guidelines and orders. Essential operations in research and maintenance that occur within our facilities are continuing in accordance with the permissions granted under government ordinances. Across all of our locations, we have instituted a temporary work from home policy for all office personnel who do not need to work on site to maintain productivity. We have recently allowed these employees to voluntarily return to work on site with appropriate health and safety measures.
While our financial results for the three months ended September 30, 20212022 and the fiscal year ended June 30, 20212022 were not significantly impacted by COVID-19, we cannot predict the impact of the progression of the COVID-19 pandemic on future results due to a variety of factors, including the ongoing challenges associated with the pandemic, including the emergence of new variants of the coronavirus, such as the Delta variant,and Omicron variants, resurgences in the number ofand rates of infections,infection, the continued good health of our employees, the ability of us to maintain operations, access to healthcare facilities and patient willingness to participate in our clinical trials, any further government and/or public actions taken in response to the pandemic, and ultimately the length of the pandemic. The ultimate impact of the COVID-19 pandemic on our business operations, our ability to raise capital, as well as our preclinical studies and clinical trial timeliness remainsremain uncertain and subject to change and will depend on future developments, which cannot be accurately predicted. Any prolonged material
21
disruption of our employees, suppliers, or manufacturing may negatively impact our consolidated financial position, results of operations, and cash flows. We will continue to monitor the situation closely.
Recent Developments
Financing Activities
In July 2022, we entered into amended securities purchase agreements with Handok, Inc. (“Handok”) and certain of its affiliates (the “2022 Private Placement”), resulting in gross proceeds of $12.3 million in exchange for the issuance of approximately 3.2 million shares of common stock. We incurred approximately $0.8 million for underwriting commissions and other offering costs, resulting in net proceeds of $11.5 million.
Termination of Loan Agreement
On April 14, 2021, we entered into a $30.0 million Loan and Security Agreement (the “Loan Agreement”) with Solar Investment Corp. (“SLR”) as collateral agent, and the parties signing the Loan Agreement from time to time as lenders, including SLR in its capacity as a lender. The scheduled maturity date of the Loan Agreement was on April 1, 2026. In April 2021, we borrowed $15.0 million under the Loan Agreement. On June 30, 2022, we paid off the outstanding loan amount of $15.0 million in full and terminated the Loan Agreement in accordance with its terms.
Please refer to our discussion under the caption Liquidity and Capital Resources for further discussion of our recent financing activities.
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Summary of Clinical Assets
RZ358
Our lead clinical asset, RZ358, is an antibody therapy in Phase 2b development as a potential treatment for congenital hyperinsulinism (“HI”HI”), an ultra-rare pediatric genetic disorder. In February 2020, we announced the initiation of the RZ358-606 Phase 2b study (“RIZE”) globally at multiple study centers. Prior to COVID-19, we had planned to complete the RIZE study by the middle of calendar year 2021. In March 2020, we paused the RIZE study as a result of the COVID-19 pandemic. As the COVID-19 pandemic began to abate in different regions, we resumed clinical activities including trial site initiations and patient enrollment. Subject to COVID-19 conditions, we are expecting to report top-line results in the first quarter of calendar year 2022.
In addition, in the first half of calendar year 2020, we had positive interactions with the U.S. Food and Drug Administration (“FDA”). In June 2020, we announced that FDA granted us Rare Pediatric Disease (“RPD”) designation for RZ358, which qualifies us to receive a priority review voucher (“PRV”) upon marketing approval of the drug in congenital HI. Such a voucher could be redeemed to receive a priority review of a subsequent marketing application for any drug candidate in any disease indication. Further, we submitted the RIZE protocol to FDA which allows us to expand the study to clinical sites in the United States.
Our second clinical asset, RZ402, is a selective and potent plasma kallikrein inhibitor (“PKI”) being developed as a potential oral therapy for the chronic treatment of diabetic macular edema (“DME”). RZ402 is currently in Phase 1 development. In January 2021, we dosed the first subject in the Phase 1a study, and in May 2021, we announced positive topline results whereby single dose oral administration of RZ402 resulted in plasma concentrations that substantially exceeded target pharmacologically-active drug levels, demonstrating the potential for once daily dosing. RZ402 was generally safe and well-tolerated at all doses tested, without dose-limiting toxicities. In August 2021, we announced the initiation in the Phase 1b multiple-ascending dose (“MAD”) study and planned to be completed by the first quarter of calendar year 2022. If favorable results are also obtained in the Phase 1b study, we expect to advance developmental activities toward a Phase 2a proof-of-concept study during the second half of calendar year 2022.
RZ358
Congenital HI is an ultra-rare pediatric genetic disorder characterized by excessive production of insulin by the pancreas. If untreated, the elevated insulin levels in these patients suffering with congenital HI can induce extreme hypoglycemia (low blood sugar) events, increasing the risk of neurological and developmental complications, including persistent feeding problems, learning disabilities, recurrent seizures, brain damage or even death. There are no FDA approved therapies for all forms of congenital HI and the current standard of care treatments are suboptimal. In some cases, pancreatic surgery is a treatment option, but this approach is invasiveThe current treatments used by physicians include glucagon, diazoxide, somatostatin analogues and may require repeat surgeries.pancreatectomy.
Our lead candidate, RZ358 is an intravenously administered human monoclonal antibody that binds to a unique site (allosteric) on the insulin receptor throughout the body,in insulin target tissues, such as in the liver, fat, and muscle. The antibody modifies insulin'sinsulin’s binding and signaling to maintain glucose levels in a normal range which counteracts the effects of elevated insulin in the body. RZ358 shows dose dependent pharmacokinetics with a half-life greater than two weeks which has the potential for semi-monthly dosing. Therefore, we believe that RZ358 is ideally suited as a potential therapy for conditions characterized by excessive insulin levels, and it is being developed to treat the hyperinsulinism and low blood sugar characteristic of diseases such as congenital HI.sugar. As RZ358 acts downstream from the beta cells, it has the potential to be universally effective at treating congenital HI caused by any of the underlying genetic defects.
RZ358 received Pediatric Rare Disease Designation inA summary of the U.S. as well as Orphan Drug Designation in the U.S. and European Union.completed clinical studies for RZ358 is currentlyas follows.
A Phase 1 pharmacokinetic (“PK”) study of single intravenous doses of RZ358 at 0.1 to 9 mg/kg in Phase 2b development (the RIZE study, RZ358-606). healthy volunteers revealed dose-dependent pharmacokinetics with a half-life of 15 days, supporting the biweekly dosing approach. In healthy volunteers, RZ358 prevented hypoglycemia induced by insulin administration, without producing hyperglycemia. This effect showed a PK-pharmacodynamic (dose—response) correlation, with the hypoglycemia blunting effects of RZ358 lasting for two weeks.
The RIZE study is a multi-center, open-label, repeat-dose Phase 2b studyclinical proof-of-concept of RZ358 in four sequential dosing cohortscongenital HI was evaluated in a Phase 2a study in a total of 14 patients with congenital HI. The study investigated the PK, pharmacodynamics (“PD”), safety and preliminary efficacy of RZ358. RZ358 was well-tolerated in adult and pediatric patients with congenital HI who are at least two years oldreceived single intravenous doses in the Phase 2a study and have residual lowthe PK results from the Phase 2a studies were consistent with those in healthy volunteers. There was a durable normalization of blood sugar (<70 mg/dL) that is inadequately controlled on existing therapies. in patients with hypoglycemia, with an approximate 50% improvement and near normalization of glucose control, which was sustained for more than two weeks after dosing. RZ358 did not increase blood sugar levels in patients with normal blood sugar levels at baseline.
In additioncalendar year 2022 we completed the RZ358-606 Phase 2b global clinical study for RZ358 (“RIZE”). The RIZE study was conducted in a repeat-dose fashion to evaluate the safety, pharmacokinetics, dose-exposure response relationship and pharmacokinetic evaluations,to assess the glycemic efficacy across a range of continuous glucose monitoring (“CGM”CGM”) and self-monitored blood glucose monitoring-based principle glycemic endpoints to inform Phase 3. In the study, eligible patients received RZ358 in open-label fashion in one of 4, sequentially conducted dosing cohorts of up to 8 participants per cohort. RZ358 was administered as a 30-minute intravenous infusion every other week for eight weeks. The first three cohorts were fixed dosing levels of RZ358 and the fourth cohort was designed to explore whether there were any advantages of a fixed titration approach.
The RIZE study enrolled 23 patients, primarily in a young pediatric population, averaging approximately 6.5 years of age, in a diverse group across gender and genetic cause of congenital HI. A key entry criterion was for patients to have continued hypoglycemia despite available therapies to be eligible for enrollment. We observed that patients enrolled on stable background therapies had clinically significant, and in many cases, substantial residual hypoglycemia as well as some hyperglycemia (> 180 mg/dL) at baseline.
Outcomes from the RIZE study were presented at the Pediatric Endocrine Society meeting on May 1, 2022. The results from the study showed that target and expected RZ358 concentrations were achieved and dose-exposure dependent responses were also observed. RZ358 was generally safe and well-tolerated and there were no adverse drug reactions, adverse events leading to study discontinuations, or dose-limiting toxicities. Importantly, RZ358 demonstrated an approximately 50% improvement in hypoglycemia across all doses and cohorts and an approximately 75% improvement in hypoglycemia at the 6 mg/kg and 9 mg/kg cohorts. Time in range by CGM improved 8% across all doses, 16% at the top dose, and more significantly (>25%) in patients without baseline hyperglycemia on SOC.
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We believe that the positive results from the RIZE study will be utilizedPhase 3 enabling and accordingly we have initiated interactions with regulatory authorities in the US and Europe. Our objective is to evaluate several glycemic efficacy endpoints. The primary endpointcomplete the regulatory dialogue prior to the end of the first quarter of calendar year 2023, which would facilitate initiation of a Phase 3 study in the first half of calendar year 2023.
RZ402
Our second clinical asset, RZ402, is an oral plasma kallikrein inhibitor (“PKI”) being developed as a potential therapy for the time within a glucose target rangechronic treatment of 70-180 mg/dL by CGM after week 8 of treatment compared to baseline.
RZ402
diabetic macular edema (“DME”). DME is a vascular complication of diabetes and a leading cause of blindness in the U.S.US and elsewhere. Chronic exposure to high blood sugar levels can lead to inflammation, cell damage, and the breakdown of blood vessel walls. Specifically, in DME, blood vessels behind
22
the back of the eye become porous and permeable leading to the unwanted infiltration of fluid into the macula. This fluid leakage creates distorted vision, and if left untreated, blindness.
Currently available treatments for DME involve frequent burdensomeinclude anti-vascular growth factor (anti-VEGF) injections into the eye or invasive laser surgery. RZ402 is designed to be a once daily oral therapy for the treatment of DME. UnlikeDME and unlike the anti-VEGF therapies, RZ402 targets the Kallikrein–KininKallikrein-Kinin System in order to address inflammation and vascular leakage. We believe that systemic exposure through oral delivery is critical to target the microvasculature behind the back of the eye. Further, as an oral therapy, RZ402 has the potential to substantially change the therapeutic paradigm for patients suffering with DME by providing a convenient, self-administered treatment option to encourage patients to initiateearlier initiation of therapy, sooner, adhereadherence to prescribed treatment guidelines, and improveimproved overall outcomes.
Results from our single ascending dose (“SAD”) Phase 1a Study (“RZ402-101”) were reported in May 2021. RZ402-101 was a first-in-human single-center, randomized, double-blind, placebo-controlled SAD study in healthy adult volunteers. The study objectives were to characterize the safety profile and pharmacokinetics of RZ402 administered as single oral doses. The study enrolled 30 individuals in three planned sequential dose- level cohorts of 25 mg, 100 mg, and 250 mg. Within each ten-subject dose cohort, volunteers were randomized 8:2 to receive either RZ402 oral solution or matched placebo. After receiving single doses, participants remained in the clinic for seven days for serial PK and safety assessments, before completing two outpatient follow-up visits at study days 14 and 30. Dose advancement proceeded following blinded reviews of safety and PK data from the preceding cohort(s).
Single doses of RZ402 resulted in dose-dependent increases in systemic exposure. Plasma concentrations of RZ402 significantly exceeded the 3.5 ng/mL target concentration that was pharmacologically active in animal models of DME for a 24-hour period after receipt of RZ402. Across the dose and exposure range, there were no serious adverse events, adverse drug reactions, or discontinuations due to adverse events, and no imbalance of adverse events between the treatment and placebo control groups. Similarly, regular laboratory, hemodynamic, cardiac, and ophthalmologic safety examinations were unremarkable.
Following the success of the SAD study, we undertook a follow-on multiple ascending dose (“MAD”) study (“RZ402-102”). Results from the MAD Study were reported in February 2022. RZ402-102 was a single center, randomized, double-blind, placebo-controlled, in healthy adult volunteers. The objectives of the study were to characterize the repeat dose safety profile (including maximum tolerated dose) and PK of RZ402 administered as daily oral doses for two weeks. The study was conducted in 40 volunteers in sequential ascending dose cohorts with 10 individuals per cohort. Within each cohort, participants were randomized in an 8:2 ratio to receive either RZ402 as an oral solution or a placebo. Participants remained in the clinic throughout the two-week dosing period for serial PK and safety assessments, before completing an outpatient follow-up visit at study day 28. Blood biomarkers of target engagement (kallikrein activity) were explored as a systemic surrogate for DME, using a precedent from studies of kallikrein inhibitors in a systemic vascular leakage syndrome (hereditary angioedema). Dose advancement proceeded in staggered fashion every three weeks as appropriate, following blinded reviews of data from the preceding cohort(s).
The MAD study showed dose-dependent increases in systemic exposures, with repeat-dosing to steady-state resulting in the highest concentrations of RZ402 explored to date, exceeding 200 ng/mL and 50 ng/mL at peak and 24-hour trough, respectively. Following the precedent established in hereditary angioedema, steady-state plasma kallikrein activity in human plasma was measured on Day 14 as a biomarker of RZ402 target engagement. Daily dosing with RZ402 inhibited plasma kallikrein in a dose and concentration-dependent manner (r=0.74; p < 0.001). Given that the in-vivo EC90 for RZ402 in animal models of DME is ~6 ng/mL, the results at both peak and 24-hour trough substantially exceeded target concentrations based on a combination of in-vitro and in-vivo profiling. RZ402 was generally safe and well-tolerated, including at higher doses than previously tested in the SAD study. There were no serious adverse events, adverse drug reactions or identified risks.
We are advancing developmental activities toward a Phase 2a proof-of-concept study, which we plan to initiate during the fourth quarter of calendar year 2022. Dosing of the first patient in a Phase 2 study will trigger a developmental milestone payment of $3.0 million due to ActiveSite Pharmaceuticals.
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Factors Impacting our Results of Operations
We have not generated any meaningful revenues since our inception in March 2010. Since inception,Over the last several years, we have engaged in organizational activities, conducted private placements and public offerings to raise additional capital, built out a manufacturing suite and produced material for our lead product candidate under good laboratory practices (“GLP”), conducted studies using the GLP material, subsequently changed our strategy toadopted a licensing model that resulted in disposalto pursue development of our manufacturing assets,product candidates, conducted pre-clinical and clinical trials, and conducted other research and development activities on our pipeline of product candidates.
Due to the time required to conduct clinical trials and obtain regulatory approval for any of our product candidates, we anticipate it will be some timeseveral years before we generate substantial revenues, if ever. We expect to generateincur operating losses for the foreseeable future; therefore, we expect to continue efforts to raise additional capital to maintain our current operating plans beyondover the next year.several years. We cannot assure you that we will secure such financing or that it will be adequate for the long-term execution of our business strategy. Even if we obtain additional financing, it may be costly and may require us to agree to covenants or other provisions that will favor new investors over our existing shareholders.
Key Components of Consolidated Statements of Operations
Research and development expenses. Research and development (“R&D”&D”) expenses consist primarily of compensation and benefits for our personnel engaged in R&D activities, clinical trial costs, licensing costs, and consultantsconsulting and outside services. Our R&D compensation costs include an allocable portion of our cash and share-based compensation, employee benefits, and consulting costs related to personnel engaged in the design and development of product candidates and other scientific research projects. We also allocate a portion of our facilities and overhead costs based on the personnel and other resources devoted to R&D activities.
General and administrative expenses. General and administrative (“G&A”&A”) expenses consist primarily of (i) an allocable portion of our cash and share-based compensation and employee benefits related to personnel engaged in our administrative, finance, accounting, and executive functions, and (ii) an allocable portion of our facilities and overhead costs related to such personnel. G&A expenses also include travel, legal, auditing, consulting, investor relations and other costs primarily related to our status as a public company.
Interest and other income. Interest and other income consist primarily of interest income earned on temporary cash investments.
Gain on changes(loss) from change in fair value of derivative liability. liabilities.We recognized liabilities for financial instruments that are required to be accounted for as derivatives, as well as embedded derivatives in our debt agreements. Derivative liabilities are adjusted to fair value at the end of each reporting period until the derivative liability contracts are settled, expire, or otherwise meet the conditions for equity classification. Changes in fair value are reflected as a gain or loss in our unaudited condensed consolidated statements of operations. Any gains or losses reflected prior
Employee retention credit. In response to the deficiency was cured will not be reversed.COVID-19 pandemic, the United States government has designed programs to assist businesses in dealing with the financial hardships caused by the pandemic. We recognize the right to receive governmental assistance payments in the period in which the related conditions on which they depend are substantially met.
Interest expense. The components of interest expense include the amount of interest payable in cash at the stated interest rate, and accretion of debt discounts and issuance costs (“DDIC”DDIC”) using the effective interest method. DDIC arises from the issuance of debt instruments and other related contracts or agreements which possess certain terms and conditions resulting in additional financing costs arising from origination, exit and final fees, and other incremental and direct costs incurred to consummate the financing.
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Critical Accounting Policies and Significant Judgments and Estimates
Overview
The discussion herein is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue and expenses during the reporting periods. These items are monitored and analyzed for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on 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. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ from these estimates under different assumptions or conditions.
With respect to our significant accounting policies that are described in Note 1 to our consolidated financial statements included in Item 8 of our 20212022 Form 10-K, we believe that the following accounting policies involve a greater degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations.
Change in Fair Value of Derivative LiabilityAccounting for Complex Financings
We recognize liabilitiesIn order to account for embedded derivativescomplex financing transactions, we are required to make judgments, assumptions, and estimates to determine the appropriate amounts reported in our consolidated financial statements. These financing transactions typically involve entering into several distinct legal agreements, whereby we are required to identify and account for each freestanding financial instrument separately. The freestanding financial instruments may be classified as debt, agreements.temporary equity or permanent equity instruments depending on the results of our evaluation. In addition, we evaluate if any of the financial instruments contain embedded features that are required to be accounted for as derivatives at fair value. Each freestanding financial instrument is required to be recognized at fair value on the closing date of the financing. The determinationfair value of warrants is generally determined using the Black-Scholes-Merton (“BSM”) valuation model and the fair value of common stock is based on the embedded derivatives includes subjective assumptions that can materially affecttrading price of our shares on the closing date.
For financial instruments classified as debt, a discount is recognized if the stated principal balance exceeds the initial allocation of fair value estimates. Derivative liabilities are adjustedas of the closing date. This discount is accreted to fair valueinterest expense using the interest method that results in recognition of interest expense at a fixed rate through the end of each reporting period with changes in fair value reflected as a gain or loss in our unaudited condensed consolidated statements of operations.expected maturity date.
Share-Based Compensation Expense
We measure the fair value of services received in exchange for all stock options granted based on the fair value of the award as of the grant date. We compute the fair value of stock options with time-based vesting using the BSM option-pricing model and recognize the cost of the equity awards over the period that services are provided to earn the award. For awards granted whichthat contain a graded vesting schedule, and the only condition for vesting is a service condition, compensation cost is recognized on a straight-line basis over the requisite service period as if the award was, in substance, a single award. We recognize the impact of forfeitures in the period that the forfeiture occurs, rather than estimating the number of awards that are not expected to vest in accounting for share-based compensation. For stock options that are voluntarily surrendered by employees, all unrecognized compensation is immediately recognized in the period the options are cancelled.
We have granted stock options with vesting that is dependent on achieving certain market, performance and service conditions (“Hybrid Options”). For purposes of recognizing compensation cost, we determine the requisite service period as the longest of the derived, implicit and explicit vesting periods for each of the market, performance and service conditions, respectively. Due to achievement of the performance condition, we began recognizing compensation cost using the grant date fair value in November 2020 and continuing through the end of the requisite service period. Determination of the requisite service period of the Hybrid Options was based on the date that the performance condition was achieved. If the Hybrid Options do not ultimately become exercisable due to the option holders’ failure to achieve the requisite service period, any previously recognized compensation cost will be reversed. However, if the Hybrid Options do not ultimately become exercisable due to the failure to achieve the market condition, previously recognized compensation cost will not be reversed.
Research and Development
R&D costs are expensed as incurred. Intangible assets related to in-licensing costs under license agreements with third parties are charged to expense unless we are able to determine that the licensing rights have an alternative future use in other R&D projects or otherwise.
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Clinical Trial Accruals
Clinical trial costs are a component of R&D expenses. We accrue and recognize expenses for clinical trial activities performed by third parties based upon estimates of the percentage of work completed over the life of the individual study in accordance with agreements
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established with clinical research organizations and clinical trial sites. We determine the estimates through discussions with internal clinical personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services. Nonrefundable advance payments for goods and services that will be used or rendered in future R&D activities, are deferred and recognized as expense in the period that the related goods are delivered, or services are performed.
Results of Operations
Three months ended September 30, 20212022 and 20202021
Revenue.As a clinical stage company, we did not generate any revenue for the three months ended September 30, 20212022 and 2020.2021. We are at an early stage of development as a proprietary product specialty pharmaceutical company, and we do not currently have any commercial products. Our existing product candidates will require extensive additional clinical evaluation, regulatory review, significant marketing efforts and substantial investment before they generate any revenues. We do not expect to be able to marketgenerate revenue from any of our product candidates for several years.
Research and development expenses.R&D expenses for each of the three months ended September 30, 20212022 and 20202021 were as follows (in thousands, except percentages):
| | | | | | |
|
| Three Months Ended | ||||
| | September 30, | ||||
|
| 2021 |
| 2020 | ||
Research and development expenses | | $ | 5,774 | | $ | 2,344 |
Dollar increase | | $ | 3,430 | |
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|
Precentage increase | |
| 146 | % |
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| | | | | | | | | | | | |
| | | | |
| | | Increase |
| |||
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| 2022 |
| 2021 |
| | Amount |
| Percent |
| ||
| | | | | | | | | | | | |
Total R&D expenses | | $ | 7,704 | | $ | 5,774 | | $ | 1,930 |
| 33 | % |
The increase in research and developmentR&D expenses of $3.4$1.9 million for the three months ended September 30, 20212022 was primarily attributable to an increase in clinical trial costs associated with RZ402 of approximately $1.3 million and RZ358 of approximately $0.9 million. The $1.3 million of costs for RZ402 was primarily attributable to the MAD study that was initiated in August 2021, as discussed above under the caption Summary of Clinical Assets. No clinical trial costs related to RZ402 were incurred for the three months ended September 30, 2020. Aside from clinical trial costs, we had an increase of approximately $0.6 million in compensation and benefits for our R&D workforce that increased by approximately $1.3 million. Approximately $0.6 million of this increase was attributable to an increase in share-based compensation related to stock options granted in June 2022. In addition, cash-based compensation and benefits increased by approximately $0.7 million that was primarily attributable to increased headcount.
General and administrative expenses. G&A expensesan increase in the average number of R&D employees from 23 for each of the three months ended September 30, 2021 to 33 for the three months ended September 30, 2022. In addition to the increases in compensation and 2020benefits cost, an increase of $0.5 million was due to higher spending for RZ358 program related costs, primarily for Phase 3 readiness manufacturing costs.
General and administrative expenses. G&A expenses for the three months ended September 30, 2022 and 2021 were as follows (in thousands, except percentages):
| | | | | | |
|
| Three Months Ended | ||||
| | September 30, | ||||
|
| 2021 |
| 2020 | ||
General and Administrative expenses | | $ | 1,866 | | $ | 1,279 |
Dollar increase | | $ | 587 | |
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|
Precentage increase | |
| 46 | % |
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| | | | | | | | | | | | |
| | | | |
| | | Increase |
| |||
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| 2022 |
| 2021 |
| | Amount |
| Percent |
| ||
| | | | | | | | | | | | |
Total G&A expenses | | $ | 2,514 | | $ | 1,866 | | $ | 648 |
| 35 | % |
The increase in general and administrativeG&A expenses of $0.6 million for the three months ended September 30, 20212022 was primarily attributable to an increase in professional fees associated with corporate development activities, consulting services,share-based compensation expense of $0.5 million due to stock options granted to certain executives and strategic financial advisory services. In addition, thereemployees in June 2022. An additional $0.1 million increase in other G&A was due to facilities and travel expenses as COVID related travel restrictions have diminished.
Interest and Other Income. Interest and other income amounted to $0.4 million for the three months ended September 30, 2022, whereas we did not earn any interest income for the three months ended September 30, 2021. The increase in interest income for the three months ended September 30, 2022 was primarily due to (i) an increase in share-based compensation expense primarily dueexcess of $100 million in cash balances held in interest bearing accounts, and (ii) an increase in interest rates for such temporary cash investments. The large increase in cash balances was attributable to a grantthe completion of stock options to G&A employeesequity financings between October 2021 and directors in June 2021.July 2022.
Employee Retention Credit. EmployeeWe did not generate any employee retention credit income wasfor the three months ended September 30, 2022, compared to $0.2 million for the three months ended September 30, 2021. ThisThe income isin the prior year was a result of of the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act benefits we qualified for during the fiscal quarter. We did not qualify for any employee retention credits in the same period in 2020
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Interest Expense. Interest expense was approximately $0.4 million forbenefits. For the three months ended September 30, 2021, whereas we2022, governmental assistance was not available under the CARES Act.
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Interest Expense. We did not incur any interest expense for the same period in 2020.three months ended September 30, 2022 due to the repayment of the Loan Agreement on June 30, 2022, whereas we incurred $0.4 million of interest expense for the three months ended September 30, 2021. Interest expense for the three months ended September 30, 2021 was solely attributable to the Loan Agreement entered into in April 2021 and consisted of (i) interest expense of $0.3 million based on the weighted average contractual rate of 8.87%9.0%, and (ii) accretion of discount of $0.1 million.
Income Taxes
Taxes. For the three months ended September 30, 20212022 and 2020,2021, we did not recognize any income tax benefit due to our net losses, and our determination that a full valuation allowance was required for all of our deferred tax assets.
Liquidity and Capital Resources
Short-term Liquidity Requirements
As of September 30, 2021,2022, we had cash and cash equivalents totaling approximately $37.3of $154.3 million and working capital was approximately $35.7$153.2 million. We have incurred cumulative net losses of $176.0$219.0 million since our inception and as a clinical stage company we have not generated any meaningful revenue to date.
Our primary source of liquidity has historically been from the completion of private placements and public offerings of our equity securities, as well as proceeds from the issuance of debt securities. For the three months ended September 30, 2022, as discussed above under the caption Recent Developments, we issued common stock in the 2022 Private Placement that resulted in net proceeds of $11.6 million. For the fiscal year ended June 30, 2022, we received net proceeds from the issuance of equity securities of $165.2 million. The completion of these equity financings is the primary factor that resulted in our cash and cash equivalents balance of $154.3 million as of September 30, 2022. For further information about the key terms and results of our debt and equity financing activities, please refer to the discussion below under the captions 2022 Registered Direct Offering, 2021 Underwritten Public Offering and 2021 Registered Direct Offering.
Our most significant contractual obligations consist of milestone payments pursuant to licensing agreements with XOMA Corporation (“XOMA”) and ActiveSite Pharmaceuticals, Inc. (“ActiveSite”) discussed below. Based on our expectations for the dates when certain clinical and regulatory milestones will be achieved, we anticipate that $5.0 million will be payable to XOMA and $3.0 million will be payable to ActiveSite within the next twelve months.
Based on our cash and cash equivalents balance of $154.3 million as of September 30, 2022, we believe we have adequate capital resources to meet all of our contractual obligations and conduct all planned activities to advance our clinical trials during through the fiscal quarter ending September 30, 2023.
Long-term Liquidity Requirements
Our most significant long-term contractual obligations consist of clinical and regulatory milestone payments up to $35.0 million payable to XOMA and up to $45.5 million in milestones payable to ActiveSite, for a total of $80.5 million. As discussed above, we expect that $5.0 million will be payable to XOMA and $3.0 million will be payable to ActiveSite during the next twelve months. Accordingly, the remainder of $72.5 million is considered a long-term liquidity requirement. Our current expectations are that we will incur additional milestone payments of $5.0 million payable to XOMA for the fiscal year ending June 30, 2024. Due to uncertainties in the timing associated with clinical trial activities and regulatory approvals, there is even greater uncertainty in forecasting the milestone payments to XOMA and ActiveSite during the fiscal year ending June 30, 2024 and thereafter.
Our long-term contractual obligations also include (i) operating lease payments up to approximately $0.7 million per year through calendar year 2027, and (ii) an exit fee of $0.6 million if we enter into certain transactions (defined as “Exit Events”) prior to April 13, 2031. Exit Events include, but are not limited to, sales of substantially all assets, certain mergers, change of control transactions, and issuances of common stock that result in new investors owning more than 35% of the Company’s shares. As discussed above under the caption Recent Developmentsin August 2021, on June 30, 2022 we terminated the Loan Agreement with SLR. However, we remain contingently obligated to pay the $0.6 million exit fee.
The following discussion provides additional information about the ongoing requirements pursuant to our license agreements with XOMA and ActiveSite, along with additional information about our recent financing activities that impacted our liquidity and capital resources through September 30, 2022.
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XOMA License Agreement
In December 2017, we entered into a license agreement (the “XOMA License Agreement”) with XOMA through its wholly-owned subsidiary, XOMA (US) LLC, pursuant to which XOMA granted an exclusive global license to develop and commercialize XOMA 358 (formerly X358, now RZ358) for all indications. In January 2019, the PurchaseXOMA License Agreement was amended with an updated payment schedule, as well as revised the amount we were required to expend on development of RZ358 and related licensed products, and revised provisions with respect to our diligence efforts in conducting clinical studies.
Upon the achievement of certain clinical and regulatory events, we will be required to make up to $35.0 million in aggregate milestone payments to XOMA. The first such milestone payment of $2.0 million was triggered upon enrollment of the last patient in our ongoing phase 2 clinical study in January 2022. The next milestone payment of $3.0 million will be due upon the enrollment of the first patient in a Phase 3 study, which we believe will occur in the next twelve months. Additionally, upon the future commercialization of RZ358, we will be required to pay royalties to XOMA based on the net sales of the related products, and milestone payments up to an additional $185.0 million if future annual sales related to RZ358 exceed targets ranging from $100.0 million to $1.0 billion. Through September 30, 2022, no events have occurred that would result in the requirement to make additional milestone payments and no royalties have been incurred.
ActiveSite License Agreement
In August 2017, we entered into a Development and License Agreement with LPC that providesActiveSite (“ActiveSite License Agreement”) pursuant to which we acquired the rights to ActiveSite’s plasma kallikrein inhibitor portfolio (the “PKI Program”). We are planning to use the PKI Program to develop, file, manufacture, market and sell products for issuances of common stockdiabetic macular edema and other therapeutic indications. The ActiveSite License Agreement requires various milestone payments ranging from $1.0 million to $10.0 million when milestone events occur, up to an aggregate of $20.0 million.$46.5 million of aggregate milestone payments. The aggregate numberfirst milestone payment for $1.0 million paid in December 2020 after completion of sharesthe preclinical work and submission of an IND to the FDA for RZ402. The next milestone payment for $5.0 million will be due upon enrollment of the first patient in a Phase 2 study, which we expect to occur within the next 12 months. We will also be required to pay royalties equal to 2.0% of any sales of products that use the PKI Program. Through September 30, 2022, no events have occurred that would result in the requirement to make additional milestone payments and no royalties have been incurred.
2022 Registered Direct Offering
On May 1, 2022, we can sellentered into an underwriting agreement with Jefferies LLC, as representative of the underwriters listed therein, relating to LPC under the Purchase Agreement may not exceed 1,669,620issuance and sale of equity securities in an underwritten registered direct offering (the “2022 RDO”). The 2022 RDO resulted in the issuance of (i) approximately 18.0 million shares of our common stock subjectat a public offering price of $3.80 per share, (ii) Class A pre-funded warrants (the “Class A PFWs”) to certain exceptions set forthpurchase up to 2.0 million shares of common stock at a public offering price of $3.799 per Class A PFW, and (iii) Class B pre-funded warrants (the “Class B PFWs”) to purchase up to 10.9 million shares of common stock at a public offering price of $3.799 per Class B PFW. On May 4, 2022, the 2022 RDO closed resulting in net proceeds of approximately $110.1 million. The gross amount of the Purchase Agreement. Through September 30, 2021, we have issued2022 RDO was $117.6 million, before deduction of an aggregate of 149,507$7.1 million for underwriting discounts and approximately $0.4 million for professional fees and other offering expenses payable by us. We believe the additional funding from the 2022 RDO along with the funding received in July 2022 from the 2022 Private Placement provides us with sufficient cash to fund a Phase 3 clinical program for RZ358, as well as a Phase 2 proof of concept study for RZ402.
2021 Underwritten Public Offering and Registered Direct Offering
In October 2021, we entered into an underwriting agreement with Oppenheimer & Co., Inc., as representative of the underwriters listed therein (the “2021 Underwriters”) for the planned issuance and sale of equity securities in an underwritten public offering (the “2021 Underwritten Offering”). On October 15, 2021, closing occurred for the 2021 Underwritten Offering resulting in the issuance of (i) 6,030,847 shares underof common stock at $6.50 per share for gross proceeds of $39.2 million, and (ii) 1,661,461 pre-funded warrants to purchase 1,661,461 shares of common stock at an issuance price of $6.49 per warrant (the “2021 PFWs”) for gross proceeds of $10.8 million. The Company granted the Purchase AgreementUnderwriters a 30-day option to purchase up to an additional 1,153,845 shares of its common stock in the 2021 Underwritten Offering at a public offering price of $6.50 per share, less underwriting discounts and havecommissions (the “Underwriters’ Option”). In November 2021, the Underwriters’ Option was partially exercised for 116,266 shares resulting in gross proceeds of approximately $0.8 million. The aggregate gross proceeds from the 2021 Underwritten Offering amounted to $50.7 million, excluding the Underwriters’ Option, and before deductions for underwriting commissions of 6.0% of the gross proceeds and other offering costs of approximately $0.3 million. After deducting total offering costs of $3.3 million, the net proceeds of the 2021 Underwritten Offering amounted to approximately $47.2 million.
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Concurrently with the 2021 Underwritten Offering, Handok, an entity affiliated with a member of the Board of Directors, entered into a subscription agreement for a registered direct offering (the “2021 RDO”) pursuant to which we agreed to sell to the Handok an aggregate of 769,231 shares of our common stock at a purchase price of $6.50 per share. The closing for the 2021 RDO occurred on October 27, 2021, whereby we received gross proceeds of approximately $1.2$5.0 million.
EDA and LPC Financings
In December 2020, we entered into the EDAan Equity Distribution Agreement (the “EDA”) with Oppenheimer & Co. Inc. as sales agent that providesprovided for an “at the market offering” for the sale of up to $50.0 million in Placement Shares.shares of our common stock (the “Placement Shares”). For the period from July 1, 2021 throughthree months ended September 30, 2021, we sold 138,388 shares of our common stockPlacement Shares for which aggregate net proceeds of approximately $1.5 million were received. Accordingly, we may sell up to an additional $48.5 million under the EDA.
In AprilAugust 2021, we entered into a $30.0 million Loan and Security Agreementpurchase agreement (the “Loan“LPC Purchase Agreement”) with SLR Investment Corp. and certain other lenders (the “Lenders”Lincoln Park Capital Fund, LLC (“LPC”). The Lenders agreed to loan, that provided for issuances up to $30.0 million in three tranches consistingan aggregate of (i) a $15.0 million term A loan that was funded on April 14, 2021, (ii) a $7.5 million term B loan to be funded upon our request no later than January 25, 2022, and (iii) a $7.5 million term C loan to be funded upon our request no later than September 25, 2022. Funding of the term B loan was subject to our ability to obtain at least $35$20.0 million of equity or subordinated debt financing by January 2022 and the achievementshares of certain clinical milestones related to RZ358 and RZ402. Funding of the term C loan is subject to our ability to meet the conditions for funding the term B loan, plus obtaining an additional $35 million of equity or subordinated debt financing by September 2022 and the achievement of certain additional clinical milestones related to RZ358 and RZ402. Each term loan has a maturity date of April 1, 2026common stock (the “Maturity Date”“Purchase Shares”). We are permitted to make interest-only payments on each term loan at least through May 1, 2023.
As a result of the completion of the Underwritten Offering and the registered direct offering in October 2021 for gross proceeds of $55.0 million, as well as equity issuances under the EDA and LPC Purchase Agreement duringFor the three months ended September 30, 2021, LPC purchased 115,708 shares of our common stock and we have metreceived net proceeds of $1.2 million. In May 2022, we terminated the financing threshold to qualify forEDA and the term B loan but will need to raise an additional $12.3 million to qualify for the term C loan. To date we have not achieved the clinical milestones to qualify for the term B and term C loans. No assurance can be provided that we will meet the requirements to qualify for the term B and term C loans and, even if we do qualify for this funding,LPC Purchase Agreement whereby no assurance can be provided that we would elect to request it.further equity securities are issuable under these agreements.
As a condition of the Loan Agreement our cash and cash equivalents became subject to a blocked account control agreement (“BACA”) in favor of the Lenders whereby a cash balance of at least $5.0
In April 2021, we borrowed $15.0 million must be maintained beginning on the earlier of (i) December 31, 2021, and (ii) the date the term B loan is funded. In the event of a default under the Loan Agreement discussed above under the BACA would enable the Lenders to prevent the release of funds from our cash accounts until the default is cure or waived. For additional information aboutcaption Recent Developments. Outstanding borrowings under the Loan Agreement please referprovided for interest at a floating rate equal to Note 5(a) 8.75% per annum plus (b) the greater of (i) the rate per annum published by the Intercontinental Exchange Benchmark Administration Ltd. for a term of one month and (ii) 0.12% per annum. On June 30, 2022, we paid off the outstanding loan amount of $15.0 million and terminated the Loan Agreement in accordance with its terms. In addition to the financial statements includedrepayment of principal and accrued interest, we paid (i) a prepayment fee equal to 2.00% of the outstanding principal balance for a total of $300,000, and (ii) a final fee equal to 4.75% of the aggregate amount of the term loans funded for a total of $712,500. The terminated Loan Agreement was secured by substantially all of our assets. The security interests and liens granted in Part I, Item 1 of this Report.
We believe our existing cash and cash equivalents balance of $37.3 million as of September 30, 2021, combinedconnection with the public offering and registered direct offering net proceeds of $51.7 million received in October 2021 will be adequate to carry out currently planned activities into Novemberterminated Loan Agreement were released on June 30, 2022.
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Cash Flows Summary
Presented below is a summary of our operating, investing, and financing cash flows for the three months ended September 30, 20212022 and 20202021 (in thousands):
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| 2021 |
| 2020 |
| Change | |||
Net cash provided by (used in): |
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| |
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Operating activities | | $ | (6,341) | | $ | (3,551) | | $ | (2,790) |
Investing activities | |
| — | |
| — | |
| — |
Financing activities | |
| 2,586 | |
| — | |
| 2,586 |
| | | | | | | | | |
|
| 2022 |
| 2021 |
| Change | |||
Net cash provided by (used in): | |
| | |
| | |
| |
Operating activities | | $ | (7,589) | | $ | (6,341) | | $ | (1,248) |
Investing activities | |
| (70) | |
| — | |
| (70) |
Financing activities | |
| 11,571 | |
| 2,586 | |
| 8,985 |
Cash Flows Used in Operating Activities
For the three months ended September 30, 2022 and 2021, and 2020, cash flows used in operating activities amounted to $6.3$7.6 million and $3.6$6.3 million, respectively. The key components in the calculation of our cash used in operating activities are as follows (in thousands):
| | | | | | | | | |
|
| 2021 |
| 2020 |
| Change | |||
Net loss | | $ | (7,836) | | $ | (3,620) | | $ | (4,216) |
Non-cash expenses | |
| 1,028 | |
| 699 | |
| 329 |
Non-cash gains | |
| (16) | |
| — | |
| (16) |
Changes in operating assets and liabilities, net | |
| 483 | |
| (630) | |
| 1,113 |
Total | | $ | (6,341) | | $ | (3,551) | | $ | (2,790) |
| | | | | | | | | |
|
| 2022 |
| 2021 |
| Change | |||
| | | | | | | | | |
Net loss | | $ | (9,831) | | $ | (7,836) | | $ | (1,995) |
Non-cash expenses |
| | 1,918 |
| | 1,028 |
| | 890 |
Non-cash gains, net |
| | — |
| | (16) |
| | 16 |
Changes in operating assets and liabilities, net |
| | 324 |
| | 483 |
| | (159) |
Total | | $ | (7,589) | | $ | (6,341) | | $ | (1,248) |
For the three months ended September 30, 2021,2022, our net loss was $7.8$9.8 million compared to $3.6$7.8 million for the three months ended September 30, 2020.2021. For further discussion about changes in our operating results for the three months ended September 30, 20212022 and 2020,2021, please refer to Results of Operations above.
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For the three months ended September 30, 20212022 and 2020,2021, our non-cash expenses of $1.0$1.9 million and $0.7$1.0 million, respectively, were primarily attributable to share-based compensation expense, accretion of debt discount and issuance costs, and non-cash lease expense. For the three months ended September 30, 2022, net changes in operating assets and liabilities decreased operating cash flow by $0.3 million, primarily driven by an increase in prepaid expenses and other assets of $0.4 million, offset by a net decrease of $0.1 million in accounts payable and other accrued liabilities. For the three months ended September 30, 2021, net changes in operating assets and liabilities increased operating cash flow by $0.5 million, primarily driven by increased in accounts payable by $0.6 million, partially offset by an increase in prepaid expenses and other assets of $0.1 million.
Cash Provided by Investing Activities
For the three months ended September 30, 2020,2022, our net changescash utilized in operating assetsinvesting activities amounted to $70,000, related to the purchase of furniture and liabilities decreased operating cash flow by $0.6 million, primarily driven by a reduction in accrued liabilities of $0.6 million.
Cash Flows Provided by Investing Activities
equipment. We did not have any cash flows from investing activities for the three months ended September 30, 2021 and 2020.2021.
Cash Flows Provided by Financing Activities
Net cash provided by financing activities for the three months ended September 30, 2022 amounted to $11.6 million. This amount consisted of proceeds of $12.3 million from the 2022 Private Placement. The total proceeds from the 2022 Private Placement of $12.3 million were partially offset by payments of $0.8 million for underwriting commissions and other costs related to this offering.
Net cash provided by financing activities for the three months ended September 30, 2021 amounted to $2.6 million. This amount included (i) $1.5 million of gross proceeds from the EDA and (ii) $1.2 million of gross proceeds from LPC purchase agreement. The total proceeds from equity financing activities amounted to $2.7 million and were partially offset by payments of $0.1 million related to financial advisory fees and other costs of equity financings.
We did not have any cash flows from financing activities for the three months ended September 30, 2020.
Recent Accounting Pronouncements
Please refer to Note 1 to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Report regarding the impact of certainrecent accounting pronouncements on our unaudited condensed consolidated financial statements.pronouncements.
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Off-Balance Sheet Arrangements
We did not have any off-balance sheet transactions for the periods covered by this Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required for smaller reporting companies.applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (our principal executive and financial officer), of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Based on that assessment under those criteria, our management has determined that as of June 30, 2021, our internal control over financial reporting was not effective due to twoa material weaknessesweakness in the system of internal control. A material weakness is a deficiency, or combination of deficiencies, that creates a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected in a timely manner.
The first material weakness identified by management is primarily that due to our limited number of employees, we have not adequately segregated certain duties to prevent employees from overriding the internal control system. During ourthe fiscal year ended June 30, 2021,2022, we implemented a more robust accounting software that is expected to result in stronger controls. In October 2022, we hired a VP of Finance and we implemented additional procedures to improve our segregation of duties. However, without hiring additional personnel, we have been unablewhich will enable us to fully remediate this material weakness.better segregate many functions. We cannot provide assurance that these or other measures will eventually result in the elimination of the material weakness described above.
In March 2021, we identified a second material weakness that resulted from ineffective treasury controls over review of outstanding authorized shares and requirements for all securities and contracts to issue common shares to ensure adequate authorized shares exist. This material weakness occurred in February 2021 when we decided to file a Charter Revision that changed our authorized shares of capital stock in the same 50 shares for one share ratio that applied to our issued shares of common stock, stock options and warrants pursuant to a reverse stock split that was effected in October 2020. The impact of this adjustment caused an immediate reduction in our authorized shares of common stock from 500,000,000 shares to 10,000,000 shares. Accordingly, after the Charter Revision we did not have a sufficient number of authorized shares of common stock in the event that all of our outstanding stock options and warrants are subsequently exercised.26
On May 26, 2021, our shareholders voted to approve motions to reincorporate from the state of Delaware to the state of Nevada and to increase our authorized shares of common stock from 10,000,000 shares to 40,000,000 shares. Accordingly, the authorized share deficiency that occurred in February 2021 was cured on May 26, 2021, such that we have an adequate number of shares of common stock whereby all outstanding stock options and warrants may be exercised in exchange for shares of common stock. In addition to the shareholder approvals to reincorporate and increase our authorized shares, we are implementing procedures to ensure that our Board of Directors provides explicit approval for all future charter amendments, and all future issuances of shares of our common stock and any warrants and stock options that are not subject to a plan approved by our shareholders. We cannot provide assurance that these or other measures will eventually result in the elimination of this material weakness.
Changes in internal controls over financial reporting
ThereDuring the period covered by this Quarterly Report on Form 10-Q, there were no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 1A. Risk Factors.
CertainOur risk factors exist which may affectare set forth under “Item 1A. Risk Factors” in our 2022 Form 10-K (referred to as our “Legacy Risk Factor Disclosures”). As of the Company’s business and could cause actual resultsdate of this Report, there have been no material changes with respect to differ materially from those expressedLegacy Risk Factor Disclosures.
You should carefully consider the Legacy Risk Factor Disclosures in any forward-looking statements. Factors that could cause our actual resultsaddition to differ materially from thosethe other information set forth in this Report areand in our 2022 Form 10-K, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations sections and the consolidated financial statements and related notes. These risks, some of which have occurred and any of which may occur in the risks described in Item 1.A. Risk Factors of our 2021 Form 10-K, and the risk factor discussed below. Any of these factors could result infuture, can have a significant or material adverse effect on our business, financial condition, results of operations or financial condition.the prices of our publicly traded securities. The Legacy Risk Factor Disclosures are not the only risks we face. Additional risk factorsrisks and uncertainties not presentlycurrently known to us, or that we currently deem to be immaterial, may also impairoccur or become material in the future and adversely affect our business, orreputation, financial condition, results of operations.operations or the prices of our publicly traded securities. Therefore, historical operating results, financial and business performance, events and trends are often not a reliable indicator of future operating results, financial and business performance, events or trends.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
There were no reportable issuancesOn May 1, 2022, we entered into a placement agency agreement with Jefferies LLC, that provided for a private placement of unregisteredequity securities (the “Private Placement”) with Handok, Inc. and certain of its affiliates. The closing for the Private Placement occurred on July 22 and July 26, 2022, whereby we received gross proceeds of approximately $12.3 million in exchange for the issuance of approximately 3.2 million shares of common stock at a purchase price of $3.80 per share. The net proceeds from the Company's equityPrivate Placement amounted to approximately $11.6 million after deduction of $0.7 million for underwriting commissions. The securities forthat were sold in the period covered by this Report.Private Placement were offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
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Item 6. Exhibits.
The following exhibits are incorporated by reference or filed as part of this Quarterly Report on Form 10-Q:
Exhibit Number |
| Description of Exhibits | |
10.1 | |
| |
|
|
| |
31.1* | |
| |
32.1* | |
| |
101.INS* | | Inline XBRL Instance Document |
|
101.SC* | | Inline XBRL Taxonomy Extension Schema |
|
101.CA* | | Inline XBRL Taxonomy Extension Calculation Linkbase |
|
101.DEF* | | Inline XBRL Taxonomy Extension Definition Linkbase |
|
101.LA* | | Inline XBRL Taxonomy Extension Label Linkbase |
|
101.PRE* | | Inline XBRL Taxonomy Extension Presentation Linkbase |
|
104 | | Cover Page Interactive Data File, |
|
* Filed herewith.
29
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | |
| | REZOLUTE, INC. |
| | |
Date: November | By: | /s/ Nevan Charles Elam |
| | Nevan Charles Elam |
| | Chief Executive Officer |
| | (Principal Executive and Financial Officer) |
30