| Time and Date | | | August 14, 2023 at 10:00 a.m. Eastern Time | |
| Place | | | The special meeting of stockholders (the “Special Meeting”) of Aceragen, Inc. (“Aceragen,” the “Company,” “we,” “us” and “our”) will held at the offices of Morgan, Lewis & Bockius LLP, 1701 Market Street, Philadelphia, PA 19103. | |
| Items of Business | | | • To consider and vote upon a proposal to approve the resolutions attached hereto as Exhibit A, approving and authorizing the Board’s determination to effect the transfer of all or substantially all of Aceragen’s assets through an assignment for the benefit of creditors (the “Assignment,” and such proposal, the “Assignment Proposal”). • To grant discretionary authority to Aceragen’s board of directors (the “Board”) to adjourn the Special Meeting, from time to time, to a later date or dates, even if a quorum is present, to solicit additional proxies in the event that there are insufficient shares present in person or by proxy voting in favor of the Assignment Proposal (the “Adjournment Proposal”). • To transact such other business as may properly come before the Special Meeting or any adjournments, postponements or continuations thereof. | |
| Board Recommendations | | | After careful consideration of a number of factors, as described in the attached proxy statement, the Board has unanimously determined that the Assignment is advisable and in the best interests of Aceragen and its stockholders. The Board unanimously recommends that you vote “FOR” both the Assignment Proposal and the Adjournment Proposal. | |
| Record Date | | | The close of business on July 19, 2023 (the “Record Date”). Only stockholders on the Record Date are entitled to receive notice of, and to vote at, the Special Meeting. | |
| Proxy Voting | | | IMPORTANT | |
| | | | Please vote your shares at your earliest convenience. Promptly voting your shares via the Internet, by telephone, or by signing, dating and returning the enclosed proxy card will save the expenses and extra work of additional solicitation. If you wish to vote by mail, an addressed envelope is enclosed, postage prepaid if mailed in the United States. Submitting your proxy now will not prevent you from voting your shares at the Special Meeting, as your proxy is revocable at your option. | |
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Plan Category | | | Number of Securities to be Issued upon Exercise of Outstanding Options, Restricted Stock Units and Rights | | | Weighted Average Exercise Price of Outstanding Options and Rights | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the first Column) | | |||||||||
Equity compensation plans approved by security holders | | | | | | | | | | | | | | | | | | | |
Idera Pharmaceuticals, Inc. 2013 Stock Incentive Plan | | | | | 242,440 | | | | | $ | 79.39 | | | | | | — | | |
Aceragen, Inc. 2021 Stock Incentive Plan | | | | | 832,478 | | | | | $ | 7.23 | | | | | | — | | |
Idera Pharmaceuticals, Inc. 2022 Stock Incentive Plan | | | | | 218,900 | | | | | $ | 5.21 | | | | | | 1,450,338 | | |
All plans approved by security holders | | | | | 1,293,818 | | | | | $ | 19.18 | | | | | | 1,450,338 | | |
Equity compensation plans not approved by security holders | | | | | 14,705 | | | | | $ | 424.32 | | | | | | — | | |
TOTAL | | | | | 1,308,523 | | | | | $ | 23.82 | | | | | | 1,450,338 | | |
Name of Beneficial Owner | | | Number of Shares Beneficially Owned | | | Value of Common Stock Beneficially Owned | | | Percentage of Shares Beneficially Owned | | |||||||||
Directors and Executive Officers: | | | | | | | | | | | | | | | | | | | |
John Taylor | | | | | 1,469,482 | | | | | $ | 2,116,054 | | | | | | 17.45% | | |
John J. Kirby | | | | | 40,586 | | | | | $ | 58,444 | | | | | | * | | |
Bryant D. Lim | | | | | 18,217 | | | | | $ | 26,232 | | | | | | * | | |
Vincent J. Milano | | | | | 69,502 | | | | | $ | 100,083 | | | | | | * | | |
Daniel Soland | | | | | 20,799 | | | | | $ | 29,951 | | | | | | * | | |
Cristina Csimma | | | | | 5,762 | | | | | $ | 8,297 | | | | | | * | | |
Michael R. Dougherty | | | | | 27,829 | | | | | $ | 40,074 | | | | | | * | | |
Maxine Gowen | | | | | 5,966 | | | | | $ | 8,591 | | | | | | * | | |
Ronald Wooten | | | | | 909,326 | | | | | $ | 1,309,429 | | | | | | 9.75% | | |
All current directors and executive officers as a group (6 persons) | | | | | 2,487,867** | | | | | $ | 3,582,528 | | | | | | 26.45% | | |
| | | Shares beneficially owned | | |||||||||
Name and Address of Beneficial Owner(1) | | | Number | | | Percentage | | ||||||
5% Stockholders: | | | | | | | | | | | | | |
Pillar Investment Entities | | | | | 16,748,500(2) | | | | | | 19.99 | | |
co/ Stuarts Corporate Services Ltd. Kensington House, 69 Dr. Roy’s Drive Georgetown, Grand Cayman KY1-1104 Cayman Islands | | | | | | | | | | | | | |
Company Officers and Directors: | | | | | | | | | | | | | |
John Taylor | | | | | 2,171,214 | | | | | | 3.5 | | |
Daniel Salain | | | | | 2,171,214 | | | | | | 3.5 | | |
Vincent J. Milano | | | | | 1,037,546(3) | | | | | | 1.7 | | |
Andrew Jordan | | | | | 651,364 | | | | | | 1.0 | | |
John J. Kirby | | | | | 354,041(4) | | | | | | * | | |
Bryant D. Lim | | | | | 427,371(5) | | | | | | * | | |
Ronald Wooten | | | | | 1,343,547(6) | | | | | | 2.2 | | |
Carl Kraus | | | | | 189,981(7) | | | | | | * | | |
Michael R. Dougherty | | | | | 355,116(8) | | | | | | * | | |
Cristina Csimma | | | | | 72,000(9) | | | | | | * | | |
James A. Geraghty | | | | | 271,229(10) | | | | | | * | | |
Maxine Gowen | | | | | 75,500(11) | | | | | | * | | |
All current directors and executive officers as a group (12 individuals) | | | | | 9,120,123(12) | | | | | | 14.6 | | |
Name of Beneficial Owner(1) | | | Number of Shares Beneficially Owned | | | Percentage of Shares Beneficially Owned | | ||||||
5% Stockholders: | | | | | | | | | | | | | |
NovaQuest Co-Investment Fund XV, L.P.(2) 4208 Six Forks Road, Suite 920 Raleigh, North Carolina 27609 | | | | | 909,326 | | | | | | 9.75% | | |
Pillar Investment Entities(3) c/o Stuarts Corporate Services Ltd. Kensington House, 69 Dr. Roy’s Drive Georgetown, Grand Cayman KY1-1104 Cayman Islands | | | | | 571,588 | | | | | | 6.72% | | |
Atul Chopra(4) 4002 White Oak Trail Beachwood, Ohio 44122 | | | | | 1,205,158 | | | | | | 14.31% | | |
Daniel Salain(5) | | | | | 1,469,482 | | | | | | 17.45% | | |
Andrew Jordan(6) | | | | | 451,890 | | | | | | 5.37% | | |
Executive Officers and Directors: | | | | | | | | | | | | | |
John Taylor | | | | | 1,469,482 | | | | | | 17.45% | | |
John J. Kirby(7) | | | | | 40,586 | | | | | | * | | |
Bryant D. Lim(8) | | | | | 18,217 | | | | | | * | | |
Vincent J. Milano(9) | | | | | 69,502 | | | | | | * | | |
Daniel Soland(10) | | | | | 20,799 | | | | | | * | | |
Cristina Csimma(11) | | | | | 5,762 | | | | | | * | | |
Michael R. Dougherty(12) | | | | | 27,829 | | | | | | * | | |
Maxine Gowen(13) | | | | | 5,966 | | | | | | * | | |
Ronald Wooten(14) | | | | | 909,326 | | | | | | 9.75% | | |
All current directors and executive officers as a group (6 persons) (15) | | | | | 2,487,867 | | | | | | 26.45% | | |
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| | | | A-7 | | | |
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| | | | Valuation of intangible assets acquired in a business combination | |
| Description of the Matter | | | As discussed in Notes 2 and 3 of the consolidated financial statements, the Company acquired Aceragen, Inc., a privately held, biotechnology company in a transaction accounted for as a business combination. In connection with the acquisition, the Company recognized $71.6 million of in-process research and development intangible assets. Auditing the Company’s accounting for its acquisition was especially complex due to the significant estimation and judgment required by management in determining the fair value of the identifiable intangible assets, which consisted principally of in-process research and development. The Company used the multi-period excess earnings method of the income approach to measure the fair value of the in-process research and development. The estimation uncertainty was primarily due to the subjective nature of the significant inputs to the valuation model, including the relevant market size, the estimated probability of regulatory success rates, anticipated patent protection, expected pricing, expected treated population, estimated payments (e.g., royalty) and discount rate. Given the preclinical nature of the assets acquired, these significant assumptions are forward-looking and could be affected by future economic and market conditions. | |
| How We Addressed the Matter in Our Audit | | | To test the estimated fair value of the in-process research and development intangible assets, we performed audit procedures that included, among others, evaluating the Company’s use of the income approach (the multi-period excess earnings method), testing the significant assumptions used in the model, including the relevant market size, the estimated probability of regulatory success rates, anticipated patent protection, expected pricing, expected treated population, estimated payments (e.g., royalty) and discount rate, and assessing the completeness and accuracy of the underlying data. We compared the significant assumptions to current industry and market data, and to related data from comparable companies within the same industry. We involved our valuation professionals to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimate. | |
| | | | Valuation of Series X preferred stock liability | |
| Description of the Matter | | | As discussed in Notes 2, 3 and 4 of the consolidated financial statements, the Company issued shares of Series X preferred stock (Series X) in connection with the acquisition of Aceragen, Inc. The Series X represents a liability for accounting purposes for which the Company has elected the fair value option. The fair value of the Series X as of the date of acquisition and at December 31, 2022 was $31.9 million and $34.3 million, respectively. Auditing the Company’s valuation for the Series X was especially complex due to the significant estimation and judgment required by management in determining the fair value of the Series X. The Company used an income approach and Monte Carlo simulation method to measure the fair value of the Series X. The estimation uncertainty was primarily due to the subjective nature of the significant inputs to the valuation model, including the estimated sales proceeds related to the priority review voucher, the relevant market | |
| | | | size, the estimated probability of regulatory success rates, anticipated patent protection, expected pricing, expected treated population, sales by region, estimated royalty payments and discount rate. These significant assumptions are forward-looking and could be affected by future economic and market conditions. | |
| How We Addressed the Matter in Our Audit | | | To test the estimated fair value of the Series X, we performed audit procedures that included, among others, evaluating the Company’s use of the income approach and the Monte Carlo simulation approach, testing the significant assumptions used in the model, including the estimated sales proceeds related to the priority review voucher, the relevant market size, the estimated probability of regulatory success rates, anticipated patent protection, expected pricing, expected treated population, sales by region, estimated royalty payments and discount rate, and assessing the completeness and accuracy of the underlying data. We compared the significant assumptions to current industry and market data, to related data from comparable companies within the same industry and to underlying contracts. We involved our valuation professionals to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimate. | |
| | | 2021 | | |||
Assets | | | | | | | |
Current assets | | | | | | | |
Cash and cash equivalents | | | | $ | 5,010,224 | | |
Restricted cash | | | | | 125,000 | | |
Accounts receivable | | | | | 268,166 | | |
Unbilled accounts receivable | | | | | 328,012 | | |
Funding receivable | | | | | 6,315,637 | | |
Prepaid expenses and other current assets | | | | | 798,376 | | |
Total current assets | | | | | 12,845,415 | | |
Operating lease – right-of-use asset | | | | | 96,212 | | |
Intangible asset | | | | | 165,600 | | |
Total assets | | | | $ | 13,107,227 | | |
Liabilities, Preferred Equity and Stockholders’ Deficit | | | | | | | |
Current liabilities | | | | | | | |
Accounts payable | | | | $ | 313,355 | | |
Accrued expenses | | | | | 75,115 | | |
Accrued placement fee | | | | | 442,095 | | |
Accrued bonuses | | | | | 883,747 | | |
Operating lease liability, net | | | | | 40,323 | | |
Acquisition obligation, less unamortized discount based on imputed interest rate of 9.2%, $567,765 | | | | | 5,798,919 | | |
Total current liabilities | | | | | 7,553,554 | | |
Operating lease liability, net of current portion | | | | | 55,889 | | |
Acquisition obligation, less current portion, less unamortized discount based on imputed interest rate of 9.2%, $10,824 | | | | | 1,489,176 | | |
Total liabilities | | | | | 9,098,619 | | |
Commitments and contingencies (Note 13) | | | | | | | |
Preferred equity | | | | | | | |
Preferred stock, 5 shares authorized, $.001 par value; 5 shares issued and outstanding with a liquidation preference of $33,583,912 as of December 31, 2021 | | | | | 33,583,912 | | |
Stockholders’ deficit | | | | | | | |
Common stock, 10,000,000 shares authorized, $.001 par value; 3,536,000 shares issued and outstanding as of December 31, 2021 | | | | | 3,536 | | |
Additional paid-in capital | | | | | — | | |
Accumulated deficit | | | | | (29,576,083) | | |
Accumulated other comprehensive income | | | | | (2,757) | | |
Total stockholders’ deficit | | | | | (29,575,304) | | |
Total liabilities preferred stock and stockholders’ deficit | | | | $ | 13,107,227 | | |
(In thousands, except share and per share amounts) | | | December 31, 2022 | | | December 31, 2021 | | ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 12,044 | | | | | $ | 32,545 | | |
Accounts receivable | | | | | 4,208 | | | | | | — | | |
Prepaid expenses and other current assets | | | | | 1,611 | | | | | | 1,493 | | |
Total current assets | | | | | 17,863 | | | | | | 34,038 | | |
Property and equipment, net | | | | | 7 | | | | | | 22 | | |
Intangible assets | | | | | 71,600 | | | | | | — | | |
Goodwill | | | | | 11,100 | | | | | | — | | |
Operating lease right-of-use assets | | | | | 537 | | | | | | 734 | | |
Other assets | | | | | — | | | | | | 70 | | |
Total assets | | | | $ | 101,107 | | | | | $ | 34,864 | | |
LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable | | | | $ | 5,200 | | | | | $ | 565 | | |
Accrued expenses | | | | | 9,911 | | | | | | 4,088 | | |
Acquisition obligation, net | | | | | 6,078 | | | | | | — | | |
Operating lease liability | | | | | 234 | | | | | | 209 | | |
Total current liabilities | | | | | 21,423 | | | | | | 4,862 | | |
Warrant liability | | | | | 2,819 | | | | | | — | | |
Series X preferred stock liability (includes 5 shares of Series X convertible preferred stock, $0.01 par value per share issued and outstanding as December 31, 2022 – Note 8) | | | | | 34,300 | | | | | | — | | |
Operating lease liability, net of current portion | | | | | 326 | | | | | | 549 | | |
Deferred tax liability | | | | | 3,283 | | | | | | — | | |
Other liabilities | | | | | 22 | | | | | | — | | |
Total liabilities | | | | | 62,173 | | | | | | 5,411 | | |
Commitments and contingencies (Note 15) | | | | | | | | | | | | | |
Preferred stock, $0.01 par value, Authorized – 5,000,000 shares: | | | | | | | | | | | | | |
Series Z convertible redeemable preferred stock (Note 9); Designated – 150,000 shares, Issued and outstanding – 77,900 shares at December 31, 2022 | | | | | 27,108 | | | | | | — | | |
Stockholders’ equity*: | | | | | | | | | | | | | |
Preferred stock, $0.01 par value, Authorized – 5,000,000 shares: | | | | | | | | | | | | | |
Series A convertible preferred stock; Designated – 1,500,000 shares; Issued and outstanding – 655 shares | | | | | — | | | | | | — | | |
Series B preferred stock; Designated – 200,000 shares; Issued and outstanding – 62,355 shares | | | | | 1 | | | | | | — | | |
Common stock, $0.001 par value, Authorized – 140,000,000 shares; Issued and outstanding – 3,653,685 and 3,106,947 at December 31, 2022 and December 31, 2021, respectively | | | | | 4 | | | | | | 3 | | |
Additional paid-in capital | | | | | 770,663 | | | | | | 764,911 | | |
Accumulated deficit | | | | | (758,821) | | | | | | (735,461) | | |
Accumulated other comprehensive income (loss) | | | | | (21) | | | | | | — | | |
Total stockholders’ equity | | | | | 11,826 | | | | | | 29,453 | | |
Total liabilities, convertible redeemable preferred stock, and stockholders’ equity | | | | $ | 101,107 | | | | | $ | 34,864 | | |
| | | Year Ended December 31, | | |||||||||
(In thousands, except share and per share amounts) | | | 2022 | | | 2021 | | ||||||
Government contracts revenue | | | | $ | 4,862 | | | | | $ | — | | |
Operating expenses: | | | | | | | | | | | | | |
Research and development | | | | | 12,188 | | | | | | 16,375 | | |
General and administrative | | | | | 12,213 | | | | | | 9,976 | | |
Acquisition-related costs | | | | | 4,566 | | | | | | — | | |
Restructuring and other costs | | | | | 3,713 | | | | | | 1,322 | | |
Total operating expenses | | | | | 32,680 | | | | | | 27,673 | | |
Loss from operations | | | | | (27,818) | | | | | | (27,673) | | |
Other income (expense): | | | | | | | | | | | | | |
Interest income (expense), net | | | | | 204 | | | | | | 2 | | |
Warrant revaluation gain | | | | | 361 | | | | | | 6,983 | | |
Series X preferred stock liability loss | | | | | (2,400) | | | | | | — | | |
Future tranche right revaluation gain | | | | | — | | | | | | 118,803 | | |
Foreign currency exchange and other gain (loss), net | | | | | (25) | | | | | | (24) | | |
(Loss) income before income tax benefit | | | | $ | (29,678) | | | | | $ | 98,091 | | |
Income tax benefit | | | | | 6,318 | | | | | | — | | |
Net (loss) income | | | | $ | (23,360) | | | | | $ | 98,091 | | |
Undistributed earnings to preferred stockholders | | | | | — | | | | | | (1,150) | | |
Net (loss) income applicable to common stockholders | | | | $ | (23,360) | | | | | $ | 96,941 | | |
Net (loss) income applicable to common stockholders (Note 18)* | | | | | | | | | | | | | |
– Basic | | | | $ | (23,360) | | | | | $ | 96,941 | | |
– Diluted | | | | $ | (23,360) | | | | | $ | (28,845) | | |
Net (loss) income per share applicable to common stockholders (Note 18)* | | | | | | | | | | | | | |
– Basic | | | | $ | (7.18) | | | | | $ | 33.49 | | |
– Diluted | | | | $ | (7.18) | | | | | $ | (9.78) | | |
Weighted-average number of common shares used in computing net (loss) income per share applicable to common stockholders* | | | | | | | | | |||||
– Basic | | | | | 3,255,648 | | | | | | 2,894,287 | | |
– Diluted | | | | | 3,255,648 | | | | | | 2,948,659 | | |
Comprehensive (loss) income: | | | | | | | | | | | | | |
Net (loss) income | | | | $ | (23,360) | | | | | $ | 98,091 | | |
Other comprehensive income (loss), net of tax: | | | | | | | | | | | | | |
Foreign currency translation | | | | | (21) | | | | | | — | | |
Total other comprehensive (loss) income, net of tax | | | | | (21) | | | | | | — | | |
Total comprehensive (loss) income | | | | $ | (23,381) | | | | | $ | 98,091 | | |
| | | Series B1 Preferred | | | Series Z Preferred | | | | Series B Preferred | | | Common Stock | | | Additional Paid-In Capital* | | | Accumulated Deficit | | | Other Comprehensive Income (Loss) | | | Total Stockholders’ Equity (Deficit) | | ||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands, except share and per share amounts) | | | Number of Shares | | | $0.01 Par Value | | | Number of Shares | | | $0.01 Par Value | | | | Number of Shares | | | $0.01 Par Value | | | Number of Shares* | | | $0.001 Par Value* | | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | | | | | 23,684 | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | | — | | | | | $ | — | | | | | | 2,252,390 | | | | | $ | 2 | | | | | $ | 742,378 | | | | | $ | (833,552) | | | | | $ | — | | | | | $ | (91,172) | | |
Sale of common stock, net of issuance costs | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 348,079 | | | | | | 1 | | | | | | 19,514 | | | | | | — | | | | | | — | | | | | | 19,515 | | |
Conversion of Series B1 preferred stock | | | | | (23,684) | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 139,317 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | |
Issuance of common stock under employee stock purchase plan | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 2,889 | | | | | | — | | | | | | 59 | | | | | | — | | | | | | — | | | | | | 59 | | |
Issuance of common stock under equity incentive plan (vesting of restricted stock units) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 13,927 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock upon exercise of common stock options and warrants | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 345,332 | | | | | | — | | | | | | 271 | | | | | | — | | | | | | — | | | | | | 271 | | |
Issuance of common stock for services rendered | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 5,013 | | | | | | — | | | | | | 152 | | | | | | — | | | | | | — | | | | | | 152 | | |
Stock-based compensation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,537 | | | | | | — | | | | | | — | | | | | | 2,537 | | |
Net income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 98,091 | | | | | | — | | | | | | 98,091 | | |
Balance, December 31, 2021 | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | | — | | | | | $ | — | | | | | | 3,106,947 | | | | | $ | 3 | | | | | $ | 764,911 | | | | | $ | (735,461) | | | | | $ | — | | | | | $ | 29,453 | | |
Sale of common stock, net of issuance costs | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (15) | | | | | | — | | | | | | — | | | | | | (15) | | |
Issuance of common stock, preferred stock, restricted stock, options and warrants upon Acquisition of Aceragen (Note 3) | | | | | — | | | | | | — | | | | | | 77,663 | | | | | | 27,108 | | | | | | | — | | | | | | — | | | | | | 434,845 | | | | | | 1 | | | | | | 3,427 | | | | | | — | | | | | | — | | | | | | 3,428 | | |
Vesting of restricted stock awards | | | | | — | | | | | | — | | | | | | 237 | | | | | | — | | | | | | | — | | | | | | — | | | | | | 1,331 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock under employee stock purchase plan | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 7,788 | | | | | | — | | | | | | 49 | | | | | | — | | | | | | — | | | | | | 49 | | |
Common stock dividend issued in the form of Series B Preferred Stock | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 62,355 | | | | | | 1 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1 | | |
Issuance of common stock under equity incentive plan (vesting of restricted stock units) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 1,600 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock upon exercise of common stock warrants | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 90,185 | | | | | | — | | | | | | 15 | | | | | | — | | | | | | — | | | | | | 15 | | |
Issuance of common stock for services rendered | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 10,989 | | | | | | — | | | | | | 88 | | | | | | — | | | | | | — | | | | | | 88 | | |
Stock-based compensation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,188 | | | | | | — | | | | | | — | | | | | | 2,188 | | |
Foreign currency translation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (21) | | | | | | (21) | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (23,360) | | | | | | — | | | | | | (23,360) | | |
Balance, December 31, 2022 | | | | | — | | | | | $ | — | | | | | | 77,900 | | | | | $ | 27,108 | | | | | | | 62,355 | | | | | $ | 1 | | | | | | 3,653,685 | | | | | $ | 4 | | | | | $ | 770,663 | | | | | $ | (758,821) | | | | | $ | (21) | | | | | $ | 11,826 | | |
| | | Year Ended December 31, | | |||||||||
(In thousands) | | | 2022 | | | 2021 | | ||||||
Cash Flows from Operating Activities: | | | | | | | | | | | | | |
Net (loss) income | | | | $ | (23,360) | | | | | $ | 98,091 | | |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | | | | | | | | | | | | | |
Stock-based compensation | | | | | 2,188 | | | | | | 2,537 | | |
Foreign currency translation | | | | | 6 | | | | | | — | | |
Warrant liability revaluation gain | | | | | (361) | | | | | | (6,983) | | |
Series X preferred stock liability loss | | | | | 2,400 | | | | | | — | | |
Future tranche right liability revaluation gain | | | | | — | | | | | | (118,803) | | |
Issuance of common stock for services rendered | | | | | 88 | | | | | | 152 | | |
Accretion of discounts on short-term investments | | | | | — | | | | | | (1) | | |
Accretion of discounts on acquisition obligation | | | | | 66 | | | | | | — | | |
Depreciation and amortization expense | | | | | 15 | | | | | | 22 | | |
Deferred tax benefit | | | | | (6,318) | | | | | | — | | |
Changes in operating assets and liabilities, net of effects from Acquisition: | | | | | | | | | | | | | |
Accounts receivable | | | | | (2,294) | | | | | | — | | |
Prepaid expenses and other assets | | | | | 506 | | | | | | 2,134 | | |
Accounts payable, accrued expenses, and other liabilities | | | | | 2,548 | | | | | | (1,751) | | |
Other | | | | | 21 | | | | | | 5 | | |
Net cash used in operating activities | | | | | (24,495) | | | | | | (24,597) | | |
Cash Flows from Investing Activities: | | | | | | | | | | | | | |
Cash acquired in acquisition of Aceragen | | | | | 5,482 | | | | | | — | | |
Proceeds from maturity of available-for-sale securities | | | | | — | | | | | | 4,500 | | |
Net cash provided by investing activities | | | | | 5,482 | | | | | | 4,500 | | |
Cash Flows from Financing Activities: | | | | | | | | | | | | | |
Proceeds from common stock financings, net | | | | | (15) | | | | | | 19,518 | | |
Proceeds from employee stock purchases | | | | | 49 | | | | | | 59 | | |
Proceeds from exercise of common stock options and warrants | | | | | 15 | | | | | | 271 | | |
Payment on Acquisition Obligation | | | | | (1,534) | | | | | | — | | |
Payments on seller-financed purchases | | | | | — | | | | | | (435) | | |
Other | | | | | (3) | | | | | | — | | |
Net cash (used in) provided by financing activities | | | | | (1,488) | | | | | | 19,413 | | |
Net decrease in cash and cash equivalents | | | | | (20,501) | | | | | | (684) | | |
Cash and cash equivalent, beginning of period | | | | | 32,545 | | | | | | 33,229 | | |
Cash and cash equivalents, end of period | | | | $ | 12,044 | | | | | $ | 32,545 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for interest | | | | $ | — | | | | | $ | 5 | | |
Supplemental disclosure of non-cash financing and investing activities: | | | | | | | | | | | | | |
Offering costs in accrued expenses | | | | $ | — | | | | | $ | 3 | | |
Non-cash seller-financed purchases | | | | $ | — | | | | | $ | 652 | | |
| | | 2021 | | |||
Revenues | | | | | | | |
Government sponsored product development | | | | $ | 897,002 | | |
Consulting services | | | | | 107,944 | | |
Total revenues | | | | | 1,004,946 | | |
Research and development expenses: | | | | | | | |
Government sponsored product development | | | | | 624,215 | | |
Consulting services | | | | | 31,234 | | |
Non-sponsored research and development | | | | | 8,542,309 | | |
In-process research and development | | | | | 11,809,631 | | |
Total research and development expenses | | | | | 21,007,389 | | |
General and administrative expenses | | | | | 3,794,028 | | |
Total operating expenses | | | | | 24,801,417 | | |
Operating loss | | | | | (23,796,471) | | |
Other expense | | | | | | | |
Interest expense | | | | | (108,631) | | |
Foreign currency transaction loss | | | | | (1,785) | | |
Total other expense | | | | | (110,416) | | |
Loss before income taxes | | | | | (23,906,887) | | |
Income tax benefit | | | | | — | | |
Net loss | | | | $ | (23,906,887) | | |
Other comprehensive loss | | | | | | | |
Currency translation adjustment | | | | | (2,757) | | |
Comprehensive loss | | | | $ | (23,909,644) | | |
| | | Preferred Equity | | | | Stockholders’ Deficit | | ||||||||||||||||||||||||||||||||||||||||||
| | | Preferred Stock – Series X | | | | Common Stock | | | Additional Paid-in Capital | | | Accumulated Deficit | | | Accumulated Other Comprehensive Loss | | | Total | | ||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||
Series X preferred stock, net of issuance costs | | | | | 5 | | | | | $ | 12,527,164 | | | | | | | — | | | | | $ | — | | | | | $ | 1,422,836 | | | | | $ | — | | | | | $ | — | | | | | $ | 1,422,836 | | |
Preferred shareholder contributions, net of issuance costs | | | | | — | | | | | | 13,905,708 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Preferred shares modification | | | | | — | | | | | | 7,151,040 | | | | | | | — | | | | | | — | | | | | | (1,481,844) | | | | | | (5,669,196) | | | | | | — | | | | | | (7,151,040) | | |
Stock-based compensation | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 59,008 | | | | | | — | | | | | | — | | | | | | 59,008 | | |
Issuance of common stock | | | | | — | | | | | | — | | | | | | | 3,536,000 | | | | | | 3,536 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,536 | | |
Currency translation adjustment | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,757) | | | | | | (2,757) | | |
Net loss | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (23,906,887) | | | | | | — | | | | | | (23,906,887) | | |
Balances at December 31, 2021 | | | | | 5 | | | | | $ | 33,583,912 | | | | | | | 3,536,000 | | | | | $ | 3,536 | | | | | $ | — | | | | | $ | (29,576,083) | | | | | $ | (2,757) | | | | | $ | (29,575,304) | | |
| | | 2021 | | |||
Cash flows from operating activities | | | | | | | |
Net loss | | | | $ | (23,906,887) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | |
Amortization of acquisition obligation discount | | | | | 109,223 | | |
Amortization of right-of-use asset | | | | | 12,609 | | |
Non-cash expense in connection with asset acquisition | | | | | 6,918,772 | | |
Foreign currency transaction loss | | | | | (2,721) | | |
Stock-based compensation | | | | | 59,008 | | |
Changes in operating assets and liabilities: | | | | | | | |
Accounts receivable | | | | | (237,177) | | |
Unbilled accounts receivable | | | | | 361,713 | | |
Funding receivable | | | | | (6,315,637) | | |
Prepaid expenses and other current assets | | | | | (715,638) | | |
Accounts payable | | | | | (83,951) | | |
Accrued expenses and other liabilities | | | | | 1,254,875 | | |
Operating lease liability, net | | | | | (12,609) | | |
Net cash used in operating activities | | | | | (22,558,420) | | |
Cash flows from investing activities | | | | | | | |
Purchase of intangible asset | | | | | (165,600) | | |
Net cash used in investing activities | | | | | (165,600) | | |
Cash flows from financing activities | | | | | | | |
Proceeds from issuance of preferred stock, net | | | | | 27,855,708 | | |
Proceeds from issuance of common stock | | | | | 3,536 | | |
Net cash provided by financing activities | | | | | 27,859,244 | | |
Net change in cash, cash equivalents, and restricted cash | | | | | 5,135,224 | | |
Cash and cash equivalents | | | | | | | |
Consolidated cash and restricted cash at beginning of year | | | | | — | | |
Consolidated cash and restricted cash at end of year | | | | $ | 5,135,224 | | |
Supplemental disclosure of cash flow information | | | | | | | |
Cash paid for interest | | | | $ | — | | |
Supplemental disclosure of noncash investing and financing activities | | | | | | | |
Preferred stock modification dividend | | | | $ | 7,151,040 | | |
| | | 2021 | | |||
Cash and cash equivalents | | | | $ | 5,010,224 | | |
Restricted cash | | | | | 125,000 | | |
Total cash, cash equivalents, and restricted cash | | | | $ | 5,135,224 | | |
(In thousands) | | | | | | | |
Common stock issued to Aceragen stockholders | | | | $ | 2,809 | | |
Series Z issued to Aceragen stockholders (Note 9) | | | | | 25,085 | | |
Series X liability in connection with Aceragen Acquisition (Note 8) | | | | | 31,900 | | |
Stock options, restricted stock and warrants allocated to consideration paid | | | | | 5,822 | | |
Total Consideration paid | | | | $ | 65,616 | | |
(In thousands) | | | | | | | |
Assets acquired: | | | | | | | |
Cash and cash equivalents | | | | $ | 5,482 | | |
Receivables | | | | | 1,914 | | |
Prepaid expenses and other assets | | | | | 575 | | |
In-process research and development assets | | | | | 71,600 | | |
Goodwill | | | | | 11,100 | | |
| | | | $ | 90,671 | | |
Liabilities assumed: | | | | | | | |
Accounts Payable and accrued expenses | | | | $ | 7,886 | | |
Acquisition Obligation (Note 7) | | | | | 7,546 | | |
Operating lease liabilities | | | | | 22 | | |
Deferred tax liabilities | | | | | 9,601 | | |
| | | | $ | 25,055 | | |
Net assets acquired | | | | $ | 65,616 | | |
(In thousands) | | | Acquisition Date Fair Value | | | Impairment | | | Carrying Value as of December 31, 2022 | | |||||||||
ACG-701 for Cystic Fibrosis | | | | $ | 50,700 | | | | | $ | — | | | | | $ | 50,700 | | |
ACG-701 for Melioidosis | | | | | 14,900 | | | | | | — | | | | | | 14,900 | | |
ACG-801 for Farber Disease | | | | | 6,000 | | | | | | — | | | | | | 6,000 | | |
Total in-process research and development costs (IPR&D) | | | | $ | 71,600 | | | | | $ | — | | | | | $ | 71,600 | | |
| | | 2021 | | |||
Prepaid materials | | | | $ | 614,319 | | |
Prepaid licenses | | | | | 61,581 | | |
Prepaid research fees | | | | | 37,013 | | |
Prepaid insurance | | | | | 23,984 | | |
Prepaid rent | | | | | 11,352 | | |
Other | | | | | 50,127 | | |
Total prepaid expenses and other current assets | | | | $ | 798,376 | | |
| | | 2021 | | |||
2022 | | | | $ | 47,502 | | |
2023 | | | | | 47,502 | | |
2024 | | | | | 11,876 | | |
Total lease payments | | | | $ | 106,880 | | |
Less: imputed interest | | | | | (10,668) | | |
Total operating lease liabilities | | | | $ | 96,212 | | |
| | | December 31, | | |||||||||
(In thousands) | | | 2022 | | | 2021 | | ||||||
Net revenues | | | | $ | 18,196 | | | | | $ | 1,005 | | |
Net (loss) income | | | | $ | (35,379) | | | | | $ | 80,502 | | |
| | | December 31, 2022 | | |||||||||||||||||||||
(In thousands) | | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash | | | | $ | 3,342 | | | | | $ | 3,342 | | | | | $ | — | | | | | $ | — | | |
Cash equivalents – money market funds | | | | | 8,702 | | | | | | 8,702 | | | | | | — | | | | | | — | | |
Total assets | | | | $ | 12,044 | | | | | $ | 12,044 | | | | | $ | — | | | | | $ | — | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Warrant liability | | | | $ | 2,819 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,819 | | |
Series X Preferred Stock liability | | | | | 34,300 | | | | | | — | | | | | | — | | | | | | 34,300 | | |
Total liabilities | | | | $ | 37,119 | | | | | $ | — | | | | | $ | — | | | | | $ | 37,119 | | |
| | | December 31, 2021 | | |||||||||||||||||||||
(In thousands) | | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash | | | | $ | 250 | | | | | $ | 250 | | | | | $ | — | | | | | $ | — | | |
Cash equivalents – money market funds | | | | | 32,295 | | | | | | 32,295 | | | | | | — | | | | | | — | | |
Total assets | | | | $ | 32,545 | | | | | $ | 32,545 | | | | | $ | — | | | | | $ | — | | |
(In thousands) | | | Warrant Liability | | | Series X Preferred Stock Liability | | ||||||
Balance, December 31, 2021 | | | | $ | — | | | | | $ | — | | |
Issuance in connection with the Aceragen Acquisition | | | | | 3,180 | | | | | | 31,900 | | |
Change in fair value | | | | | (361) | | | | | | 2,400 | | |
Balance, December 31, 2022 | | | | $ | 2,819 | | | | | $ | 34,300 | | |
| | | December 31, 2022 | | |||
Risk-free interest rate | | | | | 4.09% | | |
Expected dividend yield | | | | | — | | |
Expected term (years) | | | | | 4.1 | | |
Expected volatility | | | | | 104% | | |
Stock price (common stock) | | | | $ | 5.95 | | |
Discount rate applied to preferred shares | | | | | 15% | | |
Exercise price (per share) | | | | $ | 7.82 | | |
($ in thousands) | | | December 31, 2022 | | | December 31, 2021 | | ||||||
Leasehold improvements | | | | $ | 107 | | | | | $ | 107 | | |
Equipment and other | | | | | 712 | | | | | | 712 | | |
Total property and equipment, at cost | | | | $ | 819 | | | | | $ | 819 | | |
Less: Accumulated depreciation and amortization | | | | | 812 | | | | | | 797 | | |
Property and equipment, net | | | | $ | 7 | | | | | $ | 22 | | |
($ in thousands) | | | December 31, 2022 | | | December 31, 2021 | | ||||||
Payroll and related costs | | | | $ | 1,886 | | | | | $ | 477 | | |
Clinical and nonclinical trial expenses | | | | | 2,106 | | | | | | 2,909 | | |
Professional and consulting fees | | | | | 1,637 | | | | | | 591 | | |
Restructuring and other costs (Note 13) | | | | | 2,327 | | | | | | — | | |
Acquisition-related costs | | | | | 1,666 | | | | | | — | | |
Other | | | | | 289 | | | | | | 111 | | |
Total accrued expenses | | | | $ | 9,911 | | | | | $ | 4,088 | | |
| | | Number of Warrants | | | | | | | | | | | |||||||||
Description | | | December 31, 2022 | | | December 31, 2021 | | | Weighted-Average Exercise Price | | | Expiration Date | | |||||||||
Equity-classified warrants: | | | | | | | | | | | | | | | | | | | | | | |
May 2013 warrants | | | | | 908 | | | | | | 908 | | | | | $ | 1.36 | | | | None | |
September 2013 warrants | | | | | 241 | | | | | | 241 | | | | | $ | 1.36 | | | | None | |
February 2014 warrants | | | | | 128 | | | | | | 128 | | | | | $ | 1.36 | | | | None | |
April 2020 Private Placement first closing warrants | | | | | 178,794 | | | | | | 178,794 | | | | | $ | 38.76 | | | | Apr 2023 | |
April 2020 Private Placement second closing warrants | | | | | 80,801 | | | | | | 80,801 | | | | | $ | 46.07 | | | | Dec 2023 | |
April 2020 Private Placement second closing warrants | | | | | — | | | | | | 67,260 | | | | | $ | 0.17 | | | | None | |
July 2020 Private Placement first closing warrants | | | | | — | | | | | | 22,925 | | | | | $ | 0.17 | | | | None | |
July 2020 Private Placement first closing warrants | | | | | 162,601 | | | | | | 162,601 | | | | | $ | 43.86 | | | | Jul 2023 | |
Assumed Legacy Aceragen common stock warrants | | | | | 79,596 | | | | | | — | | | | | $ | 7.82 | | | | Mar 2031 | |
| | | | | 503,069 | | | | | | 513,658 | | | | | | | | | | | |
Liability-classified warrants: | | | | | | | | | | | | | | | | | | | | | | |
Assumed Legacy Aceragen Series Z Warrants(1) | | | | | 14,215 | | | | | | — | | | | | $ | 460.00 | | | | Mar 2031 | |
| | | | | 14,215 | | | | | | — | | | | | | | | | | | |
Total outstanding | | | | | 517,284 | | | | | | 513,658 | | | | | | | | | | | |
| | | Number of Warrants | | | | | | | | |||||||||||||||
| | | Common Warrants | | | Series Z Warrants | | | Total | | | Weighted-Average Exercise Price(1) | | ||||||||||||
Outstanding at December 31, 2021 | | | | | 513,658 | | | | | | — | | | | | | 513,658 | | | | | $ | 21.76 | | |
Issued(2) | | | | | 79,596 | | | | | | 14,215 | | | | | | 93,811 | | | | | | 7.82 | | |
Exercised | | | | | (90,185) | | | | | | — | | | | | | (90,185) | | | | | | 0.17 | | |
Expired | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Outstanding at December 31, 2022 | | | | | 503,069 | | | | | | 14,215 | | | | | | 517,284 | | | | | $ | 17.58 | | |
| | | Year Ended December 31, | | |||||||||
(in thousands) | | | 2022 | | | 2021 | | ||||||
Stock-based compensation: | | | | | | | | | | | | | |
Research and development | | | | | | | | | | | | | |
Employee Stock Purchase Plan | | | | $ | 24 | | | | | $ | 28 | | |
Equity Incentive Plans | | | | | 258 | | | | | | 546 | | |
| | | | $ | 282 | | | | | $ | 574 | | |
General and administrative | | | | | | | | | | | | | |
Employee Stock Purchase Plan | | | | $ | 5 | | | | | $ | 3 | | |
Equity Incentive Plans | | | | | 1,901 | | | | | | 1,960 | | |
| | | | $ | 1,906 | | | | | $ | 1,963 | | |
Total stock-based compensation expense | | | | $ | 2,188 | | | | | $ | 2,537 | | |
| | | 2022 | | | 2021 | | ||||||
Average risk-free interest rate | | | | | 2.6% | | | | | | 0.4% | | |
Expected dividend yield | | | | | — | | | | | | — | | |
Expected lives (years) | | | | | 3.8 | | | | | | 3.6 | | |
Expected volatility | | | | | 104% | | | | | | 94% | | |
Weighted average exercise price (per share) | | | | $ | 8.34 | | | | | $ | 45.56 | | |
| | | Common Stock Options | | |||||||||||||||||||||
($ in thousands, except per share data) | | | Number of Options | | | Weighted-Average Exercise Price | | | Weighted-Average Remaining Contractual Life (in years) | | | Aggregate Intrinsic Value | | ||||||||||||
Outstanding at December 31, 2021 | | | | | 305,838 | | | | | $ | 137.08 | | | | | | 5.9 | | | | | $ | — | | |
Granted | | | | | 68,796 | | | | | | 8.34 | | | | | | | | | | | | | | |
Assumed in connection with Aceragen Acquisition | | | | | 111,038 | | | | | | 6.22 | | | | | | | | | | | | | | |
Exercised | | | | | — | | | | | | — | | | | | | | | | | | | | | |
Forfeited | | | | | (15,963) | | | | | | 3.27 | | | | | | | | | | | | | | |
Expired | | | | | (63,535) | | | | | | 148.30 | | | | | | | | | | | | | | |
Outstanding at December 31, 2022(1) | | | | | 406,174 | | | | | $ | 83.00 | | | | | | 6.1 | | | | | $ | 102 | | |
Exercisable at December 31, 2022 | | | | | 239,866 | | | | | $ | 132.26 | | | | | | 4.1 | | | | | $ | 54 | | |
| | | Preferred Stock Options | | |||||||||||||||||||||
($ in thousands, except per share data) | | | Number of Options | | | Weighted-Average Exercise Price | | | Weighted-Average Remaining Contractual Life (in years) | | | Aggregate Intrinsic Value | | ||||||||||||
Outstanding at December 31, 2021 | | | | | — | | | | | $ | — | | | | | | — | | | | | | — | | |
Assumed in connection with Aceragen Acquisition | | | | | 19,826 | | | | | | 365.96 | | | | | | | | | | | | | | |
Forfeited | | | | | (2,304) | | | | | | 130.00 | | | | | | | | | | | | | | |
Outstanding at December 31, 2022(1) | | | | | 17,522 | | | | | $ | 397.02 | | | | | | 9.1 | | | | | $ | 1,073 | | |
Exercisable at December 31, 2022 | | | | | 5,229 | | | | | $ | 317.43 | | | | | | 8.9 | | | | | $ | 568 | | |
| | | Time-based Awards | | | Market/Performance-based Awards | | ||||||||||||||||||
| | | Number of Shares | | | Weighted-Average Grant Date Fair Value | | | Number of Shares | | | Weighted-Average Grant Date Fair Value | | ||||||||||||
Nonvested shares at December 31, 2021 | | | | | 4,039 | | | | | $ | 39.10 | | | | | | 29,814 | | | | | $ | 26.14 | | |
Granted | | | | | 16,657 | | | | | | 6.79 | | | | | | — | | | | | | — | | |
Cancelled | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Vested | | | | | (1,600) | | | | | | 41.36 | | | | | | — | | | | | | — | | |
Nonvested shares at December 31, 2022 | | | | | 19,096 | | | | | $ | 10.73 | | | | | | 29,814 | | | | | $ | 26.14 | | |
| | | Number of Shares | | |||||||||
| | | Common Stock | | | Series Z | | ||||||
Nonvested shares at December 31, 2021 | | | | | — | | | | | | — | | |
Issued in connection with Aceragen Acquisition(1) | | | | | 16,763 | | | | | | 2,993 | | |
Cancelled | | | | | — | | | | | | — | | |
Vested | | | | | (1,331) | | | | | | (237) | | |
Nonvested shares at December 31, 2022 | | | | | 15,432 | | | | | | 2,756 | | |
December 31, | | | Operating Leases (in thousands) | | |||
2023 | | | | $ | 285 | | |
2024 | | | | | 240 | | |
2025 | | | | | 101 | | |
Total lease payments | | | | $ | 626 | | |
Less: imputed interest | | | | | (66) | | |
Total present value of lease liabilities | | | | $ | 560 | | |
(in thousands) | | | 2022 | | | 2021 | | ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Operating loss carryforwards | | | | $ | 94,356 | | | | | $ | 90,550 | | |
Tax credit carryforwards | | | | | 29,988 | | | | | | 28,226 | | |
Stock-based compensation | | | | | 4,959 | | | | | | 6,902 | | |
Capitalized research and development | | | | | 11,287 | | | | | | 7,818 | | |
Lease liabilities | | | | | 141 | | | | | | 220 | | |
Other | | | | | 459 | | | | | | 70 | | |
Total deferred tax assets | | | | $ | 141,190 | | | | | $ | 133,786 | | |
Deferred tax liabilities: | | | | | | | | | | | | | |
Right-of-use asset | | | | $ | (134) | | | | | $ | (213) | | |
In-process research and development intangible assets | | | | | (15,312) | | | | | | — | | |
Total deferred tax liabilities | �� | | | $ | (15,446) | | | | | $ | (213) | | |
Valuation allowance | | | | $ | (129,027) | | | | | $ | (133,573) | | |
Net deferred tax assets (liabilities) | | | | $ | (3,283) | | | | | $ | — | | |
| | | 2022 | | | 2021 | | ||||||
Expected federal income tax rate | | | | | (21.0)% | | | | | | (21.0)% | | |
State income taxes, net of federal benefit | | | | | 1.7 | | | | | | 2.1 | | |
Federal and state credits | | | | | (4.2) | | | | | | 1.7 | | |
Reduction of state income tax rate | | | | | 14.9 | | | | | | — | | |
Warrant and future tranche right revaluation gain | | | | | (0.3) | | | | | | 26.9 | | |
Series X revaluation loss | | | | | 1.7 | | | | | | — | | |
Stock-based compensation | | | | | 4.6 | | | | | | — | | |
Other | | | | | 1.7 | | | | | | (0.4) | | |
Change in valuation allowance | | | | | (20.4) | | | | | | (9.3) | | |
Effective tax rate | | | | | (21.3)% | | | | | | 0.0% | | |
(in thousands) | | | 2022 | | | 2021 | | ||||||
Current: | | | | | | | | | | | | | |
Federal | | | | $ | — | | | | | $ | — | | |
State | | | | | — | | | | | | — | | |
| | | | $ | — | | | | | $ | — | | |
Deferred: | | | | | | | | | | | | | |
Federal | | | | $ | (6,318) | | | | | $ | — | | |
State | | | | | — | | | | | | — | | |
| | | | $ | (6,318) | | | | | $ | — | | |
Total Income Tax Benefit | | | | $ | (6,318) | | | | | $ | — | | |
| | | Incentive Stock Options | | | Nonqualified Stock Options | | ||||||||||||||||||
| | | Number of Shares | | | Weighted Average Exercise Prices | | | Number of Shares | | | Weighted Average Exercise Prices | | ||||||||||||
Outstanding at December 31, 2020 | | | | | — | | | | | | | | | | | | — | | | | | | | | |
Granted | | | | | 244,240 | | | | | $ | 3.07 | | | | | | 70,760 | | | | | $ | 3.07 | | |
Exercised | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Forfeited | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Outstanding at December 31, 2021 | | | | | 244,240 | | | | | $ | — | | | | | | 70,760 | | | | | $ | — | | |
Exercisable at December 31, 2021 | | | | | — | | | | | | | | | | | | 6,250 | | | | | | | | |
| | | Amounts | | |||
Years Ending December 31 | | | | | | | |
2022 | | | | $ | 6,366,684 | | |
2023 | | | | | 1,500,000 | | |
Total | | | | | 7,866,684 | | |
Less: Unamortized acquisition discount | | | | | (578,589) | | |
Total acquisition obligation | | | | $ | 7,288,095 | | |
| | | 2021 | | |||
Deferred tax assets | | | | | | | |
Tax loss carryforwards | | | | $ | 3,041,100 | | |
Tax credits | | | | | 391,500 | | |
Stock Compensation | | | | | 10,400 | | |
Intangible asset | | | | | 388,300 | | |
Total deferred tax assets | | | | | 3,831,300 | | |
Valuation allowance | | | | | (3,698,400) | | |
Net deferred tax assets | | | | | 132,900 | | |
Deferred tax liabilities | | | | | | | |
Debt discount | | | | | (132,900) | | |
Total deferred tax liabilities | | | | | (132,900) | | |
Net deferred tax assets | | | | $ | — | | |
| | | 2021 | | |||||||||
| | | Amount | | | Pretax Earnings | | ||||||
U.S. federal tax at statutory rate | | | | $ | (5,020,400) | | | | | | 21.0% | | |
State taxes, net of federal benefit | | | | | (455,300) | | | | | | 1.9% | | |
Non-deductible expenses | | | | | 4,500 | | | | | | 0.0% | | |
Non-deductible IPR&D expense | | | | | 2,351,200 | | | | | | (9.9)% | | |
Foreign rate differential | | | | | 33,700 | | | | | | (0.1)% | | |
Credits | | | | | (391,500) | | | | | | 1.6% | | |
Other | | | | | 100 | | | | | | 0.0% | | |
Change in valuation allowance | | | | | 3,477,700 | | | | | | (14.5)% | | |
Provision (benefit) for income taxes | | | | $ | — | | | | | | 0.0% | | |
| | | Year Ended December 31, | | |||||||||
($ in thousands except share and per share data) | | | 2022 | | | 2021 | | ||||||
Net (loss) income per share – Basic: | | | | | | | | | | | | | |
Net (loss) income | | | | $ | (23,360) | | | | | $ | 98,091 | | |
Less: Undistributed earnings to preferred stockholders | | | | | — | | | | | | (1,150) | | |
Net (loss) income applicable to common stockholders – basic | | | | $ | (23,360) | | | | | $ | 96,941 | | |
Numerator for basic net (loss) income applicable to common stockholders | | | | $ | (23,360) | | | | | $ | 96,941 | | |
Denominator for basic net (loss) income applicable to common stockholders | | | | | 3,255,648 | | | | | | 2,894,287 | | |
Net (loss) income applicable to common stockholders – basic | | | | $ | (7.18) | | | | | $ | 33.49 | | |
Net (loss) income per share – Diluted: | | | | | | | | | | | | | |
Net (loss) income applicable to common holders – basic | | | | $ | (23,360) | | | | | $ | 96,941 | | |
Less: Warrant revaluation gain applicable to dilutive liability-classified warrants | | | | | — | | | | | | (6,983) | | |
Less: Future tranche right revaluation gain applicable to dilutive liability-classified future tranche rights | | | | | — | | | | | | (118,803) | | |
Numerator for diluted net (loss) income applicable to common stockholders | | | | $ | (23,360) | | | | | $ | (28,845) | | |
Denominator for basic net (loss) income applicable to common stockholders | | | | | 3,255,648 | | | | | | 2,894,287 | | |
Plus: Incremental shares underlying “in the money” liability-classified warrants outstanding | | | | | — | | | | | | 5,492 | | |
Plus: Incremental shares underlying “in the money” liability-classified future tranche rights outstanding | | | | | — | | | | | | 48,880 | | |
Denominator for diluted net income (loss) applicable to common stockholders | | | | | 3,255,648 | | | | | | 2,948,659 | | |
Net (loss) income applicable to common stockholders – diluted | | | | $ | (7.18) | | | | | $ | (9.78) | | |
| | | Year Ended December 31, | | |||||||||
| | | 2022 | | | 2021 | | ||||||
Common stock options | | | | | 406,174 | | | | | | 306,000 | | |
Preferred stock options | | | | | 1,030,693 | | | | | | — | | |
Restricted stock units and restricted stock awards | | | | | 226,460 | | | | | | 33,865 | | |
Common stock warrants | | | | | 503,069 | | | | | | 513,661 | | |
Preferred stock warrants | | | | | 836,176 | | | | | | — | | |
Convertible preferred stock | | | | | 4,582,364 | | | | | | 14 | | |
Total | | | | | 7,584,936 | | | | | | 853,540 | | |
(In thousands, except share and per share amounts) | | | March 31, 2023 | | | December 31, 2022* | | ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 2,118 | | | | | $ | 12,044 | | |
Accounts receivable | | | | | 2,203 | | | | | | 4,208 | | |
Prepaid expenses and other current assets | | | | | 1,315 | | | | | | 1,611 | | |
Total current assets | | | | | 5,636 | | | | | | 17,863 | | |
Property and equipment, net | | | | | 4 | | | | | | 7 | | |
Intangible assets | | | | | 67,000 | | | | | | 71,600 | | |
Goodwill | | | | | 4,629 | | | | | | 11,100 | | |
Operating lease right-of-use assets | | | | | 471 | | | | | | 537 | | |
Other assets | | | | | 752 | | | | | | — | | |
Total assets | | | | $ | 78,492 | | | | | $ | 101,107 | | |
LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable | | | | $ | 3,409 | | | | | $ | 5,200 | | |
Accrued expenses | | | | | 7,198 | | | | | | 9,911 | | |
Acquisition obligation, net | | | | | 6,300 | | | | | | 6,078 | | |
Operating lease liability | | | | | 223 | | | | | | 234 | | |
Other current liability | | | | | 733 | | | | | | — | | |
Total current liabilities | | | | | 17,863 | | | | | | 21,423 | | |
Warrant liability | | | | | — | | | | | | 2,819 | | |
Series X preferred stock liability (includes 5 shares of Series X convertible preferred stock, $0.01 par value per share issued and outstanding as December 31, 2022 – Note 6) | | | | | 34,800 | | | | | | 34,300 | | |
Operating lease liability, net of current portion | | | | | 271 | | | | | | 326 | | |
Deferred tax liability | | | | | 3,010 | | | | | | 3,283 | | |
Other liabilities | | | | | — | | | | | | 22 | | |
Total liabilities | | | | | 55,944 | | | | | | 62,173 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Preferred stock, $0.01 par value, Authorized – 5,000,000 shares: | | | | | | | | | | | | | |
Series Z convertible redeemable preferred stock (Note 8); Designated – 150,000 shares, Issued and outstanding – 0 and 77,900 shares at March 31, 2023 and December 31, 2022, respectively | | | | | — | | | | | | 27,108 | | |
Stockholders’ equity: | | | | | | | | | | | | | |
Preferred stock, $0.01 par value, Authorized – 5,000,000 shares: | | | | | | | | | | | | | |
Series A convertible preferred stock; Designated – 1,500,000 shares; Issued and outstanding – 655 shares | | | | | — | | | | | | — | | |
Series B preferred stock; Designated – 200,000 shares; Issued and outstanding – 0 and 62,355 shares at March 31, 2023 and December 31, 2022, respectively | | | | | — | | | | | | 1 | | |
Common stock, $0.001 par value, Authorized – 140,000,000 shares; Issued and outstanding – 8,346,949 and 3,653,685 shares at March 31, 2023 and December 31, 2022, respectively | | | | | 8 | | | | | | 4 | | |
Additional paid-in capital | | | | | 803,251 | | | | | | 770,663 | | |
Accumulated deficit | | | | | (780,688) | | | | | | (758,821) | | |
Accumulated other comprehensive income (loss) | | | | | (23) | | | | | | (21) | | |
Total stockholders’ equity | | | | | 22,548 | | | | | | 11,826 | | |
Total liabilities, convertible redeemable preferred stock, and stockholders’ equity | | | | $ | 78,492 | | | | | $ | 101,107 | | |
| | | Three Months Ended March 31, | | |||||||||
(In thousands, except share and per share amounts) | | | 2023 | | | 2022 | | ||||||
Government contracts revenue | | | | $ | 2,470 | | | | | $ | — | | |
Operating expenses: | | | | | | | | | | | | | |
Research and development | | | | | 4,993 | | | | | | 1,784 | | |
General and administrative | | | | | 4,920 | | | | | | 2,398 | | |
Goodwill and intangible assets impairment | | | | | 11,071 | | | | | | — | | |
Restructuring and other costs | | | | | 1,300 | | | | | | — | | |
Acquisition-related costs | | | | | 794 | | | | | | — | | |
Total operating expenses | | | | | 23,078 | | | | | | 4,182 | | |
Loss from operations | | | | | (20,608) | | | | | | (4,182) | | |
Other income (expense): | | | | | | | | | | | | | |
Interest income (expense), net | | | | | (185) | | | | | | 3 | | |
Warrant revaluation loss | | | | | (874) | | | | | | — | | |
Series X preferred stock liability loss | | | | | (500) | | | | | | — | | |
Foreign currency exchange and other gain (loss), net | | | | | 27 | | | | | | 1 | | |
Loss before income tax benefit | | | | $ | (22,140) | | | | | $ | (4,178) | | |
Income tax benefit | | | | | 273 | | | | | | — | | |
Net loss | | | | $ | (21,867) | | | | | $ | (4,178) | | |
Net loss per share applicable to common stockholders – Basic and Diluted | | | | $ | (2.94) | | | | | $ | (1.34) | | |
Weighted-average number of common shares used in computing net loss per share applicable to common stockholders – Basic and Diluted | | | | | 7,448,799 | | | | | | 3,111,354 | | |
Comprehensive loss: | | | | | | | | | | | | | |
Net loss | | | | $ | (21,867) | | | | | $ | (4,178) | | |
Other comprehensive income (loss), net of tax: | | | | | | | | | | | | | |
Foreign currency translation | | | | | (2) | | | | | | — | | |
Total other comprehensive (loss) income, net of tax | | | | | (2) | | | | | | — | | |
Total comprehensive loss | | | | $ | (21,869) | | | | | $ | (4,178) | | |
| | | Three Months Ended March 31, | | |||||||||
(In thousands) | | | 2023 | | | 2022 | | ||||||
Cash Flows from Operating Activities: | | | | | | | | | | | | | |
Net loss | | | | $ | (21,867) | | | | | $ | (4,178) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Stock-based compensation | | | | | 1,231 | | | | | | 545 | | |
Foreign currency translation | | | | | (9) | | | | | | — | | |
Goodwill and intangible assets impairment | | | | | 11,071 | | | | | | — | | |
Warrant revaluation loss | | | | | 874 | | | | | | — | | |
Series X preferred stock liability loss | | | | | 500 | | | | | | — | | |
Issuance of common stock for services rendered | | | | | 15 | | | | | | 22 | | |
Accretion of discounts on acquisition obligation | | | | | 222 | | | | | | — | | |
Depreciation and amortization expense | | | | | 3 | | | | | | 4 | | |
Deferred tax benefit | | | | | (273) | | | | | | — | | |
Changes in operating assets and liabilities | | | | | | | | | | | | | |
Accounts receivable | | | | | 2,005 | | | | | | — | | |
Prepaid expenses and other assets | | | | | 449 | | | | | | 124 | | |
Accounts payable, accrued expenses, and other liabilities | | | | | (3,826) | | | | | | (1,086) | | |
Other | | | | | (247) | | | | | | 1 | | |
Net cash used in operating activities | | | | | (9,852) | | | | | | (4,568) | | |
Cash Flows from Financing Activities: | | | | | | | | | | | | | |
Proceeds from employee stock purchases | | | | | — | | | | | | 16 | | |
Proceeds from exercise of stock options | | | | | 88 | | | | | | — | | |
Payments on seller-financed purchases | | | | | (170) | | | | | | — | | |
Other | | | | | 8 | | | | | | — | | |
Net cash (used in) provided by financing activities | | | | | (74) | | | | | | 16 | | |
Net decrease in cash and cash equivalents | | | | | (9,926) | | | | | | (4,552) | | |
Cash and cash equivalent, beginning of period | | | | | 12,044 | | | | | | 32,545 | | |
Cash and cash equivalents, end of period | | | | $ | 2,118 | | | | | $ | 27,993 | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
Cash paid for interest | | | | $ | — | | | | | $ | 5 | | |
Supplemental disclosure of non-cash financing and investing activities: | | | | | | | | | | | | | |
Offering costs in accrued expenses | | | | $ | — | | | | | $ | 15 | | |
Non-cash seller-financed purchases | | | | $ | 903 | | | | | $ | — | | |
| | | Three Months Ended March 31, 2023 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Series Z Preferred | | | | Series B Preferred | | | Common Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | Other Comprehensive Income (Loss) | | | Total Stockholders’ Equity | | |||||||||||||||||||||||||||||||||||||||
(In thousands, except share and per share amounts) | | | Number of Shares | | | $0.01 Par Value | | | | Number of Shares | | | $0.01 Par Value | | | Number of Shares | | | $0.001 Par Value | | ||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2022 | | | | | 77,900 | | | | | $ | 27,108 | | | | | | | 62,355 | | | | | $ | 1 | | | | | | 3,653,685 | | | | | $ | 4 | | | | | $ | 770,663 | | | | | $ | (758,821) | | | | | $ | (21) | | | | | $ | 11,826 | | |
Vesting of restricted stock awards | | | | | 47 | | | | | | — | | | | | | | — | | | | | | — | | | | | | 6,386 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock under equity incentive plan upon vesting of restricted stock units and exercise of options | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 55,891 | | | | | | — | | | | | | 88 | | | | | | — | | | | | | — | | | | | | 88 | | |
Issuance of common stock under equity incentive plan for retention payments | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 43,900 | | | | | | — | | | | | | 456 | | | | | | — | | | | | | — | | | | | | 456 | | |
Issuance of common stock for services rendered | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 1,972 | | | | | | — | | | | | | 15 | | | | | | — | | | | | | — | | | | | | 15 | | |
Conversion of Series Z Preferred Stock to common stock, net of unvested portion, and redemption of Series B Preferred Stock | | | | | (77,947) | | | | | | (27,108) | | | | | | | (62,355) | | | | | | (1) | | | | | | 4,585,115 | | | | | | 4 | | | | | | 27,105 | | | | | | — | | | | | | — | | | | | | 27,108 | | |
Reclassification of warrant liability upon conversion of Series Z Preferred Stock warrants to common stock warrants | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,693 | | | | | | — | | | | | | — | | | | | | 3,693 | | |
Stock-based compensation | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,231 | | | | | | — | | | | | | — | | | | | | 1,231 | | |
Foreign currency translation | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2) | | | | | | (2) | | |
Net loss | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (21,867) | | | | | | — | | | | | | (21,867) | | |
Balance, March 31, 2023 | | | | | — | | | | | $ | — | | | | | | | — | | | | | $ | — | | | | | | 8,346,949 | | | | | $ | 8 | | | | | $ | 803,251 | | | | | $ | (780,688) | | | | | $ | (23) | | | | | $ | 22,548 | | |
| | | Three Months Ended March 31, 2022 | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Series Z Preferred | | | | Series B Preferred | | | Common Stock | | | Additional Paid-In Capital | | | Accumulated Deficit | | | Other Comprehensive Income (Loss) | | | Total Stockholders’ Equity | | |||||||||||||||||||||||||||||||||||||||
(In thousands, except share and per share amounts) | | | Number of Shares | | | $0.01 Par Value | | | | Number of Shares | | | $0.01 Par Value | | | Number of Shares | | | $0.001 Par Value | | ||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | | | | | — | | | | | $ | — | | | | | | | — | | | | | $ | — | | | | | | 3,106,947 | | | | | $ | 3 | | | | | $ | 764,911 | | | | | $ | (735,461) | | | | | $ | — | | | | | $ | 29,453 | | |
Sale of common stock, net of issuance costs | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (15) | | | | | | — | | | | | | — | | | | | | (15) | | |
Issuance of common stock under employee stock purchase plan | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 2,482 | | | | | | — | | | | | | 16 | | | | | | — | | | | | | — | | | | | | 16 | | |
Issuance of common stock under equity incentive plan upon vesting of restricted stock units | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 1,600 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock for services rendered | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 2,180 | | | | | | — | | | | | | 22 | | | | | | — | | | | | | — | | | | | | 22 | | |
Stock-based compensation | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 545 | | | | | | — | | | | | | — | | | | | | 545 | | |
Net loss | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (4,178) | | | | | | — | | | | | | (4,178) | | |
Balance, March 31, 2022 | | | | | — | | | | | $ | — | | | | | | | — | | | | | $ | — | | | | | | 3,113,209 | | | | | $ | 3 | | | | | $ | 765,479 | | | | | $ | (739,639) | | | | | $ | — | | | | | $ | 25,843 | | |
The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements — Going Concern, which requires management to assess the Company’s ability to continue as a going concern within one year after the date the condensed consolidated financial statements are issued. The Company has incurred substantial losses and negative cash flows from operations since its inception and had an accumulated deficit of $780.7 million as of March 31, 2023. The Company’s cash and cash equivalents balance of $2.1 million as of March 31, 2023 is not sufficient to fund its operations for the one-year period after the date that the condensed consolidated financial statements were issued. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Funding for Future Operations Management has evaluated different strategies to obtain the required funding for future operations. Despite its efforts, the Company has been unsuccessful in securing additional capital to fund operations, restructure its outstanding debt and otherwise satisfy creditor obligations. As further discussed in Note 15, on April 28, 2023, the Company’s Board of Directors (the “Board”) approved a reduction in workforce in which approximately 80% of the Company’s employees were terminated, effective immediately. This reduction in workforce required the Company to cease development of ACG-701 (patented formulation of sodium fusidate) for Cystic Fibrosis Pulmonary Exacerbations and ACG-801 (recombinant human acid ceramidase (rhAC)) for Farber Disease. Currently, the Company continues to develop only ACG-701 for Melioidosis subsequent to the reduction in workforce. | |||||||
| | | As of | | |||||||||
| | | June 30, 2022 | | | December 31, 2021 | | ||||||
| | | | | | | | | (audited) | | |||
Assets | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 7,934,183 | | | | | $ | 5,010,224 | | |
Restricted cash | | | | | 125,000 | | | | | | 125,000 | | |
Accounts receivable | | | | | 1,312,248 | | | | | | 268,166 | | |
Unbilled accounts receivable | | | | | 1,451,330 | | | | | | 328,012 | | |
Funding receivable | | | | | 701,249 | | | | | | 6,315,637 | | |
Prepaid expenses and other current assets | | | | | 564,128 | | | | | | 798,376 | | |
Total current assets | | | | | 12,088,138 | | | | | | 12,845,415 | | |
Operating lease right-of-use asset | | | | | 32,740 | | | | | | 96,212 | | |
Intangible asset | | | | | 165,600 | | | | | | 165,600 | | |
Total assets | | | | $ | 12,286,478 | | | | | $ | 13,107,227 | | |
Liabilities and Stockholders’ Deficit | | | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | |
Accounts payable | | | | $ | 2,488,899 | | | | | $ | 313,355 | | |
Accrued expenses | | | | | 307,782 | | | | | | 75,115 | | |
Accrued placement fee | | | | | 49,087 | | | | | | 442,095 | | |
Accrued bonuses | | | | | 688,579 | | | | | | 883,747 | | |
Operating lease liability | | | | | 32,740 | | | | | | 40,323 | | |
Acquisition obligation, less unamortized discount of $250,919 and $567,765 as of June 30, 2022 and December 31, 2021 | | | | | 7,615,765 | | | | | | 5,798,919 | | |
Total current liabilities | | | | | 11,182,852 | | | | | | 7,553,554 | | |
Operating lease liability, less current portion | | | | | — | | | | | | 55,889 | | |
Acquisition obligation, less current portion, less unamortized discount of $0 and $10,824 as of June 30, 2022 and December 31, 2021 | | | | | — | | | | | | 1,489,176 | | |
Total liabilities | | | | | 11,182,852 | | | | | | 9,098,619 | | |
Commitments and Contingencies (Note 6) | | | | | — | | | | | | — | | |
Preferred equity | | | | | | | | | | | | | |
Preferred stock, 5 shares authorized, $0.001 par value; 5 shares issued and outstanding with a liquidation preference of $38,134,262 as of June 30, 2022 | | | | | 38,134,262 | | | | | | 33,583,912 | | |
Stockholders’ deficit | | | | | | | | | | | | | |
Common stock, 10,000,000 shares authorized, $.001 par value; 3,536,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021 | | | | | 3,536 | | | | | | 3,536 | | |
Additional paid-in capital | | | | | 494,759 | | | | | | — | | |
Accumulated deficit | | | | | (37,525,332) | | | | | | (29,576,083) | | |
Accumulated other comprehensive loss | | | | | (3,599) | | | | | | (2,757) | | |
Total stockholders’ equity | | | | | (37,030,636) | | | | | | (29,575,304) | | |
Total liabilities, preferred equity and stockholders’ deficit | | | | $ | 12,286,478 | | | | | $ | 13,107,227 | | |
| | | Six Months Ended June 30, 2022 | | | Period from March 2, 2021 to June 30, 2021 | | ||||||
Revenues | | | | | | | | | | | | | |
Government sponsored product development | | | | $ | 8,393,491 | | | | | $ | — | | |
Non-government sponsored product development | | | | | 1,000,000 | | | | | | — | | |
Total revenues | | | | | 9,393,491 | | | | | | — | | |
Research and development expenses: | | | | | | | | | | | | | |
Government and non-government sponsored product development | | | | | 6,363,077 | | | | | | — | | |
Non-sponsored research and development | | | | | 7,377,712 | | | | | | 1,702,145 | | |
In-process research and development expenses | | | | | — | | | | | | 1,575,763 | | |
Total research and development expenses | | | | | 13,740,789 | | | | | | 3,277,908 | | |
General and administrative expenses | | | | | 3,233,282 | | | | | | 1,189,506 | | |
Total operating expenses | | | | | 16,974,071 | | | | | | 4,467,414 | | |
Operating loss | | | | | (7,580,580) | | | | | | (4,467,414) | | |
Other expense | | | | | | | | | | | | | |
Interest expense, net | | | | | (330,513) | | | | | | 157 | | |
Foreign currency transaction loss | | | | | (1,292) | | | | | | (523) | | |
Total other expense | | | | | (331,805) | | | | | | (366) | | |
Loss before income taxes | | | | | (7,912,385) | | | | | | (4,467,780) | | |
Provision for income taxes | | | | | (36,864) | | | | | | — | | |
Net loss | | | | | (7,949,249) | | | | | | (4,467,780) | | |
Other comprehensive loss | | | | | | | | | | | | | |
Currency translation adjustment | | | | | (842) | | | | | | 4,184 | | |
Comprehensive loss | | | | $ | (7,950,091) | | | | | $ | (4,463,596) | | |
| | | Preferred Equity | | | | Stockholders’ Deficit | | ||||||||||||||||||||||||||||||||||||||||||
| | | Preferred Stock — Series X | | | | Common Stock | | | Additional Paid-in Capital | | | Accumulated Deficit | | | Accumulated Other Comprehensive Income | | | Total Stockholders’ Equity | | ||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||
Balances at March 2, 2021 (Inception) | | | | | — | | | | | $ | — | | | | | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Series X preferred stock, net of issuance costs | | | | | 5 | | | | | | 12,527,167 | | | | | | | — | | | | | | — | | | | | | 1,422,836 | | | | | | — | | | | | | — | | | | | | 1,422,836 | | |
Preferred shareholder contributions, net of issuance costs | | | | | — | | | | | | 5,080,705 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Stock-based compensation | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 1,000 | | | | | | — | | | | | | — | | | | | | 1,000 | | |
Issuance of common stock | | | | | — | | | | | | — | | | | | | | 3,536,000 | | | | | | 3,536 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,536 | | |
Currency translation adjustment | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,184 | | | | | | 4,184 | | |
Net loss | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (4,467,780) | | | | | | — | | | | | | (4,467,780) | | |
Balances at June 30, 2021 | | | | | 5 | | | | | $ | 17,607,872 | | | | | | | 3,536,000 | | | | | $ | 3,536 | | | | | $ | 1,423,836 | | | | | $ | (4,467,780) | | | | | $ | 4,184 | | | | | $ | (3,036,224) | | |
| | | Preferred Equity | | | | Stockholders’ Deficit | | ||||||||||||||||||||||||||||||||||||||||||
| | | Preferred Stock — Series X | | | | Common Stock | | | Additional Paid-in Capital | | | Accumulated Deficit | | | Accumulated Other Comprehensive Income | | | Total Stockholders’ Equity | | ||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||
Balances at December 31, 2021 (audited) | | | | | 5 | | | | | $ | 33,583,912 | | | | | | | 3,536,000 | | | | | $ | 3,536 | | | | | $ | — | | | | | $ | (29,576,083) | | | | | $ | (2,757) | | | | | $ | (29,575,304) | | |
Preferred shareholder contributions, net of issuance costs | | | | | — | | | | | | 4,550,350 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | $ | — | | |
Stock-based compensation | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 494,759 | | | | | | — | | | | | | — | | | | | $ | 494,759 | | |
Currency translation adjustment | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (842) | | | | | $ | (842) | | |
Net loss | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (7,949,249) | | | | | | — | | | | | $ | (7,949,249) | | |
Balances at June 30, 2022 | | | | | 5 | | | | | $ | 38,134,262 | | | | | | | 3,536,000 | | | | | $ | 3,536 | | | | | $ | 494,759 | | | | | $ | (37,525,332) | | | | | $ | (3,599) | | | | | $ | (37,030,636) | | |
| | | Six Months Ended June 30, 2022 | | | Period from March 2, 2021 to June 30, 2021 | | ||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Net loss | | | | $ | (7,949,249) | | | | | $ | (4,467,780) | | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | | | | | | | | | | | | | |
Amortization of acquisition discount | | | | | 327,670 | | | | | | — | | |
Amortization of right-of-use asset | | | | | 19,511 | | | | | | — | | |
Foreign currency translation | | | | | 320 | | | | | | (4,757) | | |
Stock-based compensation | | | | | 494,759 | | | | | | 1,000 | | |
Changes in assets and liabilities, net of effects of acquisitions | | | | | | | | | | | | | |
Accounts receivable | | | | | (1,044,082) | | | | | | — | | |
Unbilled accounts receivable | | | | | (1,123,318) | | | | | | — | | |
Prepaid expenses and other current assets | | | | | 286,291 | | | | | | (50,010) | | |
Accounts payable | | | | | 2,103,318 | | | | | | 1,345,292 | | |
Accrued expenses and other liabilities | | | | | 68,969 | | | | | | (1,225,892) | | |
Operating lease liability, net | | | | | (19,511) | | | | | | — | | |
Net cash used in operating activities | | | | | (6,835,322) | | | | | | (4,402,147) | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Proceeds from Series X preferred stock transaction, net | | | | | 9,771,732 | | | | | | 16,342,061 | | |
Proceeds from issuance of common stock | | | | | — | | | | | | 3,536 | | |
Effects of exchange rate changes on cash | | | | | (12,451) | | | | | | 49 | | |
Net cash provided by financing activities | | | | | 9,759,281 | | | | | | 16,345,646 | | |
Net change in cash, cash equivalents, and restricted cash | | | | | 2,923,959 | | | | | | 11,943,499 | | |
Consolidated cash and restricted cash at beginning of period | | | | | 5,135,224 | | | | | | — | | |
Consolidated cash and restricted cash at end of period | | | | $ | 8,059,183 | | | | | $ | 11,943,499 | | |
Supplemental disclosure of cash flow information | | | | | | | | | | | | | |
Remeasurement of operating lease right-of-use asset for lease modification | | | | $ | 40,295 | | | | | $ | — | | |
Cash paid for interest | | | | | 3,914 | | | | | | — | | |
Accrued capital contributions, net of issuance costs | | | | | 652,162 | | | | | | 2,688,647 | | |
| | | Incentive Stock Options | | | Nonqualified Stock Options | | ||||||||||||||||||
| | | Number of Shares | | | Weighted Average Exercise Prices | | | Number of Shares | | | Weighted Average Exercise Prices | | ||||||||||||
Outstanding at December 31, 2021 (audited) | | | | | 244,240 | | | | | $ | 3.07 | | | | | | 70,760 | | | | | $ | 3.07 | | |
Granted | | | | | 225,741 | | | | | $ | 12.28 | | | | | | 308,759 | | | | | $ | 12.28 | | |
Exercised | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Forfeited | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Outstanding at June 30, 2022 | | | | | 469,981 | | | | | $ | 7.49 | | | | | | 379,519 | | | | | $ | 10.56 | | |
Exercisable at June 30, 2022 | | | | | 20,936 | | | | | $ | 3.07 | | | | | | 16,458 | | | | | $ | 3.07 | | |
| | | Amounts | | |||
Years Ending December 31 | | | | | | | |
2022 | | | | $ | 6,366,684 | | |
2023 | | | | | 1,500,000 | | |
Total | | | | | 7,866,684 | | |
Less: Unamortized acquisition discount | | | | | (250,919) | | |
Total acquisition obligation | | | | $ | 7,615,765 | | |
| | | Idera Pharmaceuticals, Inc. (Historical) | | | Aceragen, Inc. Historical for the Period from January 1, 2022 through September 28, 2022 | | | Transaction Accounting Adjustments | | | Notes | | | Pro Forma Combined | | |||||||||||||||
Government contracts revenue | | | | $ | 49 | | | | | $ | 13,209 | | | | | | — | | | | | | | | | | | $ | 13,258 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development | | | | | 5,960 | | | | | | 21,556 | | | | | | — | | | | | | | | | | | | 27,516 | | |
General and administrative | | | | | 7,325 | | | | | | 7,978 | | | | | | (2,966) | | | | | | A | | | | | | 12,337 | | |
Acquisition-related costs | | | | | 2,836 | | | | | | — | | | | | | (2,836) | | | | | | A | | | | | | — | | |
Restructuring and other costs | | | | | 2,802 | | | | | | — | | | | | | (2,802) | | | | | | A | | | | | | — | | |
Total operating expenses | | | | | 18,923 | | | | | | 29,534 | | | | | | (8,604) | | | | | | | | | | | | 39,853 | | |
Loss from operations | | | | | (18,874) | | | | | | (16,325) | | | | | | 8,604 | | | | | | | | | | | | (26,595) | | |
Non-operating income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest income (expense), net | | | | | 156 | | | | | | (482) | | | | | | (67) | | | | | | B | | | | | | (393) | | |
Warrant revaluation gain | | | | | 116 | | | | | | — | | | | | | (116) | | | | | | C | | | | | | — | | |
Foreign currency exchange and other gains (losses) | | | | | (21) | | | | | | (2) | | | | | | — | | | | | | | | | | | | (23) | | |
Change in fair value of Series X preferred stock liability | | | | | — | | | | | | — | | | | | | (1,536) | | | | | | D | | | | | | (1,536) | | |
Loss before income tax benefit | | | | | (18,623) | | | | | | (16,809) | | | | | | 6,885 | | | | | | | | | | | | (28,547) | | |
Income tax benefit | | | | | 6,039 | | | | | | (37) | | | | | | (6,039) | | | | | | E | | | | | | (37) | | |
Net loss | | | | $ | (12,584) | | | | | $ | (16,846) | | | | | $ | 846 | | | | | | | | | | | $ | (28,584) | | |
Net loss per share, basic and diluted | | | | $ | (0.24) | | | | | $ | (4.99) | | | | | | | | | | | | | | | | | $ | (0.26) | | |
Weighted average common shares outstanding, basic and diluted | | | | | 53,052 | | | | | | 3,373 | | | | | | 55,257 | | | | | | F | | | | | | 111,682 | | |
| | | Idera Pharmaceuticals, Inc. (Historical) | | | Aceragen, Inc. (Historical) | | | Arrevus, Inc. Historical for the Period from January 1, 2021 through October 24, 2021 | | | Other Transaction Accounting Adjustments | | | Notes | | | Pro Forma Aceragen, Inc. | | | Transaction Accounting Adjustments | | | Notes | | | Pro Forma Combined | | |||||||||||||||||||||||||||
Government contracts revenue | | | | $ | — | | | | | $ | 1,005 | | | | | $ | 2,867 | | | | | $ | — | | | | | | | | | | | $ | 3,872 | | | | | $ | — | | | | | | | | | | | $ | 3,872 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development | | | | | 16,375 | | | | | | 21,007 | | | | | | 2,010 | | | | | | — | | | | | | | | | | | | 23,017 | | | | | | — | | | | | | | | | | | | 39,392 | | |
General and administrative | | | | | 9,976 | | | | | | 3,794 | | | | | | 589 | | | | | | (104) | | | | | | A | | | | | | 4,279 | | | | | | — | | | | | | | | | | | | 14,255 | | |
Restructuring charge | | | | | 1,322 | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | — | | | | | | | | | | | | 1,322 | | |
Total operating expenses | | | | | 27,673 | | | | | | 24,801 | | | | | | 2,599 | | | | | | (104) | | | | | | | | | | | | 27,296 | | | | | | — | | | | | | | | | | | | 54,969 | | |
Loss from operations | | | | | (27,673) | | | | | | (23,796) | | | | | | 268 | | | | | | 104 | | | | | | | | | | | | (23,424) | | | | | | — | | | | | | | | | | | | (51,097) | | |
Non-operating income (expense): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest income (expense) | | | | | 2 | | | | | | (109) | | | | | | (36) | | | | | | 36 | | | | | | G | | | | | | (109) | | | | | | (89) | | | | | | B | | | | | | (196) | | |
Warrant revaluation gain | | | | | 6,983 | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | — | | | | | | | | | | | | 6,983 | | |
Future tranche right revaluation gain | | | | | 118,803 | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | — | | | | | | | | | | | | 118,803 | | |
Foreign currency exchange loss | | | | | (24) | | | | | | (2) | | | | | | — | | | | | | — | | | | | | | | | | | | (2) | | | | | | — | | | | | | | | | | | | (26) | | |
Change in fair value of Series X preferred stock liability | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | (2,734) | | | | | | D | | | | | | (2,734) | | |
Other income | | | | | — | | | | | | — | | | | | | 54 | | | | | | — | | | | | | | | | | | | 54 | | | | | | — | | | | | | | | | | | | 54 | | |
Net income (loss) before income tax benefit | | | | | 98,091 | | | | | | (23,907) | | | | | | 286 | | | | | | 140 | | | | | | | | | | | | (23,481) | | | | | | (2,823) | | | | | | | | | | | | 71,787 | | |
Income tax benefit | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | 6,039 | | | | | | E | | | | | | 6,039 | | |
Net income (loss) | | | | $ | 98,091 | | | | | $ | (23,907) | | | | | $ | 286 | | | | | $ | 140 | | | | | | | | | | | $ | (23,481) | | | | | $ | 3,216 | | | | | | | | | | | $ | 77,826 | | |
Undistributed earnings to preferred stockholders | | | | | (1,150) | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | — | | | | | | | | | | | | (1,150) | | |
Net income (loss) attributable to common stockholders | | | | $ | 96,941 | | | | | $ | (23,907) | | | | | $ | 286 | | | | | $ | 140 | | | | | | | | | | | $ | (23,481) | | | | | $ | 3,216 | | | | | | | | | | | $ | 76,676 | | |
Net income (loss) per share applicable to common stockholders | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | | $ | 1.97 | | | | | $ | (8.15) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 0.71 | | |
Diluted | | | | $ | (0.58) | | | | | $ | (8.15) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (0.67) | | |
Weighted-average number of common shares used in computing net income (loss) per share applicable to common stockholders | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | | | 49,203 | | | | | | 2,933 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 55,424 | | | | | | F | | | | | | 107,560 | | |
Diluted | | | | | 50,127 | | | | | | 2,933 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 55,424 | | | | | | F | | | | | | 108,484 | | |
Net loss – diluted | | | | | (28,845) | | | | | | (23,907) | | | | | | 286 | | | | | | 140 | | | | | | | | | | | | (23,481) | | | | | | 3,216 | | | | | | | | | | | | (72,591) | | |
(In thousands) | | | | | | | |
Common stock issued to Aceragen stockholders | | | | $ | 2,809 | | |
Series Z issued to Aceragen stockholders (Note 8) | | | | | 25,085 | | |
Series X liability in connection with Aceragen Acquisition (Note 6) | | | | | 31,900 | | |
Stock options, restricted stock and warrants allocated to consideration paid | | | | | 5,822 | | |
Total Consideration paid | | | | $ | 65,616 | | |
| Fair value of Idera common stock issued to Aceragen stockholders | | | | $ | 1,672 | | |
| Fair value of Idera Series Z convertible preferred stock issued to Aceragen stockholders | | | | | 26,971 | | |
| Fair value of Idera Series X preferred stock issued to Aceragen stockholders | | | | | 20,400 | | |
| Fair value of Aceragen stock options and warrants assumed and allocated to consideration paid | | | | | 6,670 | | |
| Total consideration paid | | | | $ | 55,713 | | |
| Assets acquired: | | | | | | | |
| Cash, cash equivalents and restricted cash | | | | $ | 5,482 | | |
| Receivables | | | | | 1,914 | | |
| Prepaid expenses and other assets | | | | | 575 | | |
| In-process research and development assets | | | | | 63,067 | | |
| Goodwill | | | | | 9,934 | | |
| | | | | | 80,972 | | |
| Liabilities assumed: | | | | | | | |
| Accounts payable and accrued expenses | | | | | 7,827 | | |
| Assumed debt obligations | | | | | 7,476 | | |
| Operating lease liabilities | | | | | 22 | | |
| Deferred tax liability | | | | | 9,934 | | |
| | | | | | 25,259 | | |
| Net assets acquired | | | | $ | 55,713 | | |
(In thousands) | | | | | | | |
Assets acquired: | | | | | | | |
Cash and cash equivalents | | | | $ | 5,482 | | |
Receivables | | | | | 1,914 | | |
Prepaid expenses and other assets | | | | | 575 | | |
In-process research and development assets | | | | | 71,600 | | |
Goodwill | | | | | 11,100 | | |
| | | | $ | 90,671 | | |
Liabilities assumed: | | | | | | | |
Accounts Payable and accrued expenses | | | | $ | 7,886 | | |
Acquisition Obligation (Note 7) | | | | | 7,546 | | |
Operating lease liabilities | | | | | 22 | | |
Deferred tax liabilities | | | | | 9,601 | | |
| | | | $ | 25,055 | | |
Net assets acquired | | | | $ | 65,616 | | |
(In thousands) | | | Acquisition Date Fair Value | | | Impairment | | | Carrying Value as of March 31, 2023 | | |||||||||
ACG-701 for Cystic Fibrosis | | | | $ | 50,700 | | | | | $ | (2,600) | | | | | $ | 48,100 | | |
ACG-701 for Melioidosis | | | | | 14,900 | | | | | | — | | | | | | 14,900 | | |
ACG-801 for Farber Disease | | | | | 6,000 | | | | | | (2,000) | | | | | | 4,000 | | |
Total in-process research and development costs (IPR&D) | | | | $ | 71,600 | | | | | $ | (4,600) | | | | | $ | 67,000 | | |
(In thousands) | | | March 31, 2022 | | |||
Net revenues | | | | $ | 5,688 | | |
Net loss | | | | $ | (7,354) | | |
| | | March 31, 2023 | | |||||||||||||||||||||
(In thousands) | | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash | | | | $ | 500 | | | | | $ | 500 | | | | | $ | — | | | | | $ | — | | |
Cash equivalents – money market funds | | | | | 1,618 | | | | | | 1,618 | | | | | | — | | | | | | — | | |
Total assets | | | | $ | 2,118 | | | | | $ | 2,118 | | | | | $ | — | | | | | $ | — | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Series X Preferred Stock liability | | | | $ | 34,800 | | | | | $ | — | | | | | $ | — | | | | | $ | 34,800 | | |
Total liabilities | | | | $ | 34,800 | | | | | $ | — | | | | | $ | — | | | | | $ | 34,800 | | |
| | | December 31, 2022 | | |||||||||||||||||||||
(In thousands) | | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | ||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash | | | | $ | 3,342 | | | | | $ | 3,342 | | | | | $ | — | | | | | $ | — | | |
Cash equivalents – money market funds | | | | | 8,702 | | | | | | 8,702 | | | | | | — | | | | | | — | | |
Total assets | | | | $ | 12,044 | | | | | $ | 12,044 | | | | | $ | — | | | | | $ | — | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Warrant liability | | | | $ | 2,819 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,819 | | |
Series X Preferred Stock liability | | | | | 34,300 | | | | | | — | | | | | | — | | | | | | 34,300 | | |
Total liabilities | | | | $ | 37,119 | | | | | $ | — | | | | | $ | — | | | | | $ | 37,119 | | |
(In thousands) | | | Warrant Liability | | | Series X Preferred Stock Liability | | ||||||
Balance, December 31, 2022 | | | | $ | 2,819 | | | | | $ | 34,300 | | |
Change in fair value | | | | | 874 | | | | | | 500 | | |
Reclassification to stockholders’ equity(1) | | | | | (3,693) | | | | | | — | | |
Balance, March 31, 2023 | | | | $ | — | | | | | $ | 34,800 | | |
($ in thousands) | | | March 31, 2023 | | | December 31, 2022 | | ||||||
Payroll and related costs | | | | $ | 339 | | | | | $ | 1,886 | | |
Clinical and nonclinical trial expenses | | | | | 1,576 | | | | | | 2,106 | | |
Professional and consulting fees | | | | | 1,041 | | | | | | 1,637 | | |
Restructuring and other costs(1) | | | | | 2,882 | | | | | | 2,327 | | |
Acquisition-related costs | | | | | 1,144 | | | | | | 1,666 | | |
Other | | | | | 216 | | | | | | 289 | | |
Total accrued expenses | | | | $ | 7,198 | | | | | $ | 9,911 | | |
| | | Number of Warrants | | | | | |||||||||||||||
Description | | | March 31, 2023 | | | December 31, 2022 | | | Weighted-Average Exercise Price | | | Expiration Date | | |||||||||
Equity-classified warrants: | | | | | | | | | | | | | | | | | | | | | | |
May 2013 warrants | | | | | 908 | | | | | | 908 | | | | | $ | 1.36 | | | | None | |
September 2013 warrants | | | | | 241 | | | | | | 241 | | | | | $ | 1.36 | | | | None | |
February 2014 warrants | | | | | 128 | | | | | | 128 | | | | | $ | 1.36 | | | | None | |
April 2020 Private Placement first closing warrants | | | | | 178,794 | | | | | | 178,794 | | | | | $ | 38.76 | | | | Apr 2023 | |
April 2020 Private Placement second closing warrants | | | | | 80,801 | | | | | | 80,801 | | | | | $ | 46.07 | | | | Dec 2023 | |
July 2020 Private Placement first closing warrants | | | | | 162,601 | | | | | | 162,601 | | | | | $ | 43.86 | | | | Jul 2023 | |
Assumed Legacy Aceragen warrants | | | | | 915,772 | | | | | | 79,596 | | | | | $ | 7.82 | | | | Mar 2031 | |
| | | | | 1,339,245 | | | | | | 503,069 | | | | | | | | | | | |
Liability-classified warrants: | | | | | | | | | | | | | | | | | | | | | | |
Assumed Legacy Aceragen Series Z Warrants(1) | | | | | — | | | | | | 14,215 | | | | | $ | 460.00 | | | | Mar 2031 | |
| | | | | — | | | | | | 14,215 | | | | | | | | | | | |
Total outstanding | | | | | 1,339,245 | | | | | | 517,284 | | | | | | | | | | | |
| | | Number of Warrants | | | | | | | | | | | | | | |||||||||
| | | Common Warrants | | | Series Z Warrants | | | Total | | | Weighted-Average Exercise Price(1) | | ||||||||||||
Outstanding at December 31, 2022 | | | | | 503,069 | | | | | | 14,215 | | | | | | 517,284 | | | | | $ | 17.58 | | |
Issued | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Exercised | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Expired | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Conversion | | | | | 836,176 | | | | | | (14,215) | | | | | | 821,961 | | | | | | 7.82 | | |
Outstanding at March 31, 2023 | | | | | 1,339,245 | | | | | | — | | | | | | 1,339,245 | | | | | $ | 17.58 | | |
| | | Nine Months Ended September 30, 2022 | | | Year Ended December 31, 2021 | | ||||||
Issuance of Idera common stock to Aceragen stockholders | | | | | 57,716 | | | | | | 58,357 | | |
Vesting of equity awards issued to Aceragen stockholders | | | | | 914 | | | | | | — | | |
Elimination of historical Aceragen basic weighted average shares outstanding | | | | | (3,373) | | | | | | (2,933) | | |
Pro forma adjustment | | | | | 55,257 | | | | | | 55,424 | | |
| | | Three Months Ended March 31, | | |||||||||
(in thousands) | | | 2023 | | | 2022 | | ||||||
Stock-based compensation: | | | | | | | | | | | | | |
Research and development | | | | | | | | | | | | | |
Employee Stock Purchase Plan | | | | $ | — | | | | | $ | 6 | | |
Equity Incentive Plans | | | | | 500 | | | | | | 89 | | |
| | | | $ | 500 | | | | | $ | 95 | | |
General and administrative | | | | | | | | | | | | | |
Employee Stock Purchase Plan | | | | $ | — | | | | | $ | 2 | | |
Equity Incentive Plans | | | | | 731 | | | | | | 448 | | |
| | | | $ | 731 | | | | | $ | 450 | | |
Total stock-based compensation expense | | | | $ | 1,231 | | | | | $ | 545 | | |
| | | 2023 | | | 2022 | | ||||||
Average risk-free interest rate | | | | | 3.9% | | | | | | 1.3% | | |
Expected dividend yield | | | | | — | | | | | | — | | |
Expected lives (years) | | | | | 3.1 | | | | | | 3.8 | | |
Expected volatility | | | | | 106% | | | | | | 105% | | |
Weighted average exercise price (per share) | | | | $ | 5.21 | | | | | $ | 10.20 | | |
| | | Common Stock Options | | |||||||||||||||||||||
($ in thousands, except per share data) | | | Number of Options | | | Weighted-Average Exercise Price | | | Weighted-Average Remaining Contractual Life (in years) | | | Aggregate Intrinsic Value | | ||||||||||||
Outstanding at December 31, 2022 | | | | | 406,174 | | | | | $ | 83.00 | | | | | | 6.1 | | | | | $ | 102 | | |
Granted | | | | | 321,900 | | | | | | 5.21 | | | | | | | | | | | | | | |
Conversion of preferred stock options to common stock options | | | | | 994,399 | | | | | | 6.91 | | | | | | | | | | | | | | |
Exercised | | | | | (3,458) | | | | | | 2.21 | | | | | | | | | | | | | | |
Forfeited | | | | | (43,565) | | | | | | 7.94 | | | | | | | | | | | | | | |
Expired | | | | | (17,397) | | | | | | 2.21 | | | | | | | | | | | | | | |
Outstanding at March 31, 2023(1) | | | | | 1,658,053 | | | | | $ | 25.26 | | | | | | 8.2 | | | | | $ | 20 | | |
Exercisable at March 31, 2023 | | | | | 593,192 | | | | | $ | 57.65 | | | | | | 6.5 | | | | | $ | 10 | | |
| | | Preferred Stock Options | | |||||||||||||||||||||
($ in thousands, except per share data) | | | Number of Options | | | Weighted-Average Exercise Price | | | Weighted-Average Remaining Contractual Life (in years) | | | Aggregate Intrinsic Value | | ||||||||||||
Outstanding at December 31, 2022 | | | | | 17,522 | | | | | $ | 397.02 | | | | | | 9.1 | | | | | $ | 1,073 | | |
Exercised | | | | | (617) | | | | | | 130.00 | | | | | | | | | | | | | | |
Conversion of preferred stock options to common stock options | | | | | (16,905) | | | | | | 406.76 | | | | | | | | | | | | | | |
Outstanding at March 31, 2023(1) | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | |
Exercisable at March 31, 2023 | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | |
| | | Time-based Awards | | | Market/Performance-based Awards | | ||||||||||||||||||
| | | Number of Shares | | | Weighted-Average Grant Date Fair Value | | | Number of Shares | | | Weighted-Average Grant Date Fair Value | | ||||||||||||
Nonvested shares at December 31, 2022 | | | | | 19,096 | | | | | $ | 10.73 | | | | | | 29,814 | | | | | $ | 26.14 | | |
Granted | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Cancelled | | | | | (294) | | | | | | — | | | | | | (6,030) | | | | | | — | | |
Vested | | | | | (1,601) | | | | | | — | | | | | | (14,538) | | | | | | — | | |
Nonvested shares at March 31, 2023 | | | | | 17,201 | | | | | $ | 7.54 | | | | | | 9,246 | | | | | $ | 26.14 | | |
| | | Number of Shares | | |||||||||
| | | Common Stock | | | Series Z | | ||||||
Nonvested shares at December 31, 2022 | | | | | 15,432 | | | | | | 2,756 | | |
Granted | | | | | — | | | | | | — | | |
Conversion of preferred stock RSAs to common stock RSAs | | | | | 75,471 | | | | | | (1,283) | | |
Cancelled | | | | | (7,962) | | | | | | (1,426) | | |
Vested | | | | | (6,386) | | | | | | (47) | | |
Nonvested shares at March 31, 2023 | | | | | 76,555 | | | | | | — | | |
| | | Three Months Ended March 31, | | |||||||||
| | | 2023 | | | 2022 | | ||||||
Common stock options | | | | | 1,658,053 | | | | | | 283,526 | | |
Restricted stock units and restricted stock awards | | | | | 103,002 | | | | | | 32,253 | | |
Common stock warrants | | | | | 1,339,245 | | | | | | 513,658 | | |
Convertible preferred stock | | | | | 14 | | | | | | 14 | | |
Total | | | | | 3,100,314 | | | | | | 829,451 | | |
(in thousands) | | | For the period from March 2, 2021 (inception) through December 31, 2021 | | |||
Revenues: | | | | | | | |
Government sponsored product development | | | | $ | 897 | | |
Consulting services | | | | | 108 | | |
Total revenues | | | | | 1,005 | | |
(in thousands) | | | For the period from March 2, 2021 (inception) through December 31, 2021 | | |||
Direct costs by program: | | | | | | | |
Government sponsored product development: | | | | $ | 624 | | |
Non-sponsored research and development: | | | | | 8,542 | | |
Consulting Services | | | | | 31 | | |
In-process research and development | | | | | 11,810 | | |
Total Research and Development Costs | | | | $ | 21,007 | | |
(in thousands) | | | For the period from March 2, 2021 (inception) through December 31, 2021 | | |||
General and administrative expenses | | | | $ | 3,794 | | |
(in thousands) | | | Three Months Ended June 30, 2022 | | | Three Months Ended June 30, 2021 | | | $ Variance | | | % Variance | | ||||||||||||
Government sponsored product development | | | | $ | 3,705 | | | | | $ | — | | | | | $ | 3,705 | | | | | | — | | |
Non-government sponsored product development | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total Revenues | | | | $ | 3,705 | | | | | $ | — | | | | | $ | 3,705 | | | | | | — | | |
(in thousands) | | | Three Months Ended June 30, 2022 | | | Three Months Ended June 30, 2021 | | | $ Variance | | | % Variance | | ||||||||||||
Government and non-government sponsored product development | | | | $ | 2,745 | | | | | $ | — | | | | | $ | 2,745 | | | | | | — | | |
Non-sponsored research and development | | | | $ | 3,768 | | | | | $ | 662 | | | | | $ | 3,102 | | | | | | 469% | | |
Total research and development expenses | | | | $ | 6,513 | | | | | $ | 662 | | | | | $ | 5,851 | | | | | | 884% | | |
(in thousands) | | | Three Months Ended June 30, 2022 | | | Three Months Ended June 30, 2021 | | | $ Variance | | | % Variance | | ||||||||||||
General and administrative expenses | | | | $ | 1,735 | | | | | $ | 851 | | | | | $ | 884 | | | | | | 104% | | |
(in thousands) | | | Three Months Ended June 30, 2022 | | | Three Months Ended June 30, 2021 | | | $ Variance | | | % Variance | | ||||||||||||
Interest expense (income), net | | | | $ | 167 | | | | | $ | — | | | | | $ | 167 | | | | | | — | | |
| | | Year Ended December 31, | | | | | | | | | | | | | | |||||||||
($ in thousands) | | | 2022 | | | 2021 | | | $ Change | | | % Change | | ||||||||||||
Government contracts revenue | | | | $ | 4,862 | | | | | $ | — | | | | | $ | 4,862 | | | | | | 100% | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development | | | | | 12,188 | | | | | | 16,375 | | | | | | (4,187) | | | | | | (26)% | | |
General and administrative | | | | | 12,213 | | | | | | 9,976 | | | | | | 2,237 | | | | | | 22% | | |
Acquisition-related costs | | | | | 4,566 | | | | | | — | | | | | | 4,566 | | | | | | 100% | | |
Restructuring and other costs | | | | | 3,713 | | | | | | 1,322 | | | | | | 2,391 | | | | | | 181% | | |
Total operating expenses | | | | | 32,680 | | | | | | 27,673 | | | | | | 5,007 | | | | | | 18% | | |
Loss from operations | | | | $ | (27,818) | | | | | $ | (27,673) | | | | | $ | (145) | | | | | | 1% | | |
| | | Year Ended December 31, | | | | | | | | | | | | | | |||||||||
($ in thousands) | | | 2022 | | | 2021 | | | $ Change | | | % Change | | ||||||||||||
ACG-701 development expense | | | | | | | | | | | | | | | | | | | | | | | | | |
REPRIEVE Study (CF PEx) | | | | $ | 673 | | | | | $ | — | | | | | $ | 673 | | | | | | 100% | | |
TERRA Study (Melioidosis) | | | | | 3,128 | | | | | | — | | | | | | 3,128 | | | | | | 100% | | |
Subtotal | | | | | 3,801 | | | | | | — | | | | | | 3,801 | | | | | | 100% | | |
ACG-801 development expense (Farber disease) | | | | | 1,684 | | | | | | — | | | | | | 1,684 | | | | | | 100% | | |
Tilsotolimod (IMO-2125) development expense | | | | | 3,234 | | | | | | 9,247 | | | | | | (6,013) | | | | | | (65)% | | |
Other drug development expense | | | | | 3,469 | | | | | | 7,128 | | | | | | (3,659) | | | | | | (51)% | | |
Total research and development expenses | | | | $ | 12,188 | | | | | $ | 16,375 | | | | | | (4,187) | | | | | | (26)% | | |
(in thousands) | | | Six Months Ended June 30, 2022 | | | Period from March 2, 2021 (inception) to June 30, 2021 | | | $ Variance | | | % Variance | | ||||||||||||
Government sponsored product development | | | | $ | 8,393 | | | | | $ | — | | | | | $ | 8,393 | | | | | | — | | |
Non-government sponsored product development | | | | | 1,000 | | | | | | — | | | | | | 1,000 | | | | | | — | | |
Total Revenues | | | | $ | 9,393 | | | | | $ | — | | | | | $ | 9,393 | | | | | | — | | |
| | | Three months ended March 31, | | | | | | | | | | | | | | |||||||||
($ in thousands) | | | 2023 | | | 2022 | | | $ Change | | | % Change | | ||||||||||||
Government contracts revenue | | | | $ | 2,470 | | | | | $ | — | | | | | $ | 2,470 | | | | | | 100% | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Research and development | | | | | 4,993 | | | | | | 1,784 | | | | | | 3,209 | | | | | | 180% | | |
General and administrative | | | | | 4,920 | | | | | | 2,398 | | | | | | 2,522 | | | | | | 105% | | |
Goodwill and intangible assets impairment | | | | | 11,071 | | | | | | — | | | | | | 11,071 | | | | | | 100% | | |
Restructuring and other costs | | | | | 1,300 | | | | | | — | | | | | | 1,300 | | | | | | 100% | | |
Acquisition-related costs | | | | | 794 | | | | | | — | | | | | | 794 | | | | | | 100% | | |
Total operating expenses | | | | $ | 23,078 | | | | | $ | 4,182 | | | | | $ | 18,896 | | | | | | 452% | | |
Loss from operations | | | | $ | (20,608) | | | | | $ | (4,182) | | | | | $ | (16,426) | | | | | | 393% | | |
(in thousands) | | | Six Months Ended June 30, 2022 | | | Period from March 2, 2021 (inception) to June 30, 2021 | | | $ Variance | | | % Variance | | ||||||||||||
Government and non-government sponsored product development | | | | $ | 6,363 | | | | | $ | — | | | | | $ | 6,363 | | | | | | — | | |
Non-sponsored research and development | | | | | 7,378 | | | | | | 1,702 | | | | | | 5,676 | | | | | | 333% | | |
In-Process Research and Development | | | | | — | | | | | | 1,576 | | | | | | (1,576) | | | | | | — | | |
Total research and development expenses | | | | $ | 13,741 | | | | | $ | 3,278 | | | | | $ | 10,463 | | | | | | 319% | | |
(in thousands) | | | Six Months Ended June 30, 2022 | | | Period from March 2, 2021 (inception) to June 30, 2021 | | | $ Variance | | | % Variance | | ||||||||||||
General and administrative expenses | | | | $ | 3,233 | | | | | $ | 1,190 | | | | | $ | 2,044 | | | | | | 172% | | |
| | | Three months ended March 31, | | | | | | | | | | | | | | |||||||||
($ in thousands) | | | 2023 | | | 2022 | | | $ Change | | | % Change | | ||||||||||||
ACG-701 development expense | | | | | | | | | | | | | | | | | | | | | | | | | |
REPRIEVE Study (CF PEx) | | | | $ | 1,318 | | | | | $ | — | | | | | $ | 1,318 | | | | | | 100% | | |
TERRA Study (Melioidosis) | | | | | 1,572 | | | | | | — | | | | | | 1,572 | | | | | | 100% | | |
Subtotal | | | | $ | 2,890 | | | | | $ | — | | | | | $ | 2,890 | | | | | | 100% | | |
ACG-801 development expense (Farber disease) | | | | | 557 | | | | | | — | | | | | | 557 | | | | | | 100% | | |
Tilsotolimod (IMO-2125) development expense | | | | | — | | | | | | 724 | | | | | | (724) | | | | | | (100)% | | |
Other drug development expense | | | | | 1,547 | | | | | | 1,060 | | | | | | 487 | | | | | | 46% | | |
Total research and development expenses | | | | $ | 4,994 | | | | | $ | 1,784 | | | | | $ | 3,210 | | | | | | 180% | | |
(in thousands) | | | Six Months Ended June 30, 2022 | | | Period from March 2, 2021 (inception) to June 30, 2021 | | | $ Variance | | | % Variance | | ||||||||||||
Interest expense, net | | | | $ | 331 | | | | | $ | — | | | | | $ | 331 | | | | | | — | | |
| | | Three Months Ended March 31, | | |||||||||
(in thousands) | | | 2023 | | | 2022 | | ||||||
Net cash provided by (used in): | | | | | | | | | | | | | |
Operating activities | | | | $ | (9,852) | | | | | $ | (4,568) | | |
Financing activities | | | | | (74) | | | | | | 16 | | |
Decrease in cash and cash equivalents | | | | $ | (9,926) | | | | | $ | (4,552) | | |