☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
31-1103425
|
|
(State of incorporation)
|
(I.R.S. Employer Identification No.)
|
1035 Cambridge Street, Suite 18A
Cambridge, Massachusetts
|
02141
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading symbol
|
Name of each exchange on which registered
|
||
Common stock, $0.005 par value per share
|
ERNA
|
The Nasdaq Stock Market LLC
|
Large accelerated filer
|
☐ |
Accelerated filer
|
☐
|
Non-accelerated filer
|
☒ |
Smaller reporting company
|
☒ |
Emerging growth company
|
☐ |
|
|
Page
|
PART I – FINANCIAL INFORMATION
|
|
|
Item 1.
|
Financial Statements (unaudited)
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
5
|
|
Item 2.
|
20
|
|
Item 3.
|
30
|
|
Item 4.
|
30
|
|
|
|
|
PART II – OTHER INFORMATION
|
|
|
Item 1.
|
32
|
|
Item 1A.
|
32
|
|
Item 2.
|
32
|
|
Item 3.
|
32
|
|
Item 4.
|
32
|
|
Item 5.
|
32
|
|
Item 6.
|
32
|
|
34
|
Item 1. |
Financial Statements
|
June 30, | December 31, | |||||||
2023
|
2022
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash
|
$
|
1,837
|
$
|
11,446
|
||||
Other receivables
|
984
|
951
|
||||||
Prepaid expenses and other current assets
|
1,070
|
1,284
|
||||||
Total current assets
|
3,891
|
13,681
|
||||||
Restricted cash
|
4,095 | 4,095 | ||||||
Property and equipment, net
|
193
|
236
|
||||||
Right-of-use assets - operating leases
|
35,357
|
1,030
|
||||||
Goodwill
|
2,044
|
2,044
|
||||||
Investment in non-controlling interest
|
- | 59 | ||||||
Other assets
|
1,374
|
1,134
|
||||||
Total assets
|
$
|
46,954
|
$
|
22,279
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
2,675
|
$
|
1,620
|
||||
Accrued expenses
|
2,109
|
3,626
|
||||||
Income taxes payable
|
8 | - | ||||||
Operating lease liabilities, current
|
173
|
295
|
||||||
Due to related party, current
|
1,750 | 1,750 | ||||||
Other current liabilities | 450 | 363 | ||||||
Total current liabilities
|
7,165
|
7,654
|
||||||
Warrant liabilities
|
185
|
331
|
||||||
Operating lease liabilities, non-current
|
34,963
|
887
|
||||||
Due to related party, non-current
|
331 | 1,206 | ||||||
Deferred revenue
|
250 | - | ||||||
Contingent consideration liability
|
107 | - | ||||||
Other liabilities
|
87
|
94
|
||||||
Total liabilities
|
43,088
|
10,172
|
||||||
Stockholders’ equity:
|
||||||||
Preferred stock, $0.005 par value, 1,000 shares authorized, 156
designated and outstanding of Series A convertible preferred stock at June 30, 2023 and December 31, 2022, $156 liquidation
preference
|
1 | 1 | ||||||
Common stock, $0.005 par value, 100,000 shares authorized at June 30, 2023 and December 31, 2022; 5,410 and 5,127 issued and outstanding at June 30, 2023 and December 31, 2022,
respectively
|
27
|
26
|
||||||
Additional paid-in capital
|
179,067
|
177,377
|
||||||
Accumulated deficit
|
(175,229
|
)
|
(165,297
|
)
|
||||
Total stockholders’ equity
|
3,866
|
12,107
|
||||||
Total liabilities and stockholders’ equity
|
$
|
46,954
|
$
|
22,279
|
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Operating expenses:
|
||||||||||||||||
License costs |
$ | - | $ | - | $ | 50 | $ | - | ||||||||
Research and development
|
1,579
|
1,685
|
3,253
|
3,467
|
||||||||||||
General and administrative
|
2,510 | 6,205 | 6,102 | 10,719 | ||||||||||||
Acquisition of Exacis in-process research and development |
460 | - | 460 | - | ||||||||||||
Impairment of in-process research and development | - | 5,990 | - | 5,990 | ||||||||||||
Total operating expenses
|
4,549
|
13,880
|
9,865
|
20,176
|
||||||||||||
Loss from operations
|
(4,549
|
)
|
(13,880
|
)
|
(9,865
|
)
|
(20,176
|
)
|
||||||||
Other income (expense), net:
|
||||||||||||||||
Change in fair value of warrant liabilities
|
191 | 10,792 | 146 | 9,470 | ||||||||||||
Change in fair value of contingent consideration |
118 | - | 118 | - | ||||||||||||
Loss on non-controlling investment
|
(8 | ) | (296 | ) | (59 | ) | (911 | ) | ||||||||
Other expense, net
|
(256
|
)
|
(14
|
)
|
(255
|
)
|
(1,156
|
)
|
||||||||
Total other income (expense), net
|
45
|
10,482
|
(50
|
)
|
7,403
|
|||||||||||
Loss before income taxes |
(4,504 | ) | (3,398 | ) | (9,915 | ) | (12,773 | ) | ||||||||
Provision for income taxes |
(4 | ) | - | (9 | ) | - | ||||||||||
Net loss
|
$ |
(4,508
|
)
|
$ |
(3,398
|
)
|
$ |
(9,924
|
)
|
$ |
(12,773
|
)
|
||||
Series A preferred stock dividend | (8 | ) | (8 | ) | (8 | ) | (8 | ) | ||||||||
Net loss attributable to common stockholders | $ |
(4,516 | ) | $ |
(3,406 | ) | $ |
(9,932 | ) | $ |
(12,781 | ) | ||||
Net loss per common share - basic and diluted
|
$
|
(0.85
|
)
|
$
|
(1.16
|
)
|
$
|
(1.90
|
)
|
$
|
(4.55
|
)
|
||||
Weighted average shares outstanding - basic and diluted
|
5,303
|
2,940
|
5,215
|
2,811
|
Series A Preferred
Stock
|
Common Stock
|
Additional Paid-
in
|
Accumulated
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
||||||||||||||||||||||
Balances at April 1, 2023
|
156
|
$
|
1
|
5,127
|
$
|
26
|
$
|
178,066
|
$
|
(170,713
|
)
|
$
|
7,380
|
|||||||||||||||
Issuance of common stock in connection with Exacis
asset acquisition
|
-
|
-
|
69
|
-
|
208
|
-
|
208
|
|||||||||||||||||||||
Issuance of common stock related to stock purchase agreement with Lincoln Park Capital Fund, LLC, net
|
-
|
-
|
214
|
1
|
579
|
-
|
580
|
|||||||||||||||||||||
Cash dividends to Series A preferred stockholders
|
-
|
-
|
-
|
-
|
-
|
(8
|
)
|
(8
|
)
|
|||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
214
|
-
|
214
|
|||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(4,508
|
)
|
(4,508
|
)
|
|||||||||||||||||||
Balances at June 30, 2023
|
156
|
$
|
1
|
5,410
|
$
|
27
|
$
|
179,067
|
$
|
(175,229
|
)
|
$
|
3,866
|
|||||||||||||||
Balances at January 1, 2023
|
156
|
$
|
1
|
5,127
|
$
|
26
|
$
|
177,377
|
$
|
(165,297
|
)
|
$
|
12,107
|
|||||||||||||||
Issuance of common stock in connection with Exacis asset acquisition
|
-
|
-
|
69
|
-
|
208
|
-
|
208
|
|||||||||||||||||||||
Issuance of common stock related to stock purchase agreement with Lincoln Park Capital Fund, LLC, net
|
-
|
-
|
214
|
1
|
579
|
-
|
580
|
|||||||||||||||||||||
Cash dividends to Series A preferred stockholders
|
-
|
-
|
-
|
-
|
-
|
(8
|
)
|
(8
|
)
|
|||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
903
|
-
|
903
|
|||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(9,924
|
)
|
(9,924
|
)
|
|||||||||||||||||||
Balances at June 30, 2023
|
156
|
$
|
1
|
5,410
|
$
|
27
|
$
|
179,067
|
$
|
(175,229
|
)
|
$
|
3,866
|
|||||||||||||||
Balances at April 1, 2022
|
156
|
$
|
1
|
2,872
|
$
|
14
|
$
|
167,373
|
$
|
(150,077
|
)
|
$
|
17,311
|
|||||||||||||||
Issuance of common stock from vested restricted stock units
|
-
|
-
|
1
|
-
|
(5
|
)
|
-
|
(5
|
)
|
|||||||||||||||||||
Cash dividends to Series A preferred stockholders
|
-
|
-
|
-
|
-
|
-
|
(8
|
)
|
(8
|
)
|
|||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
879
|
-
|
879
|
|||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(3,398
|
)
|
(3,398
|
)
|
|||||||||||||||||||
Balances at June 30, 2022
|
156
|
$
|
1
|
2,873
|
$
|
14
|
$
|
168,247
|
$
|
(153,483
|
)
|
$
|
14,779
|
|||||||||||||||
Balances at January 1, 2022
|
156
|
$
|
1
|
2,601
|
$
|
13
|
$
|
166,191
|
$
|
(140,702
|
)
|
$
|
25,503
|
|||||||||||||||
Issuance of common stock in connection with private offering
|
-
|
-
|
275
|
1
|
(1
|
)
|
-
|
-
|
||||||||||||||||||||
Issuance of common stock from vested restricted stock units
|
-
|
-
|
1
|
-
|
(5
|
)
|
-
|
(5
|
)
|
|||||||||||||||||||
Forfeiture of unvested restricted stock
|
-
|
-
|
(4
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
Cash dividends to Series A preferred stockholders
|
-
|
-
|
-
|
-
|
-
|
(8
|
)
|
(8
|
)
|
|||||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
2,062
|
-
|
2,062
|
|||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(12,773
|
)
|
(12,773
|
)
|
|||||||||||||||||||
Balances at June 30, 2022
|
156
|
$
|
1
|
2,873
|
$
|
14
|
$
|
168,247
|
$
|
(153,483
|
)
|
$
|
14,779
|
For the six months ended | ||||||||
|
June 30,
|
|||||||
|
2023
|
2022
|
||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(9,924
|
)
|
$
|
(12,773
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
42
|
104
|
||||||
Stock-based compensation
|
903
|
2,062
|
||||||
Commitment shares issued to Lincoln Park Capital, LLC
|
249 | - | ||||||
Loss on shares sold to Lincoln Park Capital, LLC
|
11 | - | ||||||
Amortization of right-of-use asset
|
83
|
186
|
||||||
Impairment of right-of-use-asset
|
- | 772 | ||||||
Non-cash component of acquisition of Exacis in-process research and development
|
433 | - | ||||||
Impairment of in-process research and development
|
- | 5,990 | ||||||
Loss on disposal of fixed assets
|
1 | 274 | ||||||
Gain on lease termination
|
- | (85 | ) | |||||
Change in fair value of warrant liabilities
|
(146 | ) | (9,470 | ) | ||||
Change in fair value of contingent consideration liability
|
(118 | ) | - | |||||
Loss on non-controlling investment
|
59
|
911
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Other receivables
|
(33
|
)
|
(5
|
)
|
||||
Prepaid expenses and other current assets
|
214
|
(727
|
)
|
|||||
Other non-current assets
|
(481
|
)
|
11
|
|||||
Accounts payable and accrued expenses
|
(454
|
)
|
2,295
|
|||||
Operating lease liability
|
(215
|
)
|
(153
|
)
|
||||
Due to related party
|
(875 | ) | - | |||||
Deferred revenue
|
250 | - | ||||||
Other liabilities
|
80
|
1,183
|
||||||
Net cash used in operating activities
|
(9,921
|
)
|
(9,425
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Purchase of property and equipment
|
-
|
(233
|
)
|
|||||
Proceeds from the sale of fixed assets
|
- | 100 | ||||||
Net cash used in investing activities
|
-
|
(133
|
)
|
|||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of common stock and warrants in connection with private offering
|
- | 11,993 | ||||||
Proceeds from sale of common stock pursuant to stock purchase agreement with Lincoln Park Capital Fund, LLC
|
320 | - | ||||||
Payroll tax remitted on net share settlement of equity awards
|
- | (5 | ) | |||||
Dividends paid to Series A preferred stockholders
|
(8 | ) | (8 | ) | ||||
Net cash provided by financing activities
|
312
|
11,980
|
||||||
Net (decrease) increase in cash and cash equivalents |
(9,609
|
)
|
2,422
|
|||||
Cash, cash equivalents and restricted cash at beginning of period
|
15,541
|
16,985
|
||||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
5,932
|
$
|
19,407
|
||||
|
||||||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
13
|
$
|
14
|
||||
Income taxes
|
$ | 4 | $ | 8 | ||||
|
||||||||
Supplemental disclosure of non-cash investing and financing activities:
|
||||||||
Contingent consideration for Exacis asset acquisition
|
$ | 225 | $ | - | ||||
Issuance of common stock for Exacis asset acquisition
|
$ | 208 | $ | - | ||||
Initial measurement of right-of-use asset
|
$ | 34,410 | $ | 1,706 | ||||
Initial measurement of lease liability
|
$ |
34,169 | $ |
1,706 | ||||
Reconciliation of cash, cash equivalents and restricted cash at end of period:
|
||||||||
Cash and cash equivalents
|
$ | 1,837 | $ | 19,407 | ||||
Restricted cash
|
4,095 | - | ||||||
Total cash, cash equivalents and restricted cash at end of period
|
$ | 5,932 | $ | 19,407 |
1) |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
|
2) |
LIQUIDITY AND CAPITAL RESOURCES
|
3) |
ASSET ACQUISITION
|
(i) |
if, at any time during the three-year period commencing on the closing date and ending on the three-year
anniversary of the closing date, the Company’s market capitalization equals or exceeds $100.0 million for at least ten consecutive trading days, then the Company will issue to Exacis a number of shares of common stock equal to (x) $2.0 million divided by (y) the quotient of $100.00
million divided by the number of the Company’s then issued and outstanding shares of common stock;
|
|
(ii) |
if, at any time during the three-year period commencing on the closing date and ending on the three-year anniversary of the closing date, the Company’s market capitalization equals or exceeds $200.0 million for at least ten
consecutive trading days, then the Company will issue to Exacis a number of additional shares of common stock equal to (x) $2.0
million divided by (y) the quotient of $200.00 million divided by the number of the Company’s then issued and outstanding shares
of common stock (collectively with (i) above, the “Market Cap Contingent Consideration”); and
|
|
(iii) |
during the five-year period commencing on the closing date and ending on the five-year anniversary of the closing date, the Company will pay or deliver to Exacis 20% of all cash or other consideration (collectively, “License Contingent Consideration”) actually received by the Company during the five-year
period from (i) third-party licensees or sublicensees of the intellectual property rights acquired by the Company from Exacis pursuant to the Exacis Purchase Agreement, or (ii) subject to certain exceptions, the sale of such intellectual
property rights; provided, that the License Contingent Consideration shall not in any event exceed $45.0 million.
|
Fair Value of
Consideration
|
||||
Shares issued
|
$
|
208
|
||
Contingent consideration
|
225
|
|||
Direct costs
|
27
|
|||
Total fair value
|
$
|
460
|
4) |
FAIR VALUE OF FINANCIAL INSTRUMENTS
|
●
|
Level
1 Inputs – Valued based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
|
●
|
Level 2 Inputs – Valued based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. |
●
|
Level
3 Inputs – Valued based on inputs for which there is little or no market value, which require the reporting entity to develop its own assumptions.
|
Description
|
Level
|
June 30, 2023
|
December 31, 2022
|
|||||||||
Liabilities:
|
||||||||||||
Warrant liabilities - Common Warrants
|
3
|
$
|
185
|
$
|
331
|
|||||||
Market Cap Contingent Consideration
|
3 | $ | 107 | $ | - |
Acquisition Date
|
June 30, 2023
|
|||||||
Stock price
|
$
|
3.00
|
$
|
2.26
|
||||
Risk-free rate
|
3.58
|
%
|
4.46
|
%
|
||||
Volatility
|
100
|
%
|
90
|
%
|
||||
Dividend yield
|
0
|
%
|
0
|
%
|
||||
Expected term
|
3.0 years
|
2.82 years
|
|
Warrant
Liabilities
|
Contingent Consideration |
||||||
Fair value at January 1, 2023
|
$
|
331
|
$ | - | ||||
Initial measurement
of Market Cap Contingent Consideration
|
- | 225 | ||||||
Change in fair value
|
(146
|
)
|
(118 | ) | ||||
Fair value at June 30, 2023
|
$
|
185
|
$ | 107 |
5) |
CONTRACT WITH CUSTOMER
|
1.
|
Identify the contract with a customer;
|
2.
|
Identify the performance obligations in the contracts;
|
3.
|
Determine the transaction price;
|
4.
|
Allocate the transaction price to the performance obligations; and
|
5.
|
Recognize revenue when (or as) the performance obligations are satisfied.
|
6) |
LEASES
|
Three months ended June 30,
|
Six months ended June 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Operating lease expense
|
$
|
67
|
$
|
146
|
$
|
135
|
$
|
333
|
||||||||
Sublease income
|
(21
|
)
|
(21
|
)
|
(42
|
)
|
(42
|
)
|
||||||||
Variable lease expense
|
7
|
51
|
12
|
53
|
||||||||||||
Total lease expense
|
$
|
53
|
$
|
176
|
$
|
105
|
$
|
344
|
Operating Lease
ROU Assets
|
||||
Operating lease ROU assets at
January 1, 2023
|
$
|
1,030
|
||
Recognition of ROU asset for Somerville Sublease |
34,410 | |||
Amortization of operating lease
ROU assets
|
(83
|
)
|
||
Operating lease ROU assets at
June 30, 2023
|
$
|
35,357
|
Operating Lease
Liabilities
|
||||
Operating lease liabilities at
January 1, 2023
|
$
|
1,182
|
||
Recognition of lease liability for Somerville Sublease |
34,169 | |||
Principal payments on operating
lease liabilties
|
(215
|
)
|
||
Operating lease liabilities at
June 30, 2023
|
35,136
|
|||
Less non-current portion
|
34,963
|
|||
Current portion at June 30, 2023
|
$
|
173
|
As of
June 30, 2023
|
||||
2023
|
$
|
1,064
|
||
2024
|
5,931
|
|||
2025
|
6,065
|
|||
2026
|
6,227
|
|||
2027
|
6,298
|
|||
Thereafter
|
40,224
|
|||
Total payments | |
65,809
|
||
Less imputed interest | (30,673 | ) | ||
Total operating lease liabilities | $ | 35,136 |
7) |
GOODWILL
|
8) |
RELATED PARTY TRANSACTIONS
|
9)
|
ACCRUED EXPENSES
|
June 30,
2023 |
December 31,
2022
|
|||||||
Legal fees and settlements
|
$
|
349
|
$
|
1,138
|
||||
Clinical
|
310
|
570
|
||||||
Professional fees
|
431
|
333
|
||||||
Accrued compensation
|
324
|
1,065
|
||||||
Other
|
695
|
520
|
||||||
Total accrued expenses
|
$
|
2,109
|
$
|
3,626
|
10) |
COMMITMENTS AND CONTINGENCIES
|
11) |
STOCK-BASED COMPENSATION
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Stock options granted
|
25
|
36
|
237
|
99
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Weighted average risk-free rate
|
3.54
|
%
|
2.74
|
%
|
3.82
|
%
|
2.42
|
%
|
||||||||
Weighted average volatility
|
96.09
|
%
|
92.74
|
%
|
95.15
|
%
|
92.85
|
%
|
||||||||
Dividend yield
|
0
|
%
|
0
|
%
|
0
|
%
|
0
|
%
|
||||||||
Expected term
|
6.08 years
|
4.15 years
|
5.44 years
|
4.79 years
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Weighted average grant date fair value
|
$
|
1.64
|
$
|
9.97
|
$
|
2.99
|
$
|
23.68
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Research and development
|
$
|
56
|
$
|
470
|
$
|
120
|
$
|
892
|
||||||||
General and administrative
|
158
|
409
|
783
|
1,170
|
||||||||||||
Total
|
$
|
214
|
$
|
879
|
$
|
903
|
$
|
2,062
|
12) |
WARRANTS
|
Private Placement
|
Warrants
Outstanding (in thousands) |
Exercise
Price |
Date
Exerciseable |
Expiration
Date |
Classification
|
||||||||
March 2022 PIPE
|
343
|
$
|
38.20
|
September 9, 2022
|
September 9, 2027
|
Liability
|
|||||||
November 2022 PIPE
|
4,370
|
$
|
3.28
|
June 2, 2023
|
June 2, 2028
|
Equity
|
|||||||
4,713
|
|
|
|
13) |
EARNINGS PER SHARE
|
Three and Six months ended June 30,
|
||||||||
2023
|
2022
|
|||||||
Warrants |
4,713 | 343 | ||||||
Stock options
|
522
|
188
|
||||||
Preferred stock converted into common stock
|
7
|
3
|
||||||
RSUs |
1 | 29 | ||||||
Total potential common shares excluded from computation
|
5,243
|
563
|
14) |
STANDBY EQUITY PURCHASE AGREEMENT
|
15) |
RECENT ACCOUNTING PRONOUNCEMENTS
|
16) |
SUBSEQUENT EVENTS
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||||||||||||
|
2023
|
2022
|
Change
|
2023
|
2022
|
Change
|
||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||
License costs
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
50
|
$
|
-
|
$
|
50
|
||||||||||||
Research and development
|
1,579
|
1,685
|
(106
|
)
|
3,253
|
3,467
|
(214
|
)
|
||||||||||||||||
General and administrative
|
2,510
|
6,205
|
(3,695
|
)
|
6,102
|
10,719
|
(4,617
|
)
|
||||||||||||||||
Acquisition of Exacis in-process research and development
|
460
|
-
|
460
|
460
|
-
|
460
|
||||||||||||||||||
Impairment of in-process research and development
|
-
|
5,990
|
(5,990
|
)
|
-
|
5,990
|
(5,990
|
)
|
||||||||||||||||
Total operating expenses
|
4,549
|
13,880
|
(9,331
|
)
|
9,865
|
20,176
|
(10,311
|
)
|
||||||||||||||||
Loss from operations
|
(4,549
|
)
|
(13,880
|
)
|
9,331
|
(9,865
|
)
|
(20,176
|
)
|
10,311
|
||||||||||||||
|
||||||||||||||||||||||||
Other income (expense), net:
|
||||||||||||||||||||||||
Change in fair value of warrant liabilities
|
191
|
10,792
|
(10,601
|
)
|
146
|
9,470
|
(9,324
|
)
|
||||||||||||||||
Change in fair value of contingent consideration
|
118
|
-
|
118
|
118
|
-
|
118
|
||||||||||||||||||
Loss on non-controlling investment
|
(8
|
)
|
(296
|
)
|
288
|
(59
|
)
|
(911
|
)
|
852
|
||||||||||||||
Other expense, net
|
(256
|
)
|
(14
|
)
|
(242
|
)
|
(255
|
)
|
(1,156
|
)
|
901
|
|||||||||||||
Total other income (expense), net
|
45
|
10,482
|
(10,437
|
)
|
(50
|
)
|
7,403
|
(7,453
|
)
|
|||||||||||||||
|
||||||||||||||||||||||||
Loss before income taxes
|
(4,504
|
)
|
(3,398
|
)
|
(1,106
|
)
|
(9,915
|
)
|
(12,773
|
)
|
2,858
|
|||||||||||||
Provision for income taxes
|
(4
|
)
|
-
|
(4
|
)
|
(9
|
)
|
-
|
(9
|
)
|
||||||||||||||
Net loss
|
$
|
(4,508
|
)
|
$
|
(3,398
|
)
|
$
|
(1,110
|
)
|
$
|
(9,924
|
)
|
$
|
(12,773
|
)
|
$
|
2,849
|
|
Three months ended June 30,
|
|||||||||||
|
2023
|
2022
|
Change
|
|||||||||
(in thousands)
|
||||||||||||
Payroll-related
|
$
|
167
|
$
|
639
|
$
|
(472
|
)
|
|||||
Stock-based compensation
|
56
|
470
|
(414
|
)
|
||||||||
Professional fees
|
249
|
79
|
170
|
|||||||||
MSA expense
|
813
|
-
|
813
|
|||||||||
Other expenses, net
|
294
|
497
|
(203
|
)
|
||||||||
Total research and development expenses
|
$
|
1,579
|
$
|
1,685
|
$
|
(106
|
)
|
|||||
|
||||||||||||
|
Six months ended June 30,
|
|||||||||||
|
2023
|
2022
|
Change
|
|||||||||
(in thousands)
|
||||||||||||
Payroll-related
|
$
|
369
|
$
|
1,601
|
$
|
(1,232
|
)
|
|||||
Stock-based compensation
|
120
|
892
|
(772
|
)
|
||||||||
Professional fees
|
529
|
120
|
409
|
|||||||||
MSA expense
|
1,625
|
-
|
1,625
|
|||||||||
Other expenses, net
|
610
|
854
|
(244
|
)
|
||||||||
Total research and development expenses
|
$
|
3,253
|
$
|
3,467
|
$
|
(214
|
)
|
|
Three months ended June 30,
|
|||||||||||
|
2023
|
2022
|
Change
|
|||||||||
(in thousands)
|
||||||||||||
Professional fees
|
$
|
1,312
|
$
|
2,552
|
$
|
(1,240
|
)
|
|||||
Payroll-related
|
700
|
1,533
|
(833
|
)
|
||||||||
Impairment of ROU asset
|
-
|
772
|
(772
|
)
|
||||||||
Insurance
|
194
|
527
|
(333
|
)
|
||||||||
Stock-based compensation
|
158
|
409
|
(251
|
)
|
||||||||
Occupancy expense
|
19
|
182
|
(163
|
)
|
||||||||
Other expenses, net
|
127
|
230
|
(103
|
)
|
||||||||
Total general and administrative expenses
|
$
|
2,510
|
$
|
6,205
|
$
|
(3,695
|
)
|
|||||
|
||||||||||||
|
Six months ended June 30,
|
|||||||||||
|
2023
|
2022
|
Change
|
|||||||||
(in thousands)
|
||||||||||||
Professional fees
|
$
|
3,248
|
$
|
4,623
|
$
|
(1,375
|
)
|
|||||
Payroll-related
|
1,057
|
2,282
|
(1,225
|
)
|
||||||||
Impairment of ROU asset
|
-
|
772
|
(772
|
)
|
||||||||
Stock-based compensation
|
783
|
1,170
|
(387
|
)
|
||||||||
Occupancy expense
|
43
|
352
|
(309
|
)
|
||||||||
Insurance
|
726
|
894
|
(168
|
)
|
||||||||
Other expenses, net
|
245
|
626
|
(381
|
)
|
||||||||
Total general and administrative expenses
|
$
|
6,102
|
$
|
10,719
|
$
|
(4,617
|
)
|
|
Three months ended June 30,
|
|||||||||||
|
2023
|
2022
|
Change
|
|||||||||
(in thousands)
|
||||||||||||
SEPA commitment shares
|
$
|
(249
|
)
|
$
|
-
|
$
|
(249
|
)
|
||||
Interest income (expense), net
|
24
|
(13
|
)
|
37
|
||||||||
Other
|
(31
|
)
|
(1
|
)
|
(30
|
)
|
||||||
Total other expense, net
|
$
|
(256
|
)
|
$
|
(14
|
)
|
$
|
(242
|
)
|
|||
|
||||||||||||
|
Six months ended June 30,
|
|||||||||||
|
2023
|
2022
|
Change
|
|||||||||
(in thousands)
|
||||||||||||
PIPE transaction fees
|
$
|
-
|
$
|
(1,007
|
)
|
$
|
1,007
|
|||||
Liquidated damages
|
-
|
(240
|
)
|
240
|
||||||||
Interest expense, net
|
26
|
(14
|
)
|
40
|
||||||||
SEPA commitment shares
|
(249
|
)
|
-
|
(249
|
)
|
|||||||
Other income, net
|
(32
|
)
|
105
|
(137
|
)
|
|||||||
Total other expense, net
|
$
|
(255
|
)
|
$
|
(1,156
|
)
|
$
|
901
|
|
• |
the terms and timing of any collaborative, licensing and other agreements that we may establish;
|
|
• |
the cost of filing and potentially prosecuting, defending and enforcing any patent claims and other intellectual property rights;
|
|
• |
the cost and timing of regulatory approvals;
|
|
• |
the cost and delays in product development as a result of any changes in regulatory oversight applicable to our products;
|
|
• |
the cost and timing of establishing sales, marketing and distribution capabilities;
|
|
• |
the effect of competition and market developments;
|
|
• |
the scope, rate of progress and cost of clinical trials and other product development activities; and
|
|
• |
future clinical trial results.
|
|
For the six months ended
June 30, |
|||||||||||
(in thousands)
|
2023
|
2022
|
Change
|
|||||||||
Cash (used in) provided by:
|
||||||||||||
Operating activities
|
$
|
(9,921
|
)
|
$
|
(9,425
|
)
|
$
|
(496
|
)
|
|||
Investing activities
|
-
|
|
(133
|
)
|
133 | |||||||
Financing activities
|
312
|
11,980
|
(11,668
|
)
|
||||||||
Net (decrease) increase in cash and cash equivalents
|
$
|
(9,609
|
)
|
$
|
2,422
|
$
|
(12,031
|
)
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4. |
Controls and Procedures.
|
|
• |
enhancing the business process controls related to reviews over technical, complex, and non-recurring transactions;
|
|
• |
providing additional training to accounting personnel; and
|
|
• |
consulting with an accounting advisor for technical, complex and non-recurring matters, with whom we have engaged and begun consulting.
|
Item 1. |
Legal Proceedings.
|
Item 1A. |
Risk Factors.
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Item 3. |
Defaults Upon Senior Securities.
|
Item 4. |
Mine Safety Disclosures.
|
Item 5. |
Other Information.
|
Item 6. |
Exhibits.
|
Exhibit
|
Description
|
Incorporated By
Reference
|
||
Purchase Agreement, dated as of April 5, 2023, by and between Eterna Therapeutics Inc. and Lincoln Park Capital Fund, LLC
|
Exhibit 10.1 to Form 8-K filed on April 11, 2023
|
|||
Registration Rights Agreement, dated as of April 5, 2023, by and between Eterna Therapeutics Inc. and Lincoln Park Capital Fund, LLC
|
Exhibit 10.2 to Form 8-K filed on April 11, 2023
|
|||
Asset Purchase Agreement, dated April 26, 2023, by and among Eterna Therapeutics Inc., Exacis Biotherapeutics Inc., the stockholders party thereto and, with respect to certain provisions, Factor Bioscience
Limited.
|
Exhibit 10.1 to Form 8-K filed on May 2, 2023
|
|||
10.4*
|
Separation Agreement and General Release, dated May 2, 2023, by and between Eterna Therapeutics Inc. and Andrew Jackson.
|
Exhibit 10.1 to Form 8-K filed on May 5, 2023
|
||
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
|||
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Furnished herewith
|
|||
Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Furnished herewith
|
|||
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
Filed herewith
|
||
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
Filed herewith
|
||
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
Filed herewith
|
||
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
Filed herewith
|
||
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
Filed herewith
|
||
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
Filed herewith
|
||
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
|
|
* |
Indicates management contract or compensatory plan.
|
ETERNA THERAPEUTICS INC.
|
||
Date: August 11, 2023
|
By:
|
/s/ Matthew Angel
|
Matthew Angel
|
||
Chief Executive Officer and President
|
||
(on behalf of the Registrant and as Principal Executive Officer)
|
Date: August 11, 2023
|
/s/ Matthew Angel
|
Matthew Angel
|
|
Chief Executive Officer and President
|
|
(Principal Executive Officer)
|
Date: August 11, 2023
|
/s/ Sandra Gurrola
|
Sandra Gurrola
|
|
Vice President of Finance
|
|
(Principal Financial Officer)
|
Date: August 11, 2023
|
/s/ Matthew Angel
|
Matthew Angel
|
|
Chief Executive Officer and President
|
|
(Principal Executive Officer)
|
Date: August 11, 2023
|
/s/ Sandra Gurrola
|
Sandra Gurrola
|
|
Vice President of Finance
|
|
(Principal Financial Officer)
|