# Revelation Biosciences, Inc.: Form 10-Q for the period ended Sep 30, 2023

- Company: [Revelation Biosciences, Inc.](/companies/revb.md) (CIK 1810560)
- Form: 10-Q
- Filed: 2023-11-09
- Accepted by EDGAR: Nov 9, 2023, 16:07 ET
- Period: 2023-09-30
- Accession: 0000950170-23-062025
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1810560/000095017023062025/revb-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1810560/000095017023062025/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2023-07-01 to 2023-09-30 | $1.7m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2023-01-01 to 2023-09-30 | $3.1m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | −$2.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | −$6.3m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | −$2.6m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $2.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.42 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $0.41 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.42 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $0.43 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 6,297,303 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 5,024,091 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | −$5.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2023-09-30 | $14.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $14.1m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $14.2m | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $5.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $5.4m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-09-30 | $8.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 32,637 characters.

*You should read the following discussion of our financial condition and results of operations in conjunction with our financial statements and the notes included elsewhere in this Form 10-Q. The following discussion contains forward-looking statements that involve certain risks and uncertainties. Our actual results could differ materially from those discussed in these statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2022 particularly under the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements and Risk Factors Summary” sections.*

### Overview

Revelation is a clinical-stage biopharmaceutical company founded in May 2020. We are focused on the development or commercialization of innate immune system therapeutics and diagnostics. Our current product candidates were developed by us and licensed to potentially prevent, treat and detect disease. Our therapeutic product candidates are based on our therapeutic platform and consist of REVTx-300, which is being developed as a potential therapy for the prevention and treatment of acute organ injury (e.g. AKI, MI) and chronic organ disease including CKD; REVTx-100, which is being developed for the prevention and treatment of infections including healthcare-associated bacterial infection resulting from surgery, severe burns, and antibiotic resistance; REVTx-200, which is being developed as a potential intranasal therapy that will be administered concurrently with a traditional commercially available IM vaccine; and REVTx-99b, which is being developed for the treatment of food allergies. REVTx-99a was being developed as a broad anti-viral nasal drop solution for the potential prevention or potential treatment of respiratory viral infections and REVTx-99b was being developed as a prevention or treatment for chronic nasal congestion and allergic rhinitis until June of 2022. Our diagnostic, REVDx-501 (REVIDTM Rapid Test Kit), was being developed as a rapid point of care diagnostic product that can potentially be used to detect various respiratory viral infections.

Since our inception in May 2020, we have devoted substantially all of our resources to organizing and staffing our Company, business planning, raising capital, and research and development of REVTx-300, REVTx-100, REVTx-200, REVTx-99a/b and REVDx-501, our product candidates.

We have funded our operations since our inception in May 2020 to September 30, 2023 through the issuance and sale of our capital stock, from which we have raised net proceeds of $43.9 million. Our current cash and cash equivalents balance will not be sufficient to complete all necessary product development or future commercialization efforts. We anticipate that our current cash and cash equivalents balance will not be sufficient to sustain operations within one year after the date that our audited financial statements for September 30, 2023 were issued, which raises substantial doubt about our ability to continue as a going concern.

We plan to seek additional funding through public or private equity or debt financings. We may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of our stockholders. If we are unable to obtain funding we could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect our business operations.

As of September 30, 2023 we had an accumulated deficit of $23.3 million. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future if and as we:

- continue the research and development of our product candidates;
- initiate clinical studies for, or preclinical development of, our product candidates;
- further develop and refine the manufacturing processes of our product candidates;
- change or add manufacturers or suppliers of product candidate materials;
- seek regulatory and marketing authorizations for any of our product candidates that successfully complete development;
- acquire or license other product candidates, technologies or biological materials;
- make milestone, royalty or other payments under future license agreements;
- obtain, maintain, protect and enforce our intellectual property portfolio;
- seek to attract and retain new and existing skilled personnel;
- create additional infrastructure to support our operations as a public company and incur increased legal, accounting, investor relations and other expenses; and
- experience delays or encounter issues with any of the above.

Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical studies and our expenditures on other research and development activities.

We have never generated revenue and do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for REVTx-300, REVTx-100, REVTx-200, REVTx-99b, REVDx-501 or other product candidates, which we expect will not be for at least several years, if ever. Accordingly, until such time as we can generate significant revenue from sales of REVTx-300, REVTx-100, REVTx-200, REVTx-99b, REVDx-501 or other product candidates, if ever, we expect to finance our cash needs through a combination of public or private equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

On January 10, 2022, we consummated the previously announced Business Combination, pursuant to the terms of the agreement and plan of merger, dated as of August 29, 2021 with Petra and Merger Sub. Pursuant to the Business Combination Agreement, on the Closing Date, (i) Merger Sub merged with and into Revelation Sub, with Revelation Sub as the surviving company in the Business Combination, and became a wholly-owned subsidiary of Petra and (ii) Petra changed its name to “Revelation Biosciences, Inc.”

### Recent Developments

#### Change in Authorized Shares and Reverse Stock Split

On January 30, 2023, at a special meeting of stockholders, our stockholders approved a Certificate of Amendment to our Third Amended and Restated Certificate of Incorporation to change the authorized common stock from 100,000,000 to 500,000,000 shares and effect a reverse stock split of our outstanding shares of common stock at a specific ratio within a range of one-for-twenty (1-for-20) to a maximum of a one-for-one hundred (1-for-100) split. On January 30, 2023, we filed the Certificate of Amendment which set the authorized common stock to 500,000,000 and effected a 1-for-35 reverse stock split of our outstanding shares of common stock as of 12:01 a.m. Eastern Standard Time on February 1, 2023.

### Research and Development

Research and development expenses consist primarily of costs incurred for the development of our product candidates, REVTx-300, REVTx-100, REVTx-200, REVTx-99a/b and REVDx-501. Our research and development expenses consist primarily of external costs related to clinical development, costs related to contract research organizations, costs related to consultants, costs related to acquiring and manufacturing clinical study materials, costs related to contract manufacturing organizations and other vendors, costs related to the preparation of regulatory submissions, costs related to laboratory supplies and services, and personnel costs. Personnel and related costs consist of salaries, employee benefits and stock-based compensation for personnel involved in research and development efforts.

We expense all research and development expenses in the periods in which they are incurred. We accrue for costs incurred as the services are being provided by monitoring the status of specific activities and the invoices received from our external service providers. We adjust our accrual as actual costs become known.

We expect our research and development expenses to increase substantially for the foreseeable future as we continue the development of REVTx-300, REVTx-100, REVTx-200, REVTx-99b and REVDx-501 and continue to invest in research and development activities. The process of conducting the necessary clinical research and product development to obtain regulatory approval is costly and time consuming, and the successful development of REVTx-300, REVTx-100, REVTx-200, REVTx-99b, REVDx-501 and any future product candidates is highly uncertain. To the extent that our product candidates continue to advance into larger and later stage clinical studies, our expenses will increase substantially and may become more variable.

The actual probability of success for REVTx-300, REVTx-100, REVTx-200, REVTx-99b, REVDx-501 or any future product candidate may be affected by a variety of factors, including the safety and efficacy of our product candidates, investment in the development of REVDx-501, investment in our clinical programs, manufacturing capability and competition with other products. As a result, we are unable to determine the timing of initiation, duration and completion costs of our research and development efforts or when and to what extent we will generate revenue from the commercialization and sale of REVTx-300, REVTx-100, REVTx-200, REVTx-99b, REVDx-501 or any future product candidate.

### General and Administrative

Our general and administrative expenses consist primarily of personnel costs, expenses for outside professional services, including financial advisory, legal, human resource, audit and accounting services and consulting costs. Personnel and related costs consist of salaries, employee benefits and stock-based compensation for personnel involved in executive, finance and other administrative functions. We expect our general and administrative expenses to increase for the foreseeable future as we increase the size of our administrative function to support the growth of our business and support our continued research and development activities. We also anticipate increased expenses as we continue to operate as a public company, including increased expenses related to financial advisory services, audit, legal, regulatory, investor relations costs, director and officer insurance premiums associated with maintaining compliance with exchange listing and SEC requirements.

### Other Income (Expense), Net

Other income (expense), net primarily consists of the change in fair value of warrant liability, foreign currency transaction gains and losses, interest expense and interest income from our cash balances in savings accounts.

### Results of Operations

The following table summarizes our results of operations for the periods presented:

| Operating expenses: | Three Months Ended September 30, 2023 | 2022 | Change | Nine Months Ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Research and development | $1,651,367 | $381,566 | $1,269,801 | $3,085,918 | $5,037,429 | $(1,951,511) |
| General and administrative | 1,126,530 | 817,898 | 308,632 | 3,244,856 | 4,608,755 | (1,363,899) |
| Total operating expenses | 2,777,897 | 1,199,464 | 1,578,433 | 6,330,774 | 9,646,184 | (3,315,410) |
| Loss from operations | (2,777,897) | (1,199,464) | (1,578,433) | (6,330,774) | (9,646,184) | 3,315,410 |
| Total other income (expense), net | 149,521 | 28,728 | 120,793 | 8,413,423 | 24,221 | 8,389,202 |
| Net (loss) income | $(2,628,376) | $(1,170,736) | $(1,457,640) | $2,082,649 | $(9,621,963) | $11,704,612 |

23

#### Research and Development Expenses

The following table summarizes our research and development expenses for the periods presented:

|  | Three Months Ended September 30, 2023 | 2022 | Change | Nine Months Ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| REVTx-99a clinical study expenses | $— | $8,993 | $(8,993) | $— | $3,086,960 | $(3,086,960) |
| REVTx-99b clinical study expenses | — | 110,389 | (110,389) | — | 385,886 | (385,886) |
| REVTx-300 clinical study expenses | 66,721 | — | 66,721 | 66,721 | — | 66,721 |
| Manufacturing expenses | 183,253 | 8,665 | 174,588 | 693,759 | 225,578 | 468,181 |
| REVDx-501 diagnostic development | — | — | — | — | 27,660 | (27,660) |
| Other program expenses | 1,108,558 | — | 1,108,558 | 1,651,297 | — | 1,651,297 |
| Other expenses | 85,764 | 169,204 | (83,440) | 206,303 | 232,772 | (26,469) |
| Personnel expenses (including stock-based compensation) | 207,071 | 84,315 | 122,756 | 467,838 | 1,078,573 | (610,735) |
| Total research and development expenses | $1,651,367 | $381,566 | $1,269,801 | $3,085,918 | $5,037,429 | $(1,951,511) |

Research and development expenses increased by $1.3 million, from $0.4 million for the three months ended September 30, 2022 to $1.7 million for the three months ended September 30, 2023. The increase was primarily due to an increase of $1.1 million in other program expenses. Other program expenses include pre-clinical costs and clinical preparation costs primarily for programs REVTx-300, REVTx-100 and REVTx-200.

Research and development expenses decreased by $2.0 million, from $5.0 million for the nine months ended September 30, 2022 to $3.1 million for the nine months ended September 30, 2023. The decrease was primarily due to decreases of $3.1 million in clinical study expenses related to REVTx-99a and $0.6 million in personnel expenses, offset by increases of $1.7 million in other program expenses and $0.5 million in manufacturing expenses. Other program expenses include pre-clinical costs and clinical preparation costs primarily for programs REVTx-300, REVTx-100 and REVTx-200.

#### General and Administrative Expenses

The following table summarizes our general and administrative expenses for the periods presented:

|  | Three Months Ended September 30, 2023 | 2022 | Change | Nine Months Ended September 30, 2023 | 2022 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Personnel expenses (including employee stock-based compensation) | $634,691 | $364,988 | $269,703 | $1,641,129 | $1,551,447 | $89,682 |
| Legal and professional fees (including non-employee stock-based compensation) | 411,715 | 138,896 | 272,819 | 1,344,650 | 1,775,839 | (431,189) |
| Other expenses | 80,124 | 314,014 | (233,890) | 259,077 | 1,281,469 | (1,022,392) |
| Total general and administrative expenses | $1,126,530 | $817,898 | $308,632 | $3,244,856 | $4,608,755 | $(1,363,899) |

General and administrative expenses increased by $0.3 million, from $0.8 million for the three months ended September 30, 2022 to $1.1 million for the three months ended September 30, 2023. The increase was primarily due to increases of $0.3 million in personnel expenses and $0.3 million in financial advisory fees, legal fees and professional consulting service fees, offset by a decrease of $0.2 million in other expenses as a result of a decrease in D&O Insurance.

General and administrative expenses decreased by $1.4 million, from $4.6 million for the nine months ended September 30, 2022 to $3.2 million for the nine months ended September 30, 2023. The decrease was primarily due to decreases of $1.0 million in other expenses as a result of a decrease in D&O Insurance and $0.4 million in financial advisory fees, legal fees and professional consulting service fees.

#### Other Income (Expense), Net

Other income (expense), net was $28,728 for the three months ended September 30, 2022, related to foreign currency transaction gains and losses and interest income from our cash balances in savings accounts. Other income (expense), net was $149,521 for the three months ended September 30, 2023, related to the change in fair value of the warrant liability, foreign currency transaction gains and losses, and interest income from our cash balances in savings accounts.

Other income (expense), net was $24,221 for the nine months ended September 30, 2022, related to interest expense for the Promissory Notes Payable and Convertible Note, foreign currency transaction gains and losses, and interest income from our cash balances in savings accounts. Other income (expense), net was $8,413,423 for the nine months ended September 30, 2023, related to the change in fair value of the warrant liability, foreign currency transaction gains and losses, and interest income from our cash balances in savings accounts.

### Liquidity and Capital Resources

Since our inception to September 30, 2023, we have funded our operations from the issuance and sale of our common stock, preferred stock and warrants, from which we have raised net proceeds of $43.9 million, of which $14.0 million was received during the nine months ended September 30, 2023. As of September 30, 2023, we had available cash and cash equivalents of $14.0 million and an accumulated deficit of $23.3 million.

Our use of cash is to fund operating expenses, which consist primarily of research and development expenditures related to our therapeutic product candidates, REVTx-300, REVTx-100 and REVTx-200. We plan to increase our research and development expenses substantially for the foreseeable future as we continue the clinical development of our current and future product candidates. At this time, due to the inherently unpredictable nature of product development, we cannot reasonably estimate the costs we will incur and the timelines that will be required to complete development, obtain marketing approval, and commercialize our current product candidate, diagnostic product or any future product candidates. For the same reasons, we are also unable to predict when, if ever, we will generate revenue from product sales or any future license agreements which we may enter into or whether, or when, if ever, we may achieve profitability. Clinical and preclinical development timelines, the probability of success, and development costs can differ materially from expectations. In addition, we cannot forecast the timing and amounts of milestone, royalty and other revenue from licensing activities, which future product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

We expect to continue to generate substantial operating losses for the foreseeable future as we expand our research and development activities. We will continue to fund our operations primarily through utilization of our current financial resources and through additional raises of capital.

To the extent that we raise additional capital through partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, future revenue streams or research programs or to grant licenses on terms that may not be favorable to us. If we raise additional capital through public or private equity offerings, the ownership interest of our then-existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our clinical studies or preclinical studies, research and development programs or commercialization efforts or grant rights to develop and market our product candidates or diagnostic product even if we would otherwise prefer to develop and market such product candidates or diagnostic product ourselves.

### Going Concern

As of September 30, 2023, we had an accumulated deficit of $23.3 million, a stockholders’ equity of $8.8 million and available cash and cash equivalents of $14.0 million. We expect to continue to incur significant operating and net losses, as well as negative cash flows from operations, for the foreseeable future as we continue to complete all necessary product development or future commercialization efforts. We have never generated revenue and do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for REVTx-300, REVTx-100, REVTx-200, REVTx-99b, REVDx-501 or other product candidates, which we expect will not be for at least several years, if ever. We do not anticipate that our current cash and cash equivalents balance will be sufficient to sustain operations within one year after the date that our audited financial statements for September 30, 2023 were issued, which raises substantial doubt about our ability to continue as a going concern.

To continue as a going concern, we will need, among other things, to raise additional capital resources. We plan to seek additional funding through public or private equity or debt financings. We may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of our stockholders. If we are unable to obtain funding we could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect our business operations.

The unaudited condensed consolidated financial statements for September 30, 2023, have been prepared on the basis that we will continue as a going concern, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability for us to continue as a going concern.

### Cash Flows

The following table summarizes our cash flows for the periods presented:

|  | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Net cash used in operating activities | $(5,283,450) | $(10,271,929) |
| Net cash provided by financing activities. | 14,025,008 | 15,192,646 |
| Net increase in cash and cash equivalents | $8,741,558 | $4,920,717 |

### Net Cash Used in Operating Activities

During the nine months ended September 30, 2023, net cash used in operating activities was $5.3 million, which consisted of a net income of $2.1 million, offset by a net change of non-cash charges of $8.1 million comprised of the change in fair value of the warrant liability, stock-based compensation expense and depreciation expense.

During the nine months ended September 30, 2022, net cash used in operating activities was $10.3 million, which consisted of a net loss of $9.6 million and a net change of $1.0 million in our net operating assets and liabilities, offset by non-cash charges of $0.3 million comprised of stock-based compensation expense, non-cash lease expense and depreciation expense.

### Net Cash Provided by Financing Activities

During the nine months ended September 30, 2023, net cash provided by financing activities was $14.0 million, from net cash proceeds of $14.0 million received from the February 2023 Public Offering.

During the nine months ended September 30, 2022, net cash provided by financing activities was $15.2 million, from net proceeds of $4.2 million received in connection with the Business Combination, after exercise of the forward share purchase agreement of $7.7 million, and net proceeds of $7.3 million received from the PIPE Investment, and net proceeds of approximately $4.5 million received from the July 2022 Public Offering, offset by $0.8 million in repayments of promissory notes payable, including interest expense.

### Contractual Obligations and Other Commitments

The following table summarizes our contractual obligations as of September 30, 2023 and the effects of such obligations are expected to have on our liquidity and cash flow in future periods:

|  | Less than 1 year | 1 to 3 years | 3 to 5 years | More than 5 years | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Operating lease obligations | $28,890 | $— | $— | $— | $28,890 |
| Total contractual obligations | $28,890 | $— | $— | $— | $28,890 |

We have entered into an operating lease for laboratory space in San Diego, California. The table above includes future minimum lease payments under the non-cancelable lease arrangement.

We enter into contracts in the normal course of business with third party service providers and vendors. These contracts generally provide for termination on notice and, therefore, are cancellable contracts and not considered contractual obligations and commitments. We believe that our non-cancelable obligations under these agreements are not material.

### Off-Balance Sheet Arrangements

As of September 30, 2023, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

### Quantitative and Qualitative Disclosure about Market Risk

We are exposed to market risks in the ordinary course of our business.

### Interest Rate Risk

Our cash and cash equivalents consist primarily of highly liquid investments in money market funds and cash on hand and have an original maturity date of 90 days or less. The fair value of our cash and cash equivalents would not be significantly affected by either an increase or decrease in interest rates due mainly to the short-term nature of these instruments.

### Foreign Currency Risk

Our expenses are generally denominated in the currencies in which our operations are located, which is primarily in the United States, England and Australia. We make payments to vendors for research and development services with payments denominated in foreign currencies including Australian Dollars and British Pounds. We are subject to foreign currency transaction gains or losses on our payments denominated in foreign currencies. To date, foreign currency transaction gains and losses have not been material and we have not had a formal hedging program with respect to foreign currency; however, we may consider doing so in the future. A 10% increase or decrease in currency exchange rates would not have a material effect on our financial results.

### Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with the U.S. generally accepted accounting principles (“GAAP”). The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions about future events that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenue and expenses. These estimates and assumptions are based on management’s best estimates and judgment. Management regularly evaluates its estimates and assumptions using industry experience and other factors; however, actual results could differ materially from these estimates and could have an adverse effect on our condensed consolidated financial statements. While our significant accounting policies are more fully described in the notes to our condensed consolidated financial statements, we believe that the accounting policies discussed below are most critical to understanding and evaluating our historical and future performance.

### Research and Development Expenditures

We record accrued expenses for estimated preclinical and clinical study and research expenses related to the services performed but not yet invoiced pursuant to contracts with research institutions, contract research organizations and clinical manufacturing organizations that conduct and manage preclinical studies, and clinical studies, and research services on our behalf. Payments for these services are based on the terms of individual agreements and payment timing may differ significantly from the period in which the services were performed. Our estimates are based on factors such as the work completed, including the level of patient enrollment. We monitor patient enrollment levels and related activity to the extent reasonably possible and make judgments and estimates in determining the accrued balance in each reporting period. Our estimates of accrued expenses are based on the facts and circumstances known at the time. If we underestimate or overestimate the level of services performed or the costs of these services, our actual expenses could differ from our estimates. As actual costs become known, we adjust our accrued expenses. To date, we have not experienced significant changes in our estimates of clinical study accruals.

### Stock-based Compensation

We recognize the compensation expense related to stock options, third-party warrants, and RSU awards granted, based on the estimated fair value of the awards on the date of grant. The fair value of employee stock options and third-party warrants are generally determined using the Black-Scholes option-pricing model using various inputs, including estimates of historic volatility, term, risk-free rate, and future dividends. The grant date fair value of the stock-based awards, which have graded vesting, is recognized using the straight-line method over the requisite service period of each stock-based award, which is generally the vesting period of the respective stock-based awards. The Company recognizes forfeitures as they occur.

As of September 30, 2023, there were 3,006 Rollover RSU awards and 35,005 stock options outstanding.

### Determination of the Fair Value of Common Stock

Prior to the Business Combination, given the absence of a public trading market for our shares of common stock, our board of directors exercises its judgment and considers a number of objective and subjective factors to determine the best estimate of the fair value of our shares of common stock, including timely valuations of our shares of common stock prepared by an unrelated third-party valuation firm, important developments in our operations, sales of common stock and convertible preferred shares, actual operating results and financial performance, the conditions in the biotechnology industry and the economy in general, the stock price performance and volatility of comparable public companies, and the lack of liquidity of our shares of common stock, among other factors. After the Business Combination, the fair value of each share of common stock is based on the closing price of our shares of common stock as reported on the date of grant.

### Recent Accounting Pronouncements

See Note 2 to our unaudited condensed consolidated financial statements for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations.

### JOBS Act Accounting Election

We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

We have elected to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements and our interim financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

## Market risk

As filed, 163 characters.

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

## Controls and procedures

As filed, 2,087 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures. Based on that evaluation of our disclosure controls and procedures as of September 30, 2023, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective at the reasonable assurance level. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

### Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during our most recent quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 264 characters.

Our business is subject to various risks, including those described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes from the risk factors disclosed in Item 1A of our Annual Report on Form 10-K.

Filed Nov 9, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-062025. Last ingested by Listed: Oct 24, 2026, 15:07 ET. No prices; not investment advice.