# SAB Biotherapeutics, Inc.: Form 10-Q for the period ended Mar 31, 2024

- Company: [SAB Biotherapeutics, Inc.](/companies/sabs.md) (CIK 1833214)
- Form: 10-Q
- Filed: 2024-05-20
- Accepted by EDGAR: May 20, 2024, 16:01 ET
- Period: 2024-03-31
- Accession: 0000950170-24-062367
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1833214/000095017024062367/sabs-20240331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1833214/000095017024062367/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $944.6k | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Research and development | 3 months, 2024-01-01 to 2024-03-31 | $8.1m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | −$11.4m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $76.4k | us-gaap:InterestExpense |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | −$5.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.54 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.54 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 9,241,940 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | −$10.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $129.1k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-03-31 | $14.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $47.0m | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $71.4m | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $8.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $18.5m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-03-31 | $52.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 63,404 characters.

*You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the accompanying notes included in Part I, Item 1 of this Form 10-Q. Some of the information contained in this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. As a result of many factors, including those factors set forth in the section titled “Risk Factors,” our actual results could differ materially from those discussed in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors.” Please also refer to the section titled “Special Note Regarding Forward Looking Statements.”*

### Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Quarterly Report” or “Form 10-Q”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act of 1934, as amended (the "Exchange Act"), as amended, that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements involved known and unknown risks, relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. In addition, historic results, including but not limited to those related to IND enabling GLP safety/toxicology of SAB-142; and Phase 1 & Phase 2a results of SAB-176; do not guarantee that future research or trials will suggest the same conclusions, nor that historic results referred to herein will be interpreted in the same manner due to future preclinical and clinical trial results or otherwise. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the sections entitled “Risk Factors” in this Quarterly Report, our most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, and other periodic reports filed with the Securities and Exchange Commission (the “SEC”) and available at https://www.sec.gov/. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except as expressly required by applicable law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.

### Company Overview

We are a clinical-stage biopharmaceutical company focused on the development of human polyclonal immunotherapeutic antibodies, or hIgG, to address immune system disorders and infectious diseases. Our antibodies are both target-specific and polyclonal, meaning they are comprised of multiple hIgGs and can bind to multiple sites on specific immunogens, making them ideally suited to address the complexities associated with many immune-mediated disorders. Our lead candidate, SAB-142 is a human ATG focused on preventing or delaying the progression of T1D. We recently initiated a Phase 1 trial of SAB-142 to establish its safety and pharmacokinetic profiles in human subjects.

In addition to SAB-142, we also have clinical stage assets targeting infectious diseases that have significant mortality and morbidity in the general population and in high-risk patients. To date, we have conducted seven clinical trials, including Phase 1, Phase 2 and Phase 3, totaling more than 700 individuals dosed with our proprietary hIgGs. In May of 2023, we received Fast Track Designation and Breakthrough Therapy Designation from the U.S. Food and Drug Administration (the “FDA”) Center for Biologics Evaluation and Research (“CBER”) for our SAB-176 immunoglobulin targeting multiple strains of influenza based upon positive clinical data from a Phase 2a trial.

More broadly, we believe that our proprietary platform, referred to as DiversitAb,™ holds the potential to generate additional novel therapeutic candidates to expand our pipeline. DiversitAb,™ utilizes the human immune response to generate the optimal repertoire of IgGs for drug targets of interest. We believe it is the only technology capable of producing disease-targeted, hIgG in large quantities without the need for human plasma donors. We have optimized genetic engineering in the development of transchromosomic cattle, or Tc Bovine, which produce hIgGs. Our engineering of the DiversitAb production system drives IgG1 production across our pipeline. As our lead program SAB-142 advances, we intend to expand our pipeline in complimentary indications through strategic utilization of our platform.

### Recent Developments

SAB continues to execute its corporate strategy through building partnerships and expertise that advance its program focus on T1D. Additionally, the SAB executive team recently transitioned corporate headquarters of SAB to Miami Beach, FL, while retaining its Research and Development Campus in South Dakota.

In April, 2024, we announced our partnership with INNODIA, an international non-profit organization and the largest European network dedicated to the prevention of T1D (“INNODIA”). This partnership was highlighted at INNODIA’s annual meeting on April 11, 2024 in Belgium, where our executive team was invited to present the latest updates on SAB-142 to global T1D partners.

In addition to our INNODIA T1D partnership, our clinical development continues track. On April 16, 2024, SAB disclosed a Phase 1 update for SAB-142 noting that the third cohort of SAB-142 has been fully enrolled and dosed with no observed serum sickness.

### Corporate Strategy

We are focused on developing product candidates for disease targets where a differentiated approach has the greatest potential to be either first-in-class against novel targets or best-in-class against complex targets to treat diseases with significant unmet medical needs, including immune and autoimmune disorders including T1D. Our business strategy is focused on SAB-142 as a first-in-class, human, multi-target antibody treatment designed to provide superior efficacy and safety in delaying the onset or progression of T1D.

DiversitAb,™ represents the first technology of its kind to produce large-scale human high-titer and high-avidity antibodies across multiple modalities.

Leveraging our proprietary production system will help us advance a robust pipeline of differentiated hIgG-based therapies for the treatment of immune system disorders and infectious diseases. Our hIgGs have been safely demonstrated up through Phase 3 clinical trials with a patient safety database that includes over 700 patients who were safely administered our hIgG therapeutics.

We have a demonstrated regulatory pathway through each of the FDA, CBER, UK Medicines and Healthcare products Regulatory Agency (“MHRA”), and Australian Therapeutic Goods Administration (“TGA”). These organizations understand our science and are familiar with the multivalent and multitarget properties of our single vial drug products. This further streamlines our ability to develop new and novel drug products rapidly and efficiently where single target monoclonal antibodies (“mAbs”) cannot replicate or duplicate our drug product attributes.

### Our Product Pipeline

### SAB-142: Human Anti-Thymocyte Globulin for Type 1 Diabetes

The following table summarizes our drug candidate, SAB-142 and its existing clinical plan and proposed stages of development.

*Figure 1. An overview of phased milestones for SAB-142, starting with Phase 1 study cohorts 1-5 starting end of 2023 through beginning of 2025, with Phase 1 topline results anticipated in late 2024. Phase 2 study POC/DRF is anticipated to begin in early 2025 with Phase 2 topline results expected at the end of 2026.*

SAB-142 is a first-in-class, human, multi-target anti-thymocyte globulin treatment designed to provide superior efficacy and safety in delaying the onset or progression of T1D. SAB-142 is expected to reduce autoimmune β-cell destruction and delay progression or onset of T1D in patients with Stage 3 or Stage 2 T1D respectively.

In addition to potentially preserving beta cell function in early T1D patients, SAB-142 offers the potential of re-dosing when examining clinically meaningful indicators such as C-peptide levels and glycosylated hemoglobin (HbA1c), without the potential risk of inducing major immune reactions of analogous animal derived IgGs. The overall long-term safety profile of a low-dose ATG is supportive of the vision to use SAB-142 as a lifelong disease-modifying treatment without a risk of immunosuppression associated with clinically significant effects such as infections, malignancies or suppressed humoral response.

#### Mechanism of Action

Maintenance of the level of connecting peptide, a short 31 amino acid polypeptide that connects insulin’s A chain to its B chain in the proinsulin molecule, commonly referred to as C-peptide, is a validated surrogate endpoint for endogenous insulin production, essential for the prevention of progression of T1D. Placebo controlled trials with low-dose rabbit ATG, defined as a single dose of 2.5 milligram per kilogram (mg/kg), have shown statistically significant maintenance of C-peptide levels and thus a delay in progression of recent onset T1D.

Based on the results of a Phase 2 clinical trial conducted at the University of Florida, a single dose of rabbit ATG showed sustained benefit in T1D over a two-year period by maintaining significantly higher C-peptide levels than a placebo control. However, more than 65% of treated patients in this study acquired serum sickness due to the infusion of a non-human antibody, with symptoms that included rash, malaise, fever, and joint swelling. The symptoms often required treatment with steroids that control serum sickness but impair diabetes management and reduces the capacity to re-dose rabbit ATG when C-peptide levels begin to drop.

While the mechanism of action of our compound closely resembles rabbit ATG, SAB-142 has clear advantages that are fundamental for safe and reliable re-dosing required to delay disease progression. Data from more than 700 human subjects treated with antibodies produced by our platform support expectation of a zero serum sickness rate and zero incidence of neutralizing anti-drug antibodies (“ADA”) within the upcoming SAB-142 trials. There is an established regulatory path for T1D indications using the SAB-142 modality. We initiated the Phase 1 clinical study with the first patient dosed November 2023. Finally, our next steps will be to file a clinical trial application (“CTA”) in the European Union, and an investigational new drug (“IND”) application in the United States to expand the clinical trials to global jurisdictions.

Rabbit ATG shows therapeutic promise but offers problematic potential for adverse events that could inhibit long term disease modification and redosing; we believe those issues are resolved by SAB-142. SAB-142 represents an opportunity to offer a novel human alternative to rabbit- or equine-derived ATG IgGs with potential for safe and reliable re-dosing while avoiding the risk factors observed with currently available therapies.

#### Clinical Strategy

Immunological processes resulting in the breakdown of self-tolerance and gradual destruction of pancreatic beta cells by the patient’s own immune system preceding the clinical onset of disease oftentimes starts very early in patients’ lives, sometimes as early as in utero. The average age of clinical onset of T1D is 13 years old. Stage 1 is the start of T1D, marked by individuals having two or more diabetes-related autoantibodies and still normal blood sugar concentrations. In Stage 2, individuals have dysglycemia but without symptoms. Stage 3 is the time of a full clinical diagnosis. Unfortunately, when an individual is first diagnosed with clinical stage T1D, 50- 90% of pancreatic insulin-producing beta cells are already destroyed. Hence, it is critical to start therapy that preserves the remaining fully functional beta cells as soon as possible as it may provide the highest benefit throughout the patient’s lifetime.

In addition to the currently approved and ongoing Phase 1, we plan to bring this program to IND and CTA filings with global regulatory authorities by the mid-2024. As there are unmet medical needs globally for disease-modifying treatments of T1D, we plan to work with global health authorities and file clinical trial applications and clinical trial notifications in other countries to have a global footprint and reach patients with T1D worldwide. We anticipate topline results by the end of 2024. Topline data will include the safety data to support re-dosing along with proof of biological activity. Topline data will further enable global Phase 2 clinical proof of concept and dose-range finding trials in adults and even more importantly, in adolescent T1D population, another critical milestone for 2024 as T1D onset most often occurs in pediatric and adolescent patient populations.

### SAB-176: Human Anti-Influenza Globulin for High-Risk Influenza

SAB-176 represents a comprehensive approach to treatment and prophylaxis (PreP and PEP) of high-risk patients with influenza as a broadly neutralizing -human polyclonal immunoglobulin therapeutic with several anti-viral mechanisms. SAB-176 was evaluated in an ascending dose, double-blind, randomized, placebo-controlled Phase 1 safety trial in 27 healthy volunteers in 2020. The FDA allowed us to initiate a Phase 1 trial in healthy adults based on the safety profile in the preclinical data set. A Safety Review Committee (“SRC”) monitored adverse events after each cohort was infused and recommended that each later cohort could be infused with the next highest dose according to the study protocol. Although anticipated adverse events were noted among the SAB-176 and placebo participants, no drug related serious adverse events (“SAEs”) were identified by the SRC.

In March 2024, SAB announced that the Navy Medical Research Command (“NMRC”) would be moving forward with a safety and tolerability study to evaluate SAB-176 pursuant to the Cooperative Research and Development Agreement governing the relationship between SAB and the NMRC, with funding for the study provided by the Henry Jackson Foundation.

### Key Factors Affecting Our Results of Operations and Future Performance

We believe that our financial performance has been, and in the foreseeable future will continue to be, primarily driven by multiple factors as described throughout our analysis within *Components of Results of Operations* below, each of which presents growth opportunities for our business. These factors also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations. Our ability to successfully address these challenges is subject to various risks and uncertainties, including those described in the section captioned “Part I, Item 1A, Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and supplemented with the following revised or additional risk factors in “Part II, Item 1A, Risk Factors” included herein.

### Components of Results of Operations

### Revenue

Our revenue has historically been generated through grants from government and other (non-government) organizations. We currently have no commercially approved products.

Grant revenue is recognized for the period that the research and development services occur, as qualifying expenses are incurred or conditions of the grants are met. We concluded that payments received under these grants represent conditional, nonreciprocal contributions, as described in ASC 958, *Not-for-Profit Entities*, and that the grants are not within the scope of ASC 606, *Revenue from Contracts with Customers*, as the organizations providing the grants do not meet the definition of a customer. Expenses for grants are tracked by using a project code specific to the grant, and the employees also track hours worked by using the project code.

#### Government grants

Total revenue recognized from government grants was approximately $945 thousand and $581 thousand for the three months ended March 31, 2024 and 2023, respectively.

National Institute of Health – National Institute of Allergy and Infectious Disease (“NIH-NIAID”) (Federal Award #1R41AI131823-02) – this grant was for approximately $1.5 million and had an original term of April 2019 through March 2021. The grant was subsequently amended to extend the end date to March 2023. No grant income was recognized for this grant for the three months ended March 31, 2024 and approximately $192 thousand of grant income was recognized for the three months ended March 31, 2023. This grant was completed as of June 30, 2023.

NIH-NIAID through Geneva Foundation (Federal Award #1R01AI132313-01, Subaward #S-10511-01) – this grant was for approximately $2.7 million and had an original term of August 2017 through July 2021. The grant was subsequently amended to extend the end date to July 2023. No grant income was recognized for the three months ended March 31, 2024, and approximately $236 thousand of grant income was recognized for the three months ended March 31, 2023. This grant was completed as of June 30, 2023.

US Department of Defense (“DoD”), Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense Enabling Biotechnologies (“JPEO”) through Advanced Technology International – this grant was for a potential of $25 million, awarded in stages starting in August 2019 and with potential stages running through February 2023. Additional contract modifications were added to this contract in 2020 and 2021 for work on a COVID therapeutic, bringing the contract total to $203.6 million. Deferred grant income recognized was approximately $945 thousand and $153 thousand for the three months ended March 31, 2024 and 2023, respectively. This grant was terminated in 2022.

The grants for our Rapid Response contract with JPEO (the “JPEO Rapid Response Contract”) are cost reimbursement agreements, with reimbursement of qualified direct research and development expense (labor and consumables) with an overhead charge (based on actual, reviewed quarterly) and a fixed fee (9%).

On August 3, 2022, we received notice from the DoD terminating the JPEO Rapid Response contract (the “JPEO Rapid Response Contract Termination”). We engaged in negotiations with the DoD to compensate us for services provided prior to the JPEO Rapid Response Contract Termination and costs we would be expected to bear in future periods. A termination and settlement proposal was submitted the DoD on September 9, 2022; we submitted a final invoice on December 15, 2022; and received payment from the DoD on or about January 12, 2023. The terms of the arrangement provide for a cost-reimbursable structure, and state that the parties will work in good faith equitable reimbursement for work performed toward accomplishment of the tasks provided in the agreement. At this time, other than certain deferred obligations (presented within deferred grant income within our condensed consolidated unaudited balance sheet) potentially payable to the DoD solely due to subsequent negotiations with third-party vendors, we believe and have been advised there is a reasonable, good faith basis for the position that no present or future obligations exist. Revenue recognized subsequent to the JPEO Rapid Response Contract Termination relates to satisfaction of residual obligations under the termination and settlement agreement—see Note 2, *Summary of Significant Accounting Policies* in our condensed consolidated financial statements for further information about our established revenue recognition process.

### Operating Expenses

### Research and Development Expenses

Research and development expenses primarily consist of salaries, benefits, incentive compensation, stock-based compensation, laboratory supplies and materials for employees and contractors engaged in research and product development, licensing fees to use certain technology in our research and development projects, fees paid to consultants and various entities that perform certain research and testing on our behalf. Research and development expenses are tracked by target/project code. Indirect general and administrative costs are allocated based upon a percentage of direct costs. We expense all research and development costs in the period in which they are incurred.

Research and development activities consist of discovery research for our platform development and the various indications we are working on. We have not historically tracked our research and development expenses on a product candidate-by-product candidate basis.

For the three months ended March 31, 2024 and 2023, we had contracts with multiple CROs to conduct and complete clinical studies. In the case of SAB-185, the CRO was contracted and paid by the US government. For SAB-176, PPD Development, LP, acting as CRO oversaw the Phase 1 safety study. The terms of that agreement are subject to confidentiality, and the status of the agreement is that it is current, in good standing and 100% of the contract has been paid as of March 31, 2024. SAB has also contracted with hVIVO Services Limited to conduct the Phase 2a influenza study on SAB-176. The terms of that agreement are subject to confidentiality, and the status of the agreement is that it is current, in good standing and 100% of the contract has been paid as of March 31, 2024. For SAB-142, Avance Clinical PTY, Ltd (“Avance”), acting as CRO oversaw Phase 1 safety study. This study started in December 2023 and the terms of that agreement are subject to confidentiality and the status of the agreement is that it is current.

We expect to continue to incur substantial research and development expenses as we conduct discovery research to enhance our platform and work on our indications. We expect to hire additional employees and continue research and development and manufacturing activities. As a result, we expect that our research and development expenses will continue to increase in future periods and vary from period to period as a percentage of revenue.

Major components within our research and development expenses are salaries and benefits (laboratory & farm), laboratory supplies, animal care, contract manufacturing, clinical trial expense, outside laboratory services, project consulting, and facility expense. Our platform allows us to work on multiple projects with the same resources, as the research and development process of each product is very similar (with minimal differences in the manufacturing process).

Research and development expenses by component for the three months ended March 31, 2024 and 2023:

|  | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Salaries & benefits | $2,293,789 | $1,716,030 |
| Laboratory supplies | 336,353 | 389,627 |
| Animal care | 113,389 | 582,068 |
| Contract manufacturing | 1,533 | — |
| Clinical trial expense | 806,060 | 47,608 |
| Outside laboratory services | 1,663,155 | 163,206 |
| Project consulting | 280,199 | 228,099 |
| Facility expense | 2,605,051 | 1,338,188 |
| Other expenses | 46,541 | 70,895 |
| Total research and development expenses | $8,146,070 | $4,535,721 |

### General and Administrative Expenses

General and administrative expenses primarily consist of salaries, benefits, and stock-based compensation costs for employees in our executive, accounting and finance, project management, corporate development, office administration, legal and human resources functions as well as professional services fees, such as consulting, audit, tax and legal fees, general corporate costs and allocated overhead expenses. General and administrative expenses also include rent and facilities expenses allocated based upon total direct costs. We expect that our general and administrative expenses will continue to increase in future periods, primarily due to increased headcount to support anticipated growth in the business and due to incremental costs associated with operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a securities exchange and costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC and stock exchange listing standards, public relations, insurance and professional services. We expect these expenses to vary from period to period in absolute terms and as a percentage of revenue.

### Nonoperating (Expense) Income

### Gain (loss) on change in fair value of warrant liabilities

Gain (loss) on change in fair value of warrant liabilities consists of the changes in the fair value of the warrant liabilities.

### Other Income (expense)

Other income primarily consists of income associated with the refundable portion of Australian research and development tax credits.

### Interest income

Interest income consists of interest earned on our investments in debt securities, cash, and cash equivalents.

### Interest expense

Interest expense consists primarily of interest related to borrowings under notes payable for equipment, abated rent, and insurance financing.

### Results of Operations

The following tables set forth our results of operations for the three months ended March 31, 2024 and 2023:

| Revenue | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Grant revenue | $944,575 | $581,101 |
| Total revenue | 944,575 | 581,101 |
| Operating expenses |  |  |
| Research and development | 8,146,070 | 4,535,721 |
| General and administrative | 4,189,121 | 3,447,389 |
| Total operating expenses | 12,335,191 | 7,983,110 |
| Loss from operations | (11,390,616) | (7,402,009) |
| Other income (expense) |  |  |
| Changes in fair value of warrant liabilities | 5,468,219 | 82,586 |
| Interest expense | (76,371) | (92,385) |
| Interest income | 497,893 | 57,988 |
| Other income | 475,130 | — |
| Total other income (expense) | 6,364,871 | 48,189 |
| Loss before income taxes | (5,025,745) | (7,353,820) |
| Income tax expense (benefit) | — | — |
| Net loss | $(5,025,745) | $(7,353,820) |

### Comparison of the three months ended March 31, 2024 and 2023

### Revenue

|  | Three Months Ended March 31, 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $944,575 | $581,101 | $363,474 | 62.5% |
| Total revenue | $944,575 | $581,101 |  |  |

Revenue increased by $363 thousand, or 62.5%, in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to the JPEO Rapid Response Contract Termination. Included in revenues for the three months ended March 31, 2024, are closeout activities and charges of $945 thousand due to outside services for laboratory supply disposal, as compared to $52 thousand for supplies, $151 thousand for labor, and $378 thousand for contract manufacturing for the three months ended March 31, 2023.

As a result of the JPEO Rapid Response Contract Termination, we expect future revenues to be lower as our primary pipeline development target of Type 1 diabetes remains independently financed as we explore potential partnerships, co-development opportunities, and licensing arrangements.

### Research and Development

|  | Three Months Ended March 31, 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Research and development | $8,146,070 | $4,535,721 | $3,610,349 | 79.6% |
| Total research and development expenses | $8,146,070 | $4,535,721 |  |  |

Research and development expenses increased by $3.6 million, or 79.6%, for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to increases in outside lab services (year-over-year increase of $1.5 million, 919.1%), salaries and benefits (year-over-year increase of $0.6 million, 33.7%), an out-of-period adjustment of $0.9 million of amortization expense, overhead (year-over-year increase of $0.6 million, 29.4%), project consulting (year-over-year increase of $0.1 million, 22.8%) offset by a decrease in laboratory supplies (year-over-year decrease of $0.1 million, 13.7%).

### General and Administrative

|  | Three Months Ended March 31, 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| General and administrative | $4,189,121 | $3,447,389 | $741,732 | 21.5% |
| Total general and administrative expenses | $4,189,121 | $3,447,389 |  |  |

General and administrative expenses increased by $0.7 million, or 21.5%, in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to salaries and benefits (year-over-year increase of $0.9 million, 76.1%), project consulting (year-over-year increase of $0.1 million, 63.6%), offset by a decrease in other administrative support fees relating to IT, human resources, and legal (year-over-year decrease of $0.2 million, 14.5%) and insurance costs (year-over-year decrease of $0.1 million, 27.9%). We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance costs as well as investor and public relations expenses associated with being a public company.

### Non-operating Income

|  | Three Months Ended March 31, 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Changes in fair value of warrant liabilities | $5,468,219 | $82,586 | $5,385,633 | 6521.2% |
| Other income | 475,130 | — | 475,130 | N/M |
| Total non-operating income | $5,943,349 | $82,586 |  |  |

Total non-operating income increased by $5.9 million, or 7096.6% in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to the change in fair value of warrant liabilities (year-over-year increase of $5.4 million, 6521.2%), and Australian research and development tax credit (year-over-year increase of $0.5 million).

### Interest Expense

|  | Three Months Ended March 31, 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Interest expense | $76,371 | $92,385 | $(16,014) | (17.3)% |
| Total interest expense | $76,371 | $92,385 |  |  |

32

Interest expense in the three months ended March 31, 2024 was consistent with interest expense in the three months ended March 31, 2023, with the added interest expense on the 8% Unsecured Convertible Note in the current fiscal period offset by lower interest expenses associated with our finance leases in the same period of the prior year.

### Interest Income

|  | Three Months Ended March 31, 2024 | 2023 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Interest income | $497,893 | $57,988 | $439,905 | 758.6% |
| Total interest income | $497,893 | $57,988 |  |  |

Interest income increased by $0.4 million, or 758.6%, during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to interest earned on our investments in debt securities, and higher interest earning cash, and cash equivalent balances.

### Liquidity and Capital Resources

As of March 31, 2024 and December 31, 2023, we had $14.0 million and $56.6 million, respectively, of cash and cash equivalents.

Our standard repayment terms for accounts receivable are thirty days from the invoice date. As a majority of our accounts receivable is from work performed under government grants, we have not had an uncollectible accounts receivable amount in over 5 years.

We intend to continue to invest in our business and, as a result, may incur operating losses in future periods. We expect to continue to invest in research and development efforts towards expanding our capabilities and expertise along our platform and the primary pipeline development targets we are working on, as well as building our business development team and marketing our solutions to partners in support of the growth of the business.

We anticipate that we will continue to generate losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, our product candidates, and begin commercialization of our products. As a result, we will require additional capital to fund our operations in order to support our long-term plans.

We have incurred operating losses for the past several years. While we intend to continue to keep operating expenses at a reduced level there can be no assurance that our current level of operating expenses will not increase or that other uses of cash will not be necessary. Based on our current level of operating expenses, existing resources will be sufficient to cover operating cash needs through the twelve months following the date these financials are made available for issuance. We intend to seek additional capital through equity and/or debt financings, collaborative or other funding arrangements. Should we seek additional financing from outside sources, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital when required or on acceptable terms, we may be required to scale back or discontinue the advancement of product candidates, reduce headcount, liquidate our assets, file for bankruptcy, reorganize, merge with another entity, or cease operations.

### Sources of Liquidity

Since our inception, we have financed our operations primarily from revenue in the form of government grants and from equity financings.

### Equity Financings and Option Exercises

As of March 31, 2024, we have raised approximately $157.4 million since our inception from the issuance and sale of convertible preferred shares, net of issuance costs associated with such financings, the business combination that was consummated on October 22, 2021, proceeds from private placements of securities, and exercises of employee stock options.

### Notes payable

#### 8% Unsecured Convertible Note

Pursuant to the fourth amendment to our lease with Sanford Health, we agreed to a period of abated rent (the “Abated Rent”) from October 1, 2022 to September 30, 2023 pertaining to our leased laboratory bay at the Sanford Research Center. In exchange for the Abated Rent, effective as of October 1, 2022, we issued to Sanford Health an 8% unsecured, convertible promissory note (the “8% Unsecured Convertible Note”).

Pursuant to the 8% Unsecured Convertible Note, we shall pay the sum of approximately $542 thousand (the “Principal”) plus accrued and unpaid interest thereon on September 30, 2024 (the “Maturity Date”). Simple interest shall accrue on the outstanding Principal from and after the date of the 8% Unsecured Convertible Note and shall be payable on the Maturity Date. Sanford Health shall have the right, but not the obligation, to convert all or any part of the outstanding Principal of the 8% Unsecured Convertible Note, together with any accrued and unpaid interest thereon to the date of such conversion, into such number of fully paid and non-assessable shares of our common stock, at any time and from time to time, prior to the later of the Maturity Date and the date on which the 8% Unsecured Convertible Note is paid in full, subject to certain restrictions, at a conversion price per share of common stock equal to greater of (x) $15.00 and (y) the price at which the we sells shares of common stock in any bona fide private or public equity financing prior to the Maturity Date.

#### Insurance Financing

We obtained financing for certain Director & Officer liability insurance policy premiums. The agreement assigns First Insurance Funding (the “Lender”) a first priority lien on and security interest in the financed policies and any additional premium required in the financed policies including (a) all returned or unearned premiums, (b) all additional cash contributions or collateral amounts assessed by the insurance companies in relation to the financed policies and financed by Lender, (c) any credits generated by the financed policies, (d) dividend payments, and (e) loss payments which reduce unearned premiums. If any circumstances exist in which premiums related to any financed policy could become fully earned in the event of loss, Lender shall be named a loss-payee with respect to such policy.

The total premiums, taxes and fees financed is approximately $765 thousand with an annual interest rate of 7.96%. In consideration of the premium payment by Lender to the insurance companies or the agent or broker, we unconditionally promises to pay Lender the amount financed plus interest and other charges permitted under the agreement. We paid the insurance financing through installment payments with the last payment for the current note being September 22, 2024. At March 31, 2024 and December 31, 2023, we recognized approximately $294 thousand and $509 thousand, respectively, as an insurance financing note payable in our condensed consolidated balance sheets.

Please refer to Note 9, *Notes Payable*, in our condensed consolidated unaudited financial statements for additional information on our debt.

### Cash Flows

The following table summarizes our cash flows for the three months ended March 31, 2024 and 2023:

|  | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash used in operating activities | $(10,750,009) | $(1,605,717) |
| Net cash used in investing activities | (31,359,207) | (21,300) |
| Net cash used in financing activities | (394,418) | (359,790) |
| Effect of exchange rate changes on cash and cash equivalents | (28,270) | — |
| Net decrease in cash and cash equivalents | $(42,531,904) | $(1,986,807) |

### Operating Activities

Net cash used by operating activities increased by $9.1 million in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to a increase in cash used in operating activities related to change in our operating assets and liabilities of $7.0 million and a increase in our net loss adjusted for non-cash items of $2.2 million. Year-over-year changes in cash used by operating activities is explained by shifts in the non-cash working capital balances as we continue to invest in the development of our lead product candidate, SAB-142.

### Investing Activities

Net cash used by investing activities increased by $31.3 million in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to an increase in purchases of investment securities.

### Financing Activities

Net cash used by financing activities remained steady in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due a decrease in payments on financing agreements for our insurance agreements offset by an increase in payment for deferred issuance costs.

### Contractual Obligations and Commitments

We enter into contracts in the normal course of business with third parties, including CROs. These payments are not included in the table above, as the amount and timing of such payments are not known.

As of March 31, 2024, there were no material changes outside of the ordinary course of business to our commitments and contractual obligations.

### Income Taxes

The effective income tax rate for the first quarter of 2024 is 0.0%, compared with an effective tax rate of 0.0% for the year ending December 31, 2023. The prior year tax rate reflects a tax provision on a pre-tax loss.

We continue to record a valuation allowance on its net deferred tax assets. The valuation increased by approximately $2.2 million during the three months ended March 31, 2024. We have not recognized any reserves for uncertain tax positions.

### Off-Balance Sheet Arrangements

We did not have, for the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

### Critical Accounting Policies and Estimates

We have prepared our condensed consolidated financial statements in accordance with U.S. GAAP. Our preparation of these condensed consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could therefore differ materially from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 2, *Summary of Significant Accounting Policies,* in our condensed consolidated financial statements we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our condensed consolidated financial statements.

### Cash, cash equivalents, and restricted cash

Cash and cash equivalents are comprised of cash and highly liquid investments with original maturities of 90 days or less at the date of purchase. Cash equivalents consist primarily of exchange-traded money market funds.

The Company is exposed to credit risk in the event of default by the financial institutions or the issuers of these investments to the extent the amounts on deposit or invested are in excess of amounts that are insured.

### Short and long-term investments

Our accounts for short-term investments in accordance with Accounting Standard Codification (ASC) Topic 320, Investments - Debt and Equity Securities. Management determines the appropriate classification of its investments at the time of purchase and reevaluates such determinations at each reporting period.

At March 31, 2024, our short and long-term investments consisted of U.S. treasury securities with original maturity exceeding 90 days and investments in exchange traded mutual funds. We classify these securities as both current and non-current depending on their time to maturity.

Trading securities are measured at fair value with unrealized gains and losses reported within other income in our condensed consolidated statement of operations. Available-for-sale debt securities are measured at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss) in our condensed consolidated statement of operations. We consider all of its securities for which there is a determinable fair market value, and there are no restrictions on our ability to sell within the next twelve months, as available-for-sale securities.

We review its investments at each reporting date to identify and evaluate whether a decline in fair value below the amortized cost basis of available-for-sale securities is due to credit-related factors and determines if such unrealized losses are the result of credit losses that require impairment. Factors considered in determining whether an unrealized loss is the result of a credit loss or other factors include the extent to which the fair value is less than the cost basis, any changes to the rating of the security by a rating agency, the financial condition and near-term prospects of the issuer, any historical failure of the issuer to make scheduled interest or principal payments, any adverse legal or regulatory events affecting the issuer or issuer’s industry, any significant deterioration in economic condition and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.

We did not recognize any credit losses on its short-term or long-term investments during the three months ended March 31, 2024 and 2023.

### Research and development expenses

Expenses incurred in connection with research and development activities are expensed as incurred. These include licensing fees to use certain technology in our research and development projects, fees paid to consultants and various entities that perform certain research and testing on our behalf, and expenses related to animal care, research-use equipment depreciation, salaries, benefits, and stock-based compensation granted to employees in research and development functions.

During the three months ended March 31, 2024 and 2023, we had contracts with multiple contract research organizations (“CRO”) to complete studies as part of research grant agreements. These costs include upfront, milestone and monthly expenses as well as reimbursement for pass through costs. All research and development costs are expensed as incurred except when we are accounting for nonrefundable advance payments for goods or services to be used in future research and development activities. In these cases, these payments are capitalized at the time of payment and expensed in the period the research and development activity is performed. As actual costs become known, we will adjust the accrual; such changes in estimate may be a material change in our clinical study accrual, which could also materially affect reported results of operations. For the three months ended March 31, 2024 and 2023, there were no material adjustments to our prior period estimates of accrued expenses for clinical trials.

### Revenue Recognition

Our revenue is primarily generated through grants from government and other (non-government) organizations.

Grant revenue is recognized during the period that the research and development services occur, as qualifying expenses are incurred, or conditions of the grants are met. Deferred grant income represents grant proceeds received by us prior to the period in which the research and development services occur, as qualifying expenses are incurred, or conditions of the grants are met. We concluded that payments received under these grants represent conditional, nonreciprocal contributions, as described in ASC 958, *Not-for-Profit Entities*, and that the grants are not within the scope of ASC 606, *Revenue from Contracts with Customers*, as the organizations providing the grants do not meet the definition of a customer. Expenses for grants are tracked by using a project code specific to the grant, and the employees also track hours worked by using the project code.

### Stock-based compensation

FASB ASC Topic 718, *Compensation– Stock Compensation*, prescribes accounting and reporting standards for all share-based payment transactions in which employee and non-employee services are acquired. We recognize compensation cost relating to stock-based payment transactions using a fair-value measurement method, which requires all stock-based payments to employees, directors, and non-employee consultants, including grants of stock options, to be recognized in operating results as compensation expense based on fair value over the requisite service period of the awards. We determine the fair value of common stock based on the closing market price at closing on the date of the grant.

In determining the fair value of stock-based awards, we utilize the Black-Scholes option-pricing model, which uses both historical and current market data to estimate fair value. The Black-Scholes option-pricing model incorporates various assumptions, such as the value of the underlying common stock, the risk-free interest rate, expected volatility, expected dividend yield, and expected life of the options. For awards with performance-based vesting criteria, we estimate the probability of achievement of the performance criteria and recognizes compensation expense related to those awards expected to vest. No awards may have a term in excess of ten years. Forfeitures are recorded when they occur. Stock-based compensation expense is classified in the condensed consolidated statements of operations based on the function to which the related services are provided. We recognize stock-based compensation expense over the vesting period.

See Note 11, *Stock Option Plan,* in our condensed consolidated financial statements for information concerning certain specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options granted for the three months ended March 31, 2024 and 2023.

### Deferred Issuance Costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred issuance costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in shareholders’ equity as a reduction of additional paid-in capital generated as a result of the issuance.

As of March 31, 2024, the Company had $236 thousand in deferred issuance costs related to the Company’s sales agreement with Cantor Fitzgerald & Co. The sales agreement is discussed further in Note 10, *Stockholders’ Equity*. The Company had no deferred issuance costs as of December 31, 2023.

### Foreign Currency Translations and Transactions

Assets and liabilities of the Company's foreign subsidiary are translated at the year-end exchange rate. Operating results of the Company's foreign subsidiary are translated at average exchange rates during the period. Translation adjustments have no effect on net loss and are included in “Accumulated other comprehensive loss, net” in the accompanying Consolidated Balance Sheets.

### Warrant Liabilities Valuations

#### Liability Classified Warrants

We are required to periodically estimate the fair value of our Private Placement Warrant liabilities with the assistance of an independent third-party valuation firm. The assumptions underlying these valuations represented our best estimates, which involved inherent uncertainties and the application of significant levels of our judgment. The fair value of our Public Warrant liability is determined by reference to the quoted market price.

The warrants are accounted for as liabilities in accordance with ASC 815-40, *Derivatives and Hedging—Contracts in Entity’s Own Equity*, and were presented within warrant liabilities on the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023. The initial fair value of the warrant liabilities were measured at fair value on the closing date of our business combination, and changes in the fair value of the warrant liabilities were presented within changes in fair value of warrant liabilities in the condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023.

#### Public Warrants and Private Placement Warrants

The fair value of the private placement warrants held by assignees of Big Cypress Holdings, LLC (the “Private Placement Warrants”) was determined utilizing both the Black-Scholes Merton formula and a MCS analysis. Specifically, we considered a MCS to derive the implied volatility in the publicly listed price of the public warrants issued in connection with the closing of our initial public offering (the “Public Warrants”). We then considered this implied volatility in selecting the volatility for the application of a Black-Scholes Merton model for the Private Placement Warrants. We determined the fair value of the Public Warrants by reference to the quoted market price.

The Public Warrants were classified as a Level 1 fair value measurement, due to the use of the quoted market price, and the Private Placement Warrants held privately by assignees of Big Cypress Holdings LLC, were classified as a Level 3 fair value measurement, due to the use of unobservable inputs. See Note 12, *Warrants,* for further information regarding the Public Warrants and Private Placement Warrants.

The measurement as of March 31, 2024 and December 31, 2023 for the Private Placement Warrant liability was approximately $8 thousand and $6 thousand, respectively, and the change in fair value of the Private Placement Warrant liability was approximately $2 thousand the three months ended March 31, 2024.

#### September 2023 Purchase Agreement Warrants

We established fair value of the preferred warrants (the “Preferred Warrants”) issued in connection with the September 2023 private placement offering of Company securities (the “September 2023 Offering”) utilizing the Black-Scholes Merton formula. All tranches of the Preferred Warrants were classified as Level 3 fair value measurements, due to unobservable inputs. See Note 12, *Warrants*, for further information regarding the Preferred Warrants.

The measurement as of March 31, 2024 and the measurement as of December 31, 2023 for the Preferred Warrant liability was approximately $6.1 million and $11.6 million, respectively. The change in fair value of the Preferred Warrant liability was approximately $5.5 million for three months ended March 31, 2024.

### Equity Classified Warrants

#### PIPE Warrants and PIPE Placement Agent Warrants

In December 2022, as a part of our December 2022 private placement (the “December 2022 Private Placement”), we issued warrants (the “PIPE Warrants”) to investors to purchase up to 736,337 shares of common stock. The PIPE Warrants, including those purchased by the participating directors of SAB are exercisable beginning six months from the date of issuance at an exercise price equal to $10.80 per share, and are exercisable for five years from the date of issuance. We also issued our placement agent, Brookline Capital Markets, warrants (the “PIPE Placement Agent Warrants”) to purchase up to an aggregate of 21,091 shares of common stock. The PIPE Placement Agent Warrants have an exercise price equal to $13.50 per share and are exercisable six months from the date of issuance and expires five years from the date of issuance.

#### 2023 Ladenburg Agreement Warrants

On March 21, 2023, we entered into a settlement agreement with Ladenburg Thalmann & Co. Inc. (“Ladenburg”), effective March 23, 2023 (the “2023 Ladenburg Agreement”). In connection with the 2023 Ladenburg Agreement, on March 24, 2023, we issued to Ladenburg a warrant (the “Ladenburg Warrants”) to purchase up to 30,000 shares of common stock, exercisable for three years from the date of issuance at $5.424 per share.

#### Preferred PIPE Placement Agent Warrants

On November 21, 2023 we issued to Chardan Capital Markets LLC, the placement agent for the September 2023 Offering, a warrant to purchase 850,119 shares (as adjusted following the 1 for 10 reverse stock split, effective January 5, 2024) of our common stock (“the Preferred PIPE Placement Agent Warrants”). The Preferred PIPE Placement Agent Warrants have an exercise price equal to $6.30 per share (subject to adjustment for stock dividends and splits) and are exercisable in whole or in part, at any time or times on or after the issuance date and on or before October 2, 2028. The Preferred PIPE Placement Agent Warrant was classified in equity in additional paid-in capital.

We determined the Ladenburg Warrants, PIPE Warrants, PIPE Placement Agent Warrants, and Preferred PIPE Placement Agent Warrant met all necessary criteria to be accounted for as equity in accordance with ASC 815-40, *Derivatives and Hedging—Contracts in Entity’s Own Equity.* As such, they are presented within additional paid-in capital within our condensed consolidated statements of changes in stockholders’ equity and condensed consolidated balance sheets.

Warrants classified as equity are initially measured at fair value. Subsequent changes in fair value are not recognized as long as the warrants continue to be classified as equity. See Note 12, *Warrants,* for further information regarding warrants classified as equity in our condensed consolidated financial statements.

### Common Stock Valuations

Prior to becoming a public company, we were required to periodically estimate the fair value of our common stock with the assistance of an independent third-party valuation firm, as discussed above, when issuing stock options and computing our estimated stock-based compensation expense. The assumptions underlying these valuations represented our best estimates, which involved inherent uncertainties and the application of significant levels of our judgment. In order to determine the fair value of our common stock, we considered, among other items, previous transactions involving the sale of our securities, our business, financial condition and results of operations, economic and industry trends, the market performance of comparable publicly traded companies, and the lack of marketability of our common stock.

We determine the fair value of our common stock based on the closing market price at closing on the date of grant.

Compensation expense related to stock-based transactions is measured and recognized in the financial statements at fair value of our post-merger common stock based on the closing market price at closing on the date of grant. Stock-based compensation expense is measured at the grant date based on the fair value of the equity award and is recognized as expense over the requisite service period, which is generally the vesting period, on the straight-line method. We estimate the fair value of each stock option award on the date of grant using the Black-Scholes option-pricing model. Determining the fair value of stock option awards at the grant date requires judgment, including estimating the expected volatility, expected term, risk-free interest rate, and expected dividends.

### Lease Liabilities and Right-of-Use Assets

We are party to certain contractual arrangements for equipment, lab space, and an animal facility, which meet the definition of leases under ASC 842. In accordance with ASC 842, we, as of January 1, 2018 (the date of adoption), recorded right-of-use assets and related lease liabilities for the present value of the lease payments over the lease terms. We utilized the practical expedient regarding lease and non-lease components and have combined such items into a single combined component. Our incremental borrowing rate was used in the calculation of our right-of-use assets and lease liabilities.

### Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 3, *New Accounting Standards,* in our condensed consolidated financial statements.

### JOBS Act Accounting Election

We qualify as an “emerging growth company” as defined in the JOBS Act. An emerging growth company may take advantage of reduced reporting requirements that are not otherwise applicable to public companies. These provisions include, but are not limited to:

- being permitted to present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q;
- not being required to comply with the auditor attestation requirements on the effectiveness of our internal controls over financial reporting;
- not being required to comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis);
- reduced disclosure obligations regarding executive compensation arrangements; and
- exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We may use these provisions until the last day of our fiscal year in which the fifth anniversary of the completion of our initial public offering occurred. However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer,” our annual gross revenue exceeds $1.235 billion, or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period.

We have elected to take advantage of certain of the reduced disclosure obligations in this Form 10-Q and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our shareholders may be different than the information you receive from other public companies in which you hold stock.

The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards, until those standards apply to private companies. We have elected to take advantage of the benefits of this extended transition period and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. Until the date that we are no longer an emerging growth company or affirmatively and irrevocably opt out of the exemption provided by Section 7(a)(2)(B) of the Securities Act upon issuance of a new or revised accounting standard that applies to our financial statements and that has a different effective date for public and private companies, we will disclose the date on which we will adopt the recently issued accounting standard.

## Market risk

As filed, 1,349 characters.

### Concentration of Credit Risk

We received 100% of our total revenue through grants from government organizations for the three months ended March 31, 2024 and 2023, respectively. To date, no receivables have been written off.

### Interest Rate Risk

As of March 31, 2024 and December 31, 2023, we had a cash, cash equivalents and investments of $45.3 million and $56.6 million, respectively, all of which was maintained in bank accounts, money market funds, and U.S. treasury securities. Our primary exposure to market risk is to interest income volatility, which is affected by changes in the general level of interest rates. A 10% change in the market interest rates would not have a material effect on our business, financial condition, or results of operations.

### Foreign Currency Risk

We conduct materially all of our business in U.S. dollars. We do not have any foreign currency or other derivative financial instruments. Our primary exposure to changes in foreign currency exchange rates relates mainly to SAB Australia. We do not currently hedge our foreign currency exchange rate risk. As of March 31, 2024 and December 31, 2023, our liabilities denominated in foreign currencies were not material. Accordingly, we do not believe a 10% increase or decrease in current exchange rates would have a material effect on our financial results.

## Controls and procedures

As filed, 3,530 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under 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 is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, 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 management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on the evaluation as of March 31, 2024, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2024. Management has concluded that there is a material weakness in the design and operating effectiveness of the Company’s control environment surrounding insufficient documentation of the formalized processes and procedures that are critical to the accomplishment of financial reporting objectives.

### Plan for Remediation of Material Weakness

We continue to work to strengthen our internal control over financial reporting and are committed to ensuring that such controls are designed and operating effectively. We are implementing process and control improvements to address the above material weakness as follows:

- We have engaged with a third party firm to perform a complete risk assessment and provide advisory services for our required documented control attributes and necessary remediation efforts.
- We will soon complete the process of implementing a contract management platform that will integrate functions governing the initiation, authorization, and execution of contracts with enhancements for our existing contract review control. This tool will improve the ability of the finance organization to review new and renewed contracts for potential financial reporting implications.

We are committed to continuing to improve our internal control processes related to these matters and will continue to review our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may take additional measures to address deficiencies or modify certain of the remediation measures described above.

### Changes in Internal Control Over Financial Reporting

There were no changes, except for the remediation effort described above, in our internal control over financial reporting that occurred during the three months ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 361 characters.

Our business is subject to various risks, including those described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 29, 2024 , which we strongly encourage you to review (the “2023 Annual Report”). There have been no material changes from the risk factors described in our 2023 Annual Report.

Filed May 20, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-062367. Last ingested by Listed: Nov 5, 2026, 12:06 ET. No prices; not investment advice.