# Rani Therapeutics Holdings, Inc.: Form 10-Q for the period ended Sep 30, 2024

- Company: [Rani Therapeutics Holdings, Inc.](/companies/rani.md) (CIK 1856725)
- Form: 10-Q
- Filed: 2024-11-14
- Accepted by EDGAR: Nov 14, 2024, 08:20 ET
- Period: 2024-09-30
- Accession: 0000950170-24-126763
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1856725/000095017024126763/rani-20240930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1856725/000095017024126763/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2024-07-01 to 2024-09-30 | $6.2m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2024-01-01 to 2024-09-30 | $19.9m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | −$11.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | −$38.4m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-07-01 to 2024-09-30 | $1.3m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2024-01-01 to 2024-09-30 | $3.9m | us-gaap:InterestExpense |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | −$6.8m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | −$21.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.24 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | −$0.78 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.24 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | −$0.78 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 28,836,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 27,071,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | −$26.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $237.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-09-30 | $4.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $32.4m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $43.5m | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $20.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-09-30 | $37.8m | us-gaap:Liabilities |
| Long-term debt | at 2024-09-30 | $13.5m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-09-30 | $14.8m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-09-30 | $3.1m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 34,840 characters.

### MANAGEMENT’S DISCUSSION AND ANALYSIS OF

### FINANCIAL CONDITION AND RESULTS OF OPERATIONS

*You should read the following management's discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes and other information included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission ("SEC"). Some of the information contained in this discussion and analysis or set forth elsewhere in this document, includes forward looking statements that involve risks, uncertainties, and assumptions. 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” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023. Please also see the section titled “Forward Looking Statements.”*

*The following discussion contains references to calendar year 2023 and the three and nine months ended September 30, 2024 and 2023, respectively, which represents the condensed consolidated financial results of Rani Therapeutics Holdings, Inc. (the "Company") and its subsidiary, Rani Therapeutics, LLC (“Rani LLC”) for the year ended December 31, 2023 and the three and nine months ended September 30, 2024 and 2023, respectively. Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our,” and “Rani” and similar references refers to the Company and its consolidated subsidiary.*

### Overview

We are a clinical stage biotherapeutics company focusing on advancing technologies to enable the administration of biologics and drugs orally, to provide patients, physicians, and healthcare systems with a convenient alternative to painful injections. We are advancing a portfolio of oral therapeutics using our proprietary delivery technology and we are actively pursuing partnering the technology with third party biopharmaceutical companies for the oral delivery of their biologics and drugs.

Our technology comprises a drug-agnostic oral delivery platform, the RaniPill capsule, which is designed to deliver a wide variety of drug substances, including antibodies, proteins, peptides, and oligonucleotides. We are currently developing two configurations of the platform – the RaniPill GO and the RaniPill HC. The RaniPill GO is designed to deliver up to a 3 mg dose of drug in microtablet form with high bioavailability. We have completed three Phase 1 clinical trials using the RaniPill GO. We are also developing a high-capacity version of the RaniPill capsule known as the RaniPill HC, which is intended to enable delivery of drug payloads up to 200µL in liquid form with high bioavailability. We have tested preclinically the RaniPill HC with multiple therapeutics, including antibodies and a peptide. We intend to initiate clinical testing of the RaniPill HC in 2025.

We believe that, together, the RaniPill GO and RaniPill HC could enable us to deliver most biologics currently on the market with convenient, oral dosing.

We do not have any products approved for sale, and we have not yet generated any revenue from sales of a commercial product. Our ability to generate product revenue sufficient to achieve profitability, if ever, will depend on the successful development of the RaniPill capsule, which we expect will take a number of years. Given our stage of development, we have not yet established a commercial organization or distribution capabilities, and we have no experience as a company in marketing drugs or a drug-delivery platform. When, and if, any of our product candidates are approved for commercialization, we plan to develop a commercialization infrastructure or engage commercial sales organizations or distributors for those products in the United States, Europe, Asia, and potentially in certain other key markets. We may also rely on partnerships to provide commercialization infrastructure, including sales, marketing, and commercial distribution.

As is common with biotechnology companies, we rely on third-party suppliers for the supply of raw materials and active pharmaceutical ingredients ("APIs") and drug substances required for the production of our product candidates. In addition, we work with third parties to manufacture and develop biologics and drugs for inclusion in the current RaniPill capsule and RaniPill HC. Design work, prototyping and pilot manufacturing are performed in house, and we have utilized third-party engineering firms to assist with the design of manufacturing lines that support our supply of the current RaniPill capsule and RaniPill HC. Certain of our suppliers of components and materials are single source suppliers. We believe our vertically integrated manufacturing strategy will offer significant advantages, including rapid product iteration, control over our product quality and the ability to rapidly scale our manufacturing capacity. This capability also allows us to develop future generations of products while maintaining the confidentiality of our intellectual property. Our vertically integrated manufacturing strategy will result in material future capital outlays and fixed costs related to constructing and operating a manufacturing facility. We have invested and plan to continue to invest in automated manufacturing production lines for the current RaniPill capsule and RaniPill HC. Those assets deemed to have an alternative future use have been capitalized as property and equipment while those projects related to our assets determined to not have an alternative future use have been expensed as research and development costs.

As of September 30, 2024, our cash, cash equivalents and marketable securities totaled $30.4 million. In July 2024, we entered into a securities purchase agreement (the “July Securities Purchase Agreement”) with an institutional investor relating to the issuance and sale of: (i) 2,800,000 shares of its Class A common stock, (ii) pre-funded warrants to purchase 446,753 shares of Class A common stock, (iii) Series A common warrants, which accompany the Class A common stock and pre-funded warrants, to purchase an aggregate of 3,246,753 shares of Class A common stock (the “Series A Warrants”) and (iv) Series B common warrants, which accompany the Class A common stock and pre-funded warrants, to purchase an aggregate of 3,246,753 shares of Class A common stock (the “July Offering”). The aggregate net proceeds from the July Offering totaled $8.9 million, after deducting placement agent fees and other offering expenses, and excluding potential proceeds, if any, from the exercise of the Series A common warrants and Series B common warrants issued in the July Offering. In August 2024, the pre-funded warrants were fully exercised for de minimis proceeds.

In October 2024, we entered into a securities purchase agreement (the “October Securities Purchase Agreement”) with an institutional investor relating to the issuance and sale of: (i) 3,000,000 shares of our Class A common stock, (ii) pre-funded warrants to purchase 333,333 shares of Class A common stock, and (iii) Series C common warrants, which accompany the Class A common stock and pre-funded warrants, to purchase an aggregate of 3,333,333 shares of Class A common stock (the “October Offering” and collectively with the July Offering, the “Offerings”). Pursuant to the October Securities Purchase Agreement, the Series A Warrants were cancelled. The aggregate gross proceeds from the October Offering were approximately $10.0 million, before deducting placement agent fees and other offering expenses payable by us, and excluding potential proceeds, if any, from the exercise of the pre-funded warrants and Series C common warrants issued in the October Offering. In October 2024, the pre-funded warrants were fully exercised for de minimis proceeds.

We expect to continue to incur losses for the foreseeable future, and our net losses may fluctuate significantly from period to period, depending on the timing of and expenditures on our planned research and development activities. Our existing capital resources, including the net proceeds from the Offerings, our initial public offering in 2021 (“IPO”) and term loans we received under a loan and security agreement and related supplement (the “Loan Agreement”) with Avenue Venture Opportunities Fund, L.P (the “Lender”), will not be sufficient to enable us to initiate any pivotal clinical trials. We will need to raise substantial additional funds in the future in order to complete the development of the RaniPill platform, to complete the clinical development of our product candidates and seek regulatory approval thereof, to expand our manufacturing capabilities, to further develop the RaniPill HC device and to commercialize any of our product candidates. We may seek to raise capital through equity offerings or debt financings, collaboration agreements, or other arrangements with other companies, or through other sources of financing.

### Preclinical Update

In October 2024, we announced new pharmacokinetic data from a preclinical study evaluating a GLP-1, GIP and glucagon receptors incretin triagonist with a delivery method mimicking the RaniPill route of administration. The pharmacokinetic data provides further evidence of the RaniPill platform’s potential to enable oral delivery of multiple obesity treatments.

### Relationship with InCube Labs, LLC

See Note 7 to the condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

### Results of Operations

The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and notes included elsewhere in this Quarterly Report on Form 10-Q. For information with respect to recent accounting pronouncements that are of significance or potential significance to us, see “Note 2. Summary of Significant Accounting Policies” in the “Notes to the Unaudited Condensed Consolidated Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

### Comparison of the three months ended September 30, 2024 and 2023

The following table summarizes our results of operations (in thousands):

| Operating expenses | Three Months Ended September 30, 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Research and development | $6,172 | $11,220 | (45.0)% |
| General and administrative | 5,627 | 6,635 | (15.2)% |
| Total operating expenses | $11,799 | $17,855 | (33.9)% |
| Loss from operations | (11,799) | (17,855) | (33.9)% |
| Other income (expense), net |  |  |  |
| Interest income and other, net | 414 | 839 | (50.7)% |
| Interest expense and other, net | (1,337) | (1,316) | 1.6% |
| Net loss | $(12,722) | $(18,332) | (30.6)% |
| Net loss attributable to non-controlling interest | (5,939) | (9,135) | (35.0)% |
| Net loss attributable to Rani Therapeutics Holdings, Inc. | $(6,783) | $(9,197) | (26.2)% |

#### Research and Development Expenses

The following table reflects our research and development costs by nature of expense (in thousands):

|  | Three Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Payroll, stock-based compensation and related benefits | $4,623 | $6,464 |
| Facilities, materials and supplies | 1,357 | 1,777 |
| Third-party services | 173 | 2,929 |
| Other | 19 | 50 |
| Total | $6,172 | $11,220 |

The decrease of $5.0 million in research and development expenses in the three months ended September 30, 2024, as compared to the same period in 2023, was primarily attributed to lower compensation costs of $1.9 million due to reduction in workforce, $2.7 million reduction in third-party services and $0.4 million reduction in materials and supplies due to the timing of certain preclinical and clinical studies.

#### General and Administrative Expenses

The decrease of $1.0 million in general and administrative expenses in the three months ended September 30, 2024, as compared to the same period in 2023, was primarily attributed to lower compensation costs of $0.5 million due to reduction in workforce, $0.4 million reduction in third-party services due to lower directors and officers insurance premiums and $0.3 million reduction in other costs, offset by an increase in facility costs of $0.2 million due to the lease in Fremont, California.

#### Other Income (Expense), Net

The increase of $0.4 million in other expense, net, in the three months ended September 30, 2024, as compared to the same period in 2023, was attributed to a decrease in interest income of $0.4 million from our investment in marketable securities.

### Comparison of the nine months ended September 30, 2024 and 2023

The following table summarizes our results of operations (in thousands):

| Operating expenses | Nine Months Ended September 30, 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Research and development | $19,872 | $32,018 | (37.9)% |
| General and administrative | 18,484 | 20,647 | (10.5)% |
| Total operating expenses | $38,356 | $52,665 | (27.2)% |
| Loss from operations | (38,356) | (52,665) | (27.2)% |
| Other income (expense), net |  |  |  |
| Interest income and other, net | 1,403 | 2,626 | (46.6)% |
| Interest expense and other, net | (3,909) | (3,789) | 3.2% |
| Net loss | $(40,862) | $(53,828) | (24.1)% |
| Net loss attributable to non-controlling interest | (19,791) | (26,956) | (26.6)% |
| Net loss attributable to Rani Therapeutics Holdings, Inc. | $(21,071) | $(26,872) | (21.6)% |

#### Research and Development Expenses

The following table reflects our research and development costs by nature of expense (in thousands):

|  | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Payroll, stock-based compensation and related benefits | $15,048 | $21,452 |
| Facilities, materials and supplies | 3,957 | 4,829 |
| Third-party services | 820 | 5,550 |
| Other | 47 | 187 |
| Total | $19,872 | $32,018 |

The decrease of $12.1 million in research and development expenses in the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily attributed to lower compensation costs of $6.4 million due to reduction in workforce, $4.7 million reduction in third-party services and $0.9 million reduction in materials and supplies due to the timing of certain preclinical and clinical studies.

#### General and Administrative Expenses

The decrease of $2.2 million in general and administrative expenses in the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily attributed to lower compensation costs of $2.0 million due to reduction in workforce, $0.6 million reduction in other costs and $0.3 million reduction in third-party services due to lower directors and officers insurance premiums, offset by an increase in facility costs of $0.7 million due to the lease in Fremont, California.

#### Other Income (Expense), Net

The increase of $1.3 million in other expense, net, in the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily attributed to a decrease in interest income of $1.2 million from our investment in marketable securities and an increase interest expense of $0.1 million from our debt.

### Liquidity and Capital Resources

### Overview

We have incurred recurring losses and negative cash flows from operations since inception, including net loss of $40.9 million for nine months ended September 30, 2024. As of September 30, 2024, we had an accumulated deficit of $94.0 million and for nine months ended September 30, 2024, had negative cash flows from operations of $26.8 million. As of September 30, 2024, our cash, cash equivalents and marketable securities totaled $30.4 million. We expect to continue to incur losses for the foreseeable future, and our net losses may fluctuate significantly from period to period, depending on the timing of and expenditures on our planned research and development activities. Our existing capital resources, including the net proceeds from our IPO and term loans we received under the Loan Agreement and the Offerings, will not be sufficient to enable us to initiate any pivotal clinical trials. Based on our available cash resources and current operating plan, there is substantial doubt regarding our ability to continue as a going concern for a period of one year after the date that our financial statements for the nine months ended September 30, 2024 are issued. If we are unable to continue as a going concern, we may have to cease operations and liquidate our assets. We may receive less than the value at which those assets are carried on our condensed consolidated financial statements, and investors may lose all or a part of their investment.

### Financial Update

In July 2024, we entered into the July Securities Purchase Agreement with an institutional investor relating to the July Offering. The aggregate net proceeds from the July Offering totaled $8.9 million, after deducting placement agent fees and other offering expenses, and excluding potential proceeds, if any, from the exercise of the Series A common warrants and Series B common warrants issued in the July Offering. In August 2024, the pre-funded warrants were fully exercised for de minimis proceeds.

In October 2024, we entered into the October Securities Purchase Agreement with an institutional investor relating to the October Offering. The aggregate gross proceeds from the October Offering were approximately $10.0 million, before deducting placement agent fees and other offering expenses payable by us, and excluding potential proceeds, if any, from the exercise of the Series C common warrants issued in the October Offering. In October 2024, the pre-funded warrants were fully exercised for de minimis proceeds.

In November 2023, our Board of Directors (the “Board”) approved a reduction in the annual salary of Talat Imran, our Chief Executive Officer, from $520,000 to $100,000, effective November 1, 2023 through December 31, 2024 or until such time as we receive gross proceeds of $50,000,000 or more, in the aggregate, from equity financing and/or one or more non-dilutive strategic, licensing or partnering transactions (the “Financing Threshold”). In November 2024, the Board approved to extend the reduction in annual salary of Talat Imran through December 31, 2025 or until the Financing Threshold is met.

In August 2022, we entered into the Loan Agreement with the Lender. The Loan Agreement provides for term loans (the “Loans”) in an aggregate principal amount up to $45.0 million. A Loan of $30.0 million was committed at closing, with $15.0 million funded immediately and $15.0 million available to be drawn between October 1, 2022 and December 31, 2022, which was drawn in December 2022. The remaining $15.0 million of Loans was uncommitted and subject to certain conditions and is no longer available under the Loan Agreement. The Loan Agreement also contains various covenants and restrictive provisions. There have been no material adverse events in connection with the Loan Agreement and the substantial doubt regarding our ability to continue as a going concern does not currently constitute a material adverse event under the terms of the Loan Agreement. The Loan principal is repayable in equal monthly installments beginning September 2024. As of September 30, 2024, we were in compliance with all applicable debt covenants under the Loan Agreement.

In August 2022, we entered into a Controlled Equity Sales Agreement (the "Sales Agreement") with Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC (collectively the "Agents"), pursuant to which we may offer and sell from time to time through the Agents up to $150.0 million of shares of its Class A common stock, in such share amounts as we may specify by notice to the Agents, in accordance with the terms and conditions set forth in the Sales Agreement. The potential proceeds from the Sales Agreement are expected to be used for general corporate purposes. As of September 30, 2024, we had no sales under the Sales Agreement.

### Tax Receivable Agreement

See Note 12 to the condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

### Future Funding Requirements

Notwithstanding the sharing of development costs for the RT-114 program under the ProGen Agreement, our existing capital resources, including the net proceeds from our IPO, the Loans and the Offerings, will not be sufficient to enable us to initiate any pivotal clinical trials with respect to any of our product candidates. We will need to raise substantial additional funds in the future in order to complete the development of the RaniPill platform, to complete the clinical development of our product candidates and seek regulatory approval thereof, to expand our manufacturing capabilities, to further develop the RaniPill HC device and to commercialize any of our product candidates.

To date, we have not generated any commercial product revenue. We do not expect to generate any commercial product revenue unless and until we obtain regulatory approval and commercialize any of our commercial product candidates, and we do not know when, or if at all, that will occur. We will continue to require additional capital to develop our product candidates and fund operations for the foreseeable future. Our primary uses of cash are to fund our operations, which consist primarily of research and development expenses related to our programs, manufacturing automation and scaleup, and general and administrative expenses. We expect our expenses to continue to increase in connection with our ongoing activities as we continue to advance the RaniPill GO, RaniPill HC and our product candidates.

We may seek to raise capital through equity offerings or debt financings, which may include ATM Sales, collaboration agreements, or other arrangements with other companies, or through other sources of financing. Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our consolidated financial condition and our ability to pursue our business strategies. We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including:

- the progress, costs, trial design, results of and timing of our preclinical studies and clinical trials;
- the progress, costs, and results of our research pipeline;
- the willingness of the FDA, or other regulatory authorities to accept data from our clinical trials, as well as data from our completed and planned clinical trials and preclinical studies and other work, as the basis for review and approval of our product candidates or collaborator drugs or biologics paired with the RaniPill GO and/or RaniPill HC for various indications;
- the outcome, costs, and timing of seeking and obtaining FDA and any other regulatory approvals;
- the number and characteristics of product candidates that we pursue;
- our ability to manufacture sufficient quantities of the RaniPill capsules;
- our need to expand our research and development activities;
- the costs associated with manufacturing our product candidates, including establishing commercial supplies and sales, marketing, and distribution capabilities;
- the costs associated with securing and establishing commercial infrastructure;
- the costs of acquiring, licensing, or investing in businesses, product candidates, and technologies;
- our ability to maintain, expand, and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense, and enforcement of any patents or other intellectual property rights;
- our need and ability to retain key management and hire scientific, technical, business, and engineering personnel;
- the effect of competing drugs and product candidates and other market developments;
- the timing, receipt, and amount of sales from our potential products, if approved;
- our ability to establish strategic collaborations;
- our need to implement additional internal systems and infrastructure, including financial and reporting systems;
- security breaches, data losses or other disruptions affecting our information systems;
- our ability to realize savings from any restructuring plans or cost-containment measures we may implement; and
- the economic and other terms, timing of and success of any collaboration, licensing, or other arrangements which we may enter in the future.

Pursuant to the terms of the October Securities Purchase Agreement, until 30 days following the closing of the October Offering, we agreed not to issue, enter into any agreement to issue, or announce the issuance or proposed issuance of any shares of Class A common stock or common stock equivalents, or file or amend any registration statement or prospectus, other than as necessary to maintain the registration of the securities offered in the October Offering. We further agreed not to enter into an agreement involving any new variable rate transactions until January 23, 2025, subject to certain exceptions. These restrictions could prevent us from raising additional capital that we might otherwise be able to raise.

If we raise additional capital through debt financing, we may be subject to covenants that restrict our operations including limitations on our ability to incur liens or additional debt, pay dividends, make certain investments, and engage in certain merger, consolidation, or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us. If we raise funds through collaborations, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, reduce, or terminate some or all of our development programs and clinical trials or delay investments in our manufacturing scale-up and automation. In addition, our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to and volatility in the credit and financial markets. Furthermore, this Quarterly Report on Form 10-Q contains statements expressing substantial doubt about our ability to continue as a going concern. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide funding to us on commercially reasonable terms, if at all.

The following table summarizes our cash, cash equivalents and marketable securities:

|  | September 30, 2024 | December 31, 2023 |
| --- | ---: | ---: |
| Cash and cash equivalents | $4,277 | $5,864 |
| Marketable securities | 26,127 | 42,675 |
| Total cash, cash equivalents and marketable securities | $30,404 | $48,539 |

As of September 30, 2024, we had cash and cash equivalents and marketable securities of $30.4 million, compared to $48.5 million as of December 31, 2023. Based on our available cash resources and current operating plan, there is substantial doubt regarding our ability to continue as a going concern for a period of one year after the date that our financial statements for the nine months ended September 30, 2024 are issued. Our existing capital resources, including the net proceeds from our IPO, Loans and the Offerings, will not be sufficient to fund our projected operating requirements for a twelve-month period from the issuance of our financial statements.

### Cash Flows

The following table summarizes our cash flows for the periods presented (in thousands):

|  | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash used in operating activities | $(26,841) | $(38,758) |
| Net cash provided by investing activities | 17,288 | 16,586 |
| Net cash provided by financing activities | 7,966 | 137 |
| Net decrease in cash, cash equivalents and restricted cash equivalents | $(1,587) | $(22,035) |

### Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2024 was $26.8 million, which was primarily attributable to a net loss of $40.9 million and net accretion and amortization of investments in marketable securities of $0.9 million, partially offset by stock-based compensation expense of $12.0 million and depreciation and amortization expense of $0.8 million. Additionally, there was an increase in accounts payable of $0.9 million, an increase in deferred revenue of $0.6 million and an increase of $0.3 million in prepaid expenses and other current assets for the nine months ended September 30, 2024.

Net cash used in operating activities for the nine months ended September 30, 2023 was $38.8 million, which was primarily attributable to a net loss of $53.8 million and net accretion and amortization of investments in marketable securities of $1.9 million, partially offset by stock-based compensation expense of $14.5 million and depreciation and amortization expense of $0.6 million. Additionally, there was an increase in accrued expenses and other current liabilities of $1.6 million for the nine months ended September 30, 2023.

### Investing Activities

For the nine months ended September 30, 2024, net cash provided by investing activities was $17.3 million, which primarily consisted of $57.3 million in proceeds from maturities of marketable securities partially offset by $39.7 million in purchases of marketable securities and $0.2 million in purchases of property and equipment.

For the nine months ended September 30, 2023, net cash provided by investing activities was $16.6 million consisting of $81.5 million in proceeds from maturities of marketable securities partially offset by $63.9 million and $1.0 million in purchases of marketable securities and property and equipment, respectively.

### Financing Activities

For the nine months ended September 30, 2024, net cash provided by financing activities was $8.0 million, which primarily consisted of net proceeds of $8.9 million from the July Offering and $0.2 million from the issuance of common stock under employee stock purchase plan, partially offset by $1.3 million repayment of debt.

For the nine months ended September 30, 2023, net cash provided by financing activities was de minimis.

### Contractual Obligations and Other Commitments

As of September 30, 2024, there have been no material changes to our contractual obligations and other commitments compared to those disclosed in our Annual Report on Form 10-K

### Critical Accounting Estimates

We prepare our condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our condensed consolidated financial statements that require estimation but are not deemed critical, as defined above.

### Recently Adopted Accounting Standards

See Note 2 to the condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

### Other Information

#### JOBS Act Accounting Election

We are an “emerging growth company” within the meaning of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). The JOBS Act permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are electing to use this extended transition period and we will therefore comply with new or revised accounting standards on the earlier of (i) when they apply to private companies; or (ii) when we lose our emerging growth company status. As a result, our financial statements may not be comparable with companies that comply with public company effective dates for accounting standards. We also rely on other exemptions provided by the JOBS Act, including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act unless we cease to be an emerging growth company.

We will remain an emerging growth company until the earliest of (1) December 31, 2026 (the last day of the fiscal year following the fifth anniversary of the closing of our IPO), (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our Class A common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

## Market risk

As filed, 153 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 required under this item.

## Controls and procedures

As filed, 3,634 characters.

### Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15(d)-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2024.

### Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the three months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost–effective control system, misstatements due to error or fraud may occur and not be detected.

## Risk factors

As filed, 3,383 characters.

Other than as described below, management believes that there have been no significant changes to the risk factors associated with our business as compared to those disclosed in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023.

***Our collaboration agreement with ProGen Co., Ltd. includes certain restrictions and obligations that may limit our flexibility in developing and commercializing RT-114 or require us to bear costs we otherwise would not incur.***

In June 2024, we entered into a Collaboration Agreement with ProGen for the worldwide development and commercialization of RT-114, a GLP-1/GLP-2 dual agonist in the RaniPill® HC capsule. Under the terms of the ProGen Agreement, the parties will share equally the costs and revenues from development and commercialization of RT-114. Each party has certain rights, restrictions and obligations under the ProGen Agreement with respect to the development, manufacture and commercialization of RT-114, including certain rights to provide input on or approve activities of the other party or costs related thereto. As a result, we may not be able to develop and commercialize RT-114 in the manner or timeframe we believe to be most advantageous, and may be obligated to share costs that we otherwise would not incur. In addition, under the terms of the ProGen Agreement, each party has the right to opt-out of the collaboration, including the cost and revenue sharing, for RT-114, in which case the continuing party would bear all costs for further development, manufacture and commercialization of RT-114, other than certain costs already then-approved, and receive all future revenues from the program, subject to a low-to-mid single-digit royalty to the other party, depending on when the opt-out occurred. If ProGen were to opt-out, we would bear all such costs for further development, manufacture and commercialization of RT-114.

***Negative results arising from ProGen’s development or future commercialization of PG-102, the therapeutic compound used in RT-114, could have materially adverse effects on our development of RT-114, or limit the commercial profile of an approved label for or result in limiting the commercial opportunity for RT-114, if approved.***

The therapeutic compound utilized in RT-114 is a GLP-1/GLP-2 dual agonist from ProGen known as PG-102. ProGen is developing PG-102, independent of our collaboration, as a subcutaneous injection for obesity and type-II diabetes. ProGen may develop PG-102 for other indications. ProGen’s PG-102 is in Phase 1 clinical testing. If ProGen’s clinical or preclinical testing of PG-102 results in data that is negative, or perceived to be negative, including without limitation safety concerns, adverse events or uncompetitive or poor efficacy data, or if ProGen encounters challenges obtaining regulatory approval for or commercial success with PG-102, such results could materially adversely affect the development, potential for regulatory approval for and/or commercial opportunity of RT-114, since RT-114 utilizes the same compound. In addition, if ProGen, itself or through a partner, succeeds in developing, obtaining regulatory approval for, and commercializing PG-102 outside of our collaboration, that product could compete with RT-114 and have a material adverse effect on the commercial opportunity for RT-114.

Filed Nov 14, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-126763. Last ingested by Listed: Oct 24, 2026, 15:16 ET. No prices; not investment advice.