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

- Company: [Cadrenal Therapeutics, Inc.](/companies/cvkd.md) (CIK 1937993)
- Form: 10-Q
- Filed: 2024-05-09
- Accepted by EDGAR: May 9, 2024, 10:23 ET
- Period: 2024-03-31
- Accession: 0001213900-24-041014
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1937993/000121390024041014/ea0205058-10q_cadrenal.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1937993/000121390024041014/

## Figures reported in this filing

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

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2024-01-01 to 2024-03-31 | $629.0k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | −$1.8m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | −$1.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.10 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.10 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 16,008,469 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | −$1.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2024-03-31 | $6.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $7.0m | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $7.0m | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $856.3k | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $856.3k | us-gaap:Liabilities |
| Shareholders' equity | at 2024-03-31 | $6.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 19,990 characters.

*You should read the following management’s discussion and analysis of our financial condition and results of operations in conjunction with our unaudited financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and notes thereto for the year ended December 31, 2023, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed on March 11, 2024 (the “Annual Report”) with the U.S. Securities and Exchange Commission (the “SEC”). This discussion, particularly information with respect to our future results of operations or financial condition, business strategy, plans and objectives for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading “Special note regarding forward-looking statements” in this Quarterly Report on Form 10-Q. You should review the disclosure under Part 1, Item 1A of the Annual Report for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. References in this Quarterly Report on Form 10-Q to “we,” “us,” “our” and similar first-person expressions refer to Cadrenal Therapeutics, Inc. (“Cadrenal”).*

### Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. The statements contained in this report that are not purely historical are 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified under Part 1, Item 1A of the Annual Report. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

### Company Overview

We are developing tecarfarin, a late-stage novel oral and reversible anticoagulant (blood thinner), to prevent heart attacks, strokes, and deaths due to blood clots in patients with certain rare medical conditions requiring chronic anticoagulation. Tecarfarin has orphan drug and Fast Track designations from the United States Food and Drug Administration (the “FDA”) for the prevention of systemic thromboembolism (blood clots) of cardiac origin in patients with ESKD and AFib. and just recently received orphan drug designation for the prevention of thrombosis and thromboembolism in patients with an implanted mechanical circulatory support device (left ventricular assist devices, right ventricular assist devices, biventricular assist device, total artificial heart (collectively, “VADs”)) in April 2024. We are also pursuing additional regulatory strategies for unmet needs in anticoagulation therapy for patients with thrombotic antiphospholipid syndrome (“APS”). These patients have historically been treated with warfarin, which has been shown to be challenging and unreliable. The direct oral anticoagulants, which are an alternative to warfarin for certain indications, are contraindicated for VADs patients and have been associated with an increased risk for recurrent thrombosis in patients with APS.

Tecarfarin is specifically designed to target a different metabolism pathway than the most commonly prescribed drugs used in the treatment of thrombosis and AFib. Tecarfarin has been evaluated in eleven (11) human clinical trials in over 1,000 individuals (269 patients were treated for at least six months and 129 patients were treated for one year or more). In Phase 1, Phase 2 and Phase 2/3 clinical trials, tecarfarin has generally been well-tolerated in both healthy adult subjects and patients with chronic kidney disease (“CKD”). In the Phase 2/3 trial, EMBRACE-AC, the largest tecarfarin trial with 607 patients having completed it, only 1.6% of the blinded tecarfarin subjects suffered from major bleeding and there were no thrombotic events.

Tecarfarin was developed by researchers using a small molecule “retrometabolic” drug design process which targets a different metabolic pathway than the most commonly prescribed drugs for the treatment of thrombosis and AFib. “Drug metabolism” refers to the process by which a drug is inactivated by the body and rendered easier to eliminate or to be cleared by the body. Most approved drugs, including warfarin, the only FDA-approved Vitamin K antagonist (“VKA”), which is a prescribed drug for the treatment of thrombosis, are metabolized in the liver through a pathway known as the Cytochrome CYP450 system, or CYP450, by the enzymes known as CYP2C9 and CYP3A4. By using a different metabolic pathway, tecarfarin eliminates or minimizes the CYP450 metabolism in the liver. Patients taking multiple medications that interact with CYP2C9, or CYP3A4 or those with impaired kidney function, can experience an overload in the pathway, creating a bottleneck that often leads to insufficient clearance, which results in a toxic build-up of one or more drugs. In some instances, patients taking multiple medications metabolized by the same CYP450 pathway may experience decreased efficacy of one or more of the medications due to rapid metabolism or increased drug effect and/or toxicity due to enzyme induction. Patient-specific genetic differences can also hinder drug clearance in the CYP450 pathway. Our product candidate tecarfarin was designed to follow a metabolic pathway distinct from the CYP450 pathway and is metabolized by both CYP450 and non-CYP450 pathways. We believe this may allow elimination by large capacity and non-saturable tissue esterase pathways that exist throughout the body rather than just in the liver.

Tecarfarin is an orphan designated, vitamin K antagonist, oral, once-daily and reversible anticoagulant in the same drug class as warfarin designed for use in patients requiring chronic VKA anticoagulation, to prevent pathologic thrombus/thromboembolism in certain medical conditions that are not well served by currently available VKAs and in which DOACS are contraindicated or not effective.

The prevailing treatment for thrombosis is with an oral anticoagulant, either a VKA, like warfarin, or non-vitamin K oral anticoagulant (“DOAC”). VKAs block the production of vitamin K-dependent blood clotting factors, such that the blood is “thinned,” preventing clots, while DOACs directly block the activity of certain of these clotting factors. Tecarfarin, like warfarin, is a VKA.

### Initial Public Offering

On January 24, 2023, we consummated our initial public offering (the “IPO”) of 1,400,000 shares of our common stock, par value $0.001 per share (the “common stock”) at a public offering price of $5.00 per share, generating gross proceeds of $7,000,000. Our shares of common stock commenced trading on the Nasdaq on January 20, 2023 under the symbol “CVKD.”

### Private Placement

On July 12, 2023, we entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional investor (the “Investor”) pursuant to which we sold to the Investor in a private placement priced at-the-market (the “Private Placement”) consistent with the rules of the Nasdaq), (i) an aggregate of 1,300,000 shares of common stock, (ii) in lieu of additional share of common stock, pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 2,985,715 shares of common stock, and (iii) accompanying common warrants (the “Common Warrants”) to purchase up to an aggregate of 4,285,715 shares of common stock. The combined purchase price of each share and accompanying Common Warrants was $1.75. The combined purchase price of each Pre-Funded Warrant and accompanying Common Warrants was $1.7499.

The Private Placement closed on July 14, 2023. We received aggregate gross proceeds from the Private Placement of approximately $7.5 million before deducting the placement agent commissions and estimated offering expenses payable by us. We intend to use the net proceeds from the Private Placement for working capital purposes. H.C. Wainwright & Co., LLC (“H.C.W.”) acted as the placement agent in the Private Placement, and as part of its compensation, we issued to designees of H.C.W. Placement Agent Warrants to purchase up to 278,571 shares of common stock.

### Results of Operations

The following table summarizes our results of operations for the three months ended March 31, 2024 and March 31, 2023.

| Operating expenses: | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| General and administrative expenses | $1,125,993 | $964,732 |
| Research and development expenses | 629,025 | 3,235,317 |
| Depreciation expense | 597 | 190 |
| Total operating expenses | 1,755,615 | 4,200,239 |
| Loss from operations | (1,755,615) | (4,200,239) |
| Other (income) expense: |  |  |
| Interest and dividend income | (92,327) | - |
| Interest expense | - | 3,534 |
| Interest expense, amortization of debt discount | - | 13,567 |
| Change in fair value of derivative liabilities | - | 216,095 |
| Loss on extinguishment of debt | - | 740,139 |
| Total other (income) expense | (92,327) | 973,335 |
| Net loss and comprehensive loss | $(1,663,288) | $(5,173,574) |

### General and administrative expenses

General and administrative expenses were $1,125,993 for the three months ended March 31, 2024 compared to $964,732 for the three months ended March 31, 2023. The $161,261, or 17%, increase can be attributed to a $115,977 increase in personnel-related expenses as we added a Chief Operating Officer in January 2024, a $105,376 increase in public company expenses, and a $41,175 increase in consulting fees. These increases were partially offset by a $127,110 decrease in stock-based compensation due to the timing of vesting.

### Research and development expenses

Research and development expenses were $629,025 for the three months ended March 31, 2024 compared to $3,235,317 for the three months ended March 31, 2023. The $2,606,292, or 81%, decrease can be primarily attributed to the issuance of 600,000 shares of common stock (valued at $3.0 million) in January 2023 to HESP LLC, pursuant to the terms of an Amendment to the Asset Purchase Agreement. This decrease was partially offset by a $48,568 increase in personnel-related expenses, a $165,077 increase in consulting fees, and a $129,263 increase in expenses associated with chemistry, manufacturing and controls (“CMC”).

### Interest and dividend income

Interest and dividend income was $92,327 for the three months ended March 31, 2024. This represents the interest and dividend income earned from our investments in money market funds from the proceeds of our IPO and July 2023 PIPE financing. We did not earn interest or dividend income during the three months ended March 31, 2023.

### Change in fair value of derivative liabilities

Concurrent with the closing of the IPO in January 2023, the note holders converted the debt into common stock, accordingly, the derivative financial liabilities were de-recognized and reclassified to stockholders’ equity (deficit) on January 24, 2023.

The derivative liabilities were considered a level 3 fair value financial instrument and were remeasured up to January 24, 2023 which was the date of derecognition. We recorded a non-cash charge of $216,095 in January 2023. This charge represented the increase in the fair value of the derivative liabilities since the previous measurement date of December 31, 2022. We did not have such activity during the three months ended March 31, 2024.

### Loss on extinguishment of debt

We recorded a $740,139 loss on the extinguishment of debt during the three months ended March 31, 2023. This loss represented the unamortized debt discount associated with the convertible notes and the November promissory notes, which were settled concurrent with the IPO. We did not have such activity during the three months ended March 31, 2024.

### Liquidity and Capital Resources

Since inception, we have incurred losses and negative cash flows from operations. To date, we have funded our operations from the proceeds of the sale of convertible notes, and the nonconvertible notes and warrants issued in November 2022, as well as our IPO completed in January 2023 and our Private Placement consummated in July 2023. We had a net loss of $1,663,288 for the three months ended March 31, 2024 which included $163,223 of non-cash expenses. Cash used in operating activities for the three months ended March 31, 2024 totaled $1,836,380. As of March 31, 2024, we had cash and cash equivalents of approximately $6.6 million and no debt. Our current cash and cash equivalents balance as of May 9, 2024 of approximately $6.1 million, is sufficient to fund our operations for at least the next twelve months; however, we expect to require additional funding to complete our planned Phase 3 clinical trial and submit our New Drug Application (“NDA”). In order to fund the commencement and completion of our Phase 3 clinical trial, we intend to raise additional funds through equity and debt financings as well as potential partnering relationships. However, there can be no assurance that we will be able to complete any additional financings or partnering relationships on terms acceptable to us or at all. If we are unable to raise additional funding to meet our working capital needs in the future, we will be forced to delay or reduce the scope of our research programs and/or limit or cease our operations.

### Cash Flows

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

|  | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Cash used in operating activities | $(1,836,380) | $(1,412,794) |
| Cash provided by financing activities | 298 | 5,408,575 |
| Net change in cash | (1,836,082) | 3,995,781 |
| Cash, beginning of period | 8,402,500 | 32,586 |
| Cash, end of period | $6,566,418 | $4,028,367 |

16

### Operating activities

During the three months ended March 31, 2024, cash used in operating activities was $1,836,380. Net loss adjusted for the non-cash items as detailed on the statement of cash flows, used $1,500,065 in cash, and the changes in operating assets and liabilities, as detailed on the statement of cash flows, used $336,315 in cash primarily from a $197,431 decrease in accrued liabilities partially, a $204,094 increase in prepaid expenses, and a $167,844 increase in deferred offering costs partially offset by a $233,054 increase in accounts payable.

During the three months ended March 31, 2023, cash used in operating activities was $1,412,794. Net loss adjusted for the non-cash items as detailed on the statement of cash flows, used $917,099 in cash, and the changes in operating assets and liabilities, as detailed on the statement of cash flows, used $495,695 in cash primarily from a $285,330 decrease in accounts payable and a $604,945 decrease in accrued liabilities partially offset by a $672,295 decrease in deferred equity offering costs.

### Financing activities

During the three months ended March 31, 2024, net cash provided by financing activities totaled $298 from the exercise of Pre-Funded Warrants.

During the three months ended March 31, 2023, net cash provided by financing activities totaled $5,408,575 as we completed our IPO of 1,400,000 shares of our common stock at a public offering price of $5.00 per share, generating gross proceeds of $7,000,000 and net proceeds of $5,408,575. We also received $250,000 from the exercise of warrants that we issued in November 2022, which proceeds were used to repay the notes that were issued in November 2022, with accrued interest on the notes being paid in cash.

### Critical Accounting Estimates

This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Significant estimates and assumptions made in the accompanying financial statements include but are not limited to the fair value of financial instruments, the fair value of stock-based awards, deferred tax assets and valuation allowance, income tax uncertainties, and certain accruals. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, that 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 may differ from these estimated under different assumption or conditions.

### Derivative Financial Instruments

We evaluate all of our agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. We account for certain redemption features that are associated with convertible notes as liabilities at fair value and adjust the instruments to their fair value at the end of each reporting period. Derivative financial liabilities are initially recorded at fair value, with gains and losses arising from changes in the fair value recognized in other income (expense) in the accompanying statements of operations and comprehensive loss for each reporting period while such instruments are outstanding. The embedded derivative liability is valued using a probability-weighted expected return model. If we repay the note holders or if, during the next round of financing, the note holders convert the debt into equity, the derivative financial liability will be de-recognized on that date. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

### Stock-Based Compensation

We measure our stock-based awards granted to employees, consultants and directors based on the estimated fair values of the awards and recognize the compensation over the requisite service period. We use the Black-Scholes option-pricing model to estimate the fair value of our stock option awards. Stock-based compensation is recognized using the straight-line method. As the stock compensation expense is based on awards ultimately expected to vest, it is reduced by forfeitures. We account for forfeitures as they occur.

### OFF-BALANCE SHEET ARRANGEMENTS

We did not have during the period presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

## 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, 2,695 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2024. 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, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. We have adopted and maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is collected, recorded, processed, summarized, and reported within the time periods specified in the rules of the SEC. Our disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management 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 of our disclosure controls and procedures as of March 31, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such a date, our disclosure controls and procedures were effective at the reasonable assurance level.

### Changes in Internal Control over Financial Reporting

During the quarter ended March 31, 2024, there were no changes in our internal control over financial reporting (as defined in Rules 13a 15(f) and 15d 15(f) of the Exchange Act) that occurred that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 412 characters.

*Investing in our securities involves a high degree of risk. Please refer to Part I, Item 1A, “Risk Factors,” contained in our Annual Report for a description of certain significant risks and uncertainties to which our business, financial condition and results of operations are subject. There have been no material changes from these risk factors as of the date of filing of this Quarterly Report on Form 10-Q.*

Filed May 9, 2024.
Source: SEC EDGAR, the filing index for accession 0001213900-24-041014. Last ingested by Listed: Oct 24, 2026, 15:16 ET. No prices; not investment advice.