RenovoRx, Inc.: Form 10-Q for the period ended Sep 30, 2024

Unless the context otherwise requires, all references in this section to the “Company,” “we,” “us,” or “our” refer to RenovoRx, Inc. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited interim condensed financial statements and related notes included elsewhere in this Report, our management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2023, which is included in our 2023 Annual Report.

This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that reflect our plans, estimates, and beliefs that involve risks and uncertainties, including those described in the section of this Report titled “Cautionary Note Regarding Forward Looking Statements.” Our actual results and the timing of selected events could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those set forth under the section titled “Risk Factors” included elsewhere in this Report and in the 2023 Annual Report.

Overview

We are a life sciences company developing novel targeted oncology therapies and offering RenovoCath, a novel, U.S. Food and Drug Administration (“FDA”)-cleared local drug-delivery platform, targeting high unmet medical needs. Our patented TAMP therapy platform is designed to ensure precise therapeutic delivery across the arterial wall near the tumor site to bathe the target tumor, while potentially minimizing a therapy’s toxicities versus systemic intravenous therapy. Our novel approach to targeted treatment offers the potential for increased safety, tolerance, and improved efficacy, and our mission is to transform the lives of cancer patients by providing innovative solutions to enable targeted delivery of diagnostic and therapeutic agents.

Our lead product candidate is a novel oncology drug-device combination product and is being investigated under a U.S. Investigational New Drug (“IND”) application that is regulated by the FDA’s 21 CFR 312 pathway. The investigational drug-device combination candidate utilizes RenovoCath®, our FDA-cleared device, indicated for temporary vessel occlusion in applications including arteriography, preoperative occlusion, and chemotherapeutic drug infusion.

The intra-arterial infusion of the chemotherapy, gemcitabine, utilizing RenovoCath is currently being evaluated for the treatment of locally advanced pancreatic cancer (“LAPC”) by the Center for Drug Evaluation and Research (the drug division of FDA) in our ongoing Phase III TIGeR-PaC randomized multi-center clinical trial.

We may also evaluate RenovoCath with gemcitabine as a potential therapy in other indications. RenovoCath with gemcitabine received Orphan Drug Designation for pancreatic cancer and bile duct cancer, which provides 7 years of market exclusivity upon NDA approval by the FDA.

Further, as described further below under “Other Potential Opportunities for RenovoCath,” we are also actively exploring other commercialization strategies utilizing our TAMP technology and FDA-cleared RenovoCath delivery system as a stand-alone device.

Intra-arterial Infusion of Gemcitabine with RenovoCath: Clinical Process to Date

Systemic (IV gemcitabine and nab-paclitaxel) chemotherapy is currently the standard of care for pancreatic cancer treatment. However, it is known to cause debilitating side effects for patients diagnosed with this disease. Unlike other tumors with extensive blood supply, pancreatic tumors have poor blood supply so systemic chemotherapy may not adequately reach the tumor. Thus, the standard of care may be less effective in treating this type of cancer because the blood vessels are critical for transporting systemic administration of chemotherapy to the tumor.

We have completed our RR1 Phase I/I and RR2 observational registry studies for RenovoCath with gemcitabine, with 20 and 25 patients respectively, in LAPC. In the 35 pooled patients evaluable in these two studies, 9 patients pretreated with radiation followed by treatment with RenovoCath with gemcitabine experienced a median Overall Survival (“OS”) of 27.1 months. Based on previous large randomized clinical trials, the expected survival of LAPC patients is 12.0 to 18.8 months in patients receiving only IV systemic chemotherapy or IV chemotherapy plus radiation (which are both considered standard of care). Unlike the randomized trials that established these standard of care results, our RR1 and RR2 clinical trials did not prospectively control the standard of care therapy received prior to administration of RenovoCath with gemcitabine. Based on FDA safety review of our Phase I/II study, the FDA allowed us to proceed to evaluate RenovoCath with gemcitabine within our Phase III TIGeR-PaC clinical trial.

Our ongoing Phase III TIGeR-PaC clinical trial, a randomized, multi-center study, is evaluating RenovoRx’s first product candidate, using TAMP, a novel investigational oncology drug-device combination utilizing the Company’s FDA-cleared RenovoCath device for the intra-arterial administration of gemcitabine to treat LAPC following stereotactic body radiation therapy (“SBRT”). The study compares the treatment of LAPC using RenovoCath with gemcitabine versus systemic IV administration of gemcitabine and nab-paclitaxel.

Our protocol for TIGeR-PaC involves systemic chemotherapy and SBRT during the induction phase of the study (prior to randomization). Patients receiving SBRT during the induction phase are required to complete 5 treatments, over 5 consecutive days, and do not receive oral chemotherapy vs. previously utilized intensity-modulated radiation therapy (“IMRT”) where patients must complete 25 radiation treatments in combination with oral chemotherapy during the induction phase of the study, which takes between 35 and 56 days to complete. In December 2021, we amended our protocol and statistical analysis plan for TIGeR-PaC (the “Modified SAP”) to (i) enroll and analyze only patients receiving SBRT during the induction phase, (ii) include a second interim analysis, (iii) change the total number of patients randomized in the study to 114 with a total of 86 deaths from SBRT patients, and (iv) repower the study from 90% to 80%,The change to the 80% power calculation aligns with common practice for clinical trials and, we believe this design will shorten the timeframe needed to complete the study, as well as significantly decrease our costs. We have not discussed the protocol amendment or the Modified SAP with the FDA, and we cannot provide any assurance that the FDA will agree with these modifications, but these modifications have been submitted to the FDA.

The first interim analysis in the TIGeR-PaC study at the 26th event of the specified events (deaths), was completed in March 2023, with the Data Monitoring Committee recommending a continuation of the study. The TIGeR-PaC study’s primary endpoint is an OS benefit with secondary endpoints including reduced side effects versus standard of care. The second interim analysis for this study will be triggered by the 52nd event, which is estimated to occur in late 2024 or early 2025. The second interim data readout would follow thereafter, with the timing for such readout depending on customary factors such as time needed for analysis. We are also aiming to complete patient enrollment in the TIGeR-PaC study in the first half of 2025.

Our TAMP Therapy Platform

Our patented TAMP therapy platform is focused on optimizing drug concentration in solid tumors by delivering oncology therapies with our RenovoCath delivery system. TAMP is designed to enable physicians to isolate segments of the vascular anatomy closest to tumors and ensure precise therapeutic delivery, while potentially minimizing a therapy’s toxicities versus systemic intravenous therapy. Specifically, our patented approach enables physicians to pre-treat patients with standard-of-care radiation therapy and utilize our RenovoCath delivery system to use pressure to force chemotherapy across the arterial wall near the tumor site to bathe the target tumor.

We believe there are many advantages to our TAMP therapy platform, including:

• Application of Approved Chemotherapeutic Agents: Approved chemotherapeutic agents, with well-known safety and efficacy profiles have been used with our RenovoCath delivery system. These include small molecule chemotherapy agents, and based on more recent animal studies, we believe that larger molecule agents could be utilized as well.
• Targeted Approach: In a preclinical study using our therapy platform, we demonstrated up to 100 times higher local drug concentration compared to systemic chemotherapy. We believe our TAMP therapy platform allows for a targeted approach that can decrease systemic exposure and improve patient outcomes.
• Delivery Method Independent of Tumor Vascularity: Our therapy platform is designed to deliver chemotherapeutic agents to solid tumors resistant to systemic chemotherapy due to lack of tumor feeder blood vessels. If approved, our product candidates utilizing our FDA-cleared RenovoCath delivery system have the potential to treat tumors that are not directly supplied by large blood vessels.
• Broad Application for Solid Tumor Indications: Our therapy platform is not restricted to a single chemotherapeutic agent or solid tumor type. As such, it may be applied for use with additional therapeutic agents and/or in additional solid tumor indications, including in solid tumors with and without identifiable tumor feeder blood vessels.

We received our first FDA 510(k) clearance for RenovoCath in 2014, a second clearance to use the RenovoCath for infusion of chemotherapy agents in 2017, a further clearance to use RenovoCath with a power-injector in 2019, and a fourth clearance in 2021 to expand vessel diameter range to 3-11 mm, implement certain changes in the Instructions for Use, change the recommended saline to contrast solution ratio, among other changes and improvements.

In a further validation of our TAMP platform, last year, we announced a collaboration with Imugene (ASX: IMU) to explore expansion of our TAMP product pipeline with Imugene’s CF33 oncolytic virus therapy for the treatment of difficult-to-access tumors. We are continually in discussions regarding similar collaborations and potentially out-licenses of RenovoCath with gemcitabine as we prepare for the NDA filing (assuming we meet our study endpoints) and commercialization of RenovoCath (if approved by FDA) as well as other collaborations with our TAMP platform.

For further information regarding our RenovoCath Instructions for Use (“IFU”), please see: IFU-10004-Rev.-F-Universal-IFU.pdf.

Other Potential Commercial Opportunities for RenovoCath

In recent years, we have focused our efforts primarily on progressing RenovoCath with gemcitabine through our ongoing Phase III TIGeR-PaC study for LAPC. During this process, we have begun to explore other opportunities for our TAMP therapy platform.

As a result of the introduction of our FDA-cleared RenovoCath delivery system as part of the TIGeR-PaC study and the resulting unsolicited (and subsequently solicited) feedback we have received from oncologists, surgeons, and interventional radiologists indicating increased demand for targeted delivery of diagnostic and/or therapeutic agents, during the first half of 2024, we began to actively explore a new opportunity to market and sell RenovoCath as a standalone device. RenovoCath is FDA-cleared and indicated for temporary vessel occlusion in applications including arteriography, preoperative occlusion, and chemotherapeutic drug infusion. We will engage in this potential revenue-generating activity either on our own or, more likely, in tandem with a commercial partner.

In September 2024, we announced the signing of a new project work order with our RenovoCath contract manufacturing organization partner, Medical Murray Inc. of North Barrington, IL (the “CMO”), for an expanded relationship as we continue our exploration of commercial opportunities for RenovoCath beyond our currently ongoing clinical programs. To create performance incentives for our CMO, we have issued a warrant to purchase up to 709,500 shares of our common stock. This warrant vests and is only exercisable over time in tranches and only if the CMO achieves certain manufacturing milestones.

Beyond LAPC, we believe there are many clinical applications for RenovoCath to improve targeted delivery of diagnostic and therapeutic agents. This leads us to a business development opportunity that would also likely engage in Phase IV post-market “registry” clinical studies of the RenovoCath delivery system to gather additional data to support both our clinical and commercial efforts. Securing the manufacturing capacity for this strategy with our CMO partner is a great first step. We are also in active discussions with many interested customers to purchase supplies of RenovoCath as well as potential distribution partners.

We are increasing production of RenovoCath supplies through our CMO, and if we launch our commercial strategy as planned, we anticipate potential for near-term revenue in 2025. Without incremental revenues from this commercial strategy, we maintain sufficient cash on hand to achieve both our next interim read-out of our Phase III TIGeR-PaC study, which will be triggered by the 52nd event, estimated to occur in late 2024 or early 2025, and fund our current efforts for our RenovoCath go to market activities. The second interim data readout would follow thereafter, with the timing for such readout depending on customary factors such as time needed for analysis. We are also aiming to complete patient enrollment in the TIGeR-PaC study in the first half of 2025.

In parallel, we remain fully engaged and committed to the ongoing pivotal Phase III TIGeR-PaC clinical trial in LAPC. During 2024, we announced that additional renowned clinical oncology sites are now participating in the study with the goal of accelerating patient enrollment. We are progressing towards data, which could allow for a second interim readout in the trial and the potential filing of NDA with the FDA for RenovoCath with gemcitabine as a drug-device treatment in LAPC.

Previous Fundraising and Anticipated Future Spending

Since our inception, we have devoted substantially all our efforts to developing our cancer therapy platform and product candidates, raising capital and organizing and staffing our company. In January and April 2024, we raised additional funding in two private placements, offering shares of common stock and warrants to purchase shares of common stock for aggregate gross proceeds of $17.2 million. As of September 30, 2024, we have received over $59.2 million in aggregate gross proceeds and have financed our operations primarily through issuance of convertible preferred stock and convertible notes prior to our initial public offering, and securities issued in our August 2021 initial public offering, a registered direct offering with a single institutional investor in April 2023 (the “RDO”), common stock purchase warrants, the aforementioned January and April 2024 private placements, and a loan pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). After deducting underwriting discounts, commissions, placement fees, legal fees, and other professional expenses of $5.8 million, our net offering proceeds to date are $53.4 million.

We have incurred significant operating losses and generated negative cash flows from operations since our inception. As of September 30, 2024, we had cash and cash equivalents of $9.6 million. As of September 30, 2024, we had an accumulated deficit of $47.3 million. We expect to continue to incur significant expenses, increasing operating losses and negative cash flows for the foreseeable future. At the time we launch our commercial strategy, we anticipate to generate revenue from RenovoCath device sales via either on our own or, more likely, in tandem with a commercial partner our direct channel and/or collaborations, licensing arrangements or other strategic or commercial activities. Given economic and market conditions and the timing of regulatory approval, we expect that our expenses will increase in connection with our ongoing research, development and potential commercialization activities, particularly if and when we decide to:

• Advance clinical development of the TAMP therapy platform with the RenovoCath delivery system by continuing to enroll patients in our ongoing Phase III TIGeR-PaC clinical trial, and advancing our technology through preclinical and clinical pipeline indication opportunities;
• Hire additional research, development, engineering, and general and administrative personnel;
• Pursue collaborations, licensing arrangements or other strategic or commercial activities relating to our technology;
• Maintain, expand, enforce, defend, and protect our intellectual property portfolio; and
• Expand our operational, financial and management systems and increase personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations.

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As a result, we will require significant additional funding to support our continuing operations. If and when any of our product candidates successfully complete development, we will incur substantial additional costs associated with establishing a sales, marketing, medical affairs and distribution infrastructure to commercialize our products for which we may obtain marketing approval, regulatory filings, marketing approval, and post-marketing requirements, in addition to other commercial costs. We cannot reasonably estimate these costs at this time.

Our ability to obtain additional financing will be subject to a number of factors, including market conditions, fluctuations in interest rates, our operating performance and investor sentiment. If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue the development and/or commercialization of our product candidates, restrict or cease our operations or obtain funds by entering into agreements on unfavorable terms. Failure to obtain additional capital on acceptable terms, or at all, would result in a material and adverse impact on our operations. As a result, there is substantial doubt about our ability to operate as a going concern.

Our financial statements as of September 30, 2024 have been prepared on a going concern basis and do not include any adjustments that may result from the outcome of this uncertainty. Based on our operating plans, we do not expect that our current cash and cash equivalents as of the date of this filing, will be sufficient to fund our operating, investing and financing cash flow needs, assuming our programs advance as currently contemplated.

Components of Our Results of Operations

Revenue

Currently, we have not generated any revenue from product sales of our patented RenovoCath device or as a result of our TIGeR-PaC clinical study or any other clinical or sales efforts. If our development efforts for our current or future product candidates are successful and result in marketing approval or collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from collaboration or license agreements. We may also pursue a strategy of commercializing our RenovoCath, as a standalone device as a means of generating revenue.

Operating Expenses

Research and Development

Research and development expenses consist of costs related to the research and development of our platform technology. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors and consultants. We outsource a substantial portion of our clinical trial activities, utilizing the service of third-party clinical trial sites and third-party vendors to assist us with the execution of our clinical trials. In addition, we have FDA 510(k) clearance for our proprietary catheter delivery device RenovoCath, which comprises part of the RenovoGem product. Accordingly, we are able to charge our clinical trial sites for the RenovoCath delivery device. To date, payments from clinical trial sites in consideration for RenovoCath delivery devices have been adequate to cover our direct manufacturing costs. Any payments we receive from clinical trial sites as consideration for use of RenovoCath delivery devices offset a portion of our research and development expenses. We expect our research and development expenses to increase for the foreseeable future as we continue the development of our product candidates and enroll subjects in our ongoing Phase III clinical trial, initiate new clinical trials and pursue regulatory approval of our product candidates. It is difficult to predict with any certainty the duration and costs of completing our current or future clinical trials of our product candidates or if, when or to what extent we will achieve regulatory approval and generate revenue from the commercialization and sale of our product candidates. The duration, costs and timing of clinical trials and other development of our product candidates will depend on a variety of factors, including uncertainties in clinical trial enrollment, timing and extent of future clinical trials, development of new product candidates and significant and changing government regulation. We may never succeed in achieving regulatory approval for any of our product candidates.

Our research and development expenses include:

• expenses incurred under agreements with clinical trial sites, third-party vendors, and consultants that are involved in conducting our clinical trials;
• costs of acquiring and developing clinical trial materials;
• personnel costs, including salaries, benefits, bonuses, and stock-based compensation for employees engaged in preclinical and clinical research and development;
• costs related to compliance with regulatory requirements;
• third-party vendor costs related to manufacturing materials and testing of our RenovoCath catheter delivery device;
• costs related to preclinical studies and pilot testing;
• travel expenses; and
• allocated general and administrative expenses which includes facilities and other indirect administrative expenses to support research and development activities, including employees’ salaries and benefits.

Research and development costs are expensed as incurred. Costs for certain development activities, such as clinical trials and preclinical studies, are recognized based on evaluation of progress to completion of specific tasks using data such as subject enrollment, clinical site activations or information provided to us by third party vendors.

General and Administrative

General and administrative expenses consist of salaries, benefits, and stock-based compensation for personnel in executive, finance and administrative functions, professional services and associated costs related to accounting, tax, audit, legal, intellectual property other matters, consulting costs, conferences, travel, and allocated expenses for rent, insurance, and other general overhead costs. We expect to continue to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations of the Securities and Exchange Commission, or SEC, and Nasdaq listing standards and increased expenses in the areas of insurance, professional services and investor relations. As a result, we expect our general and administrative expenses to increase in the foreseeable future. General and administrative expenses are expensed as incurred.

Other Income (Expenses), Net

Interest and Dividend Income (Expense), Net

Interest expense consists of financing interest for the Directors and Officers liability insurance premiums.

Interest income and dividend income are earned from cash deposited in our short-term marketable securities and money market accounts.

Change in Fair Value of Common Warrant Liability

Change in fair value of warrant liability represents the gain or loss reported from the change in the fair value of the warrant liability associated with the April 2023 Warrant. The fair value per share of the April 2023 Warrant was $0.61 and $1.69 on September 30, 2024 and December 31, 2023, respectively. The decrease in the fair value was primarily due to the decrease in our stock price.

Income Tax Expense

We account for income taxes using the asset and liability method. Under this method, deferred income tax assets and liabilities are recorded based on the estimated future tax effects of differences between the financial statement and income tax basis of existing assets and liabilities. Deferred income tax assets and liabilities are recorded net and classified as noncurrent on the balance sheets. A valuation allowance is provided against our deferred income tax assets when their realization is more likely than not.

We are subject to income taxes in the federal and state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. In accordance with the authoritative guidance on accounting for uncertainty in income taxes, we recognize tax liabilities for uncertain tax positions when it is more likely than not that a tax position will not be sustained upon examination and settlement with various taxing authorities. Liabilities for uncertain tax positions are measured based upon the largest amount of benefit that is more-likely-than-not (greater than 50%) of being realized upon settlement. Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

On March 27, 2020, the CARES Act was enacted. The CARES Act includes several significant provisions for corporations, including the usage of net operating losses (“NOLs”), interest deductions and payroll benefits. Corporate taxpayers may carryback NOLs originating during 2018 through 2020 for up to five years.

Results of Operations

Comparison of the Three Months Ended September 30, 2024, and 2023

The following table summarizes the significant components of our results of operations for the periods presented (in thousands, except percentages):

(unaudited)

Research and Development

Research and development expenses were approximately $1.7 million for the three months ended September 30, 2024, remaining relatively flat compared to the same period last year. Employee and related benefit costs increased $0.1 million including an increase of $0.1 million in clinical conferences and trade shows activities. This increase was partially offset by lower regulatory and clinical consulting costs and manufacturing for our proprietary catheter delivery device. We anticipate research and development expenses to increase as we increase manufacturing costs for our device and continue advancing our Phase III clinical trial study throughout the remainder of the year.

General and Administrative

General and administrative expenses were approximately $1.2 million for the three months ended September 30, 2024, a decrease of approximately $0.2 million compared to approximately $1.4 million for the same period last year. The decrease was primarily due to decreases of $0.2 million in professional and consulting fees, and legal fees, partially offset by an increase of $0.1 million in investor and public relations costs. We anticipate general and administrative expenses increasing moderately throughout the remaining year as we progress our commercialization activities for our RenovoCath device.

Other Income/(Expense), Net

Other income/(expense), net was approximately $0.4 million for the three months ended September 30, 2024, a decrease of approximately $1.2 million compared to approximately $1.6 million for the in the same period last year. The decrease was primarily due to a $1.3 million change in the fair value of the common warrant liability offset by interest and dividend income of $0.1 million.

Comparison of the Nine Months Ended September 30, 2024, and 2023

The following table summarizes the significant components of our results of operations for the periods presented (in thousands, except percentages):

(unaudited)

Research and Development

Research and development expenses were approximately $4.4 million for the nine months ended September 30, 2024, a decrease of approximately $0.5 million, compared to approximately $4.9 million for the prior year period. The decrease was primarily due lower costs of $0.6 million on clinical, regulatory and clinical consulting costs from our ongoing Phase III clinical trial cost as we reduced expenses to conserve our cash runway in the first quarter and a decrease of $0.1 million in clinical conferences and trade shows, partially offset by an increase of $0.3 million in employee and related benefits costs. Our primary manufacturer company of our RenovoCath device commenced production this year as we implemented our commercialization and sale of our product candidate’s strategy. Allocated general and administrative support costs for personnel, facility and office supply expenses decreased by $0.1 million compared to the same period last year. We anticipate research and development expenses to increase as we progress our commercialization strategy, including our ongoing Phase III clinical trial study throughout the remainder of the year.

General and Administrative

General and administrative expenses were approximately $3.9 million for the nine months ended September 30, 2024, a decrease of approximately $0.8 million compared to approximately $4.7 million for the prior year period. The decrease was primarily due to a $0.3 million reduction in professional and consulting fees, a $0.1 million decrease in recruitment fees, a $0.2 million decrease in investor and public relations costs, a $0.2 million decrease in directors’ and officers’ liability insurance expense and a $0.1 million decrease in legal fees. The decrease was partially offset by lower allocated general and administration expenses to research and development of $0.1 million. We anticipate general and administrative expenses to increase slightly throughout the remaining year as we progress with our commercialization activities for our RenovoCath device.

Other Income/(Expense), Net

Other income/(expense), net was approximately $2.4 million for the nine months ended September 30, 2024, a decrease of approximately $0.2 million compared to approximately $2.6 million for the prior year period. The decrease was primarily due to a $1.0 million change in the fair value of the common warrant liability due to a decline in our common stock price during the nine months ended September 30, 2023 as compared to September 30, 2024. The decrease was offset by a $0.2 million increase in interest and dividend income from an increase in cash and cash equivalents related to the completion of two private placement financings completed earlier in the year and $0.6 million of transaction costs allocated to common warrant liability in the previous period.

Liquidity and Capital Resources

For the nine months ended September 30, 2024, we incurred a net loss of $5.9 million. As of September 30, 2024, our accumulated deficit stood at $47.3 million. We anticipate incurring further losses and increasing operating expenses in future periods.

On April 3, 2023, we completed a RDO under our shelf registration statement on Form S-3 for the purchase and sale of 1,557,632 shares of common stock (or pre-funded common warrants) at a purchase price of $3.21 per share of common stock (or pre-funded warrants) to a certain institutional investor. Additionally, in a concurrent private placement, we issued to the investor common warrants to purchase up to 1,947,040 shares of our common stock. The aggregate gross proceeds from this RDO were $5.0 million, and the net offering proceeds were $4.4 million after deducting placement agent fees and placement agent’s expenses of $0.4 million and other professional expenses of $0.2 million.

On January 26, 2024, we completed a private placement to 92 accredited investors with gross proceeds of $6.1 million. The private placement included issuing 6,133,414 shares of our common stock and common stock warrants to purchase 6,133,414 shares of common stock, which expire five years from the date of issuance. In connection with the private placement, we entered into a placement agent agreement as additional compensation to the placement agent, and issued common stock warrants to purchase 511,940 shares of common stock, which expire five years from the issuance date.

On April 11, 2024, we completed a second private placement offering, issuing common stock, pre-funded warrants, Series A warrants, and Series B warrants. The aggregate gross proceeds from this offer were $11.1 million, and the net offering proceeds were $9.7 million after deducting placement agent fees of $1.2 million and other professional expenses of $0.2 million. In conjunction with the issuance of 6,960,864 shares of common stock, we bundled the offering with: (i) a pre-funded warrant exercisable for 951,500 shares of common stock at an exercise price of $0.0001 per share, with an unlimited term and immediate exercisability upon issuance, subject to specific beneficial ownership limitations; (ii) Series A warrants exercisable for 7,912,364 shares of common stock at $1.22 per share, valid for 5 years and immediately exercisable subject to customary adjustments and beneficial ownership limitations; (iii) Series B warrants exercisable for 3,956,182 shares of common stock at $1.22 per share, valid for 2 years and immediately exercisable subject to customary adjustments and beneficial ownership limitations, with us retaining the right to call these warrants under certain conditions. Additionally, we issued the April 2024 PA Warrants on the same date, exercisable for 701,243 shares of common stock at $1.69 per share over a 5-year term, with provisions for cashless exercise if the shares are unregistered or no current prospectus is available for resale. The April 2024 PA Warrants become exercisable on October 11, 2024, subject to specific beneficial ownership limitations and customary adjustments.

As of September 30, 2024, we have received over $59.2 million in gross proceeds through various financial arrangements to include the issuance of preferred stock, convertible debt, securities in our IPO, the RDO, private placements and various loans. After deducting underwriting discounts, commissions, placement fees, legal fees, and other professional expenses of $5.8 million, our net offering proceeds from these activities were $53.4 million.

Based on our operational plans, we do not expect that our current cash and cash equivalents as of the date of this filing, will be sufficient to fund our operating, investing and financing cash flow needs for at least the next twelve months, assuming our programs advance as currently contemplated. Based upon this review and the Company’s current financial condition, the Company has concluded that substantial doubt exists as to the Company’s ability to continue as a going concern. We believe we will continue to be able to raise additional capital through debt financing, private or public equity financings, license agreements, obtain a credit facility or other loan or at-the-market offering, collaborative agreements or other arrangements with other companies, or other sources of financing.

Our ability to obtain additional required financing will be subject to a number of factors, including market conditions, fluctuations in interest rates, our operating performance and investor sentiment. However, there can be no assurances that such financing will be available or will be at terms acceptable to us, or at all. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our clinical trials, discontinue the development and/or commercialization of our product candidates, restrict or cease our operations or obtain funds by entering into agreements on unfavorable terms. If any of these events occur, our ability to achieve our operational goals would be adversely affected. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section titled “Risk Factors in Part I item 1A on Form 10-K on our 2023 Annual Report.” Depending on the severity and direct impact of these factors on us, we may be unable to secure additional financing to meet our operating requirements on commercially acceptable terms favorable to us, or at all.

Sources of Liquidity

Since our inception, we have not generated any revenue from product sales and we have incurred significant operating losses and negative cash flows from operations. We anticipate that we will continue to incur net losses for the foreseeable future. We do not have any drug-device combination products that have achieved regulatory marketing approval and we do not expect to generate revenue from sales of any drug-device combination product candidates for several years, if ever. While we are actively, in parallel to our clinical efforts, exploring commercialization of our FDA-cleared RenovoCath delivery system on a standalone basis, which could generate revenues over the nearer term, our plans in this regard may not lead to meaningful revenue generation or cash liquidity for us over the next 12 months, if at all.

We have financed our operations from inception through the date of this Report primarily through the issuance and sale of an aggregate of $59.2 million from private placements of our convertible preferred stock, convertible debt securities prior to our August 2021 initial public offering, and the issuance of securities in our initial public offering, our RDO and other private placement offerings, various loans and the exercise of warrants and common stock options. After deducting underwriting discounts and commissions, placement agent fees and other offering expenses, net offerings were $53.8 million. During the first four months of 2024 alone, we raised new capital for aggregate gross proceeds of $17.2 million, to further advance our programs.

Cash Flows

Our primary uses of cash are to fund our operations including research and development and general and administrative expenses. We will continue to incur operating losses in the future and expect that our research and development and general and administrative expenses will continue to increase as we continue our research and development efforts with respect to clinical development of our product candidates, further develop our therapy platform and ensure that we are complying with the requirements of being a public company. The cash used to fund operating expenses is impacted by the timing of when we pay expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.

The following table summarizes our cash flows for the period indicated (in thousands):

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Net Cash Used in Operating Activities

Cash used in operating activities for the nine months ended September 30, 2024, reflected a net loss of $5.9 million and non-cash charges of $1.2 million, and offset by net change in our operating assets and liabilities of $0.4 million.

Cash used in operating activities for the nine months ended September 30, 2023, reflected a net loss of $7.0 million and non-cash charges of $2.2 million, offset by a net change in our operating assets and liabilities of $1.0 million.

Cash Provided by Investing Activities

Cash provided by investing activities for the nine months ended September 30, 2023, consisted of $2.0 million from the sale of investments.

Cash Provided by Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2024 was $15.1 million, consisting primarily of net proceeds from two private placement offerings.

Net cash provided by financing activities for the nine months ended September 30, 2023 was $5.0 million, consisting primarily of proceeds from common stock and pre-funded common warrants.

Contractual Obligations and Other Commitments

There have been no significant changes in our contractual obligations or other commitments as of September 30, 2024.

Critical Accounting Policies and Significant Judgments and Estimates

The accompanying management’s discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed interim financial statements and the related disclosures, which have been prepared in accordance with GAAP. The preparation of these unaudited condensed interim financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts in our unaudited condensed interim financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. Our critical accounting policies and estimates are detailed in our 2023 Annual Report.

There have been no significant changes to our critical accounting policies or significant judgments and estimates for the nine months ended September 30, 2024, from those previously disclosed in our 2023 Annual Report.

Convertible Instruments and Embedded Derivatives

We evaluate all of our agreements to determine whether such instruments have derivatives or contain features that qualify as embedded derivatives. We account for certain redemption features that are associated with the terms of convertible notes as liabilities at fair value and adjust the instruments to their fair value at the end of each reporting period. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in other income (expenses), net in the statements of operations. Derivative instrument liabilities are classified in the balance sheets 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.

April 2023 Warrants

We evaluate pre-funded warrants and April 2023 Warrant issued in connection with registered direct financing in April 2023 to determine whether such warrants qualify for equity classification, or meet the definition of a derivative instrument, classified as a liability on the Condensed Balance Sheets and measured at fair value at inception and at each reporting date with changes in fair value recognized in the Condensed Statements of Operations in the period of change.

Direct Offering Costs

Direct offering costs consist principally of commissions, placement fees and legal fees, including other professional expenses incurred. We evaluate the terms under the financing agreement to determine the classification of direct costs in the accompanying Condensed Statements of Operations.

Emerging Growth Company and Smaller Reporting Company Status

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. Under the JOBS Act, companies have extended transition periods available for complying with new or revised accounting standards. We have elected this exemption to delay adopting new or revised accounting standards. We will remain an emerging growth company until the earlier of (1) December 31, 2026, (2) the last day of the fiscal year in which we have total annual gross revenues of at least $1.235 billion, (3) the date on which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, 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. An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company,

• we may present only two years of audited financial statements, plus unaudited interim condensed financial statements for any interim period, and related Management’s Discussion and Analysis of Financial Condition and Results of Operations;
• we may avail ourselves of the exemption from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act;
• we may provide reduced disclosure about our executive compensation arrangements; and
• we do not require stockholder non-binding advisory votes on executive compensation or golden parachute arrangements.

We have elected to take advantage of certain of the reduced disclosure obligations in this Quarterly Report on 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 stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.

We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates plus the proposed aggregate amount of gross proceeds to us is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (1) the market value of our stock held by nonaffiliates is less than $250.0 million or (2) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, like emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Recently Issued and Adopted Accounting Pronouncements

There were no new accounting pronouncements that were issued or became effective since the issuance of our 2023 Annual Report that had, or are expected to have, a material impact on our unaudited condensed balance sheets, unaudited condensed statement of operations or unaudited condensed statement of cash flows.

The disclosures in this Item are not required because we qualify as a smaller reporting company under federal securities laws.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Accounting Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15I and 15d-15(e) under the Exchange Act) as of the end of the fiscal quarter ended September 30, 2024. Based on this evaluation, our Chief Executive Officer and Principal Accounting Officer have concluded that, during the period covered by this Report, our disclosure controls and procedures were not effective due to our previously identified material weaknesses in internal control over financial reporting. As a result, we have performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with GAAP. Accordingly, notwithstanding the identified material weaknesses, management, including our Chief Executive Officer and Principal Accounting Officer, believes the financial statements included in this Report are fairly presented, in all material respects, in accordance with GAAP.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated, communicated and discussed with our management, including our Chief Executive Officer and Principal Accounting Officer or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that controls and procedures, no matter how well designed and operated, can only provide reasonable, not absolute, assurance the desired control objectives will be met. In reaching a reasonable level of assurance, management has weighed the cost of contemplated controls against their intended benefits. The design of any system of controls is based on management’s assumptions about the likelihood of future events. We cannot assure you that our controls will achieve their stated goals under all possible conditions. Changes in future conditions may render our controls inadequate or may cause our degree of compliance with them to deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

For the fiscal quarter ended September 30, 2024, our management identified material weaknesses in our internal control over financial reporting related to our control environment. A material weakness is a deficiency, or combination of significant deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timely basis.

Specifically, we have determined that we have not maintained adequate formal accounting policies, processes and controls related to complex transactions as a result of a lack of finance and accounting staff with the appropriate GAAP technical expertise needed to identify, evaluate and account for complex and non-routine transactions. We also determined that we have not maintained sufficient staffing or written policies and procedures for accounting and financial reporting, which contributed to the lack of a formalized process or controls for management’s timely review and approval of financial information. More specifically, we have determined that our financial statement close process includes significant control gaps mainly driven by the small size of our accounting and finance staff and, as a result, a significant lack of appropriate segregation of duties. This includes the ability of users to create and post journal entries without adequate compensating review controls as well as review of system rights on the journal entry and financial close process. In addition, we did not have proper information technology general controls related to user access, including the performance of user access reviews, access to edit data in applications was not properly restricted, and formal approval of application access was not documented and retained.

We are in the process of implementing a number of measures to address the material weaknesses that has been identified including: (i) engaging additional accounting and financial reporting personnel with GAAP and SEC reporting experience, (ii) developing, communicating and implementing an accounting policy manual for our accounting and financial reporting personnel for recurring transactions and period-end closing processes, and (iii) establishing effective monitoring and oversight controls for non-recurring and complex transactions to ensure the accuracy and completeness of our financial statements and related disclosures.

These additional resources and procedures are designed to enable us to broaden the scope and quality of our internal review of underlying information related to financial reporting and to formalize and enhance our internal control procedures. With the oversight of senior management and our Audit Committee, we have begun taking steps and plan to take additional measures to remediate the underlying causes of the material weaknesses.

We intend to complete the implementation of our remediation plan when we have sufficient cash to remediate our material weaknesses. Although we believe that our remediation plan will improve our internal control over financial reporting, additional time may be required to fully implement it and to make conclusions regarding the effectiveness of our internal control over financial reporting. Our management will closely monitor and modify, as appropriate, the remediation plan to eliminate the identified material weaknesses.

Changes in Internal Control over Financial Reporting

Except for the material weaknesses noted above, during the quarter ended September 30, 2024, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

An investment in our securities is speculative and involves a high degree of risk. You should carefully consider the risk factors below, as well as the other information in this Report, including our unaudited interim condensed financial statements and the related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in our other public filings in evaluating our business, including those risk factors included in our 2023 Annual Report. The occurrence of any of the events or developments described in our 2023 Annual Report, or summarized below or described elsewhere in this Report could harm our business, financial condition, results of operations, growth prospects or stock price. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations and the market price of our common stock.

Risk Factors Summary

The following is a summary of principal factors and uncertainties that make investing in shares of our common stock risky and impact our ability to execute on our business strategy include risks regarding the following. This summary is not exhaustive, and readers are therefore encouraged to review the “Risk Factors” section and the “Risk Factors” section in our 2023 Annual Report in their entirety:

• We are a clinical stage biopharmaceutical company, have a limited operating history and have no drug/device combination products approved for commercial sale, which makes it difficult to evaluate our current business and predict our future success and viability.
• We have incurred significant net losses in each period since inception, and we expect to continue to incur net losses for the foreseeable future.
• We will need to raise substantial additional capital to develop and fully commercialize RenovoGem and/or RenovoCath, and our failure to obtain funding when needed may force us to delay, reduce or eliminate our product development programs or collaboration efforts. As a result, there is substantial doubt about our ability to operate as a going concern.
• We may consider strategic alternatives in order to maximize stockholder value, including financing, strategic alliances, and licensing arrangements, particularly in connection with our proposal commercialization of RenovoCath should we utilize a commercial collaboration. We may not be able to identify or consummate any suitable strategic alternatives and any consummated strategic alternatives may not be successful.
• Our product candidates’ commercial viability remains subject to current and future preclinical studies, clinical trials, regulatory approvals, and the risks generally inherent in the development of a pharmaceutical product candidate. If we are unable to successfully advance or develop our product candidates, our business will be materially harmed.
• If we do not achieve our projected development goals in the timeframes we announce and expect, our stock price may decline.
• Our product candidates may exhibit undesirable side effects when used alone or in combination with other approved pharmaceutical products or investigational new drugs, which may delay or preclude further development or regulatory approval or limit their use if approved.
• If the results of preclinical studies or clinical trials for our product candidates are negative, we could be delayed or precluded from the further development or commercialization of our product candidates, which could materially harm our business.
• If we are unable to satisfy any applicable regulatory requirements, we may not be able to commercialize our product candidates.
• If our product candidates are unable to compete effectively with marketed drugs targeting similar indications as our product candidates, our commercial opportunity will be reduced or eliminated.
• We may delay or terminate the development of our product candidates at any time if we believe the perceived market or commercial opportunity does not justify further investment, which could materially harm our business.
• Our future success depends on our ability to retain our key personnel and to attract, retain, and motivate qualified personnel, especially in light of an acute workforce shortage and hyper-competitive compensation environment.
• If we are unable to protect our intellectual property effectively, we may be unable to prevent third parties from using our technologies, which would impair our competitive advantage.
• The patents issued to us may not be broad enough to provide any meaningful protection, one or more of our competitors may develop more effective technologies, designs, or methods without infringing our intellectual property rights and one or more of our competitors may design around our proprietary technologies.
• The market price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for our investors.
• We issued a large number of shares of common stock and warrants to purchase common stock in connection with our 2024 financing activities. Substantial future sales of such shares of our common stock could cause the market price of our common stock to decline or have other adverse effects on our company.

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