# CytoDyn Inc.: Form 10-Q for the period ended Aug 31, 2023

- Company: [CytoDyn Inc.](/companies/cydy.md) (CIK 1175680)
- Form: 10-Q
- Filed: 2023-10-23
- Accepted by EDGAR: Oct 23, 2023, 21:16 ET
- Period: 2023-08-31
- Accession: 0001558370-23-016632
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1175680/000155837023016632/cydy-20230831x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1175680/000155837023016632/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-08-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2023-06-01 to 2023-08-31 | $1.9m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-06-01 to 2023-08-31 | −$4.6m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-06-01 to 2023-08-31 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-06-01 to 2023-08-31 | −$11.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-06-01 to 2023-08-31 | −$0.01 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-06-01 to 2023-08-31 | −$0.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-06-01 to 2023-08-31 | 923,587,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-06-01 to 2023-08-31 | −$4.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2023-08-31 | $2.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-08-31 | $12.0m | us-gaap:AssetsCurrent |
| Total assets | at 2023-08-31 | $12.4m | us-gaap:Assets |
| Current liabilities | at 2023-08-31 | $129.1m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-08-31 | $129.3m | us-gaap:Liabilities |
| Long-term debt | at 2023-08-31 | $44.9m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2023-08-31 | −$116.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 36,991 characters.

Certain information included in this quarterly report on Form 10-Q contains, or incorporates by reference, forward-looking statements within the meaning of Section 21E of the Exchange Act. Words and expressions reflecting optimism, satisfaction or disappointment with current prospects, as well as words such as “believes,” “hopes,” “intends,” “estimates,” “expects,” “projects,” “plans,” “anticipates” and variations thereof, or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking.

Our forward-looking statements are not guarantees of performance, and actual results could vary materially from those contained in or expressed by such statements. In evaluating all such statements, we urge you to specifically consider various risks identified in this quarterly report, and those set forth in Item 1A. *Risk Factors* in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023 (the “2023 Form 10-K”), any of which could cause actual results to differ materially from those indicated by our forward-looking statements. Our forward-looking statements reflect our current views with respect to future events and are based on currently available financial, economic, scientific, and competitive data and information about current business plans. Forward-looking statements include, among others, statements about leronlimab, its ability to have positive health outcomes, the Company’s ability to resolve the clinical hold imposed by the FDA and information regarding future operations, future capital expenditures, and future net cash flows. You should not place undue reliance on our forward-looking statements, which are subject to risks and uncertainties relating to, among other things: the regulatory determinations of leronlimab’s safety and effectiveness by the FDA and various drug regulatory agencies in other countries; the Company’s ability to raise additional capital to fund its operations; the Company’s ability to meet its debt and other payment obligations; the Company’s ability to enter into or maintain partnership or licensing arrangements with third-parties; the Company’s ability to recruit and retain key employees; the timely and sufficient development, through internal resources or third-party consultants, of analyses of the data generated from the Company’s clinical trials required by the FDA or other regulatory agencies in connection with the Company’s regulatory submissions or applications for approval of the Company’s drug product; the Company’s ability to achieve approval of a marketable product; the design, implementation and conduct of clinical trials; the results of any such clinical trials, including the possibility of unfavorable clinical trial results; the market for, and marketability of, any product that is approved; the existence or development of vaccines, drugs, or other treatments that are viewed by medical professionals or patients as superior to the Company’s products; regulatory initiatives, compliance with governmental regulations and the regulatory approval process; legal proceedings, investigations or inquiries affecting the Company or its products; general economic and business conditions; changes in foreign, political, and social conditions; stockholder actions or proposals with regard to the Company, its management, or its Board of Directors; and various other matters, many of which are beyond the Company’s control. Should one or more of these risks or uncertainties develop, or should underlying assumptions prove to be incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated, or otherwise indicated by our forward-looking statements. Except as required by law, we do not undertake any responsibility to update these forward-looking statements to take into account events or circumstances that occur after the date of this quarterly report. Additionally, we do not undertake any responsibility to update you on the occurrence of any unanticipated events that may cause actual results to differ from those expressed or implied by these forward-looking statements.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our 2023 Form 10-K, and the other sections of this Form 10-Q, including our consolidated financial statements and related notes set forth in Part I, Item 1. This discussion and analysis contain forward-looking statements, including information about possible or assumed results of our financial condition, operations, plans, objectives and performance that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated and set forth in such forward-looking statements.

#### Overview

The Company is a clinical stage biotechnology company focused on the clinical development and potential commercialization of its product candidate, leronlimab, which is being studied for MASH, MASH-HIV, solid tumors in oncology, and other HIV indications. Our current business strategy is to seek the removal of the partial clinical hold imposed by the FDA in March 2022. In October 2022, the Company voluntarily withdrew its BLA submission for leronlimab as a combination therapy for highly treatment experienced HIV patients, due to management’s conclusion that a significant risk existed that the BLA would not receive FDA approval due to the inadequate process and performance around the monitoring and oversight of the clinical data from its clinical trials by its former CRO.

The Company’s strategy and efforts are currently primarily directed toward obtaining the removal of the partial clinical hold on its HIV program, preparation for and development of a Phase 2b/3 MASH clinical trial protocol, research and development of longer-acting molecules including for the treatment and/or prevention of HIV, maintenance and testing of clinical drug product, and resolving legal and regulatory matters. These initiatives are discussed in more detail below.

#### First Quarter Overview

#### Partial clinical hold on HIV program

In March 2022, the FDA notified the Company that it had placed a partial clinical hold on the Company’s HIV program; the Company was not enrolling any new patients in the trials placed on hold. The partial clinical hold on the HIV program impacted patients enrolled in HIV extension trials, who were transitioned to other available therapeutics. No new clinical studies can be initiated or resumed for the HIV indication until the partial clinical hold is resolved. Recent efforts by the Company have been focused on activities that will allow us to resolve this partial clinical hold. During the third quarter ended February 28, 2023, the Company submitted the documents requested by the FDA in its March 2022 clinical hold letter. Subsequently, the FDA responded through written communication to the Company, requesting additional information and clarification regarding our benefit-risk assessment for the HIV population, which had previously been submitted, and made a supplemental request that the Company submit a general investigational plan under the HIV program IND. In March 2023, the Company responded to and submitted to the FDA the additional information and clarifications requested for the items previously requested. The FDA then responded with further written communication requesting information relating to the benefit-risk assessment, as well as requesting the submission of a new protocol for the HIV indication. At the end of March 2023, the Company and the FDA held an informal meeting in which the FDA clarified certain questions with respect to the clinical hold submission and further information requests made by the FDA. The Company is finalizing its supplemental submission to address items discussed with the FDA during the informal meeting.

#### MASH clinical developments

The Company continues to develop a clinical trial protocol for a future MASH clinical trial in addition to identifying next steps in exploring potential business opportunities to continue the investigation of leronlimab in MASH.

#### Pre-clinical development of a long-acting CCR5 antagonist

In March 2023, as part of its conveyed long-term development and value creation initiatives, the Company made efforts to pursue the continued development of a longer-acting agent. In furtherance of this initiative, the Company entered into a joint development agreement with a third-party company to develop one or more longer-acting molecules. In addition to potentially leading to a modified therapeutic that will have greater acceptance by patients, the services provided by the third party may yield extended intellectual property protection, thereby increasing the value of the Company’s patent portfolio.

#### Cancer clinical developments

The Company continues to identify the next steps in clinical development and is exploring potential business opportunities to continue the investigation of leronlimab for solid tumors in oncology based on data generated to date by the Company.

#### Corporate developments

On October 6, 2023, the Audit Committee engaged BF Borgers CPA PC and appointed the firm as the Company’s independent registered public accounting firm for the Company’s fiscal year ending May 31, 2024.

At the Company’s annual meeting scheduled for November 9, 2023, our stockholders will be asked to vote on an amendment to the Company’s Certificate of Incorporation to provide for an increase in the total number of shares of common stock authorized for issuance from 1,350,000,000 shares to 1,750,000,000 shares. As of September 30, 2023, the Company had only approximately 21.8 million authorized but unissued shares of common stock available for issuance in future financing transactions, including 20.0 million shares that the Board of Directors temporarily released from reservation under the Company’s 2012 equity incentive plan.

### Results of Operations

#### Fluctuations in operating results

The Company’s operating results may fluctuate significantly depending on the outcomes, number and timing of pre-clinical and clinical studies, patient enrollment and/or completion rates in the studies, and their related effect on research and development expenses, regulatory and compliance activities, activities related to seeking removal of the partial clinical hold and FDA approval of our drug product, general and administrative expenses, professional fees, and legal and regulatory proceedings and related consequences. We require a significant amount of capital to continue to operate; therefore, we regularly conduct financing offerings to raise capital, which may result in various forms of non-cash interest expense or other expenses. Additionally, we periodically seek to negotiate settlement of debt payment obligations in exchange for equity securities of the Company and enter into warrant exchanges or modifications that may result in non-cash charges. Our ability to continue to fund operations will depend on our ability to raise additional funds. See the *Liquidity and Capital Resources*, and *Going Concern* sections included in this quarterly report and Item 1A. *Risk Factors* in our 2023 Form 10-K.

The results of operations were as follows for the periods presented:

*(in thousands, except for per share data)*

| ​ ​ Operating expenses: | ​ ​ ​ | ​ ​ Three months ended August 31, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ | ​ ​ Change $% ​ ​ | ​ ​ | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| General and administrative | ​ | $2,688 |  | $6,333 | ​ | $(3,645) | ​ | (58)% |
| Research and development | ​ | 1,914 |  | 576 | ​ | 1,338 | ​ | 232 ​ |
| Amortization and depreciation | ​ | 10 |  | 99 | ​ | (89) | ​ | (90) ​ |
| Inventory charge | ​ | ​ — | ​ | ​ 2,704 | ​ | ​ (2,704) | ​ | (100) ​ |
| Total operating expenses | ​ | 4,612 |  | 9,712 | ​ | (5,100) | ​ | (53) ​ |
| Operating loss | ​ | (4,612) |  | (9,712) | ​ | 5,100 | ​ | 53 ​ |
| Interest and other expenses: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Interest on convertible notes | ​ | (1,197) | ​ | ​ (1,146) | ​ | ​ (51) | ​ | (4) ​ |
| Amortization of discount on convertible notes | ​ | (400) |  | (576) | ​ | 176 | ​ | 31 ​ |
| Amortization of debt issuance costs | ​ | ​ (366) | ​ | ​ (16) | ​ | ​ (350) | ​ | (2,188) ​ |
| Loss on induced conversion | ​ | ​ (2,004) | ​ | ​ — | ​ | ​ (2,004) | ​ | (100) ​ |
| Finance charges | ​ | (912) |  | (940) | ​ | 28 | ​ | 3 ​ |
| Loss on note extinguishment | ​ | (2,084) |  | — | ​ | (2,084) | ​ | (100) ​ |
| Gain (loss) on derivatives | ​ | ​ 4 | ​ | ​ (8,601) | ​ | ​ 8,605 | ​ | 100 ​ |
| Total interest and other expenses | ​ | (6,959) |  | (11,279) | ​ | 4,320 | ​ | 38 ​ |
| Loss before income taxes | ​ | (11,571) |  | (20,991) | ​ | 9,420 | ​ | 45 ​ |
| Income tax benefit | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | — ​ |
| Net loss | ​ | $(11,571) |  | $(20,991) | ​ | $9,420 | ​ | 45% |
| Basic and diluted: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Weighted average common shares outstanding | ​ | ​ 923,587 | ​ | ​ 787,856 | ​ | ​ 135,731 | ​ | 17 ​ |
| Loss per share | ​ | $(0.01) | ​ | $(0.03) | ​ | $0.02 | ​ | 67% |

#### General and administrative (“G&A”) expenses

G&A expenses consisted of the following:

*(in thousands)*

| ​ ​ | ​ ​ Three months ended August 31, 2023 | ​ | ​ ​ 2022 | ​ ​ | ​ ​ Change $% | ​ | ​ |
| --- | ---: | --- | ---: | --- | --- | --- | ---: |
| Salaries, benefits, and other compensation | $642 | ​ | $1,278 | ​ | $(636) | ​ | (50) |
| Stock-based compensation | 503 | ​ | 1,341 | ​ | ​ (838) | ​ | (62) |
| Legal fees | ​ 317 | ​ | ​ 1,453 | ​ | ​ (1,136) | ​ | (78) |
| Directors and officers liability insurance | ​ 416 | ​ | ​ 608 | ​ | ​ (192) | ​ | (32) |
| Other | 810 | ​ | 1,653 | ​ | ​ (843) | ​ | (51) |
| Total general and administrative | $2,688 | ​ | $6,333 | ​ | $(3,645) | ​ | (58) |

The decreases in G&A expenses for the three-month period ended August 31, 2023, compared to the same period in the prior year, were primarily due to a reduction in legal fees, other, stock-based compensation, and salaries, benefits, and other compensation. The decreases in legal fees were primarily due to decreased legal fees related to the SEC and DOJ investigations, offset by a decrease in the amount of fees covered by the Company’s insurance carrier(s). The decreases in other expenses were primarily the result of a reduction in auditor and audit-related fees. The decreases in stock-based compensation and salaries, benefits, and other compensation were primarily related to headcount reductions.

#### Research and development (“R&D”) expenses

R&D expenses consisted of the following:

*(in thousands)*

| ​ ​ | ​ ​ Three months ended August 31, 2023 | ​ | ​ ​ 2022(1) | ​ ​ | ​ ​ Change $% | ​ | ​ |
| --- | ---: | --- | ---: | --- | --- | --- | ---: |
| Clinical | $1,250 | ​ | $81 | ​ | $1,169 | ​ | 1,443 |
| Non-clinical | 250 | ​ | 49 | ​ | ​ 201 | ​ | 410 |
| CMC | 169 | ​ | 213 | ​ | ​ (44) | ​ | (21) |
| License and patent fees | 245 | ​ | 233 | ​ | ​ 12 | ​ | 5 |
| Total research and development | $1,914 | ​ | $576 | ​ | $1,338 | ​ | 232 |

(1) Certain prior year amounts have been reclassified from CMC to Clinical and Non-clinical for consistency with the current quarter presentation. These reclassifications have no effect on the reported results of operations.

The increases in R&D expenses in the three-month period ended August 31, 2023, compared to the same period in the prior year, were primarily related to related to close-out costs associated with the closing of the uncompleted Brazilian COVID-19 trials partially offset by costs related to activities focused on addressing the HIV program partial clinical hold. The increase in non-clinical expenses were primarily driven by activities related to the discovery and development of a long-acting modified therapeutic.

The future trend of our R&D expenses is dependent on the timing of FDA clearance of the clinical hold and any future clinical trials, our decision-making and timing of which indications on which to focus our future efforts toward the development and study of leronlimab, which may include pre-clinical and clinical treatments for MASH, MASH-HIV, oncology, and other HIV related indications, as well as efforts to develop a long-acting modified therapeutic, and the timing and outcomes of such efforts.

#### Inventory charge

The decrease in the inventory charge for the three-month period ended August 31, 2023, compared to the same period in the prior year was attributable to the full inventory write-off in the prior year due to the pre-launch inventories no longer qualifying for inventory capitalization due to the withdrawal of the BLA submission. See Note 3, *Inventories, net*, in the 2023 Form 10-K for additional information.

#### Interest and other expense

Interest and other expense consisted of the following:

*(in thousands)*

| ​ ​ | ​ ​ Three months ended August 31, 2023 | ​ | ​ ​ 2022 | ​ ​ | ​ ​ Change $% | ​ | ​ |
| --- | ---: | --- | ---: | --- | --- | --- | ---: |
| Interest on convertible notes payable | $(1,197) | ​ | $(1,146) | ​ | $(51) | ​ | (4) |
| Amortization of discount on convertible notes | (400) | ​ | (576) | ​ | ​ 176 | ​ | 31 |
| Amortization of debt issuance costs | ​ (366) | ​ | ​ (16) | ​ | ​ (350) | ​ | (2,188) |
| Loss on induced conversion | (2,004) | ​ | — | ​ | ​ (2,004) | ​ | (100) |
| Finance charges | (912) | ​ | (940) | ​ | ​ 28 | ​ | 3 |
| Loss on note extinguishment | ​ (2,084) | ​ | ​ — | ​ | ​ (2,084) | ​ | (100) |
| Legal settlement | ​ — | ​ | ​ — | ​ | ​ — | ​ | - |
| Gain (loss) on derivatives | ​ 4 | ​ | ​ (8,601) | ​ | ​ 8,605 | ​ | 100 |
| Total interest and other expenses | $(6,959) | ​ | $(11,279) | ​ | $4,320 | ​ | (38) |

The decreases in interest and other expenses for the three-month period ended August 31, 2023, compared to the same period in the prior year was primarily due to an increase in non-cash gain on derivatives, offset by increases in loss on note extinguishment and loss on induced conversion. The decrease in loss on derivatives is due to fewer liability-classified warrants in the current period compared to the same period in the prior year. The increase in loss on induced conversions resulted from the Company settling outstanding convertible debt with common stock during the current period. The increase in loss on note extinguishment resulted from the Company retiring outstanding convertible debt by converting the notes outstanding to common stock and warrants during the current period.

### Liquidity and Capital Resources

As of August 31, 2023, we had a total of approximately $2.0 million in cash and $6.5 million in restricted cash and approximately $129.1 million in short-term liabilities. We expect to continue to incur operating losses and require a significant amount of capital in the future as we continue to develop and seek approval to commercialize leronlimab. We cannot be certain, however, that future funding will be available to us when needed on terms that are acceptable to us, or at all. We sell securities and incur debt when the terms of such arrangements are deemed acceptable to both parties under then current circumstances and as necessary to fund our current and projected cash needs. As of September 30, 2023, we had only approximately 21.8 million shares of common stock available for issuance in new financing transactions. Consequently, if the Company’s stockholders do not vote, at the Company’s annual meeting in November 2023, to approve an amendment to the Company’s Certificate of Incorporation to provide for an increase in the total number of shares of common stock authorized for issuance from 1,350,000,000 shares to 1,750,000,000 shares, the Company will be extremely limited in its ability to engage in equity financing activities.

Since inception, the Company has financed its activities principally from the public and private sale of equity securities as well as with proceeds from issuance of convertible notes and related party notes payable. The Company intends to finance its future operating activities and its working capital needs largely from the sale of equity and debt securities. The sale of equity and convertible debt securities to raise additional capital is likely to result in dilution to stockholders and those securities may have rights senior to those of common shares. If the Company raises funds through the issuance of additional preferred stock, convertible debt securities or other debt or equity financing, the related transaction documents could contain covenants restricting its operations.

During the 2021 fiscal year, the Company entered into long-term convertible notes that are secured by all of our assets (excluding our intellectual property), and include certain restrictive provisions, including limitations on incurring additional indebtedness and future dilutive issuances of securities, any of which could impair our ability to raise additional capital on acceptable terms.

Future third-party funding arrangements may also require the Company to relinquish valuable rights. Additional capital, if available, may not be available on reasonable or non-dilutive terms.

#### Cash

The Company’s cash and restricted cash position of approximately $2.0 million and $6.5 million, respectively, as of August 31, 2023, decreased by approximately $0.5 million and was unchanged, respectively, when compared to the balance of $2.5 million and $6.5 million, respectively, as of May 31, 2023. This decrease was primarily the result of approximately $4.5 million in cash used in our operating activities, offset by approximately $4.0 million in cash provided by financing activities during the three months ended August 31, 2023. Refer to Item 1, Note 2, *Summary of Significant Accounting Policies – Going Concern*, and the *Going Concern* discussion below for information regarding concerns about the Company’s ability to continue to fund its operations and satisfy its payment obligations and commitments. A summary of cash flows and changes between the periods presented is as follows:

*(in thousands)*

| ​ ​ Net cash (used in) provided by: | ​ ​ Three months ended August 31, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ | ​ ​ Change $​ ​ ​ | ​ ​ ​ | ​ ​ ​ ​ |
| --- | ---: | --- | ---: | --- | ---: | --- | --- |
| Net cash provided by/ used in operating activities | $(4,495) | ​ | $(11,074) | ​ | $6,579 | ​ | ​ |
| Net cash provided by/ used in investing activities | $— | ​ | $— | ​ | $— | ​ | ​ |
| Net cash provided by financing activities | $4,019 | ​ | $11,519 | ​ | $(7,500) | ​ | ​ |

#### Cash used in operating activities

Net cash used in operating activities totaled approximately $4.5 million during the three months ended August 31, 2023, representing an improvement of approximately $6.6 million compared to the three months ended August 31, 2022. The decrease in the net amount of cash used was due primarily to a decrease in our net loss, primarily attributable to decreased G&A, and working capital fluctuations, all of which are highly variable. Refer to *General and Administrative* and *Research and Development Expense* sections for further discussion.

#### Cash provided by financing activities

Net cash provided by financing activities totaled approximately $4.0 million, a decrease of approximately $7.5 million compared to the three months ended August 31, 2022. The decrease in net cash provided was primarily the result of raising less funds from private placements of common stock and warrants, offset by an increase in funds from the sale of convertible notes.

#### Pre-launch inventories

The Company previously capitalized pre-launch inventories which were subsequently charged-off in October of 2022 for GAAP accounting purposes due to no longer qualifying for pre-launch inventory capitalization resulting from the withdrawal of the BLA submission. Work-in-progress and finished drug product inventories continue to be physically maintained, can be used for clinical trials, and can be sold commercially upon regulatory approval if the shelf-lives can be extended as a result of the performance of on-going stability tests. Raw materials continued to be maintained so that they can be used in the future if needed.

The table below summarizes previously capitalized pre-launch inventories that were subsequently charged-off for GAAP accounting purposes due to no longer qualifying for pre-launch inventory capitalization due to the withdrawal of the BLA submission and estimated expiration based on remaining shelf life.

*(in thousands, Expiration period ending August 31,)*

| ​ ​ | ​ ​ | ​ ​ Remaining shelf-life (mos) | ​ ​ ​ Raw Materials Specialized | ​ ​ ​ Resins | ​ ​ ​ Other | ​ ​ ​ Total Raw Materials | ​ ​ ​ | ​ ​ ​ Work-in-progress Bulk drug product | ​ ​ | ​ ​ Finished drug product | ​ ​ ​ | ​ ​ ​ ​ Total inventories |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2024 | ​ | 0 to 12 | $5,525 | $16,264 | $1,589 | $23,378 | ​ | $- | ​ | $- | ​ | $23,378 |
| 2025 | ​ | 13 to 24 | ​ 1,930 | ​ - | ​ - | ​ 1,930 | ​ | ​ 1,661 | ​ | ​ 45,307 | ​ | ​ 48,898 |
| 2026 | ​ | 25 to 36 | ​ 2,124 | ​ - | ​ - | ​ 2,124 | ​ | ​ - | ​ | ​ 16,178 | ​ | ​ 18,302 |
| Thereafter | ​ | 37 or more | ​ - | ​ - | ​ - | ​ - | ​ | ​ - | ​ | ​ - | ​ | ​ - |
| Inventories, gross | ​ | ​ | ​ 9,579 | ​ 16,264 | ​ 1,589 | ​ 27,432 | ​ | ​ 1,661 | ​ | ​ 61,485 | ​ | ​ 90,578 |
| Inventory charge | ​ | ​ | ​ (9,579) | ​ (16,264) | ​ (1,589) | ​ (27,432) | ​ | ​ (1,661) | ​ | ​ (61,485) | ​ | ​ (90,578) |
| Inventories, net | ​ | ​ | $- | $- | $- | $- | ​ | $- | ​ | $- | ​ | $- |

For additional information, refer to Note 3, *Inventories, net*, in the 2023 Form 10-K.

#### Convertible debt

#### April 2, 2021 Convertible Note

On April 2, 2021, we issued a convertible note with a principal amount of $28.5 million resulting in net cash proceeds of $25.0 million, after $3.4 million of debt discount and $0.1 million of offering costs. The note accrues interest daily at a rate of 10% per annum, contains a stated conversion price of $10.00 per share, and matures in April 2025. The April 2, 2021 Note required monthly debt reduction payments of $7.5 million for the six months beginning in May 2021, which could also be satisfied by payments on other notes held by the noteholder or its affiliates. Beginning six months after the issuance date, the noteholder may request monthly redemptions of up to $3.5 million. As of August 31, 2023, the outstanding balance of the April 2, 2021 Note, including accrued interest, was approximately $8.6 million.

#### April 23, 2021 Convertible Note

On April 23, 2021, we issued a convertible note with a principal amount of $28.5 million resulting in net cash proceeds of $25.0 million, after $3.4 million of debt discount and $0.1 million of offering costs. The note accrues interest daily at a rate of 10% per annum, contains a stated conversion price of $10.00 per share, and matures in April 2025. Beginning six months after the issuance date, the noteholder may request monthly redemptions of up to $7.0 million. As of August 31, 2023, the outstanding balance of the April 23, 2021 Note, including accrued interest, was approximately $37.1 million.

#### Common stock

We have 1,350.0 million authorized shares of common stock. The table below summarizes intended uses of common stock.

*(in millions)*

| ​ ​ Issuable upon: | ​ As of August 31, 2023 ​ |
| --- | ---: |
| Warrants exercise | 256.8 |
| Convertible preferred stock and undeclared dividends conversion | 34.8 |
| Outstanding stock options exercise or vesting of outstanding RSUs and PSUs | 19.7 |
| Reserved for issuance pursuant to future stock-based awards under equity incentive plan | 20.6 |
| Reserved and issuable upon conversion of outstanding convertible notes | 12.0 |
| Reserved for private placement of common stock and warrants through a placement agent | 31.5 |
| Reserved for issuance of common stock and warrants related to note conversion | 23.0 |
| Total shares reserved for future uses | 398.4 |
| Common stock outstanding | 931.0 |

As of August 31, 2023, we had approximately 20.6 million unreserved authorized shares of common stock available for issuance. Our ability to continue to fund our operations depends on our ability to raise capital. The funding necessary for our operations may not be available on acceptable terms, or at all. If we deplete our cash reserves, we may be forced to file for bankruptcy protection, discontinue operations or liquidate our assets.

### Off-Balance Sheet Arrangements

As of August 31, 2023, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our current or future financial condition, results of operations, liquidity, capital expenditures or capital resources.

### Contractual Obligations

Refer to Note 3, *Accounts Payable and Accrued Liabilities*, Note 4, *Convertible Instruments and Accrued Interest*, and Note 8*, Commitments and Contingencies* included in Part I, Item 1 of this Form 10-Q, and Notes 6 and 10 in Part II, Item 8 in the 2023 Form 10-K.

### Legal Proceedings

The Company is a party to various legal proceedings described in Part I, Item 1, Note 8, *Commitments and Contingencies – Legal Proceedings* of this Form 10-Q. We are unable to predict the outcome of these proceedings, including the defense and other litigation-related costs and expenses that may be incurred by the Company, as the outcomes of legal proceedings are inherently uncertain. Therefore, it is possible that the ultimate outcome of any proceeding, if in excess of a recognized accrual, if any, could be material to the Company’s consolidated financial statements. As of August 31, 2023, the Company had not recorded any accruals related to the outcomes of the legal matters discussed in this Form 10-Q.

### Regulatory Matters

#### Voluntary Withdrawal of HIV BLA Submission

In July 2020, the Company received a Refusal to File letter from the FDA regarding its BLA submission for leronlimab as a combination therapy with highly active antiretroviral therapy for highly treatment-experienced HIV patients. In November 2021, the Company resubmitted the non-clinical and chemistry, manufacturing, and controls (“CMC”) sections of the BLA. In October 2022, the Company voluntarily withdrew its BLA submission due to management’s conclusion that a severe risk of the BLA not receiving approval by the FDA existed due to the

Company’s former CRO's inadequate process and performance around the monitoring and oversight of the clinical data. For additional information see Note 8, *Commitments and Contingencies – Legal Proceedings.*

#### FDA HIV partial clinical hold and COVID-19 full clinical hold letters

In March 2022, the FDA placed a partial clinical hold on the Company’s HIV program and a full clinical hold on its COVID-19 program in the United States. The Company was not enrolling any new patients in the trials placed on hold in the United States. Under the full clinical hold on the COVID-19 program, no new clinical studies may be initiated for the COVID-19 indication until the clinical hold is resolved. The Company has made a business decision not to pursue the use of leronlimab in COVID-19 patients, has no plans for further trials under the COVID-19 indication and has withdrawn the investigational new drug (“IND”) for COVID-19. Should the opportunity arise, the Company may explore potential non-dilutive clinical development options. CytoDyn is working diligently with the FDA to resolve the partial clinical hold for HIV as soon as possible, as no new clinical studies can be initiated or resumed for the HIV indication until the partial clinical hold is resolved.

During the third quarter ended February 28, 2023, the Company submitted the documents requested by the FDA in its March 2022 clinical hold letter. Subsequently, the FDA responded through written communication to the Company, requesting additional information and clarification regarding an item that was previously submitted, the benefit-risk assessment for the HIV population, and made a supplemental request that the Company submit an IND amendment containing the proposed general investigational plan for the coming year, appropriate protocols, and any additional information supporting the proposed investigation under the HIV program IND.

In March 2023, the Company responded to and submitted to the FDA the additional information and clarifications requested for the items previously requested. The FDA responded with further written communication requesting information relating to the benefit-risk assessment, as well as requesting the submission of a new protocol for the HIV indication. At the end of March 2023, the Company and the FDA held an informal meeting in which the FDA addressed certain clarifying questions with respect to the clinical hold submission and further information requests made by the FDA. As of the date of this report, the Company has submitted the following to the FDA in connection with resolving the clinical hold: an aggregate analysis of cardiovascular events across all leronlimab clinical programs, a Safety Surveillance Plan, an aggregate safety data analysis, an updated Investigator’s Brochure, annual reports, a benefit-risk assessment, and a general investigational plan. The Company is currently finalizing a supplemental submission to address items discussed with the FDA during the informal meeting.

### Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As presented in the accompanying consolidated financial statements, the Company had losses for all periods presented. The Company incurred a net loss of approximately $11.6 million in the three months ended August 31, 2023, and has an accumulated deficit of approximately $853.3 million as of August 31, 2023. These factors, among several others, including the various legal matters discussed in Note 8, *Commitments and Contingencies – Legal Proceedings*, raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company’s continuance as a going concern is dependent upon its ability to obtain additional operating capital, complete the development of its product candidate, leronlimab, obtain approval to commercialize leronlimab from regulatory agencies, continue to outsource manufacturing of leronlimab, and ultimately achieve revenues and attain profitability. The Company plans to continue to engage in research and development activities related to leronlimab for multiple indications and expects to incur significant research and development expenses in the future, primarily related to its regulatory compliance, including seeking the lifting of the FDA’s partial clinical hold with regard to the Company’s HIV program, performing additional clinical trials, and seeking regulatory approval of its product candidate for commercialization. These research and development activities are subject to significant risks and uncertainties. The Company intends to finance its future development activities and its working capital needs primarily from the sale of equity and debt securities, combined with additional funding from other sources. However, there can be no assurance that the Company will be successful in these endeavors. See also *Liquidity and Capital Resources* above.

### New Accounting Pronouncements

Refer to Part I, Note 2, *Summary of Significant Accounting Policies –* Recent Accounting Pronouncements of this Form 10-Q for the discussion.

### Critical Accounting Policies and Estimates

This discussion and analysis of the Company’s financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our financial statements and related disclosures requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company’s critical accounting policies are described under the heading *Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates* in our 2023 Form 10-K.

## Controls and procedures

As filed, 1,692 characters.

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act, is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to our management, including our Principal Executive Officer, who is also our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Principal Executive Officer, who is also our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of August 31, 2023 (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our 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. Our Principal Executive Officer, who is also our Chief Financial Officer, concluded, based upon the evaluation described above that, as of August 31, 2023, our disclosure controls and procedures were effective at the reasonable assurance level.

During the quarter ended August 31, 2023, there have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 3,091 characters.

We are subject to various risks, including risk factors identified in our 2023 Form 10-K. You should carefully consider these risk factors in addition to the risk factors below and other information in this Form 10-Q.

***Our cash reserves are extremely low, requiring that we obtain substantial additional financing to satisfy our current payment obligations and to fund our operations, which continues to be difficult in light of the low trading price of our common stock.***

As of September 30, 2023, we had an unrestricted cash balance of approximately $1.3 million and a reserved cash balance of approximately $6.5 million. We must continue to raise substantial additional funds in the near term to meet our payment obligations and fund our operations. Additional funding may not be available on acceptable terms or at all. In addition, as of September 30, 2023, we had only approximately 21.8 million shares of common stock unreserved for other purposes and available for issuance in new financing transactions. We will need to use some of the additional authorized shares (or funds raised through the sale of such shares) to satisfy a portion of our outstanding accounts payable and accrued liabilities, which totaled approximately $71.6 million on August 31, 2023. If we are not able to raise additional funds on a timely basis, we may be forced to delay, reduce the scope of, or eliminate one or more of our planned operating activities, including continuing to seek removal of the clinical hold placed on us by the FDA, analyzing clinical trial data for purposes of responding to FDA requirements, and preparing additional regulatory submissions, developing additional clinical trials for indications we plan to pursue, regulatory and compliance activities, and legal defense activities. Any delay or inability to pursue our planned activities likely will adversely affect our business, financial condition, and stock price. The continued low trading price of our common stock (with a closing price of $0.19 per share on September 30, 2023) presents a significant challenge to our ability to raise additional funds. If we deplete our cash reserves, we may have to discontinue our operations and liquidate our assets.

***The class-action litigation filed against us could harm our business, and existing insurance coverage may not be sufficient to cover all related costs and damages.***

The securities class action lawsuits filed against the Company in March 2021 have exhausted certain coverage allowances under the Company’s D&O insurance applicable to the relevant time period. This litigation, whether or not successful, may require us to incur substantial costs, which could harm our business and financial condition. During the course of litigation, negative public announcements regarding the results of hearings, motions, or other interim proceedings or developments may occur, which could have a further negative effect on the market price of our common stock. Refer to Note 8, *Commitments and Contingencies – Securities Class Action Lawsuits* for further information.

Filed Oct 23, 2023.
Source: SEC EDGAR, the filing index for accession 0001558370-23-016632. Last ingested by Listed: Oct 24, 2026, 14:53 ET. No prices; not investment advice.