MetaVia Inc.: Form 10-Q for the period ended Mar 31, 2025

The following discussion of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this Report and the audited financial statements and related notes for the fiscal year ended December 31, 2024 included in our 2024 Form 10-K. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by any forward-looking statements as a result of various factors, including, but not limited to, the risks and uncertainties described under Part II, Item 1A. Risk Factors, elsewhere in this Report.

Certain amounts in the following discussion and analysis may not add up due to rounding, and all percentages have been calculated using unrounded amounts.

Overview

We are a clinical-stage biotechnology company focused primarily on developing novel pharmaceuticals to treat cardiometabolic diseases. MetaVia has two programs focused primarily on the treatment of metabolic dysfunction-associated steatohepatitis (“MASH”) and obesity.

• DA-1241 is a novel G-Protein-Coupled Receptor 119 (“GPR119”) agonist with development optionality as a standalone and/or combination therapy for both MASH and Type 2 Diabetes Mellitus (“T2DM”). Agonism of GPR119 in the gut promotes the release of key gut peptides, glucagon-like peptide 1 (“GLP-1”), glucagon-dependent insulinotropic polypeptide receptor, and peptide YY. These peptides play a further role in glucose metabolism, lipid metabolism and weight loss. DA-1241 has demonstrated beneficial effects on glucose, lipid profile and liver inflammation, as demonstrated during in-vivo preclinical studies.
• DA-1726 is a novel oxyntomodulin (“OXM”) analog agonist functioning as a GLP-1 receptor (“GLP1R”) and glucagon receptor (“GCGR”) dual agonist for the treatment of obesity that is designed to be administered once weekly subcutaneously. With the activation of the dual agonist, weight loss may be achieved by GLP1R reducing appetite while GCGR increasing energy expenditure.

While we primarily focus our financial resources and management’s attention on the development of DA-1241 and DA-1726, we also have four legacy therapeutic programs designed to impact a range of indications in viral, neurodegenerative and cardiometabolic diseases on which we are not planning to advance development and have, or continue to consider for, out-licensing and divestiture opportunities.

Our operations have consisted principally of performing research and development (“R&D”) activities, which includes preclinical developments and clinical trials, and raising capital. Our activities are subject to significant risks and uncertainties, such as failing to secure additional funding before sustainable revenues and profit from operations are achieved. For more information on our business and product candidates, see “Part I, Item 1. Business” in our 2024 Form 10-K.

DA-1241

We are currently finalizing the Clinical Study Report on a Phase 2a clinical trial in the United States (“U.S.”). MASH Phase 2a is a 16-week, multicenter, randomized, double-blind, placebo-controlled, parallel arm clinical trial to establish safety and an early signal of efficacy in MASH as a next-generation competitive oral agent while we follow the trend for T2DM.

In December 2024, we announced positive top-line 16-week results from the two-part Phase 2a clinical trial in patients with presumed MASH. Part 1 of this Phase 2a trial is exploring DA-1241, a novel GPR119 agonist compared to placebo, while Part 2 is investigating the efficacy of DA-1241 in combination with sitagliptin, a DPP-4 inhibitor.

The Company expects to have an end-of-Phase 2 meeting with the FDA in the first half of 2025. For additional information on DA-1241, including an overview of the top-line 16-week results from the two-part Phase 2a clinical trial, see “Part I, Item 1. Business, Our Pipeline, DA-1241 Treatment of MASH” in our 2024 Form 10-K.

DA-1726

We are currently conducting a Phase 1 trial in the U.S. The Phase 1 trial, a first-in-human trial, is a randomized, placebo-controlled, double-blind, two-part study to investigate the safety, tolerability, pharmacokinetics, and pharmacodynamics of single and multiple ascending doses of DA-1726 in obese, otherwise healthy subjects.

In September 2024, we announced positive top-line data from the single ascending dose Part 1 of our Phase 1 trial evaluating DA-1726. In April 2025, we announced positive top-line data from the multiple ascending dose (“MAD”) Part 2 study of our Phase 1 trial. Currently, we are planning to add higher-dose cohorts to assess the maximum tolerated dose and fully realize DA-1726's potential, as higher doses may also show a similar profile, while potentially demonstrating increased weight reduction. The enrollment for the additional cohorts is expected to begin in the third quarter of 2025 with data expected in the fourth quarter of 2025.

For additional information on DA-1726, see “Part I, Item 1. Business, Our Pipeline, DA-1726 Treatment of Obesity” in our 2024 Form 10-K, our Current Report on Form 8-K (“Form 8-K) dated April 15, 2025, and our Form 8-K dated April 22, 2025.

Recent developments

• April 2025: Announced positive results from the MAD Part 2 of the Phase 1 clinical trial of DA-1726, a novel, dual OXM analog agonist that functions as a GLP1R and GCGR, for the treatment of obesity.
• April 2025: Reported previously issued and outstanding pre-funded warrants were exercised for 1,430,000 shares of the Company’s common stock -- leaving no pre-funded warrants outstanding.
• April 2025: Reported additional top-line results from the MAD Part 2 of the Phase 1 clinical trial of DA-1726, a novel, dual OXM analog agonist that functions as a GLP1R and GCGR, for the treatment of obesity.
• May 2025: Presented data from the Phase 2a clinical trial of DA-1241 in patients with presumed MASH, demonstrating both hepatoprotective and glucose-regulating effects. The data was presented in late-breaking poster presentation at the European Association for the Study of the Liver (EASL) Congress 2025 in Amsterdam, the Netherlands.
• May 2025: Closed on a private placement transaction pursuant to a securities purchase agreement with Dong-A ST, a related party, and Dong-A Socio Holdings Co., Ltd., the parent company of Dong-A ST (the “Securities Purchase Agreements”). The terms of the Securities Purchase Agreements include an agreement to sell (i) 9,479,345 shares of the Company’s common stock at a price of $0.71 per share and (ii) 4,605,162 pre-funded warrants to purchase shares of Company’s common stock at a price of $0.709 per pre-funded warrant for an aggregate gross proceeds of $10.0 million, before deducting the placement agent’s fees and related offering expenses. The pre-funded warrants have an exercise price of $0.001 per pre-funded warrant.

Key operating information

Except for the following disclosure and the financial amounts for the presented periods in this Report (see financial amounts in the below results of operations and the condensed consolidated balance sheets included elsewhere in this Report), there have been no material changes to our key operating information since December 31, 2024. Refer to our 2024 Form 10-K for a complete discussion of our key operating information.

Research and development expenses

R&D expenses consist primarily of costs incurred in connection with the development of our product candidates. These expenses include:

Direct costs

• expenses incurred in connection with the clinical development of our product candidates, including under agreements with third parties, such as clinical research organizations (“CROs”) and consultants;
• the cost of manufacturing and storing drug products for use in our preclinical studies and clinical trials, including under agreements with third parties, such as consultants and Clinical Manufacturing Organizations (“CMOs”);
• costs related to compliance with regulatory requirements; and
• payments made under third-party licensing agreements including the Shared Services Agreement with Dong-A ST (related party).

Indirect costs

• employee-related expenses, including salaries, related benefits and stock-based compensation, for employees engaged in research and development functions; and
• consulting and other expenses not directly tied to a product candidate.

We recognize external development costs based on an evaluation of the progress toward completion of specific tasks using information provided to us by our service providers. This process involves reviewing contracts and purchase orders, communicating with our clinical research staff to identify services that have been performed on our behalf, and estimating the level of service provided and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense when the goods have been delivered or the services have been performed, or when it is no longer expected that the goods will be delivered, or the services rendered.

Our direct R&D expenses consist primarily of external costs, such as fees paid to CROs, CMOs, research laboratories and outside consultants in connection with our clinical development, quality assurance and quality control processes, manufacturing, and clinical development activities. Our direct research and development expenses also include fees incurred under third-party license agreements, including the Shared Services Agreement with Dong-A ST (related party). We utilize our employee and infrastructure resources across multiple research and development projects. We do not allocate employee costs and costs associated with our facilities, including depreciation or other indirect costs, to specific product candidates because these costs are deployed across multiple programs and, as such, are not separately classified. We utilize internal resources to manage CRO and CMO activities. These employees work across multiple programs. Our direct R&D expenses consist of (i) expenses attributable to our product candidates and (ii) certain other R&D expenses, including non-clinical and preclinical services or other R&D expenses that are not attributable to a single product candidate. Our indirect R&D expenses consist of (i) employment-related expenses for compensation and benefits, which are internal costs and (ii) consulting expenses.

Clinical development activities are central to our business model. We do not believe that our historical costs are indicative of the future costs associated with these programs, nor do they represent the costs of future programs we may initiate. Product candidates in later stages of clinical development generally have higher development costs than those in preclinical development or in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We have some control over the timing of these expenses, but costs may be difficult to control once clinical trials have commenced.

The successful development and commercialization of our product candidates are highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates. Additionally, because of the risks inherent in novel treatment discovery and development, we cannot reasonably estimate or know:

• the timing and progress of preclinical and clinical development activities;
• the number and scope of preclinical and clinical programs that we decide to pursue;
• our ability to maintain our current development programs and to establish new ones;
• establishing an appropriate safety profile with IND-enabling studies;
• successful patient enrollment in, and the initiation and completion of, clinical trials;
• the successful completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority;
• the receipt of regulatory approvals from applicable regulatory authorities;
• the timing, receipt and terms of any marketing approvals from applicable regulatory authorities;
• our ability to establish new licensing or collaboration arrangements;
• establishing agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if any of our product candidates is approved;
• development and timely delivery of clinical-grade and commercial-grade drug formulations that can be used in our clinical trials and for commercial launch;
• obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;
• launching commercial sales of our product candidates, if approved, whether alone or in collaboration with others;
• maintaining a continued acceptable safety profile of the product candidates following commercialization; or
• the effect of competing technological and market developments.

A change in the outcome of any of these variables with respect to the development of our product candidates could significantly change the costs and timing associated with the development of that product candidate.

Results of operations

Three months ended March 31, 2025 compared to three months ended March 31, 2024

The following table summarizes our results of operations (in thousands, except share and per share amounts):

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Total operating expenses and loss from operations

Our total operating expenses and loss from operations for the three months ended March 31, 2025 were $3.9 million, a decrease of $3.0 million, or 43.5%, compared to the three months ended March 31, 2024. This decrease was attributable to lower R&D and general and administrative expenses for the three months ended March 31, 2025. Our R&D expenses were $2.3 million for the three months ended March 31, 2025, a decrease of $2.6 million, or 52.5%, compared to the three months ended March 31, 2024. Our general and administrative expenses were $1.6 million for the three months ended March 31, 2025, a decrease of $0.4 million, or 21.1%, compared to the three months ended March 31, 2024.

The following table summarizes our R&D expenses for the three months ended March 31, 2025 and 2024 (in thousands):

The $2.6 million decrease in R&D expenses reflects decreased R&D activities related to the Phase 2a clinical trial for DA-1241 and increased activities related to the Phase 1 trial for DA-1726 as compared to the three months ended March 31, 2024. Specifically, the decrease in R&D expenses was primarily attributable to (i) $2.9 million in lower direct R&D expenses related to DA-1241 product development and (ii) $0.2 million in lower direct other R&D costs. These decreases were partially offset by (i) $0.5 million in higher direct R&D expenses related to DA-1726 product development and (ii) $0.1 million in higher indirect R&D expenses related to employee compensation and benefits. Included in direct R&D costs were expenses totaling $1.1 million and $0.2 million for the three months ended March 31, 2025 and 2024, respectively, related to investigational drug manufacturing, non-clinical and preclinical costs incurred under the Shared Services Agreement with Dong-A ST (related party).

The $0.4 million decrease in general and administrative expenses was primarily attributable to (i) $0.4 million in lower consulting expenditures and (ii) $0.2 million in lower other G&A expenses. These decreases were partially offset by $0.2 million in higher employee compensation and benefits.

Total other income

Our total other income for the three months ended March 31, 2025 and 2024 remained relatively consistent at $0.2 million. The net increase in the gain from the change in fair value of warrant liabilities during the three months ended March 31, 2025 was partially offset by a decrease in interest income earned on our cash balance during the three months ended March 31, 2025.

Provision for income taxes

Our effective tax rate for the three months ended March 31, 2025 and 2024 was zero percent as we have recorded a full valuation allowance for the income tax benefits attributable to our pre-tax losses.

Net loss

For the three months ended March 31, 2025, we had a net loss of $3.7 million, or $0.36 per share of basic and diluted common stock, compared to a net loss of $6.7 million, or $1.32 per share of basic and diluted common stock for the three months ended March 31, 2024, primarily due to the factors described above.

Going concern

As reflected in the condensed consolidated financial statements, we had $11.2 million in cash as of March 31, 2025. We have experienced net losses and negative cash flows from operating activities since our inception and had an accumulated deficit of $139.5 million as of March 31, 2025. We have incurred a net loss of $3.7 million and net cash used in operating activities of $4.8 million for the three months ended March 31, 2025. Due in large part to the ongoing Phase 2a clinical trial for DA-1241 and Phase 1 clinical trial for DA-1726, we expect to continue to incur net losses and negative cash flows from operating activities for the foreseeable future. These conditions raise substantial doubt about our ability to continue as a going concern within one year from the issuance of these condensed consolidated financial statements.

We believe that our existing cash will be sufficient to fund our operations into 2026. We plan to continue to fund our operations from equity offerings, debt financing, or other sources, potentially including collaborations, out-licensing and other similar arrangements. However, there can be no assurance that we will be able to obtain any sources of financing on acceptable terms, or at all, or that the Series A and Series B warrants issued in June 2024 will be exercised. To the extent that we can raise additional funds by issuing equity securities or in the event our existing warrants are exercised, our stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact our ability to conduct our business. If we are unable to raise additional capital, we may slow down or stop our ongoing and planned clinical trials until such time as additional capital is raised and this may have a material adverse effect on us.

The determination as to whether we can continue as a going concern contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Our condensed consolidated financial statements have been prepared assuming that we will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. This basis of accounting contemplates the recovery of our assets and the satisfaction of our liabilities in the normal course of business.

Liquidity and capital resources

Our primary use of cash is to fund our R&D activities. We have funded our operations primarily through public offerings of our common stock and private placements of equity and convertible securities. As of March 31, 2025, we had cash totaling $11.2 million. We maintain cash at financial institutions that at times may exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limits of $250 thousand per bank. Our cash balance includes liquid insured deposits, which are obligations of the program banks in which the deposits are held and qualify for FDIC insurance protection per depositor in each recognized legal category of account ownership in accordance with the rules of the FDIC. To date, we have not experienced any losses related to these funds.

Cash flows

The principal use of cash in operating activities is to fund our current expenditures in support of our R&D activities. Financing activities currently represent the principal source of our cash flow. The following table reflects the major categories of cash flows (in thousands).

Net cash used in operating activities was $4.8 million for the three months ended March 31, 2025 and consisted of net loss of $3.7 million and net cash used in change in operating assets and liabilities of $1.2 million, partially offset by non-cash charges totaling $0.1 million, which was primarily related to stock-based compensation and change in fair value of warrant liabilities. Net cash used in operating activities was $6.4 million for the three months ended March 31, 2024 and consisted of net loss of $6.7 million, partially offset by non-cash charges totaling $0.2 million, which was primarily related to stock- based compensation and change in fair value of warrant liabilities, and net cash provided by changes in operating assets and liabilities of $0.1 million.

We had no investing activities for the three months ended March 31, 2025. Net cash used in investing activities was less than $0.1 million for the three months ended March 31, 2024, related to the purchase of property and equipment.

Net cash used in financing activities was less than $0.1 million for the three months ended March 31, 2025 related to the payment of employee withholding taxes related to share withheld from the issuance of vested restricted stock units. We had no financing activities for the three months ended March 31, 2024.

For additional details, see the condensed consolidated statements of cash flows in the condensed consolidated financial statements included elsewhere in this Report.

Critical accounting estimates

Our condensed consolidated financial statements included in this Report have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses, and related disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in our condensed consolidated financial statements relate to accrued expenses and the fair value of stock-based compensation and warrants. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates. Changes in estimates are reflected in reported results in the period in which they become known.

There have been no material changes to our critical accounting estimates and judgments since December 31, 2024. Refer to our 2024 Form 10-K for a complete discussion of our critical accounting estimates and judgments.

Recent accounting pronouncements

Information regarding (i) adoption of new accounting standards and (ii) accounting standards issued but not yet adopted is included in “Note 1. Business, basis of presentation, new accounting standards and summary of significant accounting policies” to the condensed consolidated financial statements included in this Report.

Evaluation of disclosure controls and procedures

As required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act, our management, with the participation of our principal executive officer (“PEO”) and principal financial officer (“PFO”), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Report. Based upon that evaluation, our PEO and PFO concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Report, as a result of the material weaknesses in our internal control over financial reporting, which is discussed further below.

Previously identified material weaknesses in internal control over financial reporting

In connection with the preparation of the financial statements included in our 2024 Form 10-K, management identified the following material weaknesses: (i) logical access over the accounting software and (ii) lack of review over reconciliation of accrued clinical trial liabilities. A material weakness is a deficiency, or a combination of 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 on a timely basis. See “Remediation efforts to address the material weaknesses” below for steps we had taken to correct these material weaknesses.

Remediation efforts to address the material weaknesses

We are in the process of remediating, but have not yet remediated, the material weaknesses, as described above, related to logical access over the accounting software and lack of review over reconciliation of accrued clinical trial liabilities. Under the oversight of the audit committee, management developed a detailed plan and timetable for the implementation of appropriate remedial measures to address the material weaknesses. As of the March 31, 2025, the following actions have been taken:

• we have implemented enhanced controls relating to logical access over the accounting software, which includes (i) validation of certain financial reports for accuracy and completeness and (ii) supervision and review over financial reporting; and
• we have implemented enhanced controls relating to lack of review over reconciliation of accrued clinical trial liabilities, which include enhanced documentation of the reviews.

The corrective controls were implemented during the three months ended March 31, 2025, and these corrective controls need to continue operating effectively for a sufficient period of time in order for us to conclude that the material weaknesses have been remediated. The remediation will thereafter be completed after management has concluded through testing that these controls have operated effectively for a sufficient period of time. Management is working to fully remediate these material weaknesses in 2025.

Inherent limitations of disclosure controls and procedures

Our management, including our PEO and PFO, does not expect that our disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in internal control over financial reporting

Other than the remediation activities listed above, there have been no changes in our internal control over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in Part I, Item 1A of the 2024 Form 10-K under the heading “Risk Factors,” any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results and stock price. Except for the following disclosure, there have been no material changes to our risk factors since the 2024 Form 10-K.

Changes in and uncertainty surrounding U.S. trade policy could have a material adverse impact on our business, financial condition and results of operations.

As a result of changes in tariffs that have been announced and/or implemented, and the underlying uncertainty currently surrounding international trade, we could experience a negative impact to our costs of materials and production processes, and supply chain disruptions and delays as a result of any new tariff policies or trade restrictions. If we are unable to obtain necessary raw materials or product components in sufficient quantity and in a timely manner due to disruptions in the global supply chain caused by macroeconomic events and conditions, the development, testing and clinical trials of our product candidates may be delayed or infeasible, and regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business. We cannot yet predict the effect of the recently imposed U.S. tariffs on imports, or the extent to which other countries will impose quotas, duties, tariffs, taxes or other similar restrictions upon imports or exports in the future, nor can we predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business.