Elicio Therapeutics, Inc.: Form 10-Q for the period ended Mar 31, 2023

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2022. In addition to the historical financial information, this discussion contains forward-looking statements involving risks, assumptions and uncertainties, such as statements of our plans, objectives, expectations, intentions, forecasts and projections. Our actual results and the timing of selected events could differ materially from those discussed in these forward-looking statements as a result of several factors, including those set forth under the section of this Quarterly Report on Form 10-Q titled “Risk Factors,” which you should carefully to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section titled “Forward-Looking Statements” at the beginning of this report.

Overview

We had been a clinical-stage biopharmaceutical company focused on the discovery, development, and commercialization of novel small molecule therapeutics to address chronic and progressive fibrotic diseases, prior to our 2022 Strategic Realignment. Our goal was to transform the treatment paradigm for patients suffering from these potentially life-threatening conditions for which there are no approved medicines or where existing approved medicines have known limitations. Our product candidates and programs included ANG-3070, a TKI formerly in development as a treatment for fibrotic diseases; a ROCK2 preclinical program targeted towards the treatment of fibrotic diseases; a CYP11B2 preclinical program targeted towards diseases related to aldosterone synthase dysregulation; and a CYP26 (retinoic acid metabolism) inhibitor program targeted towards a number of indications, including cancer; and ANG-3777, a HGF mimetic. If we do not complete the merger transaction with Elicio, we could move forward with developing ANG-3070 and conducting further preclinical studies for its ROCK2 program.

Our 2022 Strategic Realignment was announced following our June 2022 termination of our Phase 2 “JUNIPER” dose-finding trial for ANG-3070 in patients with primary proteinuric kidney diseases, specifically FSGS and IgAN. The JUNIPER trial was terminated in the interests of patient safety based upon a reassessment of the risk/benefit profile of ANG-3070 in patients with established serious kidney disease. We completed the data collection work necessary related to the JUNIPER trial to ascertain whether the drug had any effect, positive or negative, in patients with fibrotic kidney diseases and determined there was no economically-viable path forward for ANG-3070 in primary proteinuric kidney diseases.

On January 17, 2023, we entered into and announced a definitive merger agreement with Elicio under which Elicio will merge with a wholly-owned subsidiary of Angion in an all-stock transaction (“Merger”). Upon completion of the Merger, the combined company will focus on advancing Elicio’s proprietary lymph node AMP technology to develop immunotherapies, with a focus on ELI-002, a therapeutic cancer vaccine targeting mKRAS-driven tumors.

We have currently suspended clinical development activities in anticipation of the announced Merger, do not have any products approved for sale and have not generated any revenue from product sales since our inception and do not expect to generate revenue from product sales unless we successfully develop, and we or our collaborators commercialize, our product candidates, which we do not expect to occur in the near future, if ever. Our net losses were $4.5 million and $14.2 million for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, we had an accumulated deficit of $258.5 million. We expect to continue to incur net losses for the foreseeable future.

In addition, if we resume clinical development of our product candidates absent the completion of the announced Merger and if we seek regulatory approval for any of our product candidates or those for which we retain the right to commercialize in the future, we would need to incur additional expenses as we develop and expand our clinical, regulatory, quality, manufacturing and commercialization capabilities, and incur significant commercialization expenses for marketing, sales, manufacturing and distribution if we were to obtain marketing approval for such product candidates.

We have relied on third parties in the conduct of our preclinical studies and clinical trials and for manufacturing and supply of our product candidates. We have no internal manufacturing capabilities, and if we continue to develop product candidates, we expect to continue to rely on third parties, many of whom are single-source suppliers, for our preclinical study and clinical trial materials. In addition, we do not have a marketing or sales organization or commercial infrastructure. Accordingly, if we are able to develop and obtain approval for one or more product candidates, we will incur significant expenses to develop a marketing and sales organization and commercial infrastructure in advance of generating any product sales of wholly-owned product candidates or those for which we retain the right to commercialize.

Furthermore, we would need to make continued investment in development studies, registration activities and the development of commercial support functions including quality assurance and safety pharmacovigilance before we would be in a position to sell any of our product candidates, if approved.

Restructuring and Long-Lived Asset impairment

We incurred restructuring and impairment expenses due to the significant cut in the number of employees from our reductions in force announced in January and July 2022 and suspension of certain of our operations in deference to our 2022 Strategic Realignment which impacted the use of our leased facilities. In 2022, we incurred restructuring and impairment expenses in the amount of $9.2 million. Included in restructuring expenses were $6.2 million one-time termination benefit charges incurred in connection with the reductions in force announced in January and July 2022 and noncash impairment charges of $3.0 million, recorded in the fourth quarter of 2022, in connection with our long-lived assets primarily associated with our leased facility in Uniondale, New York. Of the $6.2 million of termination benefit charges incurred, zero and $3.2 million was reported in operating expenses through our condensed consolidated statements of operations in the three months period ended March 31, 2023, and 2022, respectively. As of March 31, 2023, $1.4 million was paid in the first quarter of 2023 and we expect to pay the remaining $0.2 million of termination benefit charges by the end of September 2023.

License Agreements

License Agreement with Vifor Pharma

In November 2020, we granted Vifor Pharma, an exclusive, global (excluding Greater China), royalty-bearing license, for the commercialization of ANG-3777 in all Renal Indications, beginning with DGF and CSA-AKI. The Vifor License also grants Vifor Pharma exclusive rights, with a right to sublicense subject to our consent for certain specified conditions, to develop and manufacture ANG-3777 for commercialization in Renal Indications worldwide (excluding Greater China) in cooperation with us or independently. We retain the right to develop and commercialize combination therapy products combining ANG-3777 with our other proprietary molecules, subject to Vifor Pharma's right of first negotiation with respect to global (excluding Greater China) rights to such combination therapy products in the Renal Indications. Although the Vifor License includes additional milestone and royalty objectives, we do not expect to receive any clinical, post-approval, or sales milestones, or royalties, as we do not intend to continue to pursue the clinical development plan for ANG-3777, which had included a Phase 3 study for CSA-AKI and a phase 4 confirmatory study in DGF. We and Vifor continue to discuss the analyses of the results of the clinical trials announced in the fourth quarter of 2021 and the future of the collaboration.

Components of Results of Operations

The following discussion summarizes the key factors our management believes are necessary for an understanding of our financial statements.

Revenue

We do not have any products approved for sale and have not generated any revenue from product sales. Our revenue to date primarily has been derived from government funding consisting of U.S. government grants and contracts, and revenue under our license agreements, specifically the Vifor License.

Contract Revenue

Our license agreements comprise elements of upfront license fees, milestone payments based on development and royalties based on net product sales. The timing of our operating cash flows may vary significantly from the recognition of the related revenue. Income from upfront payments is recognized when we satisfy the performance obligations in the contract, which can result in recognition at either a point in time or over the period of continued involvement. Other revenue, such as milestone payments, are recognized when achieved.

Our revenue to date has been generated from payments received pursuant to the Vifor License Agreement. We recognize revenue from upfront payments over the term of our estimated period of performance using a cost-based input method under Topic 606, Revenue from Contracts with Customers.

In addition to receiving an upfront payment, we may also be entitled to milestones and other contingent payments upon achieving predefined objectives. If a milestone is considered probable of being reached, and if it is probable that a significant revenue reversal would not occur, the associated milestone amount would also be included in the transaction price. We expect any license revenue we generate from any future collaboration partners, will fluctuate in the future as a result of the timing and amount of upfront, milestones and other collaboration agreement payments and other factors.

Operating Expenses

Research and Development Expenses

To date, our research and development expenses have primarily related to discovery efforts and preclinical and clinical development of our product candidates. We recognize research and development expenses as they are incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

Our research and development expenses have consisted primarily of:

• personnel costs, including salaries, payroll taxes, employee benefits and stock-based compensation, for personnel in research and development functions;
• costs associated with medical affairs activities;
• fees paid to consultants, clinical testing sites and contract research organizations (CROs), including in connection with our preclinical studies and clinical trials, and other related clinical trial fees, such as for investigator grants, patient screening, laboratory work, clinical trial database management, clinical trial material management and statistical compilation, analysis and reporting;
• contracted research and license agreement fees with no alternative future use;
• costs related to acquiring, manufacturing and maintaining clinical trial materials and laboratory supplies;
• depreciation of equipment and facilities;
• legal expenses related to clinical trial agreements and material transfer agreements; and
• costs related to preparation of regulatory submissions and compliance with regulatory requirements.

Other than with respect to reimbursable expenses required to be recorded under our government grants and contracts, we do not allocate our expenses by product candidates. A significant amount of our direct research and development expenses include payroll and other personnel expenses for our departments supporting multiple product candidate research and development programs and, other than as specified above, we do not record research and development expenses by product. For the three months ended March 31, 2023, research and development expenses primarily consisted of losses on the termination of lease obligations and associated loss on the disposal of property and equipment (see Note 5 and Note 11 to the condensed consolidated financial statements for additional information) due our suspended clinical development activities in anticipation of the announced Merger. For the three months ended March 31, 2022, research and development expenses were primarily driven by expenses relating to the development of ANG-3777 and ANG-3070.

For the three months ended March 31, 2023 and 2022, 88% and 59%, respectively, of research and development expenses were from external third-party sources and the remaining 12% and 41%, respectively, were from internal sources.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel-related expenses, such as salaries, payroll taxes, employee benefits and stock-based compensation, for personnel in executive, operational, finance and human resources functions. Other significant general and administrative expenses include insurance costs, accounting and legal services and expenses associated with the Merger and obtaining and maintaining patents.

Other Income (Expense)

Notes Receivable Recorded at Fair Value

As permitted under ASC 825, Financial Instruments, we have elected the fair value option for recognition of our notes receivable issued to Elicio. Our notes receivable are subject to re-measurement each reporting period with gains and losses reported through our condensed consolidated statements of operations.

Warrant Liability

We have accounted for certain of our freestanding warrants to purchase shares of our common stock as liabilities measured at fair value, in accordance with ASC 815, Derivatives and Hedging. The warrants are subject to re-measurement at each reporting period with gains and losses reported through our condensed consolidated statements of operations.

Foreign Exchange Transaction Gain

Foreign currency transaction gains, primarily related to intercompany loans, are recorded as a component of other income (expense) in our condensed consolidated statements of operations.

Earnings in Equity Method Investment

Earnings in equity method investment represents our 10% interest in NovaPark accounted for under the equity method. We wrote off our investment in NovaPark during the three months ended March 31, 2023. (See Note 15 to our condensed consolidated financial statements for additional information).

Interest Income

Interest income consists of interest earned on our cash and cash equivalents.

Results of Operations

Comparison of the Three Months Ended March 31, 2023 and 2022

The following table summarizes our results of operations for the periods indicated:

(In thousands, except percentages)

Contract Revenue

Contract revenue decreased by $1.6 million for the three months ended March 31, 2023 compared to the same period in 2022. Contract revenue for the three months ended March 31, 2022 was due to acceleration of revenue recognition related to the upfront payment we received from Vifor Pharma when the license agreement with Vifor

Pharma was entered into in 2020. We completed our performance obligations under the Vifor License Agreement by the second quarter of 2022 and recognized all deferred revenue as of the end of that period.

Research and Development Expenses

Research and development expenses decreased by $11.3 million, or 97%, for the three months ended March 31, 2023 compared to the same period in 2022. The net decrease in research and development expenses was primarily due to a $6.4 million reduction in clinical trial related expenses and R&D consulting and subcontractor expenses as a result of the completion of the ANG-3777 and termination of the ANG-3070 trials, a $4.7 million decrease in salary, bonus, and stock based compensation and related severance due to the reduction in headcount following the reduction in force announced in January 2022, and a decrease of $0.5 million in other operating expenses. These decreases were offset in part by a total increase of $0.3 million from the loss on disposal of property and equipment and losses recognized related to the termination of our Novapark lease obligation and sales lease back arrangement (see Note 5, Note 10 and Note 15 to our condensed consolidated financial statements for additional information).

General and Administrative Expenses

General and administrative expenses decreased by $0.2 million, or 4%, for the three months ended March 31, 2023 compared to the same period in 2022. The decrease in general and administrative expenses was primarily due to a net decrease of $1.2 million in personnel-related expenses primarily in salary, bonus, severance and stock-based compensation related to the reduction in force announced in January 2022 and $0.6 million decreases in professional services expense, including audit, consulting and insurance fees. These net decreases were offset by an increase of $1.6 million in legal expenses primarily for Merger related expenses.

Other Income (Expense)

Other income (expense) decreased by $0.2 million for the three months ended March 31, 2023 compared to the same period in 2022. The decrease is primarily due to a $0.2 million foreign currency transaction loss and a $0.3 million net loss in fair value on the note receivable due to remeasurement partially offset by a net increase of $0.4 million in interest income earned on our cash and cash equivalents. The remaining net fluctuations of $0.1 million were individually insignificant.

Liquidity and Capital Resources

Sources and Uses of Liquidity

We have incurred losses and negative cash flows from operations since inception, and we anticipate we will incur losses for at least 12 months following the issuance date of our condensed consolidated financial statements. To date, we have not generated any revenue from product sales. We have funded our operations primarily through the receipt of grants, the sale of debt and equity securities, and proceeds from license agreements. As of March 31, 2023, we had $29.2 million of cash and cash equivalents and an accumulated deficit of $258.5 million, compared to $50.5 million of cash and cash equivalents and an accumulated deficit of $253.9 million as of December 31, 2022.

On March 10, 2023, Silicon Valley Bank (SVB), at which we maintained cash and cash equivalents in multiple accounts, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The failure of SVB exposed us to liquidity and credit risk prior to the completion of the FDIC resolution of SVB in a manner that fully protects all depositors. At the end of March 2023, we transferred substantially all of our cash and cash equivalents from SVB to an asset manager.

Future Cash Needs and Funding Requirements

Based on our current operating plan, we believe our cash and cash equivalents will be sufficient to fund our planned operations for at least 12 months, well into 2024, following the issuance date of our condensed consolidated financial statements. However, we have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all our available capital resources sooner than we expect. We are unable to estimate the exact amount of our operating capital requirements. The amount and timing of our future funding requirements will depend on many factors, including, but not limited to:

• our ability to complete the Merger or, if the Merger is not completed, identify and consummate another strategic transaction;
• the scope, progress, results and costs of researching and developing product candidates, and conducting preclinical studies and clinical trials;
• the outcome of any future clinical trials, for any existing or future product candidates;
• whether we are able to take advantage of any FDA expedited development and approval programs for any of its product candidates;
• the extent to which COVID-19 may impact our business, and financial condition;
• the outcome, costs and timing of seeking and obtaining and maintaining FDA and any foreign regulatory approvals;
• the number and characteristics of product candidates we pursue, including product candidates in preclinical development;
• the ability of our product candidates to progress through clinical development successfully;
• our need to expand its research and development activities, including to conduct additional clinical trials;
• market acceptance of our product candidates, including physician adoption, market access, pricing and reimbursement;
• the costs of acquiring, licensing or investing in businesses, products, product candidates and technologies;
• our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments potentially required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;
• our need and ability to hire additional personnel, including management, clinical development, medical and commercial personnel;
• the effect of competing technological, market developments and government policy;
• the costs associated with being a public company, including our need to implement additional internal systems and infrastructure, including financial and reporting systems;
• the costs associated with securing and establishing commercialization and manufacturing capabilities, as well as those associated with packaging, warehousing and distribution;
• the economic and other terms, timing of and success of our existing licensing arrangements and any collaboration, licensing or other arrangements into which we may enter in the future and timing and amount of payments thereunder; and
• the timing, receipt and amount of sales and general commercial success of any future approved products, if any.

Until such time as we or our collaborators can generate significant revenue from sales of product candidates, if ever, we expect to finance our operations through public or private equity offerings or debt financings or other sources of capital, including collaborations, licenses, credit or loan facilities, receipt of research contributions or grants, tax credit revenue or a combination of one or more of these funding sources. Adequate funding may not be available to us on acceptable terms, or at all. To the extent we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raises funds through additional collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to its technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to and/or may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates itself.

Summary Statement of Cash Flows

The following table sets forth a summary of our net cash flow activity for the three months ended March 31, 2023 and 2022 (in thousands):

Operating activities

For the three months ended March 31, 2023, net cash used in operating activities was $8.1 million, which primarily consisted of a net loss of $4.5 million and a use of cash from the change in net operating assets and liabilities of $4.6 million which was partially offset by net non-cash charges of $1.0 million. The change in net operating assets and liabilities of $4.6 million was primarily the result of an increase in prepaid expenses of $1.6 million due to prepayment of business insurance and other services in the period, a decrease of $1.8 million in accounts payable due to the timing of vendor payments, the decrease of $1.1 million in accrued expenses due to the suspended clinical development activities in anticipation of the announced Merger and $0.1 million fluctuations that were individually insignificant. The $1.0 million of net non-cash charges primarily included stock-based compensation of $0.4 million, $0.3 million loss on the disposal of property and equipment and a $0.3 million loss from the changes in fair value of the notes receivable during the three months ended March 31, 2023.

For the three months ended March 31, 2022, net cash used in operating activities was $15.7 million, which primarily consisted of a net loss of $14.2 million, partially offset by net non-cash charges of $0.2 million and a use of cash from the change in net operating assets and liabilities of $1.6 million. The net non-cash charges were primarily related to the amortization of operating lease right-of-use assets of $0.2 million. The use of cash due to the change in net operating assets and liabilities was due to a decrease in deferred revenue of $1.6 million due to revenue recognized in the period, an increase of $1.5 million in prepaid expenses and other current assets primarily due to the prepayment of business insurance, and a decrease of $1.3 million in accounts payable due to the payment of CRO invoices, partially offset by an increase of $2.0 million in accrued expenses due to timing of invoices, and an increase of $0.2 million in other liabilities, noncurrent, for accrued severance, and a decrease of $0.8 million in grants receivable due to the fulfillment of the grant contract with the U.S. Department of Defense.

Investing activities

For the three months ended March 31, 2023, $10 million in cash was used for the bridge loan to Elicio pursuant to Note Purchase Agreement in connection with execution of the Merger Agreement in January 2023.

For the three months ended March 31, 2022, no cash was provided by or used in investing activities.

Financing activities

For the three months ended March 31, 2023, the net cash used in financing activities was $3.3 million, consisting primarily of termination fee of $3.0 million for the Novapark lease termination and $0.2 million used to terminate our sale and leaseback arrangement. The remaining $0.1 million net cash used in financing activities was individually insignificant.

For the three months ended March 31, 2022, net cash used in financing activities was immaterial.

Critical Accounting Policies and Significant Judgements and Estimates

Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and judgments affecting the reported amounts of assets, liabilities, costs and expenses. We base our estimates on historical experience, known trends and events and various other factors we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 17, 2023. During the three months ended March 31, 2023, except as described in Note 2 to the unaudited interim condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, there were no material changes to our critical accounting policies from those previously disclosed.

Emerging Growth Company and Smaller Reporting Company Status

We are a smaller reporting company and an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay the adoption of new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act for emerging growth companies include presentation of only two years of audited financial statements in a registration statement for an initial public offering, an exemption from the requirement to provide an auditor's report on internal controls over financial reporting pursuant to Sarbanes-Oxley Act of 2002, as amended (Sarbanes-Oxley) an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation, and less extensive disclosure about our executive compensation arrangements.

We have elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting standards as of public company effective dates.

We will remain an emerging growth company until the earliest of (i) December 31, 2026, (ii) the last day of our first fiscal year in which we have total annual gross revenue of $1.235 billion or more, (iii) the date on which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (Exchange Act), which means the market value of equity securities held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter and (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company” and/or “non-accelerated filer” which may allow us to take advantage of many of the same exemptions from disclosure requirements including not being required to comply for a period of time with the auditor attestation requirements of Section 404 of Sarbanes-Oxley, and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer, our principal executive officer and principal accounting and financial officer, respectively, have 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 March 31, 2023.

Disclosure controls and procedures are controls and other procedures designed to ensure information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our President and Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures, our President and Chief Executive Officer and our Chief Financial Officer concluded our disclosure controls and procedures were effective as of March 31, 2023.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) under the Exchange Act) that occurred during the quarter ended March 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitation on the Effectiveness Over Financial Reporting

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable and not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but there can be no assurance such improvements will be sufficient to provide us with effective internal control over financial reporting.

Investing in our common stock involves a high degree of risk. You should carefully consider the risk factors, described in our Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 17, 2023, as amended on April 28, 2023, as well as the other information in this Quarterly Report on Form 10-Q, before deciding whether to invest in shares of our common stock. As previously disclosed, we have entered into the Merger Agreement with Elicio, and we have discontinued the clinical development of ANG-3070 for all indications and discontinued other development activities pending conclusion of the strategic process, except certain pre-clinical studies of ANG-3777 and certain other pre-clinical development.

Many of the risks and uncertainties described in our Annual Report on Form 10-K for the year ended December 31, 2022 are, and will be, exacerbated by any worsening of the global business and economic environment. The occurrence of any of the adverse developments described in our risk factors could materially and adversely harm our business, financial condition, results of operations or prospects. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.