d
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Units, each consisting of one share of common stock and one redeemable warrant |
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REVBU |
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The Nasdaq Stock Market LLC |
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The |
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Redeemable warrants, each exercisable for a share of common stock at an exercise price of $11.50 per share |
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REVBW |
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The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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☐ |
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Accelerated filer |
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☐ |
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☒ |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 7, 2022, the registrant had
Table of Contents
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Page |
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PART I. |
1 |
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Item 1. |
1 |
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1 |
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2 |
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Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) |
3 |
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4 |
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5 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 |
Item 3. |
26 |
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Item 4. |
26 |
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PART II. |
27 |
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Item 1. |
27 |
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Item 1A. |
27 |
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Item 2. |
29 |
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Item 3. |
29 |
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Item 4. |
29 |
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Item 5. |
30 |
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Item 6. |
30 |
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31 |
i
PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
REVELATION BIOSCIENCES, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
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September 30, |
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December 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Right-of-use lease asset |
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— |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Lease liability |
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— |
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Deferred underwriting commissions |
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— |
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Total current liabilities |
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Total liabilities |
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(Note 5) |
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Stockholders’ equity (deficit): |
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Series A Preferred Stock, $ |
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Series A-1 Preferred Stock, $ |
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Common Stock, $ |
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Additional paid-in-capital |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity (deficit) |
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( |
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Total liabilities and stockholders’ equity (deficit) |
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$ |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
1
REVELATION BIOSCIENCES, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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2022 |
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2021 |
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2022 |
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2021 |
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Operating expenses: |
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Research and development |
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$ |
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$ |
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$ |
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$ |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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( |
) |
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( |
) |
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( |
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( |
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Other income (expense): |
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Other income (expense) |
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( |
) |
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( |
) |
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Total other income (expense), net |
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( |
) |
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( |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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Net loss per share, basic and diluted |
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$ |
( |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Weighted-average shares used to compute net loss per share, basic and diluted |
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See accompanying notes to the condensed consolidated financial statements.
2
REVELATION BIOSCIENCES, INC.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
(Unaudited)
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Series A |
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Series A-1 |
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Common Stock |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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(Deficit) |
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Balance as of December 31, 2020 |
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$ |
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— |
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$ |
— |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Issuance of common stock |
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— |
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— |
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— |
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— |
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— |
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Issuance of Series A-1 Preferred Stock, net |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of Warrants in connection with the issuance of the Series A-1 Preferred Stock |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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— |
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— |
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Payment for Series A Preferred Stock subscribed |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Payment for common stock subscribed |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance as of March 31, 2021 |
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( |
) |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance as of June 30, 2021 |
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( |
) |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance as of September 30, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Balance as of December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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Conversion of Series A Preferred Stock to common stock |
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( |
) |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
Conversion of Series A-1 Preferred Stock to common stock |
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— |
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— |
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( |
) |
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( |
) |
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— |
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— |
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— |
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— |
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( |
) |
Issuance of common stock in connection with the Business Combination, net |
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— |
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— |
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— |
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— |
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— |
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Equity Issuance for fees in connection with the Business Combination |
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— |
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— |
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— |
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— |
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— |
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— |
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Proceeds from the PIPE Investment, net |
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— |
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— |
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— |
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— |
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— |
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Rollover Warrant exercise |
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— |
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— |
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— |
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— |
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— |
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Repurchase for the Forward Share Purchase Agreement exercise |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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( |
) |
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— |
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( |
) |
Pre-Funded Warrants exercise |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance as of March 31, 2022 |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance as of June 30, 2022 |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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Proceeds from the July 2022 Public Offering, net |
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— |
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— |
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— |
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— |
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— |
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RSU awards issued |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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Conversion of Accrued Expenses to Equity in connection with the Business Combination |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance as of September 30, 2022 |
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— |
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$ |
— |
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— |
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$ |
— |
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$ |
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$ |
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$ |
( |
) |
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$ |
|
See accompanying notes to the condensed consolidated financial statements.
3
REVELATION BIOSCIENCES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
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Nine Months Ended |
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2022 |
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2021 |
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||
Cash flows from operating activities: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation expense |
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Depreciation expense |
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Non-cash lease expense |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
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( |
) |
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Accounts payable |
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( |
) |
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Accrued expenses |
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( |
) |
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Operating lease liability |
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( |
) |
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( |
) |
Accrued interest on Promissory Notes Payable & Convertible Note |
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— |
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Net cash used in operating activities |
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( |
) |
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( |
) |
Cash flows from investing activities: |
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Purchase of property and equipment |
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— |
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( |
) |
Net cash used in investing activities |
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— |
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( |
) |
Cash flows from financing activities: |
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Proceeds from the Convertible Note |
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— |
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Repayment of the Convertible Note |
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( |
) |
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— |
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Proceeds from the Business Combination, net |
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|
|
— |
|
|
Proceeds from the PIPE Investment, net |
|
|
|
|
|
— |
|
|
Proceeds from Rollover Warrant exercise |
|
|
|
|
|
— |
|
|
Repurchase for the Forward Share Purchase Agreement exercise |
|
|
( |
) |
|
|
— |
|
Repayments of Promissory Notes Payable, including interest |
|
|
( |
) |
|
|
— |
|
Proceeds from Pre-Funded Warrants exercise |
|
|
|
|
|
— |
|
|
Proceeds from the July 2022 Public Offering, net |
|
|
|
|
|
— |
|
|
Proceeds from issuance of common stock, net |
|
|
— |
|
|
|
|
|
Proceeds from issuance of Series A Preferred Stock, net |
|
|
— |
|
|
|
|
|
Proceeds from issuance of Series A-1 Preferred Stock, net |
|
|
— |
|
|
|
|
|
Net cash provided by financing activities |
|
|
|
|
|
|
||
Net increase (decrease) in cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental disclosure of non-cash investing and financing activities: |
|
|
|
|
|
|
||
Current liabilities assumed in the Business Combination |
|
$ |
|
|
$ |
— |
|
|
Deferred underwriting commissions assumed in the Business Combination |
|
$ |
|
|
$ |
— |
|
|
Conversion of Series A Preferred Stock to common stock |
|
$ |
|
|
$ |
— |
|
|
Conversion of Series A-1 Preferred Stock to common stock |
|
$ |
|
|
$ |
— |
|
|
Equity Issuance for fees in connection with the Business Combination |
|
$ |
|
|
$ |
— |
|
|
Issuance of Common Warrants in connection with the PIPE Investment |
|
$ |
|
|
$ |
— |
|
|
Issuance of Placement Agent Warrants in connection with the PIPE Investment |
|
$ |
|
|
$ |
— |
|
|
Premium Financing Agreement - D&O Insurance |
|
$ |
|
|
$ |
— |
|
|
Conversion of Accrued Expenses to Equity in connection with the Business Combination |
|
$ |
|
|
$ |
— |
|
|
Issuance of New Common Stock Warrants in connection with the July 2022 Public Offering |
|
$ |
|
|
$ |
— |
|
|
Issuance of New Placement Agent Warrants in connection with the July 2022 Public Offering |
|
$ |
|
|
$ |
— |
|
|
Acquisition of right-of-use asset through operating lease obligation |
|
$ |
— |
|
|
$ |
|
|
Issuance of warrants in connection with Series A-1 Preferred Stock |
|
$ |
— |
|
|
$ |
|
|
|
|
|
|
|
|
|
See accompanying notes to the condensed consolidated financial statements.
4
REVELATION BIOSCIENCES, INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1. Organization and Basis of Presentation
Revelation Biosciences, Inc. (collectively with its wholly-owned subsidiaries, the “Company” or “Revelation”), formerly known as Petra Acquisition, Inc. (“Petra”), was incorporated in Delaware on November 20, 2019. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. On January 10, 2022 (the “Closing Date”) the Company consummated its business combination, with Revelation Biosciences Sub, Inc. (“Old Revelation” or “Revelation Sub”), the Company's wholly owned subsidiary (the “Business Combination”). Since the Business Combination, the Company is a clinical-stage biopharmaceutical company and has been focused on the development and commercialization of immunologic therapeutics and diagnostics.
The Business Combination was accounted for as a reverse recapitalization with Revelation Sub as the accounting acquirer and Petra as the acquired company for accounting purposes. Accordingly, all historical financial information presented in the unaudited condensed consolidated financial statements represents the accounts of Revelation Sub as if Revelation Sub is the predecessor to the Company. The common stock and net loss per share, prior to the Merger, have been retroactively restated as common stock and net loss per share reflecting the exchange ratio established in the Business Combination (
Petra’s Common Stock, Public Warrants and Units were historically listed on the Nasdaq Capital Market under the symbols “PAIC,” “PAICW” and “PAICU,” respectively. On January 10, 2022, the Company’s units, common stock and warrants were listed on the Nasdaq Capital Market under the symbols “REVBU”, “REVB” and “REVBW”, respectively, (see Note 3).
The Company has incurred recurring losses since its inception, including a net loss of $
To continue as a going concern, the Company will need, among other things, to raise additional capital resources. The Company plans to seek additional funding through public or private equity or debt financings. The Company may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, it could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect the Company’s business operations.
The unaudited condensed consolidated financial statements for September 30, 2022, have been prepared on the basis that the Company will continue as a going concern, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability for the Company to continue as a going concern.
The accompanying financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All inter-company transactions and balances have been eliminated in consolidation. Certain amounts previously reported in the financial statements have been reclassified to conform to the current year presentation. Such reclassifications did not affect net loss, stockholders’ deficit or cash flows.
2. Summary of Significant Accounting Policies
Unaudited Interim Condensed Consolidated Financial Statements
The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements as of December 31, 2021 and for the year ended December 31, 2021 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position. The
5
financial data and the other financial information contained in these notes to the condensed consolidated financial statements related to the three and nine months ended September 30, 2022 are unaudited. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other future annual or interim period. The condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2021 included on Form 8-K/A, as filed with the SEC on April 22, 2022. The accompanying condensed consolidated balance sheet as of December 31, 2021 has been derived from the audited balance sheet at December 31, 2021 contained in the above referenced Form 8-K/A.
Use of Estimates
The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions about future events that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of expenses. These estimates and assumptions are based on the Company’s best estimates and judgment. The Company regularly evaluates its estimates and assumptions using historical and industry experience and other factors; however, actual results could differ materially from these estimates and could have an adverse effect on the Company’s condensed consolidated financial statements.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. The Company maintains its cash in checking and savings accounts. Income generated from cash held in savings accounts is recorded as interest income. The carrying value of the Company’s savings accounts is included in cash and approximates the fair value.
Fair Value Measurements
The carrying values of the Company’s financial assets and liabilities, including cash and cash equivalents, subscription receivables, prepaid expenses, accounts payable and accrued expenses approximate their fair value due to the short-term nature of these instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. Assets and liabilities recorded at fair value in the financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels are directly related to the amount of subjectivity with the inputs to the valuation of these assets or liabilities as follows:
Level 1 — Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable inputs for similar assets or liabilities. These include quoted prices for identical or similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active;
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents. Bank deposits are held by accredited financial institutions and these deposits may at times be in excess of federally insured limits. The Company limits its credit risk associated with cash and cash equivalents by placing them with financial institutions that it believes are of high quality. The Company has not experienced any losses on its deposits of cash or cash equivalents.
Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which is
6
Leases
The Company determines if an arrangement is a lease at inception. Lease right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. For operating leases with an initial term greater than 12 months, the Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of lease payments over the lease term at the commencement date. Operating lease right-of-use assets are comprised of the lease liability plus any lease payments made and excludes lease incentives. Lease terms include options to renew or terminate the lease when the Company is reasonably certain that the renewal option will be exercised or when it is reasonably certain that the termination option will not be exercised. For an operating lease, if the interest rate used to determine the present value of future lease payments is not readily determinable, the Company estimates the incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in similar economic environments. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for the development of the Company’s product candidates, REVTx-99a/b, REVTx-200, REVTx-300 and diagnostic product, REVDx-501. Research and development costs are charged to expense as incurred. The Company records accrued expenses for estimated preclinical, clinical study and research expenses related to the services performed but not yet invoiced pursuant to contracts with research institutions, contract research organizations, and clinical manufacturing organizations that conduct and manage preclinical studies, clinical studies, research services, and development services on the Company’s behalf. Payments for these services are based on the terms of individual agreements and payment timing may differ significantly from the period in which the services were performed. Estimates are based on factors such as the work completed, including the level of patient enrollment. The Company monitors patient enrollment levels and related activity to the extent reasonably possible and makes judgments and estimates in determining the accrued balance in each reporting period. The Company’s estimates of accrued expenses are based on the facts and circumstances known at the time. If the Company underestimates or overestimates the level of services performed or the costs of these services, actual expenses could differ from estimates. As actual costs become known, the Company adjusts accrued expenses. To date, the Company has not experienced significant changes in estimates of clinical study and development services accruals.
Patent Costs
Legal costs in connection with approved patents and patent applications are expensed as incurred, as recoverability of such expenditures is uncertain. These costs are recorded in general and administrative expense in the statements of operations.
Stock-based Compensation
The Company recognizes compensation expense related to stock options, third-party warrants, and Restricted Stock Unit (“RSU”) awards granted, based on the estimated fair value of the stock-based awards on the date of grant. The fair value of employee stock options and third-party warrants are generally determined using the Black-Scholes option-pricing model using various inputs, including estimates of historic volatility, term, risk-free rate, and future dividends. The grant date fair value of the stock-based awards, which have graded vesting, is recognized using the straight-line method over the requisite service period of each stock-based award, which is generally the vesting period of the respective stock-based awards. The Company recognizes forfeitures as they occur.
Income Taxes
Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in the years in which those temporary differences are expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or loss in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. Interest and penalties related to unrecognized tax benefits are included within the provision of income tax. To date, there have been
Basic and Diluted Net Loss per Share
Basic net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding during the period, without consideration of potential shares of common stock. Diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding plus potential shares of common stock.
7
Convertible preferred stock on an as converted basis, unvested and unissued RSU awards, warrants and stock options outstanding are considered potential shares of common stock and are included in the calculation of diluted net loss per share using the treasury stock method when their effect is dilutive. Potential shares of common stock are excluded from the calculation of diluted net loss per share when their effect is anti-dilutive. As of September 30, 2022 and 2021, there were
Comprehensive Loss
The Company has no components of comprehensive loss other than net loss. Thus, comprehensive loss is the same as net loss for the periods presented.
Segment Reporting
Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources in assessing performance.
The Company has
Recent Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) (“ASU 2019-12”). ASU 2019-12 issued guidance on the accounting for income taxes that, among other provisions, eliminates certain exceptions to existing guidance related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also requires an entity to reflect the effect of an enacted change in tax laws or rates in its effective income tax rate in the first interim period that includes the enactment date of the new legislation, aligning the timing of recognition of the effects from enacted tax law changes on the effective income tax rate with the effects on deferred income tax assets and liabilities. Under existing guidance, an entity recognizes the effects of the enacted tax law change on the effective income tax rate in the period that includes the effective date of the tax law. This guidance is effective for fiscal years beginning after December 15, 2021, and interim periods within the fiscal years beginning after December 15, 2022. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.
3. Business Combination
As disclosed in Note 1, the Company consummated the Business Combination, pursuant to the terms of the agreement and plan of merger, dated as of August 29, 2021 (the “Business Combination Agreement”), by and among Petra, Petra Acquisition Merger, Inc., a Delaware corporation and wholly-owned subsidiary of Petra (“Merger Sub”), and Old Revelation. Pursuant to the Business Combination Agreement, on the Closing Date, (i) Merger Sub merged with and into Old Revelation (the “Merger”), with Old Revelation as the surviving company in the Merger, and, after giving effect to such Merger, Old Revelation was renamed Revelation Biosciences Sub, Inc. and became a wholly-owned subsidiary of the Company and (ii) the Company changed its name to “Revelation Biosciences, Inc.”
In accordance with the terms and subject to the conditions of the Business Combination Agreement, at the effective time of the Merger (the “Effective Time”), (i) each share of common stock and preferred stock of Old Revelation outstanding as of immediately prior to the Effective Time was exchanged for shares of common stock, par value $
At the Closing Date, up to
8
immediately prior to the Effective Time and (iii)
Immediately after giving effect to the Business Combination, there were
Prior to the Closing Date, on December 21, 2021, Petra entered into certain backstop agreements (the “Backstop Agreements”) with AXA Prime Impact Master Fund (“AXA”) (through a backstop agreement with Old Revelation), LifeSci Venture Partners (“LifeSci”) and other Petra and Old Revelation institutional, and individual investors, including Dr. Tidmarsh, Chairman of Old Revelation and present Chairman of the Company (such additional institutional and individual investors, together with LifeSci and Old Revelation collectively, the “Backstop Subscribers”). Pursuant to the Backstop Agreements, the Backstop Subscribers agreed to purchase, in the aggregate, up to $
On the Closing Date, in connection with the Business Combination, stockholders holding
At the closing of the Business Combination, Petra adopted the third amended and restated certificate of incorporation, which became effective upon filing with the Secretary of State of the State of Delaware on the Closing Date.
Subsequent to the Closing Date on February 10, 2022 and February 22, 2022 the Company paid $
The Business Combination has been accounted for as a reverse recapitalization, in accordance with U.S. GAAP. Under this method of accounting, although Petra issued shares for outstanding equity interests of Old Revelation in the Business Combination, Petra was treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination was treated as the equivalent of Old Revelation issuing stock for the net assets of Petra, accompanied by a recapitalization. The net assets of Petra have been stated at historical cost, with
4. Balance Sheet Details
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
|
|
September 30, |
|
|
December 31, |
|
||
Prepaid clinical costs |
|
$ |
— |
|
|
$ |
|
|
Prepaid insurance |
|
|
|
|
|
— |
|
|
Other prepaid expenses & current assets |
|
|
|
|
|
|
||
Total prepaid expenses & current assets |
|
$ |
|
|
$ |
|
9
Property and Equipment, Net
Property and equipment, net consisted of the following:
|
|
September 30, |
|
|
December 31, |
|
||
Lab equipment |
|
$ |
|
|
$ |
|
||
Total property and equipment, gross |
|
|
|
|
|
|
||
Accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Total property and equipment, net |
|
$ |
|
|
$ |
|
Depreciation expense was $
Accrued Expenses
Accrued expenses consisted of the following:
|
|
September 30, |
|
|
December 31, |
|
||
Accrued payroll and related expenses |
|
$ |
|
|
$ |
|
||
Accrued clinical study expenses |
|
|
|
|
|
|
||
Accrued professional fees |
|
|
|
|
|
|
||
Accrued clinical development costs |
|
|
|
|
|
|
||
Accrued other expenses |
|
|
|
|
|
|
||
Premium Finance Agreement - D&O Insurance |
|
|
|
|
|
— |
|
|
Total accrued expenses |
|
$ |
|
|
$ |
|
On July 31, 2022, the Company released
In connection with the Business Combination the Company entered into a payment deferral of legal fees with Loeb & Loeb, LLP, which, deferred the legal fees for six months from the Closing Date of the Business Combination, or July 9, 2022. The agreement stated, if the fees were not paid by July 9, 2022,
5. Commitments and Contingencies
Lease Commitments
In February 2021, Revelation Sub entered into an agreement to lease
In October 2021, Revelation Sub amended the Original Lease to expire on
Rent expense was $
10
Future minimum lease payments under the First Amendment of the operating lease as of September 30, 2022 is $
Convertible Note Financing
On January 4, 2022, Revelation Sub entered into a convertible note financing in an amount of up to $
Total interest incurred under the Convertible Note was $
Premium Finance Agreement - D&O Insurance
In order to obtain a public company directors and officers insurance policy (“D&O Insurance”), the Company entered into an agreement with a premium financing lender, where by the lender paid the D&O Insurance premium for the company (“Premium Finance Agreement”). If the Company were to not pay the lender monthly installment payments, the lender would cancel the D&O Insurance and the remaining D&O Insurance premium would be returned to the lender. In addition, if the Company were to cancel the D&O Insurance, the remaining D&O Insurance premium would be returned to the lender.
The Premium Finance Agreement is for $
Total expense incurred under the Finance Agreement for upfront, monthly and interest payments was $
Commitments
The Company enters into contracts in the normal course of business with third party service providers and vendors. These contracts generally provide for termination on notice and, therefore, are cancellable contracts and not considered contractual obligations and commitments.
Contingencies
From time to time, the Company may become subject to claims and litigation arising in the ordinary course of business. The Company is not a party to any material legal proceedings, nor is it aware of any material pending or threatened litigation other than described below.
Legal Proceedings
On February 18, 2022, LifeSci Capital LLC filed an action against the Company in the U.S. District Court for the Southern District of New York seeking damages in the amount of approximately $
On September 27, 2022, A-IR Clinical Research Ltd. filed a claim against the Company in the High Court of Justice, In the Business and Property Courts of England and Wales, seeking £
11
Company’s viral challenge study. The Company is disputing the claim because much of the invoices relate to work that wasn’t performed and that it had misrepresented its qualifications to perform the contracted for work.
6. PIPE Investment
On January 23, 2022, the Company entered into a securities purchase agreement with an institutional investor (“the Purchaser”) pursuant to which the Purchaser agreed to purchase, and the Company agreed to issue and sell to the Purchaser in a private placement,
Each Pre-Funded Warrant was funded to the amount of $
Each Common Warrant has an exercise price of $
Also on January 23, 2022 and in connection with the private placement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Purchaser, pursuant to which the Company agreed to use its best efforts to file a registration statement on Form S-1 (the “Registration Statement”) to register for resale the Shares and any shares of the Company’s common stock issuable upon exercise of the Pre-Funded Warrants and Common Stock Warrants by January 31, 2022, but in no event later than February 4, 2022. The company filed the Registration Statement on January 28, 2022 and it became effective on February 7, 2022.
Roth Capital Partners, LLC (the “Placement Agent”) was engaged by the Company to act as its exclusive placement agent for the private placement. The Company agreed to pay the Placement Agent a cash fee equal to
Using the Black-Scholes option pricing model, the Common Warrants were valued in the aggregate at $
7. Public Offering
On July 28, 2022, the Company closed a public offering of
Roth Capital Partners, LLC (the “Placement Agent”) was engaged by the Company to act as its exclusive placement agent for the July 2022 Public Offering. The Company agreed to pay the Placement Agent a cash fee equal to
12
sold in the public offering (the “New Placement Agent Warrants”). The Placement Agent Warrants have an exercise price of $
Using the Black-Scholes option pricing model, the New Common Stock Warrants were valued in the aggregate at $
8
Prior to the Merger, in August 2020, Revelation Sub authorized the sale and issuance of up to
The third amended and restated certificate of incorporation of the Company authorizes up to
Series A Preferred Stock
Prior to the Merger, in December 2020, Revelation Sub sold and issued
Series A-1 Preferred Stock
Prior to the Merger, in January 2021, Revelation Sub sold and issued
9
In connection with the Company's IPO, in October of 2020, the Company issued unit's that consists of one share of common stock and one warrant with an exercise price of $
As of September 30, 2022 there were
10
Prior to the Business Combination, in December 2020, Revelation Sub authorized the sale and issuance of up to
Business Combination Transaction
At the Closing Date, the Company authorized the sale and issuance of up to
Immediately after giving effect to the Business Combination, there were
On the Closing Date, the Company received net proceeds from the Business Combination of $
Subsequent to Business Combination
13
On January 23, 2022, the Company issued
On January 31, 2022, the Company issued
On February 4, 2022, the Company cancelled
On February 22, 2022, the Company issued
On February 2, 2022, the Company issued
On July 28, 2022, the Company issued
On July 29, 2022, the Company issued
As of September 30, 2022 and December 31, 2021,
The total shares of common stock reserved for issuance are summarized as follows:
|
|
September 30, |
|
|
September 30, |
|
||
Series A Preferred Stock |
|
|
— |
|
|
|
|
|
Series A-1 Preferred Stock |
|
|
— |
|
|
|
|
|
Public Warrants |
|
|
|
|
|
— |
|
|
Common Warrants |
|
|
|
|
|
— |
|
|
Placement Agent Warrants |
|
|
|
|
|
— |
|
|
New Common Stock Warrants |
|
|
|
|
|
— |
|
|
New Placement Agent Warrants |
|
|
|
|
|
— |
|
|
Rollover Warrants |
|
|
|
|
|
|
||
Unvested and unissued Rollover RSU awards |
|
|
|
|
|
|
||
Stock options outstanding |
|
|
|
|
|
— |
|
|
Dilutive shares reserved for issuance |
|
|
|
|
|
|
||
Shares available for future stock grants under the 2021 Equity Incentive Plan |
|
|
|
|
|
— |
|
|
Total common stock reserved for issuance |
|
|
|
|
|
|
11. Stock-Based Compensation
2020 Equity Incentive Plan and 2021 Equity Incentive Plan
Prior to the Merger, Revelation Sub adopted the Revelation Biosciences, Inc. 2020 Equity Incentive Plan (the “2020 Plan”) on October 1, 2020 for the issuance of stock-based awards. There was a total of
In January 2022, in connection with the Business Combination, the Board of Directors adopted the 2021 Equity Incentive Plan (the “2021 Plan”) and reserved
14
Under the 2021 Plan, stock options and stock appreciation rights are granted at exercise prices determined by the Board of Directors which cannot be less than
As of September 30, 2022, there were
Restricted Stock Units
At the Closing Date of the Business Combination, all Revelation Sub RSU award holders received a Rollover RSU award in exchange for each RSU award of Revelation Sub at an exchange ratio of
The Rollover RSU awards have time-based and milestone-based vesting conditions.
As of September 30, 2022 and December 31, 2021, the Company has a total of
Stock Options
The Company has granted stock options which
On July 29, 2022, in connection with the release of
The activity related to stock options, during the nine months ended September 30, 2022 is summarized as follows:
|
|
Shares |
|
|
Weighted-average Exercise Price |
|
|
Weighted-average Remaining Contractual Term (Years) |
|
|||
Outstanding at December 31, 2021 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
Granted |
|
|
|
|
|
|
|
|
|
|||
Exercised |
|
|
— |
|
|
|
— |
|
|
|
|
|
Expired and foreited |
|
|
( |
) |
|
|
|
|
|
|
||
Outstanding at September 30, 2022 |
|
|
|
|
$ |
|
|
|
|
|||
Exercisable at September 30, 2022 |
|
|
|
|
$ |
|
|
|
|
For the nine months ended September 30, 2022, the weighted-average Black-Scholes value per stock option was $
Volatility |
|
|
% |
|
Expected term (years) |
|
|
|
|
Risk-free interest rate |
|
|
% |
|
Expected dividend yield |
|
|
% |
Expected volatility is based on the historical volatility of shares of the Company’s common stock. In determining the expected term of stock options, the Company uses the “simplified” method. Under this method, the expected term is presumed to be the midpoint between the average vesting date and the end of the contractual term. The risk-free interest rate is based on the U.S.
15
Treasury yield for a period consistent with the expected term of the stock options in effect at the time of the grants. The dividend yield assumption is based on the expectation of no future dividend payments by the Company. In addition to assumptions used in the Black-Scholes model, the Company reduces stock-based compensation expense based on actual forfeitures in the period that each forfeiture occurs.
Stock-Based Compensation Expense
For the three and nine months ended September 30, 2022 and 2021, the Company recorded stock-based compensation expense for the period indicated as follows:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
General and administrative: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
RSU awards |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Stock Options |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
— |
|
|
General and administrative stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
RSU awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock Options |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Research and development stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
As of September 30, 2022, there was $
12. Warrants
Public Warrants
In connection with the Company's IPO, the Company issued
The Company may redeem the Public Warrants at a price of $
Rollover Warrants
Prior to the Merger, in connection with the issuance of the Series A-1 Preferred Stock through a private placement, Revelation Sub issued warrants to the placement agent to purchase an aggregate of
At the Closing Date of the Business Combination, all warrant holders received a Rollover Warrant with an exchange ratio of
On February 2, 2022, the Company received a notice of cash exercise for the Company’s Rollover Warrants for
The fair value of the Rollover Warrants was estimated using the Black-Scholes option pricing model with the following assumptions:
16
Volatility |
|
|
% |
|
Expected term (years) |
|
|
|
|
Risk-free interest rate |
|
|
% |
|
Expected dividend yield |
|
|
% |
Common Warrants
In connection with the PIPE Investment, the Company issued warrants to the Purchaser to purchase an aggregate of
The fair value of the warrants was estimated using the Black-Scholes option pricing model with the following assumptions:
Volatility |
|
|
% |
|
Expected term (years) |
|
|
|
|
Risk-free interest rate |
|
|
% |
|
Expected dividend yield |
|
|
% |
Pre-Funded Warrants
In connection with the PIPE Investment, the Company issued warrants to the Purchaser to purchase an aggregate of
On February 22, 2022, the Company received a notice of cash exercise for the Pre-Funded Warrants issued in connection with the PIPE Investment for
Placement Agent Warrants
In connection with the PIPE Investment, the Company issued warrants to the Placement Agent to purchase an aggregate of
The fair value of the warrants was estimated using the Black-Scholes option pricing model with the following assumptions:
Volatility |
|
|
% |
|
Expected term (years) |
|
|
|
|
Risk-free interest rate |
|
|
% |
|
Expected dividend yield |
|
|
% |
New Common Stock Warrants
In connection with the July 2022 Public Offering, the Company issued warrants to purchase an aggregate of
The fair value of the warrants was estimated using the Black-Scholes option pricing model with the following assumptions:
Volatility |
|
|
% |
|
Expected term (years) |
|
|
|
|
Risk-free interest rate |
|
|
% |
|
Expected dividend yield |
|
|
% |
New Placement Agent Warrants
In connection with the July 2022 Public Offering, the Company issued warrants to the Placement Agent to purchase an aggregate of
17
the aggregate at $
The fair value of the warrants was estimated using the Black-Scholes option pricing model with the following assumptions:
Volatility |
|
|
% |
|
Expected term (years) |
|
|
|
|
Risk-free interest rate |
|
|
% |
|
Expected dividend yield |
|
|
% |
13. Income Taxes
For the nine months ended September 30, 2022 and 2021, the Company did
14. Subsequent Events
In preparing these condensed consolidated financial statements, the Company has evaluated and determined there are no events and transactions for potential recognition or disclosure through November 10, 2022, the date the financial statements were available to be issued.
18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion of our financial condition and results of operations in conjunction with our financial statements and the notes included elsewhere in the Form 10-Q. The following discussion contains forward-looking statements that involve certain risks and uncertainties. Our actual results could differ materially from those discussed in these statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in the Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2021, particularly under the “Risk Factors” and “Disclosure Regarding Forward-Looking Statements” sections.
Throughout this section, unless otherwise noted, “we,” “our,” “us,” “Revelation” and the “Company” refer to Revelation Biosciences, Inc. and its subsidiary.
Overview
Revelation is a clinical-stage biopharmaceutical company founded in May 2020. We are focused on the development or commercialization of innate immune system therapeutics and diagnostics. Our current product candidates were developed by Revelation to potentially prevent, treat and detect disease. Our therapeutic product candidates are based on our therapeutic platform and consist of REVTx-100, which is being developed for the prevention or treatment of infections including those resulting from surgery, severe burns and antibiotic resistance; REVTx-200, which is being developed as a potential intranasal therapy that will be administered concurrently with a commercially available IM vaccine; REVTx-300, which is being developed as a potential therapy for the treatment of chronic organ disease including CKD and NASH; REVTx-99b, which is being developed for the treatment of food allergies; and REVTx-99a, which was being developed as a broad anti-viral nasal drop solution for the potential prevention or potential treatment of respiratory viral infections until June of 2022. Our diagnostic, REVDx-501 (REVIDTM Rapid Test Kit), is being developed as a rapid point of care or at home diagnostic product that can potentially be used to detect various respiratory viral infections. The results display diagnostic is similar to a home pregnancy test with a simple to read visual readout in less than 15 minutes without the need for specialized instrumentation or complicated sample collection.
Since our inception in May 2020, we have devoted substantially all of our resources to organizing and staffing our Company, business planning, raising capital, and research and development of REVTx-99a/b, REVTx-100, REVTx-200, REVTx-300 and REVDx-501, our product candidates.
We have funded our operations since our inception in May 2020 to September 30, 2022 through the issuance and sale of our capital stock, from which we have raised net proceeds of $29.9 million. Our current cash and cash equivalents balance will not be sufficient to complete all necessary product development or future commercialization efforts. We anticipate that our current cash and cash equivalents balance will not be sufficient to sustain operations within one year after the date that our unaudited financial statements for September 30, 2022 were issued, which raises substantial doubt about our ability to continue as a going concern.
We plan to seek additional funding through public or private equity or debt financings. We may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of our stockholders. If we are unable to obtain funding we could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect our business operations.
We have incurred recurring losses since our inception, including a net loss of $1.2 million and $9.6 million for the three and nine months ended September 30, 2022, respectively, and $3.0 million and $8.1 million for the three and nine months ended September 30, 2021. As of September 30, 2022 we had an accumulated deficit of $24.1 million. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future if and as we:
19
Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical studies and our expenditures on other research and development activities.
We have never generated revenue and do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for REVTx-99b, REVTx-100, REVTx-200, REVTx-300, REVDx-501 or other product candidates, which we expect will not be for at least several years, if ever. Accordingly, until such time as we can generate significant revenue from sales of REVTx-99b, REVTx-100, REVTx-200, REVTx-300, REVDx-501 or other product candidates, if ever, we expect to finance our cash needs through a combination of public or private equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Recent Developments
Business Combination
On January 10, 2022, we consummated the previously announced Business Combination, pursuant to the terms of the agreement and plan of merger, dated as of August 29, 2021 with Petra and Merger Sub. Pursuant to the Business Combination Agreement, on the Closing Date, (i) Merger Sub merged with and into Revelation Sub, with Revelation Sub as the surviving company in the Business Combination, and became a wholly-owned subsidiary of Petra and (ii) Petra changed its name to “Revelation Biosciences, Inc.”
Research and Development
Research and development expenses consist primarily of costs incurred for the development of our product candidates, REVTx-99a/b, REVTx-100, REVTx-200, REVTx-300 and REVDx-501. Our research and development expenses consist primarily of external costs related to clinical development, costs related to contract research organizations, costs related to consultants, costs related to acquiring and manufacturing clinical study materials, costs related to contract manufacturing organizations and other vendors, costs related to the preparation of regulatory submissions, costs related to laboratory supplies and services, and personnel costs. Personnel and related costs consist of salaries, employee benefits and stock-based compensation for personnel involved in research and development efforts.
We expense all research and development expenses in the periods in which they are incurred. We accrue for costs incurred as the services are being provided by monitoring the status of specific activities and the invoices received from our external service providers. We adjust our accrual as actual costs become known.
We expect our research and development expenses to increase substantially for the foreseeable future as we continue the development of REVTx-99b, REVTx-100, REVTx-200, REVTx-300 and REVDx-501 and continue to invest in research and development activities. The process of conducting the necessary clinical research and product development to obtain regulatory approval is costly and time consuming, and the successful development of REVTx-99b, REVTx-100, REVTx-200, REVTx-300, REVDx-501 and any future product candidates is highly uncertain. To the extent that our product candidates continue to advance into larger and later stage clinical studies, our expenses will increase substantially and may become more variable.
The actual probability of success for REVTx-99b, REVTx-100, REVTx-200, REVTx-300, REVDx-501 or any future product candidate may be affected by a variety of factors, including the safety and efficacy of our product candidates, investment in the development of REVDx-501, investment in our clinical programs, manufacturing capability and competition with other products. As a result, we are unable to determine the timing of initiation, duration and completion costs of our research and development efforts or when and to what extent we will generate revenue from the commercialization and sale of REVTx-99b, REVTx-100, REVTx-200, REVTx-300, REVDx-501 or any future product candidate.
20
General and Administrative
Our general and administrative expenses consist primarily of personnel costs, expenses for outside professional services, including financial advisory, legal, human resource, audit and accounting services and consulting costs. Personnel and related costs consist of salaries, employee benefits and stock-based compensation for personnel involved in executive, finance and other administrative functions. We expect our general and administrative expenses to increase for the foreseeable future as we increase the size of our administrative function to support the growth of our business and support our continued research and development activities. We also anticipate increased expenses as a result of operating as a public company, including increased expenses related to financial advisory services, audit, legal, regulatory, investor relations costs, director and officer insurance premiums associated with maintaining compliance with exchange listing and SEC requirements.
Other Income (Expense), Net
Other income (expense), net primarily consists of foreign currency transaction gains and losses, interest expense for the Promissory Notes Payable and Convertible Note and interest income from our cash balances in savings accounts.
Results of Operations
The following table summarizes our results of operations for the periods presented:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
2022 |
|
|
2021 |
|
|
Change |
|
||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Research and development |
|
$ |
381,566 |
|
|
$ |
1,532,782 |
|
|
$ |
(1,151,216 |
) |
|
$ |
5,037,429 |
|
|
$ |
4,249,326 |
|
|
$ |
788,103 |
|
General and administrative |
|
|
817,898 |
|
|
|
1,511,165 |
|
|
|
(693,267 |
) |
|
|
4,608,755 |
|
|
|
3,844,212 |
|
|
|
764,543 |
|
Total operating expenses |
|
|
1,199,464 |
|
|
|
3,043,947 |
|
|
|
(1,844,483 |
) |
|
|
9,646,184 |
|
|
|
8,093,538 |
|
|
|
1,552,646 |
|
Loss from operations |
|
|
(1,199,464 |
) |
|
|
(3,043,947 |
) |
|
|
1,844,483 |
|
|
|
(9,646,184 |
) |
|
|
(8,093,538 |
) |
|
|
(1,552,646 |
) |
Total other income (expense), net |
|
|
28,728 |
|
|
|
(557 |
) |
|
|
29,285 |
|
|
|
24,221 |
|
|
|
(32,913 |
) |
|
|
57,134 |
|
Net loss |
|
$ |
(1,170,736 |
) |
|
$ |
(3,044,504 |
) |
|
$ |
1,873,768 |
|
|
$ |
(9,621,963 |
) |
|
$ |
(8,126,451 |
) |
|
$ |
(1,495,512 |
) |
Research and Development Expenses
The following table summarizes our research and development expenses for the periods presented:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
2022 |
|
|
2021 |
|
|
Change |
|
||||||
REVTx-99a clinical study expenses |
|
$ |
8,993 |
|
|
$ |
680,975 |
|
|
$ |
(671,982 |
) |
|
$ |
3,086,960 |
|
|
$ |
1,656,846 |
|
|
$ |
1,430,114 |
|
REVTx-99b clinical study expenses |
|
|
110,389 |
|
|
|
87,996 |
|
|
|
22,393 |
|
|
|
385,886 |
|
|
|
110,208 |
|
|
|
275,678 |
|
REVTx-99a/b manufacturing expenses |
|
|
8,665 |
|
|
|
— |
|
|
|
8,665 |
|
|
|
225,578 |
|
|
|
— |
|
|
|
225,578 |
|
REVDx-501 diagnostic development |
|
|
— |
|
|
|
336,521 |
|
|
|
(336,521 |
) |
|
|
27,660 |
|
|
|
1,059,815 |
|
|
|
(1,032,155 |
) |
Personnel expenses (including stock-based compensation) |
|
|
84,315 |
|
|
|
391,852 |
|
|
|
(307,537 |
) |
|
|
1,078,573 |
|
|
|
1,158,260 |
|
|
|
(79,687 |
) |
Other expenses |
|
|
169,204 |
|
|
|
35,438 |
|
|
|
133,766 |
|
|
|
232,772 |
|
|
|
264,197 |
|
|
|
(31,425 |
) |
Total research and development expenses |
|
$ |
381,566 |
|
|
$ |
1,532,782 |
|
|
$ |
(1,151,216 |
) |
|
$ |
5,037,429 |
|
|
$ |
4,249,326 |
|
|
$ |
788,103 |
|
Research and development expenses decreased by $1.2 million, from $1.5 million for the three months ended September 30, 2021 to $0.4 million for the three months ended September 30, 2022. The decrease was primarily due to a decrease of $0.7 million in clinical study expenses related to REVTx-99a, $0.3 million in diagnostic development expenses related to REVDx-501, and $0.3 million in personnel expenses. The decrease in personnel expenses is primarily due to the release of employees in July 2022, including a decrease of $0.1 million due to the reversal of accrued bonus expense and non-cash, share-based compensation expense related to forfeited, unvested equity awards, offset by an increase in severance expense. These decreases were offset by an increase of $0.1 in other expenses as a result of an increase in pre-clinical development costs related to REVTx-200 and REVTx-300, lab supplies, lab facilities costs and consulting expenses that were not specific to REVTx-99a/b or REVDx-501.
Research and development expenses increased by $0.8 million, from $4.2 million for the nine months ended September 30, 2021 to $5.0 million for the nine months ended September 30, 2022. The increase was primarily due to an increase of $1.4 million in clinical study expenses related to REVTx-99a, $0.3 million in clinical study expenses related to REVTx-99b, and $0.2 million in REVTx-99a/b manufacturing expenses. These increases were offset by a decrease of $1.0 million in diagnostic development expenses
21
related to REVDx-501 and $0.1 million in personnel expenses. The decrease in personnel expenses is primarily due to the release of employees in July 2022, including a decrease of $0.1 million due to the reversal of accrued bonus expense and non-cash, share-based compensation expense related to forfeited, unvested equity awards, offset by an increase in severance expense.
General and Administrative Expenses
The following table summarizes our general and administrative expenses for the periods presented:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
Change |
|
|
2022 |
|
|
2021 |
|
|
Change |
|
||||||
Personnel expenses (including employee stock-based compensation) |
|
$ |
364,988 |
|
|
$ |
615,934 |
|
|
$ |
(250,946 |
) |
|
$ |
1,551,447 |
|
|
$ |
1,880,140 |
|
|
$ |
(328,693 |
) |
Legal and professional fees (including non-employee stock-based compensation) |
|
|
138,896 |
|
|
|
838,651 |
|
|
|
(699,755 |
) |
|
|
1,775,839 |
|
|
|
1,858,556 |
|
|
|
(82,717 |
) |
Other expenses |
|
|
314,014 |
|
|
|
56,580 |
|
|
|
257,434 |
|
|
|
1,281,469 |
|
|
|
105,516 |
|
|
|
1,175,953 |
|
Total general and administrative expenses. |
|
$ |
817,898 |
|
|
$ |
1,511,165 |
|
|
$ |
(693,267 |
) |
|
$ |
4,608,755 |
|
|
$ |
3,844,212 |
|
|
$ |
764,543 |
|
General and administrative expenses decreased by $0.7 million, from $1.5 million for the three months ended September 30, 2021 to $0.8 million for the three months ended September 30, 2022. The decrease was primarily due to a decrease of $0.7 million in financial advisory fees, legal fees and professional consulting service fees and $0.3 million in personnel expenses. The decrease in personnel expenses is primarily due to the release of employees in July 2022, including a decrease of $0.1 million due to the reversal of accrued bonus expense and non-cash, share-based compensation expense related to forfeited, unvested equity awards, offset by an increase in severance expense. These decreases were offset by an increase of $0.3 million in other expenses as a result of an increase in D&O Insurance.
General and administrative expenses increased by $0.8 million, from $3.8 million for the nine months ended September 30, 2021 to $4.6 million for the nine months ended September 30, 2022. The increase was primarily due to an increase of $1.2 million in other expense as a result of an increase in D&O Insurance. These increases were offset by a decrease of $0.3 million in personnel expenses and $0.1 million in financial advisory fees, legal fees and professional consulting service fees. The decrease in personnel expenses is primarily due to the release of employees in July 2022, including a decrease of $0.1 million due to the reversal of accrued bonus expense and non-cash, share-based compensation expense related to forfeited, unvested equity awards, offset by an increase in severance expense.
Other Income (Expense), Net
Other income (expense), net was $557 for the three months ended September 30, 2021 and $28,728 for the three months ended September 30, 2022, related to interest expense for foreign currency transaction gains and losses and interest income from our cash balances in savings accounts.
Other income (expense), net was $32,913 for the nine months ended September 30, 2021 and $24,221 for the nine months ended September 30, 2022, related to interest expense for the Promissory Notes Payable and Convertible Note, foreign currency transaction gains and losses, and interest income from our cash balances in savings accounts.
Liquidity and Capital Resources
Since our inception to September 30, 2022, we have funded our operations from the issuance and sale of our common stock, preferred stock and warrants, from which we have raised net proceeds of $29.9 million, of which $16.0 million was received during the nine months ended September 30, 2022. As of September 30, 2022, we had available cash and cash equivalents of $6.2 million and an accumulated deficit of $24.1 million.
Our use of cash is to fund operating expenses, which consist primarily of research and development expenditures related to our therapeutic product candidate, REVTx-99b, REVTx-100, REVTx-200, REVTx-300, and the development of our diagnostic product, REVDx-501. We plan to increase our research and development expenses substantially for the foreseeable future as we continue the clinical development of our current and future product candidates. At this time, due to the inherently unpredictable nature of product development, we cannot reasonably estimate the costs we will incur and the timelines that will be required to complete development, obtain marketing approval, and commercialize our current product candidate, diagnostic product or any future product candidates. For the same reasons, we are also unable to predict when, if ever, we will generate revenue from product sales or any future license agreements which we may enter into or whether, or when, if ever, we may achieve profitability. Clinical and preclinical
22
development timelines, the probability of success, and development costs can differ materially from expectations. In addition, we cannot forecast the timing and amounts of milestone, royalty and other revenue from licensing activities, which future product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.
We expect to continue to generate substantial operating losses for the foreseeable future as we expand our research and development activities. We will continue to fund our operations primarily through utilization of our current financial resources and through additional raises of capital.
To the extent that we raise additional capital through partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, future revenue streams or research programs or to grant licenses on terms that may not be favorable to us. If we raise additional capital through public or private equity offerings, the ownership interest of our then-existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our clinical studies or preclinical studies, research and development programs or commercialization efforts or grant rights to develop and market our product candidates or diagnostic product even if we would otherwise prefer to develop and market such product candidates or diagnostic product ourselves.
Going Concern
We have incurred recurring losses since our inception, including a net loss of $9.6 million for the nine months ended September 30, 2022. As of September 30, 2022 we had an accumulated deficit of $24.1 million, a stockholders’ equity of $2.2 million and available cash and cash equivalents of $6.2 million. We expect to continue to incur significant operating and net losses, as well as negative cash flows from operations, for the foreseeable future as we continue to complete all necessary product development or future commercialization efforts. We have never generated revenue and do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for REVTx-99b, REVTx-100, REVTx-200, REVTx-300, REVDx-501 or other product candidates, which we expect will not be for at least several years, if ever. We do not anticipate that our current cash and cash equivalents balance will be sufficient to sustain operations within one year after the date that our unaudited financial statements for September 30, 2022 were issued, which raises substantial doubt about our ability to continue as a going concern.
To continue as a going concern, we will need, among other things, to raise additional capital resources. We plan to seek additional funding through public or private equity or debt financings. We may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of our stockholders. If we are unable to obtain funding we could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect our business operations.
The unaudited condensed consolidated financial statements for September 30, 2022, have been prepared on the basis that we will continue as a going concern, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability for us to continue as a going concern.
Cash Flows
The following table summarizes our cash flows for the periods presented:
|
|
Nine Months Ended |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Net cash used in operating activities |
|
$ |
(10,271,929 |
) |
|
$ |
(8,211,666 |
) |
Net cash used in investing activities |
|
|
— |
|
|
|
(148,116 |
) |
Net cash provided by financing activities. |
|
|
15,192,646 |
|
|
|
8,004,865 |
|
Net increase (decrease) in cash and cash equivalents |
|
$ |
4,920,717 |
|
|
$ |
(354,917 |
) |
Net Cash Used in Operating Activities
23
During the nine months ended September 30, 2022, net cash used in operating activities was $10.3 million, which consisted of a net loss of $9.6 million and a net change of $1.0 million in our net operating assets and liabilities, offset by non-cash charges of $0.3 million comprised of stock-based compensation expense, non-cash lease expense and depreciation expense.
During the nine months ended September 30, 2021, net cash used in operating activities was $8.2 million, which consisted of a net loss of $8.1 million and a net change of $0.5 million in our net operating assets and liabilities, offset by non-cash charges of $0.4 million comprised of stock-based compensation expense, non-cash lease expense and depreciation expense.
Net Cash Used in Investing Activities
During the nine months ended September 30, 2022, there was no cash used in investing activities.
During the nine months ended September 30, 2021, net cash used in investing activities consisted of $0.1 million for purchases of lab equipment.
Net Cash Provided by Financing Activities
During the nine months ended September 30, 2022, net cash provided by financing activities was $15.2 million, from net proceeds of $4.2 million received in connection with the Business Combination, after exercise of the Forward Share Purchase Agreement of $7.7 million, net proceeds of $7.3 million received from the PIPE, and net proceeds of approximately $4.5 million received from the July 2022 Public Offering, offset by $0.8 million in repayments of Promissory Notes Payable, including interest expense.
During the nine months ended September 30, 2021, net cash provided by financing activities was $8.0 million, from the sale of our common stock, Series A Preferred Stock and Series A-1 Preferred Stock.
Contractual Obligations and Other Commitments
The following table summarizes our contractual obligations as of September 30, 2022 and the effects of such obligations are expected to have on our liquidity and cash flow in future periods:
|
|
Less than |
|
|
1 to 3 |
|
|
3 to 5 |
|
|
More than |
|
|
Total |
|
|||||
Operating lease obligations |
|
$ |
17,192 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
17,192 |
|
Premium Finance Agreement - D&O Insurance |
|
|
74,428 |
|
|
|
|
|
|
|
|
|
|
|
|
74,428 |
|
|||
Total contractual obligations |
|
$ |
91,620 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
91,620 |
|
We have entered into an operating lease for laboratory space in San Diego, California. The table above includes future minimum lease payments under the non-cancelable lease arrangement.
We have entered into a Premium Finance Agreement with a lender that directly paid the Company’s D&O Insurance. The table above includes future minimum payments under the cancelable Premium Finance Agreement.
We enter into contracts in the normal course of business with third party service providers and vendors. These contracts generally provide for termination on notice and, therefore, are cancellable contracts and not considered contractual obligations and commitments.
Off-Balance Sheet Arrangements
As of September 30, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Quantitative and Qualitative Disclosure about Market Risk
We are exposed to market risks in the ordinary course of our business.
Interest Rate Risk
24
Our cash and cash equivalents consist primarily of highly liquid investments in money market funds and cash on hand and have an original maturity date of 90 days or less. The fair value of our cash and cash equivalents would not be significantly affected by either an increase or decrease in interest rates due mainly to the short-term nature of these instruments.
Foreign Currency Risk
Our expenses are generally denominated in the currencies in which our operations are located, which is primarily in the United States and Australia. We make payments to vendors for research and development services with payments denominated in foreign currencies including Australian Dollars and British Pounds. We are subject to foreign currency transaction gains or losses on our payments denominated in foreign currencies. To date, foreign currency transaction gains and losses have not been material and we have not had a formal hedging program with respect to foreign currency; however, we may consider doing so in the future. A 10% increase or decrease in currency exchange rates would not have a material effect on our financial results.
Critical Accounting Policies and Significant Judgements and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with the U.S. generally accepted accounting principles (“GAAP”). The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions about future events that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenue and expenses. These estimates and assumptions are based on management’s best estimates and judgment. Management regularly evaluates its estimates and assumptions using industry experience and other factors; however, actual results could differ materially from these estimates and could have an adverse effect on our condensed consolidated financial statements. While our significant accounting policies are more fully described in the notes to our condensed consolidated financial statements, we believe that the accounting policies discussed below are most critical to understanding and evaluating our historical and future performance.
Research and Development Expenditures
We record accrued expenses for estimated preclinical and clinical study and research expenses related to the services performed but not yet invoiced pursuant to contracts with research institutions, contract research organizations and clinical manufacturing organizations that conduct and manage preclinical studies, and clinical studies, and research services on our behalf. Payments for these services are based on the terms of individual agreements and payment timing may differ significantly from the period in which the services were performed. Our estimates are based on factors such as the work completed, including the level of patient enrollment. We monitor patient enrollment levels and related activity to the extent reasonably possible and make judgments and estimates in determining the accrued balance in each reporting period. Our estimates of accrued expenses are based on the facts and circumstances known at the time. If we underestimate or overestimate the level of services performed or the costs of these services, our actual expenses could differ from our estimates. As actual costs become known, we adjust our accrued expenses. To date, we have not experienced significant changes in our estimates of clinical study accruals.
Stock-based Compensation
We recognize the compensation expense related to stock options, third-party warrants, and RSU awards granted, based on the estimated fair value of the awards on the date of grant. The fair value of employee stock options and third-party warrants are generally determined using the Black-Scholes option-pricing model using various inputs, including estimates of historic volatility, term, risk-free rate, and future dividends. The grant date fair value of the stock-based awards, which have graded vesting, is recognized using the straight-line method over the requisite service period of each stock-based award, which is generally the vesting period of the respective stock-based awards. The Company recognizes forfeitures as they occur.
As of September 30, 2022, there were 257,047 Rollover RSU awards unvested and unissued and 352,313 stock options outstanding.
Determination of the Fair Value of Common Stock
Prior to the Business Combination, given the absence of a public trading market for our shares of common stock, our board of directors exercises its judgment and considers a number of objective and subjective factors to determine the best estimate of the fair value of our shares of common stock, including timely valuations of our shares of common stock prepared by an unrelated third-party valuation firm, important developments in our operations, sales of common stock and convertible preferred shares, actual operating results and financial performance, the conditions in the biotechnology industry and the economy in general, the stock price
25
performance and volatility of comparable public companies, and the lack of liquidity of our shares of common stock, among other factors. After the Business Combination, the fair value of each share of common stock is based on the closing price of our shares of common stock as reported on the date of grant.
Recent Accounting Pronouncements
See Note 2 to our unaudited condensed consolidated financial statements for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures. Based on that evaluation of our disclosure controls and procedures as of September 30, 2022, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective at the reasonable assurance level. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during our most recent quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
26
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
On February 18, 2022, LifeSci Capital LLC filed an action against the Company in the U.S. District Court for the Southern District of New York seeking damages in the amount of approximately $2.7 million in cash and $2.6 million in equity for unpaid banking and advisory fees. These fees arise under contracts which were entered into prior to the Business Combination and the Company is disputing the amount owed under those contracts and has asserted affirmative defenses including the defense that the amount of the fees sought exceeded the $8.5 million cap on transaction expenses in the Business Combination Agreement. This action remains pending as of the date of this Report. $1.5 million of the claim relates to deferred underwriting fees from the Petra initial public offering, which are recorded as a current liability in the financial statements under deferred underwriting commissions. No other liabilities are reflected in the financial statements as the amount of any additional liability can not be determined at this time.
On September 27, 2022, A-IR Clinical Research Ltd. filed a claim against the Company in the High Court of Justice, In the Business and Property Courts of England and Wales, seeking £1.6 million in unpaid invoices, plus interest and costs, relating to the Company’s viral challenge study. The Company is disputing the claim because much of the invoices relate to work that wasn’t performed and that it had misrepresented its qualifications to perform the contracted for work.
Item 1A. Risk Factors
Our business is subject to various risks, including those described below and in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021.
Although our financial statements have been prepared on a going concern basis, we have a limited operating history and no products approved for commercial sale. We have incurred net losses since our inception, we anticipate that we will continue to incur significant losses for the foreseeable future, and even if we were to generate revenue, we may never achieve or maintain profitability.
We are a clinical stage biopharmaceutical company with a limited operating history may make it difficult to evaluate the success of our business to date and to assess our future viability. We commenced our operations in May 2020, and, to date, our operations have been limited to organizing and staffing our Company, business planning, raising capital, conducting research and development activities, including early clinical study, and providing general and administrative support for these operations. Investment in biopharmaceutical product development and diagnostic device is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate and/or diagnostic device will fail to demonstrate adequate effect and/or an acceptable safety profile, gain regulatory approval or become commercially viable. We currently have no products approved for commercial sale, we have not generated any revenue from product sales to date and we continue to incur significant research and development and other expenses related to our ongoing operations. We have limited experience as a Company conducting clinical studies and no experience as a Company commercializing any products.
We are not profitable and have incurred net losses since our inception. As of September 30, 2022, we had an accumulated deficit of $24.1 million. Consequently, predictions about our future success or viability may not be as accurate as they would be if we had a longer operating history or a history of successfully developing and commercializing pharmaceutical products. We have spent, and expect to continue to spend, significant resources to fund research and development of, conduct clinical studies, and seek regulatory approvals for, our Program Products, and any future product candidates. We expect to incur substantial and increasing operating losses over the next several years as our research, development, preclinical testing and clinical study activities increase. As a result, our accumulated deficit will also increase significantly. We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have, had and will continue to have a material adverse effect on our stockholders’ equity and working capital.
Additionally, taking into consideration the net proceeds of approximately $4.4 million received in connection with the public offering completed in July of 2022, we do not anticipate that our current cash and cash equivalents balance will be sufficient to sustain operations within one year after the date that our unaudited financial statements for June 30, 2022 were issued, which raises substantial doubt about our ability to continue as a going concern. In our own required quarterly assessments, we may continue to conclude that there is substantial doubt about our ability to continue as a going concern, and future reports from our independent registered public accounting firm may also contain statements expressing substantial doubt about our ability to continue as a going concern.
If we seek additional financing to fund our business activities in the future and there remains substantial doubt about going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms or at all. Our ability to raise more equity capital will depend in part on our ability to amend our certificate of incorporation to authorize additional shares of Common Stock.
27
The net losses we incur may fluctuate significantly from quarter-to-quarter such that a period-to-period comparison of our results of operations may not be a good indication of our future performance.
We have no products approved for marketing in any jurisdiction, our Program Products are in early stages of development. We have never generated any revenue from product sales. Our ability to generate revenue and achieve profitability depends on our ability, alone or with strategic collaboration partners, to successfully complete the development of and obtain the regulatory and marketing approvals necessary to commercialize one or more of our Program Products. We do not anticipate generating revenue from product sales in the next couple of years. Even if we eventually generate product revenue, we may never be profitable and, if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis
We may not be able to raise additional funding on acceptable terms, or at all. Failure to obtain funding on acceptable terms and on a timely basis may require us to curtail, delay or discontinue our product development efforts or other operations. Raising additional funding may cause dilution to our stockholders.
Developing our Program Products is expensive, and we expect our research and development expenses to increase substantially in connection with our ongoing activities, particularly as we advance our Program Products through clinical studies, manufacturing and regulatory approval. We expect to finance future cash needs through public or private equity or debt offerings or product collaborations. We do not have any committed external source of funds. We cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all, and the terms of any financing may adversely affect the interests or rights of our stockholders. Even if we believe that we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations. The issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may affect the value of your investment.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of such securities may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt.
If we do not raise additional capital, we may not be able to expand our operations or otherwise capitalize on our business opportunities, our business and financial condition will be negatively impacted, and we may need to:
If Revelation is not able to comply with the applicable continued listing requirements or standards of Nasdaq, Nasdaq could delist our Common Stock.
Revelation’s Common Stock, Public Warrants and Units are listed on the Nasdaq Capital Market under the symbols “REVB,” “REVBW” and “REVBU,” respectively. As of March 31, 2022, we were not in compliance with NASDAQ’s stockholder equity requirement and our stock has traded for significant periods below the Nasdaq $1 minimum bid requirement. We have agreed with Nasdaq on a compliance plan which gives us until November 21, 2022 to regain compliance with the stockholder equity requirement. With the anticipated proceeds of this offering and other actions being undertaken by the Company we will have met the requirements of our compliance plan. Additionally, if our stock price continues to trade below $1 we are at risk of being delisted from Nasdaq. Under Nasdaq rules, if the Company meets the stockholder equity requirement of its compliance plan, it will have an additional six months to meet the $1 minimum bid requirement if it agrees to undertake a reverse stock split in the event the market price does not otherwise meet the minimum bid requirement by such date. If Nasdaq delists the Revelation Common Stock from trading on its exchange for failure to meet the listing standards such as the minimum stockholders equity requirement or minimum bid price, we and our stockholders could face significant material adverse consequences including:
28
In the event that a reverse stock split is required to maintain the $1 minimum bid requirement for continued listing on Nasdaq, the Company intends to undertake such a stock split. Even if a reverse stock split is effected, there can be no assurance that the market price will increase in proportion to the reverse stock split, or be maintained above the Nasdaq minimum bid requirement. The market price of our Common Stock will continue to be based, in part, on our performance and other factors unrelated to the number of shares outstanding.
Our financial condition will be adversely affected if we are unsuccessful in our defense in our litigation with LifeSci Capital LLC
The investment banking firm for the SPAC into which we merged has brought suit against us for unpaid investment banking fees relating to the merger and deferred underwriting fees, which claims damages of $5.3 million, payable in a combination of cash and shares of common stock. See “Item 1. Legal Proceedings.” While we have defenses which we believe are meritorious, if we were to be unsuccessful in the proceeding it would have a material adverse effect on our financial condition and reduce the available funds to advance our product development.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Period |
|
Total number of shares purchased |
|
Average price paid per share |
|
Total number of shares purchased as part of publicly announced plans or programs |
|
Maximum number of shares that may yet be purchased under the plans or programs |
January 1, 2022 to January 31, 2022 |
|
– |
|
– |
|
– |
|
– |
February 1, 2022 to February 28, 2022 |
|
750,000(1) |
|
$ 10.2031 |
|
750,000 |
|
– |
March 1, 2022 to March 31, 2022 |
|
– |
|
– |
|
– |
|
– |
April 1, 2022 to April 30, 2022 |
|
– |
|
– |
|
– |
|
– |
May 1, 2022 to May 31, 2022 |
|
– |
|
– |
|
– |
|
– |
June 1, 2022 to June 30, 2022 |
|
– |
|
– |
|
– |
|
– |
July 1, 2022 to July 31, 2022 |
|
– |
|
– |
|
– |
|
– |
August 1, 2022 to August 31, 2022 |
|
– |
|
– |
|
– |
|
– |
September 1, 2022 to September 30, 2022 |
|
– |
|
– |
|
– |
|
– |
Total |
|
750,000 |
|
$ 10.2031 |
|
750,000 |
|
– |
1. |
Shares repurchased as part of the February 4, 2022 exercise of the Forward Share Purchase Agreement dated December 21, 2021, with a total repurchase amount of $7,652,325. The Forward Share Purchase Agreement expired 30 days after the Closing Date of the Business Combination. The shares of common stock repurchased have been retired. |
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
29
Item 5. Other Information
None.
Item 6. Exhibits
Furnish the exhibits required by Item 601 of Regulation S-K (§ 229.601 of this chapter).
Exhibit Number |
|
Description |
31.1* |
|
|
31.2* |
|
|
32.1* |
|
|
32.2* |
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
REVELATION BIOSCIENCES, INC. |
|
|
|
|
|
Date: November 10, 2022 |
|
By: |
/s/ James Rolke |
|
|
|
James Rolke |
|
|
|
Chief Executive Officer |
|
|
|
(principal executive officer) |
|
|
|
|
Date: November 10, 2022 |
|
By: |
/s/ Chester S. Zygmont, III |
|
|
|
Chester S. Zygmont, III |
|
|
|
Chief Financial Officer |
|
|
|
(principal financial and accounting officer) |
31