ACTU 10-Q

Actuate Therapeutics, Inc. (ACTU)

10-Q 2024-11-13 For: 2024-09-30

View Original

Added on April 09, 2026

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, par value $0.000001 per share		ACTU		The Nasdaq Stock Market LLC

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☒

	Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures About Market Risk	45
Item 4. Controls and Procedures	45

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	46
Item 1A. Risk Factors	46
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	100
Item 3. Defaults Upon Senior Securities	100
Item 4. Mine Safety Disclosures	100
Item 5. Other Information	100
Item 6. Exhibits	101

SIGNATURES	102

	·	We have a limited operating history, have incurred significant operating losses since our inception and expect to incur significant operating losses for the foreseeable future. We have a high risk of never generating revenue or becoming profitable or, if we achieve profitability, we may not be able to sustain it.
	·	Our financial condition raises substantial doubt as to our ability to continue as a going concern.
	·	We will require substantial additional capital to finance our operations, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our development programs, commercialization efforts or other operations.
	·	Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates. In addition, any capital obtained by us may be obtained on terms that are unfavorable to us, our investors, or both.

	·	We do not have, and may never have, any approved products on the market. Our business is highly dependent upon receiving approvals from various U.S. and international governmental agencies and will be severely harmed if we are not granted approval to manufacture and sell our product candidates.
	·	We currently depend entirely on the success of elraglusib, which is our only product candidate. If we are unable to advance elraglusib in clinical development, obtain regulatory approval and ultimately commercialize elraglusib, or experience significant delays in doing so, our business will be materially harmed.
	·	Even if we complete all planned clinical trials including a Phase 3 trial in the future, there is no guarantee that at the time of submission the U.S. Food and Drug Administration (“FDA”) will accept our new drug application (“NDA”).
	·	Clinical and preclinical drug development involves a lengthy and expensive process with uncertain timelines and outcomes, and results of prior preclinical studies and early clinical trials are not necessarily predictive of future results. Elraglusib or any future product candidates may not achieve favorable results in clinical trials or preclinical studies or receive regulatory approval on a timely basis, if at all.
	·	We may not be successful in our efforts to investigate elraglusib in additional indications. We may expend our limited resources to pursue a new product candidate or a particular indication for elraglusib and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
	·	Use of elraglusib or any future product candidates could be associated with side effects, adverse events or other properties or safety risks, which could delay or preclude regulatory approval, cause us to suspend or discontinue clinical trials, abandon elraglusib or any future product candidate, limit the commercial profile of an approved label or result in other significant negative consequences that could severely harm our business, financial condition, results of operations and prospects.
	·	If we experience delays or difficulties in the enrollment of subjects to our clinical trials, our receipt of necessary regulatory approvals could be delayed or otherwise adversely affected, which could materially affect our financial condition.
	·	Interim, topline, and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

	·	The termination of third-party licenses could adversely affect our rights to important compounds or technologies.
	·	Our current elraglusib drug substance (“DS”) manufacturer is in China, and it is unknown how current or future geopolitical relationships with China may affect our ability to obtain DS; however, if they are negatively impacted, this could increase our DS manufacturing costs, delay our ability to obtain elraglusib for clinical trials and potential regulatory approval, and adversely impact our financial condition.
	·	We rely on third parties to conduct our non-clinical studies and our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be unable to obtain regulatory approval for or commercialize our current product candidates or any future products and our financial condition will be adversely affected.
	·	Data provided by collaborators and other parties upon which we rely have not been independently verified and could turn out to be inaccurate, misleading, or incomplete.

	·	We have a limited operating history and no products approved for commercial sale, which may make it difficult to evaluate our prospects and likelihood of success.
	·	Our business is highly dependent on the success of our lead product candidate, elraglusib, and any other future product candidates that we advance into clinical development. All of our product candidates will require significant additional clinical and preclinical development before we can seek regulatory approval for and launch a product commercially.

	·	If we and our third-party licensors do not obtain and preserve protection for our respective intellectual property rights, our competitors may be able to take advantage of our development efforts to develop competing drugs.
	·	We may not be able to enforce our intellectual property rights throughout the world.
	·	If we fail to comply with our obligations under any license, collaboration or other intellectual property-related agreements, we may be required to pay damages and could lose intellectual property rights that may be necessary for developing, commercializing and protecting our current or future technologies or drug candidates or we could lose certain rights to grant sublicenses.

	·	If we lose key management leadership, and/or scientific personnel, and if we cannot recruit qualified employees or other significant personnel, we may experience program delays and increased compensation costs, and our business may be materially disrupted.
	·	We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively.
	·	Competition and technological change may make our product candidates less competitive or obsolete.
	·	Our anticipated operating expenses and capital expenditures over the next year are based upon our management’s estimates of possible future events. Actual amounts could differ materially from those estimated by our management.
	·	We will require substantial additional capital to finance our operations and fund our clinical trials. We may not be able to obtain this necessary capital when needed on acceptable terms, or at all.

	·	Concentration of ownership by our principal stockholders, the Bios Equity Affiliated Funds (as defined below), which are affiliated with our Chairman, Aaron G.L. Fletcher, limits the ability of others to influence the outcome of director elections and other transactions requiring stockholder approval, creates the potential for conflicts of interest, may negatively impact our stock price and may deter or prevent efforts by others to acquire us, which could prevent our stockholders from realizing a control premium.
	·	Existing and new investors will experience dilution as a result of future sales or issuances of our common stock and future option exercises or other award grants under our stock incentive plan.
	·	The trading price of the shares of our common stock could be highly volatile regardless of our operating performance, and purchasers of our common stock could incur substantial losses.
	·	Substantial amounts of our outstanding shares may be sold into the market when lock-up or market standoff periods end. If there are substantial sales of shares of our common stock, the price of our common stock could decline.

	·	Unstable market and economic conditions may have serious adverse consequences on our ability to raise funds, which may cause us to cease or delay our operations.
	·	If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.


	September 30, 2024			December 31, 2023
ASSETS		Unaudited
Current assets:
Cash and cash equivalents	$	13,523,449		$	2,958,659
Prepaid assets and other current assets		739,332			36,907
Total current assets		14,262,781			2,995,566

Total assets	$	14,262,781		$	2,995,566

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	2,330,005		$	3,421,840
Other accrued expenses		6,096,448			3,221,254
Accrued compensation		–			277,500
Accrued interest, current		70,957			–
Total current liabilities		8,497,410			6,920,594

Long term liabilities:
Warrant liability		–			988,049
Accrued interest, less current portion		1,692			130,041
License payable		404,991			404,991
Total long-term liabilities		406,683			1,523,081

Total liabilities		8,904,093			8,443,675

Commitments and contingencies (Note 6)					–

Redeemable convertible preferred stock, $0.000001 par value; no shares authorized, issued or outstanding at September 30, 2024; 33,463,018 shares authorized and 24,678,355 shares issued and outstanding at December 31, 2023; aggregate liquidation value of $0 and $121,033,336 as of September 30, 2024 and December 31, 2023, respectively		–			94,178,404

Stockholders’ equity (deficit):
Preferred stock, $0.000001 par value; 10,000,000 shares authorized, no shares issued or outstanding at September 30, 2024; no shares authorized, issued or outstanding at December 31, 2023		–			–
Common stock: $0.000001 par value, 200,000,000 shares authorized, 19,531,636 shares issued and outstanding at September 30, 2024; 38,108,584 shares authorized and 1,690,760 shares issued and outstanding at December 31, 2023		20			2
Additional paid-in capital		131,292,428			5,468,006
Accumulated deficit		(125,933,760	)		(105,094,521	)
Total stockholders’ equity (deficit)		5,358,688			(99,626,513	)

Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)	$	14,262,781		$	2,995,566


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Operating expenses:
Research and development	$	3,757,102		$	5,761,506		$	14,990,337		$	15,062,505
General and administrative		1,635,801			714,167			3,611,269			2,296,143
Total operating expenses		5,392,903			6,475,673			18,601,606			17,358,648

Loss from operations		(5,392,903	)		(6,475,673	)		(18,601,606	)		(17,358,648	)

Other income (expense):
Change in estimated fair value of warrant liability		193,951			16,866			(78,903	)		(28,224	)
Gain on settlement of warrants		343,240			–			343,240			–
Loss on issuance of related party convertible notes payable at fair value		–			–			(400,000	)		–
Change in estimated fair value of related party convertible notes payable		(1,192,507	)		–			(2,192,507	)		–
Interest expense		(3,489	)		(5,062	)		(13,641	)		(38,578	)
Interest income		80,747			125,944			104,178			292,984
Total other income (expense), net		(578,058	)		137,748			(2,237,633	)		226,182

Net loss	$	(5,970,961	)	$	(6,337,925	)	$	(20,839,239	)	$	(17,132,466	)

Weighted-average shares of common stock outstanding, basic and diluted		10,772,640			1,472,182			4,647,199			1,412,151
Net loss per share attributable to common stockholders, basic and diluted	$	(0.55	)	$	(4.31	)	$	(4.48	)	$	(12.13	)


	Redeemable Convertible										Additional					Total
	Preferred Stock						Common Stock				Paid-in		Accumulated			Stockholders’
	Shares			Amount			Shares		Amount		Capital		Deficit			Equity (Deficit)
Balances, January 1, 2024		24,678,355		$	94,178,404			1,690,760	$	2	$	5,468,006	$	(105,094,521	)	$	(99,626,513	)
Stock-based compensation expense		–			–			–		–		148,206		–			148,206
Net loss		–			–			–		–		–		(8,296,059	)		(8,296,059	)
Balances, March 31, 2024		24,678,355			94,178,404			1,690,760		2		5,616,212		(113,390,580	)		(107,774,366	)
Stock-based compensation expense		–			–			–		–		90,019		–			90,019
Net loss		–			–			–		–		–		(6,572,219	)		(6,572,219	)
Balances, June 30, 2024		24,678,355			94,178,404			1,690,760		2		5,706,231		(119,962,799	)		(114,256,566	)
Issuance of common stock in initial public offering, net of underwriting discounts, commissions and offering costs of $3,734,389		–			–			3,220,000		3		22,025,608		–			22,025,611
Conversion of redeemable convertible preferred stock into common stock upon closing of initial public offering		(24,678,355	)		(94,178,404	)		13,710,379		14		94,178,390		–			94,178,404
Conversion of related party convertible notes payable into common stock upon closing of initial public offering		–			–			884,427		1		8,092,506		–			8,092,507
Reclassification of warrant liability to equity upon exchange of warrants to purchase redeemable convertible preferred stock for warrants to purchase common stock upon closing of initial public offering		–			–			–		–		485,172		–			485,172
Exercise of in-the-money warrants to purchase redeemable convertible preferred stock and conversion into common stock upon closing of initial public offering		–			–			26,070		–		238,540		–			238,540
Stock-based compensation expense		–			–			–		–		565,981		–			565,981
Net loss		–			–			–		–		–		(5,970,961	)		(5,970,961	)
Balances, September 30, 2024		–		$	–			19,531,636	$	20	$	131,292,428	$	(125,933,760	)	$	5,358,688


	Nine Months Ended September 30,
	2024			2023
Operating Activities:
Net loss	$	(20,839,239	)	$	(17,132,466	)
Adjustment to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		804,206			301,489
Change in estimated fair value of warrant liability		78,903			28,224
Gain on settlement of warrant liability		(343,240	)		–
Loss on issuance of related party convertible notes payable at fair value		400,000			–
Change in estimated fair value of related party convertible notes payable		2,192,507			–
Interest accrued on license payable		13,565			38,579
Changes in operating assets and liabilities:
Prepaid assets and other current assets		(702,425	)		3,806
Accounts payable		(1,197,747	)		426,310
Accrued compensation		(277,500	)		(132,033	)
Accrued interest		(70,957	)		–
Other accrued expenses		2,871,694			352,768
Net cash used in operating activities		(17,070,233	)		(16,113,323	)

Financing Activities:
Proceeds from initial public offering, net of underwriting discounts and commissions		23,956,800			–
Payment of offering costs related to initial public offering		(1,821,777	)		–
Proceeds from issuance of related party short-term loan		200,000			–
Payment of related party short-term loan		(200,000	)		–
Proceeds from issuances of related party convertible notes payable		5,500,000			–
Proceeds from issuances of redeemable convertible preferred stock, net		–			4,134,516
Net cash provided by financing activities		27,635,023			4,134,516

Net change in cash and cash equivalents		10,564,790			(11,978,807	)
Cash and cash equivalents, beginning of period		2,958,659			20,449,310
Cash and cash equivalents, end of period	$	13,523,449		$	8,470,503

Supplemental disclosure of cash flow information:
Cash paid for interest	$	71,033		$	–
Cash paid for income taxes	$	800		$	–

Supplemental Schedule of Noncash Financing Activities:
Conversion of redeemable convertible preferred stock into common stock upon initial public offering	$	94,178,404		$	–
Reclassification of warrant liability to equity upon exchange of not in-the-money Series B and Series C Redeemable Convertible Preferred Stock Warrants for warrants to purchase common stock	$	485,172		$	–
Settlement of in-the-money warrants to purchase redeemable convertible preferred stock and conversion into common stock upon initial public offering	$	238,540		$	–
Conversion of related party convertible notes payable into common stock upon initial public offering	$	8,092,507		$	–
Accrued and unpaid offering costs	$	109,412		$	–
Estimated fair market value of warrants issued to placement agent in connection with issuance of redeemable convertible preferred stock	$	–		$	93,863

	·	Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities;

	·	Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

	·	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. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation.


			Fair Value Measurements at December 31, 2023 Using
	Fair Value at December 31, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Redeemable Convertible Preferred Stock Warrant liability	$	988,049	$	–	$	–	$	988,049
Total liabilities	$	988,049	$	–	$	–	$	988,049

Schedule of other accrued expenses
	September 30, 2024		December 31, 2023
Accrued clinical trial costs	$	5,627,976	$	3,207,785
Other accrued expenses		468,472		13,469
Total other accrued expenses	$	6,096,448	$	3,221,254


Balance as of December 31, 2023	$	–
Principal amount of Related Party Convertible Notes Payable issued		5,500,000
Loss recorded at issuance (see Note 2)		400,000
Change in fair value		2,192,507
Conversion into common stock		(8,092,507	)
Balance as of September 30, 2024	$	–


	Number of Shares Authorized		Number of Shares Issued and Outstanding		Face Amount		Original Issue Price		Common Stock Issuable Upon Conversion
Series A		1,983,663		1,983,663	$	3,967,333	$	2.00000	1,102,039
Series B-1		4,133,477		3,858,547		14,121,012	$	3.65967	2,143,652
Series B-2		2,307,017		2,307,017		8,824,986	$	3.82528	1,281,680
Series B-3		1,625,000		1,625,000		6,500,000	$	4.00000	902,786
Series B-4		11,961,721		9,333,928		39,015,819	$	4.18000	5,185,526
Series C		11,452,140		5,570,200		24,286,072	$	4.36000	3,094,696
		33,463,018		24,678,355	$	96,715,222			13,710,379


	September 30, 2024
Warrants issued and outstanding to purchase common stock		255,599
Stock option awards issued and outstanding		763,317
Restricted stock unit awards issued and outstanding		544,111
Shares reserved for issuance under the 2024 Plan		2,402,362
Total		3,965,389

Schedule of warrants outstanding
	Warrants Outstanding		Exercise Price per Share		Expiry Date
Warrants issued under IPO		161,000	$	10.00	August 12, 2027
Warrants originally issued in conjunction with Series B Redeemable Convertible Preferred Stock		76,376	$	10.55	August 13, 2026
Warrants originally issued in conjunction with Series C Redeemable Convertible Preferred Stock		18,223	$	9.42	August 13, 2026
Total		255,599


Estimated fair value as of December 31, 2023	$	988,049
Change in fair value		78,903
Exercise of in-the-money warrants to purchase redeemable convertible preferred stock and conversion into common stock upon closing of IPO		(238,540	)
Gain on settlement of in-the-money warrants upon conversion into common stock upon closing of IPO		(343,240	)
Reclassification of warrant liability to equity upon exchange of warrants to purchase redeemable convertible preferred stock for warrants to purchase common stock upon closing of IPO		(485,172	)
Balance as of September 30, 2024	$	–

Schedule of assumptions
	In-the-Money Series B Warrants
	Prior to Settlement	December 31, 2023
Expected term (in years)	4.04	4.7
Expected volatility	127.26%	80.68%
Weighted average risk-free interest rate	5.25%	4.48%
Expected dividend yield	0.00%	0.00%
Fair value of convertible preferred stock	$8.82	$8.60

Schedule of assumptions
	Out-of-the Money Series B Warrants		Out-of-the Money Series C Warrants
	August 14, 2024	December 31, 2023	August 14, 2024	December 31, 2023
Expected term (in years)	2.0	4.7	2.0	4.5
Expected volatility	111.47%	80.68%	111.47%	80.68%
Weighted average risk-free interest rate	3.97%	4.48%	3.97%	4.48%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%
Fair value of convertible preferred stock	–	$8.60	–	$8.50
Fair value of common stock per share	$9.15	–	$9.15	–

Schedule of RSAs transaction activity
	Restricted Common Stock Award Shares			Weighted Average Grant Date Fair Value
Unvested balance at December 31, 2023		169,030		$	2.21
Granted		–		$	–
Vested		(91,925	)	$	2.11
Forfeited		–		$	–
Unvested balance at September 30, 2024		77,105		$	2.33

Schedule of RSUs transaction activity
	Restricted Common Stock Unit Shares		Weighted Average Grant Date Fair Value
Unvested balance at December 31, 2023		–	$	–
Granted		544,111	$	9.15
Vested		–	$	–
Forfeited		–	$	–
Unvested balance at September 30, 2024		544,111	$	9.15


	Number of Stock Options		Grant Date Weighted Average Exercise Price
Outstanding at December 31, 2023		265,566	$	2.14
Options granted		497,751	$	7.15
Options exercised		–	$	–
Options canceled and forfeited		–	$	–
Outstanding at September 30, 2024		763,317	$	5.41

Schedule of assumptions
	Nine Months Ended September 30, 2024
Expected volatility		94.71%
Risk-free interest rate		3.89%
Expected dividend yield		0.00%
Expected term (in years)		5.97


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Research and development	$	19,404	$	15,667	$	123,973	$	51,534
General and administrative		546,577		139,560		680,233		249,955
Total	$	565,981	$	155,227	$	804,206	$	301,489

Schedule of anti-dilutive shares
	September 30,
	2024		2023
Redeemable Convertible Preferred Stock		–		13,710,379
Options issued and outstanding		763,317		225,414
Unvested RSAs		77,105		200,600
Unvested RSUs		544,111		–
Warrants issued and outstanding		255,599		170,975
Total		1,640,132		14,307,368

	·	the results of our clinical trials and preclinical studies of elraglusib and any future product candidates we may choose to pursue, including any modifications to clinical development plans based on feedback that we may receive from regulatory authorities;
	·	per patient trial costs;
	·	the number of trials required for approval;
	·	the number of sites included in the trials and the number of countries in which the trials are conducted;
	·	the number of patients that participate in the trials, the drop-out or discontinuation rates of patients, and the length of time required to enroll eligible patients;
	·	the number of doses that patients receive;
	·	the potential additional safety monitoring requested by regulatory agencies;
	·	the duration of patient participation in the trials and follow-up;
	·	the cost and timing of manufacturing elraglusib and any future product candidates;
	·	the costs, if any, of obtaining third-party drugs for use in our combination trials;
	·	the extent of changes in government regulation and regulatory guidance;
	·	the efficacy and safety profile of elraglusib and any future product candidates;
	·	the timing, receipt, and terms of any approvals from applicable regulatory authorities; and
	·	the extent to which we establish additional collaboration, license, or other arrangements.

	·	Change in fair value of warrant liability —During the three months ended September 30, 2024 and 2023, we recognized a decrease in fair value of the warrant liability of $193,951 and $16,866, respectively, based on the estimated fair value of warrant liability using the Black-Scholes valuation model at August 14, 2024 (closing date of the IPO) and September 30, 2023, respectively, which amounts are included in other income (expense) in the accompanying unaudited condensed consolidated financial statements.

	·	Gain on settlement of warrants — Upon the closing of the IPO on August 14, 2024, the Company’s Series B Redeemable Convertible Preferred Stock Warrants issued at an exercise price of $5.27 per share (in-the-money warrants) were automatically exercised and settled on a cashless basis for shares of our Series B Redeemable Convertible Preferred Stock, and such shares of Series B Redeemable Convertible Preferred Stock were subsequently converted into 26,070 shares of our common stock. The fair value at the time of settlement of $238,540 was calculated by multiplying the number of shares of common stock issued upon settlement by the fair value per share on the settlement date, which was the closing price of the Company’s common stock on the Nasdaq Global Market on the closing date of the IPO. Upon the settlement of the in-the-money warrants, the Company recorded a gain on settlement of $343,240.

	·	Change in estimated fair value of Related Party Convertible Notes Payable — The change in the estimated fair value of the Related Party Convertible Notes Payable of $1,192,507 for the three months ended September 30, 2024 represents the difference between the estimated fair value at June 30, 2024 and the estimated fair value upon conversion into shares of common stock on August 14, 2024. The aggregate fair value at the time of conversion was calculated by multiplying the number of shares of common stock issued upon conversion by the fair value per share on the conversion date, which was the closing price of the Company’s common stock on the Nasdaq Global Market on the closing date of the IPO.

	·	Interest expense — Interest expense for the three months ended September 30, 2024 and 2023 represents interest accrued on amounts owed under a license agreement with UIC, whereby UIC agreed to defer amounts payable to UIC under a former sublicense agreement in the amount of $404,991 in exchange for an interest-bearing license payable.

	·	Interest income — Interest income for the three months ended September 30, 2024 and 2023 represents interest earned on cash and cash equivalents based on the prevailing market rates. The decrease in interest income for the three months ended September 30, 2024 compared to the same prior year period is primarily due to a lower average cash balance on hand compared to the same prior year period.

	·	Change in fair value of warrant liability —During the nine months ended September 30, 2024 and 2023, we recognized an increase in fair value of the warrant liability of $78,903 and $28,224, respectively, based on the estimated fair value of warrant liability using the Black-Scholes valuation model at August 14, 2024 (closing date of the IPO) and September 30, 2023, respectively, which amounts are included in other income (expense) in the accompanying unaudited condensed consolidated financial statements.

	·	Gain on settlement of warrants — Upon the closing of the IPO on August 14, 2024, the Company’s Series B Redeemable Convertible Preferred Stock Warrants issued at an exercise price of $5.27 per share (in-the-money warrants) were automatically exercised and settled on a cashless basis for shares of our Series B Redeemable Convertible Preferred Stock, and such shares of Series B Redeemable Convertible Preferred Stock were subsequently converted into 26,070 shares of our common stock. Upon the settlement of the in-the-money warrants, the Company recorded a gain on settlement of $343,240.

	·	Loss on issuance of related party convertible notes payable at fair value — The loss on issuance of the Related Party Convertible Notes Payable of $400,000 for the nine months ended September 30, 2024 represents the difference between the estimated fair value of the Related Party Convertible Notes Payable on the issuance date and the principal amount on the issuance date based on the valuation assumptions.

	·	Change in estimated fair value of Related Party Convertible Notes Payable — The change in the estimated fair value of the Related Party Convertible Notes Payable of $2,192,507 for the nine months ended September 30, 2024 represents the difference between the estimated fair value at issuance and the estimated fair value upon conversion into common stock on August 14, 2024.

	·	Interest expense — Interest expense for the nine months ended September 30, 2024 and 2023 represents interest accrued on amounts owed under a license agreement with UIC, whereby UIC agreed to defer amounts payable to UIC under a former sublicense agreement in the amount of $404,991 in exchange for an interest-bearing license payable.

	·	Interest income — Interest income for the nine months ended September 30, 2024 and 2023 represents interest earned on cash and cash equivalents based on the prevailing market rates. The decrease in interest income for the nine months ended September 30, 2024 compared to the same prior year period is primarily due to a lower average cash balance on hand compared to the same prior year period.

	·	the costs and timing of, including invoicing for, clinical trials and preclinical studies of elraglusib and any future product candidates we may choose to pursue, including the costs of modification to clinical development plans based on feedback that we may receive from regulatory authorities and any third-party products used as combination agents in our clinical trials;
	·	the costs, timing and outcome of regulatory meetings and reviews of elraglusib or any future product candidates, including requirements of regulatory authorities in any additional jurisdictions in which we may seek approval for elraglusib and any future product candidates;
	·	the costs of obtaining, maintaining, enforcing and protecting our patents and other intellectual property and proprietary rights;
	·	our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal control over financial reporting;
	·	the costs associated with hiring additional personnel and consultants as our business grows, including additional executive officers and clinical development, regulatory, CMC, quality and commercial personnel;
	·	the timing and payment of milestone, royalty or other payments we must make pursuant to our existing and potential future license or collaboration agreements with third parties;
	·	the costs and timing of establishing or securing sales and marketing capabilities if elraglusib or any future product candidate is approved;
	·	our ability to achieve sufficient market acceptance, coverage, and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products;
	·	our ability and strategic decision to develop future product candidates other than elraglusib, and the timing of such development, if any;
	·	the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; and
	·	costs associated with any products or technologies that we may in-license or acquire.

	·	the prices at which we sold shares of preferred stock and the superior rights and preferences of the preferred stock relative to our common stock at the time of each grant;
	·	the progress of our research and development programs, including the status of preclinical studies and clinical trials for our product candidates;
	·	our stage of development and business strategy;
	·	external market conditions affecting the biotechnology industry and trends within the biotechnology industry;
	·	our financial position, including cash on hand, and our historical and forecasted performance and operating results;
	·	the lack of an active public market for our common stock and our preferred stock;
	·	the likelihood of achieving a liquidity event, such as an initial public offering, or IPO, or sale of our company in light of prevailing market conditions; and
	·	the analysis of IPOs and subsequent market performance of similar companies in the biotechnology industry.