CervoMed Inc 10-Q for FY2024 Q1

CervoMed Inc. (CRVO)

10-Q 2024-05-14 For: 2024-03-31

Added on April 12, 2026

About this 10-Q

CervoMed Inc filed this 10-Q on May 14, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).

Headline figures

Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.35M; up 66.7% from $1.41M a year earlier
Net loss: $2.51M; compared with a net loss of $534.34K a year earlier

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Delaware	30-0645032
(State of other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

20 Park Plaza, Suite 424
Boston, Massachusetts	02116
(Address of principal executive offices, including zip code)	(Zip Code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	CRVO	NASDAQ Capital Market

Large accelerated filer ☐	Accelerated filer ☐

Non-accelerated filer ☒	Smaller reporting company ☒

	Emerging growth company ☐

		Page No.
Part I	PART I – FINANCIAL INFORMATION	1

Item 1:	ITEM 1. FINANCIAL STATEMENTS	1

Item 2:	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18

Item 3:	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26

Item 4:	ITEM 4. CONTROLS AND PROCEDURES	26

Part II	PART II – OTHER INFORMATION	27

Item 1:	ITEM 1. LEGAL PROCEEDINGS	27

Item 1A:	ITEM 1A. RISK FACTORS	27

Item 2:	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	27

Item 3:	ITEM 3. DEFAULTS UPON SENIOR SECURITIES	27

Item 4:	ITEM 4. MINE SAFETY DISCLOSURES	27

Item 5:	ITEM 5. OTHER INFORMATION	27

Item 6:	ITEM 6. EXHIBITS	28

Signatures		29

Term	Definition
2015 Equity Plan	CervoMed Inc. 2015 Equity Incentive Plan, as amended
2018 Plan	CervoMed Inc. 2018 Employee, Director and Consultant Equity Incentive Plan, as amended
2020 Notes	the previously outstanding convertible promissory notes of EIP, dated as of December 4, 2020, as amended
2021 Notes	the previously outstanding convertible promissory notes of EIP, dated as of December 10, 2021, as amended
2022 Notes Amendment	the amendments to the 2020 Notes entered into in April 2022
2022 Sales Agreement	our At-The-Market Sales Agreement, dated July 22, 2022, with BTIG, as agent
2024 Private Placement	our private placement of an aggregate of 2,532,285 units, each consisting of (i) (A) one share of common stock or (B) one Pre-Funded Warrant in lieu thereof and (ii) one Series A Warrant, for aggregate gross proceeds of up to approximately $149.4 million, completed on April 1, 2024
401(k) Plan	CervoMed Inc. 401(k) Defined Contribution Plan
AD	Alzheimer’s Disease

Annual Report	our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 29, 2024
ASC	Accounting Standard Codification of the FASB
AscenD-LB Trial	our Phase 2a clinical trial evaluating neflamapimod for the treatment of patients with DLB, completed in the second half of 2021
ASU	Accounting Standards Update
BFC	basal forebrain cholinergic
Board	the board of directors of the Company
BTIG	BTIG LLC
CDR-SB	Clinical Dementia Rating Sum of Boxes test
CMO	contract manufacturing organization
Code	the U.S. Internal Revenue Code of 1986, as amended
Convertible Notes	collectively, the 2020 Notes and the 2021 Notes
CRO	contract research organization
DLB	dementia with Lewy bodies
Effective Time	the effective time of the Merger on August 16, 2023
Exchange Act	Securities Exchange Act of 1934, as amended
Exchange Ratio	the “Exchange Ratio” as defined in the Merger Agreement
FASB	Financial Accounting Standards Board
FDA	U.S. Food and Drug Administration
FTD	frontotemporal dementia
G&A	general and administrative
Nasdaq	Nasdaq Stock Market, LLC
NDA	New Drug Application
NIA	the National Institute on Aging of the National Institutes of Health
NIA Grant	the $21 million grant awarded to us by the NIA in January 2023 to support the RewinD-LB Trial
p38α	p38 mitogen-activated protein kinase alpha
Pre-Funded Warrants	the pre-funded warrants each to purchase one share of common stock at a purchase price of $0.001 per share issued in connection with the 2024 Private Placement
ptau181	plasma phosphorylated tau at position 181
R&D	research and development
Regulation S-K	Regulation S-K promulgated under the Securities Act

RewinD-LB Trial	our Phase 2b clinical trial evaluating neflamapimod for the treatment of patients with DLB, initiated in the second quarter of 2023
ROU	right-of-use
SEC	U.S. Securities and Exchange Commission
Section 382	Section 382 of the Code
Securities Act	Securities Act of 1933, as amended
Series A Warrants	the Series A warrants to purchase an aggregate of 2,532,285 shares of common stock at a purchase price of $39.24 per share issued in connection with the 2024 Private Placement
TUG	Timed Up and Go test
U.S.	United States of America
US GAAP	U.S. generally accepted accounting principles
Vertex	Vertex Pharmaceuticals Incorporated
Vertex Agreement	the Option and License Agreement, dated as of August 27, 2012, by and between EIP Pharma LLC and Vertex, as amended

	●	our cash balances and our ability to obtain additional financing in the future and continue as a going concern;
	●	the success and timing of our ongoing RewinD-LB Trial and our other clinical and preclinical studies, including our ability to enroll subjects in our studies at anticipated rates and our ability to manufacture an adequate amount of drug supply for our studies;
	●	obtaining and maintaining intellectual property protection for our current or future product candidates and our proprietary technology;
	●	the performance of third parties, including contract research organizations, manufacturers, suppliers, and outside consultants, to whom we outsource certain operational, staff and other functions;
	●	our ability to obtain and maintain regulatory approval of our current or future product candidates and, if approved, our products, including the labeling under any approval we may obtain;
	●	our plans and ability to develop and commercialize our current or future product candidates and the outcomes of our research and development activities;
	●	our estimates regarding expenses, future revenues, capital requirements, and needs for additional financing;
	●	our future obligations under the Vertex Agreement;
	●	our failure to recruit or retain key scientific or management personnel or to retain our executive officers;
	●	the accuracy of our estimates of the size and characteristics of the potential markets for our current or future product candidates, the rate and degree of market acceptance of any of our current or future product candidates that may be approved in the future, and our ability to serve those markets;
	●	the success of products that are or may become available which also target the potential markets for our current or future product candidates;
	●	our ability to operate our business without infringing the intellectual property rights of others and the potential for others to infringe upon our intellectual property rights;
	●	any significant breakdown, infiltration, or interruption of our information technology systems and infrastructure;
	●	our ability to remediate our previously disclosed material weaknesses in our internal controls over financial reporting in a timely manner;
	●	our ability to successfully integrate the historical businesses of EIP and Diffusion and realize the anticipated benefits of the Merger;
	●	recently enacted and future legislation related to the healthcare system;
	●	other regulatory developments in the U.S., European Union, and other foreign jurisdictions;
	●	our ability to satisfy the continued listing requirements of the Nasdaq or any other exchange on which our securities may trade in the future;
	●	uncertainties related to general economic, political, business, industry, and market conditions, including the continued availability of funding for the NIA to support disbursements under our previously received grant; and
	●	other risks and uncertainties, including those discussed under the heading "Risk Factors" herein and in our other public filings.

	March 31, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	6,369,172		$	7,792,846
Deferred offering costs		247,671			—
Prepaid expenses		1,348,679			1,256,501
Grant receivable		—			915,404
Total current assets		7,965,522			9,964,751
Other assets		31,926			7,770
Total assets	$	7,997,448		$	9,972,521
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		679,739			662,471
Deferred grant revenue		572,475			—
Accrued expenses and other current liabilities		1,408,856			1,933,276
Total liabilities		2,661,070			2,595,747
Commitments and Contingencies (Note 8)
Stockholders’ Equity:
Series A preferred stock $0.001 par value; 30,000,000 authorized at March 31, 2024 and December 31, 2023, 0 shares issued and outstanding at March 31, 2024 and December 31, 2023		—			—
Common stock, $0.001 par value: 1,000,000,000 shares authorized: 6,170,479 and 5,674,520 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively		6,170			5,674
Additional paid-in capital		62,285,332			61,811,889
Accumulated deficit		(56,955,124	)		(54,440,789	)
Total stockholders' equity		5,336,378			7,376,774
Total liabilities and stockholders' equity	$	7,997,448		$	9,972,521

	Three Months Ended March 31,
	2024			2023 (As Restated)
Grant revenue	$	2,347,250		$	1,407,868
Operating expenses:
Research and development		2,814,258			1,833,274
General and administrative		2,127,930			1,000,913
Total operating expenses		4,942,188			2,834,187
Loss from operations		(2,594,938	)		(1,426,319	)
Other income (expense):
Other income (expense)		(30	)		856,579
Interest income		80,633			35,404
Total other income, net		80,603			891,983
Net loss	$	(2,514,335	)	$	(534,336	)
Per share information:
Net loss per share of common stock, basic and diluted	$	(0.41	)	$	(1.03	)
Weighted average shares outstanding, basic and diluted		6,170,501			518,140

	Convertible preferred stock				Common Stock				Additional Paid-in		Accumulated			Total Stockholders' Equity
	Shares		Amount		Shares		Amount		Capital		Deficit			(Deficit)
Balance at January 1, 2023		3,331,201	$	24,287,211		518,140	$	518	$	18,983,339	$	(52,268,916	)	$	(33,285,059	)
Stock-based compensation expense		—		—		—		—		71,240		—			71,240
Net loss (As Restated)		—		—		—		—		—		(534,336	)		(534,336	)
Balance at March 31, 2023		3,331,201	$	24,287,211		518,140	$	518	$	19,054,579	$	(52,803,252	)	$	(33,748,155	)

	Three Months Ended March 31,
	2024			2023 (As Restated)
Operating activities:
Net loss	$	(2,514,335	)	$	(534,336	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		218,215			71,240
Changes in fair value of convertible debt		—			(858,000	)
Changes in operating assets and liabilities:
Prepaid expenses, deposits and other assets		(116,334	)		(629,713	)
Deferred offering costs		—			(638,018	)
Accounts payable		(230,403	)		240,257
Accrued expenses and other liabilities		(268,696	)		364,807
Grant receivable		915,404
Deferred grant revenue		572,475			501,821
Net cash used in operating activities		(1,423,674	)		(1,481,942	)

Net decrease in cash and cash equivalents		(1,423,674	)		(1,481,942	)
Cash and cash equivalents at beginning of period		7,792,846			4,093,579
Cash and cash equivalents at end of period	$	6,369,172		$	2,611,637

Supplemental disclosure of non-cash investing and financing activities:
Deferred offering costs in accounts payable and accrued expenses	$	247,671		$	—
Stock options granted in lieu of cash bonus	$	255,724		$	—
Cashless exercise of prefunded warrants	$	496		$	—

	March 31, 2024
	(Level 1)		(Level 2)		(Level 3)

Assets
Cash equivalents (money market accounts)	$	3,729,954	$	—	$	—
Total assets measured at fair value	$	3,729,954	$	—	$	—

	December 31, 2023
Assets
Cash equivalents (money market accounts)	$	7,792,846	$	—	$	—
Total assets measured at fair value	$	7,792,846	$	—	$	—

	Three Months Ended March 31,
	2023
Beginning balance	$	12,414,000
Fair value adjustment		(858,000	)
Ending balance	$	11,556,000

	March 31, 2024		December 31, 2023
Clinical expenses	$	952,574	$	711,362
Insurance		265,944		436,859
Professional services		21,917		37,917
Dues and memberships		77,599		—
Other		30,645		70,363
Total	$	1,348,679	$	1,256,501

	March 31, 2024		December 31, 2023
Employee compensation costs	$	264,237	$	1,026,054
Clinical development costs		253,883		389,045
Professional fees		772,074		309,062
State franchise and excise tax		54,856		120,456
Other		63,806		88,659
Total	$	1,408,856	$	1,933,276

	Outstanding		Range of exercise price per share		Expiration dates
Historical Diffusion common stock warrants		58,844	$26.27 - $459.06		May 2024 through February 2026
Historical EIP common stock warrants		43,618	$	19.81	4/1/2028
		102,462

	March 31,
	2024		2023
Convertible preferred stock		—		3,331,201
Common stock warrants		102,462		43,621
Stock options		519,257		114,525
		621,719		3,489,347

	Number of Options			Weighted average exercise price per share		Weighted average remaining contractual life (in years)		Aggregate intrinsic value
Balance at January 1, 2024		349,374		$	51.15
Granted		169,934			9.52
Expired		(51	)		28,897.06
Outstanding at March 31, 2024		519,257		$	34.69		8.5		—
Exercisable at March 31, 2024		192,004		$	79.03		6.7		—

	Three Months Ended March 31,
	2024
Expected term (in years)		5.74 - 5.76
Risk-free interest rate		4.06 - 4.14	%
Expected volatility		79.13 - 79.31	%
Dividend yield		—

	March 31, 2023
	As reported			Adjusted		As restated
Deferred offering costs	$	-		$	638,018	$	638,018
Accumulated deficit	$	(53,441,270	)	$	638,018	$	(52,803,252	)
Total assets	$	3,305,477		$	638,018	$	3,943,495
Total liabilities, convertible preferred stock and stockholder’s equity (deficit)	$	3,305,477		$	638,018	$	3,943,495
Total stockholders’ equity (deficit)	$	(34,386,173	)	$	638,018	$	(33,748,155	)

	Three Months Ended March 31, 2023
	As reported			Adjusted			As restated
General and administrative expense	$	1,638,931		$	(638,018	)	$	1,000,913
Total operating expenses	$	3,472,205		$	(638,018	)	$	2,834,187
Loss from operations	$	(2,064,337	)	$	638,018		$	(1,426,319	)
Net loss	$	(1,172,354	)	$	638,018		$	(534,336	)
Net loss per share of common stock, basic and diluted	$	(2.26	)	$	1.23		$	(1.03	)

	●	advance neflamapimod through clinical trials, including our ongoing Phase 2b trial for DLB, through to initiation of a Phase 3 trial in DLB;
	●	manufacture supplies for our nonclinical studies and clinical trials;
	●	obtain, maintain, expand, and protect our intellectual property portfolio;
	●	hire additional personnel to support our operations and growth; and
	●	continue to operate as a public company.

	●	expenses incurred under agreements with CROs, preclinical testing organizations, consultants, and other third-party vendors, collaborators and service providers;
	●	costs related to production of clinical materials, including fees paid to CMOs;
	●	vendor expenses related to the execution of preclinical studies and clinical trials;
	●	personnel-related expenses, including salaries, benefits, and stock-based compensation for personnel engaged in research and development functions;
	●	costs related to the preparation of regulatory submissions;
	●	third-party license fees; and
	●	expenses for rent and other supplies.

	●	the enrollment, progress, timing, costs and results of the RewinD-LB Trial, as well as additional development plans for neflamapimod in other disease indications, such as Recovery after Anterior Circulation Ischemic Stroke and FTD;
	●	the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities;
	●	our ability to reach certain milestone events set forth in our collaboration agreements and the timing of such achievements, triggering our obligation to make applicable payments;
	●	the hiring of additional clinical, scientific and commercial personnel to pursue our development plans, as well the increased costs of internal and external resources as to support our operations as a public reporting company;
	●	the cost and timing of securing manufacturing arrangements for clinical or commercial production;
	●	the cost of establishing, either internally or in collaboration with others, sales, marketing and distribution capabilities to commercialize neflamapimod, if approved;
	●	the cost of filing, prosecuting, enforcing, and defending our patent claims and other intellectual property rights, including defending against any patent infringement actions brought by third parties against us;
	●	the ability to receive additional non-dilutive funding, including grants from organizations and foundations;
	●	our ability to establish strategic collaborations, licensing or other arrangements with other parties on favorable terms, if at all; and
	●	the extent to which we may in-license or acquire other product candidates or technologies.

Exhibit No.	Description	Method of Filing
4.1	Form of 2024 Private Placement Pre-Funded Warrant	Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on March 28, 2024.
4.2	Form of 2024 Private Placement Series A Warrant	Incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on March 28, 2024.
4.3	Amendment to Pre-Funded Warrant, dated as of February 26, 2024, by and between CervoMed Inc. and the Joshua S. Boger 2021 Trust DTD 12/09/2021	Incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on February 28, 2024.
10.1	Securities Purchase Agreement, dated March 28, 2024, by and between CervoMed Inc. and each of the purchasers party thereto	Incorporated by reference to Exhibit 10.19 to the Company’s Registration Statement on Form S-1 filed on May 10, 2024.
10.2#	Amended & Restated Employment Agreement, dated as of February 1, 2024, by and between John Alam, M.D., and CervoMed Inc.	Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 2, 2024.
10.3#	Amended & Restated Employment Agreement, dated as of February 1, 2024, by and between Robert J. Cobuzzi, Ph.D., and CervoMed Inc.	Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 2, 2024.
10.4#	Employment Agreement, dated as of February 1, 2024, by and between Kelly Blackburn, M.H.A., and CervoMed Inc.	Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on February 2, 2024.
31.1	Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)	Filed herewith.
31.2	Certification of the Acting Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)	Filed herewith.
32.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b)	Furnished herewith.
32.2	Certification of Acting Principal Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b)	Furnished herewith.
101.INS*	Inline XBRL Instance Document	Filed herewith.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document	Filed herewith.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document	Filed herewith.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101)	Filed herewith.

		CervoMed INC.

Date: May 14, 2024	By:	/s/ John Alam
		John Alam
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: May 14, 2024	By:	/s/ William Elder
		William Elder
		General Counsel & Corporate Secretary
		(Acting Principal Financial Officer)