10-Q
--12-31false0001035354Q30001035354us-gaap:ComputerEquipmentMember2021-12-310001035354us-gaap:RetainedEarningsMember2022-04-012022-06-300001035354us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-09-300001035354us-gaap:RestrictedStockUnitsRSUMember2022-09-300001035354us-gaap:LeaseholdImprovementsMember2021-12-310001035354us-gaap:PrimeRateMemberelox:HerculesTermLoanAgreementMember2022-01-012022-09-300001035354us-gaap:FairValueInputsLevel3Memberelox:MonteCarloSimulationMember2022-01-012022-09-300001035354us-gaap:AdditionalPaidInCapitalMember2021-12-310001035354us-gaap:AssetUnderConstructionMember2022-09-300001035354us-gaap:AdditionalPaidInCapitalMember2021-09-300001035354us-gaap:RetainedEarningsMember2021-07-012021-09-300001035354elox:LoanAndSecurityAgreementMember2021-12-310001035354us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001035354us-gaap:CommonStockMember2022-06-300001035354us-gaap:RetainedEarningsMember2022-09-300001035354us-gaap:GeneralAndAdministrativeExpenseMember2021-07-012021-09-300001035354elox:LoanAndSecurityAgreementMember2021-01-012021-09-300001035354us-gaap:CommonStockMember2021-09-300001035354elox:TrancheOneAdvanceMemberelox:HerculesTermLoanAgreementMember2021-09-300001035354elox:PaycheckProtectionProgramLoanMemberelox:LoanAndSecurityAgreementMember2021-09-032021-09-030001035354elox:LoanAndSecurityAgreementMember2021-09-3000010353542022-01-012022-03-310001035354us-gaap:CommonStockMember2021-06-3000010353542021-01-012021-03-310001035354us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001035354elox:LaboratoryEquipmentMember2021-12-3100010353542021-12-310001035354elox:EloxPhaseTwoClinicalDevelopmentMemberelox:EloxCysticFibrosisFoundationMemberelox:TwoThousandTwentyTwoCysticFibrosisFoundationAgreementMember2022-03-012022-03-310001035354elox:HerculesTermLoanAgreementMember2022-09-300001035354elox:EloxLiabilitiesMemberelox:TwoThousandTwentyTwoCysticFibrosisFoundationAgreementMember2022-07-012022-09-300001035354elox:LoanAndSecurityAgreementMemberelox:InitialLoanMember2019-01-300001035354us-gaap:ComputerEquipmentMember2022-09-300001035354us-gaap:LeaseholdImprovementsMember2022-09-300001035354elox:HerculesTermLoanAgreementMember2022-08-150001035354us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-09-3000010353542022-03-310001035354us-gaap:RetainedEarningsMember2021-12-310001035354us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001035354us-gaap:TreasuryStockMember2022-03-310001035354us-gaap:CommonStockMember2021-07-012021-09-300001035354elox:ZikaniTherapeuticsIncMemberus-gaap:RestrictedStockUnitsRSUMember2021-04-012021-04-010001035354us-gaap:TreasuryStockMember2021-04-012021-06-3000010353542021-03-310001035354srt:MinimumMemberelox:HerculesTermLoanAgreementMember2022-09-300001035354us-gaap:AdditionalPaidInCapitalMember2021-03-310001035354us-gaap:TreasuryStockMember2021-07-012021-09-300001035354srt:MaximumMemberelox:TwoThousandNineteenCysticFibrosisFoundationAwardMember2019-01-012019-12-310001035354us-gaap:FairValueInputsLevel3Memberelox:MonteCarloSimulationMember2022-09-300001035354us-gaap:FurnitureAndFixturesMember2021-12-310001035354us-gaap:WarrantMember2021-01-012021-09-300001035354elox:TwoThousandNineteenCysticFibrosisFoundationAwardMember2021-12-310001035354us-gaap:TreasuryStockMember2022-06-300001035354us-gaap:TreasuryStockMember2021-06-300001035354elox:ZikaniTherapeuticsIncMember2021-04-010001035354us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-3000010353542022-04-012022-06-300001035354us-gaap:RetainedEarningsMember2022-03-310001035354us-gaap:AdditionalPaidInCapitalMember2022-03-310001035354elox:ZikaniTherapeuticsIncMember2021-01-012021-09-3000010353542021-01-012021-12-310001035354elox:TwoThousandTwentyOneCysticFibrosisFoundationAwardMemberelox:EloxCysticFibrosisFoundationMember2022-01-012022-09-300001035354elox:HerculesTermLoanAgreementMember2021-01-012021-09-300001035354elox:LaboratoryEquipmentMember2022-09-300001035354elox:OptionsToPurchaseCommonStockMember2021-01-012021-09-300001035354elox:EloxLiabilitiesMemberelox:TwoThousandTwentyTwoCysticFibrosisFoundationAgreementMember2022-09-300001035354us-gaap:TreasuryStockMember2021-01-012021-03-310001035354us-gaap:RetainedEarningsMember2021-01-012021-03-310001035354srt:MaximumMemberelox:HerculesTermLoanAgreementMember2022-09-300001035354elox:ZikaniTherapeuticsIncMemberus-gaap:CommonStockMember2021-04-012021-04-010001035354us-gaap:AdditionalPaidInCapitalMember2022-09-300001035354elox:TwoThousandTwentyOneCysticFibrosisFoundationAwardMember2022-09-300001035354us-gaap:CommonStockMember2021-01-012021-03-310001035354us-gaap:CommonStockMember2021-03-310001035354elox:EloxCysticFibrosisFoundationMemberelox:TwoThousandTwentyTwoCysticFibrosisFoundationAgreementMember2022-01-012022-09-300001035354us-gaap:ResearchAndDevelopmentExpenseMember2021-07-012021-09-300001035354us-gaap:FurnitureAndFixturesMember2022-09-300001035354us-gaap:TreasuryStockMember2021-03-310001035354elox:SalesAgreementMembersrt:MaximumMember2021-09-300001035354elox:LoanAndSecurityAgreementMemberus-gaap:PrimeRateMember2019-01-302019-01-3000010353542021-06-300001035354elox:PaycheckProtectionProgramLoanMemberelox:LoanAndSecurityAgreementMember2020-04-012020-04-300001035354us-gaap:TreasuryStockMember2021-09-300001035354us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-3000010353542021-04-012021-06-300001035354us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001035354us-gaap:CommonStockMember2021-12-310001035354us-gaap:TreasuryStockMember2021-12-3100010353542022-01-012022-09-300001035354us-gaap:WarrantMember2022-01-012022-09-300001035354elox:PaycheckProtectionProgramLoanMemberelox:LoanAndSecurityAgreementMember2020-04-300001035354us-gaap:FairValueInputsLevel3Memberelox:MonteCarloSimulationMember2021-12-310001035354elox:ZikaniTherapeuticsIncMemberus-gaap:CommonStockMember2021-04-010001035354elox:TwoThousandTwentyTwoCysticFibrosisFoundationAgreementMember2022-09-300001035354us-gaap:RetainedEarningsMember2022-07-012022-09-3000010353542020-12-310001035354srt:MaximumMemberelox:HerculesTermLoanAgreementMember2021-09-300001035354us-gaap:AdditionalPaidInCapitalMember2020-12-310001035354us-gaap:RetainedEarningsMember2022-01-012022-03-310001035354elox:HerculesTermLoanAgreementMember2021-07-012021-09-300001035354elox:TrancheTwoAdvanceMemberelox:HerculesTermLoanAgreementMember2021-09-300001035354us-gaap:CommonStockMember2020-12-310001035354elox:LoanAndSecurityAgreementMember2021-07-012021-09-3000010353542021-01-012021-09-300001035354us-gaap:TreasuryStockMember2020-12-310001035354us-gaap:FairValueInputsLevel3Memberelox:MonteCarloSimulationMember2022-07-012022-09-300001035354us-gaap:CommonStockMember2022-01-012022-03-3100010353542022-07-012022-09-300001035354us-gaap:CommonStockMember2022-04-012022-06-300001035354us-gaap:CommonStockMember2022-03-310001035354us-gaap:RestrictedStockUnitsRSUMember2021-12-310001035354us-gaap:CommonStockMember2022-09-300001035354us-gaap:AssetUnderConstructionMember2021-12-310001035354us-gaap:RetainedEarningsMember2021-04-012021-06-300001035354elox:HerculesTermLoanAgreementMember2022-01-012022-09-300001035354us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300001035354elox:ZikaniTherapeuticsIncMember2021-07-012021-09-300001035354us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-09-300001035354elox:EloxPhaseTwoClinicalDevelopmentMemberelox:EloxCysticFibrosisFoundationMemberelox:TwoThousandTwentyTwoCysticFibrosisFoundationAgreementMember2022-01-012022-09-300001035354elox:TwoThousandTwentyOneCysticFibrosisFoundationAwardMember2021-12-310001035354us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-3000010353542022-06-300001035354us-gaap:RetainedEarningsMember2021-03-310001035354elox:HerculesTermLoanAgreementMember2021-12-310001035354elox:LoanAndSecurityAgreementMember2019-01-302019-01-300001035354us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-3000010353542022-11-080001035354elox:TwoThousandTwentyOneCysticFibrosisFoundationAwardMembersrt:MaximumMember2021-05-012021-05-310001035354elox:HerculesTermLoanAgreementMember2022-07-012022-09-300001035354elox:OptionsToPurchaseCommonStockMember2022-01-012022-09-300001035354us-gaap:RetainedEarningsMember2021-09-3000010353542021-07-012021-09-3000010353542021-09-300001035354us-gaap:RetainedEarningsMember2020-12-310001035354us-gaap:CommonStockMember2021-04-012021-06-300001035354us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-09-300001035354elox:EloxLiabilitiesMemberelox:TwoThousandTwentyTwoCysticFibrosisFoundationAgreementMember2022-01-012022-09-300001035354us-gaap:RetainedEarningsMember2022-06-300001035354us-gaap:TreasuryStockMember2022-09-300001035354elox:TrancheThreeAdvanceMemberelox:HerculesTermLoanAgreementMember2021-09-300001035354elox:TrancheOneAdvanceMemberelox:HerculesTermLoanAgreementMember2022-09-300001035354elox:EloxPhaseTwoClinicalDevelopmentMembersrt:MaximumMemberelox:EloxCysticFibrosisFoundationMemberelox:TwoThousandTwentyTwoCysticFibrosisFoundationAgreementMember2022-03-012022-03-310001035354us-gaap:RetainedEarningsMember2021-06-300001035354us-gaap:FairValueInputsLevel3Memberelox:MonteCarloSimulationMember2022-06-300001035354us-gaap:AdditionalPaidInCapitalMember2022-06-300001035354us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001035354us-gaap:AdditionalPaidInCapitalMember2021-06-3000010353542022-09-300001035354elox:ZikaniTherapeuticsIncMember2021-04-012021-04-010001035354us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-30xbrli:purexbrli:shareselox:Installmentelox:Timeiso4217:USDiso4217:USDxbrli:shares

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

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: 001-31326

 

ELOXX PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

84-1368850

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

 

480 Arsenal Way

Watertown, Massachusetts 02472

(Address of principal executive offices) (Zip Code)

781-577-5300

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

ELOX

The Nasdaq Capital Market

 

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. Yes No

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). Yes No

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

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

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

 

On November 8, 2022, the registrant had 86,656,221 shares of common stock, $0.01 par value per share, outstanding.

 

 


 

ELOXX PHARMACEUTICALS, INC.

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

Special Note Regarding Forward-Looking Statements

 

3

 

 

 

 

 

 

 

Market and Industry Data

 

4

 

 

 

 

 

 

 

 

 

 

 

 

Risk Factor Summary

 

5

 

 

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

6

 

 

 

 

 

Item 1.

 

Condensed Consolidated Financial Statements (unaudited)

 

6

 

 

 

 

 

 

 

Balance Sheets as of September 30, 2022 and December 31, 2021

 

6

 

 

 

 

 

 

 

Statements of Operations for the Three and Nine Months ended September 30, 2022 and 2021

 

7

 

 

 

 

 

 

 

Statements of Cash Flows for the Nine Months ended September 30, 2022 and 2021

 

8

 

 

 

 

 

 

 

Statements of Stockholders’ (Deficit) Equity for the Three and Nine Months ended September 30, 2022 and 2021

 

9

 

 

 

 

 

 

 

Notes to Financial Statements

 

11

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

27

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

27

 

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

28

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

28

 

 

 

 

 

Item 1A.

 

Risk Factors

 

28

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

60

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

60

 

 

 

 

 

Item 4.

 

Mine Safety Data

 

60

 

 

 

 

 

Item 5.

 

Other Information

 

60

 

 

 

 

 

Item 6.

 

Exhibits

 

61

 

 

 

 

 

 

 

SIGNATURES

 

63

 

 

2


 

Special Note Regarding Forward-Looking Statements

Eloxx Pharmaceuticals, Inc., together with its subsidiaries, is collectively referred to herein as “we,” “our,” “us,” “Eloxx” or the “Company”. Hyperlinks and web addresses are provided as a convenience and for informational purposes only. Eloxx bears no responsibility for the security or content of external websites.

This Quarterly Report on Form 10-Q, and information incorporated herein, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of present and historical facts contained in this Quarterly Report on Form 10-Q, including without limitation statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. Without limiting the foregoing, in some cases, you can identify forward-looking statements by terms such as “aim,” “may,” “will,” “would,” “should,” “expect,” “exploring,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “seeks,” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. No forward-looking statement is a guarantee of future results, performance, or achievements, and one should avoid placing undue reliance on such statements.

Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to us. Such beliefs and assumptions may or may not prove to be correct. Additionally, such forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to:

risks related to our ability to obtain the capital necessary to fund our operations;
risks related to our dependence on our lead product candidate, ELX-02 and our ability to progress any product candidates in preclinical or clinical trials;
risks related to our ability to obtain adequate financing in the future through product licensing, grants, public or private equity or debt financing or otherwise;
the length and expense of preclinical and clinical trial development, the uncertainty of clinical trial results and the fact that positive results from preclinical studies are not always indicative of positive clinical results;
risks related to the scope, rate and progress of our preclinical studies and clinical trials and other research and development activities;
risks related to the competition for patient enrollment from drug candidates in development;
the impact of the global COVID-19 pandemic on our clinical trials, operations, vendors, suppliers and employees;
risks related to regulatory approvals and other requirements applicable to our product candidates;
risks relating to the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
general business conditions, regulatory environment, competition and market for our products;
business abilities and judgment of personnel, and the availability of qualified personnel; and
those identified in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Annual Report”).

Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risks and uncertainties.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. You should not rely upon forward-looking statements as predictions of future events. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q.

3


 

Unless required by law, we will not undertake and we specifically disclaim any obligation to release publicly the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of events, whether or not anticipated. In that respect, we wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made.

MARKET AND INDUSTRY DATA

This Quarterly Report on Form 10-Q and the other documents incorporated herein by reference include statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data and disclaim responsibility for its content.

 

4


 

RISK FACTOR SUMMARY

The following is a summary of the principal risks of an investment in our common stock. This summary does not list all the risks that we face. Additional discussion of the risks summarized below follow directly under the heading “Risk Factors” and should be carefully considered, together with other information in our 2021 Annual Report and our other filings with the SEC before making an investment decision regarding our common stock.

We are heavily dependent on the success of our lead product candidate, ELX-02. If ELX-02 does not achieve positive results during development or suffers any material development delays, it may adversely impact the commercial viability of ELX-02 and our business.
We will need substantial additional funding by the end of the first half of 2023. If we are unable to raise capital when needed, we would be forced to delay, reduce, or eliminate our product development programs or commercialization efforts.
Preclinical and clinical drug development is a lengthy and expensive process, with an uncertain outcome. Our preclinical and clinical programs may experience delays or may never advance, which would adversely affect ability to further advance clinical development, obtain regulatory approvals or commercialize our product candidates on a timely basis or at all, which could have an adverse effect on our business.
We and our collaborating partners may be subject, directly or indirectly, to federal and state healthcare fraud and abuse and false claims laws and regulations. If we or our collaborating partners are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.
Our product candidates, including ELX-02, may cause adverse events or have other properties that could delay or prevent their regulatory approval or limit the scope of any approved label or market acceptance.
Even though we have received orphan drug designation from the FDA for ELX-02 for the treatment of cystic fibrosis, cystinosis, MPS I, and Rett syndrome, we may not be able to maintain the benefits of orphan drug designation or obtain orphan drug marketing exclusivity for ELX-02 or any of our other product candidates for Alport syndrome or other indications.
A Fast Track Designation by the FDA, even if granted for any of our product candidates, may not lead to a faster development or regulatory review or approval process, and does not increase the likelihood that our product candidates will receive marketing approval.
We may find it difficult to recruit and enroll patients in our clinical trials, which could cause significant delays in the completion of such trials or may cause us to abandon one or more clinical trials.
If we are unable to develop and commercialize our product candidates, our business will be adversely affected.
We have incurred significant operating losses since our inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future. We may never achieve or maintain profitability.
Our recurring losses from operations raise substantial doubt regarding our ability to continue as a going concern.
If we fail to adequately protect or enforce our intellectual property rights or secure rights to third party patents, the value of our intellectual property rights would diminish, and our business, competitive position and results of operations would suffer.
If we infringe the rights of third parties, we could be prevented from selling products, forced to pay damages and required to defend against litigation which could result in substantial costs and may have a material adverse effect on our business, results of operations and financial condition.
Maintaining and improving our financial controls and the requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.
Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.
Our stock price may be volatile, and purchasers of our common stock could incur substantial losses.

 

5


 

PART I. FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Information

ELOXX PHARMACEUTICALS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

 

 

September 30,
2022

 

 

December 31,
2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,554

 

 

$

42,268

 

Restricted cash

 

 

263

 

 

 

299

 

Prepaid expenses and other current assets

 

 

854

 

 

 

913

 

Total current assets

 

 

25,671

 

 

 

43,480

 

Property and equipment, net

 

 

215

 

 

 

216

 

Operating lease right-of-use asset

 

 

993

 

 

 

1,443

 

Total assets

 

$

26,879

 

 

$

45,139

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,595

 

 

$

1,379

 

Accrued expenses

 

 

4,518

 

 

 

4,196

 

Current portion of long-term debt

 

 

2,530

 

 

 

 

Advances from collaboration partners

 

 

12,223

 

 

 

3,723

 

Derivative liabilities

 

 

116

 

 

 

 

Current portion of operating lease liability

 

 

698

 

 

 

657

 

Total current liabilities

 

 

21,680

 

 

 

9,955

 

Long-term debt, net of current portion

 

 

9,863

 

 

 

11,996

 

Operating lease liability

 

 

318

 

 

 

804

 

Total liabilities

 

 

31,861

 

 

 

22,755

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ (deficit) equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value per share, 5,000,000 shares authorized, no
   shares issued or outstanding as of September 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, $0.01 par value per share, 500,000,000 shares authorized,
   
87,077,587 and 87,071,324 shares issued and 86,656,221 and
  
86,649,958 shares outstanding as of September 30, 2022 and
   December 31, 2021, respectively

 

 

871

 

 

 

871

 

Common stock in treasury, at cost, 421,366 shares as of both
   September 30, 2022 and December 31, 2021

 

 

(2,190

)

 

 

(2,190

)

Additional paid-in capital

 

 

264,406

 

 

 

262,026

 

Accumulated deficit

 

 

(268,069

)

 

 

(238,323

)

Total stockholders’ (deficit) equity

 

 

(4,982

)

 

 

22,384

 

Total liabilities and stockholders’ (deficit) equity

 

$

26,879

 

 

$

45,139

 

 

See accompanying notes to unaudited condensed consolidated financial statements

6


 

ELOXX PHARMACEUTICALS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

 

 

 

Three Months Ended
 September 30,

 

 

Nine Months Ended
 September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

4,880

 

 

$

5,210

 

 

$

20,430

 

 

$

14,987

 

General and administrative

 

 

2,262

 

 

 

5,035

 

 

 

7,961

 

 

 

16,731

 

In process research and development

 

 

 

 

 

 

 

 

 

 

 

22,670

 

Total operating expenses

 

 

7,142

 

 

 

10,245

 

 

 

28,391

 

 

 

54,388

 

Loss from operations

 

 

(7,142

)

 

 

(10,245

)

 

 

(28,391

)

 

 

(54,388

)

Other expense (income), net

 

 

366

 

 

 

(360

)

 

 

1,355

 

 

 

249

 

Net loss

 

$

(7,508

)

 

$

(9,885

)

 

$

(29,746

)

 

$

(54,637

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.09

)

 

$

(0.11

)

 

$

(0.34

)

 

$

(0.85

)

Weighted average number of shares of common stock
   used in computing net loss per share, basic and diluted

 

 

86,656,221

 

 

 

86,208,754

 

 

 

86,653,811

 

 

 

64,428,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to unaudited condensed consolidated financial statements

7


 

ELOXX PHARMACEUTICALS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

Nine Months Ended
September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(29,746

)

 

$

(54,637

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Acquired in-process research and development

 

 

 

 

 

22,670

 

Stock-based compensation

 

 

2,380

 

 

 

7,567

 

Depreciation

 

 

67

 

 

 

86

 

Amortization of operating lease right-of-use asset

 

 

450

 

 

 

672

 

Amortization of debt discount

 

 

397

 

 

 

298

 

Loss on sales and disposals of property and equipment

 

 

 

 

 

84

 

Change in fair value of derivative liabilities

 

 

116

 

 

 

 

Gain on extinguishment of debt

 

 

 

 

 

(808

)

Loss on extinguishment of debt

 

 

 

 

 

268

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

59

 

 

 

631

 

Accounts payable

 

 

216

 

 

 

410

 

Accrued expenses

 

 

322

 

 

 

(649

)

Merger related costs paid

 

 

 

 

 

(1,003

)

Operating lease liabilities

 

 

(445

)

 

 

(659

)

Net cash used in operating activities

 

 

(26,184

)

 

 

(25,070

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(66

)

 

 

(69

)

Cash acquired in merger transaction

 

 

 

 

 

2,145

 

Net cash (used in) provided by investing activities

 

 

(66

)

 

 

2,076

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from advances from collaboration partners

 

 

8,500

 

 

 

2,918

 

Proceeds from underwritten public offerings, net of issuance costs

 

 

 

 

 

47,718

 

Proceeds from debt financing obligations

 

 

 

 

 

11,910

 

Repayment of term loan principal

 

 

 

 

 

(11,383

)

Payment for settlement of taxes upon vesting of restricted stock units

 

 

 

 

 

(238

)

Proceeds from exercises of stock options

 

 

 

 

 

23

 

Net cash provided by financing activities

 

 

8,500

 

 

 

50,948

 

(Decrease) Increase in cash, cash equivalents and restricted cash

 

 

(17,750

)

 

 

27,954

 

Cash, cash equivalents and restricted cash at the beginning of the period

 

 

42,567

 

 

 

24,724

 

Cash, cash equivalents and restricted cash at the end of the period

 

$

24,817

 

 

$

52,678

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash to condensed
   consolidated balance sheets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,554

 

 

$

52,432

 

Restricted cash

 

 

263

 

 

 

246

 

Total cash, cash equivalents and restricted cash

 

$

24,817

 

 

$

52,678

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow activities:

 

 

 

 

 

 

Issuance of common stock in merger transaction

 

$

 

 

$

22,335

 

Cash paid for interest

 

$

968

 

 

$

415

 

 

See accompanying notes to unaudited condensed consolidated financial statements

8


 

ELOXX PHARMACEUTICALS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(in thousands, except share data)

 

 

 

Common stock

 

 

 

 

 

Treasury stock

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
paid-in
capital

 

 

Shares

 

 

Amount

 

 

Accumulated
deficit

 

 

Total
stockholders'
(deficit) equity

 

Balance at December 31, 2021

 

 

86,649,958

 

 

$

871

 

 

$

262,026

 

 

 

(421,366

)

 

$

(2,190

)

 

$

(238,323

)

 

$

22,384

 

Vesting of restricted stock units

 

 

3,131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

922

 

 

 

 

 

 

 

 

 

 

 

 

922

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,620

)

 

 

(11,620

)

Balance at March 31, 2022

 

 

86,653,089

 

 

$

871

 

 

$

262,948

 

 

 

(421,366

)

 

$

(2,190

)

 

$

(249,943

)

 

$

11,686

 

Vesting of restricted stock units

 

 

3,132

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

744

 

 

 

 

 

 

 

 

 

 

 

 

744

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,618

)

 

 

(10,618

)

Balance at June 30, 2022

 

 

86,656,221

 

 

$

871

 

 

$

263,692

 

 

$

(421,366

)

 

$

(2,190

)

 

$

(260,561

)

 

$

1,812

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

714

 

 

 

 

 

 

 

 

 

 

 

 

714

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,508

)

 

 

(7,508

)

Balance at September 30, 2022

 

 

86,656,221

 

 

$

871

 

 

$

264,406

 

 

 

(421,366

)

 

$

(2,190

)

 

$

(268,069

)

 

$

(4,982

)

 

See accompanying notes to unaudited condensed consolidated financial statements

 

9


 

ELOXX PHARMACEUTICALS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(in thousands, except share data)

 

 

 

Common stock

 

 

 

 

 

Treasury stock

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
paid-in
capital

 

 

Shares

 

 

Amount

 

 

Accumulated
deficit

 

 

Total
stockholders'
equity

 

Balance at December 31, 2020

 

 

40,157,187

 

 

$

404

 

 

$

183,250

 

 

 

(193,735

)

 

$

(1,828

)

 

$

(171,596

)

 

$

10,230

 

Vesting of restricted stock units

 

 

57,687

 

 

 

 

 

 

 

 

 

(23,883

)

 

 

(94

)

 

 

 

 

 

(94

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,308

 

 

 

 

 

 

 

 

 

 

 

 

1,308

 

Net loss