UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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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)
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
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Trading Symbol(s) |
Name of each exchange on which registered |
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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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Non-accelerated filer |
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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
On November 2, 2020, the registrant had
ELOXX PHARMACEUTICALS, INC.
TABLE OF CONTENTS
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Item 1. |
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Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 6. |
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51 |
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52 |
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, or this Report, and the other documents we have filed with the U.S. Securities and Exchange Commission that are incorporated herein by reference, contain forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. In particular, you should consider the numerous risks described in the “Risk Factors” section in this Report.
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. 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.
This Report 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.
The following are some risks and uncertainties, among others, that could cause actual results to differ materially from those expressed or implied by forward-looking statements in this Report:
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risks related to our ability to progress any product candidates in preclinical or clinical trials; |
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the uncertainty of clinical trial results and the fact that positive results from preclinical studies are not always indicative of positive clinical results; |
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risks related to the scope, rate and progress of our preclinical studies and clinical trials and other research and development activities; |
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risks related to the competition for patient enrollment from drug candidates in development; |
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the impact of the recent global outbreak of COVID-19 on our clinical trials, operations, vendors, suppliers and employees; |
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risks related to our ability to obtain the capital necessary to fund our operations; |
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risks relating to the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; |
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risks related to our ability to obtain adequate financing in the future through product licensing, public or private equity or debt financing or otherwise; |
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general business conditions, regulatory environment, competition and market for our products; |
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business abilities and judgment of personnel, and the availability of qualified personnel; and |
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risks related to the potentially significant, unexpected costs and liabilities arising with respect to the historic Sevion business and operations. |
3
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)
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September 30, 2020 |
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December 31, 2019 |
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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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Marketable securities |
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— |
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Restricted cash |
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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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Operating lease right-of-use asset |
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Other long-term assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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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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Current portion of long-term debt |
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Advances from collaboration partners |
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Current portion of operating lease liability |
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Taxes payable |
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Total current liabilities |
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Long-term debt |
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Operating lease liability |
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Total liabilities |
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Commitments and contingencies |
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Stockholders’ equity: |
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Preferred stock, $ shares issued or outstanding as of September 30, 2020 and December 31, 2019 |
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Common stock, $ December 31, 2019, respectively |
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Common stock in treasury, at cost, September 30, 2020 and December 31, 2019, respectively |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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— |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements
4
ELOXX PHARMACEUTICALS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(in thousands, except share and per share data)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2020 |
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2019 |
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2020 |
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2019 |
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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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Restructuring charges |
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— |
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— |
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— |
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Total operating expenses |
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Loss from operations |
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Other expense, net |
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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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Weighted average number of shares of common stock used in computing net loss per share, basic and diluted |
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Comprehensive loss: |
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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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Other comprehensive income (loss): |
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Change in unrealized gain (loss) on available-for-sale securities |
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( |
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( |
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( |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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$ |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements
5
ELOXX PHARMACEUTICALS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
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Nine Months Ended September 30, |
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2020 |
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2019 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
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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 |
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Depreciation |
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Amortization of operating lease right-of-use asset |
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Amortization of debt discount |
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Amortization, net, of premiums and discounts on investments |
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( |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other assets |
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( |
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( |
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Advances from collaboration partners |
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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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( |
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Operating lease liabilities |
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( |
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( |
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Taxes payable |
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( |
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( |
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Net cash used in operating activities |
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( |
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( |
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Cash flows from investing activities: |
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Purchases of marketable securities |
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— |
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( |
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Proceeds from maturities of marketable securities |
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Purchase of property and equipment |
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— |
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( |
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Cash received (paid) for long-term deposits |
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( |
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Net cash provided by (used in) investing activities |
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( |
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Cash flows from financing activities: |
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Proceeds from underwritten public offering, net of issuance costs |
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— |
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Proceeds from debt financing obligation |
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Payment of debt issuance costs |
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— |
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( |
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Repayment of term loan principal |
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( |
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— |
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Proceeds from exercises of stock options |
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Proceeds from sale of common stock under at-the-market sales agreement |
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— |
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Payment for settlement of taxes upon vesting of restricted stock units |
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( |
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( |
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Proceeds from advances from collaboration partners |
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— |
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Net cash (used in) provided by financing activities |
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( |
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Increase (decrease) in cash, cash equivalents and restricted cash |
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( |
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Cash, cash equivalents and restricted cash at the beginning of the period |
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Cash, cash equivalents and restricted cash at the end of the period |
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$ |
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$ |
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Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Total cash, cash equivalents and restricted cash |
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$ |
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$ |
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Supplemental disclosure of cash flow activities: |
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Cash paid for interest |
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$ |
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$ |
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Cash paid for income taxes |
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$ |
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$ |
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Supplemental disclosure of non-cash financing activities: |
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Non-cash acquisition of treasury stock |
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$ |
— |
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$ |
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Non-cash issuance of common stock upon exercise of warrants |
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$ |
— |
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$ |
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Fair value of warrants issued in connection with long-term debt |
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$ |
— |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements
6
ELOXX PHARMACEUTICALS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
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Common stock |
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Treasury stock |
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Shares |
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Amount |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Shares |
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Amount |
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Accumulated deficit |
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Total stockholders' equity |
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Balance at December 31, 2019 |
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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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Exercise of stock options |
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— |
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— |
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— |
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— |
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— |
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Vesting of restricted stock units |
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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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Change in unrealized gain (loss) on investments |
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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 at March 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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Vesting of restricted stock units |
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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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Change in unrealized gain (loss) on investments |
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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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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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( |
) |
Balance at June 30, 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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Exercise of stock options |
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— |
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|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Vesting of restricted stock units |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Change in unrealized gain (loss) on investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2020 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
— |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
7
ELOXX PHARMACEUTICALS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
|
|
Common stock |
|
|
|
|
|
|
|
|
|
|
Treasury stock |
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Shares |
|
|
Amount |
|
|
Additional paid-in capital |
|
|
Accumulated other comprehensive income |
|
|
Shares |
|
|
Amount |
|
|
Accumulated deficit |
|
|
Total stockholders' equity |
|
||||||||
Balance at December 31, 2018 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
— |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Exercise of stock options |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Issuance of common stock under at-the-market sales agreement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Issuance of warrants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Vesting of restricted stock units |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|