Form 10-Q - Quarterly report [Sections 13 or 15(d)]
07 8월 2024 - 5:09AM
Edgar (US Regulatory)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
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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 June 30, 2024
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: 001-40672
RANI THERAPEUTICS HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware |
86-3114789 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer
Identification No.) |
2051 Ringwood Avenue San Jose, California |
95131 |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (408) 457-3700
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Name of each exchange on which registered |
Class A common stock, par value $0.0001 per share |
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RANI |
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The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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.
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Large accelerated filer |
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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 ☐ No ☒
As of August 2, 2024, the registrant had 29,290,064 shares of Class A common stock, $0.0001 par value per share, outstanding, 24,116,444 shares of Class B common stock, $0.0001 par value per share, outstanding and no shares of Class C common stock, $0.0001 par value per share, outstanding. Certain holders of units of the registrant’s consolidated subsidiary, Rani Therapeutics, LLC, who do not hold shares of the registrant’s Class B common stock can exchange their units of Rani Therapeutics, LLC for 1,261,690 shares of the registrant’s Class A common stock.
Unless otherwise stated or the context otherwise requires, the terms “we,” “us,” and “our,” and similar references refer to Rani Therapeutics Holdings, Inc. (“Rani Holdings”) and its consolidated subsidiary, Rani Therapeutics, LLC (“Rani LLC”).
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations," contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and consolidated financial position, business strategy, product candidates, planned preclinical studies and clinical trials, results of clinical trials, research and development costs, manufacturing costs, regulatory approvals, development and advancement of our oral delivery technology, timing and likelihood of success, potential partnering activities as well as plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that are in some cases beyond our control and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “believe,” “estimate,” “predict,” “potential,” “seek,” “aim,” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
•the progress and focus of our current and future clinical trials in the United States and abroad, and the reporting of data from those trials;
•our ability to advance product candidates into and successfully complete clinical trials;
•the beneficial characteristics, safety, efficacy, and therapeutic effects of our product candidates;
•our potential and ability to successfully manufacture and supply our product candidates for clinical trials and for commercial use, if approved;
•our ability to complete development of the RaniPill HC or any redesign and conduct additional preclinical and clinical studies of the RaniPill HC or any future design of the RaniPill capsule to accommodate target payloads that are larger than the payload capacity of the RaniPill GO capsule used to date for clinical studies of our product candidates;
•our ability to further develop and expand our platform technology;
•our ability to utilize our technology platform to generate and advance additional product candidates;
•the accuracy of our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing;
•our financial performance;
•our ability to continue as a going concern;
•our plans relating to commercializing our product candidates, if approved;
•our ability to selectively enter into strategic partnership and the expected potential benefits thereof;
•the implementation of our strategic plans for our business and product candidates;
•our ability to continue to scale and optimize our manufacturing processes by expanding our use of automation;
•our estimates of the number of patients in the United States who suffer from the indications we target and the number of patients that will enroll in our clinical trials;
•the size of the market opportunity for our product candidates in each of the indications we target;
•our ability to continue to innovate and expand our intellectual property by developing novel formulations and new applications of the RaniPill capsule;
•our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available;
•the scope of protection we are able to establish and maintain for intellectual property rights, including our technology platform and product candidates;
•the sufficiency of our existing cash and cash equivalents to fund our future operating expenses and capital expenditure requirements;
•our ability to realize savings from any restructuring plans or cost-containment measures we propose to implement;
•developments relating to our competitors and our industry, including competing product candidates and therapies;
•our realization of any benefit from our organizational structure, taking into account our obligations under the Tax Receivable Agreement (defined herein) and the impact of any payments required to be made thereunder on our liquidity and financial condition; and
•our expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
These forward-looking statements are subject to a number of risks, uncertainties, and assumptions described in the section titled “Risk Factors” and elsewhere in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 20, 2024. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, or otherwise.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.
RANI THERAPEUTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
(Unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
4,514 |
|
|
$ |
5,864 |
|
Marketable securities |
|
|
26,387 |
|
|
|
42,675 |
|
Prepaid expenses and other current assets |
|
|
1,133 |
|
|
|
2,308 |
|
Total current assets |
|
|
32,034 |
|
|
|
50,847 |
|
Property and equipment, net |
|
|
5,695 |
|
|
|
6,105 |
|
Operating lease right-of-use asset |
|
|
5,751 |
|
|
|
718 |
|
Other assets |
|
|
246 |
|
|
|
246 |
|
Total assets |
|
$ |
43,726 |
|
|
$ |
57,916 |
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
506 |
|
|
$ |
648 |
|
Accrued expenses and other current liabilities |
|
|
2,422 |
|
|
|
1,726 |
|
Current portion of long-term debt |
|
|
12,290 |
|
|
|
4,897 |
|
Current portion of operating lease liability |
|
|
1,363 |
|
|
|
718 |
|
Total current liabilities |
|
|
16,581 |
|
|
|
7,989 |
|
Long-term debt, less current portion |
|
|
17,207 |
|
|
|
24,484 |
|
Operating lease liability, less current portion |
|
|
4,388 |
|
|
|
— |
|
Total liabilities |
|
|
38,176 |
|
|
|
32,473 |
|
Commitments and contingencies (Note 11) |
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
Preferred stock, $0.0001 par value - 20,000 shares authorized; none issued and outstanding as of June 30, 2024 and December 31, 2023 |
|
|
— |
|
|
|
— |
|
Class A common stock, $0.0001 par value - 800,000 shares authorized; 26,489 and 26,036 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively |
|
|
3 |
|
|
|
3 |
|
Class B common stock, $0.0001 par value - 40,000 shares authorized; 24,116 issued and outstanding as of June 30, 2024 and December 31, 2023 |
|
|
2 |
|
|
|
2 |
|
Class C common stock, $0.0001 par value - 20,000 shares authorized; none issued and outstanding as of June 30, 2024 and December 31, 2023 |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
90,012 |
|
|
|
85,762 |
|
Accumulated other comprehensive loss |
|
|
(5 |
) |
|
|
(12 |
) |
Accumulated deficit |
|
|
(87,177 |
) |
|
|
(72,889 |
) |
Total stockholders' equity attributable to Rani Therapeutics Holdings, Inc. |
|
|
2,835 |
|
|
|
12,866 |
|
Non-controlling interest |
|
|
2,715 |
|
|
|
12,577 |
|
Total stockholders' equity |
|
|
5,550 |
|
|
|
25,443 |
|
Total liabilities and stockholders' equity |
|
$ |
43,726 |
|
|
$ |
57,916 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
RANI THERAPEUTICS HOLDINGS, INC.
CONDENSED Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
6,115 |
|
|
$ |
11,086 |
|
|
$ |
13,700 |
|
|
$ |
20,798 |
|
General and administrative |
|
|
6,409 |
|
|
|
7,208 |
|
|
|
12,857 |
|
|
|
14,012 |
|
Total operating expenses |
|
$ |
12,524 |
|
|
$ |
18,294 |
|
|
$ |
26,557 |
|
|
$ |
34,810 |
|
Loss from operations |
|
|
(12,524 |
) |
|
|
(18,294 |
) |
|
|
(26,557 |
) |
|
|
(34,810 |
) |
Other income (expense), net |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and other, net |
|
|
439 |
|
|
|
896 |
|
|
|
988 |
|
|
|
1,787 |
|
Interest expense and other, net |
|
|
(1,276 |
) |
|
|
(1,266 |
) |
|
|
(2,571 |
) |
|
|
(2,473 |
) |
Net loss |
|
$ |
(13,361 |
) |
|
$ |
(18,664 |
) |
|
$ |
(28,140 |
) |
|
$ |
(35,496 |
) |
Net loss attributable to non-controlling interest |
|
|
(6,556 |
) |
|
|
(9,361 |
) |
|
|
(13,852 |
) |
|
|
(17,821 |
) |
Net loss attributable to Rani Therapeutics Holdings, Inc. |
|
$ |
(6,805 |
) |
|
$ |
(9,303 |
) |
|
$ |
(14,288 |
) |
|
$ |
(17,675 |
) |
Net loss per Class A common share attributable to Rani Therapeutics Holdings, Inc., basic and diluted |
|
$ |
(0.26 |
) |
|
$ |
(0.37 |
) |
|
$ |
(0.55 |
) |
|
$ |
(0.70 |
) |
Weighted-average Class A common shares outstanding—basic and diluted |
|
|
26,324 |
|
|
|
25,345 |
|
|
|
26,179 |
|
|
|
25,293 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
RANI THERAPEUTICS HOLDINGS, INC.
CONDENSED Consolidated Statements of Comprehensive Loss
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Net loss |
|
$ |
(13,361 |
) |
|
$ |
(18,664 |
) |
|
$ |
(28,140 |
) |
|
$ |
(35,496 |
) |
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized gain (loss) on marketable securities |
|
|
12 |
|
|
|
(107 |
) |
|
|
13 |
|
|
|
19 |
|
Comprehensive loss |
|
$ |
(13,349 |
) |
|
$ |
(18,771 |
) |
|
$ |
(28,127 |
) |
|
$ |
(35,477 |
) |
Comprehensive loss attributable to non-controlling interest |
|
|
(6,550 |
) |
|
|
(9,415 |
) |
|
|
(13,845 |
) |
|
|
(17,811 |
) |
Comprehensive loss attributable to Rani Therapeutics Holdings, Inc. |
|
$ |
(6,799 |
) |
|
$ |
(9,356 |
) |
|
$ |
(14,282 |
) |
|
$ |
(17,666 |
) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
RANI THERAPEUTICS HOLDINGS, INC.
CONDENSED Consolidated Statements of Changes in STOCKHOLDERS’ Equity
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Common Stock |
|
|
Class B Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Additional Paid In Capital |
|
|
Accumulated Other Comprehensive Loss |
|
|
Accumulated Deficit |
|
|
Non-Controlling Interest |
|
|
Total Stockholders' Equity |
|
Balance at December 31, 2023 |
|
|
26,036 |
|
|
$ |
3 |
|
|
|
24,116 |
|
|
$ |
2 |
|
|
$ |
85,762 |
|
|
$ |
(12 |
) |
|
$ |
(72,889 |
) |
|
$ |
12,577 |
|
|
$ |
25,443 |
|
Issuance of common stock under employee equity plans |
|
|
175 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Effect of exchanges of non-corresponding Class A Units of Rani LLC |
|
|
83 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
45 |
|
|
|
— |
|
|
|
— |
|
|
|
(45 |
) |
|
|
— |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,969 |
|
|
|
— |
|
|
|
— |
|
|
|
1,901 |
|
|
|
3,870 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,483 |
) |
|
|
(7,296 |
) |
|
|
(14,779 |
) |
Other comprehensive gain |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Balance at March 31, 2024 |
|
|
26,294 |
|
|
$ |
3 |
|
|
|
24,116 |
|
|
$ |
2 |
|
|
$ |
87,776 |
|
|
$ |
(11 |
) |
|
$ |
(80,372 |
) |
|
$ |
7,137 |
|
|
$ |
14,535 |
|
Issuance of common stock under employee stock purchase plan, net of shares withheld for tax settlement |
|
|
110 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
221 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
221 |
|
Issuance of common stock under employee equity plans, net of shares withheld for tax settlement |
|
|
85 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14 |
|
Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(108 |
) |
|
|
— |
|
|
|
— |
|
|
|
108 |
|
|
|
— |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,109 |
|
|
|
— |
|
|
|
— |
|
|
|
2,020 |
|
|
|
4,129 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,805 |
) |
|
|
(6,556 |
) |
|
|
(13,361 |
) |
Other comprehensive gain |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
|
|
6 |
|
|
|
12 |
|
Balance at June 30, 2024 |
|
|
26,489 |
|
|
$ |
3 |
|
|
|
24,116 |
|
|
$ |
2 |
|
|
$ |
90,012 |
|
|
$ |
(5 |
) |
|
$ |
(87,177 |
) |
|
$ |
2,715 |
|
|
$ |
5,550 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Common Stock |
|
|
Class B Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Additional Paid In Capital |
|
|
Accumulated Other Comprehensive Loss |
|
|
Accumulated Deficit |
|
|
Non-Controlling Interest |
|
|
Total Stockholders' Equity |
|
Balance at December 31, 2022 |
|
|
25,295 |
|
|
$ |
3 |
|
|
|
24,116 |
|
|
$ |
2 |
|
|
$ |
75,842 |
|
|
$ |
(73 |
) |
|
$ |
(38,919 |
) |
|
$ |
37,149 |
|
|
$ |
74,004 |
|
Issuance of common stock under employee equity plans, net of shares withheld for tax settlement |
|
|
81 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(124 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(124 |
) |
Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
98 |
|
|
|
— |
|
|
|
— |
|
|
|
(98 |
) |
|
|
— |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,202 |
|
|
|
— |
|
|
|
— |
|
|
|
2,213 |
|
|
|
4,415 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8,372 |
) |
|
|
(8,460 |
) |
|
|
(16,832 |
) |
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
63 |
|
|
|
— |
|
|
|
63 |
|
|
|
126 |
|
Balance at March 31, 2023 |
|
|
25,376 |
|
|
$ |
3 |
|
|
|
24,116 |
|
|
$ |
2 |
|
|
$ |
78,018 |
|
|
$ |
(10 |
) |
|
$ |
(47,291 |
) |
|
$ |
30,867 |
|
|
$ |
61,589 |
|
Issuance of common stock under employee stock purchase plan |
|
|
63 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
219 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
219 |
|
Issuance of common stock under employee equity plans, net of shares withheld for tax settlement |
|
|
78 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9 |
) |
Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(54 |
) |
|
|
— |
|
|
|
— |
|
|
|
54 |
|
|
|
— |
|
Equity-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,572 |
|
|
|
— |
|
|
|
— |
|
|
|
2,569 |
|
|
|
5,141 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9,303 |
) |
|
|
(9,361 |
) |
|
|
(18,664 |
) |
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(53 |
) |
|
|
— |
|
|
|
(54 |
) |
|
|
(107 |
) |
Balance at June 30, 2023 |
|
|
25,517 |
|
|
$ |
3 |
|
|
|
24,116 |
|
|
$ |
2 |
|
|
$ |
80,746 |
|
|
$ |
(63 |
) |
|
$ |
(56,594 |
) |
|
$ |
24,075 |
|
|
$ |
48,169 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
RANI THERAPEUTICS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
2023 |
|
Cash flows from operating activities |
|
|
|
|
|
|
Net loss |
|
$ |
(28,140 |
) |
|
$ |
(35,496 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Stock-based compensation expense |
|
|
7,999 |
|
|
|
9,556 |
|
Depreciation and amortization |
|
|
503 |
|
|
|
377 |
|
Non-cash operating lease expense |
|
|
477 |
|
|
|
520 |
|
Amortization of debt discount and issuance costs |
|
|
116 |
|
|
|
116 |
|
Net accretion and amortization of investments in marketable securities |
|
|
(630 |
) |
|
|
(1,242 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
1,175 |
|
|
|
860 |
|
Accounts payable |
|
|
(142 |
) |
|
|
(332 |
) |
Accrued expenses and other current liabilities |
|
|
688 |
|
|
|
1,707 |
|
Operating lease liabilities |
|
|
(477 |
) |
|
|
(521 |
) |
Net cash used in operating activities |
|
|
(18,431 |
) |
|
|
(24,455 |
) |
Cash flows from investing activities |
|
|
|
|
|
|
Proceeds from maturities of marketable securities |
|
|
38,550 |
|
|
|
58,000 |
|
Purchases of marketable securities |
|
|
(21,619 |
) |
|
|
(52,505 |
) |
Purchases of property and equipment |
|
|
(112 |
) |
|
|
(583 |
) |
Net cash provided by investing activities |
|
|
16,819 |
|
|
|
4,912 |
|
Cash flows from financing activities |
|
|
|
|
|
|
Issuance of common stock under employee stock purchase plan |
|
|
221 |
|
|
|
219 |
|
Exercise of options |
|
|
38 |
|
|
|
— |
|
Proceeds from employee stock purchase plan |
|
|
27 |
|
|
|
2 |
|
Tax withholdings paid on behalf of employees for net share settlement |
|
|
(24 |
) |
|
|
(133 |
) |
Net cash provided by financing activities |
|
|
262 |
|
|
|
88 |
|
Net decrease in cash, cash equivalents and restricted cash equivalents |
|
|
(1,350 |
) |
|
|
(19,455 |
) |
Cash, cash equivalents and restricted cash equivalents, beginning of period |
|
|
6,364 |
|
|
|
27,507 |
|
Cash, cash equivalents and restricted cash equivalents, end of period |
|
$ |
5,014 |
|
|
$ |
8,052 |
|
Supplemental disclosures of non-cash investing and financing activities |
|
|
|
|
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities |
|
$ |
4,731 |
|
|
$ |
— |
|
Remeasurement of operating lease right-of-use assets |
|
$ |
589 |
|
|
$ |
578 |
|
Exchanges of non-corresponding Class A Units of Rani LLC |
|
$ |
298 |
|
|
$ |
— |
|
Interest income receivable included in prepaid expenses and other current assets |
|
$ |
51 |
|
|
$ |
186 |
|
Property and equipment purchases included in accounts payable and accrued expenses and other current liabilities |
|
$ |
— |
|
|
$ |
38 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
RANI THERAPEUTICS HOLDINGS, INC.
Notes to THE UNAUDITED CONDENSED Consolidated Financial Statements
1. Organization and Nature of Business
Description of Business
Rani Therapeutics Holdings, Inc. (“Rani Holdings”, and together with its consolidated subsidiary, the “Company”) is a clinical stage biotherapeutics company focusing on advancing technologies to enable the administration of biologics and drugs orally, to provide patients, physicians, and healthcare systems with a convenient alternative to painful injections. The Company’s technology comprises a drug-agnostic oral delivery platform, the RaniPill capsule, which is designed to deliver a wide variety of drug substances, including antibodies, proteins, peptides, and oligonucleotides. The Company is advancing a portfolio of oral therapeutics using the RaniPill capsule. The Company is headquartered in San Jose, California and operates in one segment.
Organization
Rani Holdings was formed as a Delaware corporation in April 2021 for the purpose of facilitating an initial public offering (“IPO”) of its Class A common stock. In connection with the IPO, the Company effected a series of organizational transactions (the “Organizational Transactions”), which, together with the IPO, were completed in August 2021, that resulted in the Company becoming the ultimate parent company of Rani Therapeutics, LLC (“Rani LLC”). The Company operates its business through Rani LLC.
As part of the Organizational Transactions, the Company entered into a Registration Rights Agreement with certain individuals and entities that continued to hold economic nonvoting Class A units of Rani LLC (“Class A Units”), collectively referred to herein as the “Continuing LLC Owners”. The Continuing LLC Owners are entitled to exchange, subject to the terms of the Rani LLC Agreement, the Class A Units they hold in Rani LLC, together with the shares they hold of the Company Class B common stock (together referred to as a "Paired Interest"), in return for shares of the Company’s Class A common stock on a one-for-one basis provided that, at the Company’s election, the Company has the ability to effect a direct exchange of such Class A common stock or make a cash payment equal to a volume weighted average market price of one share of Class A common stock for each Paired Interest redeemed. Any shares of Class B common stock will be canceled on a one-for-one basis if, at the election of the Continuing LLC Owners, the Company redeems or exchanges such Paired Interest pursuant to the terms of the Rani LLC Agreement. As of June 30, 2024, certain individuals who continue to own interests in Rani LLC but do not hold shares of the Company’s Class B common stock (“non-corresponding Class A Units”) have the ability to exchange their non-corresponding Class A Units of Rani LLC for 1,261,690 shares of the Company’s Class A common stock.
Liquidity
The Company has incurred recurring losses since its inception, including net losses of $28.1 million for the six months ended June 30, 2024. As of June 30, 2024, the Company had an accumulated deficit of $87.2 million and for the six months ended June 30, 2024, had negative cash flows from operations of $18.4 million. As of June 30, 2024, cash, cash equivalents and marketable securities totaled $30.9 million. Based on its available cash resources and current operating plan, there is substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year after the date that its financial statements for the six months ended June 30, 2024 are issued. The Company’s existing capital resources, including the net proceeds from our IPO and term loans (the “Loans”) under a loan and security agreement and related supplement (the “Loan Agreement”) with Avenue Venture Opportunities Fund, L.P (the “Lender”) entered into in August 2022, will not be sufficient to enable it to initiate any pivotal clinical trials. The Company will need to raise substantial additional funds in the future in order to complete the development of the RaniPill platform, to complete the clinical development of its product candidates and seek regulatory approval thereof, to expand its manufacturing capabilities, to further develop the RaniPill HC device and to commercialize any of its product candidates.
The Loan Agreement provides for Loans in an aggregate principal amount up to $45.0 million. A Loan of $30.0 million was committed at closing, with $15.0 million funded immediately and $15.0 million available to be drawn between October 1, 2022 and December 31, 2022, which was drawn in December 2022. The remaining $15.0 million of Loans is uncommitted and is subject to certain conditions, which may not occur, and approval by the Lender.
In August 2022, the Company entered into a Controlled Equity Sales Agreement (the "Sales Agreement") with Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC (collectively the "Agents"), pursuant to which the Company may offer and sell from time to time through the Agents up to $150 million of shares of its Class A common stock, in such share amounts as the Company may specify by notice to the Agents, in accordance with the terms and conditions set forth in the Sales Agreement. The potential proceeds from the Sales Agreement are expected to be used for general corporate purposes. As of June 30, 2024, the Company has no sales under the Sales Agreement.
The Company expects to continue to generate operating losses and negative operating cash flows for the foreseeable future as it continues to develop the RaniPill capsule. The Company expects to finance its future operations with its existing cash and through strategic financing opportunities that could include, but are not limited to, future offerings of its equity, such as “at the market offerings” as defined in Rule 415(a)(4) under the Securities Act, collaboration or licensing agreements, or the incurrence of debt. However, there is no guarantee that any of these strategic or financing opportunities will be executed or realized on favorable terms, if at all. As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern.
Subsequent to June 30, 2024, the Company completed an equity offering with the aggregate gross proceeds of approximately $10.0 million, before deducting placement agent fees and other estimated offering expenses payable by the Company, and excluding potential proceeds, if any, from the exercise of certain warrants issued in the offering (Note 15). The proceeds received do not alleviate substantial doubt about the Company’s ability to continue as a going concern.
2. Summary of Significant Accounting Policies
Basis of Presentation
These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain prior period amounts have been reclassified to be consistent with current period presentation.
The Company operates and controls all of the business and affairs of Rani LLC and, through Rani LLC conducts its business. Because the Company manages and operates the business and controls the strategic decisions and day-to-day operations of Rani LLC and also has a substantial financial interest in Rani LLC, the Company consolidates the financial results of Rani LLC, and a portion of its net loss is allocated to the non-controlling interests in Rani LLC held by the Continuing LLC Owners. All intercompany accounts and transactions have been eliminated in consolidation.
Unaudited Interim Condensed Consolidated Financial Statements
The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and pursuant to Form 10-Q of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements include all adjustments necessary to fairly state the financial position and the results of the Company's operations and cash flows for interim periods in accordance with U.S. GAAP. All such adjustments are of a normal, recurring nature. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or for any future period.
The consolidated balance sheet as of December 31, 2023 included herein was derived from the audited consolidated financial statements as of that date. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the 2023 consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 20, 2024.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the Company’s condensed consolidated financial statements and accompanying notes. The Company evaluates its estimates on an ongoing basis. The Company bases its estimates on its historical experience and also on assumptions that we believe are reasonable; however, actual results may differ materially and adversely from these estimates.
Significant Accounting Policies
A description of the Company’s significant accounting policies is included in the audited consolidated financial statements within its Annual Report on Form 10-K for the year ended December 31, 2023. Except as noted below, there have been no material changes in the Company’s significant accounting policies during the six months ended June 30, 2024.
Cash, Cash Equivalents and Restricted Cash Equivalents
The following table provides a reconciliation of cash and cash equivalents and restricted cash equivalents reported as a component of prepaid expenses and other current assets on the condensed consolidated balance sheet which, in aggregate, represents the amount reported in the condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
2023 |
|
End of Period: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
4,514 |
|
|
$ |
7,552 |
|
Restricted cash equivalents |
|
|
500 |
|
|
|
500 |
|
Total cash, cash equivalents and restricted cash equivalents |
|
$ |
5,014 |
|
|
$ |
8,052 |
|
Collaborative Arrangements
The Company assesses whether its collaboration agreements are subject to ASC Topic 808: Collaborative Arrangements based on whether they involve joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards. To the extent that the arrangement falls within the scope of Topic 808 and the Company concludes that its collaboration partner is not a customer, the Company presents amounts due from its collaboration partner as a reduction of research and development expense based on the nature of such payments.
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The amendments in ASU 2023-07 are intended to improve reportable segment disclosure, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The amendments in this ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. The Company is evaluating the impact of this guidance on its financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires enhanced annual disclosures regarding the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 and may be adopted on a prospective or retrospective basis. Early adoption is permitted. The Company is evaluating the impact of this guidance on its financial statements and related disclosures.
3. Cash Equivalents, Restricted Cash Equivalents and Marketable Securities
The following tables summarizes the amortized cost and fair value of the Company's cash equivalents, restricted cash equivalents and marketable securities by major investment category (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2024 |
|
|
|
Amortized Cost |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Estimated Fair Value |
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
$ |
3,276 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3,276 |
|
Total cash equivalents |
|
|
3,276 |
|
|
|
— |
|
|
|
— |
|
|
|
3,276 |
|
Restricted cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
|
500 |
|
|
|
— |
|
|
|
— |
|
|
|
500 |
|
Total cash equivalents and restricted cash equivalents |
|
|
3,776 |
|
|
|
— |
|
|
|
— |
|
|
|
3,776 |
|
Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasuries and agencies |
|
|
24,210 |
|
|
|
— |
|
|
|
(12 |
) |
|
|
24,198 |
|
Corporate debt securities |
|
|
992 |
|
|
|
— |
|
|
|
(2 |
) |
|
|
990 |
|
Commercial paper |
|
|
1,200 |
|
|
|
— |
|
|
|
(1 |
) |
|
|
1,199 |
|
Total marketable securities |
|
|
26,402 |
|
|
|
— |
|
|
|
(15 |
) |
|
|
26,387 |
|
Total cash equivalents, restricted cash equivalents and marketable securities |
|
$ |
30,178 |
|
|
$ |
— |
|
|
$ |
|