UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
|
The |
||
Redeemable warrants, each exercisable for a 1/35th share of common stock at an exercise price of $402.50 per share |
|
REVBW |
|
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.
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 |
|
☐ |
|
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
As of August 7, 2023, the registrant had
Table of Contents
|
|
Page |
|
|
|
PART I. |
1 |
|
Item 1. |
1 |
|
|
1 |
|
|
2 |
|
|
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) |
3 |
|
4 |
|
|
5 |
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 |
Item 3. |
27 |
|
Item 4. |
28 |
|
|
|
|
PART II. |
29 |
|
|
|
|
Item 1. |
29 |
|
Item 1A. |
29 |
|
Item 2. |
29 |
|
Item 3. |
29 |
|
Item 4. |
29 |
|
Item 5. |
29 |
|
Item 6. |
30 |
|
|
31 |
|
i
PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
REVELATION BIOSCIENCES, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
June 30, |
|
|
December 31, |
|
||
ASSETS |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Deferred offering costs |
|
|
— |
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Property and equipment, net |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued expenses |
|
|
|
|
|
|
||
Deferred underwriting commissions |
|
|
|
|
|
|
||
Warrant liability |
|
|
|
|
|
— |
|
|
Total current liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
(Note 4) |
|
|
|
|
|
|
||
Stockholders’ equity: |
|
|
|
|
|
|
||
Series A Preferred Stock, $ |
|
|
|
|
|
|
||
Common Stock, $ |
|
|
|
|
|
|
||
Additional paid-in-capital |
|
|
|
|
|
|
||
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
Total stockholders’ equity |
|
|
|
|
|
|
||
Total liabilities and stockholders’ equity |
|
$ |
|
|
$ |
|
||
See accompanying notes to the condensed consolidated financial statements.
1
REVELATION BIOSCIENCES, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss from operations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in fair value of warrant liability |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Total other income (expense), net |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Net (loss) income |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) earnings per share, basic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Weighted-average shares used to compute net (loss) earnings per share, basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) earnings per share, diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Weighted-average shares used to compute net (loss) earnings per share, diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
See accompanying notes to the condensed consolidated financial statements.
2
REVELATION BIOSCIENCES, INC.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
(Unaudited)
|
|
Series A |
|
|
Common Stock |
|
|
Additional |
|
|
Accumulated |
|
|
Total |
|
|||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
(Deficit) |
|
|||||||
Balance as of December 31, 2021 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|||
Issuance of common stock in connection with the Business Combination, net |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Issuance of common stock for fees in connection with the Business Combination |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Proceeds from the PIPE Investment, net |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Rollover Warrant exercise |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Repurchase for the Forward Share Purchase Agreement exercise |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Class A Pre-Funded Warrants exercise |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|||
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance as of March 31, 2022 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|||
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance as of June 30, 2022 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balance as of December 31, 2022 |
|
|
|
|
$ |
— |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Redemption of Series A Preferred Stock |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Issuance of common stock from the February 2023 Public Offering |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Class C Pre-Funded Warrants exercise |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|||
Alternative cashless exercise of Class C Common Stock Warrants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Balance as of March 31, 2023 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Class C Pre-Funded Warrants exercise |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|||
Alternative cashless exercise of Class C Common Stock Warrants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
RSU awards issued |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
||
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance as of June 30, 2023 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
See accompanying notes to the condensed consolidated financial statements.
3
REVELATION BIOSCIENCES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
Six Months Ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
|
|
|
||
Stock-based compensation expense |
|
|
|
|
|
|
||
Depreciation expense |
|
|
|
|
|
|
||
Non-cash lease expense |
|
|
|
|
|
|
||
Change in fair value of warrant liability |
|
|
( |
) |
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
( |
) |
|
|
|
|
Deferred offering costs |
|
|
|
|
|
|
||
Accounts payable |
|
|
|
|
|
( |
) |
|
Accrued expenses |
|
|
( |
) |
|
|
( |
) |
Operating lease liability |
|
|
|
|
|
( |
) |
|
Accrued interest on Promissory Notes Payable & Convertible Note |
|
|
|
|
|
|
||
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Proceeds from the Convertible Note |
|
|
|
|
|
|
||
Repayment of the Convertible Note |
|
|
|
|
|
( |
) |
|
Proceeds from the Business Combination, net |
|
|
|
|
|
|
||
Proceeds from the PIPE Investment, net |
|
|
|
|
|
|
||
Proceeds from Rollover Warrant exercise |
|
|
|
|
|
|
||
Repurchase for the Forward Share Purchase Agreement exercise |
|
|
|
|
|
( |
) |
|
Repayments of Promissory Notes Payable, including interest |
|
|
|
|
|
( |
) |
|
Redemption of Series A Preferred Stock |
|
|
( |
) |
|
|
|
|
Proceeds from the February 2023 Public Offering, net |
|
|
|
|
|
|
||
Proceeds from Pre-Funded Warrants exercise |
|
|
|
|
|
|
||
Net cash provided by financing activities |
|
|
|
|
|
|
||
Net increase in cash and cash equivalents |
|
|
|
|
|
|
||
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental disclosure of non-cash investing and financing activities: |
|
|
|
|
|
|
||
Deferred offering costs included in accounts payable and accrued expenses |
|
$ |
( |
) |
|
$ |
|
|
Fair Value of Class C Common Stock Warrants in connection with the February 2023 Public Offering |
|
$ |
|
|
$ |
|
||
Alternative cashless exercise of Class C Common Stock Warrants |
|
$ |
|
|
$ |
|
||
Current liabilities assumed in the Business Combination |
|
$ |
|
|
$ |
|
||
Deferred underwriting commissions assumed in the Business Combination |
|
$ |
|
|
$ |
|
||
Equity Issuance for fees in connection with the Business Combination |
|
$ |
|
|
$ |
|
||
Issuance of Class A Common Stock Warrants in connection with the PIPE Investment |
|
$ |
|
|
$ |
|
||
Issuance of Class A Placement Agent Common Stock Warrants in connection with the PIPE Investment |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
See accompanying notes to the condensed consolidated financial statements.
4
REVELATION BIOSCIENCES, INC.
Notes to the Condensed Consolidated Financial Statements
1. Organization and Basis of Presentation
Revelation Biosciences, Inc. (collectively with its wholly-owned subsidiaries, the “Company” or “Revelation”), formerly known as Petra Acquisition, Inc. (“Petra”), was incorporated in Delaware on November 20, 2019. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. On August 29, 2021 Petra and Old Revelation signed an agreement and plan of merger (the “Business Combination Agreement”). On January 10, 2022 (the “Closing Date”) the Company consummated its business combination, with Revelation Biosciences Sub, Inc. (“Old Revelation” or “Revelation Sub”), the Company's wholly owned subsidiary (the “Business Combination”). Since the Business Combination, the Company is a clinical-stage biopharmaceutical company and has been focused on the development and commercialization of immunologic therapeutics and diagnostics.
Business Combination
The Business Combination was accounted for as a reverse recapitalization with Revelation Sub as the accounting acquirer and Petra as the acquired company for accounting purposes. Accordingly, all historical financial information presented in the consolidated financial statements represents the accounts of Revelation Sub as if Revelation Sub is the predecessor to the Company. The common stock and net loss per share, prior to the Merger, have been retroactively restated as common stock and net loss per share reflecting the exchange ratio established in the Business Combination (the “Common Stock Exchange Ratio”).
Petra’s Common Stock, Public Warrants and Units were historically listed on the Nasdaq Capital Market under the symbols “PAIC,” “PAICW” and “PAICU,” respectively. On January 10, 2022, the Company’s units, common stock and warrants were listed on the Nasdaq Capital Market under the symbols “REVBU”, “REVB” and “REVBW”, respectively.
Unit Separation
Reverse Stock Split
On January 30, 2023, the Company filed a Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation (the “Certificate of Amendment”) reflecting the change in authorized shares of common stock from
Regaining NASDAQ Compliance
As previously reported in 2022, the Nasdaq Stock Market (“Nasdaq”) issued delist letters based on the Company’s non-compliance with the bid price and stockholders’ equity requirements for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Listing Rules 5550(a)(2) and 5550(b)(1), respectively. The Company’s compliance plan was approved by a Nasdaq hearing panel giving the Company until April 18, 2023 to regain compliance. On February 16, 2023, the Company received formal notice from Nasdaq stating that the Company’s common stock will continue to be listed and traded on Nasdaq, due to the Company having regained compliance with the minimum bid price requirement and minimum stockholders’ equity requirement for continued listing on Nasdaq, and all applicable listing standards.
5
Liquidity and Capital Resources
Going Concern
As of June 30, 2023, the Company had an accumulated deficit of $
To continue as a going concern, the Company will need, among other things, to raise additional capital resources. The Company plans to seek additional funding through public or private equity or debt financings. The Company may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, it could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect the Company’s business operations.
The unaudited consolidated financial statements for June 30, 2023, have been prepared on the basis that the Company will continue as a going concern, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability for the Company to continue as a going concern.
Basis of Presentation
The accompanying financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All inter-company transactions and balances have been eliminated in consolidation. Certain amounts previously reported in the financial statements have been reclassified to conform to the current year presentation. Such reclassifications did not affect net loss, stockholders’ equity or cash flows.
2. Summary of Significant Accounting Policies
Unaudited Interim Condensed Consolidated Financial Statements
The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements as of December 31, 2022 and for the year ended December 31, 2022 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position. The financial data and the other financial information contained in these notes to the condensed consolidated financial statements related to the three and six months ended June 30, 2023 are unaudited. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other future annual or interim period. The condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2022 included on Form 10-K, as filed with the SEC on March 30, 2023. The accompanying condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited balance sheet at December 31, 2022 contained in the above referenced Form 10-K.
Use of Estimates
The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions about future events that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of expenses. These estimates and assumptions are based on the Company’s best estimates and judgment. The Company regularly evaluates its estimates and assumptions using historical and industry experience and other factors; however, actual results could differ materially from these estimates and could have an adverse effect on the Company’s condensed consolidated financial statements.
6
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. The Company maintains its cash in checking and savings accounts. Income generated from cash held in savings accounts is recorded as interest income. The carrying value of the Company’s savings accounts is included in cash and approximates the fair value.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents. Bank deposits are held by accredited financial institutions and these deposits may at times be in excess of federally insured limits. The Company limits its credit risk associated with cash and cash equivalents by placing them with financial institutions that it believes are of high quality. The Company has not experienced any losses on its deposits of cash or cash equivalents.
Deferred Offering Costs
The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded as a reduction of the proceeds generated as a result of the offering. Should the planned equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the condensed consolidated statements of operations.
Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which is
Leases
The Company determines if an arrangement is a lease at inception. Lease right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. For operating leases with an initial term greater than 12 months, the Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of lease payments over the lease term at the commencement date. Operating lease right-of-use assets are comprised of the lease liability plus any lease payments made and excludes lease incentives. Lease terms include options to renew or terminate the lease when the Company is reasonably certain that the renewal option will be exercised or when it is reasonably certain that the termination option will not be exercised. For an operating lease, if the interest rate used to determine the present value of future lease payments is not readily determinable, the Company estimates the incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in similar economic environments. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for the development of the Company’s product candidates, REVTx-300, REVTx-100, REVTx-200, REVTx-99a/b and diagnostic product, REVDx-501. Research and development costs are charged to expense as incurred. The Company records accrued expenses for estimated preclinical, clinical study and research expenses related to the services performed but not yet invoiced pursuant to contracts with research institutions, contract research organizations, and clinical manufacturing organizations that conduct and manage preclinical studies, clinical studies, research services, and development services on the Company’s behalf. Payments for these services are based on the terms of individual agreements and payment timing may differ significantly from the period in which the services were performed. Estimates are based on factors such as the work completed, including the level of patient enrollment. The Company monitors patient enrollment levels and related activity to the extent reasonably possible and makes judgments and estimates in determining the accrued balance in each reporting period. The Company’s estimates of accrued expenses are based on the facts and circumstances known at the time. If the Company underestimates or overestimates the level of services performed or the costs of these services, actual expenses could differ from estimates. As actual costs become known, the Company adjusts accrued expenses. To date, the Company has not experienced significant changes in estimates of clinical study and development services accruals.
7
Patent Costs
Legal costs in connection with approved patents and patent applications are expensed as incurred, as recoverability of such expenditures is uncertain. These costs are recorded in general and administrative expense in the condensed consolidated statements of operations.
Stock-based Compensation
The Company recognizes compensation expense related to stock options, third-party warrants, and Restricted Stock Unit (“RSU”) awards granted, based on the estimated fair value of the stock-based awards on the date of grant. The fair value of employee stock options and third-party warrants are generally determined using the Black-Scholes option-pricing model using various inputs, including estimates of historic volatility, term, risk-free rate, and future dividends. The grant date fair value of the stock-based awards, which have graded vesting, is recognized using the straight-line method over the requisite service period of each stock-based award, which is generally the vesting period of the respective stock-based awards. The Company recognizes forfeitures as they occur.
Income Taxes
Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in the years in which those temporary differences are expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or loss in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. Interest and penalties related to unrecognized tax benefits are included within the provision of income tax. To date, there have been
Fair Value
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company’s valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company follows a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. These levels of inputs are the following:
The Company has determined that the measurement of the fair value of the Class C Common Stock Warrants (as defined in Note 7) is a Level 3 fair value measurement and uses the Monte-Carlo simulation model for valuation (see Note 12).
Warrant Liability
The Company reviews the terms of debt instruments, equity instruments, and other financing arrangements to determine whether there are embedded derivative features, including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. Additionally, in connection with the issuance of financing instruments, the Company may issue freestanding options and warrants.
The Company accounts for its common stock warrants in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). Based upon the provisions of ASC 480 and ASC 815, the Company accounts for common stock warrants as current liabilities if the warrant fails the equity classification criteria. Common stock warrants classified as liabilities are initially recorded at fair value on the grant date and remeasured at each balance sheet date with the offsetting adjustments recorded in change in fair value of warrant liabilities within the condensed consolidated statements of operations.
The Company values its common stock warrants classified as liabilities using either the Black-Scholes option pricing model or other acceptable valuation models, including the Monte-Carlo simulation model.
8
Basic and Diluted Net Earnings (Loss) per Share
Basic net earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period, without consideration of potential shares of common stock. Diluted net earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding plus potential shares of common stock. Convertible preferred stock on an as converted basis, RSU awards, warrants and stock options outstanding are considered potential shares of common stock and are included in the calculation of diluted net earnings (loss) per share using the treasury stock method when their effect is dilutive. Potential shares of common stock are excluded from the calculation of diluted net earnings (loss) per share when their effect is anti-dilutive.
For the three months ended June 30, 2023, there were
The basic and diluted weighted-average shares used to compute net earnings (loss) per share in the unaudited condensed consolidated statements of operations includes the shares issued from the reverse stock split fractional share round up.
Comprehensive Income (Loss)
The Company has no components of comprehensive income (loss) other than net income (loss). Thus, comprehensive income (loss) is the same as net income (loss) for the periods presented.
Segment Reporting
Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources in assessing performance.
The Company has
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. The Company has evaluated recently issued accounting pronouncements and does not believe any will have a material impact on the Company’s condensed consolidated financial statements or related financial statement disclosures.
3. Balance Sheet Details
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
|
|
June 30, |
|
|
December 31, |
|
||
Prepaid insurance costs |
|
$ |
|
|
$ |
— |
|
|
Other prepaid expenses & current assets |
|
|
|
|
|
|
||
Total prepaid expenses & current assets |
|
$ |
|
|
$ |
|
||
Property and Equipment, Net
Property and equipment, net consisted of the following:
|
|
June 30, |
|
|
December 31, |
|
||
Lab equipment |
|
$ |
|
|
$ |
|
||
Total property and equipment, gross |
|
|
|
|
|
|
||
Accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Total property and equipment, net |
|
$ |
|
|
$ |
|
||
9
Depreciation expense was $
Accrued Expenses
Accrued expenses consisted of the following:
|
|
June 30, |
|
|
December 31, |
|
||
Accrued payroll and related expenses |
|
$ |
|
|
$ |
|
||
Accrued clinical study expenses |
|
|
— |
|
|
|
|
|
Accrued professional fees |
|
|
|
|
|
|
||
Accrued clinical development costs |
|
|
|
|
|
|
||
Accrued other expenses |
|
|
— |
|
|
|
|
|
Total accrued expenses |
|
$ |
|
|
$ |
|
||
Included in accrued other expenses as of December 31, 2022, was the $
4. Commitments and Contingencies
Lease Commitments
In February 2021, Revelation Sub entered into an agreement to lease
Rent expense was $
Future minimum lease payments under the operating lease as of June 30, 2023 is $
10
Convertible Note Financing
On January 4, 2022, Revelation Sub entered into a convertible note with AXA Prime Impact Master Fund I SCA SICAV-RAIF (“AXA”) for $
On January 6, 2022, Old Revelation purchased
Total interest incurred under the Convertible Note was $
Commitments
The Company enters into contracts in the normal course of business with third party service providers and vendors. These contracts generally provide for termination on notice and, therefore, are cancellable contracts and not considered contractual obligations and commitments.
Contingencies
From time to time, the Company may become subject to claims and litigation arising in the ordinary course of business. The Company is not a party to any material legal proceedings, nor is it aware of any material pending or threatened litigation other than described below.
Legal Proceedings
On February 18, 2022, LifeSci Capital LLC filed an action against the Company in the U.S. District Court for the Southern District of New York seeking damages in the amount of approximately $
Of the LifeSci Capital LLC claim, $
On September 27, 2022, A-IR Clinical Research Ltd. (“A-IR”) filed a claim against the Company in the High Court of Justice, in the Business and Property Courts of England and Wales, seeking £
11
5. PIPE Investment
On January 25, 2022, the Company closed a private placement of
Roth Capital Partners, LLC (“Roth”) was engaged by the Company to act as its exclusive placement agent for the private placement. The Company paid Roth a cash fee equal to
In connection with the private placement, the Company entered into a registration rights agreement with the institutional investor, pursuant to which the Company agreed to file a registration statement to register for resale of the shares of common stock, shares of common stock underlying the Class A Pre-Funded Warrants and shares of common stock underlying the Class A Common Stock Warrants. The company filed the registration statement with the SEC on Form S-1 (File No. 333-262410) on January 28, 2022 and it became effective on February 7, 2022.
On February 22, 2022, the Company received a notice of cash exercise for the total outstanding Class A Pre-Funded Warrants issued in connection with the PIPE Investment for
Using the Black-Scholes option pricing model, the Class A Common Stock Warrants were valued in the aggregate at $
6. 2022 Public Offering
On July 28, 2022, the Company closed a public offering of
Roth was engaged by the Company to act as its exclusive placement agent for the July 2022 Public Offering. The Company paid Roth a cash fee equal to
The shares of common stock, the shares of common stock underlying the Class B Common Stock Warrants and the shares of common stock underlying the Class B Placement Agent Common Stock Warrants were registered with the SEC on Form S-1 (File No. 333-266108), and was declared effective by the SEC on July 25, 2022.
Using the Black-Scholes option pricing model, the Class B Common Stock Warrants were valued in the aggregate at $
12
7. 2023 Public Offering
On February 13, 2023, the Company closed a public offering of
Roth was engaged by the Company to act as its exclusive placement agent for the February 2023 Public Offering. The Company paid Roth a cash fee equal to
The shares of common stock, the shares of common stock underlying the Class C Pre-Funded Warrants and the shares of common stock underlying the Class C Common Stock Warrants were registered with the SEC on Form S-1 (File No. 333-268576), and was declared effective by the SEC on February 9, 2023.
Between February 14, 2023 and April 6, 2023, the Company received notices of cash exercise for the Class C Pre-Funded Warrants issued in connection with the February 2023 Public Offering for
Using a Monte-Carlo simulation model, the Class C Common Stock Warrants were valued in the aggregate at $
From March 13, 2023 to June 30, 2023, the Company issued 2,385,137 shares of common stock in connection with notices of alternative cashless exercise for the Class C Common Stock Warrants issued in connection with the February 2023 Public Offering. As of June 30, 2023, there were 487,160 of Class C Common Stock Warrants outstanding.
8. Preferred Stock
Revelation Authorized Preferred Stock
The Certificate of Amendment of the Company authorizes up to
Series A Preferred Stock
On December 19, 2022, the Company closed the sale of one share of the Company’s Series A Preferred Stock, par value $
The Series A Preferred Stock had
9. Units
In connection with Petra's IPO, in
As disclosed in Note 1, on January 13, 2023, the Company’s units were mandatorily separated, ceased to exist and stopped trading on the Nasdaq Capital Market. At the time of separation there were
13
10. Common Stock
The Company is authorized under its articles of incorporation, as amended, to issue
Reverse Split
As disclosed in Note 1, on January 30, 2023, the Company filed the Certificate of Amendment reflecting the change in authorized shares of common stock from
Common Stock Issuance due to the Business Combination
On the Closing Date, the Company issued an aggregate of
Common Stock Issuance during the year ended December 31, 2022
On January 23, 2022, the Company issued
On January 31, 2022, the Company issued
On February 2, 2022, the Company issued
On February 4, 2022, the Company cancelled
On February 22, 2022, the Company issued
On July 28, 2022, the Company issued
On July 29, 2022, the Company issued
14
Common Stock Issuance during the three and six months ended June 30, 2023
On February 13, 2023, the Company issued
On February 14, 2023, the Company issued
On March 2, 2023, the Company issued
From March 13, 2023 to March 31, 2023, the Company issued
From April 1, 2023 to June 30, 2023, the Company issued
On April 6, 2023, the Company received a notice of cash exercise for the Class C Pre-Funded Warrants issued in connection with the February 2023 Public Offering for
On April 18, 2023, the Company issued
As of June 30, 2023 and December 31, 2022,
15
The total shares of common stock reserved for issuance are summarized as follows:
|
|
June 30, |
|
|
June 30, |
|
||
Public Warrants (exercise price of $ |
|
|
|
|
|
|
||
Class A Common Stock Warrants (exercise price of $ |
|
|
|
|
|
|
||
Class A Placement Agent Common Stock Warrants (exercise price of $ |
|
|
|
|
|
|
||
Class B Common Stock Warrants (exercise price of $ |
|
|
|
|
|
— |
|
|
Class B Placement Agent Common Stock Warrants (exercise price of $ |
|
|
|
|
|
— |
|
|
Class C Common Stock Warrants (exercise price of $ |
|
|
|
|
|
— |
|
|
Rollover Warrants (exercise price of $ |
|
|
|
|
|
|
||
Rollover RSU awards outstanding |
|
|
|
|
|
|
||
Stock options outstanding |
|
|
|
|
|
|
||
Shares reserved for issuance |
|
|
|
|
|
|
||
Shares available for future stock grants under the 2021 Equity Incentive Plan |
|
|
|
|
|
|
||
Total common stock reserved for issuance |
|
|
|
|
|
|
||
11. Stock-Based Compensation
2021 Equity Incentive Plan
In January 2022, in connection with the Business Combination, the Board of Directors and the Company’s stockholders adopted the 2021 Equity Incentive Plan (the “2021 Plan”) and reserved
Under the 2021 Plan, stock options and stock appreciation rights are granted at exercise prices determined by the Board of Directors which cannot be less than
As of June 30, 2023, there were
Restricted Stock Units
At the Closing Date of the Business Combination, all Revelation Sub RSU award holders received a Rollover RSU award in exchange for each RSU award of Revelation Sub that vest in accordance with the original terms of the award. The Company determined this to be a Type I modification but did not record any incremental stock-based compensation expense since the fair value of the modified awards immediately after the modification was not greater than the fair value of the original awards immediately before the modification.
The Rollover RSU awards have time-based and milestone-based vesting conditions.
As of June 30, 2023 and December 31, 2022, the Company has a total of
16
Stock Options
The Company has granted stock options which
The activity related to stock options, during the six months ended June 30, 2023 is summarized as follows:
|
|
Shares |
|
|
Weighted-average Exercise Price |
|
|
Weighted-average Remaining Contractual Term (Years) |
|
|||
Outstanding at December 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|||
Granted |
|
|
|
|
|
|
|
|
|
|||
Exercised |
|
|
— |
|
|
|
— |
|
|
|
|
|
Expired and forfeited |
|
|
|
|
|
|
|
|
|
|||
Outstanding at June 30, 2023 |
|
|
|
|
$ |
|
|
|
|
|||
Exercisable at June 30, 2023 |
|
|
|
|
$ |
|
|
|
|
|||
For the six months ended June 30, 2023, the weighted-average Black-Scholes value per stock option was $
Volatility |
|
|
% |
|
Expected term (years) |
|
|
|
|
Risk-free interest rate |
|
|
% |
|
Expected dividend yield |
|
|
% |
Expected volatility is based on the historical volatility of shares of the Company’s common stock. In determining the expected term of stock options, the Company uses the “simplified” method. Under this method, the expected term is presumed to be the midpoint between the average vesting date and the end of the contractual term. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the stock options in effect at the time of the grants. The dividend yield assumption is based on the expectation of no future dividend payments by the Company. In addition to assumptions used in the Black-Scholes model, the Company reduces stock-based compensation expense based on actual forfeitures in the period that each forfeiture occurs.
Stock-Based Compensation Expense
For the three and six months ended June 30, 2023 and 2022, the Company recorded stock-based compensation expense for the period indicated as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
General and administrative: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
RSU awards |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
RSU awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As of June 30, 2023, there was $
17
12. Warrants
Public Warrants
In connection with Petra's IPO, Petra issued
The Company may redeem the Public Warrants at a price of $
Rollover Warrants
Prior to the Merger, Revelation Sub issued warrants to a placement agent to purchase up to
On February 2, 2022, the Company received a notice of cash exercise for the Company’s Rollover Warrants for
The fair value of the Rollover Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
Volatility |
|
|
% |
|
Expected term (years) |
|
|
|
|
Risk-free interest rate |
|
|
% |
|
Expected dividend yield |
|
|
% |
Class A Pre-Funded Warrants
In connection with the PIPE Investment, the Company issued pre-funded warrants to an institutional investor to purchase up to
On February 22, 2022, the Company received a notice of cash exercise for the Class A Pre-Funded Warrants issued in connection with the PIPE Investment for
Class A Common Stock Warrants
In connection with the PIPE Investment, the Company issued warrants to an institutional investor to purchase up to
The fair value of the Class A Common Stock Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
Volatility |
|
|
% |
|
Expected term (years) |
|
|
|
|
Risk-free interest rate |
|
|
% |
|
Expected dividend yield |
|
|
% |
18
Class A Placement Agent Common Stock Warrants
In connection with the PIPE Investment, the Company issued warrants to Roth to purchase an aggregate of
The fair value of the Class A Placement Agent Common Stock Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
Volatility |
|
|
% |
|
Expected term (years) |
|
|
|
|
Risk-free interest rate |
|
|
% |
|
Expected dividend yield |
|
|
% |
Class B Common Stock Warrants
In connection with the July 2022 Public Offering, the Company issued
The fair value of the Class B Common Stock Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
Volatility |
|
|
% |
|
Expected term (years) |
|
|
|
|
Risk-free interest rate |
|
|
% |
|
Expected dividend yield |
|
|
% |
Class B Placement Agent Common Stock Warrants
In connection with the July 2022 Public Offering, the Company issued warrants to the Placement Agent to purchase up to
The fair value of the Class B Placement Agent Common Stock Warrants were estimated using the Black-Scholes option pricing model with the following assumptions:
Volatility |
|
|
% |
|
Expected term (years) |
|
|
|
|
Risk-free interest rate |
|
|
% |
|
Expected dividend yield |
|
|
% |
Class C Pre-Funded Warrants
In connection with the February 2023 Public Offering, the Company issued pre-funded warrants to purchase up to
Between February 14, 2023 and April 6, 2023, the Company received notices of cash exercise for the Class C Pre-Funded Warrants issued in connection with the February 2023 Public Offering for 336,400 shares of common stock at a total purchase price of $33.64. As of June 30, 2023, there were no Class C Pre-Funded Warrants outstanding.
19
Class C Common Stock Warrants
In connection with the February 2023 Public Offering, the Company issued warrants to purchase up to
The Company accounted for the Class C Common Stock Warrants as current liabilities based upon the guidance of ASC 480 and ASC 815. The Company evaluated the Class C Common Stock Warrants under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity (“ASC 815-40”), and concluded that they do not meet the criteria to be classified in stockholders’ equity.
The Company concluded that the multiplier of
At the date of issuance, the Company valued the Class C Common Stock Warrants using a Monte-Carlo simulation model with a fair value of $
As of June 30, 2023, the Company received notices of alternative cashless exercises for
As of June 30, 2023, the Company re-valued
13. Income Taxes
The quarterly provision for or benefit from income taxes is computed based upon the estimated annual effective tax rate and the year-to-date pre-tax income (loss) and other comprehensive income. The Company did
For the three and six months ended June 30, 2023, the Company recorded non-taxable income of $
14. Subsequent Events
Increase the number of shares reserved under the Company’s 2021 Equity Incentive Plan
On July 14, 2023 at the Company’s 2023 Annual Meeting of Stockholders, an amendment to the 2021 Equity Incentive Plan to increase the number of shares reserved under the Plan from
20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion of our financial condition and results of operations in conjunction with our financial statements and the notes included elsewhere in this Form 10-Q. The following discussion contains forward-looking statements that involve certain risks and uncertainties. Our actual results could differ materially from those discussed in these statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2022 particularly under the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements and Risk Factors Summary” sections.
Overview
Revelation is a clinical-stage biopharmaceutical company founded in May 2020. We are focused on the development or commercialization of innate immune system therapeutics and diagnostics. Our current product candidates were developed by us and licensed to potentially prevent, treat and detect disease. Our therapeutic product candidates are based on our therapeutic platform and consist of REVTx-300, which is being developed as a potential therapy for the prevention and treatment of acute organ injury (e.g. AKI, MI) and chronic organ disease including CKD; REVTx-100, which is being developed for the prevention and treatment of infections including healthcare-associated bacterial infection resulting from surgery, severe burns, and antibiotic resistance; REVTx-200, which is being developed as a potential intranasal therapy that will be administered concurrently with a traditional commercially available IM vaccine; and REVTx-99b, which is being developed for the treatment of food allergies. REVTx-99a was being developed as a broad anti-viral nasal drop solution for the potential prevention or potential treatment of respiratory viral infections and REVTx-99b was being developed as a prevention or treatment for chronic nasal congestion and allergic rhinitis until June of 2022. Our diagnostic, REVDx-501 (REVIDTM Rapid Test Kit), was being developed as a rapid point of care diagnostic product that can potentially be used to detect various respiratory viral infections.
Since our inception in May 2020, we have devoted substantially all of our resources to organizing and staffing our Company, business planning, raising capital, and research and development of REVTx-300, REVTx-100, REVTx-200, REVTx-99a/b and REVDx-501, our product candidates.
We have funded our operations since our inception in May 2020 to June 30, 2023 through the issuance and sale of our capital stock, from which we have raised net proceeds of $43.9 million. Our current cash and cash equivalents balance will not be sufficient to complete all necessary product development or future commercialization efforts. We anticipate that our current cash and cash equivalents balance will not be sufficient to sustain operations within one year after the date that our audited financial statements for June 30, 2023 were issued, which raises substantial doubt about our ability to continue as a going concern.
We plan to seek additional funding through public or private equity or debt financings. We may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of our stockholders. If we are unable to obtain funding we could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect our business operations.
As of June 30, 2023 we had an accumulated deficit of $20.6 million. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future if and as we:
Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical studies and our expenditures on other research and development activities.
21
We have never generated revenue and do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for REVTx-300, REVTx-100, REVTx-200, REVTx-99b, REVDx-501 or other product candidates, which we expect will not be for at least several years, if ever. Accordingly, until such time as we can generate significant revenue from sales of REVTx-300, REVTx-100, REVTx-200, REVTx-99b, REVDx-501 or other product candidates, if ever, we expect to finance our cash needs through a combination of public or private equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Recent Developments
Change in Authorized Shares and Reverse Stock Split
On January 30, 2023, at a special meeting of stockholders, our stockholders approved a Certificate of Amendment to our Third Amended and Restated Certificate of Incorporation to change the authorized common stock from 100,000,000 to 500,000,000 shares and effect a reverse stock split of our outstanding shares of common stock at a specific ratio within a range of one-for-twenty (1-for-20) to a maximum of a one-for-one hundred (1-for-100) split. On January 30, 2023, we filed the Certificate of Amendment which set the authorized common stock to 500,000,000 and effected a 1-for-35 reverse stock split of our outstanding shares of common stock as of 12:01 a.m. Eastern Standard Time on February 1, 2023.
Business Combination
On January 10, 2022, we consummated the previously announced Business Combination, pursuant to the terms of the agreement and plan of merger, dated as of August 29, 2021 with Petra and Merger Sub. Pursuant to the Business Combination Agreement, on the Closing Date, (i) Merger Sub merged with and into Revelation Sub, with Revelation Sub as the surviving company in the Business Combination, and became a wholly-owned subsidiary of Petra and (ii) Petra changed its name to “Revelation Biosciences, Inc.”
Research and Development
Research and development expenses consist primarily of costs incurred for the development of our product candidates, REVTx-300, REVTx-100, REVTx-200, REVTx-99a/b and REVDx-501. Our research and development expenses consist primarily of external costs related to clinical development, costs related to contract research organizations, costs related to consultants, costs related to acquiring and manufacturing clinical study materials, costs related to contract manufacturing organizations and other vendors, costs related to the preparation of regulatory submissions, costs related to laboratory supplies and services, and personnel costs. Personnel and related costs consist of salaries, employee benefits and stock-based compensation for personnel involved in research and development efforts.
We expense all research and development expenses in the periods in which they are incurred. We accrue for costs incurred as the services are being provided by monitoring the status of specific activities and the invoices received from our external service providers. We adjust our accrual as actual costs become known.
We expect our research and development expenses to increase substantially for the foreseeable future as we continue the development of REVTx-300, REVTx-100, REVTx-200, REVTx-99b and REVDx-501 and continue to invest in research and development activities. The process of conducting the necessary clinical research and product development to obtain regulatory approval is costly and time consuming, and the successful development of REVTx-300, REVTx-100, REVTx-200, REVTx-99b, REVDx-501 and any future product candidates is highly uncertain. To the extent that our product candidates continue to advance into larger and later stage clinical studies, our expenses will increase substantially and may become more variable.
The actual probability of success for REVTx-300, REVTx-100, REVTx-200, REVTx-99b, REVDx-501 or any future product candidate may be affected by a variety of factors, including the safety and efficacy of our product candidates, investment in the development of REVDx-501, investment in our clinical programs, manufacturing capability and competition with other products. As a result, we are unable to determine the timing of initiation, duration and completion costs of our research and development efforts or when and to what extent we will generate revenue from the commercialization and sale of REVTx-300, REVTx-100, REVTx-200, REVTx-99b, REVDx-501 or any future product candidate.
22
General and Administrative
Our general and administrative expenses consist primarily of personnel costs, expenses for outside professional services, including financial advisory, legal, human resource, audit and accounting services and consulting costs. Personnel and related costs consist of salaries, employee benefits and stock-based compensation for personnel involved in executive, finance and other administrative functions. We expect our general and administrative expenses to increase for the foreseeable future as we increase the size of our administrative function to support the growth of our business and support our continued research and development activities. We also anticipate increased expenses as we continue to operate as a public company, including increased expenses related to financial advisory services, audit, legal, regulatory, investor relations costs, director and officer insurance premiums associated with maintaining compliance with exchange listing and SEC requirements.
Other Income (Expense), Net
Other income (expense), net primarily consists of the change in fair value of warrant liability, foreign currency transaction gains and losses, interest expense and interest income from our cash balances in savings accounts.
Results of Operations
The following table summarizes our results of operations for the periods presented:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|
2023 |
|
|
2022 |
|
|
Change |
|
||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Research and development |
|
$ |
909,278 |
|
|
$ |
975,583 |
|
|
$ |
(66,305 |
) |
|
$ |
1,434,551 |
|
|
$ |
4,655,863 |
|
|
$ |
(3,221,312 |
) |
General and administrative |
|
|
1,023,752 |
|
|
|
884,837 |
|
|
|
138,915 |
|
|
|
2,118,326 |
|
|
|
3,790,857 |
|
|
|
(1,672,531 |
) |
Total operating expenses |
|
|
1,933,030 |
|
|
|
1,860,420 |
|
|
|
72,610 |
|
|
|
3,552,877 |
|
|
|
8,446,720 |
|
|
|
(4,893,843 |
) |
Loss from operations |
|
|
(1,933,030 |
) |
|
|
(1,860,420 |
) |
|
|
(72,610 |
) |
|
|
(3,552,877 |
) |
|
|
(8,446,720 |
) |
|
|
4,893,843 |
|
Total other income (expense), net |
|
|
484,860 |
|
|
|
25,734 |
|
|
|
459,126 |
|
|
|
8,263,902 |
|
|
|
(4,507 |
) |
|
|
8,268,409 |
|
Net (loss) income |
|
$ |
(1,448,170 |
) |
|
$ |
(1,834,686 |
) |
|
$ |
386,516 |
|
|
$ |
4,711,025 |
|
|
$ |
(8,451,227 |
) |
|
$ |
13,162,252 |
|
Research and Development Expenses
The following table summarizes our research and development expenses for the periods presented:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|
2023 |
|
|
2022 |
|
|
Change |
|
||||||
REVTx-99a clinical study expenses |
|
$ |
— |
|
|
$ |
304,852 |
|
|
$ |
(304,852 |
) |
|
$ |
— |
|
|
$ |
3,077,967 |
|
|
$ |
(3,077,967 |
) |
REVTx-99b clinical study expenses |
|
|
— |
|
|
|
105,136 |
|
|
|
(105,136 |
) |
|
|
— |
|
|
|
275,497 |
|
|
|
(275,497 |
) |
Manufacturing expenses |
|
|
219,238 |
|
|
|
110,159 |
|
|
|
109,079 |
|
|
|
510,506 |
|
|
|
216,913 |
|
|
|
293,593 |
|
REVDx-501 diagnostic development |
|
|
— |
|
|
|
20,771 |
|
|
|
(20,771 |
) |
|
|
— |
|
|
|
27,660 |
|
|
|
(27,660 |
) |
Other program expenses |
|
|
477,019 |
|
|
|
— |
|
|
|
477,019 |
|
|
|
542,739 |
|
|
|
— |
|
|
|
542,739 |
|
Other expenses |
|
|
61,591 |
|
|
|
16,842 |
|
|
|
44,749 |
|
|
|
120,539 |
|
|
|
63,568 |
|
|
|
56,971 |
|
Personnel expenses (including stock-based compensation) |
|
|
151,430 |
|
|
|
417,823 |
|
|
|
(266,393 |
) |
|
|
260,767 |
|
|
|
994,258 |
|
|
|
(733,491 |
) |
Total research and development expenses |
|
$ |
909,278 |
|
|
$ |
975,583 |
|
|
$ |
(66,305 |
) |
|
$ |
1,434,551 |
|
|
$ |
4,655,863 |
|
|
$ |
(3,221,312 |
) |
Research and development expenses decreased by $0.1 million, from $1.0 million for the three months ended June 30, 2022 to $0.9 million for the three months ended June 30, 2023. The decrease was primarily due to decreases of $0.3 million in clinical study expenses related to REVTx-99a and $0.3 million in personnel expenses, offset by an increase of $0.5 million in other program expenses. Other program expenses include pre-clinical costs and clinical preparation costs primarily for programs REVTx-300, REVTx-100 and REVTx-200.
Research and development expenses decreased by $3.2 million, from $4.7 million for the six months ended June 30, 2022 to $1.4 million for the six months ended June 30, 2023. The decrease was primarily due to decreases of $3.1 million in clinical study expenses related to REVTx-99a and $0.7 million in personnel expenses, offset by increases of $0.5 million in other program expenses and $0.3 million in manufacturing expenses. Other program expenses include pre-clinical costs and clinical preparation costs primarily for programs REVTx-300, REVTx-100 and REVTx-200.
23
General and Administrative Expenses
The following table summarizes our general and administrative expenses for the periods presented:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|
2023 |
|
|
2022 |
|
|
Change |
|
||||||
Personnel expenses (including employee stock-based compensation) |
|
$ |
546,654 |
|
|
$ |
508,352 |
|
|
$ |
38,302 |
|
|
$ |
1,006,438 |
|
|
$ |
1,186,459 |
|
|
$ |
(180,021 |
) |
Legal and professional fees (including non-employee stock-based compensation) |
|
|
388,474 |
|
|
|
137,577 |
|
|
|
250,897 |
|
|
|
932,935 |
|
|
|
1,636,943 |
|
|
|
(704,008 |
) |
Other expenses |
|
|
88,624 |
|
|
|
238,908 |
|
|
|
(150,284 |
) |
|
|
178,953 |
|
|
|
967,455 |
|
|
|
(788,502 |
) |
Total general and administrative expenses |
|
$ |
1,023,752 |
|
|
$ |
884,837 |
|
|
$ |
138,915 |
|
|
$ |
2,118,326 |
|
|
$ |
3,790,857 |
|
|
$ |
(1,672,531 |
) |
General and administrative expenses increased by $0.1 million, from $0.9 million for the three months ended June 30, 2022 to $1.0 million for the three months ended June 30, 2023. The increase was primarily due to an increase of $0.3 million in financial advisory fees, legal fees and professional consulting service fees, offset by a decrease of $0.2 million in other expenses as a result of a decrease in D&O Insurance.
General and administrative expenses decreased by $1.7 million, from $3.8 million for the six months ended June 30, 2022 to $2.1 million for the six months ended June 30, 2023. The decrease was primarily due to decreases of $0.8 million in other expenses as a result of a decrease in D&O Insurance, $0.7 million in financial advisory fees, legal fees and professional consulting service fees, and $0.2 million in personnel expenses.
Other Income (Expense), Net
Other income (expense), net was $25,734 for the three months ended June 30, 2022, related to foreign currency transaction gains and losses and interest income from our cash balances in savings accounts. Other income (expense), net was $484,860 for the three months ended June 30, 2023, related to the change in fair value of the warrant liability, foreign currency transaction gains and losses, and interest income from our cash balances in savings accounts.
Other income (expense), net was $4,507 for the six months ended June 30, 2022, related to interest expense for the Promissory Notes Payable and Convertible Note, foreign currency transaction gains and losses, and interest income from our cash balances in savings accounts. Other income (expense), net was $8,263,902 for the six months ended June 30, 2023, related to the change in fair value of the warrant liability, foreign currency transaction gains and losses, and interest income from our cash balances in savings accounts.
Liquidity and Capital Resources
Since our inception to June 30, 2023, we have funded our operations from the issuance and sale of our common stock, preferred stock and warrants, from which we have raised net proceeds of $43.9 million, of which $14.0 million was received during the six months ended June 30, 2023. As of June 30, 2023, we had available cash and cash equivalents of $15.7 million and an accumulated deficit of $20.6 million.
Our use of cash is to fund operating expenses, which consist primarily of research and development expenditures related to our therapeutic product candidates, REVTx-300, REVTx-100 and REVTx-200. We plan to increase our research and development expenses substantially for the foreseeable future as we continue the clinical development of our current and future product candidates. At this time, due to the inherently unpredictable nature of product development, we cannot reasonably estimate the costs we will incur and the timelines that will be required to complete development, obtain marketing approval, and commercialize our current product candidate, diagnostic product or any future product candidates. For the same reasons, we are also unable to predict when, if ever, we will generate revenue from product sales or any future license agreements which we may enter into or whether, or when, if ever, we may achieve profitability. Clinical and preclinical development timelines, the probability of success, and development costs can differ materially from expectations. In addition, we cannot forecast the timing and amounts of milestone, royalty and other revenue from licensing activities, which future product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.
We expect to continue to generate substantial operating losses for the foreseeable future as we expand our research and development activities. We will continue to fund our operations primarily through utilization of our current financial resources and through additional raises of capital.
24
To the extent that we raise additional capital through partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, future revenue streams or research programs or to grant licenses on terms that may not be favorable to us. If we raise additional capital through public or private equity offerings, the ownership interest of our then-existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our clinical studies or preclinical studies, research and development programs or commercialization efforts or grant rights to develop and market our product candidates or diagnostic product even if we would otherwise prefer to develop and market such product candidates or diagnostic product ourselves.
Going Concern
As of June 30, 2023, we had an accumulated deficit of $20.6 million, a stockholders’ equity of $11.4 million and available cash and cash equivalents of $15.7 million. We expect to continue to incur significant operating and net losses, as well as negative cash flows from operations, for the foreseeable future as we continue to complete all necessary product development or future commercialization efforts. We have never generated revenue and do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for REVTx-300, REVTx-100, REVTx-200, REVTx-99b, REVDx-501 or other product candidates, which we expect will not be for at least several years, if ever. We do not anticipate that our current cash and cash equivalents balance will be sufficient to sustain operations within one year after the date that our audited financial statements for June 30, 2023 were issued, which raises substantial doubt about our ability to continue as a going concern.
To continue as a going concern, we will need, among other things, to raise additional capital resources. We plan to seek additional funding through public or private equity or debt financings. We may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of our stockholders. If we are unable to obtain funding we could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect our business operations.
The unaudited condensed consolidated financial statements for June 30, 2023, have been prepared on the basis that we will continue as a going concern, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability for us to continue as a going concern.
Cash Flows
The following table summarizes our cash flows for the periods presented:
|
|
Six Months Ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Net cash used in operating activities |
|
$ |
(3,566,769 |
) |
|
$ |
(8,540,511 |
) |
Net cash provided by financing activities. |
|
|
14,025,008 |
|
|
|
10,741,598 |
|
Net increase in cash and cash equivalents |
|
$ |
10,458,239 |
|
|
$ |
2,201,087 |
|
Net Cash Used in Operating Activities
During the six months ended June 30, 2023, net cash used in operating activities was $3.6 million, which consisted of a net income of $4.7 million, offset by a net change of non-cash charges of $8.1 million comprised of the change in fair value of the warrant liability, stock-based compensation expense and depreciation expense.
During the six months ended June 30, 2022, net cash used in operating activities was $8.5 million, which consisted of a net loss of $8.5 million, offset by a net change of $0.3 million in our net operating assets and liabilities and non-cash charges of $0.3 million comprised of stock-based compensation expense, non-cash lease expense and depreciation expense.
Net Cash Provided by Financing Activities
During the six months ended June 30, 2023, net cash provided by financing activities was $14.0 million, from net cash proceeds of $14.0 million received from the February 2023 Public Offering.
During the six months ended June 30, 2022, net cash provided by financing activities was $10.7 million, from net proceeds of $4.2 million received in connection with the Business Combination, after exercise of the forward share purchase agreement of $7.7 million, and net proceeds of $7.3 million received from the PIPE Investment, offset by $0.8 million in repayments of promissory notes payable, including interest expense.
25
Contractual Obligations and Other Commitments
The following table summarizes our contractual obligations as of June 30, 2023 and the effects of such obligations are expected to have on our liquidity and cash flow in future periods:
|
|
Less than |
|
|
1 to 3 |
|
|
3 to 5 |
|
|
More than |
|
|
Total |
|
|||||
Operating lease obligations |
|
$ |
57,780 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
57,780 |
|
Total contractual obligations |
|
$ |
57,780 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
57,780 |
|
We have entered into an operating lease for laboratory space in San Diego, California. The table above includes future minimum lease payments under the non-cancelable lease arrangement.
We enter into contracts in the normal course of business with third party service providers and vendors. These contracts generally provide for termination on notice and, therefore, are cancellable contracts and not considered contractual obligations and commitments. We believe that our non-cancelable obligations under these agreements are not material.
Off-Balance Sheet Arrangements
As of June 30, 2023, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
Quantitative and Qualitative Disclosure about Market Risk
We are exposed to market risks in the ordinary course of our business.
Interest Rate Risk
Our cash and cash equivalents consist primarily of highly liquid investments in money market funds and cash on hand and have an original maturity date of 90 days or less. The fair value of our cash and cash equivalents would not be significantly affected by either an increase or decrease in interest rates due mainly to the short-term nature of these instruments.
Foreign Currency Risk
Our expenses are generally denominated in the currencies in which our operations are located, which is primarily in the United States, England and Australia. We make payments to vendors for research and development services with payments denominated in foreign currencies including Australian Dollars and British Pounds. We are subject to foreign currency transaction gains or losses on our payments denominated in foreign currencies. To date, foreign currency transaction gains and losses have not been material and we have not had a formal hedging program with respect to foreign currency; however, we may consider doing so in the future. A 10% increase or decrease in currency exchange rates would not have a material effect on our financial results.
Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with the U.S. generally accepted accounting principles (“GAAP”). The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions about future events that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenue and expenses. These estimates and assumptions are based on management’s best estimates and judgment. Management regularly evaluates its estimates and assumptions using industry experience and other factors; however, actual results could differ materially from these estimates and could have an adverse effect on our condensed consolidated financial statements. While our significant accounting policies are more fully described in the notes to our condensed consolidated financial statements, we believe that the accounting policies discussed below are most critical to understanding and evaluating our historical and future performance.
26
Research and Development Expenditures
We record accrued expenses for estimated preclinical and clinical study and research expenses related to the services performed but not yet invoiced pursuant to contracts with research institutions, contract research organizations and clinical manufacturing organizations that conduct and manage preclinical studies, and clinical studies, and research services on our behalf. Payments for these services are based on the terms of individual agreements and payment timing may differ significantly from the period in which the services were performed. Our estimates are based on factors such as the work completed, including the level of patient enrollment. We monitor patient enrollment levels and related activity to the extent reasonably possible and make judgments and estimates in determining the accrued balance in each reporting period. Our estimates of accrued expenses are based on the facts and circumstances known at the time. If we underestimate or overestimate the level of services performed or the costs of these services, our actual expenses could differ from our estimates. As actual costs become known, we adjust our accrued expenses. To date, we have not experienced significant changes in our estimates of clinical study accruals.
Stock-based Compensation
We recognize the compensation expense related to stock options, third-party warrants, and RSU awards granted, based on the estimated fair value of the awards on the date of grant. The fair value of employee stock options and third-party warrants are generally determined using the Black-Scholes option-pricing model using various inputs, including estimates of historic volatility, term, risk-free rate, and future dividends. The grant date fair value of the stock-based awards, which have graded vesting, is recognized using the straight-line method over the requisite service period of each stock-based award, which is generally the vesting period of the respective stock-based awards. The Company recognizes forfeitures as they occur.
As of June 30, 2023, there were 3,006 Rollover RSU awards and 35,005 stock options outstanding.
Determination of the Fair Value of Common Stock
Prior to the Business Combination, given the absence of a public trading market for our shares of common stock, our board of directors exercises its judgment and considers a number of objective and subjective factors to determine the best estimate of the fair value of our shares of common stock, including timely valuations of our shares of common stock prepared by an unrelated third-party valuation firm, important developments in our operations, sales of common stock and convertible preferred shares, actual operating results and financial performance, the conditions in the biotechnology industry and the economy in general, the stock price performance and volatility of comparable public companies, and the lack of liquidity of our shares of common stock, among other factors. After the Business Combination, the fair value of each share of common stock is based on the closing price of our shares of common stock as reported on the date of grant.
Recent Accounting Pronouncements
See Note 2 to our unaudited condensed consolidated financial statements for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition of results of operations.
JOBS Act Accounting Election
We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
We have elected to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements and our interim financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
27
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures. Based on that evaluation of our disclosure controls and procedures as of June 30, 2023, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective at the reasonable assurance level. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during our most recent quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
28
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
On February 18, 2022, LifeSci Capital LLC filed an action against the Company in the U.S. District Court for the Southern District of New York seeking damages in the amount of approximately $2.7 million in cash and $2.6 million in equity for unpaid banking and advisory fees. These fees arise under contracts which were entered into prior to the Business Combination and the Company is disputing the amount owed under those contracts and has asserted affirmative defenses including the defense that the amount of the fees sought exceeded the $8.5 million cap on transaction expenses in the Business Combination Agreement. On March 2, 2023, the court denied the plaintiff’s motion for summary judgment. If the proceeding goes to trial it is not expected to occur, at the earliest, until the second half of 2024.
Of the LifeSci Capital LLC claim, $1.5 million relates to deferred underwriting fees from the Petra initial public offering. In addition, but separate from the claim, one of the underwriters in the Petra initial public offering who is not a participant in the litigation with LifeSci Capital LLC recently issued a demand letter seeking repayment for $655 thousand in fees owed from the Petra initial public offering that remain unpaid, Both of these amounts are recorded as a current liability in the financial statements as of June 30, 2023 under deferred underwriting commissions. No other liabilities are reflected in the financial statements as the amount of any additional liability cannot be determined at this time.
On September 27, 2022, A-IR Clinical Research Ltd. (“A-IR”) filed a claim against the Company in the High Court of Justice, in the Business and Property Courts of England and Wales, seeking £1.6 million in unpaid invoices, plus interest and costs, relating to the Company’s viral challenge study. The case has been moved to the Commercial Court. The Company is disputing the claim because many of the invoices relate to work that was not performed and A-IR had misrepresented its qualifications to perform the contracted work. Since this proceeding is at a very early stage, no liability is reflected in the financial statements as the amount of any liability cannot be determined at this time.
Item 1A. Risk Factors.
Our business is subject to various risks, including those described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes from the risk factors disclosed in Item 1A of our Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
29
Item 6. Exhibits, Financial Statement Schedules.
Furnish the exhibits required by Item 601 of Regulation S-K (§ 229.601 of this chapter).
EXHIBIT |
|
DESCRIPTION |
3.2(1) |
|
|
31.1* |
|
|
31.2* |
|
|
32.1* |
|
|
32.2* |
|
|
101.INS* |
|
XBRL Instance Document – the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH* |
|
Inline XBRL Taxonomy Extension Scema Document |
101.CAL* |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE* |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104* |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* |
Filed herewith. |
(1) |
Previously filed as an exhibit to Revelation Biosciences, Inc.’s Current Report on Form 8-K filed on July 7, 2023. |
30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
REVELATION BIOSCIENCES, INC. |
|
|
|
|
|
Date: August 11, 2023 |
|
By: |
/s/ James Rolke |
|
|
|
James Rolke |
|
|
|
Chief Executive Officer |
|
|
|
(principal executive officer) |
|
|
|
|
Date: August 11, 2023 |
|
By: |
/s/ Chester S. Zygmont, III |
|
|
|
Chester S. Zygmont, III |
|
|
|
Chief Financial Officer |
|
|
|
(principal financial and accounting officer |
31