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CervoMed (CRVO) - 2024 Q3 - Quarterly Report
CRVOCervoMed (CRVO)2024-11-12 13:44

Merger and Acquisition - The merger between Diffusion Pharmaceuticals Inc. and EIP Pharma, Inc. was completed on August 16, 2023, with EIP becoming a wholly-owned subsidiary of the newly named CervoMed Inc.[4] - Each outstanding share of EIP capital stock was converted into the right to receive 0.1151 shares of CervoMed common stock as part of the merger[4]. - The merger is treated as a reverse recapitalization under US GAAP, with EIP's historical results considered the Company's historical results prior to the merger[4]. - The Company completed the Merger of EIP and Merger Sub on August 16, 2023, with EIP security holders owning approximately 76% of the Company post-Merger[64]. - Total net assets assumed in the Merger amounted to 10,339,114afterdeductingtransactioncostsof10,339,114 after deducting transaction costs of 1,548,643[65]. Financial Performance - Total current assets increased significantly to 48,809,930asofSeptember30,2024,comparedto48,809,930 as of September 30, 2024, compared to 9,964,751 on December 31, 2023[14]. - Grant revenue for the three months ended September 30, 2024, was 1,939,751,upfrom1,939,751, up from 1,526,482 for the same period in 2023, representing a year-over-year increase of 27.1%[15]. - Total operating expenses for the nine months ended September 30, 2024, were 18,562,282,comparedto18,562,282, compared to 9,986,739 for the same period in 2023, reflecting an increase of 86.2%[15]. - The net loss for the three months ended September 30, 2024, was (4,753,541),comparedtoanetincomeof(4,753,541), compared to a net income of 2,150,362 for the same period in 2023[15]. - The accumulated deficit increased to (64,025,570)asofSeptember30,2024,from(64,025,570) as of September 30, 2024, from (54,440,789) at the end of 2023[14]. - Total stockholders' equity rose to 45,637,496asofSeptember30,2024,comparedto45,637,496 as of September 30, 2024, compared to 7,376,774 on December 31, 2023[14]. - The net loss for the nine months ended September 30, 2024, was 9,584,781,comparedtoanetincomeof9,584,781, compared to a net income of 190,525 for the same period in 2023[22]. - The company generated negative cash flows from operations, with net cash used in operating activities amounting to 8,479,909fortheninemonthsendedSeptember30,2024[22].−Thecompanyreportedanetunrealizedgainonmarketablesecuritiesof8,479,909 for the nine months ended September 30, 2024[22]. - The company reported a net unrealized gain on marketable securities of 142,864 for the three months ended September 30, 2024[15]. - The company reported stock-based compensation expense of 1,068,011fortheninemonthsendedSeptember30,2024[22].ResearchandDevelopment−CervoMedreceiveda1,068,011 for the nine months ended September 30, 2024[22]. Research and Development - CervoMed received a 21.3 million grant from the National Institute on Aging to support the RewinD-LB Trial, with 21.0millionawardedinJanuary2023andanadditional21.0 million awarded in January 2023 and an additional 0.3 million in August 2024[7]. - The company initiated the Phase 2b clinical trial, RewinD-LB, in the second quarter of 2023, evaluating neflamapimod for Early-Stage DLB[9]. - Research and development expenses for the nine months ended September 30, 2024, were 11,711,746,significantlyhigherthan11,711,746, significantly higher than 5,583,149 for the same period in 2023, indicating a focus on innovation[15]. - The company is focused on developing its lead drug candidate, neflamapimod, which is currently in a Phase 2b study funded by a 21.3milliongrantfromtheNIA[24].−Researchanddevelopmentcostsareexpensedasincurred,primarilyfornewproductdevelopment,includingsalaries,benefits,andthird−partyfees[40].RisksandUncertainties−CervoMed′sfutureperformancemaybeinfluencedbyvariousrisks,includingregulatoryapprovalsandmarketacceptanceofitsproductcandidates[10].−Thecompanyissubjecttorisksthatcouldmateriallyaffectitsfinancialconditionandfutureoperations,includingthesuccessofitsresearchanddevelopmentefforts[26].−Thecompanyanticipatesongoingclinicaltrialsandresearchanddevelopmentactivitiestoenhanceitsproductpipelineandmarketposition[9].−CervoMed′sfinancialconditionandliquidityaresubjecttovariousrisksanduncertainties,includingmarketconditionsandregulatorydevelopments[10].FundingandCapitalStructure−CervoMed′s2024PrivatePlacementraisedapproximately21.3 million grant from the NIA[24]. - Research and development costs are expensed as incurred, primarily for new product development, including salaries, benefits, and third-party fees[40]. Risks and Uncertainties - CervoMed's future performance may be influenced by various risks, including regulatory approvals and market acceptance of its product candidates[10]. - The company is subject to risks that could materially affect its financial condition and future operations, including the success of its research and development efforts[26]. - The company anticipates ongoing clinical trials and research and development activities to enhance its product pipeline and market position[9]. - CervoMed's financial condition and liquidity are subject to various risks and uncertainties, including market conditions and regulatory developments[10]. Funding and Capital Structure - CervoMed's 2024 Private Placement raised approximately 149.4 million, consisting of 2,532,285 units, each including one share of common stock or one Pre-Funded Warrant and one Series A Warrant[6]. - The company raised 46,398,606fromthesaleofcommonstockandwarrantsduringthefinancingactivities[22].−Thecompanyhasaplantofundoperationsforatleasttwelvemonthsbasedonexistingcashandmarketablesecurities,butwillrequireadditionalfinancingforongoingdevelopment[25].−Thecompanyintendstoseekfundsthroughequityofferings,debtfinancings,orothercapitalsourcestosupportitsoperations[25].StockandEquity−Theweightedaveragesharesoutstandingforbasicnetlosspersharewas8,702,764forthethreemonthsendedSeptember30,2024,comparedto3,308,302forthesameperiodin2023[15].−ThedilutednetlosspershareforthethreemonthsendedSeptember30,2024was46,398,606 from the sale of common stock and warrants during the financing activities[22]. - The company has a plan to fund operations for at least twelve months based on existing cash and marketable securities, but will require additional financing for ongoing development[25]. - The company intends to seek funds through equity offerings, debt financings, or other capital sources to support its operations[25]. Stock and Equity - The weighted average shares outstanding for basic net loss per share was 8,702,764 for the three months ended September 30, 2024, compared to 3,308,302 for the same period in 2023[15]. - The diluted net loss per share for the three months ended September 30, 2024 was (0.55), while it was (0.70)forthesameperiodin2023[57].−Thecompanyhad2,532,285SeriesAWarrantsoutstandingwithanexercisepriceof(0.70) for the same period in 2023[57]. - The company had 2,532,285 Series A Warrants outstanding with an exercise price of 39.24, set to expire upon the fulfillment of certain conditions[91]. - As of September 30, 2024, the company had 533,159 stock options outstanding with a weighted average exercise price of 21.23[98].−Stock−basedcompensationexpensefortheninemonthsendedSeptember30,2024,totaled21.23[98]. - Stock-based compensation expense for the nine months ended September 30, 2024, totaled 1,068,011, significantly higher than $242,660 for the same period in 2023, indicating a substantial increase of 341.5%[97]. Compliance and Internal Controls - The company aims to maintain compliance with Nasdaq listing requirements and other regulatory obligations[10]. - The company is actively working to remediate previously disclosed material weaknesses in its internal controls over financial reporting[10]. - The company has fully offset its net deferred tax assets with a valuation allowance due to historical operating performance and cumulative net losses[53].