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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Eterna Therapeutics Inc | NASDAQ:ERNA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.01 | -0.54% | 1.85 | 1.67 | 1.94 | 1.92 | 1.80 | 1.86 | 2,051 | 01:00:00 |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Trading symbol
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Name of each exchange on which registered
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||
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Large accelerated filer
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☐ |
Accelerated filer
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☐
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☒ |
Smaller reporting company
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Emerging growth company
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Page
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PART I – FINANCIAL INFORMATION
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|
|
Item 1.
|
Financial Statements (unaudited)
|
|
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1
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|
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2
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3
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|
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4
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|
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5
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Item 2.
|
23
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Item 3.
|
33
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Item 4.
|
33
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|
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|
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PART II – OTHER INFORMATION
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|
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Item 1.
|
34
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Item 1A.
|
35
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Item 2.
|
35
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Item 3.
|
35
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Item 4.
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35
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Item 5.
|
35
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Item 6.
|
35
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37
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September 30, | December 31, | |||||||
2023
|
2022
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash
|
$
|
|
$
|
|
||||
Other receivables
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Restricted cash
|
||||||||
Property and equipment, net
|
|
|
||||||
Right-of-use assets - operating leases
|
|
|
||||||
Goodwill
|
|
|
||||||
Investment in non-controlling interest
|
||||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
|
$
|
|
||||
Accrued expenses
|
|
|
||||||
Income taxes payable
|
||||||||
Operating lease liabilities, current
|
|
|
||||||
Due to related party, current
|
||||||||
Deferred revenue, current
|
||||||||
Other current liabilities | ||||||||
Total current liabilities
|
|
|
||||||
Convertible notes payable, net
|
||||||||
Warrant liabilities
|
|
|
||||||
Operating lease liabilities, non-current
|
|
|
||||||
Due to related party, non-current
|
||||||||
Deferred revenue, non-current
|
||||||||
Contingent consideration liability
|
||||||||
Other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Stockholders’ equity:
|
||||||||
Preferred stock, $
|
||||||||
Common stock, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ equity
|
|
|
||||||
Total liabilities and stockholders’ equity
|
$
|
|
$
|
|
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenue |
$ | $ | $ | $ | ||||||||||||
Cost of revenues | ||||||||||||||||
Gross loss
|
( |
) | ( |
) | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development
|
|
|
|
|
||||||||||||
General and administrative
|
||||||||||||||||
Acquisition of Exacis in-process research and development
|
||||||||||||||||
Impairment of in-process research and development
|
||||||||||||||||
Total operating expenses
|
|
|
|
|
||||||||||||
Loss from operations
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Other (expense) income, net: | ||||||||||||||||
Change in fair value of warrant liabilities
|
||||||||||||||||
Change in fair value of contingent consideration
|
||||||||||||||||
Loss on non-controlling investment
|
( |
) | ( |
) | ( |
) | ||||||||||
Other expense, net
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Total other (expense) income, net
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Loss before income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Benefit (provision) for income taxes |
( |
) | ( |
) | ( |
) | ||||||||||
Net loss
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
||||
Series A preferred stock dividend | ( |
) | ( |
) | ||||||||||||
Net loss attributable to common stockholders
|
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Net loss per common share - basic and diluted
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Weighted average shares outstanding - basic and diluted
|
|
|
|
|
Series A Preferred
Stock
|
Common Stock
|
Additional Paid-
in
|
Accumulated
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
||||||||||||||||||||||
Balances at July 1, 2023
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Issuance of warrants in connection with the July 2023 Financing, net of fees
|
- | - | ||||||||||||||||||||||||||
Stock-based compensation
|
-
|
|
-
|
|
|
|
|
|||||||||||||||||||||
Net loss
|
-
|
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Balances at September 30, 2023
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Balances at January 1, 2023
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Issuance of common stock in connection with Exacis asset acquisition
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Issuance of common stock related to stock purchase agreement with Lincoln Park Capital Fund, LLC, net
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Issuance of warrants in connection with the July 2023 Financing, net of fees
|
- | - | ||||||||||||||||||||||||||
Cash dividends to Series A preferred stockholders
|
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Stock-based compensation
|
-
|
|
-
|
|
|
|
|
|||||||||||||||||||||
Net loss
|
-
|
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Balances at September 30, 2023
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Balances at July 1, 2022
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Issuance of common stock from vested restricted stock units
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Issuance of common stock from exercise of pre-funded warrants
|
||||||||||||||||||||||||||||
Stock-based compensation
|
-
|
|
-
|
|
|
|
|
|||||||||||||||||||||
Net loss
|
-
|
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Balances at September 30, 2022
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Balances at January 1, 2022
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Issuance of common stock in connection with private offering
|
|
|
|
|
(
|
)
|
|
|
||||||||||||||||||||
Issuance of common stock from vested restricted stock units
|
|
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||
Forfeiture of unvested restricted stock
|
|
|
(
|
)
|
|
|
|
|
||||||||||||||||||||
Issuance of common stock from exercise of pre-funded warrants
|
||||||||||||||||||||||||||||
Cash dividends to Series A preferred stockholders
|
|
|
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Stock-based compensation
|
-
|
|
-
|
|
|
|
|
|||||||||||||||||||||
Net loss
|
-
|
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||||
Balances at September 30, 2022
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
For the nine months ended | ||||||||
|
September 30,
|
|||||||
|
2023
|
2022
|
||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Stock-based compensation
|
|
|
||||||
Commitment shares issued to Lincoln Park Capital, LLC
|
||||||||
Loss on shares sold to Lincoln Park Capital, LLC
|
||||||||
Amortization of right-of-use asset
|
|
|
||||||
Impairment of right-of-use-asset
|
||||||||
Non-cash component of acquisition of Exacis in-process research and development
|
||||||||
Impairment of in-process research and development
|
||||||||
Loss on disposal of fixed assets
|
||||||||
Gain on lease termination
|
( |
) | ||||||
Amortization of debt discount and debt issuance costs
|
||||||||
Change in fair value of warrant liabilities
|
( |
) | ( |
) | ||||
Change in fair value of contingent consideration liability
|
( |
) | ||||||
Loss on non-controlling investment
|
|
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Other receivables
|
(
|
)
|
(
|
)
|
||||
Prepaid expenses and other current assets
|
|
(
|
)
|
|||||
Other non-current assets
|
(
|
)
|
(
|
)
|
||||
Accounts payable and accrued expenses
|
|
|
||||||
Operating lease liability
|
|
(
|
)
|
|||||
Due to related party
|
( |
) | ||||||
Deferred revenue
|
||||||||
Other liabilities
|
(
|
)
|
|
|||||
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Purchase of property and equipment
|
|
(
|
)
|
|||||
Proceeds from the sale of fixed assets
|
||||||||
Net used in investing activities
|
|
(
|
)
|
|||||
Cash flows from financing activities:
|
||||||||
Proceeds received from the July 2023 Financing
|
||||||||
Fees paid related to the July 2023 Financing
|
( |
) | ||||||
Proceeds from sale of common stock pursuant to stock purchase agreement with Lincoln Park Capital Fund, LLC
|
||||||||
Proceeds from issuance of common stock and warrants in connection with private offering
|
||||||||
Issuance of common stock from exercise of pre-funded warrants
|
||||||||
Payroll tax remitted on net share settlement of equity awards
|
( |
) | ||||||
Dividends paid to Series A preferred stockholders
|
( |
) | ( |
) | ||||
Issuance of common stock from vested restricted stock units
|
||||||||
Principal payments on finance leases
|
( |
) | ||||||
Net cash provided by financing activities
|
|
|
||||||
Net decrease in cash and cash equivalents
|
(
|
)
|
(
|
)
|
||||
Cash, cash equivalents and restricted cash at beginning of period
|
|
|
||||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
|
$
|
|
||||
|
||||||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
|
$
|
|
||||
Income taxes
|
$ | $ | ||||||
Supplemental disclosure of non-cash investing and financing activities:
|
||||||||
Contingent consideration for Exacis asset acquisition
|
$ | $ | ||||||
Issuance of common stock for Exacis asset acquisition
|
$ | $ | ||||||
Warrants issued in connection with the July 2023 Financing
|
$ |
$ |
||||||
Unpaid fees incurred in connection with the July 2023 Financing
|
$ |
$ |
||||||
Initial measurement of ROU assets
|
$ | $ | ||||||
Initial measurement of lease liabilities
|
$ | $ | ||||||
Conversion of warrant liability to equity
|
$ |
$ |
||||||
Initial measurement of finance lease liabilities
|
$ |
$ |
||||||
Reconciliation of cash, cash equivalents and restricted cash at end of period:
|
||||||||
Cash and cash equivalents
|
$ | $ | ||||||
Restricted cash
|
||||||||
Total Cash, cash equivalents and restricted cash at end of period
|
$ | $ |
1) |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
|
2) |
LIQUIDITY AND CAPITAL RESOURCES
|
3) |
ASSET ACQUISITION
|
(i) |
if, at any time during the
|
(ii) |
if, at any time during the
|
(iii) |
during the
|
Stock price
|
$
|
|
||
Risk-free rate
|
|
%
|
||
Volatility
|
|
%
|
||
Dividend yield
|
|
%
|
||
Expected term
|
|
Fair Value of
Consideration
|
||||
Shares issued
|
$
|
|
||
Contingent consideration
|
|
|||
Direct costs
|
|
|||
Total fair value
|
$
|
|
4)
|
CONTRACT WITH CUSTOMER
|
1.
|
Identify the contract with a customer;
|
2.
|
Identify the performance obligations in the contracts;
|
3.
|
Determine the transaction price;
|
4.
|
Allocate the transaction price to the performance obligations; and
|
5.
|
Recognize revenue when (or as) the performance obligations are satisfied.
|
5)
|
JULY 2023 FINANCING
|
6) |
LEASES
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Operating lease expense
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Sublease income
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Variable lease expense
|
|
|
|
|
||||||||||||
Total lease expense
|
$
|
|
$
|
|
$
|
|
$
|
|
Operating Lease
ROU Assets
|
||||
Operating lease ROU assets at
January 1, 2023
|
$
|
|
||
Recognition of ROU asset for Somerville Sublease
|
||||
Amortization of operating lease
ROU assets
|
(
|
)
|
||
Operating lease ROU assets at
September 30, 2023
|
$
|
|
Operating Lease
Liabilities
|
||||
Operating lease liabilities at
January 1, 2023
|
$
|
|
||
Recognition of lease liability for Somerville Sublease
|
||||
Accretion of interest for Somerville Sublease
|
||||
Principal payments on operating
lease liabilties
|
(
|
)
|
||
Operating lease liabilities at
September 30, 2023
|
|
|||
Less non-current portion
|
|
|||
Current portion at September 30,
2023
|
$
|
|
As of
September 30, 2023
|
||||
2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Thereafter
|
|
|||
Total payments | |
|
||
Less imputed interest | ( |
) | ||
Total operating lease liabilities | $ |
7) |
FAIR VALUE OF FINANCIAL INSTRUMENTS
|
●
|
Level
1 Inputs – Valued based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
|
●
|
Level 2 Inputs – Valued based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. |
●
|
Level
3 Inputs – Valued based on inputs for which there is little or no market value, which require the reporting entity to develop its own assumptions.
|
Description
|
Level
|
September 30, 2023
|
December 31, 2022
|
|||||||||
Liabilities:
|
||||||||||||
Warrant liabilities - Common Warrants
|
3
|
$
|
|
$
|
|
|||||||
Market Cap Contingent Consideration
|
3 | $ | $ |
|
Warrant
Liabilities
|
Contingent
Consideration
|
||||||
Fair value at January 1, 2023
|
$
|
|
$ | |||||
Initial measurement
|
||||||||
Change in fair value
|
(
|
)
|
( |
) | ||||
Fair value at September 30, 2023
|
$
|
|
$ |
September 30, 2023
|
||||||||
|
Carrying
Value
|
Fair
Value
|
||||||
|
||||||||
Convertible Notes
|
$
|
|
$
|
|
8) |
GOODWILL
|
9) |
RELATED PARTY TRANSACTIONS
|
10)
|
ACCRUED EXPENSES
|
September 30,
2023 |
December 31,
2022
|
|||||||
Buildout costs for Somerville facility
|
$ | $ | ||||||
Legal fees and settlements
|
|
|
||||||
Clinical
|
|
|
||||||
Professional fees
|
|
|
||||||
Accrued compensation
|
|
|
||||||
Other
|
|
|
||||||
Total accrued expenses
|
$
|
|
$
|
|
11) |
COMMITMENTS AND CONTINGENCIES
|
12) |
STOCK-BASED COMPENSATION
|
|
Three months ended September 30,
|
Nine months ended September 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Stock options granted
|
|
|
|
|
|
Three months ended September 30,
|
Nine months ended September 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Weighted average risk-free rate
|
|
|
%
|
|
%
|
|
%
|
|||||||||
Weighted average volatility
|
|
|
%
|
|
%
|
|
%
|
|||||||||
Dividend yield
|
|
|
|
%
|
|
%
|
|
%
|
||||||||
Expected term
|
-
|
|
|
|
|
Three months ended September 30,
|
Nine months ended September 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Weighted average grant date fair value
|
|
|
$
|
|
$
|
|
$
|
|
|
Three months ended September 30,
|
Nine months ended September 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Research and development
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
General and administrative
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
13) |
WARRANTS
|
|
Warrants
Outstanding (in thousands) |
Exercise
Price |
Date
Exerciseable |
Expiration
Date |
Classification
|
||||||||
Common Warrants | $ |
Liability |
|||||||||||
November 2022 Warrants |
$ |
Equity |
|||||||||||
Note Warrants |
$ |
Equity | |||||||||||
14) |
NET LOSS PER SHARE
|
Three and Nine months ended September 30,
|
||||||||
2023
|
2022
|
|||||||
Warrants
|
||||||||
Convertible Notes converted into common stock
|
||||||||
Stock options
|
|
|
||||||
Preferred stock converted into common stock
|
|
|
||||||
RSUs
|
||||||||
Total potential shares of common stock excluded from computation
|
|
|
15) |
STANDBY EQUITY PURCHASE AGREEMENT
|
16) |
RECENT ACCOUNTING PRONOUNCEMENTS
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
|
Three months ended September 30,
|
Nine months ended September 30,
|
||||||||||||||||||||||
(In thousands)
|
2023
|
2022
|
Change
|
2023
|
2022
|
Change
|
||||||||||||||||||
Revenue
|
$
|
51
|
$
|
-
|
$
|
-
|
$
|
51
|
$
|
-
|
$
|
-
|
||||||||||||
Cost of revenues
|
120
|
-
|
80
|
170
|
-
|
130
|
||||||||||||||||||
Gross loss
|
(69
|
)
|
-
|
(80
|
)
|
(119
|
)
|
-
|
(130
|
)
|
||||||||||||||
|
||||||||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||
Research and development
|
1,457
|
4,963
|
(3,463
|
)
|
4,710
|
8,430
|
(3,677
|
)
|
||||||||||||||||
General and administrative
|
3,979
|
3,341
|
642
|
10,081
|
14,060
|
(3,975
|
)
|
|||||||||||||||||
Acquisition of Exacis in-process research and development
|
-
|
-
|
-
|
460
|
-
|
460
|
||||||||||||||||||
Impairment of in-process research and development
|
-
|
-
|
-
|
-
|
5,990
|
(5,990
|
)
|
|||||||||||||||||
Total operating expenses
|
5,436
|
8,304
|
(2,821
|
)
|
15,251
|
28,480
|
(13,182
|
)
|
||||||||||||||||
Loss from operations
|
(5,505
|
)
|
(8,304
|
)
|
2,741
|
(15,370
|
)
|
(28,480
|
)
|
13,052
|
||||||||||||||
|
||||||||||||||||||||||||
Other (expense) income, net:
|
||||||||||||||||||||||||
Change in fair value of warrant liabilities
|
20
|
1,024
|
(1,004
|
)
|
166
|
10,493
|
(10,327
|
)
|
||||||||||||||||
Change in fair value of contingent consideration
|
-
|
-
|
-
|
118
|
-
|
118
|
||||||||||||||||||
Loss on non-controlling investment
|
-
|
(21
|
)
|
21
|
(59
|
)
|
(932
|
)
|
873
|
|||||||||||||||
Other expense, net
|
(114
|
)
|
(10
|
)
|
(104
|
)
|
(369
|
)
|
(1,166
|
)
|
797
|
|||||||||||||
Total other (expense) income, net
|
(94
|
)
|
993
|
(1,087
|
)
|
(144
|
)
|
8,395
|
(8,539
|
)
|
||||||||||||||
Loss before income taxes
|
(5,599
|
)
|
(7,311
|
)
|
1,654
|
(15,514
|
)
|
(20,085
|
)
|
4,513
|
||||||||||||||
|
||||||||||||||||||||||||
Benefit (provision) for income taxes
|
8
|
(5
|
)
|
13
|
(1
|
)
|
(5
|
)
|
4
|
|||||||||||||||
Net loss
|
$
|
(5,591
|
)
|
$
|
(7,316
|
)
|
$
|
1,667
|
$
|
(15,515
|
)
|
$
|
(20,090
|
)
|
$
|
4,517
|
|
Three months ended September 30,
|
|||||||||||
|
2023
|
2022
|
Change
|
|||||||||
(in thousands)
|
||||||||||||
MSA expense
|
$
|
813
|
$
|
3,699
|
$
|
(2,886
|
)
|
|||||
Payroll-related
|
134
|
735
|
(601
|
)
|
||||||||
Stock-based compensation
|
57
|
183
|
(126
|
)
|
||||||||
Professional fees
|
295
|
57
|
238
|
|||||||||
Other expenses, net
|
158
|
289
|
(131
|
)
|
||||||||
Total research and development expenses
|
$
|
1,457
|
$
|
4,963
|
$
|
(3,506
|
)
|
|
Nine months ended September 30,
|
|||||||||||
|
2023
|
2022
|
Change
|
|||||||||
(in thousands)
|
||||||||||||
Payroll-related
|
$
|
504
|
$
|
2,337
|
$
|
(1,833
|
)
|
|||||
MSA expense
|
2,438
|
3,699
|
(1,261
|
)
|
||||||||
Stock-based compensation
|
177
|
1,075
|
(898
|
)
|
||||||||
Professional fees
|
825
|
177
|
648
|
|||||||||
Other expenses, net
|
766
|
1,142
|
(376
|
)
|
||||||||
Total research and development expenses
|
$
|
4,710
|
$
|
8,430
|
$
|
(3,720
|
)
|
|
Three months ended September 30,
|
|||||||||||
|
2023
|
2022
|
Change
|
|||||||||
(in thousands)
|
||||||||||||
Occupancy expense
|
$
|
1,563
|
$
|
189
|
$
|
1,374
|
||||||
Professional fees
|
1,656
|
1,628
|
28
|
|||||||||
Insurance
|
209
|
528
|
(319
|
)
|
||||||||
Stock-based compensation
|
117
|
293
|
(176
|
)
|
||||||||
Payroll-related
|
254
|
424
|
(170
|
)
|
||||||||
Other expenses, net
|
180
|
279
|
(99
|
)
|
||||||||
Total general and administrative expenses
|
$
|
3,979
|
$
|
3,341
|
$
|
638
|
|
Nine months ended September 30,
|
|||||||||||
|
2023
|
2022
|
Change
|
|||||||||
(in thousands)
|
||||||||||||
Payroll-related
|
$
|
1,312
|
$
|
2,706
|
$
|
(1,394
|
)
|
|||||
Professional fees
|
4,904
|
6,251
|
(1,347
|
)
|
||||||||
Impairment of ROU asset
|
-
|
772
|
(772
|
)
|
||||||||
Stock-based compensation
|
900
|
1,463
|
(563
|
)
|
||||||||
Insurance
|
936
|
1,422
|
(486
|
)
|
||||||||
Loss on disposal of fixed assets
|
1
|
431
|
(430
|
)
|
||||||||
Occupancy expense
|
1,606
|
541
|
1,065
|
|||||||||
Other expenses, net
|
422
|
474
|
(52
|
)
|
||||||||
Total general and administrative expenses
|
$
|
10,081
|
$
|
14,060
|
$
|
(3,979
|
)
|
|
Three months ended September 30,
|
|||||||||||
|
2023
|
2022
|
Change
|
|||||||||
(in thousands)
|
||||||||||||
Interest expense, net
|
(114
|
)
|
(10
|
)
|
(104
|
)
|
||||||
Total other expense, net
|
$
|
(114
|
)
|
$
|
(10
|
)
|
$
|
(104
|
)
|
|
Nine months ended September 30,
|
|||||||||||
|
2023
|
2022
|
Change
|
|||||||||
(in thousands)
|
||||||||||||
PIPE transaction fees
|
$
|
-
|
$
|
(1,007
|
)
|
$
|
1,007
|
|||||
Liquidated damages
|
-
|
(240
|
)
|
240
|
||||||||
SEPA fees
|
(280
|
)
|
-
|
(280
|
)
|
|||||||
Interest expense, net
|
(88
|
)
|
(24
|
)
|
(64
|
)
|
||||||
Other income, net
|
(1
|
)
|
105
|
(106
|
)
|
|||||||
Total other expense, net
|
$
|
(369
|
)
|
$
|
(1,166
|
)
|
$
|
797
|
• |
the terms and timing of any collaborative, licensing and other agreements that we may establish;
|
• |
the cost of filing and potentially prosecuting, defending and enforcing any patent claims and other intellectual property rights;
|
• |
the cost and timing of regulatory approvals;
|
• |
the cost and delays in product development as a result of any changes in regulatory oversight applicable to our products;
|
• |
the cost and timing of establishing sales, marketing and distribution capabilities;
|
• |
the effect of competition and market developments;
|
• |
the scope, rate of progress and cost of clinical trials and other product development activities; and
|
• |
future clinical trial results.
|
|
For the nine months ended
September 30, |
|||||||||||
(in thousands)
|
2023
|
2022
|
Change
|
|||||||||
Cash (used in) provided by:
|
||||||||||||
Operating activities
|
$
|
(15,747
|
)
|
$
|
(15,541
|
)
|
$
|
(206
|
)
|
|||
Investing activities
|
-
|
(176
|
)
|
176
|
||||||||
Financing activities
|
8,852
|
11,986
|
(3,134
|
)
|
||||||||
Net decrease in cash and cash equivalents
|
$
|
(6,895
|
)
|
$
|
(3,731
|
)
|
$
|
(3,164
|
)
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4. |
Controls and Procedures.
|
• |
enhancing the business process controls related to reviews over technical, complex, and non-recurring transactions;
|
• |
providing additional training to accounting personnel; and
|
• |
consulting with an accounting advisor for technical, complex and non-recurring matters, with whom we have engaged and begun consulting.
|
Item 1. |
Legal Proceedings.
|
Item 1A. |
Risk Factors.
|
•
|
limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate;
|
•
|
increase our vulnerability to general adverse economic and industry conditions; and
|
•
|
place us at a competitive disadvantage compared to our competitors.
|
•
|
the holders of the Convertible Notes may require us to repurchase some or all of their Convertible Notes at a price equal to 100% of the
principal amount being repurchased, plus accrued and unpaid interest;
|
•
|
the holders of the Convertible Notes could foreclose against our assets; and/or
|
•
|
we could be forced into bankruptcy or liquidation.
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Item 3. |
Defaults Upon Senior Securities.
|
Item 4. |
Mine Safety Disclosures.
|
Item 5. |
Other Information.
|
Item 6. |
Exhibits
|
Exhibit
|
Description
|
Incorporated By
Reference
|
Securities Purchase Agreement, dated as of July 13, 2023, by and among Eterna Therapeutics Inc. and the purchasers party thereto.
|
Exhibit 10.1 to Form 8-K filed on July 18, 2023
|
|
Registration Rights Agreement, dated as of July 13, 2023, by and among Eterna Therapeutics Inc. and the purchasers party thereto.
|
Exhibit 10.4 to Form 8-K filed on July 18, 2023
|
|
Form of Senior Convertible Note.
|
Exhibit 10.2 to Form 8-K filed on July 18, 2023
|
|
Form of Common Stock Purchase Warrant.
|
Exhibit 10.3 to Form 8-K filed on July 18, 2023
|
|
First Amendment to Exclusive License Agreement, dated as of July 12, 2023, by and between Eterna Therapeutics Inc. and Factor Bioscience Limited.
|
Exhibit 10.1 to Form 8-K filed on July 13, 2023
|
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Filed herewith
|
|
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Furnished herewith
|
Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
Furnished herewith
|
|
101.INS
|
Inline 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).
|
Filed herewith
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
Filed herewith
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
Filed herewith
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
Filed herewith
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
Filed herewith
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
Filed herewith
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
|
ETERNA THERAPEUTICS INC.
|
||
Date: November 13, 2023
|
By:
|
/s/ Matthew Angel
|
Matthew Angel
|
||
Chief Executive Officer and President
|
||
(Principal Executive Officer)
|
Date: November 13, 2023
|
By:
|
/s/ Sandra Gurrola
|
Sandra Gurrola
|
||
Vice President of Finance
|
||
(Principal Financial Officer and Principal Accounting Officer)
|
Date: November 13, 2023
|
/s/ Matthew Angel
|
Matthew Angel
|
|
Chief Executive Officer and President
|
|
(Principal Executive Officer)
|
Date: November 13, 2023
|
/s/ Sandra Gurrola
|
Sandra Gurrola
|
|
Vice President of Finance
|
|
(Principal Financial Officer)
|
Date: November 13, 2023
|
/s/ Matthew Angel
|
Matthew Angel
|
|
Chief Executive Officer and President
|
|
(Principal Executive Officer)
|
Date: November 13, 2023
|
/s/ Sandra Gurrola
|
Sandra Gurrola
|
|
Vice President of Finance
|
|
(Principal Financial Officer)
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.005 | $ 0.005 |
Preferred stock, shares authorized (in shares) | 1,000 | 1,000 |
Preferred stock, shares issued (in shares) | 156 | 156 |
Preferred stock, shares outstanding (in shares) | 156 | 156 |
Preferred stock, liquidation preference | $ 156 | $ 156 |
Common stock, par value (in dollars per share) | $ 0.005 | $ 0.005 |
Common stock, shares authorized (in shares) | 100,000 | 100,000 |
Common stock, shares issued (in shares) | 5,410 | 5,127 |
Common stock, shares outstanding (in shares) | 5,410 | 5,127 |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2023 | |||
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION [Abstract] | |||
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION |
Description of Business
Eterna Therapeutics Inc. (“Eterna”), together with its subsidiaries including Eterna Therapeutics LLC (“Eterna LLC”), Novellus, Inc. (“Novellus”) and Novellus Therapeutics Limited (“Novellus
Limited”), is a life science company committed to realizing the potential of mRNA cell engineering to provide patients with transformational new medicines. Eterna has in-licensed a portfolio of over 100 patents covering key mRNA cell engineering technologies, including technologies for mRNA cell reprogramming, mRNA gene editing, the NoveSliceTM and UltraSliceTM
gene-editing proteins, and the ToRNAdoTM mRNA delivery system. Eterna plans to develop and advance a pipeline of therapeutic products both internally and through strategic partnerships, with the near-term focus on strategic partnerships.
Eterna licenses its mRNA technology platform from Factor Bioscience Limited (“Factor Limited”) under an exclusive license agreement. As used herein, the “Company” refers collectively to Eterna and its subsidiaries.
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and with the
instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited financial
statements include all the normal recurring adjustments that are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented.
These condensed consolidated financial statements should be read together with the audited consolidated financial statements and notes thereto contained in Eterna’s Annual Report on Form 10-K for the year ended December 31, 2022 filed
with the Securities and Exchange Commission (the “SEC”) on March 20, 2023 (the “2022 10-K”). The accompanying condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements contained in the
2022 10-K but does not include all of the information and footnotes required by GAAP for complete financial statements. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the
results to be anticipated for the entire year ending December 31, 2023, or any other period.
Reclassifications
Certain reclassifications have
been made to the Company’s prior year amounts to conform to the current year presentation.
|
LIQUIDITY AND CAPITAL RESOURCES |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2023 | |||
LIQUIDITY AND CAPITAL RESOURCES [Abstract] | |||
LIQUIDITY AND CAPITAL RESOURCES |
The Company has incurred significant operating losses and has an accumulated deficit as a result of its efforts to develop product candidates, including conducting clinical trials and providing general and
administrative support for operations. As of September 30, 2023, the Company had an unrestricted cash balance of approximately $4.6
million and an accumulated deficit of approximately $180.8 million. For the three and nine months ended September 30, 2023, the
Company incurred a net loss of $5.6 million and $15.5 million, respectively, and the Company used cash in operating activities of $15.7
million during the nine months ended September 30, 2023.
In October 2022, the Company entered into a facility sublease agreement (the “Sublease”) for approximately 45,500 square feet of office and laboratory space in Somerville, Massachusetts. Pursuant to the Sublease, the Company delivered to the sublessor a security deposit in the form of a
letter of credit in the amount of $4.1 million, which will be reduced on an incremental basis throughout the term of the lease.
The letter of credit was issued by the Company’s commercial bank, which required that the Company cash collateralize the letter of credit by depositing $4.1 million in a restricted cash account with such bank. The amount of required restricted cash collateral will decline in parallel with the reduction in the amount of the letter of
credit over the term of the Sublease.
On April 5, 2023, the Company entered into a standby equity purchase agreement (the “SEPA”) and a registration rights agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to
which Lincoln Park committed to purchase up to $10.0 million of the Company’s common stock in an “equity line” financing
arrangement. During the nine months ended September 30, 2023, the Company issued and sold approximately 214,000 shares of common
stock under the SEPA for gross proceeds of $0.3 million. The Company did not sell any shares under the SEPA for the three months ended September 30, 2023. See Note 15.
On July 14, 2023, the Company closed a financing with certain investors providing for the private placement to the investors of (i) approximately $8.7 million in aggregate principal convertible promissory notes (the “ Convertible Notes”) and (ii) warrants to purchase an aggregate of approximately 6.1 million shares of the Company’s common stock (the “Note Warrants,” and together with the Convertible Notes, the “July 2023 Financing”).
The Convertible Notes bear interest at 6% per annum, payable quarterly in arrears, and the Company may pay interest in cash or
in-kind by increasing the outstanding principal amount of the Convertible Notes. The Convertible Notes mature in July 2028 and can be converted into shares of the Company’s common stock at the option of the applicable investor.
In connection with preparing the accompanying condensed consolidated financial statements as of and for the three and nine months ended September 30, 2023, the Company’s management concluded that
there is substantial doubt regarding the Company’s ability to continue as a going concern because it does not expect to have sufficient cash or working capital resources to fund operations for the twelve-month period subsequent to the
issuance date of these condensed consolidated financial statements. The Company will need to raise additional capital in addition to the July 2023 Financing, which could be through the remaining availability under the SEPA, public or
private equity offerings, debt financings, strategic partnerships or other means. Other than the SEPA, the Company currently has no arrangements for such capital, and no assurances can be given that it will be able to raise such capital
when needed, on acceptable terms, or at all.
The accompanying condensed consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the
normal course of business. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and
classifications of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.
|
ASSET ACQUISITION |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ASSET ACQUISITION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ASSET ACQUISITION |
In April 2023, the
Company entered into an asset purchase agreement (the “Exacis Purchase Agreement”), together with Exacis Biotherapeutics Inc. (“Exacis”), the stockholders party thereto and, with respect to specified provisions therein, Factor Limited (the “Exacis
Acquisition”). Pursuant to the Exacis Purchase Agreement, the Company acquired from Exacis substantially all of Exacis’ intellectual property assets (the “Exacis Assets”), including all of Exacis’ right, title and interest in and to an exclusive
license agreement by and between Exacis and Factor Limited (the “Purchased License”). The Company assumed none of Exacis’ liabilities, other than liabilities under the Purchased License that accrue subsequent to the closing date.
In consideration for the
Exacis Assets, on the closing date of the transaction, the Company issued to Exacis an aggregate of approximately 69,000 shares of common
stock, which shares are subject to a 12-month lockup, pursuant to which Exacis may not sell or otherwise transfer such shares. The shares were issued to Exacis at
a price based on the Company having an assumed equity valuation of $75.0 million, divided by the number of issued and outstanding
shares of common stock as of the close of business two trading days prior to the closing date. For accounting purposes, the shares issued were valued at $3.00 per share, which was the closing price of the Company’s common stock on the date of issuance. The Company additionally agreed to make the following contingent payments:
The Company accounted for the Exacis Acquisition as an asset
acquisition because it determined that substantially all of the fair value of the assets acquired was concentrated in the Purchased License. Assets acquired in an asset acquisition are recognized based on their cost to the acquirer and generally
allocated to the assets on a relative fair value basis. The Company’s cost for acquiring the Exacis Assets includes the issuance of the Company’s common stock, direct acquisition-related costs and contingent consideration.
The Market Cap Contingent Consideration is indexed to or settled in the Company’s own shares. As a result, the Company classified the Market Cap
Contingent Consideration as a liability measured at fair value because the financial instrument embodies a conditional obligation (the Company would only issue the shares on the condition that the market capitalization thresholds are met), and at
inception, the monetary value of the obligation is based solely on a fixed monetary amount ($2.0 million of shares for each target),
which will be settleable with a variable number of the Company’s shares. The Company used a Monte Carlo simulation model to estimate the fair value of the Market Cap Contingent Consideration as of the acquisition date using the following
assumptions:
The License Contingent Consideration is to be settled in cash and is generally recognized when the liability is probable and estimable. As of the
acquisition date and as of September 30, 2023, the Company concluded that paying the License Contingent Consideration was not probable or estimable. Therefore, there was no applicable contingent consideration liability recognized.
The table below shows the
total fair value of the consideration paid for the Exacis Assets (in thousands).
The Company allocated 100% of the fair value of the consideration to the Purchased License, which the Company determined is an in-process research and development (“IPR&D”)
asset. IPR&D assets acquired through an asset purchase that have no alternative future uses and no separate economic values from their original intended purpose are expensed in the period the cost is incurred. As a result, the Company expensed
the fair value of the Purchased License during the nine months ended September 30, 2023.
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CONTRACT WITH CUSTOMER |
9 Months Ended | |||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||
CONTRACT WITH CUSTOMER [Abstract] | ||||||||||||||||||
CONTRACT WITH CUSTOMER |
On February 21, 2023, the Company and Lineage Cell Therapeutics, Inc. (“Lineage”)
entered into an exclusive option and license agreement (the “Agreement”), which provided Lineage with the option (the “Option Right”) to obtain an exclusive sublicense to certain related technology for preclinical, clinical and commercial purposes,
which would permit Lineage to further sublicense such intellectual property, subject to payment of certain sublicense royalty fees. Lineage paid the Company a $0.3 million non-refundable up-front payment (the “Option Fee”) for the Option Right.
Under
the Agreement, Lineage could also request that the Company develop for, and deliver to, Lineage certain induced pluripotent stem cell lines, which Lineage would use to evaluate the possible development of cell transplant therapies for treatment
of diseases of the central nervous system in humans, excluding certain indications. Lineage had until August 22, 2023 to request that the Company develop the customized cell line, at which point, the Company would be entitled to certain cell
line customization fees.
Upon Lineage’s
request for the Company to develop the customized cell line, Lineage would then have six months from delivery to Lineage of such induced pluripotent stem cell lines to exercise the Option Right and obtain the sublicense. If Lineage obtains the
sublicense, the Company would be entitled to receive additional license fees, including milestone payments and royalties.
The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers (“ASC 606”), which requires the Company to perform the following five steps in order to recognize revenue:
Pursuant to ASC 606 the Company determined that the Option Right was an unexercised right held by Lineage under the Agreement at contract inception, as the cell line
customization activities and the sublicense were optional purchases at contract inception. These optional purchases of goods and services would be treated as separate contracts if and when Lineage determines that it will make such purchases.
Therefore, 100% of the Option Fee was allocated to the Option Right. The Option Fee will remain in deferred revenue until such
time that Lineage enters into the sublicense or when the Option Right expires.
On August 21, 2023, Lineage requested that the Company begin
developing certain induced pluripotent stem cell lines in exchange for a fixed fee, subject to certain constraints as discussed further below. Also on August 21, 2023, the Company and Lineage entered into an amendment of the
Agreement, which provided for changes specifically related to the cell line customization activities such as (i) payment terms, (ii) certain definitions, (iii)
certain courses of action if the customized cell line selected by Lineage is not successful and (iv) documentation requirements.
As previously concluded, the Option Right and the cell line customization activities
are accounted for as separate contracts, and the Company has determined that the amended terms discussed above represent a modification to the cell line customization contract. Because there were no goods or services transferred to Lineage
before entering into the amendment, and therefore, no previously recognized revenue, there was no catch-up adjustment to revenue required during the three and nine months ended September 30, 2023.
Lineage will make payments to the Company for the cell line customization activities
over the development period. During the three months ended September 30, 2023, the Company received an initial payment of $0.4 million to
commence the cell line customization activities, per the amended payment terms. The Company will only earn the remaining full amount of the cell line customization fee if it makes
certain progress towards delivery of the customized cell line. The Company estimates the amount of consideration it expects to recognize as revenue that is not probable of having a significant reversal of such recognized revenue, and it places a
constraint on the remaining contractual consideration. The Company has determined that $0.4 million of consideration could be
recognized without the probability of being reversed, and it has placed a constraint on the remaining contractual customization fee. The $0.4
million is being recognized equally over ten months (which is the expected development period), as the level of effort to perform the services is happening at the same rate over time. As it becomes evident that the constrained amounts are no
longer at risk of a significant reversal of revenue, the Company will remove the constraint from the related revenue and recognize a cumulative catch-up adjustment to revenue in the period in which the constraint was removed, with the remaining
unconstrained revenue being recognized over the remaining development time. For the three and nine months ended September 30, 2023, the Company recognized less than $0.1 million of revenue for the customization activities.
The granting of the license that the Company may provide to Lineage if Lineage
exercises the Option Right is not considered a performance obligation at this time, as it is an optional request that the customer may make in the future and will be accounted for as a separate contract when the customer exercises the Option
Right.
The Company recognizes direct labor and supplies used in the customization
activities as incurred and are recorded as a cost of revenue. As provided for in the Exclusive Factor License Agreement discussed in Note 9, the Company is obligated to pay Factor Limited 20% of any amounts the Company receives from a customer that is related to the licensed technology under the Exclusive Factor License Agreement, which is also recorded as a cost of
revenue.
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JULY 2023 FINANCING |
9 Months Ended | ||
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Sep. 30, 2023 | |||
JULY 2023 FINANCING [Abstract] | |||
JULY 2023 FINANCING |
On
July 14, 2023, the Company completed the July 2023 Financing, which provided for the issuance of approximately $8.7 million in aggregate
principal amount of Convertible Notes and the issuance of the Note Warrants to purchase an aggregate of approximately 6.1 million shares
of common stock. The Company recognized approximately $0.2 million in fees associated with the transaction.
The Convertible Notes bear interest at 6% per annum, payable quarterly in arrears. At the Company’s election, it may pay interest either in cash or in-kind by increasing the outstanding principal amount of the
Convertible Notes. The Convertible Notes mature on July 14, 2028, unless earlier converted or repurchased. The Company may not redeem
the Convertible Notes at its option prior to maturity.
At the option of the investors, the Convertible Notes may be converted from
time-to-time in whole or in part into shares of common stock at an initial conversion rate of $2.86 per share, subject to customary
adjustments for stock splits, stock dividends, recapitalization and the like. As of September 30, 2023, there were no Convertible Notes
that were converted into shares of common stock.
The Convertible Notes do not contain any ratchet or other financial antidilution provisions. The Convertible Notes purchased by the investors contain conversion limitations, providing that no conversion may be
made if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99%,
9.99% or 19.99%
immediately after conversion thereof, subject to certain increases not in excess of either 9.99% or 19.99% at the option of such holder.
The Convertible Notes provide for customary events of default which include (subject in certain cases to customary grace and
cure periods), among others, the following: nonpayment of principal or interest, breach of covenants or other agreements in the Convertible Notes; the occurrence of a material adverse effect event (as defined in the related securities purchase
agreement) and certain events of bankruptcy. Generally, if an event of default occurs and is continuing under the Convertible Notes, the holder thereof may require the Company to repurchase some or all of their Convertible Notes at a repurchase
price equal to 100% of the principal amount of the Convertible Notes being repurchased, plus accrued and unpaid interest thereon.
The Note Warrants are
immediately exercisable, have an exercise price of $2.61 per share, expire five years following the date of issuance and are subject to customary adjustments. The Note Warrants purchased by the investors contain a provision pursuant to which such Note Warrants
may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99%, 9.99% or 19.99% immediately after exercise thereof, subject to certain increases not in excess of either 9.99% or 19.99% at the option of such holder.
The Company determined that there
were no embedded derivatives within the Convertible Notes that required bifurcation from the host agreement. The Company allocated the gross proceeds received and the fees incurred over the Convertible Notes and the Note Warrants based on their
relative fair values. For purposes of the allocation, the Company used an estimated fair value of $8.7 million for the Convertible
Notes based off of a valuation performed by a third-party specialist. The fair value of the Note Warrants, which qualified for equity classification, was approximately $13.1 million using the Black-Scholes pricing model as of the transaction date of July 14, 2023. As a result, the Company allocated approximately $5.2 million in proceeds and approximately $0.1 million in fees
to the Note Warrants and a corresponding reduction in the carrying value of the Convertible Notes for the debt discount and debt issuance costs, both of which are amortized as a component of interest expense, based on the effective interest rate
method, over the contractual terms of the Convertible Notes.
As of September 30, 2023, the outstanding principal of the Convertible Notes was $8.7 million, and the unamortized balance of the debt discount and debt issuance costs was $5.2 million. The Company accrued approximately $0.1 million in interest expense related to the
Convertible Notes, which is recorded in accrued expenses in the accompanying condensed consolidated balance sheet. For both the three and nine months
ended September 30, 2023, the Company recognized approximately $0.2 million in interest expense, which is included in other
expense, net in the accompanying condensed consolidated statement of operations. The interest expense related to the Convertible Notes includes approximately $0.1 million for the amortization of the debt discount and debt issuance costs.
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LEASES |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES |
The Company currently has operating leases for office and laboratory space
in New York, New York, Cambridge, Massachusetts and Somerville, Massachusetts, which expire in 2026, 2028, and 2033, respectively.
During the second quarter of 2022, the Company determined to consolidate its research and development efforts in Cambridge, Massachusetts and
sublease its San Diego lab and office space. As a result, the Company recognized an impairment charge of approximately $0.8 million on
the San Diego Lease ROU asset during the nine months ended September 30, 2022. In November 2022, the Company entered into a lease termination agreement, effective January 31, 2023; and as of September 30, 2023, there was no lease liability or ROU asset balances remaining for the San Diego lease.
In October 2022, the Company entered into the Sublease with E.R. Squibb & Sons, L.L.C., a subsidiary
of Bristol-Myers Squibb Company (“Sublessor”), for office, laboratory and research and development space (the “Premises”). The Premises consist of approximately 45,500 square feet on the ninth floor of a building currently under construction located in Somerville, Massachusetts. The lease expires in November 2033 and is subject to a five-year extension.
Rental payments for the Sublease will begin on November 29, 2023. The Company will pay base rent of
approximately $0.5 million per month during the first year of the term, which will increase 3% per year thereafter. The Company will also make monthly payments for parking, which are based on market rates that can change from time to time, as well as pay its share
of traditional lease expenses, including certain taxes, operating expenses and utilities.
Pursuant to the Sublease, the Company paid the Sublessor a security deposit in the form of a letter of
credit in the amount of approximately $4.1 million. Provided there are no events of default by the Company under the Sublease, the
letter of credit will be reduced on an incremental basis throughout the Term.
The Sublessor has agreed to provide the Company with a tenant improvement allowance (“TIA”) of $190 per rentable square foot, or $8.6
million. Tenant improvements to the Premises in excess of this amount, if any, will be at the Company’s own cost. It is anticipated that the construction will be substantially complete by [the end of 2023].
The Company obtained access and control of the Premises on June 21, 2023, and as such, the Company determined that the
commencement date for accounting purposes was June 21, 2023. The Company also performed an analysis on the accounting ownership of the tenant improvement assets and determined that such assets were Sublessor/Lessor owned. As a result, TIA
payments made by the Sublessor to the Company for the tenant improvement assets are considered a reimbursement rather than a lease incentive and not included as part of the consideration of the contract. Amounts paid by the Company for
Sublessor/Lessor owned assets that are in excess of the TIA are considered non-cash lease payments and are added to the consideration in the contract.
The Company measured the lease
liability and corresponding ROU asset for the Somerville Sublease as of June 21, 2023, which includes lease payments the Company must make over the ten-year lease term. The Company did not include the option to extend the lease for an
additional five years in the initial measurement because the Company was not reasonably certain as of June 21, 2023 that it would exercise its right to extend the lease term. As a result, the Company recorded a lease liability of $34.2 million, which includes $0.6
million for the incremental amount above the TIA that the Company expects to pay for Sublessor/Lessor owned assets, and a corresponding ROU asset of $34.4 million as of June 30, 2023. As of September 30, 2023, the Company has recorded approximately $1.1
million as other receivables in the condensed consolidated balance sheet for amounts submitted for reimbursement under the TIA for Sublessor/Lessor owned assets and approximately $3.5 million recorded in other current assets in the condensed consolidated balance sheet for amounts paid by the Company but not yet submitted for reimbursement of
Sublessor/Lessor owned assets.
For the three and nine months ended September 30, 2023 and 2022, the net operating lease expenses were as follows (in
thousands):
The tables below show the beginning
balances of the operating ROU assets and lease liabilities as of January 1, 2023 and the ending balances as of September 30, 2023, including the changes during the period (in thousands).
As of September 30, 2023, the Company’s operating leases had a weighted-average
remaining life of 10.0 years with a weighted-average discount rate of 12.6%. The maturities of the operating lease liabilities are as follows (in thousands):
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FAIR VALUE OF FINANCIAL INSTRUMENTS |
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FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS |
Fair
value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between willing market participants. A fair value hierarchy has been established for valuation inputs that gives the
highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
The carrying amounts reported on the balance sheet for cash and cash equivalents, other receivable, prepaid assets and other current assets, accounts payable and accrued expenses, other current liabilities and other
liabilities approximate fair value based due to their short maturities.
The following tables summarize the liabilities that are measured at fair value as of September 30, 2023 and December 31, 2022 (in thousands):
The Company uses a
Black-Scholes option pricing model to estimate the fair value of its warrant liabilities and a Monte Carlo simulation model to estimate the fair value of the Market Cap Contingent Consideration, both of which are considered a Level 3 fair
value measurement. The Company remeasures the fair value of the warrant liabilities and the Market Cap Contingent Consideration at each reporting period and changes in the fair values are recognized in the statement of operations.
Certain inputs used in Black-Scholes, and Monte Carlo models may fluctuate in future
periods based upon factors that are outside of the Company’s control. A significant change in one or more of these inputs used in the calculation of the fair value may cause a significant change to the fair value of the Company’s
warrant liabilities or contingent consideration liabilities, which could also result in material non-cash gains or losses being reported in the Company’s consolidated statement of operations.
The following table presents the
changes liabilities measured at fair value from January 1, 2023, or from the initial measurement date if later than January 1, 2023, through September 30, 2023 (in thousands):
The Company assessed the fair value of the Market Cap
Contingent Consideration at September 30, 2023 and determined that there were no material changes to the inputs used in the June 30, 2023 remeasurement that would have resulted in a material change to the liability at September 30, 2023.
Therefore, the Company did not recognize a change in the fair value of the Market Cap Contingent Consideration for the three
months ended September 30, 2023.
The table below is provided for comparative purposes only and presents information about the fair value of the Company’s Convertible Notes relative to the
carrying values recognized in the condensed consolidated balance sheet as of September 30, 2023 (in thousands). The Company did not have the Convertible Notes as of December 31, 2022.
The Company assesses the fair value of the Convertible Notes using a binomial model, which is considered a Level 3
measurement.
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GOODWILL |
9 Months Ended | ||
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Sep. 30, 2023 | |||
GOODWILL [Abstract] | |||
GOODWILL |
In 2018, the Company acquired IRX Therapeutics (“IRX”), which was accounted for as a business combination. The Company recorded goodwill in the
amount of $2.0 million related to the IRX acquisition . Goodwill is not amortized but is
tested for impairment annually, or more frequently if the Company becomes aware of any events occurring or changes in circumstances that indicate that the fair value of the entity is less than its carrying value. Because management evaluates
the Company as a single reporting unit, goodwill is tested for impairment at the entity level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the entity is less than its
carrying value. Such qualitative factors include macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and other relevant events. If the entity does not pass the qualitative assessment,
then the entity’s carrying value is compared to its fair value. Goodwill is considered impaired if the carrying value of the entity exceeds its fair value.
As of September 30, 2023, the Company performed a qualitative assessment to determine whether it was more likely than not that the fair value
of the entity is less than its carrying value of goodwill. Such qualitative factors included macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and other relevant events. As a result of
the decline in the Company’s stock price from $2.26 per share as of June 30, 2023 to $2.18 per share as of September 30, 2023, the Company determined that there were indications of impairment. Accordingly, the Company proceeded to the first step in the
quantitative assessment of impairment and determined that the fair value of the reporting unit exceeded the carrying amount of goodwill, and therefore, the goodwill was not impaired as of September 30, 2023.
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RELATED PARTY TRANSACTIONS |
9 Months Ended | ||
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Sep. 30, 2023 | |||
RELATED PARTY TRANSACTIONS [Abstract] | |||
RELATED PARTY TRANSACTIONS |
Agreements with Factor Bioscience Inc. and Affiliates
As of September 30, 2023, the agreements below were in place related to Factor Bioscience Inc.
(including its affiliates, “Factor Bioscience”) and Dr. Matthew Angel. These agreements have been deemed related party transactions, as the Company’s Chief Executive Officer, Dr. Matthew Angel, is also the Chairman and Chief Executive Officer
of Factor Bioscience and a Director of Factor Limited.
In September
2022, the Company entered into a Master Services Agreement (the “MSA”) with Factor Bioscience, pursuant to which Factor Bioscience agreed to provide services to the Company as agreed between the Company and Factor Bioscience and as set forth in
one or more work orders under the MSA, including the first work order included in the MSA (“WO1”). Under WO1, Factor Bioscience agreed to provide the Company with mRNA cell engineering research support services, including access to certain
facilities, equipment, materials and training, and the Company agreed to pay Factor Bioscience an initial fee of $5.0 million,
payable in twelve equal monthly installments of approximately $0.4 million. Of the $5.0 million, the Company allocated $3.5 million to the License Fee Obligation (as defined below). Following the initial 12-month period, the Company agreed to continue paying Factor
Bioscience the monthly fee of $0.4 million until such time as WO1 is terminated. Upon entering into the MSA, the Company paid a
deposit of $0.4 million, which will be applied to the last month of WO1.
The
Company may terminate WO1 under the MSA on or after the second anniversary of the date of the MSA, subject to providing Factor Bioscience with 120
days’ prior notice. Factor Bioscience may terminate such work order only on and after the fourth anniversary of the date of the MSA, subject to providing the Company with 120 days’ prior notice. The MSA contains customary confidentiality provisions and representations and warranties of the parties, and the MSA may be
terminated by either party upon 30 days’ prior notice, subject to any superseding termination provisions contained in a particular
work order.
In connection with entering into the MSA, Factor Bioscience’s subsidiary, Factor Limited, entered into a waiver
agreement (the “Waiver Agreement”) with Eterna LLC, pursuant to which Factor Limited agreed to waive payment of $3.5 million
otherwise payable to it (the “License Fee Obligation”) in October 2022 by Eterna LLC under the exclusive license agreement entered into in April 2021 by and among Eterna LLC, Novellus Limited and Factor Limited, as amended in November
2022 (the “Original Factor License Agreement”). Under the terms of the Waiver Agreement, the License Fee Obligation is waived conditionally on the Company paying Factor Bioscience a minimum of $3.5 million due under the MSA.
Because the License Fee Obligation was conditionally waived until such amount
has been paid under the MSA, the Company recorded a liability of $3.5 million. As of September 30, 2023, there was approximately $1.6 million of the unamortized License Fee Obligation remaining, which is recorded on the accompanying condensed consolidated balance sheet in the
“due to related party” line items.
On February 20,
2023, the Company and Factor Limited entered into an exclusive license agreement (the “Exclusive Factor License Agreement”), which terminated and superseded the Original Factor License Agreement. Subject to certain exclusive licenses or other
rights granted by Factor Limited to other third parties as of the effective date of the Exclusive Factor License Agreement, Factor granted the Company the exclusive, sublicensable license under certain patents owned by Factor Limited (the
“Factor Patents”). The term of the Exclusive Factor License Agreement expires on November 22, 2027, but will be automatically extended for an additional (such period, the “Renewal Term”) if the Company receives at least $100
million in fees from sublicenses to the Factor Patents (“Sublicense Fees”) granted by the Company pursuant to the Exclusive Factor License Agreement. The Company will pay to Factor Limited 20% of any Sublicense Fee received by the Company before the initial expiration date of such license and 30% of any Sublicense Fees received by the Company during the Renewal Term. The Company may terminate the Exclusive Factor License Agreement upon 120 days’ written notice to Factor Limited, and both parties otherwise have additional customary termination rights. Under the Exclusive Factor
License Agreement, the Company is obligated to pay the expenses incurred by Factor Limited in preparing, filing, prosecuting and maintaining the Factor Patents and has agreed to bear all costs and expenses associated with enforcing and
defending the Factor Patents in any action or proceeding arising from pursuit of sublicensing opportunities under the license granted under the Exclusive Factor License Agreement.
On July 12, 2023, The Company and Factor Limited entered into the First
Amendment to the Exclusive Factor License Agreement (the “Exclusive License Agreement Amendment”), which amended the Exclusive
Factor License Agreement to (i) expand the field of use of the Factor Patents to include veterinary uses, (ii) extend the Renewal Term from to five years if the Company pays at least $6.0 million to Factor Limited from Sublicense Fees, other cash on hand or a combination of both sources of funds, (iii) reduce the Sublicense Fees
payable to Factor Limited during the Renewal Term from 30% to 20%, (iv) eliminate Factor Limited’s termination rights with respect to Factor Patents that are not sublicensed, or for which an opportunity has not been identified, in
each case by a certain date and (v) provide for the Company’s payment to Factor Limited of a monthly maintenance fee of approximately $0.4
million, beginning in September 2024.
In
September 2022, Novellus and Eterna entered into a Second Amendment to the Limited Waiver and Assignment Agreement (the “Waiver and Assignment Agreement”) with Drs. Matthew Angel and Christopher Rohde (the “Founders”) whereby the Company agreed
to be responsible for all future, reasonable and substantiated legal fees, costs, settlements and judgments incurred by the Founders, the Company or Novellus for certain claims and actions and any pending or future litigation brought against
the Founders, Novellus and/or the Company by or on behalf of the Westman and Sowyrda legal matters described in Note 11 (the “Covered Claims”). The Founders will continue to be solely responsible for any payments made to satisfy a judgement or
settlement of any pending or future wage act claims. Under the Waiver and Assignment Agreement, the Founders agreed that they are not entitled to, and waived any right to, indemnification or advancement of past, present or future legal fees,
costs, judgments, settlement or other liabilities they may have been entitled to receive from the Company or Novellus in respect of the Covered Claims. The Company and the Founders will share in any recoveries up to the point at which the
parties have been fully compensated for legal fees, costs and expenses incurred, with the Company retaining any excess recoveries. The Company has the sole authority to direct and control the prosecution, defense and settlement of the Covered
Claims.
Exacis Asset Acquisition
On April 26, 2023, the Company entered into the Exacis Purchase Agreement
to acquire the Exacis Assets, including all of Exacis’ right, title and interest in the Purchased License. The Company assumed none of Exacis’ liabilities, other than liabilities under the Purchased License that accrue subsequent to the
closing date. See Note 3.
The Exacis Acquisition was deemed a related party transaction because Dr. Gregory Fiore, who was the Chief Executive Officer of Exacis, was also a member
of the Company’s board of directors at the time of the Exacis Acquisition. Additionally, Dr. Angel was Chairman of Exacis’ scientific advisory board, he is the co-founder, President, CEO, and a director of Factor Bioscience Inc., which
is the parent of Factor Limited and a wholly owned subsidiary of Factor Bioscience LLC, the latter of which is the majority stockholder of Exacis.
Consulting Agreement with Dr. Fiore
In May 2023, the Company entered into a consulting agreement with Dr. Fiore, a former director of the Company, whereby Dr. Fiore agreed to
provide business development consulting services to the Company for a monthly retainer of $20,000. The consulting agreement was terminable for
any reason by either party upon 15 days’ written notice, and the Company terminated the consulting agreement,
effective July 31, 2023.
July 2023 Financing
On July 14, 2023, the Company closed the July 2023 Financing. Brant Binder, Richard Wagner Charles
Cherington and Nicholas Singer, who were former directors of the Company, participated in the July 2023 Financing under the same terms and subject to the same conditions as all the other purchasers. See Note 5.
|
ACCRUED EXPENSES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES |
Accrued expenses at September 30, 2023 and December 31, 2022 consisted of the
following (in thousands):
The $3.2 million shown above for the Somerville buildout costs will be subject to the TIA reimbursement described in Note 6 once such amount has been paid by the Company.
|
COMMITMENTS AND CONTINGENCIES |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2023 | |||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||
COMMITMENTS AND CONTINGENCIES |
Litigation Matters
The Company is involved in litigation and arbitrations from time to time in the ordinary course of business. Legal fees and other costs
associated with such actions are expensed as incurred. In addition, the Company assesses the need to record a liability for litigation and contingencies. The Company reserves for costs relating to these matters when a loss is probable, and the
amount can be reasonably estimated.
Novellus, Inc. v. Sowyrda et al., C.A. No.
2184CV02436-BLS2
On October 25, 2021 Novellus, Inc. filed a complaint in the Superior Court of Massachusetts, Suffolk County, against former Novellus, Inc.
employees Paul Sowyrda and John Westman and certain other former investors in Novellus LLC (Novellus, Inc.’s former parent company prior to our acquisition of Novellus, Inc.), alleging breach of fiduciary duty, breach of
contract and civil conspiracy. Eterna acquired Novellus, Inc. on July 16, 2021. On May 27, 2022 Novellus, Inc. amended the complaint to withdraw all claims against all defendants except Paul Sowyrda and John Westman. On
July 1, 2022, Westman filed a motion to compel arbitration or in the alternative, to stay the litigation pending the disposition of certain litigation in the Court of Chancery for the State of Delaware filed by Mr. Sowyrda
against Novellus LLC, Dr. Christopher Rohde, Dr. Matthew Angel, Leonard Mazur and Factor Bioscience, Inc. captioned Zelickson et al., v. Angel et al., C.A. 2021-1014-JRS and by Westman against Novellus LLC captioned Westman
v. Novellus LLC, C.A. No. 2021-0882-NAC (the “Delaware Actions”). On July 1, 2022, Sowyrda answered the complaint and asserted counterclaims against Novellus, Inc, and third-party defendants Dr. Matthew Angel and Dr.
Christopher Rohde alleging violations of the Massachusetts Wage Act, Massachusetts Minimum Fair Wage Law, the Fair Labor Standards Act, breach of contract, unjust enrichment and quantum meruit. Sowyrda also joined in
Westman’s motion to stay the case pending the Delaware Actions. Novellus, Inc.’s claims and Mr. Sowyrda’s counterclaims relate to alleged conduct that took place before Eterna acquired Novellus, Inc.
On November 15, 2022, prior to a decision on Westman’s and Sowyrda’s motion to compel or stay, the Parties agreed to voluntarily dismiss and consolidate the Delaware Actions with
this action. On December 15, 2022, Sowyrda filed an Amended Answer to the Amended Complaint, asserted affirmative defenses and filed Amended Counterclaims against Dr. Angel, Dr. Rohde, Novellus LLC, Novellus Inc., Factor
Bioscience Inc., and Eterna Therapeutics Inc. (“Counterclaim Defendants”) alleging against various Counterclaim Defendants breach of contract, breaches of the implied duty of good faith and fair dealing, breaches of
fiduciary duty, breaches of the operating agreement, aiding and abetting breaches of fiduciary duty, tortious interference with contract, equitable accounting, violations of the Massachusetts Wage Act, Massachusetts
Minimum Fair Wage Law, the Fair Labor Standards Act, unjust enrichment, and quantum meruit. Also on December 15, 2022, Westman filed an answer to the Amended Complaint and asserted similar counterclaims against the same
Counterclaim Defendants. Westman and Sowyrda each asserted claims for indemnification and/or advancement against Novellus, Inc. On January 11, 2023, Westman and Sowyrda served a joint motion to enforce their advancement
and/or indemnification rights against Novellus Inc. Novellus Inc. vigorously opposes this motion and served its opposition on January 27, 2023. On February 8, 2023, Westman and Sowyrda served a reply in support of their
motion to enforce indemnification/advancement rights, and submitted the motion to the Court. Novellus Inc. answered Westman and Sowyrda’s counterclaims on January 27, 2023, denying liability. The remaining Counterclaim
Defendants served a motion to dismiss most of the remaining counterclaims on January 27, 2023. The Court entered an order granting the Counterclaim Defendants’ motion to dismiss and denying Sowyrda and Westman’s motion to
enforce on June 15, 2023. The Court’s order dismissed all of Westman’s claims against Counterclaim Defendants except his claim for indemnification, and all of Sowyrda’s claims except his claim for indemnification and his
employment-related claims, which Counterclaim Defendants did not move to dismiss. On July 6, 2023, Westman and Sowyrda filed a petition for interlocutory review with a single justice of the Massachusetts Appeals Court,
seeking to overturn the judge’s decision granting the Counterclaim Defendants’ motion to dismiss most of the remaining counterclaims, but not the decision denying Westman and Sowyrda’s motion to enforce advancement rights.
On July 25, 2023, the parties to the appeal filed a joint motion to the single justice in the appellate court to stay the appeal to allow for amended counterclaims to be filed by Counterclaim Plaintiffs and a motion to dismiss
to be filed by Counterclaim Defendants. Counterclaim Plaintiffs filed an initial set of amended counterclaims on August 15, 2023. Counterclaim Plaintiffs amended and refiled their amended counterclaims on September 29,
2023. Counterclaim Defendants served their motion to dismiss all of the amended counterclaims, except for Sowyrda’s employment-related claims, on October 13, 2023.
Under applicable Delaware law and Novellus Inc.’s organizational documents, the Company may be required to advance or
reimburse certain legal expenses incurred by former officers and directors of Novellus, Inc. in connection with the foregoing Westman and Sowyrda matters. However, a future advance or reimbursement is not currently probable
nor can it be reasonably estimated.
eTheRNA Immunotherapies NV and eTheRNA Inc. v. Eterna Therapeutics Inc. C.A. No. 123CV11732
On July 31, 2023, eTheRNA Immunotherapies NV and eTheRNA Inc. filed a complaint in court against Eterna Therapeutics Inc.
alleging the following claims: (1) federal trademark infringement; (2) federal unfair competition; (3) Massachusetts state common law trademark infringement; (4) Massachusetts state unfair competition. Service of process
for the complaint was completed on August 1, 2023. At this stage in the litigation, the Company is not able to predict the probability of a favorable or unfavorable outcome.
Licensing Agreements
On February 20, 2023, the Company and Factor Limited
entered into the Exclusive Factor License Agreement, which terminated and superseded the Original Factor License Agreement. On July 12, 2023, the Company and Factor Limited entered into the Exclusive License Agreement Amendment. See Note
9 for details of these agreements.
Retirement Savings Plan
The Company established a defined contribution plan, organized under Section 401(k) of the Internal Revenue Code, which allows employees to defer up to 90% of their pay on a pre-tax basis. Beginning on January 1, 2023, the Company began matching employees’ contributions at a rate of 100% of the first 3% of
the employee’s contribution and 50% of the next 2% of the employee’s contribution, for a maximum Company match of 4%.
|
STOCK-BASED COMPENSATION |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION |
Stock Options
During the three and nine months ended September 30, 2023 and 2022, the Company
granted the following stock options (in thousands):
The Company recognizes stock-based compensation expense for stock options granted to employees, directors and certain consultants. The Company estimates the fair value
of stock options using the Black-Scholes option pricing model. The fair value of stock options granted is recognized as expense over the requisite service period on a straight-lined basis.
The following weighted-average assumptions were used for
stock options granted during the three and nine months ended September 30, 2023 and 2022:
The per-share weighted average grant-date fair value of stock options granted during the three and nine months ended September 30,
2023 and 2022 was as follows:
Vesting of all stock option grants is subject to continuous service with the Company through such vesting dates. As of September 30, 2023,
there were approximately 510,000 stock options outstanding.
Restricted Stock Units
During
the nine months ended September 30, 2022, the Company granted approximately 55,000 performance-based restricted stock units (“RSUs”),
all of which were forfeited during 2022, as the applicable performance goals were not met. The Company did not grant any RSUs
during the three months ended September 30, 2022 or during the three and nine months ended September 30, 2023.
The
Company recognizes the fair value of RSUs as expense on a straight-line basis over the requisite service period. For performance-based RSUs, the Company begins recognizing the expense once the achievement of the related performance goal is
determined to be probable.
Outstanding
RSUs are settled in an equal number of shares of common stock on the vesting date of the award. An RSU award is settled only to the extent vested. Vesting generally requires the continued employment or service by the award recipient through the
respective vesting date. Because RSUs are settled in an equal number of shares of common stock without any offsetting payment by the recipient, the measurement of cost is based on the quoted market price of the stock at the measurement date,
which is the grant date.
In lieu of paying cash to satisfy withholding taxes due upon the settlement of vested RSUs, at the Company’s discretion, an
employee may elect to have shares of common stock withheld that would otherwise be issued at settlement, the value of which is equal to the amount of withholding taxes payable. During each of the nine months ended September 30, 2023 and 2022,
less than 1,000 RSUs vested. No
RSUs vested during either of the three months ended September 30, 2023 and 2022. As of September 30, 2023, there were approximately 1,000
RSUs outstanding.
Stock-Based Compensation Expense
For the three and nine months ended September 30, 2023 and 2022, the Company recognized stock-based compensation expense as follows (in
thousands):
|
WARRANTS |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANTS |
On March 9, 2022, in connection with a
private placement of equity (the “March 2022 Private Placement”), the Company issued pre-funded warrants to purchase approximately 68,000
shares of common stock (the “Pre-Funded Warrants”) and warrants to purchase approximately 343,000 shares of common stock (the
“Common Warrants”).
On July 12, 2022, the investor exercised its 68,000 Pre-Funded Warrants at an exercise price of $0.10 per share for an aggregate exercise price of approximately $7,000, in cash. The Company reclassified approximately $0.7 million of
the fair value of the exercised warrants as of the exercise date from warrant liabilities to equity. Subsequent to the exercise, no
Pre-Funded Warrants remained outstanding.
The Common Warrants have an exercise price of $38.20 per share,
are currently exercisable, expire years from the date of issuance and are subject to customary adjustments.
The Common Warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99%
immediately after exercise thereof, subject to increase to 9.99% at the option of the holder.
The
Common Warrants and Pre-Funded Warrants were accounted for as liabilities under ASC 815-40, as these warrants provide for a cashless settlement provision that does not meet the requirements of the indexation guidance under ASC 815-40. These
warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the statement of operations. (See Note 7 for more information related to changes in fair value.)
The
fair values of the Common Warrants and the Pre-Funded Warrants at the issuance date totaled $12.6 million in the aggregate, which was
$0.6 million more than the subscription amount. The excess $0.6 million represents an inducement to the investor to enter into the transaction and was recorded in warrant liabilities expense in the accompanying condensed consolidated statement of
operations for the nine months ended September 30, 2022.
The
Company incurred fees of approximately $1.0 million related to the March 2022 Private Placement, which were allocated to the fair
value of the Common Warrants and the Pre-Funded Warrants and recorded in other expense, net on the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2022.
In connection with the closing of the July 2023 Financing on July 14, 2023, the Company issued the Note Warrants to purchase an aggregate of approximately 6.1 million
shares of common stock. The Note Warrants purchased by the investors contain a provision pursuant to which such Note Warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99%, 9.99% or 19.99% immediately
after exercise thereof, subject to certain increases not in excess of either 9.99% or 19.99% at the option of such holder. (See Note 5 for more information related to the Note Warrants.)
As of September 30, 2023, the Company has the following warrants outstanding that were issued in connection with transactions discussed above as well as a private placement with other investors from November 2022:
As
of September 30, 2023, the weighted average remaining contractual life of the warrants outstanding was 4.72 years and the
weighted average exercise price was $4.01.
|
NET LOSS PER SHARE |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET LOSS PER SHARE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET LOSS PER SHARE |
The
Company calculates basic and diluted net loss per share attributable to common stockholders in conformity with the two-class method required for participating securities. The Company’s Convertible Notes contractually entitle the holders of
such notes to participate in dividends but does not contractually require the holders to participate in the Company’s losses. As such, the two-class method is not applicable during periods with a net loss.
Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for
potentially dilutive securities. Diluted net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding plus dilutive securities. Shares of common
stock issuable upon exercise, conversion or vesting of stock options, RSUs, warrants and the outstanding Series A convertible preferred stock are considered potential shares of common stock and are included in the calculation of diluted net
loss per share using the treasury method when their effect is dilutive. The Company’s Convertible Notes outstanding are also considered potential shares of common stock and are included in the calculation of diluted net loss per share using the
“if-converted” method, and the more dilutive of either the two-class method or the if-converted method is reported. Diluted net loss per share is the same as basic net loss per share for periods in which the effect of potentially dilutive
shares of common stock is antidilutive.
The
following table presents the amount of warrants, stock options, convertible preferred stock, Convertible Notes and RSUs that were excluded from the computation of diluted net loss per share of common stock for the three and nine months ended
September 30, 2023 and 2022, as their effect was anti-dilutive (in thousands):
|
STANDBY EQUITY PURCHASE AGREEMENT |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2023 | |||
STANDBY EQUITY PURCHASE AGREEMENT [Abstract] | |||
STANDBY EQUITY PURCHASE AGREEMENT |
On
April 5, 2023, the Company entered into the SEPA with Lincoln Park, pursuant to which Lincoln Park committed to purchase up to $10.0
million of the Company’s common stock, subject to the terms and conditions contained in the appliable agreements. Such sales of common stock by the Company, if any, are subject to certain limitations set forth in the SEPA, and may occur from time
to time, at the Company’s sole discretion, over a period of up to 24-months, commencing April 25, 2025, which was the date on which
each of the conditions to the Lincoln Park’s purchase obligations set forth in the purchase agreement were initially satisfied. In consideration of Lincoln Park’s entry into the SEPA, the Company issued to Lincoln Park approximately 74,000 shares of common stock (the “Commitment Shares”). The value of the Commitment Shares was recorded as a period expense and included in other
expense, net, in the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2023.
The
Company evaluated the contract that includes the right to require Lincoln Park to purchase shares of common stock in the future (“put right”) considering the guidance in ASC 815-40, Derivatives and Hedging — Contracts on an Entity’s Own
Equity and concluded that it is an equity-linked contract that does not qualify for equity classification, and therefore requires fair value accounting. The Company has analyzed the terms of the freestanding put right and has concluded that it
has an immaterial value as of September 30, 2023.
During
the nine months ended September 30, 2023, the Company had issued and sold 214,000 shares of common stock under the SEPA, including the 74,000
Commitment Shares, for gross proceeds of approximately $0.3 million. There were no shares sold under the SEPA during the three months ended September 30, 2023. As of September 30, 2023, there were approximately 2,860,000 shares remaining to be sold under the SEPA.
In
connection with entry into the SEPA, the Company terminated its prior purchase agreements with Lincoln Park entered into during 2021.
|
RECENT ACCOUNTING PRONOUNCEMENTS |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2023 | |||
RECENT ACCOUNTING PRONOUNCEMENTS [Abstract] | |||
RECENT ACCOUNTING PRONOUNCEMENTS |
There have been no recent Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (the “FASB”) that would apply to the Company since the ASUs disclosed in the 2022 10-K except for the following:
In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements – Codification Amendment in Response to the SEC’s Disclosure Update and Simplification Initiative. This ASU modified the disclosure and presentation requirements of a variety of
codification topics by aligning them with the SEC’s regulations. The amendments to the various topics should be applied prospectively, and the effective date will be determined for each individual disclosure based on the effective date of
the SEC’s removal of the related disclosure. If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, then this ASU will not become effective. Early adoption is prohibited. The
Company does not expect the amendments in this ASU to have a material impact on the Company’s consolidated financial statements.
|
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Policies) |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION [Abstract] | |
Basis of Presentation |
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and with the
instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited financial
statements include all the normal recurring adjustments that are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented.
These condensed consolidated financial statements should be read together with the audited consolidated financial statements and notes thereto contained in Eterna’s Annual Report on Form 10-K for the year ended December 31, 2022 filed
with the Securities and Exchange Commission (the “SEC”) on March 20, 2023 (the “2022 10-K”). The accompanying condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements contained in the
2022 10-K but does not include all of the information and footnotes required by GAAP for complete financial statements. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the
results to be anticipated for the entire year ending December 31, 2023, or any other period.
|
Reclassifications |
Reclassifications
Certain reclassifications have
been made to the Company’s prior year amounts to conform to the current year presentation.
|
RECENT ACCOUNTING PRONOUNCEMENTS (Policies) |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
RECENT ACCOUNTING PRONOUNCEMENTS [Abstract] | |
Recent Accounting Pronouncements |
There have been no recent Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (the “FASB”) that would apply to the Company since the ASUs disclosed in the 2022 10-K except for the following:
In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements – Codification Amendment in Response to the SEC’s Disclosure Update and Simplification Initiative. This ASU modified the disclosure and presentation requirements of a variety of
codification topics by aligning them with the SEC’s regulations. The amendments to the various topics should be applied prospectively, and the effective date will be determined for each individual disclosure based on the effective date of
the SEC’s removal of the related disclosure. If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, then this ASU will not become effective. Early adoption is prohibited. The
Company does not expect the amendments in this ASU to have a material impact on the Company’s consolidated financial statements.
|
ASSET ACQUISITION (Tables) |
9 Months Ended | |||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||
ASSET ACQUISITION [Abstract] | ||||||||||||||||||||||||||
Fair Valuation of Assumptions | The Company used a Monte Carlo simulation model to estimate the fair value of the Market Cap Contingent Consideration as of the acquisition date using the following
assumptions:
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Fair Value Measurement of Assets Acquired |
The table below shows the
total fair value of the consideration paid for the Exacis Assets (in thousands).
|
LEASES (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Operating Lease Expense |
For the three and nine months ended September 30, 2023 and 2022, the net operating lease expenses were as follows (in
thousands):
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Operating Lease Right-of-use Assets and Liabilities |
The tables below show the beginning
balances of the operating ROU assets and lease liabilities as of January 1, 2023 and the ending balances as of September 30, 2023, including the changes during the period (in thousands).
|
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Maturities of Operating Lease Liabilities | The maturities of the operating lease liabilities are as follows (in thousands):
|
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities Measured at Fair Value |
The following tables summarize the liabilities that are measured at fair value as of September 30, 2023 and December 31, 2022 (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Warrant Liabilities |
The following table presents the
changes liabilities measured at fair value from January 1, 2023, or from the initial measurement date if later than January 1, 2023, through September 30, 2023 (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value and Carrying Values of Convertible Notes |
The table below is provided for comparative purposes only and presents information about the fair value of the Company’s Convertible Notes relative to the
carrying values recognized in the condensed consolidated balance sheet as of September 30, 2023 (in thousands). The Company did not have the Convertible Notes as of December 31, 2022.
|
ACCRUED EXPENSES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses |
Accrued expenses at September 30, 2023 and December 31, 2022 consisted of the
following (in thousands):
|
STOCK-BASED COMPENSATION (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Granted |
During the three and nine months ended September 30, 2023 and 2022, the Company
granted the following stock options (in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted-Average Assumptions Used for Stock Options Granted |
The following weighted-average assumptions were used for
stock options granted during the three and nine months ended September 30, 2023 and 2022:
The per-share weighted average grant-date fair value of stock options granted during the three and nine months ended September 30,
2023 and 2022 was as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Expense |
For the three and nine months ended September 30, 2023 and 2022, the Company recognized stock-based compensation expense as follows (in
thousands):
|
WARRANTS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants Outstanding |
As of September 30, 2023, the Company has the following warrants outstanding that were issued in connection with transactions discussed above as well as a private placement with other investors from November 2022:
|
NET LOSS PER SHARE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET LOSS PER SHARE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Diluted Net Loss per Share of Common Stock |
The
following table presents the amount of warrants, stock options, convertible preferred stock, Convertible Notes and RSUs that were excluded from the computation of diluted net loss per share of common stock for the three and nine months ended
September 30, 2023 and 2022, as their effect was anti-dilutive (in thousands):
|
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details) |
9 Months Ended |
---|---|
Sep. 30, 2023
Patents
| |
Description of Business [Abstract] | |
Number of patents | 100 |
ASSET ACQUISITION, Fair Value Measurement of Assets Acquired (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Apr. 30, 2023 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Fair Value Consideration of Assets Acquired [Abstract] | |||||
Total fair value | $ 0 | $ 0 | $ 460 | $ 0 | |
Allocated percentage of fair value of consideration to purchased license | 100.00% | ||||
Exacis Asset Purchase [Member] | |||||
Fair Value Consideration of Assets Acquired [Abstract] | |||||
Shares issued | $ 208 | ||||
Contingent consideration | 225 | ||||
Direct costs | 27 | ||||
Total fair value | $ 460 |
CONTRACT WITH CUSTOMER (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Feb. 21, 2023 |
Sep. 30, 2023 |
Sep. 30, 2023 |
|
Contract with Customers [Abstract] | |||
Proceeds from option and license agreement | $ 300 | ||
Performance obligation, percentage | 100.00% | ||
Revenue recognized in previous periods | $ 0 | $ 0 | |
Catch-up adjustment to revenue | 0 | $ 0 | |
Proceeds from cell line customization activities | 400 | ||
Option fee obligation payment percentage | 20.00% | ||
Maximum [Member] | |||
Contract with Customers [Abstract] | |||
Revenue recognized | $ 100 | $ 100 | |
Revenue Recognized Over Time [Member] | |||
Contract with Customers [Abstract] | |||
Revenue recognized | $ 400 |
LEASES, Net Operating Lease Expenses (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Net Operating Lease Expense [Abstract] | ||||
Operating lease expense | $ 1,623 | $ 143 | $ 1,758 | $ 476 |
Sublease income | (21) | (21) | (63) | (63) |
Variable lease expense | 6 | 60 | 18 | 113 |
Total lease expense | $ 1,608 | $ 182 | $ 1,713 | $ 526 |
LEASES, Operating Lease Right-of-use Assets and Liabilities (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Operating Lease, ROU Assets [Abstract] | |||
Operating lease ROU assets, Beginning | $ 1,030 | ||
Recognition of ROU asset for Somerville Sublease | 34,410 | ||
Amortization of operating lease ROU assets | (580) | $ (267) | |
Operating lease ROU assets, Ending | 34,860 | ||
Operating Lease, Liabilities [Abstract] | |||
Operating lease liabilities, Beginning | 1,182 | ||
Recognition of lease liability for Somerville Sublease | 34,169 | ||
Accretion of interest for Somerville Sublease | 1,055 | ||
Principal payments on operating lease liabilities | (259) | ||
Operating lease liabilities, Ending | 36,147 | ||
Less non-current portion | 34,998 | $ 887 | |
Current portion | $ 1,149 |
LEASES, Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Weighted Average Remaining Lease Term and Discount Rate [Abstract] | ||
Weighted average remaining lease term | 10 years | |
Weighted average discount rate | 12.60% | |
Maturities of Operating Lease Liabilities [Abstract] | ||
2023 | $ 932 | |
2024 | 5,947 | |
2025 | 6,065 | |
2026 | 6,227 | |
2027 | 6,298 | |
Thereafter | 40,224 | |
Total payments | 65,693 | |
Less: Imputed interest | (29,546) | |
Total operating lease liabilities | $ 36,147 | $ 1,182 |
FAIR VALUE OF FINANCIAL INSTRUMENTS, Liabilities Measured at Fair Value (Details) - Level 3 [Member] - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Market Cap Contingent Consideration [Member] | ||
Liabilities [Abstract] | ||
Liabilities, fair value disclosure | $ 107 | $ 0 |
Common Warrants [Member] | Warrant Liabilities [Member] | ||
Liabilities [Abstract] | ||
Liabilities, fair value disclosure | $ 165 | $ 331 |
FAIR VALUE OF FINANCIAL INSTRUMENTS, Changes in Warrant Liabilities (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Changes in Fair Value of Warrant Liabilities [Roll Forward] | ||||
Initial measurement | $ 12,600 | |||
Change in fair value of contingent consideration | $ 0 | $ 0 | $ 118 | $ 0 |
Contingent Consideration [Member] | ||||
Changes in Fair Value of Warrant Liabilities [Roll Forward] | ||||
Fair value, beginning of period | 0 | |||
Initial measurement | 225 | |||
Change in fair value | (118) | |||
Fair value, end of period | 107 | 107 | ||
Warrant Liabilities [Member] | ||||
Changes in Fair Value of Warrant Liabilities [Roll Forward] | ||||
Fair value, beginning of period | 331 | |||
Initial measurement | 0 | |||
Change in fair value | (166) | |||
Fair value, end of period | $ 165 | $ 165 |
FAIR VALUE OF FINANCIAL INSTRUMENTS, Carrying Value and Fair Value of Convertible Notes (Details) - Level 3 [Member] $ in Thousands |
Sep. 30, 2023
USD ($)
|
---|---|
Carrying Value [Member] | |
Debt Instrument, Fair Value Disclosure [Abstract] | |
Convertible Debt | $ 8,715 |
Fair Value [Member] | |
Debt Instrument, Fair Value Disclosure [Abstract] | |
Convertible Debt | $ 9,114 |
GOODWILL (Details) - USD ($) $ / shares in Units, $ in Thousands |
Sep. 30, 2023 |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|---|
GOODWILL [Abstract] | |||
Goodwill | $ 2,044 | $ 2,044 | |
Stock price (in dollars per share) | $ 2.18 | $ 2.26 |
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
ACCRUED EXPENSES [Abstract] | ||
Buildout costs for Somerville facility | $ 3,249 | $ 0 |
Legal fees and settlements | 771 | 1,138 |
Clinical | 95 | 570 |
Professional fees | 203 | 333 |
Accrued compensation | 121 | 1,065 |
Other | 580 | 520 |
Total accrued expenses | $ 5,019 | $ 3,626 |
COMMITMENTS AND CONTINGENCIES, Retirement Savings Plan (Details) |
12 Months Ended | |
---|---|---|
Jan. 01, 2023 |
Dec. 31, 2022 |
|
Maximum [Member] | ||
Defined Contribution Plan [Abstract] | ||
Employees contribution, deferral percentage of their pay on a pre-tax basis | 90.00% | |
401K [Member] | ||
Defined Contribution Plan [Abstract] | ||
Employees contribution, deferral percentage of their pay on a pre-tax basis | 100.00% | |
Employer matching contribution up to first 3% | 3.00% | |
Employee contribution threshold for matching percentage | 50.00% | |
Employer matching contribution in excess of first 2% | 2.00% | |
Deferred compensation matched by employer, next match | 4.00% |
STOCK-BASED COMPENSATION, Stock Option Activity (Details) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Stock Options [Member] | ||||
Stock-based Compensation [Abstract] | ||||
Stock options granted (in shares) | 0 | 188 | 237 | 287 |
STOCK-BASED COMPENSATION, Weighted-Average Assumptions Used for Stock Options Granted (Details) - Stock Options [Member] |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Weightage-Average Assumptions Used for Stock Options Granted [Abstract] | ||||
Weighted average risk-free rate | 0.00% | 2.64% | 3.82% | 2.54% |
Weighted average volatility | 0.00% | 89.80% | 95.15% | 91.20% |
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Expected term | 5 years 8 months 23 days | 5 years 5 months 8 days | 5 years 3 months 18 days |
STOCK-BASED COMPENSATION, Summary of Stock Options (Details) - Stock Options [Member] - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Stock-based Compensation [Abstract] | ||||
Weighted average grant date fair value (in dollars per share) | $ 0 | $ 7.24 | $ 2.99 | $ 12.91 |
Number of stock option awards outstanding (in shares) | 510,000 | 510,000 |
STOCK-BASED COMPENSATION, Restricted Stock Units (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
RSU [Member] | ||||
Stock-based Compensation [Abstract] | ||||
RSUs vested (in shares) | 0 | 0 | ||
Number of stock units awards outstanding (in shares) | 1,000 | 1,000 | ||
RSU [Member] | Maximum [Member] | ||||
Stock-based Compensation [Abstract] | ||||
RSUs vested (in shares) | 1,000 | 1,000 | ||
RSU [Member] | Employees [Member] | ||||
Stock-based Compensation [Abstract] | ||||
Number of RSUs granted (in shares) | 0 | 0 | 0 | |
Performance-Based Restricted Stock Units [Member] | Employees [Member] | ||||
Stock-based Compensation [Abstract] | ||||
Number of RSUs granted (in shares) | 55,000 |
STOCK-BASED COMPENSATION, Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Stock-Based Compensation Expense [Abstract] | ||||
Stock-based compensation expense | $ 174 | $ 476 | $ 1,077 | $ 2,538 |
Research and Development [Member] | ||||
Stock-Based Compensation Expense [Abstract] | ||||
Stock-based compensation expense | 57 | 183 | 177 | 1,075 |
General and Administrative [Member] | ||||
Stock-Based Compensation Expense [Abstract] | ||||
Stock-based compensation expense | $ 117 | $ 293 | $ 900 | $ 1,463 |
WARRANTS, Warrants Outstanding Issued (Details) - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Jul. 14, 2023 |
|
Warrants Outstanding [Abstract] | ||
Warrants outstanding (in shares) | 10,807 | |
Common Warrants [Member] | ||
Warrants Outstanding [Abstract] | ||
Warrants outstanding (in shares) | 343 | |
Exercise price (in dollars per share) | $ 38.2 | |
Date exercisable | Sep. 09, 2022 | |
Expiration date | Sep. 09, 2027 | |
November 2022 Warrants [Member] | ||
Warrants Outstanding [Abstract] | ||
Warrants outstanding (in shares) | 4,370 | |
Exercise price (in dollars per share) | $ 3.28 | |
Date exercisable | Jun. 02, 2023 | |
Expiration date | Jun. 02, 2028 | |
Note Warrants [Member] | ||
Warrants Outstanding [Abstract] | ||
Warrants outstanding (in shares) | 6,094 | |
Exercise price (in dollars per share) | $ 2.61 | |
Date exercisable | Jul. 14, 2023 | |
Expiration date | Jul. 14, 2028 | |
Warrant [Member] | ||
Warrants Outstanding [Abstract] | ||
Exercise price (in dollars per share) | $ 4.01 | $ 2.61 |
Warrants outstanding weighted average contractual life | 4 years 8 months 19 days | 5 years |
1 Year Eterna Therapeutics Chart |
1 Month Eterna Therapeutics Chart |
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