What changed in EXICURE, INC.'s 10-K — 2023 vs 2024
vs
Paragraph-level year-over-year comparison of EXICURE, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+191 added−213 removedSource: 10-K (2024-12-31) vs 10-K (2024-06-06)
Top changes in EXICURE, INC.'s 2024 10-K
191 paragraphs added · 213 removed · 120 edited across 7 sections
- Item 7. Management's Discussion & Analysis+79 / −77 · 43 edited
- Item 1A. Risk Factors+58 / −82 · 44 edited
- Item 1. Business+32 / −34 · 20 edited
- Item 3. Legal Proceedings+13 / −14 · 8 edited
- Item 5. Market for Registrant's Common Equity+6 / −3 · 3 edited
Item 1. Business
Business — how the company describes what it does
20 edited+12 added−14 removed6 unchanged
Item 1. Business
Business — how the company describes what it does
20 edited+12 added−14 removed6 unchanged
2023 filing
2024 filing
Biggest changeAs noted above, DGP has entered into an agreement to sell its remaining shares to a third party by or on June 30, 2024. 7 Table of Contents Current Focus The Company currently expects to focus its efforts on the following: • explore growth through transactions with potential partners that see opportunity in joining an existing, publicly-traded organization.
Biggest changeCurrent Focus We currently expect to focus our efforts on the following: • explore growth through acquisitions and transactions with potential partners that see opportunity in joining an existing, publicly-traded organization. The board of directors will consider any promising transactions that it believes can create value for stockholders, including in industries unrelated to our historical operations.
There can be no assurance that any agreement, arrangement or understanding with respect to such a transaction will be reached, or the potential structure or financial and other terms of any agreement, arrangement or understanding that may be reached. • seek additional financing for the Company as needed to support these activities.
There can be no assurance that any agreement, arrangement or understanding with respect to such a transaction will be reached, or the potential structure or financial and other terms of any agreement, arrangement or understanding that may be reached; and • seek additional financing for the Company as needed to support these activities.
Information contained in our website is not a part of, nor incorporated by reference into, this Annual Report on Form 10-K or our other filings with the SEC. 10 Table of Contents
Information contained in our website is not a part of, nor incorporated by reference into, this Annual Report on Form 10-K or our other filings with the SEC. 9 Table of Contents
Available Information We are subject to the informational requirements of the Exchange Act, and, accordingly, file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, with the Securities and Exchange Commission, or SEC.
Available Information We are subject to the informational requirements of the Exchange Act, and, accordingly, file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, with the Securities and Exchange Commission (the “SEC”).
Many of our competitors had significantly greater financial resources and expertise in research 8 Table of Contents and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do.
Many of our competitors had significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and 7 Table of Contents marketing approved products than we do.
In addition, the SEC maintains a web site (http://www.sec.gov) that contains material regarding issuers that file electronically, such as ourselves, with the SEC. We maintain a website at www.exicuretx.com, to which we regularly post copies of our press releases as well as additional information about us.
In addition, the SEC maintains a web site (http://www.sec.gov) that contains material regarding issuers that file electronically, such as ourselves, with the SEC. 8 Table of Contents We maintain a website at www.exicuretx.com, to which we regularly post copies of our press releases as well as additional information about us.
Following our restructuring in September 2022 (discussed above), we currently do not have any manufacturing or supply needs. Competition In our historical operations, we faced competition at the technology and therapeutic indication levels from both large and small biotechnology companies, academic institutions, government agencies and public and private research institutions.
Manufacturing and Supply We do not currently own or operate manufacturing facilities. Following our restructuring in September 2022, we currently do not have any manufacturing or supply needs. Competition In our historical operations, we faced competition at the technology and therapeutic indication levels from both large and small biotechnology companies, academic institutions, government agencies and public and private research institutions.
Our filings with the SEC will be available free of charge through the website as 9 Table of Contents soon as reasonably practicable after being electronically filed with or furnished to the SEC.
Our filings with the SEC will be available free of charge through the website as soon as reasonably practicable after being electronically filed with or furnished to the SEC.
Employees As of December 31, 2023, we had 6 full time employees which were engaged in finance, human resources, and general management activities after the wind down of our research and development programs. We have no collective bargaining agreement with our employees and we have not experienced any work stoppages. We consider our relations with our employees to be good.
Employees As of December 31, 2024, we had seven full time employees which were engaged in finance and general management activities after the wind down of our research and development programs. We have no collective bargaining agreement with our employees and we have not experienced any work stoppages. We consider our relations with our employees to be good.
Government Regulation and Product Approval Governmental authorities in the U.S., at the federal, state and local level, and other countries extensively regulate, among other things, the research, development, testing, manufacture, labeling, packaging, promotion, storage, advertising, distribution, marketing, sales, and export and import of products such as those we historically were developing.
Government Regulation and Product Approval Governmental authorities in the United States, at the federal, state and local level, and other countries extensively regulate, among other things, the research, development, testing, manufacture, labeling, packaging, promotion, storage, advertising, distribution, marketing, sales, and export and import of products such as those we historically were developing. Therapeutic candidates must be approved by the U.S.
We have a patent portfolio that includes pending patent applications and issued patents in the United States and in foreign countries. In the past, our portfolio included patents licensed from Northwestern University under two separate license agreements related to SNA technology, as well as owned patents.
In the past, our portfolio included patents licensed from Northwestern University under two separate license agreements related to SNA technology, as well as owned patents. Our licenses from Northwestern University were terminated in 2023, but we continue to own numerous issued patents and pending patent applications.
While the foregoing efforts are continuing, with respect to the Company’s historical assets, we do not expect they will generate significant value for stockholders. Therefore, we are engaging in a broader exploration of strategic alternatives. This effort involves exploring growth through transactions with potential partners that see opportunity in joining an existing, publicly-traded organization.
We continue to engage in a broader exploration of strategic alternatives. This effort involves exploring growth through transactions with potential partners that see opportunity in joining an existing, publicly-traded organization.
Therapeutic candidates must be approved by the FDA through the NDA process before they may be legally marketed in the U.S. and are subject to similar requirements in other countries prior to marketing in those countries.
Food and Drug Administration (the “FDA”) through the New Drug Application (“NDA”) process before they may be legally marketed in the United States and are subject to similar requirements in other countries prior to marketing in those countries.
The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Although we are no longer pursuing clinical or preclinical development activities or R&D, any third parties interested in licensing or acquiring our assets would need to comply with such regulations.
Although we are no longer pursuing clinical or preclinical development activities or research and development (“R&D”), any third parties interested in licensing or acquiring our assets would need to comply with such regulations.
The board of directors will consider any promising transactions that it believes can create value for stockholders, including in industries unrelated to our historical operations. The Company expects these efforts may be focused in Asia where its significant investors and board members have relationships and business connections, although domestic transactions will also being considered.
These efforts may be focused in Asia where its significant investors and board members have relationships and business connections, although domestic transactions will also be considered. Transactions that may be explored could include acquisitions of other businesses or investments.
Our corporate headquarters are located at 2430 N. Halsted St., Chicago, Illinois 60614, and our telephone number is (847) 673-1700.
Our corporate headquarters are located at 400 Seaport Court, Suite 102, Redwood City, California 94063, and our telephone number is (847) 673-1700.
Without a current source of revenue or committed financing, it is necessary to obtain substantial additional financing in the very near term in order to satisfy existing obligations, operate and pursue these activities.
Without a current source of revenue, it could be necessary to obtain substantial additional financing to pursue these activities and continue operations. There can be no assurance that such financing, or financing in sufficient amounts or on acceptable terms, will be received.
(“CBI USA”), pursuant to which the Company agreed to issue and sell to CBI USA in a private placement an aggregate of 3,400,000 shares of Common Stock, at a purchase price of $1.60 per share. The private placement closed on February 24, 2023 (the “Closing Date”).
(“HiTron”), pursuant to which we agreed to issue and sell to HiTron 433,333 shares of our common stock, par value $0.0001 per share (the “Common Stock”), for an aggregate purchase price of $1.3 million, at a purchase price per share of $3.00.
In February 2024, the Company exclusively licensed its relevant patents in the field of hepatitis to a third party for the development of our prior drug candidate cavrotolimod. In return, the Company received a small, one-time payment and is entitled to a modest royalty on future sales of the licensed technology.
In February 2024, we received an upfront payment of $500,000 from a licensing agreement for patents related to one of our historical drug candidates, and received a small, one-time payment and an entitlement to only modest royalties on future sales of the licensed technology that we do not believe will be material.
The Company expects to evaluate on an ongoing basis whether the resources dedicated to these activities are sustainable and commensurate with the potential value that can be derived from them. Our Intellectual Property In our historical business, we built an intellectual property portfolio relating to our prior therapeutic candidates and our SNA technology platform.
Our Intellectual Property In our historical business, we built an intellectual property portfolio relating to our prior therapeutic candidates and our SNA technology platform. We have a patent portfolio that includes pending patent applications and issued patents in the United States and in foreign countries.
Removed
We are exploring transactions in industries unrelated to our historical operations. Because we currently have no source of revenue or committed financing, we will require substantial additional funding in the very near term in order to satisfy existing obligations, continue operations and our exploration of strategic alternatives and consummate any transactions that we may identify.
Added
In the second quarter, we recognized other income of $637,000 from the sale of our samples related to the licensed product. In the third quarter, we sold our historical biotechnology intellectual property and other assets (including the licensing agreement described above) pursuant to the purchase agreement and recognized other income of $1,500,000.
Removed
Recent Developments Restructuring On December 10, 2021, we announced a strategic reduction in force and other cost cutting measures to reduce cash burn.
Added
Following the purchase agreement, any value we may generate from our historical biotechnology intellectual property and other assets will be primarily through royalties and license fees that we may receive in the future under the purchase agreement. However, whether we receive any royalties or licenses fees, and the amounts and timing thereof, are uncertain and out of our control.
Removed
On September 26, 2022, we announced our commitment to a plan to wind down our existing preclinical programs, including the development of our SCN9A program, to suspend all of our research and development (“R&D”) activities, including suspension of all partnered programs, and to implement a reduction in force whereby we reduced approximately 66% of our then-existing workforce, as well as other cost-cutting measures (collectively, the “Plan”).
Added
While the foregoing efforts are continuing, with respect to our historical assets, we do not expect they will generate significant value for stockholders. Therefore, we are engaging in a broader exploration of strategic alternatives. We obtained significant financing late in 2024 in order to continue operations and our exploration of strategic alternatives and consummate any transactions that we may identify.
Removed
The purpose of the Plan was to decrease expenses, thereby, extending our cash runway, and enable us to maintain a streamlined organization to support key corporate functions. Change of Control On September 26, 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with CBI USA, Inc.
Added
Recent Developments Change of Control Effective as of November 12, 2024, we entered into a common stock purchase agreement (the “Initial Common Stock Purchase Agreement”) with HiTron Systems Inc.
Removed
CBI USA funded the acquisition pursuant to the Securities Purchase Agreement through a loan from its affiliate, DGP Co., Ltd. (“DGP”). On June 23, 2023, DGP exercised its the option pursuant to the loan and acquired the 3,400,000 shares of Common Stock initially acquired by CBI USA pursuant to the Securities Purchase Agreement.
Added
On November 13, 2024, we entered into a subsequent agreement (the “Subsequent Common Stock Purchase Agreement”), pursuant to which we agreed to sell and issue to HiTron 2,900,000 additional shares of Common Stock for an aggregate purchase price of $8.7 million, at a purchase price per share of $3.00.
Removed
DGP subsequently agreed to sell its shares to a third party, with the closing of 10% (340,000 shares) occurring in February 2024 and the remainder to close by or on June 30, 2024.
Added
The sale of shares under the Subsequent Common Stock Purchase Agreement closed on December 24, 2024.
Removed
The Securities Purchase Agreement, as confirmed and clarified by that certain letter agreement, dated October 31, 2022, between the Company and CBI USA, provided CBI USA together with its affiliates and any “group” of which it or they are a member with the right to designate directors to the Company’s board of directors in proportion to the ownership of CBI USA and its affiliates and any such group.
Added
As of March 12, 2025, HiTron beneficially owns 53% of the outstanding shares of Common Stock based on information available to the Company. 6 Table of Contents GPCR Share Purchase Agreement On January 19, 2025, we entered into a Share Purchase Agreement with GPCR Therapeutics Inc, a Korean corporation, (“GPCR”) pursuant to which we acquired from GPCR all of the issued and outstanding equity securities of GPCR Therapeutics USA Inc., a California corporation (“GPCR USA”).
Removed
CBI USA and DGP have announced they expect to exercise such rights as a group. Together, they beneficially own 45% of the outstanding shares of Common Stock based on their most recent Schedule 13D amendment.
Added
In connection with the closing of the Share Purchase Agreement, the Company and GPCR entered into a License and Collaboration Agreement to further develop and commercialize GPCR’s technologies related to certain intellectual property and patents.
Removed
Transactions that may be explored could include reverse mergers or share exchanges, as well as acquisitions of other businesses or investments.
Added
On January 28, 2024, we entered into a patent license agreement (the “Patent License Agreement”) to develop cavrotolimod for potential treatment for hepatitis with Bluejay Therapeutics, Inc. (“Bluejay”), a private clinical stage biopharmaceutical company. Under the terms of the Patent License Agreement, Bluejay will receive an exclusive license in the field of hepatitis to all of the Company’s relevant patents.
Removed
There can be no assurance that such financing, or financing in sufficient amounts or on acceptable terms, will be received. • continue our efforts to seek to maximize stockholder value that can be derived from historical biotechnology assets.
Added
In September 2024, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Flashpoint Therapeutics, Inc. (“Flashpoint”), pursuant to which we agreed to sell certain assets to Flashpoint.
Removed
We are continuing to explore additional licenses or sales of our intellectual property. While these transactions may provide short-term liquidity relief in the form of upfront payments and/or the possibility to receive royalties in the future, we do not expect they will provide material benefits to the Company or our stockholders, either in the short or long term.
Added
The assets sold to Flashpoint pursuant to the Asset Purchase Agreement consisted of our historical biotechnology intellectual property and other assets and included our spherical nucleic acid-related technology, research and development programs, and clinical assets. As a result of this sale of our assets, we no longer own any intellectual property.
Removed
Our licenses from Northwestern University were terminated in 2023, but we continue to own numerous issued patents and pending patent applications. As described above, we are exploring ways to generate value from our historical intellectual property. We have entered into one license agreement as described above and expect to continue to explore others.
Added
The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.
Removed
However, we do not expect these efforts to generate significant value for stockholders and expect to evaluate on an ongoing basis whether the resources dedicated to these efforts are appropriate.
Removed
As part of these efforts, we may abandon or let lapse some of our patents and applications, unless any completed license agreements require us to continue to maintain such patents and applications (as is the case with the license agreement completed in February 2024). Manufacturing and Supply We do not currently own or operate manufacturing facilities.
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
44 edited+14 added−38 removed89 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
44 edited+14 added−38 removed89 unchanged
2023 filing
2024 filing
Biggest changeThe Company received an extension letter on March 12, 2024 from Nasdaq noting it must hold its annual meeting by June 28, 2024. • On November 22, 2023, the Company received a delinquency notification as it had not filed its third quarter Form 10-Q at the deadline, which was cured by filing of such Form 10-Q on May 16, 2024. • On April 17, 2024, the Company received a delinquency notification as it had not filed its Annual Report Form 10-K for the year ended December 31, 2023.
Biggest changeWe held our combined 2023 and 2024 annual meeting on June 28, 2024; • on April 17, 2024, we received a delinquency notification as we had not filed our Annual Report Form 10-K for the year ended December 31, 2023.
The market price for our common stock may be influenced by a variety of factors, including the other risks described in this section titled “Risk Factors” and the following: • our ability or inability to raise additional capital and the terms on which we raise it; • the development, execution and announcement of any proposed strategic alternative; • investors may react negatively to our controlled status and the influence of our controlling stockholder or our reconstituted board and/or our uncertain business strategy; • strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; • we are unable to achieve the perceived benefits of our Company as rapidly or to the extent anticipated by financial or industry analysts; and • changes in general economic, industry, political and market conditions, including, but not limited to, the ongoing impact of the COVID-19 pandemic. 19 Table of Contents • our ability to avoid suspension and/or delisting of our common stock by Nasdaq.
The market price for our common stock may be influenced by a variety of factors, including the other risks described in this section titled “Risk Factors” and the following: • our ability or inability to raise additional capital and the terms on which we raise it; • the development, execution and announcement of any proposed strategic alternative; • investors may react negatively to our controlled status and the influence of our controlling stockholder or our reconstituted board and/or our uncertain business strategy; • strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; • we are unable to achieve the perceived benefits of our Company as rapidly or to the extent anticipated by financial or industry analysts; and • changes in general economic, industry, political and market conditions, including, but not limited to, the ongoing impact of the COVID-19 pandemic. • our ability to avoid suspension and/or delisting of our common stock by Nasdaq.
Depending on the circumstances of any management departures, it is also possible that we will be required to pay significant severance, adversely impacting our financial condition. Our urgent need to raise capital and engage with potential partners in strategic transactions magnify these risks.
Depending on the circumstances of any management departures, it is also possible that we will be required to pay significant severance, adversely impacting our financial condition. Our need to raise capital and engage with potential partners in strategic transactions magnify these risks.
To the extent that any disruption, security breach or unauthorized or inappropriate use or access to our systems were to result in a loss of or damage to our data, or inappropriate disclosure of confidential or proprietary information, including but not limited to patient, employee or vendor information, we could incur notification obligations to affected individuals and government agencies, liability, including potential lawsuits from patients, collaborators, employees, stockholders or other third parties and liability 15 Table of Contents under foreign, federal and state laws that protect the privacy and security of personal information, and the development and potential commercialization of our therapeutic candidates could be delayed.
To the extent that any disruption, security breach or unauthorized or inappropriate use or access to our systems were to result in a loss of or damage to our data, or inappropriate disclosure of confidential or proprietary information, including but not limited to patient, employee or vendor information, we could incur notification obligations to affected individuals and government agencies, liability, including potential lawsuits from patients, collaborators, employees, stockholders or other third parties and liability 14 Table of Contents under foreign, federal and state laws that protect the privacy and security of personal information, and the development and potential commercialization of our therapeutic candidates could be delayed.
If we are unable to assert that our internal control over financial reporting is effective, investors could lose confidence in the reliability of our financial statements, the market price of our stock could decline and we could be subject to sanctions or investigations by The Nasdaq Capital Market, the SEC or other regulatory authorities. 16 Table of Contents The restatement of our prior quarterly financial statements may affect stockholder and investor confidence in us or harm our reputation, and may subject us to additional risks and uncertainties, including increased costs and the increased possibility of legal proceedings and regulatory inquiries, sanctions or investigations.
If we are unable to assert that our internal control over financial reporting is effective, investors could lose confidence in the reliability of our financial statements, the market price of our stock could decline and we could be subject to sanctions or investigations by The Nasdaq Capital Market, the SEC or other regulatory authorities. 15 Table of Contents The restatement of our prior quarterly financial statements may affect stockholder and investor confidence in us or harm our reputation, and may subject us to additional risks and uncertainties, including increased costs and the increased possibility of legal proceedings and regulatory inquiries, sanctions or investigations.
Even though we no longer qualify as an emerging growth company, we still qualify as a “smaller reporting company” and a “non-accelerated filer” which allows us to continue to take advantage of many of the same exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
Even though we no longer qualify as an emerging growth company, we still qualify as a “smaller reporting company” and a “non-accelerated filer” which allows us to continue to take advantage of many of the same or similar exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
General Risk Factors FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock due to our low stock price. The Financial Industry Regulatory Authority, or FINRA, has adopted rules requiring that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.
General Risk Factors FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock due to our low stock price. The Financial Industry Regulatory Authority, (“FINRA”), has adopted rules requiring that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.
Risks Related to Government Regulation We are subject to European data protection laws, including the European Union’s General Data Protection Regulation 2016/679, or GDPR. If we fail to comply with existing or future data protection regulations, our business, financial condition, results of operations and prospects may be materially adversely affected.
Risks Related to Government Regulation We are subject to European data protection laws, including the European Union’s General Data Protection Regulation 2016/679, (“GDPR”). If we fail to comply with existing or future data protection regulations, our business, financial condition, results of operations and prospects may be materially adversely affected.
Provisions in our amended and restated certificate of incorporation and our bylaws may delay or prevent an acquisition of us or a change in our management.
Provisions in our amended and restated certificate of incorporation, as amended, and our bylaws may delay or prevent an acquisition of us or a change in our management.
If these FINRA requirements are applicable to us or our securities, which we believe they are, they may make it more difficult for broker-dealers to recommend that at least some of their customers buy our common stock, which may limit the ability of our stockholders to buy and sell our common stock and could have an adverse effect on the market for and price of our common stock.
If 19 Table of Contents these FINRA requirements are applicable to us or our securities, which we believe they are, they may make it more difficult for broker-dealers to recommend that at least some of their customers buy our common stock, which may limit the ability of our stockholders to buy and sell our common stock and could have an adverse effect on the market for and price of our common stock.
As of December 31, 2023, we determined that we ceased operations of our historical business enterprise which subjects us to a zero limitation as defined under IRC Section 382(c). Therefore, we are restricted in our ability to use any of the historical net operating losses that occurred before the most recent ownership change in the 4 th quarter of 2022.
As of December 31, 2023, we determined that we ceased operations of our historical business enterprise which subjects us to a zero limitation as defined under IRC Section 382(c). Therefore, we are restricted in our ability to use any of the historical net operating losses that occurred before the most recent ownership change in the fourth quarter of 2022.
Because of the NUBIL, certain deductions recognized during the five-year period 21 Table of Contents beginning on the date of the IRC Section 382 ownership change (the “recognition period”) are subject to the same limitation as the net operating loss carryforwards or certain other deductions.
Because of the NUBIL, certain deductions recognized during the five-year period beginning on the date of the IRC Section 382 ownership change (the “recognition period”) are subject to the same limitation as the net operating loss carryforwards or certain other deductions.
Our common stock is currently listed on Nasdaq under the symbol “XCUR.” As previously disclosed, the Company has received numerous deficiency notices with respect to various Nasdaq listing requirements in the past year and recently received a delisting determination from the Nasdaq staff.
Our common stock is currently listed on Nasdaq under the symbol “XCUR.” As previously disclosed, we have received numerous deficiency notices with respect to various Nasdaq listing requirements in the past year and recently received a delisting determination from the Nasdaq staff.
This concern is exacerbated by the limited resources the Company has following recent reductions in force, and if there are further reductions in force or members of management leave the Company, it may be very difficult to manage this risk. The transitional state of the Company and ongoing exploration of strategic alternatives also exacerbates the challenging environment in this respect.
This concern is exacerbated by the limited resources we have following prior reductions in force, and if there are further reductions in force or members of management leave the Company, it may be very difficult to manage this risk. The transitional state of the Company and ongoing exploration of strategic alternatives also exacerbates the challenging environment in this respect.
These related to: • Compliance with Nasdaq’s minimum bid price rule due to the Company’s stock trading below $1.00 for a sustained period of time. The Company effected a one-for-thirty reverse stock split on June 29, 2022 in order to attempt to raise the stock price.
These related to: • compliance with Nasdaq’s minimum bid price rule due to our common stock trading below $1.00 for a sustained period of time. We effected a one-for-thirty reverse stock split on June 29, 2022 in order to attempt to raise the stock price.
Our ability to continue as a going concern will require us to obtain additional funding. Based on our current operating plans and existing working capital at December 31, 2023, our current liquidity is not sufficient to continue 12 Table of Contents to fund operations. As a result, there is substantial doubt about our ability to continue as a going concern.
Our ability to continue as a going concern will require us to obtain additional funding. Based on our current operating plans and existing working capital at December 31, 2024, our current liquidity is not sufficient to continue to fund operations. As a result, there is substantial doubt about our ability to continue as a going concern.
This could make it difficult to ensure that the Company complies with all applicable laws and stock exchange requirements, maintains adequate internal and disclosure controls and appropriately assesses and manages risk.
This could make it difficult to ensure that we comply with all applicable laws and stock exchange requirements, maintains adequate internal and disclosure controls and appropriately assesses and manages risk.
In March 2024, the Company notified the issuer of the investment in convertible notes receivable that it was exercising its redemption right with respect to the entire principal amount of the investment in convertible notes receivable after the first anniversary of their issue dates (May 3 and May 16, 2024, respectively) for an aggregate 11 Table of Contents redemption price of $2.090 million (representing the principal amount plus 4.5% per annum yield to the redemption date).
In March 2024, we notified the issuer of the investment in convertible notes receivable that we were exercising our redemption right with respect to the entire principal amount of the investment in convertible notes receivable after the first anniversary of their issue dates (May 3 and May 16, 2024, respectively) for an aggregate redemption price of $2.090 million (representing the principal amount plus 4.5% per annum yield to the redemption date).
Obtaining additional financing contains risks, including: • additional equity financing may not be available to us on satisfactory terms and any equity we are able to issue could lead to dilution for current stockholders; • loans or other debt instruments may have terms and/or conditions, such as interest rate, restrictive covenants and control or revocation provisions; • the current environment in capital markets combined with our capital constraints may prevent us from being able to obtain adequate debt financing; and • if we fail to obtain required additional financing to grow our business we may need to seek bankruptcy protection in the near term.
Obtaining additional financing contains risks, including: • additional equity financing may not be available to us on satisfactory terms and any equity we are able to issue could lead to dilution for current stockholders; • loans or other debt instruments may have terms and/or conditions, such as interest rate, restrictive covenants and control or revocation provisions; • the current environment in capital markets combined with our capital constraints may prevent us from being able to obtain adequate debt financing; and • if we fail to obtain required additional financing to grow our business we may need to seek bankruptcy protection in the near term. 11 Table of Contents Our common stock may be delisted from Nasdaq which could negatively impact the price of our common stock, liquidity and our ability to access the capital markets.
Members of our board and management are directly affiliated with CBI and DGP. Investors may be hesitant to invest in the Company given the influence of CBI and DGP.
Due to the recent change in control, the majority of our board members and management are directly affiliated with HiTron. Investors may be hesitant to invest in the Company given the influence of HiTron, CBI and DGP.
CBI USA and DGP collectively own approximately 45% of outstanding Common Stock and exercise significant influence over us. We previously had been a “controlled company” under the corporate governance rules for Nasdaq-listed companies and still do not have a majority independent board based on the phase-in requirements for companies after they lose “controlled company” status.
(“DGP”), also Korean companies, collectively own approximately 9% of outstanding Common Stock and exercise significant influence over us. We previously had been a “controlled company” under the corporate governance rules for Nasdaq-listed companies. We obtained a majority independent board based on the phase-in requirements for companies after they lose “controlled company” status.
Furthermore, Section 22 of the Securities Act of 1933, as amended, or the Securities Act, creates concurrent jurisdiction for federal and state courts over all Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims.
Furthermore, Section 22 of the Securities Act of 1933, as amended, or the Securities Act, creates concurrent jurisdiction for federal and state courts over all Securities Act actions.
Our controlling stockholders have not previously controlled a U.S. public company. In addition, , and no members of the board or our chief executive officer or chief financial officer have experience serving as directors or management of a U.S. publicly traded company.
In addition, no members of our board of directors nor our chief executive officer nor chief financial officer have experience serving as directors or management of a U.S. publicly traded company.
Our amended and restated certificate of incorporation also provides that any person purchasing or otherwise acquiring any interest in any shares of our common stock shall be deemed to have notice of and to have consented to this provision of our amended and restated certificate of incorporation.
Accordingly, both state and federal courts have jurisdiction to entertain such claims. 18 Table of Contents Our amended and restated certificate of incorporation also provides that any person purchasing or otherwise acquiring any interest in any shares of our common stock shall be deemed to have notice of and to have consented to this provision of our amended and restated certificate of incorporation.
As of December 31, 2023, we have generated an accumulated deficit of $208.4 million, including $18,837 of additional paid-in capital reclassed to accumulated deficit upon C-corporation conversion,. For the years ended December 31, 2023 and 2022, our net loss was $16.9 million and $2.6 million, respectively.
We have had significant operating losses since our inception. As of December 31, 2024, we have generated an accumulated deficit of $218.1 million, including $18,837 of additional paid-in capital reclassed to accumulated deficit upon C-corporation conversion. For the years ended December 31, 2024 and 2023, our net loss was $9.7 million and $16.9 million, respectively.
The staff’s delisting determination also noted the failure to hold its 2023 annual meeting as another basis of the delisting determination. • On May 28, 2024, the Company requested an appeal of the delisting determination to Nasdaq’s hearings panel. A hearing has been scheduled for July 9, 2024.
The staff’s delisting determination also noted the failure to hold our 2023 annual meeting as another basis of the delisting determination; • on May 28, 2024, we requested an appeal of the delisting determination to Nasdaq’s Hearings Panel (“Panel”), and the hearing took place on July 9, 2024.
The extended deadline for compliance was established by Nasdaq at May 20, 2024, the same deadline for our Form 10-Q for the quarter ended September 30, 2023, which had yet to be filed at the time. 13 Table of Contents • Although the Company filed its Form 10-Q for the quarter ended September 30, 2023 prior to the extended deadline of May 20, 2024, on May 21, 2024, the Company received a delisting determination from the Nasdaq staff as a result of not filing its Annual Report Form 10-K by the May 20, 2024 deadline and failure to timely file its Form 10-Q for the period ended March 31, 2024.
The Annual Report Form 10-K for the year ended December 31, 2023 was filed on June 6, 2024; • although we filed our Form 10-Q for the quarter ended September 30, 2023 prior to the extended deadline of May 20, 2024, on May 21, 2024, we received a delisting determination from the Nasdaq staff as a result of not filing our Annual Report Form 10-K by the May 20, 2024 deadline and failure to timely file our Form 10-Q for the quarter ended March 31, 2024 (which was subsequently filed on June 17, 2024).
For so long as CBI USA and DGP own a significant stake, they (and/or their transferees) will have substantial control over the elections of our directors and to approve any other corporate action requiring the affirmative vote of holders of a majority of the outstanding shares of our Common Stock.
These conflicts of interest (or the perception that they could occur) might adversely affect our business and prospects for obtaining financing or completing a strategic transaction. 16 Table of Contents For so long as CBI USA and DGP own a significant stake, they (and/or their transferees) will have substantial control over the elections of our directors and to approve any other corporate action requiring the affirmative vote of holders of a majority of the outstanding shares of our Common Stock.
In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove then-current management by making it more difficult for stockholders to replace members of the Board, which is responsible for appointing the members of management. 20 Table of Contents Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
The Company has already engaged in significant cost reductions, so our ability to further cut costs and extend our operating runway is limited. Without sufficient additional capital funding in the very near term, we may be required, among other things, to seek bankruptcy protection and/or cease operations. We may not be able to redeem the investment in convertible notes receivable.
The Company has already engaged in significant cost reductions, so our ability to further cut costs and extend our operating runway is limited. We may not be able to redeem the investment in convertible notes receivable.
Future issuances of our common stock or other equity securities, or the perception that such sales may occur, could adversely affect the prevailing market price of our common stock and impair our ability to raise capital through future offerings of equity or equity-linked securities.
Future issuances of our common stock or other equity securities, or the perception that such sales may occur, could adversely affect the prevailing market price of our common stock and impair our ability to raise capital through future offerings of equity or equity-linked securities. 17 Table of Contents We cannot be certain if the reduced reporting requirements applicable to us will make our common stock less attractive to investors.
We expect to continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability, which could result in a decline in the market value of our common stock.
We expect to continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability, which could result in a decline in the market value of our common stock. Since our inception in June 2011, we have devoted our resources to the development of SNA technology and are currently exploring strategic alternatives to maximize stockholder value.
On September 13, 2023, the Company received a delinquency notification that the closing bid price of the Company’s stock traded below $1.00 for the previous 30 consecutive business days.
On September 13, 2023, we received a delinquency notification that the closing bid price of our common stock traded below $1.00 for the previous 30 consecutive business days. We effected a one-for-five reverse stock split on August 27, 2024 in order to attempt to raise the stock price.
We need to obtain substantial funding in the very near term in order to continue operations and our exploration of strategic alternatives. We require significant capital resources in order to continue to operate our business and conduct our exploration of strategic alternatives, and our very limited liquidity could materially and adversely affect our business operations.
We require significant capital resources in order to continue to operate our business and conduct our exploration of strategic alternatives, and our limited liquidity could materially and adversely affect our business operations. Because we have no current source of revenue, our current available cash and cash equivalents provide us with very limited liquidity.
This may be onerous and we may be unsuccessful in implementing all measures required by data protection authorities or courts in interpretation of the GDPR, which may materially adversely affect our business, financial condition, results of operations and prospects. 18 Table of Contents Risks Related to Ownership of Our Common Stock The influence of our significant stockholders could make our Common Stock less attractive to some investors or otherwise harm the trading price of our Common Stock.
The GDPR imposes additional responsibility and liability in relation to our processing of personal data. This may be onerous and we may be unsuccessful in implementing all measures required by data protection authorities or courts in interpretation of the GDPR, which may materially adversely affect our business, financial condition, results of operations and prospects.
On January 11, 2024, Nasdaq notified the Company that it did not comply with listing requirements by not holding an annual meeting in 2023.
Although we are currently in compliance, there can be no assurance we will remain in compliance; • compliance with Nasdaq’s requirement to hold an annual meeting. On January 11, 2024, Nasdaq notified us that we did not comply with listing requirements by not holding an annual meeting in 2023.
Even if the Company is successful in our appeal and regains compliance with Nasdaq’s listing requirements and addresses the outstanding deficiency notices to Nasdaq’s satisfaction, there can be no assurance that the Company will remain in compliance with Nasdaq’s requirements and will not be delisted in the future.
Our securities may be at that time delisted from Nasdaq. Even though we regained compliance with Nasdaq’s listing requirements, there can be no assurance that we will remain in compliance with Nasdaq’s requirements and will not be delisted in the future.
Even if we are successful in entering into a strategic transaction, the terms and conditions of that transaction may restrict us from entering into future agreements with other potential collaborators. Additionally, such strategic transactions may not be favorable to investors nor deliver any anticipated benefits by the time of business integration.
Our board and management do not have meaningful experience executing this type of endeavor in the U.S. public markets. Even if we are successful in entering into a strategic transaction, the terms and conditions of that transaction may restrict us from entering into future agreements with other potential collaborators.
We cannot be certain if the reduced reporting requirements applicable to us will make our common stock less attractive to investors. We were an “emerging growth company” as defined in the JOBS Act until December 31,2023.
We were an “emerging growth company” as defined in the JOBS Act until December 31, 2023.
The Company believes it is in compliance with this requirement based on its December 31, 2023 balance sheet, but does not expect to be in compliance as of March 31, 2024. • Compliance with Nasdaq’s corporate governance requirements with respect to board and committee composition.
We believe we are in compliance with this requirement based on our December 31, 2024 balance sheet and expects to be in compliance going forward; • compliance with Nasdaq’s corporate governance requirements with respect to board and committee composition. We have received numerous deficiency notifications with respect to these requirements in the past year.
There can be no assurance that we will be successful in executing such a strategic transaction and at this point we do not expect these efforts to generate significant value for our stockholders. 14 Table of Contents Our internal computer systems, or those of contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our therapeutic development programs.
Our future financial performance and condition are substantially dependent on the results of our ongoing exploration of strategic alternatives, and we cannot predict whether we will be successful. 13 Table of Contents Our internal computer systems, or those of contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our therapeutic development programs.
Strategic transactions are complex and time-consuming to identify, evaluate, negotiate and consummate in compliance with applicable laws and Nasdaq requirements. Our board and management do not have meaningful experience executing this type of endeavor in the U.S. public markets.
We currently have no source of revenues, and our financial resources are limited to our cash and cash equivalents. The Company plans to continue actively pursuing strategic alternatives. Strategic transactions are complex and time-consuming to identify, evaluate, negotiate and consummate in compliance with applicable laws and Nasdaq requirements.
The Company’s stock price has remained below $1.00 since receipt of the notification, which must be cured by September 9, 2024, per the March 12, 2024 extension letter received from Nasdaq. • Compliance with Nasdaq’s rule requiring stockholders’ equity of at least $2,500,000 based on the Company’s balance sheet as of December 31, 2023.
On September 13, 2024, we received a letter received from Nasdaq noting it met the closing bid price requirement; • compliance with Nasdaq’s rule requiring stockholders’ equity of at least $2,500,000 based on our balance sheet as of December 31, 2024. We were not in compliance with this requirement based on its September 30, 2024 balance sheet.
If we are unable to redeem the investment in convertible notes receivable, or otherwise recognize value from them, it will adversely impact our financial condition and prospects. Our controlling stockholders, executive officers and members of our board, have limited experience controlling or governing a public company operating in the United States status.
We will continue our redemption attempts, however, it is unlikely these investments will ever be redeemed. 10 Table of Contents Our controlling stockholders, executive officers and members of our board, have limited experience controlling or governing a public company operating in the United States status. Our controlling stockholders have not previously controlled a U.S. public company.
Removed
We currently have no source of revenues or committed financing, and our financial resources are limited to our cash and cash equivalents. Substantial additional funding is needed in the very near term.
Added
Additionally, such strategic transactions may not be favorable to investors nor deliver any anticipated benefits by the time of business integration. We need to obtain substantial funding in order to continue operations and our exploration of strategic alternatives.
Removed
With respect to our efforts to maximize value from historical assets, while those efforts are continuing, based on the interest we have received to date we do not think it is likely they will generate significant value.
Added
Our existing cash and cash equivalents are sufficient for us to continue to fund our business operations for at least the next 12 months.
Removed
The Company plans to continue actively pursuing strategic alternatives, however, there can be no assurance that the Company will have sufficient resources or obtain additional financing necessary to complete this effort.
Added
Refer to Note 4 - Investment in Convertible Notes Receivable for more details. We attempted to redeem the investment in convertible notes receivable during 2024. However, the issuer of such convertible notes appears to have closed its operations and has not responded to our redemption requests.
Removed
Even if we do have such resources or can obtain financing, we may not be able to consummate such a transaction in a timely manner or at all or in a manner that would not adversely impact our business. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Added
If we are unable to successfully exercise our redemption right we may be unable to obtain any or all of the redemption price under such convertible notes, or otherwise recognize value from such convertible notes, which may adversely impact our financial condition and prospects.
Removed
Because we have no current source of revenue or committed financing, our current available cash and cash equivalents provide us with very limited liquidity. Our existing cash and cash equivalents are not sufficient for us to continue to fund our business operations. Substantial additional funding is needed in the very near term.
Added
The extended deadline for compliance was established by Nasdaq at May 20, 2024, the same deadline for our Form 10-Q for the quarter ended September 30, 2023.
Removed
The investment in convertible notes receivable indicate that the Company may request redemption on the first anniversary of the issue date. However, the investment in convertible notes receivable contain schedules for dates of redemption notices and redemption prices that do not contemplate a first redemption date until three months after the first anniversary of the issue dates.
Added
On July 31, 2024, we received formal notice that the Panel determined to continue our listing subject to us evidencing compliance with all applicable criteria for continued listing on The Nasdaq Capital Market by September 16, 2024.
Removed
Although the Company believes this was a clear error and is inconsistent with the plain language that the investment in convertible notes receivable are redeemable on the first anniversary of their issue dates, the issuer has taken the position that the investment in convertible notes receivable are not redeemable until August 3, 2024 and August 16, 2024.
Added
We received an additional extension to November 14, 2024 to satisfy the terms of the Panel’s decision and to ensure our continued listing on Nasdaq; • as we did not meet Nasdaq’s listing requirements as of September 30, 2024, we requested another extension by the Panel to demonstrate compliance and another extension was granted.
Removed
The Company expects to continue to seek to redeem the investment in convertible notes receivable as soon as practicable. However, there can be no assurance that the Company will be able to do so, in the near term or at all.
Added
We thereafter presented our plan to regain compliance with the Equity Requirement to the Panel, subsequent to which the Panel ultimately granted us extensions through December 17, 2024 to do so; and • on December 20, 2024, we received a letter from Nasdaq confirming that, as of December 17, 2024, we meet all requirements for continued listing on Nasdaq as required by the Panel’s decision dated November 20, 2024.
Removed
In addition, against this backdrop, it may be difficult to earn the confidence of prospective investors or strategic partners, threatening our ability to obtain much needed financing and hindering our exploration of strategic alternatives.
Added
In accordance with the Panel’s decision, on December 17, 2024, we made public disclosure under 12 Table of Contents cover of a Form 8-K, describing the transactions undertaken by us to achieve compliance with Listing Rule 5550(b)(1) and stated affirmatively that as of that date, we believe we have stockholders’ equity above the $2.5 million requirement and provided a pro-forma balance sheet as of December 17, 2024.
Removed
We currently do not comply with the Nasdaq continued listing requirements and have received a delisting determination notice from the Nasdaq staff. Our common stock may be delisted from Nasdaq which could negatively impact the price of our common stock, liquidity and our ability to access the capital markets.
Added
Pursuant to Listing Rule 5815(d)(4)(B), we will be subject to a Mandatory Panel Monitor for a period of one year from the date of Nasdaq’s letter.
Removed
The Company has received numerous deficiency notifications with respect to these requirements in the past year. Although the Company is currently in compliance, there can be no assurance it will remain in compliance. • Compliance with Nasdaq’s requirement to hold an annual meeting.
Added
If, within that one-year monitoring period, the Nasdaq Listing Qualifications staff (the “Staff”) finds us again out of compliance with the $2.5 million Equity Rule that was the subject of the exception, notwithstanding Rule 5810(c)(2), we will not be permitted to provide the Staff with a plan of compliance with respect to that deficiency and the Staff will not be permitted to grant additional time for us to regain compliance with respect to that deficiency, nor will we be afforded an applicable cure or compliance period pursuant to Rule 5810(c)(3).
Removed
In connection with its request for an appeal, the Company also requested an extended stay on the suspension of trading in the Company’s common stock through the decision of the hearings panel. If the extended stay is not granted, the automatic stay would only be in place for 15 calendar days from the May 28 appeal request.
Added
Instead, the Staff will issue a Delist Determination Letter and we will have an opportunity to request a new hearing with the initial Panel or a newly convened Panel if the initial Panel is unavailable. We will have the opportunity to respond/present to the Panel as provided by Listing Rule 5815(d)(4)(C).
Removed
We may not be successful in our appeal or be able to regain compliance with Nasdaq’s listing requirements and our failure to do so may resulted in the delisting of our Common Stock by Nasdaq’s.
Added
Risks Related to Ownership of Our Common Stock The influence of our significant stockholders could make our Common Stock less attractive to some investors or otherwise harm the trading price of our Common Stock. HiTron beneficially owns approximately 53% of the outstanding shares of Common Stock. CBI USA, Inc. (“CBI USA”) and DGP Co., Ltd.
Removed
Since our inception in June 2011, we have devoted our resources to the development of SNA technology, and are currently exploring out-licensing opportunities and strategic alternatives to maximize stockholder value. We have had significant operating losses since our inception.
Added
In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove then-current management by making it more difficult for stockholders to replace members of the Board, which is responsible for appointing the members of management.
Removed
Our future financial performance and condition are substantially dependent on the results of our ongoing exploration of strategic alternatives, and we cannot predict whether we will be successful. We are pursuing asset out-licenses, asset sales and similar strategic transactions with respect to our historical assets.
Removed
Risks Related to Intellectual Property We, or any current or future strategic partners or licensors, may become subject to third-party claims or litigation alleging infringement of patents or other proprietary rights or seeking to invalidate patents or other proprietary rights, and we may need to resort to litigation to protect or enforce our patents or other proprietary rights, all of which could be costly, time consuming, delay or prevent the development and commercialization of our therapeutic candidates, or put our patents and other proprietary rights at risk.
Removed
We or our licensors, or any current or future strategic partners, may be subject to third-party claims for infringement or misappropriation of patent or other proprietary rights. We are generally obligated under our license agreements to indemnify and hold harmless our licensors for damages arising from intellectual property infringement by us.
Removed
If we or our licensors, or any current or future strategic partners, are found to infringe a third-party patent or other intellectual property rights, we could be required to pay damages, potentially including treble damages, if we are found to have willfully infringed.
Removed
In addition, we or our licensors, or any current or future strategic partners, may choose to seek, or be required to seek, a license from a third-party, which may not be available on acceptable terms, if at all.
Removed
Even if a license can be obtained on acceptable terms, the rights may be non-exclusive, which could give our competitors access to the same technology or intellectual property rights licensed to us.
Removed
If we fail to obtain a required license, we or any current or future collaborator may be unable to effectively market therapeutic candidates based on our technology, which could limit our ability to generate revenue or achieve profitability and possibly prevent us from generating revenue sufficient to sustain our operations.
Removed
In addition, we may find it necessary to pursue claims or initiate lawsuits to protect or enforce our patent or other intellectual property rights. The cost to us in defending or initiating any litigation or other proceeding relating to patent or other proprietary rights, even if resolved in our favor, could be substantial, and litigation would divert our management’s attention.
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Item 2. Properties
Properties — owned and leased real estate
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Item 2. Properties
Properties — owned and leased real estate
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2023 filing
2024 filing
Biggest changeItem 2. Properties. Our corporate headquarters are located in Chicago, Illinois, where we lease approximately 30,000 square feet of space (the “Chicago Lease”). The Chicago Lease commenced on July 1, 2020, and expires on July 1, 2030. During 2023, we subleased approximately 57% of the space through the expiration date.
Biggest changeItem 2. Properties. Our corporate headquarters moved to Redwood City, California in January 2025. The Company was formerly located in Chicago, Illinois, where we leased approximately 30,000 square feet of space (the “Chicago Lease”). The Chicago Lease commenced on July 1, 2020, and expires on July 1, 2030.
Removed
We believe that this space is sufficient to meet our needs for the foreseeable future and that any additional or alternative space we may require will be available in the future on commercially reasonable terms.
Added
During 2023 and 2024, we subleased approximately 57% of the space through the expiration date. In February 2025, the Company terminated the Chicago Lease and related sublease.
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
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Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
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2023 filing
2024 filing
Biggest changeBased on similar factual allegations presented in the Colwell complaint, described above, the Puri, Sim, and Stourbridge complaints (collectively, the “Derivative Complaints”) allege that the defendants caused the Company to issue false and/or misleading statements in the proxy statement for its 2021 Annual Meeting of Stockholders regarding risk oversight, code of conduct, clinical program and compensation matters, among other things, in violation of federal securities law, and committed breaches of fiduciary duties.
Biggest changeGiljohann, et al., Case No. 1:22-cv-01217; and Stourbridge Investments LLC v. Exicure, Inc. et al., Case No. 1:22-cv-00526. Complaints in these cases (collectively, the “Derivative Complaints”) assert, among other things, that the Company included false or misleading statements in its proxy statement for its 2021 Annual Meeting of Stockholders, also alleging certain breaches of fiduciary duties.
The second amended complaint does not quantify any alleged damages but, in addition to 23 Table of Contents attorneys’ fees and costs, lead plaintiff seeks to recover damages on behalf of himself and others who acquired the Company’s stock during the putative class period at allegedly inflated prices and purportedly suffered financial harm as a result.
The second amended complaint does not quantify any alleged damages but, in addition to attorneys’ fees and costs, lead plaintiff seeks to recover damages on behalf of himself and others who acquired the 21 Table of Contents Company’s stock during the putative class period at allegedly inflated prices and purportedly suffered financial harm as a result.
Item 3. Legal Proceedings. On December 13, 2021, Mark Colwell filed a putative securities class action lawsuit against the Company, David A. Giljohann and Brian C. Bock in the United States District Court for the Northern District of Illinois, captioned Colwell v. Exicure, Inc. et al., Case No. 1:21-cv-0663.
Item 3. Legal Proceedings. On December 13, 2021, Mark Colwell filed a putative securities class action lawsuit against the Company, David A. Giljohann and Brian C. Bock in the United States District Court for the Northern District of Illinois, captioned Colwell v. Exicure, Inc. et al., Case No. 1:21-cv-06637.
The Derivative Complaints also assert that Dr. Giljohann and Mr. Bock are liable for contribution under the federal securities laws. The Puri and Stourbridge complaints further assert state law claims for unjust enrichment, and the Puri complaint additionally asserts state law claims for abuse of control, gross mismanagement and corporate waste.
The Derivative Complaints seek contribution from Dr. Giljohann and Mr. Bock under federal securities laws. The Puri and Stourbridge complaints further assert for a variety of related state law claims, including unjust enrichment, abuse of control, gross mismanagement, and corporate waste.
We may also be a party to litigation and subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business.
Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Cleland, Elizabeth Garofalo, Bosun Hau, Bali Muralidhar, Andrew Sassine, Matthias Schroff, James Sulat and Timothy Walbert, captioned Puri v. Giljohann, et al., Case No. 1:22-cv-01083. On March 8, 2022, Yixin Sim filed a similar shareholder derivative lawsuit in the same court against the same individuals, captioned Sim v. Giljohann, et al., Case No. 1:22-cv-01217.
In March and April 2022, three different stockholders filed separate shareholder derivative lawsuits on behalf of the Company against Dr. Giljohann and Mr. Bock, Jeffrey L. Cleland, Elizabeth Garofalo, Bosun Hau, Bali Muralidhar, Andrew Sassine, Matthias Schroff, James Sulat and Timothy Walbert. The cases in the ordered filed are captioned Puri v. Giljohann, et al., Case No. 1:22-cv-01083; Sim v.
On October 3, 2023, a former employee filed a complaint against the Company and its executives related to the former employee’s separation from the Company in August. The parties will proceed with paper discovery and an in-person settlement conference is scheduled for June 26, 2024.
The Derivative Complaints and Demand Letter are currently stayed, and the Company is engaged in settlement discussions with plaintiffs’ counsel regarding these matters. On October 3, 2023, a former employee filed a complaint against the Company and its executives related to the former employee’s separation from the Company in August.
The plaintiffs do not quantify any alleged damages in the Derivative Complaints, but seek restitution for damages to the Company, attorneys’ fees, costs, and expenses, as well as an order directing that certain proposals for strengthening board oversight be put to a vote of the Company’s shareholders.
Plaintiffs seek restitution for damages to the Company, attorneys’ fees, costs, and expenses, as well stockholder adoption of certain board oversight measures.
Removed
The parties filed a joint status report noting the mediation efforts taken by the parties.
Added
On October 8, 2024, the court granted preliminary approval of the settlement in the securities class action and set a schedule for final approval proceedings, including a final approval hearing on January 13, 2025. On January 13, 2025, the court entered final judgment approving the settlement. The settlement described above will be fully covered by insurance.
Removed
The report also proposes a litigation schedule going forward, which the Court adopted: plaintiff's third amended complaint is due on or before June 28, 2024, and any motion to dismiss is due on or before August 27, 2024, with response due on or before October 8, 2024 and any reply due on or before November 5, 2024.
Added
However, the settlement will include a reservation of rights by the insurers against the Company for the unsatisfied portion of its self-insured retainer. As a result, the Company recorded an accrual as of September 30, 2024 for the amount of the unsatisfied retainer, approximately $1.14 million.
Removed
Accordingly, the status hearing set for May 22, 2024is reset to July 23, 2024. On March 1, 2022, Kapil Puri filed a shareholder derivative lawsuit on behalf of the Company in the United States District Court for the Northern District of Illinois, against Dr. Giljohann and Mr. Bock, Jeffrey L.
Added
The parties proceeded with paper discovery and this matter did not settle at an in-person settlement conference on July 17, 2024. As a result, we are in the discovery phase of this litigation. The parties exchanged discovery and a status conference was held on February 11, 2025, wherein opposing counsel asserted alleged various discovery deficiencies.
Removed
On April 25,2022, Stourbridge Investments LLC filed a similar shareholder derivative lawsuit against the same individuals in the United States District Court for the District of Delaware, captioned Stourbridge Investments LLC v. Exicure, Inc. et al., Case No. 1:22-cv-00526.
Added
The parties are working through these alleged discovery deficiencies and anticipate deposing the plaintiff as well as witnesses on behalf of the Company and the individual defendants themselves in the coming months. We may also be a party to litigation and subject to claims incident to the ordinary course of business.
Removed
All of the Derivative Cases have been stayed pending a decision on any motion to dismiss that may be filed in the Colwell case. Further, pursuant to agreement, the Demand Letter is being held in abeyance and any related statute of limitations tolled pending such motion and decision.
Added
Item 4. Mine Safety Disclosures. Not applicable. 22 Table of Contents PART II
Removed
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Item 4. Mine Safety Disclosures. Not applicable. 24 Table of Contents PART II
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
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Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
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2023 filing
2024 filing
Biggest changeItem 4. Mine Safety Disclosures 24 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 25 Item 6. [Reserved] 26 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A. [Reserved] 36 Item 8. Financial Statements and Supplementary Data 37
Biggest changeItem 4. Mine Safety Disclosures 22 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 23 Item 6. [Reserved] 24 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 25 Item 7A. [Reserved] 35 Item 8. Financial Statements and Supplementary Data 36
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
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Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
3 edited+3 added−0 removed4 unchanged
2023 filing
2024 filing
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans Information about our equity compensation plans is incorporated herein by reference to Part III, Item 12 of this Annual Report . Unregistered Sales of Equity Securities and Use of Proceeds None. 25 Table of Contents
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans Information about our equity compensation plans is incorporated herein by reference to Part III, Item 12 of this Annual Report .
As disclosed elsewhere in this Report, we are currently in the process of appealing a delisting determination by the Nasdaq staff and there can be no assurance our common stock will remain trading and listed on Nasdaq. On May 31, 2024, the last reported sale price of our common stock on Nasdaq was $0.44 per share.
As disclosed elsewhere in this Report, we are currently in the process of appealing a delisting determination by the Nasdaq staff and there can be no assurance our common stock will remain trading and listed on Nasdaq. On March 12, 2025, the last reported sale price of our common stock on Nasdaq was $10.57 per share.
Holders of Record As of May 31, 2024, we had 8,651,148 shares of common stock outstanding held by 65 stockholders of record, one of which is Cede & Co., a nominee for Depository Trust Company, or DTC.
Holders of Record As of March 12, 2025, we had 6,317,771 shares of common stock outstanding held by 101 stockholders of record, one of which is Cede & Co., a nominee for Depository Trust Company, or DTC.
Added
Unregistered Sales of Equity Securities and Use of Proceeds Other than as listed below, there were no unregistered sales of equity securities sold during the period covered by this Annual Report on Form 10-K that were not previously included in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.
Added
On December 10, 2024, we entered into a common stock purchase agreement (the “MIRTO Purchase Agreement”) with MIRTO Co., LTD. (“MIRTO”), pursuant to which we agreed to issue and sell to MIRTO 87,808 shares of our Common Stock, for an aggregate purchase price of approximately $0.5 million, at a purchase price per share of $4.61.
Added
The transactions under the MIRTO Purchase Agreement closed on December 24, 2024. 23 Table of Contents
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
43 edited+36 added−34 removed17 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
43 edited+36 added−34 removed17 unchanged
2023 filing
2024 filing
Biggest changeOther expense, net Other expense, net mostly consists of gains and losses on foreign currency transactions and gains and losses on the sale of capital assets. 31 Table of Contents Results of Operations Comparison of the Year Ended December 31, 2023 and 2022 The following table summarizes the results of our operations for the years ended December 31, 2023 and 2022: Year Ended December 31, (dollars in thousands) 2023 2022 Change Revenue: Collaboration revenue $ — $ 28,826 $ (28,826) (100) % Total revenue — 28,826 (28,826) (100) % Operating expenses: Research and development expense 1,423 19,767 (18,344) (93) % General and administrative expense 12,653 10,890 1,763 16 % Loss from sale of property and equipment 920 — 920 100 % Total operating expenses 14,996 30,657 (15,661) (51) % Operating loss (14,996) (1,831) (13,165) 719 % Other (expense) income, net: Changes in fair value of investment in convertible notes receivable (2,000) — (2,000) 100 % Dividend income 52 78 (26) (33) % Interest income 32 15 17 113 % Interest expense — (595) 595 (100) % Other expense, net (2) (40) 38 (95) % Total other expense, net (1,918) (542) (1,376) 254 % Net loss before provision for income taxes (16,914) (2,373) (14,541) 613 % Provision for income taxes — 209 (209) n/m Net loss $ (16,914) $ (2,582) $ (14,332) 555 % Revenue The following table summarizes our revenue earned during the periods indicated: Year Ended December 31, (dollars in thousands) 2023 2022 Change Collaboration revenue: AbbVie Collaboration Agreement $ — $ 11,135 $ (11,135) (100) % Ipsen Collaboration Agreement — 17,691 (17,691) (100) % Total collaboration revenue $ — $ 28,826 28826000 $ (28,826) (100) % Total revenue $ — $ 28,826 $ (28,826) (100) % Collaboration revenue was $0.0 million during the year ended December 31, 2023, reflecting an decrease of $28.8 million, or 100%, from collaboration revenue of $28.8 million for the year ended December 31, 2022.
Biggest changeIn the fourth quarter, the Company sold certain assets pursuant to the purchase agreement with the Purchaser. 30 Table of Contents Results of Operations Comparison of the Year Ended December 31, 2024 and 2023 The following table summarizes the results of our operations for the years ended December 31, 2024 and 2023: Year Ended December 31, (dollars in thousands) 2024 2023 Change Revenue: Revenue $ 500 $ — $ 500 100 % Total revenue 500 — 500 100 % Operating expenses: Research and development expense — 1,423 (1,423) (100) % General and administrative expense 5,449 11,715 (6,266) (53) % Litigation legal expense 1,562 938 624 67 % Right-of-use asset impairment loss 5,721 — 5,721 100 % Loss from sale of property and equipment — 920 (920) 100 % Total operating expenses 12,732 14,996 (2,264) (15) % Operating loss (12,232) (14,996) 2,764 (18) % Other (expense) income, net: Changes in fair value of investment in convertible notes receivable — (2,000) 2,000 100 % Dividend income 5 52 (47) (90) % Interest income 8 32 (24) (75) % Interest expense (18) — (18) (100) % Gain on settlement of accounts payables 407 — 407 100 % Other income, net 2,137 (2) 2,139 100 % Total other income (expense), net 2,539 (1,918) 4,457 (232) % Net loss before provision for income taxes (9,693) (16,914) 7,221 (43) % Provision for income taxes 8 — 8 (100) % Net loss $ (9,701) $ (16,914) $ 7,213 (43) % Revenue On February 5, 2024, the Company entered into a patent license agreement to develop cavrotolimod for potential treatment for hepatitis with a private clinical stage biopharmaceutical company.
Research and development expense Research and development expense consisted of costs associated with our research activities, including basic research on our SNA platform, discovery and development of novel SNAs as prospective therapeutic candidates, preclinical and clinical development activities for SNAs we have nominated for clinical development as well as maintaining and protecting our intellectual property.
Research and development expense Research and development expense consisted of costs associated with our research activities, including basic research on our SNA technology platform, discovery and development of novel SNAs as prospective therapeutic candidates, preclinical and clinical development activities for SNAs we have nominated for clinical development as well as maintaining and protecting our intellectual property.
Our research and development expenses in the periods presented include: • employee-related expenses, including salaries, bonuses, benefits and equity-based compensation expense; • early research and development expenses incurred under arrangements with third parties, such as contract research organizations, contract manufacturing organizations, and consultants; • preclinical and clinical development expenses with third parties such as contract research organizations, contract manufacturing organizations, and consultants; • costs of maintaining and protecting our intellectual property portfolio, including legal advisory fees, license fees, sublicense fees, patent maintenance and other similar fees; • laboratory materials and supplies; • facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation of leasehold improvements and equipment and laboratory and other supplies.
Our research and development expenses in the prior year presented include: • employee-related expenses, including salaries, bonuses, benefits and equity-based compensation expense; • early research and development expenses incurred under arrangements with third parties, such as contract research organizations, contract manufacturing organizations, and consultants; • preclinical and clinical development expenses with third parties such as contract research organizations, contract manufacturing organizations, and consultants; • costs of maintaining and protecting our intellectual property portfolio, including legal advisory fees, license fees, sublicense fees, patent maintenance and other similar fees; • laboratory materials and supplies; • facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation of leasehold improvements and equipment and laboratory and other supplies.
In the absence of a significant source of recurring revenue, our continued viability is dependent on our ability to continue to raise additional capital to finance our operations. As discussed above, there are substantial uncertainties about our ability to raise such financing.
In the absence of a significant source of recurring revenue, our continued viability is dependent on our ability to continue to raise 34 Table of Contents additional capital to finance our operations. As discussed above, there are substantial uncertainties about our ability to raise such financing.
The effective tax rate for the year ended December 31, 2022 of (8.8)% was attributable to the fact the Company was subject to the IRC Section 174 regulations requiring companies to capitalize certain research and experimental expenditures and IRC Section 382 loss limitation rules on our ability to utilize net operating losses to offset the capitalization requirement, with the most recent ownership change being in the fourth quarter of 2022.
The effective tax rate for the year ended December 31, 2023 of 0% was attributable to the fact the Company was subject to the IRC Section 174 regulations requiring companies to capitalize certain research and experimental expenditures and IRC Section 382 loss limitation rules on our ability to utilize net operating losses to offset the capitalization requirement, with the ownership change being in the fourth quarter of 2022.
The Company effected a one-for-thirty reverse stock split on June 29, 2022 in order to attempt to raise the stock price. On September 13, 2023, the Company received a delinquency notification that the closing bid price of the Company’s stock traded below $1.00 for the previous 30 consecutive business days.
We effected a one-for-thirty reverse stock split on June 29, 2022 in order to attempt to raise the stock price. On September 13, 2023, we received a delinquency notification that the closing bid price of our stock traded below $1.00 for the previous 30 consecutive business days.
A significant portion of our research and development costs were not tracked by project as they benefit multiple projects or our technology. 30 Table of Contents As previously announced, we halted all research and development activities in 2022 and no longer incurred research and development expenses after the first quarter of 2023.
We expensed research and development costs as they were incurred. A significant portion of our research and development costs were not tracked by project as they benefit multiple projects or our technology. As previously announced, we halted all research and development activities in 2022 and no longer incurred research and development expenses after the first quarter of 2023.
Contractual Obligations and Commitments Chicago Lease Refer to Note 7 - Leases to the Notes to our Consolidated Financial Statements included herein.
Contractual Obligations and Commitments Chicago Lease Refer to Note 5 - Leases to the Notes to our Consolidated Financial Statements included herein.
As of December 31, 2023, we have generated an accumulated deficit of $208.4 million, including $18,837 of additional paid-in capital reclassed to accumulated deficit upon C-corporation conversion, since inception and expect to incur significant expenses and negative cash flows for the foreseeable future. Our current liquidity is not sufficient to continue to fund existing obligations and operations.
As of December 31, 2024, we have generated an accumulated deficit of $218.1 million, including $18,837 of additional paid-in capital reclassed to accumulated deficit upon C-corporation conversion, since inception and expect to incur significant expenses and negative cash flows for the foreseeable future. Our current liquidity is not sufficient to continue to fund existing obligations and operations.
Loss from sale of property and equipment The Company sold the majority of its scientific equipment through a third party auctioneer and incurred a loss on the sale of these assets in the third quarter.
Loss from sale of property and equipment In the third quarter of 2023, the Company sold the majority of its scientific equipment through a third party auctioneer and incurred a loss on the sale of these assets as a result.
Nasdaq Listing Requirements Deficiency Notices As previously disclosed, the Company has received numerous deficiency notes with respect to various Nasdaq listing requirements in the past year. These related to: • Compliance with Nasdaq’s minimum bid price rule due to the Company’s stock trading below $1.00 for a sustained period of time.
Nasdaq Listing Requirements Deficiency Notices As previously disclosed, we have received numerous deficiency notes with respect to various Nasdaq listing requirements in the past year. These related to: • Compliance with Nasdaq’s minimum bid price rule due to our stock trading below $1.00 for a sustained period of time.
We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. 29 Table of Contents Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors.
We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.
Our future capital requirements are difficult to forecast and will depend on many factors, including: • the results of our exploration of strategic alternatives, including any potential transactions; • the results of any future or pending litigation against the Company; • the extent to which we encounter increased costs as a result of global and macroeconomic conditions, including rising inflation and interest rates, supply chain disruptions, fluctuating exchange rates, and increases in commodity, energy and fuel prices; and • unknown legal, administrative, regulatory, accounting, and information technology costs as well as additional costs associated with operating as a public company. 35 Table of Contents Until such time, if ever, as we can generate substantial revenue, we expect to finance our cash needs primarily through equity offerings.
Our future capital requirements are difficult to forecast and will depend on many factors, including: • the results of our exploration of strategic alternatives, including any potential transactions; • the results of any future or pending litigation against the Company; • the extent to which we encounter increased costs as a result of global and macroeconomic conditions, including rising inflation and interest rates, supply chain disruptions, fluctuating exchange rates, and increases in commodity, energy and fuel prices; and • unknown legal, administrative, regulatory, accounting, and information technology costs as well as additional costs associated with operating as a public company.
The staff’s delisting determination also noted the failure to hold its 2023 annual meeting as another basis of the delisting determination. • On May 28, 2024, the Company requested an appeal of the delisting determination to Nasdaq’s hearings panel. A hearing has been scheduled for July 9, 2024.
The staff’s delisting determination also noted the failure to hold its 2023 annual meeting as another basis of the delisting determination. • On May 28, 2024, we requested an appeal of the delisting determination to Nasdaq’s Hearings Panel (“Panel”), and the hearing took place on July 9, 2024.
We may need to seek bankruptcy protection and/or cease operations in the near term, which may result in our stockholders receiving no or very little value in respect of their shares of our common stock.
We may need to seek bankruptcy protection and/or cease operations in the near term, which may result in our stockholders receiving no or very little value in respect of their shares of our common stock. See “Funding Requirements” below for additional information on our future capital needs.
For example, in February 2024, we announced a licensing deal for patents related to one of our historical drug candidates, and received a small, one-time payment and an entitlement to only modest royalties on future sales of the licensed technology that we do not believe will be material. Therefore, we are engaging in a broader exploration of strategic alternatives.
In February 2024, we received an upfront payment of $500,000 from a licensing agreement for patents related to one of our historical drug candidates, and received a small, one-time payment and an entitlement to only modest royalties on future sales of the licensed technology that we do not believe will be material.
However, it may be difficult to obtain financing given the Company’s current condition and uncertainty over its future direction. Therefore, we may be unable to raise capital 27 Table of Contents at all or on favorable terms.
We expect to seek financing through equity offerings. However, it may be difficult to obtain financing given our current condition and uncertainty over its future direction. Therefore, we may be unable to raise capital at all or on favorable terms.
The extended deadline for compliance was established by Nasdaq at May 20, 2024, the same deadline for our Form 10-Q for the quarter ended September 30, 2023, which had yet to be filed at the time. • Although the Company filed its Form 10-Q for the quarter ended September 30, 2023 prior to the extended deadline of May 20, 2024, on May 21, 2024, the Company received a delisting determination from the Nasdaq staff as a result of not filing its Annual Report Form 10-K by the May 20, 2024 deadline and failure to timely file its Form 10-Q for the period ended March 31, 2024.
The Annual Report Form 10-K for the fiscal year ended December 31, 2023 was filed on June 6, 2024. 26 Table of Contents • Although we filed its Form 10-Q for the quarter ended September 30, 2023 prior to the extended deadline of May 20, 2024, on May 21, 2024, we received a delisting determination from the Nasdaq staff as a result of not filing its Annual Report Form 10-K by the May 20, 2024 deadline and failure to timely file its Form 10-Q for the quarter ended March 31, 2024 (which was subsequently filed on June 17, 2024).
Provision for income taxes The effective tax rate for the year ended December 31, 2023 of 0% because the Company generated tax losses and provided a full valuation allowance against its deferred tax assets as the balance is not likely to be realized.
The effective income tax rate for the year ended December 31, 2024 was (0.1)% 32 Table of Contents because the Company generated tax losses and provided a full valuation allowance against its deferred tax assets to an amount that is more likely than not to be realized.
Investing activities Net cash used in investing activities was $1.1 million and provided by investing activities was $4.7 million for the years ended December 31, 2023 and 2022, respectively. The decrease in cash provided by investing activities of $5.8 million was primarily due to a decrease in proceeds from the maturity, net of purchases, of available-for-sale securities.
The decrease in cash used in investing activities of $1.1 million was primarily due to a decrease in proceeds from the maturity, net of purchases, of available-for-sale securities. Financing activities Net cash provided by financing activities of $13.4 million for year ended December 31, 2024 is primarily due to the stock purchase agreements closed in November and December 2024.
See “Funding Requirements” below for additional information on our future capital needs. 34 Table of Contents Cash Flows The following table shows a summary of our cash flows for the years ended December 31, 2023 and 2022: Years Ended December 31, (in thousands) 2023 2022 Net cash used in operating activities $ (10,357) $ (35,658) Net cash (used in) provided by investing activities (1,078) 4,696 Net cash provided by (used in) financing activities 3,674 (3,105) Net (decrease) in cash, cash equivalents, and restricted cash $ (7,761) $ (34,067) Operating activities Net cash used in operating activities was $10.4 million and $35.7 million for the years ended December 31, 2023 and 2022, respectively.
Cash Flows The following table shows a summary of our cash flows for the years ended December 31, 2024 and 2023: Years Ended December 31, (in thousands) 2024 2023 Net cash used in operating activities $ (2,910) $ (10,357) Net cash used in investing activities — (1,078) Net cash provided by financing activities 13,402 3,674 Net increase (decrease) in cash, cash equivalents, and restricted cash $ 10,492 $ (7,761) 33 Table of Contents Operating activities Net cash used in operating activities was $2.9 million and $10.4 million for the years ended December 31, 2024 and 2023, respectively.
If we are unable to raise capital, the Company could seek bankruptcy protection and/or cease operations in the near term, which may result in the Company’s stockholders receiving no or very little value in respect of their shares of the Company’s common stock. We expect to seek financing through equity offerings.
Additional financing will be needed to fund our ongoing operations and exploration of strategic alternatives and pursue any alternatives that we identify. If we are unable to raise capital, the Company could seek bankruptcy protection and/or cease operations, which may result in our stockholders receiving no or very little value in respect of their shares of our common stock.
This effort involves exploring growth through transactions with potential partners that see opportunity in joining an existing, publicly-traded organization. We are exploring transactions in industries unrelated to our historical operations.
We continue to engage in a broader exploration of strategic alternatives. This effort involves exploring growth through transactions with potential partners that see opportunity in joining an existing, publicly-traded organization.
Interest income Interest income consists of income earned on our available for sale securities that are recorded as short-term investments on our consolidated balance sheets, as well as income earned on our cash balances. Interest expense Interest expense includes amounts pursuant to the MidCap Credit Agreement (as defined below).
Dividend income Dividend income consists of income earned on our money market funds that are recorded as cash equivalents on our consolidated balance sheets. Interest income Interest income consists of income earned on our available for sale securities that are recorded as short-term investments on our consolidated balance sheets, as well as income earned on our cash balances.
The Company believes it is in compliance with this requirement based on its December 31, 2023 balance sheet, but we do not expect to be in compliance as of March 31, 2024. • Compliance with Nasdaq’s corporate governance requirements with respect to board and committee composition .
We believes it is in compliance with this requirement based on its December 31, 2024 balance sheet and expects to be in compliance going forward. • Compliance with Nasdaq’s corporate governance requirements with respect to board and committee composition . We has received numerous deficiency notifications with respect to these requirements in the past year.
Financing activities Net cash provided by financing activities of $3.7 million for year ended December 31, 2023 is primarily due to the Private Placement closed in February 2023.
Net cash provided by financing activities of $3.7 million for the year ended December 31, 2023 is primarily due to the Private Placement closed in February 2023. Funding Requirements Our existing cash and cash equivalents may not be sufficient to enable us to fund our existing obligations and ongoing operating expenses for the near term.
General and administrative expense Year Ended December 31, (dollars in thousands) 2023 2022 Change General and administrative expense $ 12,653 $ 10,890 $ 1,763 16 % Full time employees 6 8 (2) General and administrative expense was $12.7 million for the year ended December 31, 2023, representing an increase of $1.8 million, or 16%, from $10.9 million for the year ended December 31, 2022.
General and administrative expense Year Ended December 31, (dollars in thousands) 2024 2023 Change General and administrative expense $ 5,449 $ 11,715 $ (6,266) (53) % Full time employees 7 6 1 General and administrative expense was $5.4 million for the year ended December 31, 2024, representing an decrease of $6.3 million, or 53%, from $11.7 million for the year ended December 31, 2023.
On January 11, 2024, Nasdaq notified the Company that it did not comply with listing requirements by not holding an annual meeting in 2023.
Although we are currently in compliance, there can be no assurance it will remain in compliance. • Compliance with Nasdaq’s requirement to hold an annual meeting. On January 11, 2024, Nasdaq notified us that it did not comply with listing requirements by not holding an annual meeting in 2023.
We continued to incur certain expenses that were classified as research and development expenses in the first quarter of 2023. Thereafter, we determined it was no longer appropriate to record any research and development expenses, as the Company began exploring strategic alternatives in April 2023.
In 2022, the Company suspended its clinical, preclinical, and discovery program activities and reduced headcount as it began exploring strategic alternatives in April 2023. As a result, after 31 Table of Contents the first quarter of 2023, the Company determined it was no longer appropriate to record any research and development expenses.
Substantial additional financing will be needed in the very near term to fund our existing obligation, operations and exploration of strategic alternatives and pursue any alternatives that we identify.
As a result, there is substantial doubt about our ability to continue as a going concern. Additional financing will be needed to fund our ongoing operations and exploration of strategic alternatives and pursue any alternatives that we identify.
While the foregoing efforts are continuing, with respect to our historical assets, we do not expect they will generate significant value for stockholders.
While the foregoing efforts are continuing, with respect to our historical assets, we do not expect they will generate significant value for stockholders. Therefore, we are engaging in a broader exploration of strategic alternatives. We obtained significant financing late in 2024 in order to continue operations and our exploration of strategic alternatives and consummate any transactions that we may identify.
The decrease in cash used in operating activities for the year ended December 31, 2023 of $25.3 million was due to the suspension of R&D activities and lower headcount from the September 2022 and December 2021 restructurings.
The decrease in cash used in operating activities for the year ended December 31, 2024 of $7.4 million was due to the reduction of operating activities, spending and lower headcount. Investing activities Net cash used in investing activities was $0.0 million and $1.1 million for the years ended December 31, 2024 and 2023, respectively.
The Company received an extension letter on March 12, 2024 from Nasdaq noting it must hold its annual meeting by June 28, 2024. • On November 22, 2023, the Company received a delinquency notification as it had not filed its third quarter Form 10-Q at the deadline, which was cured by filing of such Form 10-Q on May 16, 2024. • On April 17, 2024, the Company received a delinquency notification as it had not filed its Annual Report Form 10-K for the year ended December 31, 2023.
We held its combined 2023 and 2024 annual meeting on June 28, 2024. • On April 17, 2024, we received a delinquency notification as it had not filed its Annual Report Form 10-K for the year ended December 31, 2023.
Operating, financing, and cash flow considerations Since our inception in 2011, we have primarily funded our operations through sales of our securities, loans and collaborations. On February 24, 2023, we raised gross proceeds of $5.4 million on the closing of the Private Placement (as defined below) (or net proceeds of approximately $4.6 million after transaction expenses).
Operating, financing, and cash flow considerations Since our inception in 2011, we have primarily funded our operations through sales of our securities, loans and collaborations.
As a result, the convertible notes receivable are recognized at a fair value of $0 as of December 31, 2023.
Changes in fair value of investment in convertible notes receivable Changes in fair value became known and the Company impaired the entire $2 million amount of these convertible notes receivable. As a result, the convertible notes receivable is recognized at a fair value of $0 as of December 31, 2024.
Even if the Company regains compliance with Nasdaq’s listing requirements and addresses the outstanding deficiency notices to Nasdaq’s satisfaction, there can be no assurance that the Company will remain in compliance with Nasdaq’s requirements and will not be delisted.
Even if we regains compliance with Nasdaq’s listing requirements and addresses the outstanding deficiency notices to Nasdaq’s satisfaction, there can be no assurance that we will remain in compliance with Nasdaq’s requirements and will not be delisted. 27 Table of Contents Reverse Stock Split On August 26, 2024, we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation, or the Amendment, with the Secretary of State of the State of Delaware to effect a one-for-five (1-for-5) reverse stock split of our outstanding common stock.
The increase for the year ended December 31, 2023 was mostly due to $1.5 million of certain expenses that previously had been recorded as research and development expenses, such as office facilities, legal, and payroll related costs, that no longer met the criteria to be classified as research and development expenses due to the shift in our historical business operations discontinuing all research and development activities as discussed above.
The decrease for the year ended December 31, 2024 was due to higher costs in 2023 from separation pay of former executives and related stock based compensation expense, payroll and related benefits, legal and consulting fees, facility and lease costs, depreciation from assets sold, and the research and development wind down costs that no longer met the criteria to be classified as research and development due to the shift in our historical operations suspending all research and development activities as previous discussed.
Our ability to generate revenues in the future is dependent on our ability to successfully explore and execute strategic alternatives. Therefore, there is substantial uncertainty as to how, when or if we might be able to generate revenues in the future.
Therefore, there is substantial uncertainty as to how, when or if we might be able to generate revenues in the future. Research and development expense Research and development expense was $0 for the year ended December 31, 2024, a $1.4 million decrease from the year ended December 31, 2023.
See “Risk Factors – We may not be able to redeem the investment in convertible notes receivable.” Our current liquidity is not sufficient to fund operations. As a result, there is substantial doubt about our ability to continue as a going concern.
As of December 31, 2024, our cash and cash equivalents cash were approximately $12.5 million. Our current liquidity may not be sufficient to fund operations for the next 12 months. As a result, there is substantial doubt about 25 Table of Contents our ability to continue as a going concern.
The Company’s stock price has remained below $1.00 since receipt of the notification, which must be cured by September 9, 2024, per the March 12, 2024 extension letter received from Nasdaq. • Compliance with Nasdaq’s rule requiring stockholders’ equity of at least $2,500,000 based on the Company’s balance sheet as of September 30, 2023.
On September 13, 2024, we received a letter received from Nasdaq noting it met the closing bid price requirement. • Compliance with Nasdaq’s rule requiring stockholders’ equity of at least $2,500,000 based on our balance sheet as of December 31, 2024. We were not in compliance with this requirement based on its September 30, 2024 balance sheet.
(“CBI USA”), pursuant to which the Company agreed to issue and sell to CBI USA in a private placement an aggregate of 3,400,000 shares of Common Stock, at a purchase price of $1.60 per share. The private placement closed on February 24, 2023 (the “Closing Date”).
On November 13, 2024, we entered into the Subsequent Common Stock Purchase Agreement, pursuant to which we agreed to sell and issue to HiTron 2,900,000 additional shares of Common Stock for an aggregate purchase price of $8.7 million, at a purchase price per share of $3.00.
In addition, there are other items within our financial statements that require estimation, but are not deemed critical as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements.
There are items within our financial statements that require estimation but are not deemed critical, as defined above. Recent adopted accounting pronouncements In the normal course of business, we evaluate all new accounting pronouncements issued by the FASB, SEC, or other authoritative accounting bodies to determine the potential impact they may have on our Consolidated Financial Statements.
Currently we are exploring strategic alternatives and generating no revenue. As of December 31, 2023, our cash and cash equivalents cash were $0.8 million. We had approximately $1.6 million in accounts payable as of December 31, 2023, as we deferred payments due to our deteriorating financial condition late in 2023.
Currently we are exploring strategic alternatives and generating limited revenue. As of December 31, 2024, our cash and cash equivalents cash were $12.5 million. We incurred net losses of approximately $9.7 million and $16.9 million for the years ended December 31, 2024 and 2023, respectively.
Removed
Because we currently have no source of revenue or committed financing, we will require substantial additional funding in the very near term in order to satisfy our existing obligations, continue to operate and continue our exploration of strategic alternatives and consummate any transactions that we may identify.
Added
In the second quarter, we recognized other income of $637,000 from the sale of our samples related to the licensed product. In the third quarter, we sold our historical biotechnology intellectual property and other assets (including the licensing agreement described above) pursuant to the purchase agreement and recognized other income of $1,500,000.
Removed
However, we have used these net proceeds for our 2023 operation expenses (i.e. severance payments, warrant put payments, investment in convertible notes receivable, and general working capital purposes as we pursue strategic alternatives). As of December 31, 2023, our cash and cash equivalents cash were $0.8 million.
Added
Following the purchase agreement, any value we may generate from our historical biotechnology intellectual property and other assets will be primarily through royalties and license fees that we may receive in the future under the purchase agreement. However, whether we receive any royalties or licenses fees, and the amounts and timing thereof, are uncertain and out of our control.
Removed
We had approximately $1.6 million in accounts payable as of December 31, 2023, as we deferred payments due to our deteriorating financial condition late in 2023. Subsequent to December 31, 2023, our cash and cash equivalents have decreased to approximately $0.2 million as of May 31, 2024.
Added
Effective as of November 12, 2024, we entered into the Initial Common Stock Purchase Agreement with HiTron, pursuant to which we agreed to issue and sell to HiTron 433,333 shares of our common stock, par value $0.0001 per share (the “Common Stock”), for an aggregate purchase price of $1.3 million, at a purchase price per share of $3.00.
Removed
Although we are attempting to redeem the $2.0 million aggregate principal amount of our convertible notes receivable, there can be no assurance that we will be able to do so, in the near term or at all.
Added
The issuance of such shares under the Subsequent Common Stock Purchase Agreement closed on December 24, 2024. On December 9, 2024, we entered into a common stock purchase agreement (the “SangSang Purchase Agreement”) with SangSangIn Investment & Securities Co., Ltd.
Removed
Recent Developments Restructuring On September 26, 2022, we announced our commitment to a plan to wind down our existing preclinical programs, including the development of our SCN9A program, to suspend all of our research and development (“R&D”) activities, including suspension of all partnered programs, and to implement a reduction in force whereby we reduced approximately 66% of our then-existing workforce, as well as other cost-cutting measures (collectively, the “Plan”).
Added
(“SangSang”), pursuant to which we agreed to issue and sell to SangSang 433,332 shares of our Common Stock, for an aggregate purchase price of approximately $2.0 million, at a purchase price per share of $4.61. The transactions under the SangSang Purchase Agreement closed on December 24, 2024.
Removed
The purpose of the Plan was to decrease expenses, thereby, extending our cash runway, and enable us to maintain a streamlined organization to support key corporate functions. Change of Control On September 26, 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with CBI USA, Inc.
Added
Recent Developments Change of Control As discussed above, effective as of November 12, 2024, we entered into the Initial Common Stock Purchase Agreement with HiTron, pursuant to which we agreed to issue and sell to HiTron 433,333 shares of Common Stock for an aggregate purchase price of $1.3 million, at a purchase price per share of $3.00.
Removed
CBI USA funded the acquisition pursuant to the Securities Purchase Agreement through a loan from its affiliate, DGP Co., Ltd. (“DGP”). On June 23, 2023, DGP exercised its the option pursuant to the loan and acquired the 3,400,000 shares of Common Stock initially acquired by CBI USA pursuant to the Securities Purchase Agreement.
Added
On November 13, 2024, we entered into the Subsequent Common Stock Purchase Agreement, pursuant to which we agreed to sell and issue to HiTron 2,900,000 additional shares of the Company’s Common Stock, for an aggregate purchase price of $8.7 million, at a purchase price of $3.00 per share.
Removed
DGP subsequently agreed to sell its shares to a third party, with the closing of 10% (340,000 shares) occurring in February 2024 and the remainder to close by or on June 30, 2024.
Added
The issuance of such shares under the Subsequent Common Stock Purchase Agreement closed on December 24, 2024. As of March 12, 2025, HiTron beneficially owns 53% of the outstanding shares of Common Stock based on information available to the Company.
Removed
The Securities Purchase Agreement, as confirmed and clarified by that certain letter agreement, dated October 31, 2022, between the Company and CBI USA, provided CBI USA together with its affiliates and any “group” of which it or they are a member with the right to designate directors to the Company’s board of directors in proportion to the ownership of CBI USA and its affiliates and any such group.
Added
We effected a one-for-five reverse stock split on August 27, 2024 in order to attempt to raise the stock price.
Removed
CBI USA and DGP have announced they expect to exercise such rights as a group. Together, they beneficially own 45% of the outstanding shares of Common Stock based on their most recent Schedule 13D amendment. As noted above, DGP has entered into an agreement to sell its remaining shares to a third party by or on June 30, 2024.
Added
The extended deadline for compliance was established by Nasdaq at May 20, 2024, the same deadline for our Form 10-Q for the quarter ended September 30, 2023.
Removed
The Company has received numerous deficiency notifications with respect to these requirements in the past year. Although the Company is currently in compliance, there can be no assurance it will remain in compliance. 28 Table of Contents • Compliance with Nasdaq’s requirement to hold an annual meeting.
Added
On July 31, 2024, we received formal notice that the Panel determined to continue our listing subject to us evidencing compliance with all applicable criteria for continued listing on The Nasdaq Capital Market by September 16, 2024.
Removed
In connection with its request for an appeal, the Company also requested an extended stay on the suspension of trading in the Company’s common stock through the decision of the hearings panel. If the extended stay is not granted, the automatic stay would only be in place for 15 calendar days from the May 28 appeal request.
Added
We received an additional extension to November 14, 2024 to satisfy the terms of the Panel’s decision and to ensure our continued listing on Nasdaq. • As we did not meet Nasdaq’s listing requirements as of September 30, 2024, we has requested another extension by the Panel to demonstrate compliance and another extension was granted.
Removed
Basis of Presentation The audited financial statements of Exicure, Inc. for the fiscal years ended December 31, 2023 and 2022, contained herein, include a summary of our significant accounting policies and should be read in conjunction with the discussion below. Segment Reporting We view our operations and manage our business as one segment.
Added
We thereafter presented its plan to regain compliance with the Equity Requirement to the Panel, subsequent to which the Panel ultimately granted us extensions through December 17, 2024 to do so. • On December 20, 2024, we received a letter from Nasdaq confirming that, as of December 17, 2024, we meet all requirements for continued listing on Nasdaq as required by the Panel’s decision dated November 20, 2024.
Removed
This includes estimates where the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and the impact of the estimate on financial condition or operating performance is material.
Added
In accordance with the Panel’s decision, on December 17, 2024, we made public disclosure under cover of a Form 8-K, describing the transactions undertaken by us to achieve compliance with Listing Rule 5550(b)(1) and stated affirmatively that as of that date, it believes it has stockholders’ equity above the $2.5 million requirement and provided a pro-forma balance sheet as of December 17, 2024.
Removed
Recent adopted accounting pronouncements Refer to Note 2, Significant Accounting Policies , of the accompanying unaudited condensed consolidated financial statements for a description of recent accounting pronouncements ASU 2016-13 adopted during the first quarter of 2023. There has been no impact on the financial statements from the adoption of this ASU.
Added
Pursuant to Listing Rule 5815(d)(4)(B), we will be subject to a Mandatory Panel Monitor for a period of one year from the date of Nasdaq’s letter.
Removed
Recent accounting pronouncements not yet adopted There are no recent accounting pronouncements that the Company has not yet adopted. Components of Statements of Operations Revenue For the year ended December 31, 2022, the Company’s revenue was generated from its collaborations with Ipsen and AbbVie, which were terminated in the fourth quarter of 2022.
Added
If, within that one-year monitoring period, the Nasdaq Listing Qualifications staff (the “Staff”) finds us again out of compliance with the $2.5 million Equity Rule that was the subject of the exception, notwithstanding Rule 5810(c)(2), we will not be permitted to provide the Staff with a plan of compliance with respect to that deficiency and the Staff will not be permitted to grant additional time for us to regain compliance with respect to that deficiency, nor will we be afforded an applicable cure or compliance period pursuant to Rule 5810(c)(3).
Removed
Following the termination of the AbbVie and Ipsen agreements, as discussed above, we have no current source of revenue. We have never generated any commercial product revenue and do not expect to generate any product revenue.
Added
Instead, the Staff will issue a Delist Determination Letter and we will have an opportunity to request a new hearing with the initial Panel or a newly convened Panel if the initial Panel is unavailable. We will have the opportunity to respond/present to the Panel as provided by Listing Rule 5815(d)(4)(C).
Removed
We expensed research and development costs as they were incurred.
Added
Our securities may be at that time delisted from Nasdaq.
Removed
Changes in fair value of investment in convertible notes receivable Changes in fair value became known and the Company impaired the entire $2 million amount of these convertible notes receivable. Dividend income Dividend income consists of income earned on our money market funds that are recorded as cash equivalents on our consolidated balance sheets.
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