VCNX 10-K & 10-Q changes, risk factors and insider trading

The regulatory review processes are lengthy, time consumingtime-consuming and inherently unpredictable. Our inability to obtain regulatory approval for our product candidates would substantially harm our business.

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has incurred significant losses and negative cash flows from operations since inception and expects to incur additional losses until such time that it can generate significant revenue from the commercialization of its product candidates. The Company had negative cash flow from operations of $17.2$16.2 million and $19.1$21.4 million for the years ended December 31, 20232024, and 2022,2023, respectively, and an accumulated deficit of $339.9$358.6 million and $319.7$339.9 million as of December 31, 20232024, and 2022,2023, respectively. In addition, the Company has been delisted from the NASDAQ Capital Market due to its inability to comply with continued listing standards, is currently listed on the OTCPK, and filed a Form 15 to deregister its securities under Section 12(g) of the Securities Act on March 27, 2025, which is expected to be effective no later than 90 days from when it was filed. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

To date, the Company has relied on equity and debt financing to fund its operations, in addition to capital contributions from noncontrolling interests and a limited amount of service revenue from collaboration agreements. In September 2020, we filed a prospectus supplement related to open market sale agreement (the “Open Market Sale Agreement” or “ATM”) with Jefferies, LLC (“Jefferies”) pursuant to which we may sell up to $113.0 million of shares of our common stock through Jefferies. On May 19, 2023, the Company filed a prospectus supplement under which the Company may offer and sell, from time to time, shares of its common stock having an aggregate offering price of up to $4,391,000 through the Open Market Sale AgreementSM. In 20232024 and 2022,2023, 3,409the Company sold 208 and 15,1883,409 shares, respectively, were sold through the Open Market Sale Agreement for proceeds of $0.3 million$2,077 and $3.6$0.3 million, respectively, net of commission. No further sales can be made pursuant to the Open Market Sale Agreement.

Even with the equity financing arrangements describedwe above,have completed in the past, we will need to complete additional financing transactions in order to continue operations. These arrangements may also not be sufficient in the near-term. Given, among other things, the current economic uncertainty associated with the inflationary environment, and our recent stock price performance, our arrangement with Jefferies and other financing strategies we may pursue may not be sufficient to fund our operations in the near term. There can be no assurances that we will be able to secure additional financing, or if available, that it will be sufficient to meet our needs or on favorable terms.

We initiated a clinical study of pepinemab as a potential treatment for AD in late 2020. In April 2023, we reached our enrollment target for the Phase 1b/2 SIGNAL-AD study evaluating pepinemab as a potential treatment for people with Mild Cognitive Impairment (MCI) or mild dementia due to AD. ItOn isApril anticipated25, thatthe allCompany 49provided an update regarding plans for analysis of biomarkers and clinical outcome measures during a presentation at 12th Annual Alzheimer’s & Parkinson’s Drug Development Summit. All 50 participants will have completed 12-months of treatment byon June 30, 2024, and SIGNAL-AD topline data will bewas reported inby Eric Siemers, MD, Principal Investigator of the secondSIGNAL-AD halftrial ofat the Alzheimer's Association International Conference in Philadelphia on July 31, 2024. BasedAdditional efficacy data for SIGNAL-AD was reported by Elizabeth Evans, PhD, Senior VP Discovery and Translational Research and Chief Operating Officer on October 31, 2024, at the PhaseClinical 1b/2Trials resultson weAlzheimer’s mayDisease notConference continuein toMadrid, pursue clinical development for this indication.Spain. If we cease to pursue the AD indication, we may pursue clinical development of our other indications for pepinemab, which require significant additional development resources. Pursuing these other indications will take a significant amount of time and capital to pursue and may not ultimately be successful. This may require that we seek an early partnership or license selected assets to advance our business efforts.

Pepinemab is our most advanced product candidate, and we are focused on developing it for AD, and as our resources allow also developing pepinemab for HNSCC, and PDAC. Additionally, third party investigators are studying pepinemab investigator-sponsored trials, or ISTs, is evaluating pepinemab in breast cancer and melanoma as well as in “window of opportunity” studies in other indications. We do not have control over how the ISTs are conducted or designed. These ISTs may identify adverse reactions associated with our product candidates. Any problems that arise in development of pepinemab for one indication, or in one trial, may have an adverse effect on the development of pepinemab for other indications and could cause us to cease development of pepinemab altogether. Similarly, as part of our SEMA4D antibody platform strategy, we intend to also develop pepinemab in additional neurodegenerative disease and cancer indications. Any adverse result or event that causes us to cease developing or limits our development of pepinemab would have adverse effects on our existing business, as well as our future prospects.

In order to market and sell our products in other jurisdictions, we must obtain separate marketing approvals for those jurisdictions and comply with their numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, we must secure product reimbursement approvals before regulatory authorities will approve the product for sale in that country. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not ensure approval in any other country, while a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory approval process in others. Also, if regulatory approval for any of our product candidates is granted, it may be later withdrawn. If we fail to comply with the regulatory requirements in international markets and do not receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmedharmed, and our business will be adversely affected. We may not obtain foreign regulatory approvals on a timely basis, if at all. Our failure to obtain approval of any of our product candidates by regulatory authorities in countries outside of the United States may significantly diminish the commercial prospects of that product candidate and our business prospects could decline.

Based on our preclinical research, we believe that the combination of pepinemab with immunotherapeutic drugs, such as immune checkpoint inhibitors, could prove beneficial because pepinemab promotes infiltration of immune cells into a tumor. As such, we believe pepinemab could enhance the activity of other agents that increases peripheral immune responses. Most of the preclinical studies with respect to the combination of pepinemab with immunotherapies have involved the anti-CTLA-4 antibody ipilimumab. The results of these studies showed that pepinemab in combination with the CTLA-4 checkpoint inhibitor can greatly enhance the immune response to tumors by amplifying the benefits of this checkpoint inhibitor. However, while we have performed research with respect to pepinemab in combination with other immunotherapies, it is not clear that such combinations will have the same benefits or synergies demonstrated in animal models by the preclinical studies of pepinemab in combination with anti-CTLA-4 antibodies. Accordingly, we may not be able to generate adequate data to demonstrate the efficacy and safety in clinical trials of pepinemab in combination with other immunotherapies, which could result in significant setbacks in clinical trials and changes to our development plans. If future clinical trials do not produce favorable results, our ability to achieve regulatory approval for pepinemab may be adversely impacted.

The Medicaid Drug Rebate Program and other governmental pricing programs require participating manufacturers to report pricing data to various government agencies. Pricing calculations vary among products and programs and include average manufacturer price and best price for the Medicaid Drug Rebate Program, average sales price for certain categories of drugs that are paid under Part B of the Medicare program, and non-federal average manufacturer price for the VA FSS pricing program. If we successfully commercialize any of our products and participate in such governmental pricing programs, we will be liable for errors associated with our submission of pricing data. That liability could be significant. For example, if we are found to have knowingly submitted false average manufacturer price, average sales price, the best price, or non-federal average manufacturer price information to the government, or fail to timely submit such information, we may be liable for significant civil monetary penalties. The foregoing also could be grounds for other sanctions, such as termination from the Medicaid Drug Rebate Program.

To succeed, we must recruit, retain, manage and motivate qualified clinical, scientific, technical and management personnel and we face significant competition for experienced personnel. If we do not succeed in attracting and retaining qualified personnel, particularly at the management level, it could adversely affect our ability to execute our business plan and harm our operating results. In particular, we are highly dependent on Dr. Maurice Zauderer, our founder and Chief Executive Officer. The loss of Dr. Zauderer, or one or more of our other executive officers, could be detrimental to us if we cannot recruit suitable replacements in a timely manner. The competition for qualified personnel in the pharmaceutical field is intense and as a result, we may be unable to continue to attract and retain qualified personnel necessary for the development of our business or to recruit suitable replacement personnel.

In addition to our current research and development collaborations, a part of our strategy is to enter into additional research and development collaborations in the future, including collaborations with pharmaceutical companies. We face significant competition in seeking appropriate development partners and the negotiation process is time-consuming and complex. Moreover, we may not succeed in our efforts to establish collaborations or other alternative arrangements for any of our other existing or future product candidates and programs because our research and development pipeline may be insufficient, our product candidates and programs may be deemed to be at too early a stage of development for collaborative effort and third parties may not view our product candidates and programs as having the requisite potential to demonstrate safety and efficacy. Even if we are successful in our efforts to establish new collaborations, the terms that we agree upon may not be favorable to usus, and we may not be able to maintain such collaborations if, for example, development or approval of a product candidate is delayed or sales of an approved product candidate are disappointing.

Certain of our management, including our chief executive officer, chairman of our board, and their affiliates, own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval. As a result, these stockholders have the ability to control us through this ownership position. These stockholders may be able to determine all matters requiring stockholder approval. For example, these stockholders may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock. The interests of this group of stockholders may not always coincide with the interests of other stockholdersstockholders, and they may act in a manner that advances their best interests and not necessarily those of other stockholders, including seeking a premium value for their common stock, and might affect the prevailing market price for our common stock. These large affiliate holdings may also contribute to a lack of liquidity in our stock.

We are a clinical-stage biotechnology company engaged in the discovery and development of targeted biotherapeutics to treat serious diseases and conditions with unmet medical needs, including neurodegenerative diseases, cancer, and autoimmune disorders. We believe we are the leader in the field of semaphorin 4D, or SEMA4D, biology and that we are the only company targeting SEMA4D as a potential treatment for neurodegenerative diseases, cancer, or autoimmune disorders. SEMA4D is an extracellular signaling molecule that regulates the activity of immune and inflammatory cells to sites of injury, cancer, or infection. We arehave leveragingused our SEMA4D antibody platform and our extensive knowledge of SEMA4D biology to develop our lead product candidate, pepinemab, an antibody that we believe utilizes novel mechanisms of action. We are focused on developing pepinemab for the treatment of Alzheimer’s disease, or AD, and as our resources allow also developing pepinemab for head and neck cancer, or HNSCC, and pancreatic cancer, or PDAC, Huntington’s disease.PDAC. Additionally, third party investigators arehave studyingstudied pepinemab in clinical trials in breast cancer, as well as in “window of opportunity” studies in other indications, including HNSCC and melanoma. We have developed multiple proprietary platform technologies and are developing product candidates to address serious diseases or conditions that have a substantial impact on day-to-day functioning and for which treatment is not addressed adequately by available therapies. We employ our proprietary platform technologies, including through our work with our academic collaborators, to identify potential product candidates for sustained expansion of our internal product pipeline and to facilitate strategic development and commercial partnerships.

Our lead platform technologiestechnology includeis our SEMA4D antibody platform andwhich includes our ActivMAb antibody discovery platform. Our lead product candidate, pepinemab, which is currently in clinical development for the treatment of Alzheimer’s disease, HNSCC, pancreatic and breast cancer, through our efforts or through investigator-sponsored trials, or ISTs. Our additional product candidate VX5 is in an earlier stage of development and was selected using our ActivMAb platform. We believe our multiple platform technologies position us well for continued pipeline expansion and partnership opportunities going forward.

All share and per share amounts have been retro-activelyretroactively restated as if the reverse splits occurred at the beginning of the earliest period presented.

On March 27, 2020, we announced that we had entered into an open market sale agreement (the “Open Market Sale Agreement” or “ATM”) with Jefferies, LLC (“Jefferies”) and filed a prospectus supplement pursuant to which we were able to issue and sell up to $11.5 million of shares of our common stock from time. In September 2020, we filed a replacement prospectus supplement related to the Open Market Sale Agreement pursuant to which we may sell up to $113 million of shares of our common stock through Jefferies. On May 19, 2023, the Company filed a prospectus supplement under which the Company may offer and sell, from time to time, shares of its common stock having an aggregate offering price of up to $4,391,000 through the Open Market Sale AgreementSM. In 2024 and 2023, the Company sold 208 and 3,409 shares, respectively, through the Open Market Sale Agreement for proceeds of $2,077 and $0.3 million, respectively, net of commission. No further sales can be made pursuant to the Open Market Sale Agreement.

Alzheimer’s Disease. We initiated a randomized, placebo-controlled, multi-center phase 1/2a clinical study of pepinemab in AD, or the SIGNAL-AD trial, in 2021. This trial is based on evidence from the SIGNAL clinical trial in HD that showed treatment with pepinemab reduced cognitive decline and induced a sharp increase in glucose metabolism in the brain during HD disease progression as detected by conventional FDG-PET imaging. Previous studies in AD have shown that decline in glucose metabolism correlates with cognitive decline. WeIn April 2023, we reached our enrollment target for the Phase 1b/2 SIGNAL-AD study evaluating pepinemab as a potential treatment for people with mild dementia due to AD. As of 49June participants6, 2024, the last patient completed their last visit in Aprilthe 2023SIGNAL-AD andPhase expect1b/2 study of pepinemab treatment for Alzheimer’s disease. SIGNAL-AD topline data inwas reported by Eric Siemers, MD, Principal Investigator of the secondSIGNAL-AD halftrial ofat the Alzheimer's Association International Conference in Philadelphia on July 31, 2024. Additional efficacy data for SIGNAL-AD was reported by Elizabeth Evans, PhD, Senior VP Discovery and Translational Research and Chief Operating Officer on October 31, 2024, at the Clinical Trials on Alzheimer’s Disease Conference in Madrid, Spain.

Cancer Studies. We and others have shown that SEMA4D, the target of pepinemab, is highly expressed in head and neck cancer where it impedes recruitment and activation of cytotoxic T cells that can attack the tumor while also inducing differentiation of myeloid derived suppressor cells that inhibit any remaining tumoricidal immune activity. Head and neck cancer is, therefore, a cancer in which immunotherapy with pepinemab in combination with a checkpoint inhibitor such as KEYTRUDA could be uniquely effective. We have entered into a collaboration with Merck, Sharp & Dohme, who is supplying KEYTRUDA, for first-line treatment of head and neck cancer patients,patients and have analyzed interim data from the first 36 patients in the study. In a similar arrangement, we are collaborating with Merck KGaA (EMD Serono in the U.S.), who is supplying Bavencio, another checkpoint inhibitor, for combination with pepinemab in pancreatic cancer. Pepinemab is also being evaluated by third parties in investigator-sponsored trials, or ISTs, for breast cancer, and in multiple “window of opportunity” studies in additional cancer indications.indications, in collaboration with the Emory University Cancer Center, in the neoadjuvant setting for melanoma and head and neck cancer. A key observation has been that pepinemab in combination with checkpoint inhibitors, nivolumab and/or ipilimumab, induces Tertiary Lymphoid Structures (TLS) in tumors and that mature TLS correlate with positive treatment outcomes.

Huntington’s Disease. We have currently paused our research efforts for HD. We evaluated pepinemab for the treatment of HD in our Phase 2 SIGNAL trial. Topline data for this trial, consisting of 265 subjects, was reported in late September 2020. Although the study did not meet its prespecified primary endpoints, it provided important new information, including evidence of cognitive benefit and a reduction in brain atrophy and increase in brain metabolic activity in patients with manifest disease symptoms. An improved study design would focus on patients with early signs of cognitive or functional deficits since they appeared to derive the greatest treatment benefit. The Company is evaluating its development strategy in terms of business opportunity and other near-term clinical activities. To advance planning for a potential phase 3 study of pepinemab in HD, we requested a Type C meeting with the FDA to discuss details of the study design and key endpoints. We received requested clarifications regarding suitable endpoints for regulatory review from the FDA, and these will be incorporated in a possible future phase 3 study.

Research and Development. Research and development expenses in the year ended December 31, 20232024, increaseddecreased by $2.6$4.0 million, or 19%,24%, compared to the year ended December 31, 2022.2023. This increasedecrease was primarily attributable to increaseda patient enrollmentreduction in head count, completion of the SIGNAL-AD trial, and a pause of the head and neck clinical trials.

General and Administrative. General and administrative expenses consist primarily of the necessary costs associated with maintaining the Company's daily operations and administration of the Company's business. General and administrative expenses in the year ended December 31, 20232024, increaseddecreased by $0.7$0.1 million, or 11%,1%, compared to the year ended December 31, 2022.2023. This increasedecrease was attributable to increased legal and patent related services.

To date, we have not generated any revenue from product sales. During the years ended December 31, 20232024, and 2022,2023, we have generated a limited amount of revenue through the achievement of contractually stated milestones as well as grants, and the performance of services from collaboration agreements, including through our ActivMAb platform. Since our inception in 2001, we have relied on public and private sales of equity and debt financing to fund our operations, in addition to capital contributions from noncontrolling interests and limited servicelimited-service revenue from collaboration agreements, and to some degree, grant money. We are not a party to any material off-balance sheet arrangements as defined in the rules and regulations of the SEC.

During the year ended December 31, 2023,2024, operating activities used $17.2$16.2 million in cash, primarily as a result of our continued efforts of discovery and development of targeted biotherapeutics to treat serious diseases and conditions with unmet medical needs without any product revenue, resulting in a net loss of $20.3$18.6 million.

Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. Our significant accounting policies are described in Note 2 Summary of Significant Accounting Policies included in Part IV, Item 16 of this Form 10-K. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgment and estimates.

Warrant LiabilitiesWarrants

The Series A Preferred Stock has a liquidation preference before our common stockholders equal to the greater of (i) $175,000.00$175,000 per share,share for a total of $1.75 million, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock (the “Original Share Price”), plus any accrued but unpaid dividends thereon, whether or not declared, together with any other dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series A Preferred Stock been converted into common stock immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event. As of JuneSeptember 30, 2024, the holder of the shares of Series A preferred stock were entitled to a liquidation preference of $1,750,000,$1.75 million, in the event of any liquidation, dissolution or winding up of the Company. Further, upon the occurrence of Deemed Liquidation Event (generally defined to include certain fundamental transactions involving the Company including a merger or sale of substantially all of the Company’s assets) or other liquidation of the Company, the holders of the Series A Preferred Stock will receive a distribution of the Company’s assets per their liquidation preference before any holders of common stock receive a distribution. As a result, in the event of a liquidation of the Company the proceeds received by the common stockholder may be reduced.

As of JuneSeptember 30, 2024, we had outstanding 10 shares of Series A Preferred Stock with an aggregate liquidation preference of $1,750,000.$1.75 million. No shares of the outstanding Series A Preferred Stock are convertible before the public announcement by the Company of top-line data from its study “SEMA4D Blockade Safety and Brain Metabolic Activity in Alzheimer’s Disease (AD)” (the “Data Release”). As of June 30, 2024, theThe Data Release has not beenwas made andon July 31, 2024, but no shares of Series A Preferred Stock werehave convertibleto date been converted into shares of common stock. The issuance of common stock upon conversion of the Series A Preferred Stock would result in immediate dilution to existing holders of our common stock.

We have generated a limited amount of service revenue from collaboration agreements but have not generated any revenue from sales of our product candidates to date. We continue to incur significant development and other expenses related to our ongoing operations. As a result, we are not and have never been profitable and have incurred losses in each period since our inception, resulting in substantial doubt in our ability to continue as a going concern. We reported a net loss of $5.6$5.7 million and $7.1$4.9 million for the three months ended JuneSeptember 30, 2024 and 2023, respectively, and a net loss of $9.5$15.3 million and $12.0$16.9 million for the sixnine months ended JuneSeptember 30, 2024 and 2023, respectively. As of JuneSeptember 30, 2024, and December 31, 2023, we had cash and cash equivalents of $0.2$2.9 million and $1.5 million, respectively. We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our product candidates. We may also encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors which may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues, if any.

Our recurring net losses and negative cash flows from operations raised substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our condensed financial statements for the three and sixnine months ended JuneSeptember 30, 2024. Until we can generate sufficient revenue from the commercialization of our product candidates, we expect to finance our operations through the public or private sale of equity, debt financing or other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties. To date, thewe Company hashave relied on equity and debt financing to fund its operations, in addition to capital contributions from noncontrolling interests and a limited amount of service revenue from collaboration agreements.

On March 27, 2024, we entered into a securities purchase agreement pursuant to which we issued and sold 193,000 shares of our common stock in a public offering together with warrants to purchase up to 193,000 shares of common stock in a concurrent private placement at a combined price of $7.77 per share and accompanying warrant for an aggregate purchase price of approximately $1.5 million. Separately on March 27, 2024, we entered into a securities purchase agreement in a different form pursuant to which we sold 159,683 shares of common stock and warrants to purchase up to 159,683 shares of common stock in a private placement at a combined price of $7.77 per share and accompanying warrant for an aggregate purchase price of approximately $1.25 million. FCMI Parent Co. (“FCMI”), which is controlled by Albert D. Friedberg, the chairman of the Company’s board of directors, and Vaccinex (Rochester) L.L.C., which is majority owned and controlled by Dr. Maurice Zauderer, the Company’s President, Chief Executive Officer, and a member of our board of directorsL.L.C. purchased shares of our common stock and accompanying warrants in the latter transaction.

On February 6, 2024, we entered into a securities purchase agreement pursuant to which we issued and sold 274,182 shares of our common stock together with warrants to purchase up to 274,182 shares of common stock at a combined price of $10.15 per share and accompanying warrant and (ii) pre-funded warrants to purchase up to 90,363 shares of common stock together with warrants to purchase up to 90,363 shares of our common stock at a combined price of $10.1486 per pre-funded warrant and accompanying warrant, for aggregate gross proceeds of approximately $3.7 million. FCMI and Vaccinex (Rochester) L.L.C. purchased 118,227 and 29,557 shares of our common stock and accompanying warrants, respectively, in the February 2024 offering for an aggregate purchase price of $1.5 million.

Our cash and cash equivalents were $0.2$2.9 million and total current assets were $2.2$4.8 million at JuneSeptember 30, 2024, which will be insufficient to fund our planned operations through one year of the date that these condensed financial statements are available for issuance. See Note 1 of our unaudited condensed financial statements. There can be no assurances that we will be able to secure additional financing when needed, or if available, that it will be sufficient to meet our needs or on favorable terms.

The Company initiated a randomized, placebo-controlled, multi-center phase 1/2a clinical study of pepinemab in AD, or the SIGNAL-AD trial, in 2021. In December 2019, we announced a funding grant of $750,000 from the Alzheimer’s Association and an award in the form of investment in our common stock of up to $3 million from the Alzheimer’s Drug Discovery Foundation, each in support of SIGNAL-AD. On March 28, 2024, we entered into a second agreement with Alzheimer’s Drug Discovery Foundation pursuant to which we sold shares of a newly designated series of convertible preferred stock, our Series A Preferred Stock, and warrants to purchase up to 229,057 shares of our common stock for an aggregate purchase price of $1.75 million. This trial is based on evidence from the SIGNAL clinical trial in HD that showed treatment with pepinemab reduced cognitive decline and induced a sharp increase in glucose metabolism in the brain during HD disease progression as detected by conventional FDG-PET imaging. Previous studies in AD have shown that decline in glucose metabolism correlates with cognitive decline. In April 2023, we reached our enrollment target for the Phase 1b/2 SIGNAL-AD study evaluating pepinemab as a potential treatment for people with Mild Cognitive Impairment (MCI) or mild dementia due to AD. On April 25, the Company provided an update regarding plans for analysis of biomarkers and clinical outcome measures during a presentation at 12th Annual Alzheimer’s & Parkinson’s Drug Development Summit. All 50 participants have completed 12-months of treatment on June 30, 2024, and SIGNAL-AD topline data was reported by Eric Siemers, MD, Principal Investigator of the SIGNAL-AD trial at the Alzheimer's Association International Conference in Philadelphia on July 31, 2024. Additional efficacy data for SIGNAL-AD was reported by Elizabeth Evans, PhD, Senior VP Discovery and Translational Research and Chief Operating Officer on October 31, 2024, at the Clinical Trials on Alzheimer’s Disease Conference in Madrid, Spain.

Our study indicates that pepinemab may be most effective in patients with very early stage symptoms, e.g., Mild Cognitive Impairment (MCI) or Mild Dementia due to AD. This suggests that a promising treatment strategy would be to identify people with MCI as early as possible and to treat with pepinemab to keep them from progressing for as long as possible. We believe that, to date, no disease modifying therapy has been shown to be effective in later stages of AD dementia.

To date, we have not generated any revenue from sales of our product candidates. The Company recorded service revenue of $232,050$52,000 and $50,000$20,000 during the three months ended JuneSeptember 30, 2024 and 2023, respectively. The Company recorded service revenue of $388,000 and $70,000 during the nine months ended September 30, 2024 and 2023, respectively, and $500,000 in revenue related to the achievement of a contractual milestone during the threenine months ended JuneSeptember 30, 2023 from our collaboration agreement with Surface Oncology. The Company recorded service revenue of $336,400 and $50,000 during the six months ended June 30, 2024 and 2023, respectively, and $500,000 in revenue during the six months ended June 30, 2023 from our collaboration agreement with Surface Oncology.

Alzheimer’s Disease. We initiated a randomized, placebo-controlled, multi-center phase 1/2a clinical study of pepinemab in AD, or the SIGNAL-AD trial, in 2021. This trial is based on evidence from the SIGNAL clinical trial in HD that showed treatment with pepinemab reduced cognitive decline and induced a sharp increase in glucose metabolism in the brain during HD disease progression as detected by conventional FDG-PET imaging. Previous studies in AD have shown that decline in glucose metabolism correlates with cognitive decline. In April 2023, we reached our enrollment target for the Phase 1b/2 SIGNAL-AD study evaluating pepinemab as a potential treatment for people with mild dementia due to AD. As of June 6, 2024, the last patient completed their last visit in the SIGNAL-AD Phase 1b/2 study of pepinemab treatment for Alzheimer’s disease. SIGNAL-AD topline data was reported by Eric Siemers, MD, Principal Investigator of the SIGNAL-AD trial at the Alzheimer's Association International Conference in Philadelphia on July 31, 2024. Additional efficacy data for SIGNAL-AD was reported by Elizabeth Evans, PhD, Senior VP Discovery and Translational Research and Chief Operating Officer on October 31, 2024 at the Clinical Trials on Alzheimer’s Disease Conference in Madrid, Spain.

Comparison of the Three Months Ended JuneSeptember 30, 2024 and 2023

The Company recorded service revenue of $232,050$52,000 and $50,000$20,000 during the three months ended JuneSeptember 30, 2024 and 2023, respectively, and $500,000 in revenue during the three months ended June 30, 2023 from our collaboration agreement with Surface Oncology.respectively.

Research and Development. Research and development expenses in the three months ended JuneSeptember 30, 2024 decreased by $1.2 million, or 23%,27%, compared to the three months ended JuneSeptember 30, 2023. The decrease was primarily attributable to the winding down of the SIGNAL-AD trial, a pause in enrollment for the head and neck cancer trial, and less drug manufacturing costs.

General and Administrative. General and administrative expenses consist primarily of the necessary costs associated with maintaining the Company’s daily operations and administration of the Company’s business. General and administrative expenses in the three months ended JuneSeptember 30, 2024 were essentially the same when compared to the three months ended JuneSeptember 30, 2023.

Comparison of the SixNine Months Ended JuneSeptember 30, 2024 and 2023

The Company recorded service revenue of $336,300$388,000 and $50,000$70,000 during the sixnine months ended JuneSeptember 30, 2024 and 2023, respectively, and $500,000 in revenue during the sixnine months ended JuneSeptember 30, 2023 from our collaboration agreement with Surface Oncology.

Research and Development. Research and development expenses in the sixnine months ended JuneSeptember 30, 2024 decreased by $1.6$2.8 million, or 18%,21%, compared to the sixnine months ended JuneSeptember 30, 2023. The decrease was primarily attributable to the winding down of the SIGNAL-AD trial, a pause in enrollment for the head and neck cancer trial, and less drug manufacturing costs.

General and Administrative. General and administrative expenses consist primarily of the necessary costs associated with maintaining the Company’s daily operations and administration of the Company’s business. General and administrative expenses in the sixnine months ended JuneSeptember 30, 2024 increasedwere byessentially $0.1the million,same or 4%,when compared to the sixnine months ended JuneSeptember 30, 2023.

To date, we have not generated any revenue from sales of our product candidates. Our recurring net losses and negative cash flows from operations raised substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our unaudited condensed financial statements. During the sixnine months ended JuneSeptember 30, 2024 and the year-ended December 31, 2023, we have generated a limited amount of revenue through the achievement of contractually stated milestones as well as grants, and the performance of services from collaboration agreements, including through our ActivMAb platform. See Note 1 of our unaudited condensed financial statements. Since our inception in 2001, we have relied on public and private sales of equity and debt financing to fund our operations, in addition to capital contributions from noncontrolling interests and limited-service revenue from collaboration agreements.

During the sixnine months ended JuneSeptember 30, 2024, the Company sold 208 shares of the Company’s common stock at a weighted average price per share of $10.30 through the Open Market Sale Agreement, for net proceeds of $2,077, respectively.

Additionally, during the sixnine months ended JuneSeptember 30, 2024 the Company received aggregate gross proceeds of approximately $7.9$14.1 million from (i) private placements of 433,865 shares of common stock, 90,363 pre-funded warrants and 717,228 warrants to purchase shares of common stock (ii) a public offering of 193,000 shares of common stock, andstock (iii) sale of 10 shares of our Series A Preferred Stock, and warrants to purchase up to 229,057 shares of our common stock.stock, and (iv) exercise of warrants.

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party research services and amounts due to vendors for research supplies. As of JuneSeptember 30, 2024 and December 31, 2023, our principal source of liquidity was cash and cash equivalents in the amount of $0.2$2.9 million and $1.5 million, respectively. Given our projected operating requirements, our existing cash and cash equivalents and marketable securities, we will seek to complete an additional financing transaction or transactions in order to continue operations.

Since our inception in 2001, we have incurred significant net losses and negative cash flows from operations. For the sixnine months ended JuneSeptember 30, 2024 and 2023, we reported a net loss of $9.5$15.3 million and $12.0$16.9 million, respectively. For the sixnine months ended JuneSeptember 30, 2024 and 2023, we reported cash used in operations of $9.0$12.3 million and $10.5$13.6 million, respectively. As of JuneSeptember 30, 2024 and December 31, 2023, we had an accumulated deficit of $349.5$355.2 million and $339.9 million, respectively. We anticipate that we will continue to generate losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, our product candidates. We are subject to risks associated with the development of new biopharmaceutical products, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors, which may adversely affect our business.

Our recurring net losses and negative cash flows from operations, as well as forecast of continued losses and negative cash flows from operations, raised substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our financial statements for the year ended December 31, 2023. Until we can generate a sufficient amount of revenue from the commercialization of our product candidates, we expect to finance our operations through the public or private sale of equity, debt financing, or other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties. Our cash and cash equivalents were $0.2$2.9 million and total current assets were $2.2$4.8 million at JuneSeptember 30, 2024, which the Company is projecting will be insufficient to sustain its operations through one year following the date that the financial statements are issued.

During the sixnine months ended JuneSeptember 30, 2024 and 2023, operating activities used $9.0$12.3 million and $10.5$13.6 million, respectively, in cash, primarily as a result of our continued efforts of discovery and development of targeted biotherapeutics to treat serious diseases and conditions with unmet medical needs without any product revenue, resulting in a net loss of $9.5$15.3 million and $12.0$16.9 million, respectively.

Investing Activities. The investing activities during the sixnine months ended JuneSeptember 30, 2024 and 2023, were due to purchases of property and equipment.

Financing Activities. During the sixnine months ended JuneSeptember 30, 2024, financing activities provided $7.8$14.1 million, from the private placement of common stock and pre-funded warrants, with accompanying warrants;warrants, the public offering of common stock and private placement of accompanying warrants, and the sale of Series A Preferred Stock and accompanying warrants, and the exercise of warrants. During the sixnine months ended JuneSeptember 30, 2023, financing activities provided a net of $6.1$7.4 million, of which $5.0$6.3 million was due to private placements of common stock, $1.0 million through an award from the Alzheimer’s Drug Discovery Foundation in the form of an investment in our common stock,stock and $0.1$0.2 million was due to the issuance of the Company’s common stock pursuant to the Open Market Sale Agreement.

There have been no material changes to our critical accounting policies and significant judgments during the sixnine months ended JuneSeptember 30, 2024, other than those discussed in Note 2 of our unaudited condensed financial statements as of and for the sixnine months ended JuneSeptember 30, 2024, included elsewhere in this quarterly report on Form 10-Q.