Climb Bio, Inc.
For the period ended Dec 31, 2024. Filed Mar 25, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 25, 2025
CLYM$10.29+16.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-28.
0000950170-24-038023
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-25.
0000950170-25-044350
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 95 previous paragraphs and 121 current paragraphs.
42 unchanged; 27 reworded; 48 added; 24 removed; 2 previous and 4 current paragraphs rearranged.
Tables are not compared: 5 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (48)
Current report
Effective on October 2, 2024, we amended our Amended and Restated Certificate of Incorporation to effect a change of our name from “Eliem Therapeutics, Inc.” to “Climb Bio, Inc.”. Unless the context requires otherwise, references in this Annual Report on Form 10-K to “we,” “us,” and “our” refer to Climb Bio, Inc. and its wholly owned subsidiaries.
Current report
We are a clinical-stage biotechnology company committed to developing potential best-in-class therapeutics that address significant unmet need for the millions of patients living with immune-mediated diseases. We have built our pipeline by strategically acquiring or in-licensing product candidates that we believe have clear biological rationale and the potential to treat multiple indications.
Current report
We are developing our product candidates for multiple immune-mediated diseases, as summarized in the pipeline figure below.
Current report
We acquired the rights to our product candidates through license and asset purchase agreements. We have worldwide rights to develop and commercialize budoprutug for all indications, except for oncology. We have rights to develop and commercialize CLYM116 for all indications worldwide outside of mainland China, Hong Kong, Macau, and Taiwan (Greater China).
Current report
Our cornerstone product candidate, budoprutug (formerly referred to as TNT119), is a clinical-stage anti-CD19 monoclonal antibody (mAb) which has the potential to address a broad range of B-cell mediated diseases. Budoprutug is designed to deplete CD19-positive B cells, including antibody secreting cells (plasma blasts), in order to directly reduce pathogenic autoantibodies. This reduction of autoantibodies has the potential to be a disease-modifying approach in the treatment of immune-mediated diseases. We believe we are well-positioned to advance budoprutug across three distinct opportunity sets in immune-mediated disease: primarily IgG4-mediated diseases, primarily single organ IgG1-3 mediated diseases and complex systemic diseases.
Current report
We are initially developing budoprutug in lead indications representing each of these three opportunity sets, namely primary membranous nephropathy (pMN), a primarily IgG4-mediated disease, immune thrombocytopenia (ITP), a primarily single organ IgG1-3 mediated disease, and systemic lupus erythematosus (SLE), a complex systemic disease, where we believe budoprutug has the potential to be differentiated from other therapies in development and improve patient outcomes.
Current report
In March 2025, we received clearance from the U.S. Food and Drug Administration (FDA) for a Phase 2, dose range finding clinical trial of budoprutug in pMN. We anticipate dosing the first patient in our Phase 2 clinical trial for pMN in the second half of 2025. Budoprutug was previously evaluated in a Phase 1b clinical trial in pMN, the results of which suggest that budoprutug may offer the opportunity to induce remission of pMN in patients with moderate to severe disease. In that clinical trial, three out of five patients (60%) that received four doses of budoprutug and completed at least 48-weeks of follow-up achieved a complete remission of proteinuria, an important clinical endpoint in pMN. Notably, the FDA has granted budoprutug orphan drug designation for the treatment of pMN. Separately, in March 2025, we received clearance from the FDA for our investigational new drug (IND) application to evaluate budoprutug in a Phase 1b/2a clinical trial in ITP. We are in the process of activating investigational sites for the Phase 1b/2a clinical trial and anticipate dosing our first patient in the first half of 2025. In October 2024, we received clearance from the FDA for our IND to evaluate budoprutug in a Phase 1b clinical trial in SLE. We are in the process of activating investigational sites for our planned Phase 1b clinical trial in SLE and anticipate dosing our first patient in the first half of 2025. Each of these clinical trials of budoprutug in pMN, ITP and SLE will be conducted using an intravenous (IV) formulation of budoprutug. In parallel, we are advancing a subcutaneous formulation of budoprutug, which may provide the opportunity for a patient-tailored approach to treatment. We plan to announce preclinical data relating to the subcutaneous formulation of budoprutug in the first half of 2025 and currently plan to initiate clinical development of the subcutaneous formulation in the second half of 2025.
Current report
In addition to budoprutug, we are also developing CLYM116, a preclinical stage anti-APRIL (A PRoliferation-Inducing Ligand) mAb for patients with IgA nephropathy (IgAN) and other B-cell mediated diseases. CLYM116 utilizes a novel mechanism of action to prevent APRIL signaling, potently blocking binding of APRIL to its receptors and also promoting lysosomal APRIL degradation via a pH-dependent bind-and-release design. Through its unique binding profile, CLYM116 has the potential to enable more rapid, deep and durable inhibition of APRIL signaling. We are currently evaluating CLYM116 in IND-enabling studies and expect to announce preclinical data from the program in the second half of 2025.
Current report
Tenet Acquisition
Current report
On June 27, 2024, we acquired 100% of the share capital of Tenet Medicines, Inc. (Tenet) in exchange for 5,560,047 shares of our common stock, valued at $41.9 million, or $7.53 per share (the Acquisition). The Acquisition is accounted for as an asset acquisition. The total cost of the asset acquisition was $52.8 million, which also included (i) $5.8 million of direct transaction costs incurred and (ii) $5.0 million related to a loan provided to Tenet prior to the closing of the Acquisition that was effectively settled upon the closing of the Acquisition. We recognized in-process research and development (IPR&D) expense of $51.7 million for the year ended December 31, 2024, as the IPR&D was determined to have no future alternative use.
Current report
As a part of our shift in focus from developing therapeutics for neuronal excitability disorders to immune-mediated diseases we ceased our operations in the United Kingdom (U.K.) and separated from our seven U.K. employees in the third quarter of 2024.
Current report
We incurred restructuring costs of $3.3 million in connection with this headcount reduction, which related to severance payments, healthcare benefits, and stock-based compensation. The costs associated with this headcount reduction were fully recognized and all of the related payments were made by December 31, 2024.
Current report
We incurred restructuring costs of $18.8 million in connection with these prior year restructuring activities, substantially all of which were recognized in 2023 and were fully recognized as of March 31, 2024. These costs related to severance payments, healthcare benefits and stock-based compensation. In addition, substantially all of the related restructuring payments were made by April 2024.
Current report
Acquired In-Process Research and Development, Related Party
Current report
Our acquired IPR&D expense consists of the relative fair value of the assets acquired and consideration transferred in connection with the Acquisition. As the assets acquired were in the research and development phase and were determined to not have any alternative future use, it was expensed as IPR&D.
Current report
The following table sets forth our disaggregated research and development expenses (in thousands):
Current report
2 Includes severance expense of $1.8 million and $2.9 million and stock-based compensation expense of $3.0 million and $2.8 million for the years ended December 31, 2024, and 2023, respectively.
Current report
3 Includes indirect expenses related to facility rent.
Current report
We expect our research and development expenses to increase substantially for the foreseeable future as we conduct our ongoing research and development activities. The process of conducting preclinical studies, acquiring drug product supply, and conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We may never succeed in achieving marketing approval for budoprutug, CLYM116, or any product candidate we may develop.
Current report
The timelines and costs associated with research and development activities are uncertain and can vary significantly among product candidates and development programs due to the inherently unpredictable nature of preclinical and clinical development. We anticipate that we will make determinations as to which indications to pursue in connection with our clinical development of budoprutug, CLYM116, or any product candidates we may develop and how much funding to direct to each such indication on an ongoing basis in response to preclinical and clinical results, regulatory developments, and ongoing assessments as to each such indication’s commercial potential. We will need to raise substantial additional capital in the future.
Current report
Our future research and development costs may vary significantly based on factors such as:
Current report
the terms of any collaborations and/or research and development agreements we may enter into, which may impact the cost, timing and development plans of one or more of our product candidate programs;
Current report
the potential delays in our preclinical studies, our development programs and our ongoing and planned clinical trial activities due to the effects of global events, including macroeconomic conditions and continued supply chain disruptions;
Current report
the cost of commercialization activities if budoprutug, CLYM116, or any product candidates we may develop are approved for sale, including marketing, sales and distribution costs; and
Current report
our efforts to enhance operational systems and hire personnel to support development of budoprutug, CLYM116, or any product candidates we may develop.
Current report
A change in the outcome of any of these variables with respect to the development of budoprutug, CLYM116, or any product candidates we may develop could significantly change the costs and timing associated with the development.
Current report
Foreign Currency (Loss) Gain
Current report
The following table sets forth our results of operations (in thousands):
Current report
Acquired In-Process Research and Development, Related Party
Current report
Acquired IPR&D expense, related party was $51.7 million for the year ended December 31, 2024. This amount represents the recognition of IPR&D expense from the Acquisition completed on June 27, 2024.
Current report
Research and Development and Research and Development, Related Party
Current report
Research and development expenses decreased 8% from $15.4 million for the year ended December 31, 2023 to $14.2 million for the year ended December 31, 2024. Research and development expenses, related party increased by $0.2 million for the year ended December 31, 2024. In total, research and development expenses decreased 7% from $15.4 million for the year ended December 31, 2023 to $14.3 million for the year ended December 31, 2024.
Current report
Direct research and development expenses were largely consistent for the years ended December 31, 2024 and 2023, as the increase driven by $6.0 million of expenses related to our budoprutug program in 2024 was offset by a $5.9 million decrease in expenses related to our legacy programs.
Current report
Foreign Currency (Loss) Gain
Current report
Foreign currency (loss) gain decreased 101.7% from a $0.5 million gain for the year ended December 31, 2023 to a $9,000 loss for the year ended December 31, 2024. The decrease was driven primarily by a reduction of our foreign currency denominated balances as well as unfavorable changes in foreign currency exchange rates for the year ended December 31, 2024.
Current report
We believe our cash, cash equivalents and marketable securities of $212.5 million as of December 31, 2024 will be sufficient to fund our operations through 2027. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.
Current report
We anticipate that our expenses will increase for the foreseeable future as we continue to advance our current product candidatesand any product candidates we may develop, expand our corporate infrastructure, and incur costs associated with potential commercialization.
Current report
We are subject to all of the risks typically related to the development of biopharmaceutical candidates, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business.
Current report
Our future funding requirements will depend on many factors, including the following:
Current report
the terms of any collaborations and/or research and development agreements we may enter into, which may impact the cost, timing and development plans of one or more of our product candidate programs;
Showing the first 40 of 48 passages. Open the source sections for the rest.
Removed paragraphs (24)
Previous report
In July 2023, we made the determination to pause further development of our Kv7 program and to conduct a comprehensive exploration of strategic alternatives focused on maximizing stockholder value. As part of that effort, we are exploring a variety of options, including seeking a partner for further development of both Kv7 and ETX-155. We formed a Special Committee of independent and disinterested directors to oversee our exploration of strategic alternatives.
Previous report
As a part of this process, our representatives and a development stage private biotechnology company (who we refer to as Tango), which is majority-owned by funds affiliated with RA Capital, have recently engaged in preliminary discussions in an effort to determine whether a potential transaction between the two companies could be mutually beneficial. On March 14, 2024, Tango submitted a Non-Binding Term Sheet, which contemplates that we would acquire Tango through a transaction whereby we would issue common stock to Tango’s equityholders in exchange for all of the outstanding equity of Tango, and Tango would become our wholly owned subsidiary. As of March 14, 2024, entities affiliated with RA Capital beneficially owned approximately 47.5% of our outstanding common stock.
Previous report
The terms of the Non-Binding Term Sheet include, without limitation:
Previous report
The proposed exchange ratio would value our company initially at $110 million as of the closing of the Proposed Transaction, while Tango would initially be valued at $20 million;
Previous report
In connection with the closing of the Proposed Transaction, a concurrent private placement of our common stock would be effected at or as of immediately after the closing pursuant to binding subscription agreements to be entered into concurrently with the execution of a definitive agreement with respect to the Proposed Transaction in an aggregate amount to be mutually determined by the parties. We currently anticipate that funds affiliated with RA Capital would purchase some portion of the securities to be issued in the Concurrent Investment;
Previous report
That after giving effect to the closing of the Proposed Transaction (but before giving effect to the Concurrent Investment), (i) the equityholders of Tango immediately prior to the closing (including all options, convertible securities and warrants) would own 15.4% of the equity of our company on a fully diluted basis and (ii) our equityholders (including all outstanding equity awards) would own 84.6% of the equity of our company on a fully diluted basis (calculated via the treasury stock method); and
Previous report
The post-closing board of directors of our company would consist of seven directors, the composition of which would satisfy applicable U.S. Securities and Exchange Commission (SEC) and Nasdaq listing requirements, and that the specific composition of the board of directors would be determined by the parties during negotiation of a definitive agreement.
Previous report
The Non-Binding Term Sheet is non-binding, and there can be no assurance that any definitive agreement will result from the Non-Binding Term Sheet or that any transaction with Tango or any other third party will be consummated. The Non-Binding Term Sheet, and the Proposed Transaction contemplated thereby, are subject to various conditions, including but not limited to, (i) the satisfactory completion of due diligence by both parties, (ii) the negotiation and execution of a definitive agreement and the satisfaction of the conditions negotiated therein, (iii) the approval and recommendation of the Proposed Transaction by the Special Committee, and (iv) a non-waivable condition requiring approval of our stockholders holding a majority of the voting power of the outstanding shares of our company not held by RA Capital or its affiliates. As the parties continue to negotiate the terms of the Proposed Transaction, it is possible that, through these negotiations, the proposed terms of the Proposed Transaction may change, including as a result of the ongoing diligence efforts of both parties, market conditions and other factors. There can be no guarantee that the parties will ever reach a definitive agreement with respect to the Proposed Transaction and either party may determine to abandon the Proposed Transaction at any time for any reason, including the parties’ respective beliefs regarding the preferability of the Proposed Transaction to other alternatives that may be available to them, as well as other factors.
Previous report
There can be no assurance that this strategic review process will result in us continuing to pursue any transaction, including the Proposed Transaction, or that any transaction, if pursued, will be completed on attractive terms or at all. We have not set a timetable for completion of this strategic review process, and our board of directors has not approved a definitive course of action. Additionally, there can be no assurances that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased stockholder value or that we will make any additional cash distributions to our stockholders.
Previous report
In February 2023, we paused further investment in the development of our clinical-stage program, ETX-155. Based on our preclinical and clinical work to date, ETX-155 has the potential to be pursued for the treatment of major depressive disorder (MDD), epilepsy and anxiety disorders. We have received clearance of our IND application filed with the psychiatry division of the FDA to support a potential Phase 2 clinical trial in MDD that may be conducted in the future by Eliem or a strategic partner.
Previous report
We further reduced our workforce by 10 employees in October 2023. We incurred additional restructuring costs of $2.0 million in the fourth quarter of 2023 associated with this reduction.
Previous report
During the year ended December 31, 2023, we recorded restructuring costs of $18.8 million, which is comprised of the following:
Previous report
We expect to incur aggregate restructuring costs of approximately $18.9 million. The remaining costs of $0.1 million are expected to be recognized in the first quarter of 2024.
Previous report
Total direct costs and indirect costs are as follows (in thousands):
Previous report
Research and development costs by stage of development are as follows (in thousands):
Previous report
Foreign Currency Gain (Loss)
Previous report
The following table summarizes our results of operations for the years ended December 31, 2023 and 2022 (dollars in thousands):
Previous report
Research and Development
Previous report
Foreign Currency Gain (Loss)
Previous report
Foreign currency gain (loss) increased from a $1.5 million loss for the year ended December 31, 2022 to a $0.5 million gain for the year ended December 31, 2023. The increase was driven by favorable changes in foreign currency exchange rates between the British Pound and the U.S. Dollar in the current period. These changes affect the remeasurement of our British Pound denominated monetary assets and liabilities, primarily our recoverable research and development tax credits and cash.
Previous report
We believe our cash, cash equivalents and marketable securities of $106.8 million as of December 31, 2023 will be sufficient to meet our projected operating requirements for at least the next twelve months following the date of this filing. Continued cash generation is highly dependent on our ability to finance our operations through the sale of equity, debt financings or other capital sources, which could include income from collaborations, strategic partnerships or other strategic arrangements. However, our resource requirements could materially change depending on the outcome of our ongoing strategic alternative review process, including to the extent we identify and enter into any potential strategic transaction.
Previous report
We estimate we will incur additional cash payments up to approximately $1.2 million for restructuring costs, which is largely expected to be paid by the first quarter of 2024.
Previous report
Off Balance Sheet Arrangements
Previous report
We did not have any off-balance sheet arrangements as of December 31, 2023 and December 31, 2022.
Reworded paragraphs (27)
Previous wording
You should read the following discussion and analysis together with our consolidated financial statements and related notes included in “Item 8. Financial Statements and Supplementary Data.” in this Annual Report on Form 10-K. The following discussion contains forward-looking statements that involve risks and uncertainties. For a complete discussion of forward-looking statements, see the section above titled “Special Note Regarding Forward Looking Statements.” Our actual results could differ materially from those expressed or implied in any forward-looking statements as a result of various factors, including those set forth under the caption “Item 1A. Risk Factors.”
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included in “Item 8. Financial Statements and Supplementary Data.” in this Annual Report on Form 10-K (this Annual Report). Some of the information contained in this discussion and analysis or set forth elsewhere in the Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve substantial risks and uncertainties. As a result of many factors, including those factors set forth in Part I, Item 1A. “Risk Factors” of this Annual Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. For further information regarding our forward-looking statements, see “Cautionary Note Regarding Forward-Looking Statements” in this Annual Report.
Previous wording
Prior to July 2023, our lead program was ETX-123, a Kv7.2/3 potassium channel opener. ETX-123 is designed to harness the efficacy of the Kv7.2/3 channel mechanism while attempting to improve the safety and tolerability relative to earlier molecules, based on our insights into the mechanisms of toxicity and the potency and selectivity profile.
Current wording
Previously, we focused primarily on developing novel therapies for neuronal excitability disorders to address unmet needs in psychiatry, epilepsy, chronic pain, and other disorders of the peripheral and central nervous systems, and our lead program was ETX-123, a Kv7.2/3 potassium channel opener. ETX-123 is designed to harness the efficacy of the Kv7.2/3 channel mechanism while attempting to improve the safety and tolerability relative to earlier molecules, based on our insights into the mechanisms of toxicity and the potency and selectivity profile. In July 2023, we made the determination to pause further development of our Kv7 program, and we continue to evaluate our Kv7 program, including seeking a partner for further development.
Previous wording
We have incurred significant operating losses since inception, as we have devoted substantially all of our resources to organizing and staffing our company, identifying potential product candidates, business planning, raising capital, undertaking research, executing preclinical studies and clinical development trials, and providing general and administrative support for business activities. We incurred net losses of $35.1 million and $45.2 million for the years ended December 31, 2023 and 2022, respectively. We had an accumulated deficit of $156.0 million and $120.9 million as of December 31, 2023 and December 31, 2022, respectively.
Current wording
We have incurred significant operating losses since inception, as we have devoted substantially all of our resources to organizing and staffing our company, identifying potential product candidates, business planning, raising capital, undertaking research, executing preclinical studies and clinical development trials, and providing general and administrative support for business activities. We incurred net losses of $73.9 million and $35.1 million for the years ended December 31, 2024 and 2023, respectively. We had an accumulated deficit of $229.9 million and $156.0 million as of December 31, 2024 and December 31, 2023, respectively.
Previous wording
Since our inception, we have primarily funded our operations with an aggregate of $208.3 million in net proceeds from the sale and issuance of shares of our redeemable convertible preferred stock and our initial public offering of our common stock, and to a lesser extent from cash received pursuant to U.K. research and development tax credits and incentives. We had cash, cash equivalents and marketable securities of $106.8 million and $123.6 million as of December 31, 2023 and December 31, 2022, respectively. Based on our current operating plan, we estimate that our cash, cash equivalents and marketable securities will be sufficient to fund our planned operations through at least 12 months following the date of this filing.
Current wording
Since our inception, we have primarily funded our operations with an aggregate of $328.0 million in net proceeds from the sale and issuance of shares of our redeemable convertible preferred stock, our initial public offering of our common stock, and the sale and issuance of shares in a private placement of our common stock that was completed in June 2024. We had cash, cash equivalents and marketable securities of $212.5 million and $106.8 million as of December 31, 2024 and December 31, 2023, respectively. Based on our current operating plan, we estimate that our cash, cash equivalents and marketable securities will be sufficient to fund our planned operations through 2027. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently anticipate, in which case we would be required to obtain additional financing, which may not be available to us on acceptable terms, or at all.
Previous wording
If a strategic transaction is not consummated and/or if product development is resumed, we will require substantial additional funding to support our continuing operations. Until such time as we can generate significant revenue from product sales, if ever, we may finance our operations through the sale of equity, debt financings or other capital sources, which could include income from collaborations, strategic partnerships or other strategic arrangements. Adequate funding may not be available when needed or on terms acceptable to us, or at all. If we are unable to raise additional capital as needed, we may have to significantly delay, scale back or discontinue any future development of our product candidates. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide, resulting from increased volatility in the trading prices for shares in the biopharmaceutical industry, the ongoing pandemic, or otherwise. In addition, our ability to continue to benefit from research and development tax credits and incentives will depend on our ability to continue meet the applicable requirements for them. If we fail to obtain necessary capital when needed on acceptable terms, or at all, it could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations. Insufficient liquidity may also require us to relinquish rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose.
Current wording
Until such time, if ever, as we can generate significant revenue from product sales, we may finance our operations through equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. Adequate funding may not be available when needed or on terms acceptable to us, or at all.
Previous wording
We do not have any products approved for sale and have not generated any revenue from product sales since our inception. To the extent we continue to pursue clinical development of any future product candidate, our ability to generate product revenue will depend on the successful development, regulatory approval and eventual commercialization of one or more of our product candidates, if approved. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities. We expect to continue to incur operating losses for the foreseeable future as we continue to explore strategic alternatives.
Current wording
We do not have any products approved for sale and have not generated any revenue from product sales since our inception. Our ability to generate product revenue will depend on the successful development, regulatory approval and eventual commercialization of one or more of our product candidates, if approved. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities. We expect to continue to incur operating losses for the foreseeable future.
Previous wording
On February 7, 2023, our board of directors approved a restructuring plan (the Restructuring Plan) to conserve financial resources and better align our workforce with current business needs, as a result of the decision to pause development of ETX-155 and focus on our preclinical Kv7.2/3 program. As part of the Restructuring Plan, our workforce was reduced by approximately 55%, with substantially all of the reduction in personnel completed in the first half of 2023.
Current wording
On February 7, 2023, our board of directors approved a restructuring plan to conserve financial resources and align our workforce with current business needs. This plan resulted in a 55% workforce reduction, mostly completed in the first half of 2023. We further reduced our workforce by 10 employees in October 2023.
Previous wording
Our operating expenses consist of (i) research and development expenses and (ii) general and administrative expenses.
Current wording
Our operating expenses consist of (i) acquired IPR&D expense, related party, (ii) research and development expenses, and (iii) general and administrative expenses.
Previous wording
Our research and development expenses consist primarily of direct and indirect costs incurred in connection with our discovery efforts, preclinical studies, and clinical trial activities related to our pipeline, including our recently paused product candidates ETX-123 and ETX-155, as well as our discontinued product candidate ETX-810.
Current wording
Our research and development expenses consist of direct and indirect costs incurred in connection with our discovery efforts, preclinical studies, and clinical trial activities related to our pipeline, including budoprutug and our previous product candidates ETX-123 and ETX-155.
Previous wording
Our direct research and development costs include:
Current wording
Our direct research and development expenses include:
Previous wording
Our indirect research and development costs include:
Current wording
Our indirect research and development expenses include:
Previous wording
We categorize costs by stage of development clinical or preclinical. Given our stage of development and the utilization of our resources across our various programs, we have not historically tracked our research and development costs by program. Research and development expenses are presented net of refundable research and development tax credits from the U.K. government.
Current wording
Given our stage of development and the utilization of our resources across our current and legacy programs, we have not historically tracked our indirect research and development costs by program or indication. Research and development expenses are presented net of refundable research and development tax credits from the U.K. government.
Previous wording
Our general and administrative expenses consist primarily of personnel-related expenses such as salaries, bonuses, benefits, stock-based compensation, and termination benefits, for our personnel in executive, finance and accounting, human resources, business development and other administrative functions. Other significant general and administrative expenses include legal fees relating to intellectual property and corporate matters, professional fees for accounting, audit, regulatory, tax and consulting services, insurance costs, as well as investor and public relations costs.
Current wording
Our general and administrative expenses consist primarily of personnel-related expenses such as salaries, bonuses, benefits, stock-based compensation, and termination benefits, for our personnel in executive, finance and accounting, human resources, business development and other administrative functions. Other significant general and administrative expenses include legal fees relating to corporate matters and intellectual property, professional fees for accounting, audit, regulatory, tax and consulting services, insurance costs, as well as investor and public relations costs.
Previous wording
Our foreign currency gain (loss) consists of foreign exchange losses resulting from remeasurement and foreign currency transactions between the British Pound and the U.S. Dollar.
Current wording
Our foreign currency (loss) gain consists of foreign exchange losses resulting from remeasurement and foreign currency transactions between foreign currency and the U.S. Dollar.
Previous wording
Our interest income consists of interest earned on our cash, cash equivalents and short-term investments and adjustments related to amortization of purchase premiums and accretion of discounts of marketable securities.
Current wording
Our interest income consists of interest earned on our cash, cash equivalents and marketable securities and adjustments related to amortization of purchase premiums and accretion of discounts of marketable securities.
Previous wording
Research and development expenses decreased 41.2% from $26.2 million for the year ended December 31, 2022 to $15.4 million for the year ended December 31, 2023. The decrease was driven by an $18.3 million decrease in direct clinical and preclinical expenses, primarily due to the pause of ETX-155 in February 2023 and the discontinuation of ETX-810 in August 2022. This decrease was partially offset by (i) a $2.8 million increase in personnel-related expenses, primarily driven by restructuring costs of $3.8 million, partially offset by a decrease of $1.0 million from reduced headcount and (ii) a $4.7 million decrease in the U.K. refundable research and development tax credits due to the overall reduction in qualifying research and development expenses and a reduction in tax credit rates.
Current wording
The decrease was driven by (i) a $2.9 million decrease in personnel-related expenses, primarily due to a $1.8 million decrease from reduced headcount, and a $1.1 million decrease in restructuring costs, and (ii) a $0.2 million decrease in facility rent. This decrease was partially offset by a $2.0 million decrease in the refundable research and development tax credits from the U.K. government due to a reduction in qualifying research and development expenses.
Previous wording
General and administrative expenses increased 31.4% from $18.9 million for the year ended December 31, 2022 to $24.9 million for the year ended December 31, 2023. This increase was driven by restructuring costs of $15.0 million, partially offset by (i) a decrease of $6.3 million in personnel-related expenses from reduced headcount and (ii) a $2.7 million overall decrease in other general and administrative expense, largely due to a reduction in consulting fees, legal expenses, insurance, and human resource costs.
Current wording
General and administrative expenses decreased 35.5% from $24.9 million for the year ended December 31, 2023 to $16.0 million for the year ended December 31, 2024. This decrease was due to (i) a $12.3 million reduction in personnel-related expenses, primarily driven by a decrease in restructuring costs of $14.2 million, and partially offset by an increase of $1.9 million from increased headcount and offset by (ii) a $3.4 million increase in other general and administrative expenses, largely due to an increase in consulting fees, legal expenses, and human resource costs.
Previous wording
Interest income, net increased from $1.4 million for the year ended December 31, 2022 to $4.6 million for the year ended December 31, 2023, which was driven by an increase in investment income. The increase was due to higher returns on our investments as a result of rising interest rates in the current period.
Current wording
Interest income, net increased 76% from $4.6 million for the year ended December 31, 2023 to $8.1 million for the year ended December 31, 2024, which was driven by an increase in marketable securities for the year ended December 31, 2024.
Previous wording
We primarily generate cash and cash equivalents from the sale of our equity securities, including common stock and redeemable convertible preferred stock, and to a lesser extent from cash received pursuant to U.K. research and development tax credits and incentives. From our inception to December 31, 2023, we raised aggregate proceeds of $208.3 million from the issuance of shares of our redeemable convertible preferred stock and from our initial public offering of our common stock. We have not generated any revenue from product sales or otherwise. We have incurred net losses from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future. As of December 31, 2023 and December 31, 2022, we had cash, cash equivalents and marketable securities of $106.8 million and $123.6 million and an accumulated deficit of $156.0 million and $120.9 million, respectively.
Current wording
Since our inception, we have primarily funded our operations with an aggregate of $328.0 million in net proceeds from the sale and issuance of shares of our redeemable convertible preferred stock, our initial public offering of our common stock and the sale and issuance of shares of our common stock in a private placement in June 2024. We have not generated any revenue from product sales or otherwise. We have incurred net losses from operations since our inception and anticipate we will continue to incur net losses for the foreseeable future. As of December 31, 2024 and December 31, 2023, we had cash, cash equivalents and marketable securities of $212.5 million and $106.8 million, respectively, and an accumulated deficit of $229.9 million and $156.0 million, respectively.
Previous wording
The following table summarized our cash flows (in thousands):
Current wording
The following table sets forth our cash flows (in thousands):
Previous wording
In 2022, net cash used in operating activities was $37.4 million. This consisted primarily of net loss of $45.2 million, which was partially offset by non-cash charges of $7.6 million that primarily related to stock-based compensation of $7.0 million, and changes in our operating assets and liabilities that resulted in a net increase in cash of $0.2 million, primarily related to research and development activities.
Current wording
In 2024, net cash used in operating activities was $15.6 million. This consisted primarily of a net loss of $73.9 million, which was partially offset by (i) non-cash charges of $56.6 million that consisted primarily of IPR&D and stock-based compensation expense and (ii) changes in our operating assets and liabilities that resulted in a net increase in cash of $1.7 million.
Previous wording
In 2023, net cash used in operating activities was $20.6 million. This consisted primarily of net loss of $35.1 million, which was partially offset by (i) non-cash charges of $10.8 million that consisted of stock-based compensation expense of $12.8 million, right-of-use (ROU) asset impairment expense of $0.2 million, and non-cash lease expense of $0.4 million, partially offset by accretion of discounts on investments of $2.3 million and foreign currency gain on remeasurement of $0.3 million and (ii) changes in our operating assets and liabilities that resulted in a net increase in cash of $3.7 million, primarily related to receipt of research and development tax credits from the U.K.
Current wording
In 2023, net cash used in operating activities was $20.6 million. This consisted primarily of a net loss of $35.1 million, which was partially offset by (i) non-cash charges of $10.8 million that consisted of stock-based compensation expense of $12.8 million, right-of-use (ROU) asset impairment expense of $0.2 million, and non-cash lease expense of $0.4 million, partially offset by accretion of discounts on investments of $2.3 million and foreign currency gain on remeasurement of $0.3 million and (ii) changes in our operating assets and liabilities that resulted in a net increase in cash of $3.7 million, primarily related to receipt of research and development tax credits from the U.K. government.
Previous wording
In 2023, net cash provided by investing activities was $69.0 million. This consisted of $127.4 million of proceeds received from maturities of investments in marketable securities, partially offset by purchases of $58.4 million of investments in marketable securities.
Current wording
In 2023, net cash provided by investing activities was $69.0 million. This consisted of $127.4 million in proceeds received from maturities of investments in marketable securities, partially offset by purchases of $58.4 million of investments in marketable securities.
Previous wording
In the normal course of business, we enter into contracts with contract research organizations (CROs), contract development and manufacturing organizations (CDMOs), and other third parties for preclinical studies and clinical trials, research and development supplies, and other testing and manufacturing services. These contracts do not contain material minimum purchase commitments and generally provide us the option to cancel, reschedule and adjust our requirements based on our business needs, prior to the delivery of goods or performance of services. However, it is not possible to predict the maximum potential amount of future payments under these agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each agreement.
Current wording
In the normal course of business, we enter into contracts with contract research organizations (CROs), contract development and manufacturing organizations (CDMOs), and other third parties for preclinical studies and clinical trials, research and development supplies, and other testing and manufacturing services. These contracts do not contain material minimum purchase commitments and generally provide us with the option to cancel, reschedule and adjust our requirements based on our business needs, prior to the delivery of goods or performance of services. However, it is not possible to predict the maximum potential amount of future payments under these agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each agreement.
Previous wording
We lease various operating spaces in the U.S. and the U.K. under non-cancelable operating lease arrangements that expire on various dates through January 31, 2025. As discussed further in Note 5 in our consolidated financial statements Commitments and Contingencies, we entered into a non-cancellable sublease agreement for the Bellevue office space in July 2023. As of December 31, 2023, our undiscounted future minimum lease payments under non-cancelable lease agreements (net of sublease income) was approximately $0.2 million.
Current wording
We lease operating spaces in the U.S. under non-cancelable operating lease arrangements that expire on various dates through January 31, 2027. As discussed further in Note 8 in our consolidated financial statements, we entered into a non-cancellable sublease agreement for office space in Bellevue, Washington in July 2023 and into a non-cancellable lease agreement for office space in Wellesley Hills, Massachusetts in October 2024. As of December 31, 2024, our undiscounted future minimum lease payments under non-cancelable lease agreements (net of sublease income) was approximately $0.5 million.
Previous wording
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Current wording
This management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Previous wording
Refer to Notes 2 and 6 in our consolidated financial statements for further details regarding the development and evaluation of the assumptions used to estimate the fair value of our stock-based awards, and the related effect of stock-based compensation expense on the consolidated financial statements.
Current wording
Refer to Notes 2 and 9 in our consolidated financial statements for further details regarding the development and evaluation of the assumptions used to estimate the fair value of our stock-based awards, and the related effect of stock-based compensation expense on the consolidated financial statements.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
If we are unable to raise additional capital as needed, we may have to significantly delay, scale back or discontinue any future development of our product candidates. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States (U.S.) and worldwide, resulting from increased volatility in the trading prices for shares in the biopharmaceutical industry, or otherwise.
Current report — wording carried from elsewhere
If we fail to obtain necessary capital when needed on acceptable terms, or at all, it could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations.
Current report — wording carried from elsewhere
Insufficient liquidity may also require us to relinquish rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose.
Current report — wording carried from elsewhere
1 Includes expenses related to our legacy product candidates ETX-123 and ETX-155.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
We are a biotechnology company focused on developing novel therapies for neuronal excitability disorders to address unmet needs in psychiatry, epilepsy, chronic pain, and other disorders of the peripheral and central nervous systems.
Previous report — wording carried elsewhere
In 2022, net cash provided by investing activities was $34.4 million. This consisted of $122.4 million of proceeds received from maturities of investments in marketable securities, partially offset by purchases of $88.0 million of investments in marketable securities.