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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2022
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number: 001-39271
Renovacor, Inc.
(Exact Name of Registrant as Specified in its Charter)
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Delaware |
83-3169838 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer
Identification No.) |
201 Broadway, Suite 310 Cambridge, Massachusetts |
02139 |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (610) 424-2650
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, par value $0.0001 per share |
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RCOR |
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NYSE American LLC |
Warrants to purchase common stock at an exercise price of $11.50 per share |
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RCOR.WS |
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NYSE American LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 10, 2022, the registrant had 17,269,415 shares of common stock, $0.0001 par value per share, outstanding.
Renovacor, Inc.
Form 10-Q
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements, other than statements of historical fact, included or incorporated in this Quarterly Report on Form 10-Q regarding our strategy, future operations, clinical trials, collaborations, intellectual property, cash resources, financial position, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will, "could," “should,” "potential," "likely," "projects," "target," "continue," "will," "schedule," "would" or, in each case, their negative or other variations or comparable terminology, although not all forward-looking statements contain these identifying words. We cannot guarantee that we will actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may be beyond our control, and which may cause our actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements.
Factors that may impact such forward-looking statements include:
•the occurrence of any change, event, series of events or circumstances that could give rise to the termination of the Agreement and Plan of Merger, or the Rocket Merger Agreement, by and among us, Rocket Pharmaceuticals, Inc., or Rocket, Zebrafish Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Rocket, or Merger Sub I, and Zebrafish Merger Sub II, LLC, a Delaware limited liability company and a wholly owned subsidiary of Rocket, or Merger Sub II, and together with Merger Sub I, the Merger Subs, that provides for the acquisition of Renovacor by Rocket, or the merger, including a termination of the Rocket Merger Agreement under circumstances that could require Renovacor or Rocket to pay a termination fee to the other party;
•the possibility that we are unable to complete the merger due to the failure of our stockholders to adopt the Rocket Merger Agreement, or the failure to satisfy any of the other conditions to the completion of the mergers, or unexpected delays in satisfying any conditions; risks that the pendency or completion of the merger and the other transactions contemplated by the Rocket Merger Agreement disrupt current plans and operations, which may adversely impact our business;
•the risk of legal proceedings that may be instituted against us, our directors and/or others relating to the merger;
•our ability to raise additional capital to fund our operations and continue the development of our current and future product candidates;
•the accuracy of our projections and estimates regarding our expenses, capital requirements, cash utilization, and need for additional financing;
•the initiation, progress, success, cost, and timing of our development activities, preclinical studies and future clinical trials;
•the timing, scope and likelihood of regulatory filings and approvals, including final regulatory approval of our product candidates;
•the preclinical nature of our business and our ability to successfully advance current and future product candidates through development activities, preclinical studies, and clinical trials;
•the timing of our future Investigational New Drug, or IND, applications and the likelihood of, and our ability to obtain and maintain, regulatory clearance of such IND applications for our product candidates;
•the novelty of our approach to the treatment of BAG3 mutation-associated dilated cardiomyopathy, or DCM, utilizing adeno-associated virus, or AAV, BAG3-based gene therapies to target BAG3 mutations, and the challenges we will face due to the novel nature of such technology;
•our dependence on the success of our product candidates, in particular REN-001;
•the potential scope and value of our intellectual property and proprietary rights;
•our ability, and the ability of our licensors, to obtain, maintain, defend, and enforce intellectual property and proprietary rights protecting our product candidates, and our ability to develop and commercialize our product candidates without infringing, misappropriating, or otherwise violating the intellectual property or proprietary rights of third parties;
•the success of competing therapies that are or become available;
•regulatory developments and approval pathways in the United States and foreign countries for our product candidates;
i
•the performance of third parties in connection with the development of our product candidates, including third parties conducting our future clinical trials as well as third-party suppliers and manufacturers;
•our ability to attract and retain strategic collaborators with development, regulatory, and commercialization expertise;
•the extent to which health epidemics and other outbreaks of communicable diseases, including the COVID-19 pandemic, geopolitical turmoil, including the ongoing invasion of Ukraine by Russia or increased trade restrictions between the United States, Russia, China, and other countries, social unrest, political instability, terrorism, or other acts of war could ultimately impact our business, including supply chain, labor, development activities, preclinical studies, and future clinical trials;
•the public opinion and scrutiny of AAV/BAG3-based gene therapies for the treatment of heart failure and our potential impact on public perception of our products and product candidates;
•our ability to successfully commercialize our product candidates and develop sales and marketing capabilities, if our product candidates are approved;
•our ability to generate revenue from future product sales and our ability to achieve and maintain profitability;
•the size and growth of the potential markets for our product candidates and our ability to serve those markets;
•changes in applicable laws or regulations;
•our ability to recruit and retain key members of management and other clinical and scientific personnel;
•the volatility of capital markets and other macroeconomic factors, including due to geopolitical tensions or the outbreak of hostilities or war;
•the possibility that we may be adversely impacted by other economic, business, and/or competitive factors, including inflation; and
•other risks and uncertainties, including those listed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 (our “2021 Form 10-K”), our Quarterly Reports on Form 10-Q and the other documents we file with the Securities and Exchange Commission (the “SEC”).
There are a number of important factors that could cause our actual results to differ materially from those indicated or implied by forward-looking statements. These important factors include those set forth under Part I, Item 1A "Risk Factors" in our 2021 Form 10-K, which was filed with the SEC on March 24, 2022, and in our other disclosures and filings with the SEC. These factors and the other cautionary statements made in this Quarterly Report on Form 10-Q should be read as being applicable to all related forward-looking statements whenever they appear in this Quarterly Report on Form 10-Q.
In addition, any forward-looking statements represent our estimates only as of the date that this Quarterly Report on Form 10-Q is filed with the SEC and should not be relied upon as representing our estimates as of any subsequent date. All forward-looking statements included in this Quarterly Report on Form 10-Q are made as of the date hereof, and are expressly qualified in their entirety by this cautionary notice. We disclaim any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.
ii
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Renovacor, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
(In thousands, except share and per share amounts) |
|
2022 |
|
|
2021* |
|
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
53,713 |
|
|
$ |
78,790 |
|
Prepaid expenses and other current assets |
|
|
1,941 |
|
|
|
1,763 |
|
Total current assets |
|
|
55,654 |
|
|
|
80,553 |
|
Property and equipment, net |
|
|
1,441 |
|
|
|
379 |
|
Operating lease right-of-use assets |
|
|
484 |
|
|
|
— |
|
Other assets |
|
|
163 |
|
|
|
67 |
|
Total assets |
|
$ |
57,742 |
|
|
$ |
80,999 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
3,228 |
|
|
$ |
1,536 |
|
Accrued expenses |
|
|
3,945 |
|
|
|
2,498 |
|
Operating lease liability |
|
|
241 |
|
|
|
— |
|
Other current liability |
|
|
1,019 |
|
|
|
— |
|
Total current liabilities |
|
|
8,433 |
|
|
|
4,034 |
|
Warrant liability |
|
|
1,369 |
|
|
|
11,165 |
|
Share earnout liability (includes 500,000 shares of Common stock, $0.0001 par value per share, subject to forfeiture, issued and outstanding at September 30, 2022 and December 31, 2021 –– Note 3) |
|
|
4,967 |
|
|
|
12,256 |
|
Operating lease liability, net of current portion |
|
|
265 |
|
|
|
— |
|
Total liabilities |
|
|
15,034 |
|
|
|
27,455 |
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
Preferred stock, $0.0001 par value per share; 1,000,000 shares authorized; none issued or outstanding at September 30, 2022 and December 31, 2021 |
|
|
— |
|
|
|
— |
|
Common stock, $0.0001 par value per share; 100,000,000 shares authorized; 16,769,415 and 16,756,042 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively |
|
|
2 |
|
|
|
2 |
|
Additional paid-in capital |
|
|
74,361 |
|
|
|
72,540 |
|
Accumulated deficit |
|
|
(31,655 |
) |
|
|
(18,998 |
) |
Total stockholders’ equity |
|
|
42,708 |
|
|
|
53,544 |
|
Total liabilities and stockholders’ equity |
|
$ |
57,742 |
|
|
$ |
80,999 |
|
———————
* The condensed balance sheet at December 31, 2021 has been derived from the audited financial statements at that date.
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
Renovacor, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
(In thousands, except share and per share amounts) |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
7,423 |
|
|
$ |
2,925 |
|
|
$ |
19,642 |
|
|
$ |
7,413 |
|
General and administrative |
|
|
4,682 |
|
|
|
2,315 |
|
|
|
10,445 |
|
|
|
3,227 |
|
Loss from operations |
|
|
(12,105 |
) |
|
|
(5,240 |
) |
|
|
(30,087 |
) |
|
|
(10,640 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
298 |
|
|
|
— |
|
|
|
347 |
|
|
|
— |
|
Interest expense |
|
|
(4 |
) |
|
|
(147 |
) |
|
|
(4 |
) |
|
|
(147 |
) |
Change in fair value of derivative liability |
|
|
— |
|
|
|
80 |
|
|
|
— |
|
|
|
80 |
|
Change in fair value of warrant liability |
|
|
(389 |
) |
|
|
(1,435 |
) |
|
|
9,796 |
|
|
|
(1,435 |
) |
Change in fair value of share earnout liability |
|
|
(3,029 |
) |
|
|
(1,427 |
) |
|
|
7,289 |
|
|
|
(1,427 |
) |
Other income (expense), net |
|
|
2 |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
Net loss |
|
$ |
(15,227 |
) |
|
$ |
(8,169 |
) |
|
$ |
(12,657 |
) |
|
$ |
(13,569 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share –– basic and diluted |
|
$ |
(0.87 |
) |
|
$ |
(0.83 |
) |
|
$ |
(0.72 |
) |
|
$ |
(1.82 |
) |
Weighted-average number of common shares used in computing net loss per share –– basic and diluted |
|
|
17,482,933 |
|
|
|
9,794,348 |
|
|
|
17,477,445 |
|
|
|
7,460,719 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Renovacor, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Nine months ended |
|
|
|
September 30, |
|
(In thousands) |
|
2022 |
|
|
2021 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net loss |
|
$ |
(12,657 |
) |
|
$ |
(13,569 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Stock-based compensation |
|
|
1,815 |
|
|
|
710 |
|
Change in fair value of derivative liability |
|
|
— |
|
|
|
(80 |
) |
Change in fair value of warrant liability |
|
|
(9,796 |
) |
|
|
1,435 |
|
Change in fair value of share earnout liability |
|
|
(7,289 |
) |
|
|
1,427 |
|
Amortization of debt discount |
|
|
— |
|
|
|
136 |
|
Depreciation expense |
|
|
55 |
|
|
|
1 |
|
Change in assets and liabilities: |
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
841 |
|
|
|
(2,528 |
) |
Accounts payable |
|
|
1,605 |
|
|
|
1,289 |
|
Accrued expenses |
|
|
1,781 |
|
|
|
1,879 |
|
Other |
|
|
(74 |
) |
|
|
— |
|
Net cash used in operating activities |
|
|
(23,719 |
) |
|
|
(9,300 |
) |
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
Acquisitions of property and equipment |
|
|
(1,311 |
) |
|
|
— |
|
Net cash used in investing activities |
|
|
(1,311 |
) |
|
|
— |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
Merger-related costs |
|
|
(53 |
) |
|
|
— |
|
Proceeds from issuance of convertible promissory note, net of issuance costs |
|
|
— |
|
|
|
2,445 |
|
Effect of Merger, net of transaction costs (Note 3) |
|
|
— |
|
|
|
86,792 |
|
Proceeds from issuance of common stock upon exercise of stock options |
|
|
6 |
|
|
|
— |
|
Net cash provided by (used in) financing activities |
|
|
(47 |
) |
|
|
89,237 |
|
Net decrease in cash and cash equivalents |
|
|
(25,077 |
) |
|
|
79,937 |
|
Cash and cash equivalents at beginning of period |
|
|
78,790 |
|
|
|
5,384 |
|
Cash and cash equivalents at end of period |
|
$ |
53,713 |
|
|
$ |
85,321 |
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES: |
|
|
|
|
|
|
Deferred merger costs in accounts payable |
|
$ |
— |
|
|
$ |
304 |
|
Property and equipment in accounts payable and accrued expenses |
|
$ |
166 |
|
|
$ |
20 |
|
Non-cash insurance premium financing |
|
$ |
1,019 |
|
|
$ |
— |
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFO: |
|
|
|
|
|
|
Cash paid for amounts included in measurement of lease liabilities |
|
$ |
118 |
|
|
$ |
— |
|
Cash paid during the period for interest |
|
$ |
— |
|
|
$ |
12 |
|
Right-of-use assets obtained in exchange for new operating lease obligations |
|
$ |
575 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Renovacor, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Total |
|
|
|
Common Stock |
|
|
Paid-in- |
|
|
Accumulated |
|
|
Stockholders' |
|
(In thousands, except share amounts) |
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Equity |
|
Balance, December 31, 2021 |
|
|
16,756,042 |
|
|
$ |
2 |
|
|
$ |
72,540 |
|
|
$ |
(18,998 |
) |
|
$ |
53,544 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
601 |
|
|
|
— |
|
|
|
601 |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,594 |
|
|
|
6,594 |
|
Balance, March 31, 2022 |
|
|
16,756,042 |
|
|
$ |
2 |
|
|
$ |
73,141 |
|
|
$ |
(12,404 |
) |
|
$ |
60,739 |
|
Issuance of common stock upon exercise of stock options |
|
|
11,648 |
|
|
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
5 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
632 |
|
|
|
— |
|
|
|
632 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,024 |
) |
|
|
(4,024 |
) |
Balance, June 30, 2022 |
|
|
16,767,690 |
|
|
$ |
2 |
|
|
$ |
73,778 |
|
|
$ |
(16,428 |
) |
|
$ |
57,352 |
|
Issuance of common stock upon exercise of stock options |
|
|
1,725 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
582 |
|
|
|
— |
|
|
|
582 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(15,227 |
) |
|
|
(15,227 |
) |
Balance, September 30, 2022 |
|
|
16,769,415 |
|
|
$ |
2 |
|
|
$ |
74,361 |
|
|
$ |
(31,655 |
) |
|
$ |
42,708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
Convertible |
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Stockholders' |
|
|
|
Preferred Stock |
|
|
|
Common Stock |
|
|
Paid-in- |
|
|
Accumulated |
|
|
Equity |
|
(In thousands, except share amounts) |
|
Shares |
|
|
Amount |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
(Deficit) |
|
Balance, December 31, 2020 |
|
|
2,578,518 |
|
|
$ |
10,074 |
|
|
|
|
1,953,368 |
|
|
$ |
— |
|
|
$ |
121 |
|
|
$ |
(4,897 |
) |
|
$ |
(4,776 |
) |
Retroactive application of reverse recapitalization (Note 3) |
|
|
(2,578,518 |
) |
|
|
(10,074 |
) |
|
|
|
4,321,198 |
|
|
|
1 |
|
|
|
10,073 |
|
|
|
— |
|
|
|
10,074 |
|
Balance, December 31, 2020, effect of Merger |
|
|
— |
|
|
$ |
— |
|
|
|
|
6,274,566 |
|
|
$ |
1 |
|
|
$ |
10,194 |
|
|
$ |
(4,897 |
) |
|
$ |
5,298 |
|
Issuance of restricted common stock |
|
|
— |
|
|
|
— |
|
|
|
|
30,495 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
7 |
|
|
|
— |
|
|
|
7 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,681 |
) |
|
|
(1,681 |
) |
Balance, March 31, 2021 |
|
|
— |
|
|
$ |
— |
|
|
|
|
6,305,061 |
|
|
$ |
1 |
|
|
$ |
10,201 |
|
|
$ |
(6,578 |
) |
|
$ |
3,624 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
185 |
|
|
|
— |
|
|
|
185 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,719 |
) |
|
|
(3,719 |
) |
Balance, June 30, 2021 |
|
|
— |
|
|
$ |
— |
|
|
|
|
6,305,061 |
|
|
$ |
1 |
|
|
$ |
10,386 |
|
|
$ |
(10,297 |
) |
|
$ |
90 |
|
Issuance of restricted common stock |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Effect of Merger and recapitalization (refer to Note 3) |
|
|
— |
|
|
|
— |
|
|
|
|
8,166,205 |
|
|
|
1 |
|
|
|
31,269 |
|
|
|
— |
|
|
|
31,270 |
|
Common stock and pre-funded warrants issued pursuant to PIPE financing |
|
|
— |
|
|
|
— |
|
|
|
|
2,284,776 |
|
|
|
— |
|
|
|
29,704 |
|
|
|
— |
|
|
|
29,704 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
518 |
|
|
|
— |
|
|
|
518 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8,169 |
) |
|
|
(8,169 |
) |
Balance, September 30, 2021 |
|
|
— |
|
|
$ |
— |
|
|
|
|
16,756,042 |
|
|
$ |
2 |
|
|
$ |
71,877 |
|
|
$ |
(18,466 |
) |
|
$ |
53,413 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Renovacor, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Business and Organization
Business Overview
Renovacor, Inc. (the “Company,” or “Renovacor”) (f/k/a Chardan Healthcare Acquisition 2 Corp. ("Chardan")), a Delaware corporation, is a biotechnology company focused on delivering innovative precision therapies to improve the lives of patients and families battling genetically-driven cardiovascular and mechanistically-related diseases. The Company’s initial focus is on the treatment of BCL2-associated athanogene 3 (BAG3) mutation-associated dilated cardiomyopathy ("DCM") ("BAG3 DCM"). BAG3 DCM is a heritable rare disease that leads to early onset, rapidly progressing heart failure and significant mortality and morbidity. The Company’s lead product candidate, REN-001, is a recombinant adeno-associated virus ("AAV") 9-based gene therapy designed to deliver a fully functional BAG3 gene to augment BAG3 protein levels in cardiomyocytes and slow or halt progression of BAG3 DCM. The Company has entered into and may explore future collaborative alliances to support research, development, and commercialization of any of its product candidates.
The Company is subject to risks common to companies in the biopharmaceutical industry, including, but not limited to, risks related to the successful development and commercialization of product candidates, fluctuations in operating results and financial risks, the ability to successfully raise additional funds when needed, protection of proprietary rights and patent risks, patent litigation, compliance with government regulations, dependence on key personnel and prospective collaborative partners, and competition from competing products in the marketplace.
Rocket Merger Agreement
On September 19, 2022, the Company entered into an Agreement and Plan of Merger (the “Rocket Merger Agreement”) with Rocket Pharmaceuticals, Inc., a Delaware corporation (“Rocket”), Zebrafish Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Rocket (“Merger Sub I”), and Zebrafish Merger Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Rocket (“Merger Sub II,” and together with Merger Sub I, the “Merger Subs”) pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Rocket Merger Agreement, (i) Merger Sub I will merge with and into the Company (the “First Merger”) and (ii) the Company, as the surviving company of the First Merger, will merge with and into Merger Sub II (the “Second Merger” and together with the First Merger, the “Mergers”), with Merger Sub II as the surviving company in the Second Merger and as a wholly owned subsidiary of Rocket (the “Surviving Company”).
Among other things and subject to the terms and conditions of the Rocket Merger Agreement, at the effective time of the First Merger (the “First Effective Time”), each share of the Company's common stock, par value $0.0001 per share (collectively, the “Renovacor Shares”), issued and outstanding immediately prior to the First Effective Time will be converted into the right to receive a number of shares of common stock of Rocket, par value $0.01 per share (collectively, the “Rocket Shares”), determined on the basis of an exchange formula set forth in the Rocket Merger Agreement (the “Rocket Exchange Ratio”). The Rocket Exchange Ratio will initially be equal to approximately 0.1676 Rocket Shares for each Renovacor Share (subject to adjustment as described in this paragraph). Under certain circumstances further described in the Rocket Merger Agreement, the Rocket Exchange Ratio may be adjusted upward or downward based on the level of Company's net cash at the closing of the First Merger and certain other adjustments, as determined in accordance with the Rocket Merger Agreement. There can be no assurances as to Company's level of net cash between now and the closing of the transactions contemplated by the Merger Agreement. Immediately following the completion of the mergers, former Renovacor stockholders are expected to own approximately 4.1% of the of the outstanding shares of Rocket.
Each of the board of directors of Rocket and the board of directors of Renovacor have approved the Rocket Merger Agreement and the transactions contemplated thereby. The transaction is subject to approval by the stockholders of both companies, as well as regulatory approvals and satisfaction of other customary closing conditions. Contemporaneously with the execution of the Rocket Merger Agreement, Renovacor and certain stockholders of Rocket, holding approximately 35% of Rocket’s outstanding shares, and Rocket and certain stockholders of Renovacor, holding approximately 9.4% of Renovacor’s outstanding shares, entered into a voting and support agreement and have agreed to vote in favor of the transaction. The special meetings of shareholders of both Rocket and Renovacor to approve the Rocket Merger Agreement and the transactions contemplated thereby is scheduled to be held on November 30, 2022. However, there is no assurance that Rocket and/or Renovacor shareholders will approve the proposals required to complete the Mergers successfully.
5
The foregoing description of the Rocket Merger Agreement is not a complete description of all the parties’ rights and obligations under the Rocket Merger Agreement and is qualified in its entirety by reference to the Rocket Merger Agreement, which was filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 20, 2022, and is filed herewith.
SPAC Merger Agreement
Prior to September 2, 2021, the Company was a special purpose acquisition company formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business transaction with one or more businesses or entities. On September 2, 2021 (the "SPAC Merger Closing Date"), the Company consummated the business combination contemplated by that certain Agreement and Plan of Merger, dated March 22, 2021 (the “SPAC Merger Agreement”), by and among the Company, CHAQ2 Merger Sub, Inc., a wholly owned subsidiary of the Company (“SPAC Merger Sub”), and Renovacor Holdings, Inc. (f/k/a Renovacor, Inc. ("Old Renovacor")). Pursuant to the SPAC Merger Agreement, (i) SPAC Merger Sub merged with and into Old Renovacor, with Old Renovacor as the surviving company in the merger and, after giving effect to such merger, continuing as a wholly owned subsidiary of the Company (the “SPAC Merger”) and (ii) the Company’s name was changed from Chardan Healthcare Acquisition 2 Corp. to Renovacor, Inc. (the “SPAC Merger” and, together with the other transactions contemplated by the SPAC Merger Agreement, the “SPAC Business Combination”).
Liquidity Considerations
The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date the financial statements are issued. As of September 30, 2022, the Company had an accumulated deficit of $31.7 million and a cash and cash equivalents balance of $53.7 million. The Company has incurred losses and negative cash flows from operations since inception. The Company expects to continue to incur substantial operating losses and negative cash flows for the foreseeable future and will require additional capital as it continues to advance REN-001 and/or any future product candidates through development.
The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements—Going Concern, which requires management to assess the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Management currently anticipates that the Company’s balance of cash and cash equivalents, as of September 30, 2022, is sufficient to