10-Q
2023-09-30falseApril 6, 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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

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: 001-40672

 

RANI THERAPEUTICS HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

86-3114789

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

2051 Ringwood Avenue

San Jose, California

95131

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (408) 457-3700

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A common stock, par value $0.0001 per share

 

RANI

 

The Nasdaq Stock Market 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.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

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 12, 2021, the registrant had 19,711,874 shares of Class A common stock, $0.0001 par value per share, outstanding, and 29,290,391 shares of Class B common stock, $0.0001 par value per share, outstanding and no shares of Class C common stock, $0.0001 par value per share, outstanding. Certain holders of units of our consolidated subsidiary, Rani Therapeutics, LLC who do not hold shares of our Class B common stock can exchange their units for 1,545,811 shares of our Class A common stock.

 

 


 

Table of Contents

 

 

 

Page

 

 

 

 

Special Note Regarding Forward-Looking Statements

3

PART I.

FINANCIAL INFORMATION

 

 

 

 

 

RANI THERAPEUTICS HOLDINGS, INC.

 

Item 1.

Financial Statements (Unaudited)

5

 

Condensed Consolidated Balance Sheets

5

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

6

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity / Convertible Preferred Units and Members' Deficit

7

 

Condensed Consolidated Statements of Cash Flows

8

 

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

27

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

39

Item 4.

Controls and Procedures

39

 

 

 

PART II.

OTHER INFORMATION

40

 

 

 

Item 1.

Legal Proceedings

40

Item 1A.

Risk Factors

40

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

95

Item 3.

Defaults Upon Senior Securities

96

Item 4.

Mine Safety Disclosures

96

Item 5.

Other Information

96

Item 6.

Exhibits

97

Signatures

98

 

 

2


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations," contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and consolidated financial position, business strategy, product candidates, planned preclinical studies and clinical trials, results of clinical trials, research and development costs, manufacturing costs, regulatory approvals, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that are in some cases beyond our control and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “believe,” “estimate,” “predict,” “potential,” “seek,” “aim,” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

 

 

 

the progress and focus of our current and future clinical trials in the United States and abroad, and the reporting of data from those trials;

 

 

 

our ability to advance product candidates into and successfully complete clinical trials;

 

 

 

the beneficial characteristics, safety, efficacy, and therapeutic effects of our product candidates;

 

 

 

our potential and ability to successfully manufacture and supply our product candidates for clinical trials and for commercial use, if approved;

 

 

 

our ability to redesign and conduct additional preclinical and clinical studies of any future design of the RaniPill capsule to accommodate target payloads that are larger than the current capacity of the RaniPill capsule;

 

 

 

our ability to further develop and expand our platform technology;

 

 

 

our ability to utilize our technology platform to generate and advance additional product candidates;

 

 

 

the accuracy of our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing;

 

 

 

our financial performance;

 

 

 

our plans relating to commercializing our product candidates, if approved;

 

 

 

our ability to selectively enter into strategic partnership and the expected potential benefits thereof;

 

 

 

the implementation of our strategic plans for our business and product candidates;

 

 

 

our ability to continue to scale and optimize our manufacturing processes by expanding our use of automation;

 

 

 

our estimates of the number of patients in the United States who suffer from the indications we target and the number of patients that will enroll in our clinical trials;

 

 

 

the size of the market opportunity for our product candidates in each of the indications we target;

 

 

 

our ability to continue to innovate and expand our intellectual property by developing novel formulations and new applications of the RaniPill capsule;

 

3


 

 

 

our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available;

 

 

 

the scope of protection we are able to establish and maintain for intellectual property rights, including our technology platform and product candidates;

 

 

 

the sufficiency of our existing cash and cash equivalents to fund our future operating expenses and capital expenditure requirements;

 

 

 

our expectations regarding the impact of the COVID-19 pandemic on our business;

 

 

 

developments relating to our competitors and our industry, including competing product candidates and therapies; and

 

 

 

our expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

 

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations, and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties, and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

 

4


 

RANI THERAPEUTICS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

129,743

 

 

$

73,058

 

Related party note receivable

 

 

 

 

 

1,720

 

Prepaid expenses

 

 

2,622

 

 

 

167

 

Total current assets

 

 

132,365

 

 

 

74,945

 

Property and equipment, net

 

 

4,593

 

 

 

4,470

 

Total assets

 

$

136,958

 

 

$

79,415

 

Liabilities, Convertible Preferred Units and Stockholders' Equity / Members’ Deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,311

 

 

$

537

 

Related party payable

 

 

290

 

 

 

145

 

Accrued expenses

 

 

3,649

 

 

 

550

 

Deferred revenue

 

 

 

 

 

2,717

 

Current portion of long-term debt

 

 

 

 

 

1,359

 

Total current liabilities

 

 

5,250

 

 

 

5,308

 

Preferred unit warrant liability

 

 

 

 

 

320

 

Long-term debt, less current portion

 

 

 

 

 

2,412

 

Total liabilities

 

 

5,250

 

 

 

8,040

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

Convertible preferred units

 

 

 

 

 

184,714

 

Stockholders' equity / members’ deficit:

 

 

 

 

 

 

Common units

 

 

 

 

 

664

 

Preferred stock, $0.0001 par value - 20,000 shares authorized; none issued and outstanding as of September 30, 2021

 

 

 

 

 

 

Class A common stock, $0.0001 par value - 800,000 shares authorized; 19,712 issued and outstanding as of September 30, 2021

 

 

2

 

 

 

 

Class B common stock, $0.0001 par value - 40,000 shares authorized; 29,290 issued and outstanding as of September 30, 2021

 

 

3

 

 

 

 

Class C common stock, $0.0001 par value - 20,000 shares authorized; none issued and outstanding as of September 30, 2021

 

 

 

 

 

 

Additional paid-in capital

 

 

54,503

 

 

 

 

Accumulated deficit

 

 

(3,142

)

 

 

(114,003

)

Total stockholders' equity attributable to Rani Therapeutics Holdings, Inc. / (members' deficit)

 

 

51,366

 

 

 

(113,339

)

Non-controlling interest

 

 

80,342

 

 

 

 

Total stockholders' equity / (members' deficit)

 

 

131,708

 

 

 

(113,339

)

Total liabilities, convertible preferred units and stockholders' equity / (members' deficit)

 

$

136,958

 

 

$

79,415

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


 

RANI THERAPEUTICS HOLDINGS, INC.

CONDENSED Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Contract revenue

 

$

 

 

$

108

 

 

$

2,717

 

 

$

252

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

11,959

 

 

 

2,090

 

 

 

19,065

 

 

 

8,708

 

General and administrative

 

 

15,822

 

 

 

845

 

 

 

21,889

 

 

 

3,144

 

Total operating expenses

 

$

27,781

 

 

$

2,935

 

 

$

40,954

 

 

$

11,852

 

Loss from operations

 

 

(27,781

)

 

 

(2,827

)

 

 

(38,237

)

 

 

(11,600

)

Other income (expense), net

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

13

 

 

 

13

 

 

 

73

 

 

 

87

 

Loss on extinguishment of debt

 

 

(700

)

 

 

 

 

 

(700

)

 

 

 

Interest expense and other, net

 

 

(110

)

 

 

(64

)

 

 

(467

)

 

 

(66

)

Change in estimated fair value of preferred unit warrant

 

 

(85

)

 

 

 

 

 

(371

)

 

 

655

 

Loss before income taxes

 

 

(28,663

)

 

 

(2,878

)

 

 

(39,702

)

 

 

(10,924

)

Income tax expense

 

 

(37

)

 

 

(5

)

 

 

(81

)

 

 

(23

)

Net loss and comprehensive loss

 

$

(28,700

)

 

$

(2,883

)

 

$

(39,783

)

 

$

(10,947

)

Net loss attributable to non-controlling interest

 

 

(25,558

)

 

 

(2,883

)

 

 

(36,641

)

 

 

(10,947

)

Net loss attributable to Rani Therapeutics Holdings, Inc.

 

$

(3,142

)

 

$

 

 

$

(3,142

)

 

$

 

Net loss per Class A common share attributable to Rani Therapeutics Holdings, Inc., basic and diluted

 

$

(0.16

)

 

 

 

 

$

(0.16

)

 

 

 

Weighted-average Class A common shares outstanding—basic and diluted

 

 

19,437

 

 

 

 

 

 

19,437

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

6


 

RANI THERAPEUTICS HOLDINGS, INC.

CONDENSED Consolidated Statements of Changes in STOCKHOLDERS’ Equity/CONVERTIBLE PREFERRED UNITS AND MEMBERS' Deficit

(in thousands)

(Unaudited)

 

 

 

 

 

 

 

Class A Common Stock

 

 

Class B Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended September 30, 2021

 

Convertible Preferred Units

 

Members’
Deficit

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional Paid In Capital

 

 

Accumulated Deficit

 

 

Non-Controlling Interest

 

 

Total Stockholders' Equity/Members' (Deficit)

 

 Activity prior to initial public offering ("IPO") and related Organizational Transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

$

184,714

 

$

(113,339

)

 

 

 

$

 

 

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

(113,339

)

Issuance of Series E preferred units

 

 

6,320

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of warrant for common
   units

 

 

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

 

Equity-based compensation from secondary sales transactions

 

 

 

 

453

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

453

 

Net loss

 

 

 

 

(5,598

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,598

)

Balance at March 31, 2021

 

$

191,034

 

$

(118,471

)

 

 

 

$

 

 

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

(118,471

)

Equity-based compensation

 

 

 

 

282

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

282

 

Net loss

 

 

 

 

(5,485

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,485

)

Balance at June 30, 2021

 

$

191,034

 

$

(123,674

)

 

 

 

$

 

 

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

(123,674

)

Equity-based compensation

 

 

 

 

17,042

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,042

 

Exercise of warrant for common
   units

 

 

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

 

Settlement of preferred unit warrant liability

 

 

691

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

(20,644

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,644

)

 Effects of the IPO and related Organizational Transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effects of Organizational Transactions

 

 

(191,725

)

 

127,263

 

 

12,048

 

 

 

1

 

 

 

29,290

 

 

 

3

 

 

 

18,106

 

 

 

 

 

 

46,352

 

 

 

191,725

 

Issuance of Class A common stock in connection with the IPO, net of issuance costs of $10,686

 

 

 

 

 

 

7,667

 

 

 

1

 

 

 

 

 

 

 

 

 

73,647

 

 

 

 

 

 

 

 

 

73,648

 

Non-controlling interest adjustment for purchase of newly issued Class A units of Rani LLC with proceeds from the IPO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(37,895

)

 

 

 

 

 

37,895

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(149

)

 

 

(233

)

 

 

(382

)

 Activity subsequent to the IPO and related Organizational Transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

646

 

 

 

 

 

 

1,010

 

 

 

1,656

 

Forfeiture of restricted stock awards

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

 

 

(2

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,993

)

 

 

(4,681

)

 

 

(7,674

)

Balance at September 30, 2021

 

$

 

$

 

 

19,712

 

 

$

2

 

 

 

29,290

 

 

$

3

 

 

$

54,503

 

 

$

(3,142

)

 

$

80,342

 

 

$

131,708

 

 

 

 

Convertible Preferred

 

 

 

Common

 

 

 

 

 

 

 

For the Nine Months Ended September 30,
2020

 

Units

 

 

Amount

 

 

 

Units

 

 

Amount

 

 

Accumulated
Deficit

 

 

Total Members’
Deficit

 

Balance at December 31, 2019

 

 

17,085

 

 

$

115,505

 

 

 

 

46,890

 

 

$

664

 

 

$

(97,300

)

 

$

(96,636

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,350

)

 

 

(5,350

)

Balance at March 31, 2020

 

 

17,085

 

 

$

115,505

 

 

 

 

46,890

 

 

$

664

 

 

$

(102,650

)

 

$

(101,986

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,714

)

 

 

(2,714

)

Balance at June 30, 2020

 

 

17,085

 

 

$

115,505