On July 14, 2023 Exicure, Inc. (Nasdaq: XCUR), reported that it has historically been an early-stage biotechnology company focused on developing nucleic acid therapies targeting ribonucleic acid against validated targets (Press release, Exicure, JUL 14, 2023, View Source [SID1234633241]). In September 2022, the Company announced a significant reduction in force, suspension of preclinical activities and halting of all research and development, and that the Company was exploring strategic alternatives to maximize stockholder value.
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Corporate Update
Recent highlights include:
•On February 24, 2023, the Company received gross proceeds of $5.44 million from the September 2022 PIPE (net proceeds of $4.6 million after transaction expenses). As a result of the closing of the September 2022 PIPE, CBI USA is the beneficial owner of approximately 50.4% of the Company’s outstanding shares. Pursuant to the board designation rights of CBI USA, CBI USA designated three members to the Company’s board of directors.
•In May, the Company entered into two separate subscription agreements ("Subscription Agreements") with Cyworld Z Co., Ltd., ("Cyworld Z"). Pursuant to the Subscription Agreements, the Company purchased non-guaranteed private placement convertible bonds ("Bonds") of Cyworld Z for a subscription amount of $1 million each. The Bonds mature in May 2026 and the yield to maturity is 4.5% per annum.
First Quarter 2023 Financial Results
Cash Position: Cash, cash equivalents and restricted cash were $11.2 million as of March 31, 2023, as compared to $9.8 million as of December 31, 2022. The Company expects that its cash and cash equivalents will fund its current operations into the fourth quarter of 2023.
Research and Development (R&D) Expense: Research and development expenses were $2.0 million for the quarter ended March 31, 2023, as compared to $7.1 million for the quarter ended March 31, 2022. The decrease in R&D expense for the three months ended March 31, 2023 of $5.2 million reflects the suspension of clinical, preclinical, and discovery program activities and a reduction in employee headcount and fewer discovery, preclinical, and clinical program activities resulting from the restructuring activities that the Company announced in September 2022 and in December 2021.
General and Administrative (G&A) Expense: General and administrative expenses were $2.6 million for the quarter ended March 31, 2023, as compared to $3.2 million for the quarter ended March 31, 2022. The decrease in G&A expense of $0.6 million for the three months ended March 31, 2023 was mostly due to lower retention award and bonus compensation, based on current estimates, as well as lower legal fees and insurance. These decreases were partially offset by less operating costs allocated out to R&D based on changes in headcount.
Net Loss: The Company had a net loss of $4.4 million for the quarter ended March 31, 2023, as compared to a net loss of $8.3 million for the quarter ended March 31, 2022. The decrease in net loss was primarily driven by lower R&D expenses during the period, partially offset by lower revenue.
Going Concern: Management believes that the Company’s existing cash and cash equivalents will fund its operating expenses into the fourth quarter of 2023. However, this estimate is based on assumptions
about how the Company can limit spending that may prove to be wrong. It is very difficult to project the Company’s current cash burn rate given the transitional status of the Company and this estimate may prove inaccurate. Depending on the direction of the Company’s review of strategic alternatives, the Company may use available resources sooner than management currently expects. The Company has already engaged in significant cost reductions, so our ability to further cut costs and extend the Company’s operating runway is limited. As a result, substantial additional financing will be needed by the Company within the next few months to pay expenses, fund the ongoing exploration of strategic alternatives and pursue any alternatives that may be identified. The Company seeks to raise capital in the third quarter of 2023 to fund its operations through 2024. There can be no assurance that such additional financing will be available and, if available, can be obtained on acceptable terms.