10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 March 31, 2024

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 001-39538

CalciMedica, Inc.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

45-2120079

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

 

505 Coast Boulevard South, Suite 307

La Jolla, CA 92037

(Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (858) 952-5500

 

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

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

 

CALC

 

The Nasdaq Capital Market

 

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

The number of shares of the Registrant’s common stock outstanding as of May 7, 2024 was 10,749,065.

 

 

 


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements, other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements. In some cases you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” or the negative or plural of these words or similar expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

our expectations regarding the success, cost and timing of our development activities, non-clinical studies and clinical trials;
our expectations regarding the timing and outcome of our current and future clinical trials, and the reporting of data from those trials;
our research and development plans;
the potential of our technologies and our ability to execute on our corporate strategy;
our ability to attract and retain key scientific, medical, commercial and management personnel;
our ability to fund our working capital needs;
the strength and breadth of our patent portfolio;
the therapeutic potential of Auxora and our other product candidates and the expected patient populations, market opportunities, commercial potential and commercialization strategy thereof;
our expectations regarding our cash runway and expected use of cash, cash equivalents and short-term investment;
our need to obtain additional funding and the ability to obtain such funding for our operations, including funding necessary to develop and commercialize our product candidates, subject to regulatory approvals:
our ability and plans to contract with third-party suppliers and manufacturers and their ability to perform adequately;
our expected competitive position;
our ability to develop and maintain our corporate infrastructure, including our ability to design and maintain an effective system of internal controls;
legislative and regulatory developments in the United States and other foreign countries;
potential claims relating to our intellectual property or other legal proceedings;
our expectations regarding future economic conditions or our financial performance;
our ability to obtain and adequately protect intellectual property rights for our product candidates;
our ability to obtain regulatory approval for our product candidates and any related restrictions, limitations and/or warnings in the label of any approved product candidate;
our ability to extend our operating capital;
our ability to continue to satisfy the Nasdaq listing requirements and have our stock continue to trade on Nasdaq; and
statements of belief and any statement of assumptions underlying any of the foregoing.

These statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in greater detail under the heading “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risks and uncertainties.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, after the date of this report, we are under no duty to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise.

i


 

We obtained industry, market and competitive position data in this report from our own internal estimates and research as well as from industry and general publications and research surveys and studies conducted by third parties. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such information or estimates.

 

ii


 

Summary of risks associated with our business

An investment in our common stock involves a high degree of risk. Below is a list of the more significant risks associated with our business. This summary does not address all of the risks that we face. Additional discussion of the risks listed in this summary, as well as other risks that we face, are set forth under Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q. These risks include, but are not limited to, the following:

We are a clinical-stage biopharmaceutical company with a limited operating history. We have a history of net losses and anticipate that we will incur significant losses in the future. We have never generated any revenue from product sales and may never be profitable.
We will need to obtain substantial additional funding to complete the development and any commercialization of our product candidates. If we are unable to raise this capital when needed, on acceptable terms, or at all, we may be forced to delay, reduce or eliminate the development of our product candidates or other operations.
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our proprietary platform or product candidates.
Any acquisitions or strategic collaborations may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities or subject us to other risks.
Our proprietary CRAC channel inhibition science is based on novel technologies that are unproven and may not result in approvable or marketable products, which exposes us to unforeseen risks and makes it difficult for us to predict the time and cost of product development and potential for regulatory approval and we may not be successful in our efforts to use and expand our science to build a pipeline of product candidates.
Our business is highly dependent on the success of our product candidates, in particular Auxora, and we may fail to develop Auxora successfully or be unable to obtain regulatory approval.
Clinical development is a lengthy, expensive and uncertain process. The results of preclinical studies and early clinical trials are not always predictive of future results. Any product candidate that we advance into clinical trials may not achieve favorable results in later clinical trials, if any, or receive marketing approval.
We have expanded to and conducted a significant portion of our ongoing CARPO trial in India, and regulatory authorities may not accept data from such trial or any future clinical trials we conduct outside the United States or the applicable foreign jurisdiction.
We depend on enrollment of patients in our clinical trials for our product candidates. If we experience delays or difficulties enrolling patients in our clinical trials, our research and development efforts and business, financial condition, results of operations and prospects could be adversely affected.
We rely on third parties to conduct and perform most of our research, preclinical studies and clinical trials. If these third parties do not satisfactorily carry out their contractual duties, fail to comply with applicable regulatory requirements, fail to meet projected clinical trial enrollment schedules or fail to meet expected deadlines, our development programs may be delayed or subject to increased costs, each of which may have an adverse effect on our business and prospects.
We contract with third parties for the manufacturing and supply of certain goods and services for our product candidates for use in preclinical studies and clinical trials, which supply may become limited or interrupted or may not be of satisfactory quality and quantity.
Any approved product candidates may fail to achieve the degree of market acceptance by physicians, patients, hospitals, healthcare payors and others in the medical community necessary for commercial success.
We may not be able to successfully commercialize our product candidates due to unfavorable pricing regulations or third-party coverage and reimbursement policies, which could make it difficult for us to sell our product candidates profitably.
We are highly dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we may not be able to continue to successfully develop or commercialize our product candidates or otherwise implement our business plan.
If we are unable to obtain and maintain sufficient intellectual property protection for Auxora, any future product candidates, and other proprietary technologies we develop, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize Auxora, any future product candidates, and other proprietary technologies if approved, may be adversely affected.

iii


 

Our business operations may subject us to disputes, claims and lawsuits, which may be costly and time-consuming and could materially and adversely impact our financial position and results of operations.

iv


 

EXPLANATORY NOTE

On March 20, 2023, the Delaware corporation formerly known as “Graybug Vision, Inc.” completed its previously announced merger transaction in accordance with the terms and conditions of the Agreement and Plan of Merger and Reorganization, dated as of November 21, 2022, as amended on February 10, 2023 (the “Merger Agreement”), by and among Graybug Vision, Inc. (“Graybug”), Camaro Merger Sub, Inc., a wholly owned subsidiary of Graybug (“Merger Sub”), and CalciMedica, Inc. (“Private CalciMedica”), pursuant to which Merger Sub merged with and into Private CalciMedica, with Private CalciMedica surviving the merger as a wholly owned subsidiary of Graybug (the “Merger”). Additionally, on March 20, 2023, the Company changed its name from “Graybug Vision, Inc.” to “CalciMedica, Inc.” (the “Company”).

On March 17, 2023, in connection with the transactions contemplated by the Merger Agreement, Graybug filed an Amended and Restated Certificate of Incorporation effecting a reverse stock split of Graybug’s common stock at a ratio of 14:1 (the “Reverse Stock Split”). As a result of the Reverse Stock Split, the number of issued and outstanding shares of Graybug’s common stock immediately prior to the Reverse Stock Split was reduced into a smaller number of shares, such that every 14 shares of Graybug’s common stock held by a stockholder immediately prior to the Reverse Stock Split were combined and reclassified into one share of common stock after the Reverse Stock Split. The information in this Quarterly Report on Form 10-Q as of and for the periods prior to the effective date of the Merger gives effect to the Reverse Stock Split.

Since Private CalciMedica was determined to be the accounting acquirer in connection with the Merger, for periods prior to the Merger, the condensed consolidated financial statements were prepared on a stand-alone basis for Private CalciMedica and did not include the combined entities’ activity or financial position. Subsequent to the Merger, the condensed consolidated financial statements as of and for the three months ended March 31, 2024 include Graybug’s activity from March 21, 2023, the date of the Merger, through March 31, 2024, and assets and liabilities at their acquisition date fair value. Historical share and per share figures of Private CalciMedica have been retroactively restated based on the exchange ratio of 0.0288.

In this Quarterly Report on Form 10-Q, unless the context indicates otherwise, the terms “Company,” “we,” “us,” and “our” refer to (i) Graybug Vision, Inc., for periods prior to the effectiveness of the Merger and (ii) CalciMedica, Inc. (as a combined company) for periods following the effectiveness of the Merger.

This report contains references to trademarks belonging to other entities, which are the property of their respective holders. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

v


 

Table of Contents

 

 

 

 

 

Page

 

PART I—FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

2

 

 

Condensed Consolidated Balance Sheets

2

 

 

Condensed Consolidated Statements of Operations

3

 

 

Condensed Consolidated Statement of Comprehensive Income (Loss)

4

 

 

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

5

 

 

Condensed Consolidated Statements of Cash Flows

7

 

 

Notes to the Condensed Consolidated Financial Statements

8

Item 2.

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

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

 

 

PART II—OTHER INFORMATION

 

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

76

Item 3.

Defaults Upon Senior Securities

76

Item 4.

Mine Safety Disclosures

76

Item 5.

Other Information

76

Item 6.

Exhibits

77

SIGNATURES

79

 

1


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CALCIMEDICA, INC.

Condensed Consolidated Balance Sheets

(in thousands, except par value and share amounts)

(Unaudited)

 

 

March 31,
2024

 

 

December 31,
2023

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,755

 

 

$

5,530

 

Short-term investments

 

 

18,955

 

 

 

5,708

 

Prepaid expenses and other current assets

 

 

894

 

 

 

367

 

Total current assets

 

 

26,604

 

 

 

11,605

 

Property and equipment, net

 

 

153

 

 

 

167

 

Other assets

 

 

377

 

 

 

413

 

Total assets

 

$

27,134

 

 

$

12,185

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

1,535

 

 

$

1,419

 

Accrued clinical trial costs

 

 

1,000

 

 

 

1,141

 

Accrued other

 

 

1,752

 

 

 

1,468

 

Total current liabilities

 

 

4,287

 

 

 

4,028

 

Long-term liabilities

 

 

 

 

 

 

Warrant liability

 

 

5,600

 

 

 

 

Total liabilities

 

 

9,887

 

 

 

4,028

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000,000 shares and no shares authorized at March 31, 2024 and December 31, 2023, respectively; no shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

 

 

 

 

Common stock, $0.0001 par value; 500,000,000 shares authorized at March 31, 2024 and December 31, 2023; 10,740,115 and 5,754,505 issued and outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

3

 

 

 

1

 

Additional paid-in capital

 

 

163,195

 

 

 

154,218

 

Accumulated deficit

 

 

(145,934

)

 

 

(146,064

)

Accumulated other comprehensive income (loss)

 

 

(17

)

 

 

2

 

Total stockholders’ equity

 

 

17,247

 

 

 

8,157

 

Total liabilities and stockholders’ equity

 

$

27,134

 

 

$

12,185

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

2


 

CALCIMEDICA, INC.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

$

2,944

 

 

$

6,491

 

General and administrative

 

 

2,823

 

 

 

15,849

 

Total operating expenses

 

 

5,767

 

 

 

22,340

 

Loss from operations

 

 

(5,767

)

 

 

(22,340

)

Other income (expense)

 

 

 

 

 

 

Change in fair value of financial instruments

 

 

5,590

 

 

 

3,168

 

Other income (expense), net

 

 

307

 

 

 

(116

)

Total other income (expense), net

 

 

5,897

 

 

 

3,052

 

Net income (loss)

 

$

130

 

 

$

(19,288

)

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

Basic

 

$

0.01

 

 

$

(23.43

)

Diluted

 

$

0.01

 

 

$

(23.43

)

 

 

 

 

 

 

 

Shares used in computing earnings per share

 

 

 

 

 

 

Basic

 

 

9,754,517

 

 

 

823,069

 

Diluted

 

 

10,047,415

 

 

 

823,069

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

3


 

 

CALCIMEDICA, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands, except par value and share amounts)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Net income (loss)

 

$

130

 

 

$

(19,288

)

Unrealized loss on available-for-sale securities,
   net of tax

 

 

(19

)

 

 

 

Comprehensive income (loss)

 

$

111

 

 

$

(19,288

)

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

4


 

CALCIMEDICA, INC.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

(Unaudited)

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance—December 31, 2023

 

 

5,754,505

 

 

$

1

 

 

$

154,218

 

 

$

(146,064

)

 

$

2

 

 

$

8,157

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

414

 

 

 

 

 

 

 

 

 

414

 

Issuance of common shares from private placement (net of issuance costs)

 

 

4,985,610

 

 

 

2

 

 

 

7,903

 

 

 

 

 

 

 

 

 

7,905

 

Issuance of warrants in connection with the private placement

 

 

 

 

 

 

 

 

660

 

 

 

 

 

 

 

 

 

660

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19

)

 

 

(19

)

Net income

 

 

 

 

 

 

 

 

 

 

 

130

 

 

 

 

 

 

130

 

Balance—March 31, 2024

 

 

10,740,115

 

 

$

3

 

 

$

163,195

 

 

$

(145,934

)

 

$

(17

)

 

$

17,247

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

5


 

CALCIMEDICA, INC.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share amounts)

(Unaudited)

 

 

 

Convertible Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity/(Deficit)

 

Balance—December 31, 2022

 

 

84,820,880

 

 

 

62,071

 

 

 

84,165

 

 

 

1

 

 

 

40,402

 

 

 

(111,707

)

 

 

(71,304

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,126

 

 

 

 

 

 

11,126

 

Conversion of preferred stock to common stock as a result of Merger

 

 

(84,820,880

)

 

 

(62,071

)

 

 

2,442,852

 

 

 

 

 

 

62,071

 

 

 

 

 

 

62,071

 

Issuance of common stock to Graybug stockholders as a result of Merger and reset to par of $0.0001

 

 

 

 

 

 

 

 

1,571,433

 

 

 

 

 

 

29,218

 

 

 

 

 

 

29,218

 

Issuance of common shares from private placement (net of issuance costs)

 

 

 

 

 

 

 

 

596,363

 

 

 

 

 

 

10,340

 

 

 

 

 

 

10,340

 

Conversion of promissory notes into common stock

 

 

 

 

 

 

 

 

590,031

 

 

 

 

 

 

3,245

 

 

 

 

 

 

3,245

 

Conversion of Series C-2 warrants into common stock

 

 

 

 

 

 

 

 

80,254

 

 

 

 

 

 

442

 

 

 

 

 

 

442

 

Conversion of promissory note warrants into common stock

 

 

 

 

 

 

 

 

152,875

 

 

 

 

 

 

841

 

 

 

 

 

 

841

 

Merger transaction costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,591

)

 

 

 

 

 

(4,591

)

Restricted stock units net settlement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(297

)

 

 

 

 

 

(297

)

Reclassification of warrant liability to equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

216

 

 

 

 

 

 

216

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,288

)

 

 

(19,288

)

Balance—March 31, 2023

 

 

 

 

 

 

 

 

5,517,973

 

 

$

1

 

 

$

153,013

 

 

$

(130,995

)

 

$

22,019

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

6


 

CALCIMEDICA, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

130

 

 

$

(19,288

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Stock-based compensation expense

 

 

414

 

 

 

11,126

 

Depreciation

 

 

15

 

 

 

13

 

Change in the fair value of warrant liability

 

 

(5,590

)

 

 

(1,146

)

Change in the fair value of convertible promissory notes

 

 

-

 

 

 

(2,022

)

Transaction costs associated with warrants

 

 

776

 

 

 

 

Non-cash interest expense

 

 

-

 

 

 

110

 

Accretion of discount on short-term investment

 

 

(163

)

 

 

(2

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current and non-current assets

 

 

(537

)

 

 

129

 

Accounts payable

 

 

129

 

 

 

(1,040

)

Accrued expenses and other liabilities

 

 

111

 

 

 

6,765

 

Net cash used in operating activities

 

 

(4,715

)

 

 

(5,355

)

Investing activities:

 

 

 

 

 

 

Purchase of investments

 

 

(17,853

)

 

 

 

Maturity of investments

 

 

4,750

 

 

 

4,750

 

Net cash provided by (used in) investing activities

 

 

(13,103

)

 

 

4,750

 

Financing activities:

 

 

 

 

 

 

Proceeds from issuance of common stock, net of issuance costs

 

 

19,043

 

 

 

10,340

 

Acquisition of stock of Graybug, net of cash

 

 

 

 

 

14,856

 

Merger transaction costs

 

 

 

 

 

(1,681

)

Net cash provided by financing activities

 

 

19,043

 

 

 

23,515

 

Net increase in cash and cash equivalents

 

 

1,225

 

 

 

22,910

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

5,530

 

 

 

1,476

 

Cash and cash equivalents at end of period

 

$

6,755

 

 

$

24,386

 

Supplemental cash flow information:

 

 

 

 

 

 

Conversion of Series A, B, C-1, C-2 and D convertible preferred stock to common stock

 

$

 

 

$

62,071

 

Issuance of common stock to Graybug stockholders as a result of the Merger

 

$

 

 

$

29,218

 

Short-term investments assumed in the Merger

 

$

 

 

$

9,776

 

Prepaid expenses and other current assets assumed in the Merger

 

$

 

 

$

2,096

 

Accounts payable and accrued liabilities assumed in the Merger

 

$

 

 

$

2,258

 

Conversion of C-2 warrants to common stock

 

$

 

 

$

442

 

Conversion of convertible promissory notes to common stock

 

$

 

 

$

3,245

 

Conversion of convertible promissory note warrants to common stock

 

$

 

 

$

841

 

Merger transaction costs in accounts payable

 

$

 

 

$

206

 

Merger transactions costs in accrued expenses

 

$

 

 

$

2,703

 

Financing costs included in accounts payable

 

$

32

 

 

$

297

 

Financing costs included in accrued expenses

 

$

32

 

 

$

 

Reclassification of warrant liability to equity

 

$

 

 

$

216

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

7


 

CALCIMEDICA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of Business

Description of Business

CalciMedica, Inc. (“CalciMedica” or the “Company”) (f/k/a Graybug Vision, Inc.) was incorporated in the state of Delaware in February 2015, following the conversion of Graybug, LLC, which was organized in May 2011, and has its principal operations in La Jolla, California. The Company is a clinical-stage biopharmaceutical company focused on developing therapeutics that treat serious illnesses driven by inflammatory processes and direct cellular damage.​ The Company includes a wholly-owned subsidiary, CalciMedica Subsidiary, Inc., incorporated in Delaware in October 2006, which survived the Merger as more fully described below.

Reverse Merger Transaction

On March 20, 2023, Graybug Vision, Inc. (“Graybug”) completed a reverse merger transaction in accordance with the terms and conditions of the Agreement and Plan of Merger and Reorganization, dated as of November 21, 2022, as amended on February 10, 2023 (the “Merger Agreement”), by and among Graybug, Camaro Merger Sub, Inc., a wholly owned subsidiary of Graybug (“Merger Sub”), and CalciMedica, Inc. (“Private CalciMedica”), pursuant to which Merger Sub merged with and into Private CalciMedica, with Private CalciMedica surviving as a wholly owned subsidiary of Graybug (the “Merger”). Additionally, on March 20, 2023, Graybug changed its name from “Graybug Vision, Inc.” to “CalciMedica, Inc.” and Private CalciMedica changed its name from “CalciMedica, Inc.” to “CalciMedica Subsidiary, Inc.” At the completion of the Merger, the prior Private CalciMedica equity holders and the prior Graybug equity holders owned 72% and 28%, respectively, of the combined company, in each case, on a fully diluted basis using the treasury stock method and excluding out-of-the-money options and warrants.

The Merger was accounted for as a reverse recapitalization, with Private CalciMedica being treated as the acquirer for accounting purposes. See discussions of the transactions in connection with the Merger in Note 3 - Merger and Related Transactions.

Liquidity and Going Concern

The Company has an accumulated deficit of $145.9 million as of March 31, 2024, and net income of $0.1 million for the three months ended March 31, 2024. Prior to the three months ended March 31, 2024, the Company experienced net losses since its inception. Total operating expenses for the three months ended March 31, 2024 were $5.8 million, offset by a gain from the fair value adjustment to the warrant liability of $5.6 million and interest income of $0.3 million. Substantially all of the Company’s operating losses resulted from expenses incurred in connection with its research and development programs and from general and administrative costs associated with its operations.

The Company expects to incur significant expenses and increasing operating losses for the foreseeable future as the Company initiates and continues the preclinical and clinical development of its product candidates and adds personnel necessary to operate as a company with an advanced clinical pipeline of product candidates. In addition, after completion of the Merger, operating as a U.S. Securities and Exchange Commission (“SEC”) registrant involves the hiring of additional financial and other personnel, upgrading financial information systems, and incurring costs associated with operating as a public company. The Company expects that its operating losses will fluctuate significantly from quarter-to-quarter and year-to-year due to timing of clinical development programs.

From inception to March 31, 2024, the Company has completed financings from the sale of preferred and common stock for total net proceeds of $131.6 million and has issued convertible debt for net proceeds of $8.6 million. As of March 31, 2024, the Company had cash, cash equivalents and short-term investments of approximately $25.7 million. The Company closed the 2024 Private Placement (as defined in Note 7) on January 23, 2024 and the second closing of the 2024 Private Placement occurred on February 5, 2024. Gross proceeds from the transaction were $20.4 million with net proceeds of approximately $19.0 million after deducting $1.4 million in commissions and other transaction expenses.

The Company intends to seek additional funding through public and private financings, debt financings, collaboration agreements, strategic alliances and licensing agreements. Although the Company has been successful in raising capital in the past, there is no assurance of success in obtaining such additional financing on terms acceptable to us, if at all, and there is no assurance that the Company will be able to enter into collaborations or other arrangements. If the Company is unable to obtain funding when required or on acceptable terms, the Company may be required to scale back or discontinue the advancement of the product candidates, reduce headcount, file for bankruptcy, reorganize, merge with another entity or cease operations.

Based on the Company’s current operating plans, management believes its cash, cash equivalents and short-term investments will be sufficient to fund its operations for the period of at least one year following the issuance of these financial statements.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”), and Accounting Standards Update (“ASU”), of the Financial Accounting Standards Board (“FASB”). The condensed consolidated financial statements include the accounts of Graybug Vision, Inc. and

8


 

CalciMedica Subsidiary, Inc. for the three months ended March 31, 2024 and 2023. All intercompany accounts and transactions have been eliminated in consolidation.

Since Private CalciMedica was determined to be the accounting acquirer in connection with the Merger, for periods prior to the Merger, the condensed consolidated financial statements were prepared on a stand-alone basis for Private CalciMedica and did not include the combined entities activity or financial position. Subsequent to the Merger, the condensed consolidated financial statements as of and for the three months ended March 31, 2024 include Graybug’s activity from March 21, 2023 through March 31, 2024, and assets and liabilities at their acquisition date fair value. Historical share and per share figures of Private CalciMedica have been retroactively restated based on the exchange ratio of 0.0288.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s condensed consolidated financial statements and accompanying notes. The most significant estimates in the Company’s condensed consolidated financial statements relate to accruals for research and development expenses, valuation of warrants and valuation of equity awards. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Concentration of Credit Risk and other Risks and Uncertainties

Financial instruments, which potentially subject the Company to concentration of risk, consist principally of cash and cash equivalents. The Company’s cash is deposited with major federally insured U.S. financial institutions. The Company has no off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.

The Company is dependent on contract manufacturing organizations (“CMO”) to supply products for research and development of its product candidates, including preclinical and clinical studies, and for commercialization of its product candidates, if approved. The Company’s development programs could be adversely affected by any significant interruption in the CMO’s operations or by a significant interruption in the supply of active pharmaceutical ingredients and other components.

Products developed by the Company require approval from the U.S. Food and Drug Administration (“FDA”) or other international regulatory agencies prior to commercial sales. There can be no assurance the Company’s product candidates will receive the necessary approvals. If the Company is denied approvals, approvals are delayed, or the Company is unable to maintain approvals received, such events could have a materially adverse impact on the Company.

Cash and Cash Equivalents

Cash and cash equivalents consist of readily available cash in checking accounts, money market funds, and commercial paper. The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents.

Short-term Investments

The Company invests excess cash in commercial paper, corporate bonds and U.S. government sponsored entities, such as mortgage-backed securities. These investments are included in short-term investments on the balance sheet, classified as available-for-sale and reported at fair value with unrealized gains and losses included in accumulated other comprehensive income (loss). Realized gains and losses on the sale of these securities are recognized in net loss.

Segment Information

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The financial information is regularly reviewed by the chief operating decision maker (“CODM”), in deciding how to allocate resources. The Company’s CODM is its chief executive officer. The Company’s singular focus is on developing highly selective calcium release-activated calcium channel inhibitors to improve outcomes for patients with acute inflammatory indications. No revenue has been generated since inception, and all tangible assets are held in the United States.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets (generally three to five years) and consist of manufacturing and lab equipment primarily located in Indiana; furniture; computers; and phones. Repairs and maintenance costs are charged to expense as incurred. Depreciation expense recognized for the three months ended March 31, 2024 and 2023 was $15,000 and $13,000, respectively.

Long-lived Assets

Long-lived assets consist primarily of property and equipment. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset is not recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows

9


 

expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair value would be assessed using discounted cash flows or other appropriate measures of fair value. The Company did not recognize any impairment losses for the three months ended March 31, 2024 and 2023, respectively.

Leases

The Company leases office space with an original lease term of twelve months and does not have a right-of-use asset or lease liability recorded. The Company's policy is not to record leases with an original term of twelve months or less on the consolidated balance sheets. The Company recognizes lease expense for this short-term lease on a straight-line basis over the term of the lease. The lease is accounted for under ASC 842, Leases, and has been classified as an operating lease. Rent expense recognized for the three months ended March 31, 2024 and 2023 was $30,000 and $65,000, respectively.

Research and Development Costs

Research and development costs consist primarily of salaries, payroll taxes, employee benefits and stock-based compensation for those individuals involved in ongoing research and development efforts, as well as fees paid to consultants, external research fees, license fees paid to third parties for use of their intellectual property, laboratory supplies and development of compound materials, associated overhead expenses and facilities and depreciation costs. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. All research and development costs are expensed as incurred.

The Company estimates preclinical studies and clinical trial expenses based on the services performed pursuant to contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on the Company’s behalf. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. These estimates are based on communications with the third-party service providers, and on information available at each balance sheet date. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. The estimates are trued up to reflect the best information available at the time of the financial statement issuance. Although the Company does not expect its estimates to be materially different from amounts actually incurred, the Company’s estimate of the status and timing of services performed relative to the actual status and timing of services performed may vary.

General and Administrative Costs

General and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation, related to executive, finance, business development, legal, human resources and support functions, including professional fees for auditing, tax, consulting and patent-related services, rent and utilities and insurance.

Patent Costs

Costs related to filing and pursuing patent applications are expensed as incurred since recoverability of such expenditures is uncertain.

Deferred Offering Costs

The Company capitalizes costs that are directly associated with equity financings until such financings are consummated, at which time such costs are recorded against the gross proceeds of the offering. Should an in-process equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the statements of operations and comprehensive income (loss). As of March 31, 2024 and December 31, 2023, the Company has deferred costs associated with its at-the-market offering of $0.4 million on the condensed consolidated balance sheets.

Warrant Liability

Private CalciMedica has issued various freestanding warrants to purchase shares of its convertible preferred stock. Prior to the Merger, Private CalciMedica adjusted the carrying value of such convertible preferred stock warrants to the estimated fair value at each reporting date, with any related increases or decreases in the fair value being recorded within other income (expense) in the condensed consolidated statements of operations and comprehensive loss. Pursuant to the Merger Agreement, the Series C convertible preferred stock warrants became warrants to purchase shares of the combined company's common stock. As a result of the Merger, the warrants no longer meet the requirements for liability accounting and, as such, Private CalciMedica adjusted the value of the warrants to the estimated fair value as of the Merger date and reclassified them to stockholders' equity (deficit).

As a result of the 2024 Private Placement, certain warrants to purchase common stock were deemed freestanding warrants and are reflected in the Company’s balance sheet as a liability as of and for the period ending March 31, 2024.

Stock-Based Compensation

Stock-based compensation expense represents the cost of the grant date fair value of employee stock options recognized over the requisite service period of the awards (usually the vesting period) on a straight-line basis. Private CalciMedica estimates the fair value of stock option grants using the Black-Scholes option pricing model (“Black-Scholes”). Forfeitures are recognized as a reduction of stock-based compensation expense as they occur. Equity-based compensation expense is classified in the statements of operations in the same manner in which the award recipients’ payroll costs are classified or in which the award recipients’ service

10


 

payments are classified. The fair value of each stock option grant is estimated on the date of grant using Black Scholes. The following summarizes the inputs used:

Fair Value of Common Stock

Prior to the Merger, there was no public market for Private CalciMedica’s common stock. The fair value of the shares of common stock underlying Private CalciMedica’s share-based awards was estimated on each grant date by Private CalciMedica’s board of directors. To determine the fair value of Private CalciMedica’s common stock underlying option grants, the board of directors considered, among other things, input from management and valuations of Private CalciMedica's common stock prepared by third-party valuation firms.

Post Merger, CalciMedica uses the closing stock price the day of the grant date for the fair value.

Risk-Free Interest Rate

The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities similar to the expected term of the awards.

Expected Volatility

Prior to the Merger, since Private CalciMedica did not have publicly traded equity securities, the volatility of the options has been estimated using peer group volatility information. Post Merger, CalciMedica uses an average volatility for comparable publicly-traded biopharmaceutical companies over a period equal to the expected term of the stock award grant as CalciMedica does not yet have sufficient historical trading history for its own stock. CalciMedica will continue to apply this method until a sufficient amount of historical information over a period equal to the expected term of the stock-based awards becomes available.

Expected Term

CalciMedica used the simplified method to calculate the expected term for all grants during all periods, which is based on the midpoint between the vesting date and the end of the contractual term.

Expected Dividend Yield

CalciMedica has never paid and has no present intention to pay cash dividends.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their net recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions on the basis of a two-step process whereby (1) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense. Any accrued interest and penalties are included within the related tax liability.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources which are excluded from net loss. The Company’s only element of other comprehensive income (loss) is unrealized gains and losses on marketable securities and short-term investments.

Related Party Transactions

The Company’s board of directors reviews and approves transactions with directors, officers and holders of 5% or more of its voting securities and their affiliates, each a related party. The material facts as to the related party’s relationship or interest in the transaction are disclosed to its board of directors prior to their consideration of such transaction, and the transaction is not considered approved by its board of directors unless a majority of the directors who are not interested in the transaction approve the transaction.

Beginning in November 2020, Private CalciMedica has paid consulting fees monthly to a consulting firm affiliated with the Company’s interim chief financial officer in connection with its consulting agreement. CalciMedica recorded expense of $100,000 and $107,000 during the three months ended March 31, 2024 and 2023, respectively.

11


 

Net Income (Loss) Per Share

Basic net income (loss) per share is computed using the weighted average number of shares of common stock outstanding during the period, including the Pre-Funded Warrants. The Company calculates diluted net income (loss) per share using the more dilutive of the (i) treasury stock method, if-converted method, or contingently issuable share method, as applicable, or (ii) the two-class method. For warrants, the calculation of diluted net income (loss) per share requires that, to the extent the average fair value of the underlying shares for the reporting period exceeds the exercise price of the warrants and the presumed exercise of such securities are dilutive to net income (loss) per share for the period, adjustments to net income (loss) used in the calculation are required to remove the change in fair value of the warrants for the period.

As of March 31, 2024 stock options and warrants that were in-the-money were included in the calculation of fully diluted shares. As of March 31, 2023, the Company’s outstanding stock options and warrants that were excluded from the calculation of loss per share because the effect would be antidilutive. Accordingly, in periods in which the Company reports a net loss, diluted net loss per share is the same as basic net loss per share.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The ASU provides guidance that simplified the accounting for certain financial instruments with characteristics of liabilities and equity. The new guidance reduced the number of accounting models for convertible debt and convertible preferred stock instruments and made certain disclosure amendments intended to improve the information provided to users. The guidance also amended the derivative guidance for the “own stock” scope exception, which exempts qualifying instruments from being accounted for as derivatives if certain criteria are met. Finally, the standard changed the way certain convertible instruments are treated when calculating earnings per share. This guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company adopted this ASU as of January 1, 2024, which did not have a material impact on its condensed consolidated financial statements and related disclosures.

3. Merger and Related Transactions

As described in Note 1 - Nature of Business, Private CalciMedica merged with a wholly-owned subsidiary of Graybug on March 20, 2023. The Merger was accounted for as a reverse recapitalization under U.S. GAAP. Private CalciMedica was considered the accounting acquirer for financial reporting purposes. This determination is based on the facts that, immediately following the Merger: (i) former Private CalciMedica stockholders owned a substantial majority of the voting rights of the combined company; Private CalciMedica designated a majority (five of seven) of the initial members of the board of directors of the combined company; and former Private CalciMedica's senior management held all key positions in senior management of the combined company. The transaction is accounted for as a reverse recapitalization of Graybug by Private CalciMedica similar to the issuance of equity for the net assets of Graybug, which are primarily cash and cash equivalents, short-term investments and other non-operating assets. It was concluded that any in-process research and development assets that remained as of the Merger would be de minimis when compared to the cash, cash equivalents and short-term investments obtained through the Merger.

Under reverse recapitalization accounting, the assets and liabilities of Graybug were recorded at their fair value, which approximated book value due to the short-term nature of the instruments. The Company's consolidated financial statements reflect the issuance of 1,571,433 shares to the former stockholders of Graybug.

Under the terms of the Merger Agreement, immediately prior to the effective time of the Merger, each outstanding share of Private CalciMedica capital stock (after giving effect to the automatic conversion of all shares of Private CalciMedica preferred stock into shares of Private CalciMedica common stock, the automatic exercise of certain Private CalciMedica warrants to purchase shares of Private CalciMedica common stock in accordance with their terms (the “Private CalciMedica warrant exercises”), the conversion of Private CalciMedica convertible promissory notes into Private CalciMedica common stock and the closing of the 2023 Private Placement (as defined and discussed in Note 7 - Convertible Preferred Stock, Common Stock, and Stockholders' Deficit)), was converted into the right to receive 0.0288 shares of Graybug common stock, which resulted in the issuance by Graybug of an aggregate of 3,946,540 shares of Graybug common stock to the stockholders of Private CalciMedica in a transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on Section 4(a)(2) of the Securities Act and the rules promulgated thereunder. In addition, Graybug assumed the Private CalciMedica 2006 Stock Plan (See Note 8 - Stock-Based Compensation), and each outstanding and unexercised option to purchase Private CalciMedica common stock and each outstanding and unexercised warrant to purchase Private CalciMedica common stock (excluding the warrants which were automatically exercised pursuant to the Private CalciMedica warrant exercises) became options and warrants, respectively, to purchase shares of Graybug common stock. Immediately following the consummation of the Merger prior Private CalciMedica and Graybug stockholders collectively own approximately 72% and 28% of the Company, respectively, on a fully diluted basis.

As part of the reverse recapitalization, Private CalciMedica received $29.4 million of cash, cash equivalents and short-term investments, net of transaction costs. Private CalciMedica also obtained prepaid and other current assets of approximately $2.1 million and assumed payables and accrued expenses of approximately $2.3 million. Private CalciMedica also incurred transaction costs of approximately $4.6 million, which is recorded as a reduction to additional paid-in capital in the accompanying condensed consolidated statement of convertible preferred stock and stockholders' equity (deficit). The Company also recorded one-time charges of $10.5 million for the acceleration of the Graybug stock awards and $5.7 million in severance charges that are recorded in the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2023.

12


 

On March 17, 2023, in connection with the transactions contemplated by the Merger Agreement and following a special meeting of Graybug’s stockholders, Graybug filed an Amended and Restated Certificate of Incorporation effecting a reverse stock split of Graybug’s common stock, par value $0.0001 per share, at a ratio of 14:1 (“Reverse Stock Split”).

4. Fair Value Measurements

The Company's assets and liabilities which are measured at fair value include short-term investments and warrants for common stock and, prior to the Merger, included warrants for preferred stock (“Preferred Warrants”) and warrants for common stock related to the convertible promissory notes (“Convertible Promissory Note Warrants”). All assets and liabilities recorded at fair value are revalued at each measurement period.

Private CalciMedica elected the fair value option for the convertible promissory notes and estimated the fair value based on a discounted cash flow analysis, a form of the Income Approach. Several different settlement scenarios were considered, and probability weighted to arrive at the final valuation. Increases or decreases in the fair value of the convertible promissory notes can result from updates to assumptions such as the expected timing or probability of the different settlement scenarios, or changes in discount rates. Judgment is used in determining these assumptions as of the initial valuation date and at each subsequent reporting period. Updates to assumptions could have a significant impact on our results of operations in any given period.

The Preferred Warrants were valued using the Hybrid Method (“Hybrid Method”). This method incorporates Private CalciMedica’s near-term liquidity event prospects utilized in conjunction with the Option Pricing Method (“OPM”) framework, representing an alternative exit, to calculate an implied overall value of Private CalciMedica. This value was, in turn, allocated to Private CalciMedica’s various equity classes.

The Convertible Promissory Note Warrants were valued using a series of Monte Carlo simulations and Black-Scholes to determine the fair value, probability weighted for difference scenarios. The Monte Carlo simulations determined the liquidity event price. Black-Scholes was used with the remaining contractual term of the warrants after the respective event date. As of March 31, 2023, the Convertible Promissory Note Warrants were valued using the common stock price on the day of conversion. See further discussion in Note 5 - Convertible Promissory Notes and Convertible Promissory Note Warrants.

The Common Warrants were valued using Black-Scholes utilizing the following inputs; (i) a risk-free interest rate; (ii) volatility based on the expected term of the Common Warrant; (iii) and an exercise price and stock price on the date of the transaction. Several different scenarios were considered, and probability weighted to arrive at the final valuation. Increases or decreases in the fair value of the Common Warrants can result from updates to assumptions such as the expected timing or probability of the different settlement scenarios. Judgment is used in determining these assumptions as of the initial valuation date and at each subsequent reporting period. Updates to assumptions could have a significant impact on our results of operations in any given period.

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following three levels:

Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2: Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values (in thousands):

 

 

 

March 31, 2024

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

6,133

 

 

$

 

 

$

 

 

$

6,133

 

Commercial paper

 

 

 

 

 

500

 

 

 

 

 

 

500

 

Total cash equivalents

 

 

6,133

 

 

 

500

 

 

 

 

 

 

6,633

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

 

 

 

 

1,210

 

 

 

 

 

 

1,210

 

Commercial paper

 

 

 

 

 

17,745

 

 

 

 

 

 

17,745

 

Total short-term investments

 

 

 

 

 

18,955

 

 

 

 

 

 

18,955

 

Total assets measured at fair value

 

$

6,133

 

 

$

19,455

 

 

$

 

 

$

25,588

 

 

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Money market funds are highly liquid investments which are actively traded. The pricing information on the Company’s money market funds is based on quoted prices in active markets for identical securities. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

During the three months ended March 31, 2024, there were no transfers between Level 1, Level 2 and Level 3.

The following table presents information about the Company’s financial liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands).

 

 

 

March 31, 2024

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Warrant Liability

 

$

 

 

$

 

 

$

5,600

 

 

$

5,600

 

Total liabilities measured at fair value

 

$

 

 

$

 

 

$

5,600

 

 

$

5,600

 

 

No fair value liabilities existed as of December 31, 2023.

The following provides a reconciliation for all liabilities measured at fair value using Level 3 inputs for the three months ended March 31, 2024 (in thousands):

 

 Warrant liability

 

 

 

Balance at December 31, 2023

 

$

 

Initial Fair Value of Warrants

 

 

11,190

 

Change in Fair Value of Preferred Warrants

 

 

(5,590

)

Balance at March 31, 2024

 

$

5,600

 

 

 

 

The following table presents information as to cost, unrealized gains and losses and fair value determination of the Company’s financial assets measured at fair value on a recurring basis (in thousands):

 

 

 

March 31, 2024

 

 

 

Amortized
Cost

 

 

Unrealized
Gains

 

 

Unrealized
Losses

 

 

Aggregate
Fair Value

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

6,133

 

 

$

 

 

$

 

 

$

6,133

 

Commercial paper

 

 

500

 

 

 

 

 

 

 

 

 

500

 

Total cash equivalents

 

 

6,633

 

 

 

 

 

 

 

 

 

6,633

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

 

1,210

 

 

 

 

 

 

 

 

 

1,210

 

Commercial paper

 

 

17,762

 

 

 

 

 

 

(17

)

 

 

17,745

 

Total short-term investments

 

 

18,972

 

 

 

 

 

 

(17

)

 

 

18,955

 

Total assets measured at fair value

 

$

25,605

 

 

$

 

 

$

(17

)

 

$

25,588

 

 

As of March 31, 2024, the contractual maturities of all available-for-sale investments were less than 12 months. The Company periodically reviews the available-for-sale for other-than-temporary impairment loss. All of the Company’s short-term investments were in unrealized loss positions as of March 31, 2024. The Company’s unrealized losses from short-term investments as of March 31, 2024, were caused by interest rate increases and not by an unfavorable change in the credit quality associated with these securities. The Company does not intend to sell the investments before recovery of their amortized cost basis, which may be maturity. Therefore, the Company believes these losses to be temporary and as a result, did not recognize any other-than-temporary losses as of March 31, 2024.

 

5. Convertible Promissory Notes and Convertible Promissory Note Warrants

In April 2022, the Private CalciMedica board of directors approved a convertible promissory note financing pursuant to which it could issue and sell up to $5.0 million of notes convertible into shares of common stock (the “convertible promissory notes”) and Convertible Promissory Note Warrants. The funding and issuance of the convertible promissory notes for gross proceeds of $3.5 million and Convertible Promissory Note Warrants to purchase shares of the Private CalciMedica’s common stock at an exercise price of $0.01 per share took place in multiple closings through October 2022.

In November 2022, the Private CalciMedica board of directors amended the convertible promissory notes and Convertible Promissory Note Warrants to issue up to an additional $3.5 million (for a total of up to $8.5 million) and added the automatic conversion for a “de-SPAC” business combination or reverse merger transaction. In November 2022, Private CalciMedica issued additional convertible promissory notes for gross proceeds of $5.0 million and Convertible Promissory Note Warrants to purchase

14


 

shares of Private CalciMedica’s common stock at an exercise price of $0.01 per share. The convertible promissory notes accrued interest at a rate of 6% per annum and had a maturity date of December 31, 2023. Immediately prior to the effective time of the Merger, all outstanding convertible promissory notes and unpaid and accrued interest automatically converted into 20,487,104 shares of Private CalciMedica’s common stock at a conversion price based on the equivalent valuation of the cash price paid per share by the private placement investors purchasing shares of common stock in the 2023 Private Placement multiplied by 0.85. Such shares of common stock were then converted into 590,031 shares of Graybug common stock at the effective time of the Merger in accordance with the Merger Agreement.

In connection with each purchase of a convertible promissory note, Private CalciMedica issued to each holder of such convertible promissory note Convertible Promissory Note Warrants to purchase shares of the Private CalciMedica’s common stock at an exercise price of $0.01 per share. Each holder of the Convertible Promissory Note Warrants had the right to purchase up to a number of shares of Private CalciMedica’s common stock equal to (i) 15% (“Warrant Coverage”) of the principal amount of the convertible promissory note purchased by such holder concurrently therewith, divided by (ii) the cash price paid per share by the investors in the qualified financing or an initial public offering, as applicable, or in the case of a “de-SPAC” business combination or a reverse merger transaction between Private CalciMedica and a publicly traded company (a “Public Combination”), the equivalent valuation of the lower of the cash price per share by the investors purchasing shares in the publicly traded company in connection with such Public Combination or the cash price per shares by the investors purchasing shares of Private CalciMedica’s common stock in connection with such Public Combination, in each case, rounding down to the nearest whole share and subject to the terms of the convertible promissory notes; provided, however, that any holder that purchased convertible promissory notes in excess of the holder’s pro rata commitment (as defined in the convertible promissory notes) received a 40% Warrant Coverage on the principal amount of the convertible promissory notes that is in excess of its pro rata commitment. The Convertible Promissory Note Warrants had a five-year term. In connection with the Merger, the Convertible Promissory Note Warrants were automatically net exercised in accordance with the terms of the Convertible Promissory Note Warrants. Immediately prior to the effective time of the Merger, 5,308,047 Convertible Promissory Note Warrants were converted into 5,308,047 shares of Private CalciMedica's common stock, which were converted into 152,875 shares of Graybug's common stock, based on the principal amount of the convertible promissory note.

Prior to the Merger, the Convertible Promissory Note Warrants were not deemed equity and were classified as a liability in Private CalciMedica’s balance sheets. The Convertible Promissory Note Warrants were valued using a series of Monte Carlo simulations and Black-Scholes to determine the fair value, probability weighted for difference scenarios. The Monte Carlo simulations determined the liquidity event price. The Black-Scholes warrant value is discounted from the respective event date using the risk-free rate. The Black-Scholes valuation included standard assumptions such as exercise price, expected term, risk-free rate, volatility, and a dividend yield of zero. Private CalciMedica estimated the initial fair value of the Convertible Promissory Note Warrants utilizing the following range of assumptions for the difference scenarios: exercise price ($0.01), risk-free rate (3.02% - 4.20%), volatility (63% - 67%), and expected term (4.1 - 4.6 years). As of the date of the Merger, Private CalciMedica revalued the Convertible Promissory Note Warrants which were converted into 152,871 shares of common stock, using the price of the common stock of Graybug of $5.50.

6. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

 

 

 

March 31,
2024

 

 

March 31,
2023

 

Accrued payroll and other employee benefits

 

$

1,126

 

 

$

935

 

Accrued severance

 

 

22

 

 

 

89

 

Accrued professional fees

 

 

507

 

 

 

345

 

Accrued franchise tax

 

 

49

 

 

 

77

 

Accrued other

 

 

48

 

 

 

22

 

Total accrued expenses

 

$

1,752

 

 

$

1,468

 

 

7. Convertible Preferred Stock, Common Stock and Stockholders' Deficit

Authorized Shares

The Company's current Amended and Restated Certificate of Incorporation authorizes 500,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share.

Convertible Preferred Stock

Immediately prior to the effective time of the Merger, the 84,820,880 shares of Private CalciMedica preferred stock were converted into 84,820,880 outstanding shares of Private CalciMedica's common stock to be exchanged for 2,442,852 shares of Graybug's common stock.

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Common Stock

Upon completion of the Merger on March 20, 2023, as the accounting acquirer, Private CalciMedica is deemed to have issued 1,571,433 shares of its common stock to Graybug shareholders.

Private Placement of Common Stock

Immediately prior to the consummation of the Merger, Private CalciMedica completed a private placement financing pursuant to which certain investors purchased approximately 20.7 million shares of Private CalciMedica’s common stock (the “2023 Private Placement”) for gross proceeds of approximately $10.3 million. In conjunction with the Merger, immediately prior to the effective time of the Merger, 20,706,997 shares of Private CalciMedica common stock were converted into 596,363 shares of Graybug’s common stock.

On January 19, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain accredited investors, in which the Company sold the following securities to the accredited investors in a private placement transaction (the “2024 Private Placement”): (i) an aggregate of 4,985,610 shares of common stock; (ii) to certain investors, in lieu of shares of common stock, pre-funded warrants (the “Pre-Funded Warrants”) to purchase an aggregate of 306,506 shares of common stock and exercisable at any time; (iii) Tranche A Common Warrants (the “Tranche A Common Warrants”) to purchase an aggregate of up to 2,646,058 shares of common stock (or Pre-Funded Warrants in lieu thereof and, in such case, shares of common stock issuable upon exercise of such Pre-Funded Warrants); and (iv) Tranche B Common Warrants (the “Tranche B Common Warrants” and together with the Tranche A Common Warrants, the “Common Warrants”) to purchase an aggregate of up to 2,646,058 shares of common stock (or Pre-Funded Warrants in lieu thereof and, in such case, shares of common stock issuable upon exercise of such Pre-Funded Warrants). At date of issuance, the fair value of the common stock was $8.5 million using the relative fair value method and is included in equity at March 31, 2024.

The Company issued placement agent warrants (“Placement Agent Warrants”) to purchase 67,908 shares of common stock at the initial closing of the 2024 Private Placement and 7,839 shares of common stock at the second closing of the 2024 Private Placement, at an exercise price of $0.0001 per share. Each Placement Agent Warrant was accompanied by one Tranche A Common Warrant to purchase one half of a share of common stock and one Tranche B Warrant to purchase one half of a share of common stock, for an aggregate of 75,746 Common Warrants.

The initial closing of the 2024 Private Placement occurred on January 23, 2024 and the second closing occurred on February 5, 2024. Gross proceeds from the transaction were $20.4 million with net proceeds of approximately $19.0 million after deducting $1.4 million in commissions and other transaction costs.

Shelf Registration Statement and At the Market Offering

In August 2023, the Company filed a shelf registration statement on Form S-3 (the “Shelf Registration Statement”). The Shelf Registration Statement permits the offering, issuance and sale of common stock, preferred stock, debt securities and warrants having an aggregate offering price of up to $100.0 million in one or more offerings and in any combination of the foregoing. As of March 31, 2024, $99.7 million remains available for sale under the Shelf Registration Statement.

The Shelf Registration Statement contains two prospectuses, a base prospectus and an at-the-market offering prospectus that covers the offering, issuance and sale of up to $17.3 million of common stock pursuant to an at-the-market offering agreement (“ATM Agreement”) with H.C Wainwright & Co., LLC, acting as sales agent (“ATM Facility”). The Company intends to use the net proceeds from the ATM Facility for general corporate purposes, which may include research and development expenses, clinical trial expenses, capital expenditures and working capital. The ATM Facility will terminate upon the earlier of (i) the sale of all of the shares of our common stock provided for in the at the market offering prospectus or (ii) termination of the ATM Agreement as permitted therein. The ATM Agreement may be terminated at any time by either party upon written notice. During the three months ended March 31, 2024, there were no shares sold under the ATM Facility. As of March 31, 2024, the Company has sold 92,572 shares of common stock for net proceeds of $246,000, which includes $11,000 of commissions paid under the ATM Facility and $17.1 million remains available for sale under the ATM Facility.

Preferred and Common Stock Warrants

The Company recognized a total change in fair value of the Preferred Stock Warrants of $0 and $796,000 for the three months ended, March 31, 2024 and 2023, respectively. The change in fair value in March 2023 was due to the conversion of Preferred Warrants to common stock warrants as part of the Merger.

In November 2020, Private CalciMedica granted a warrant to purchase 400,000 shares of common stock to a consulting firm affiliated with its interim chief financial officer in connection with its consulting agreement. The warrant has a 10-year term, an exercise price of $0.19, and vests ratably over 24 months commencing on the effective date. At the date of issuance, the fair value of the warrant was determined to be $120,000, utilizing Black-Scholes with the following assumptions: expected term of ten years, risk-free rate of 0.96%, volatility of 80.0% and a dividend yield of zero, which has been recognized as general and administrative expense over the vesting period. In conjunction with the Merger, the warrant converted to 11,520 warrants of CalciMedica at an exercise price of $6.60. The warrant is classified as equity and the Company expensed $0 and $13,000 to general and administrative expense related to this warrant for the three months ended March 31, 2024 and 2023, respectively.

16


 

In October 2022, Private CalciMedica granted warrants to certain officers and directors to purchase 496,970 shares of common stock. In conjunction with the Merger, the warrants converted to 14,313 warrants of CalciMedica at an exercise price of $10.42. The warrants have a 10-year term and vest ratably over 12 and 48 months. At the date of issuance, the fair value of the warrants collectively was $125,000 and was determined utilizing Black-Scholes and will be recognized as general and administrative expense over the vesting periods. Assumptions used in the valuation were as follows: expected term of ten years, risk free rate of 4.10%, volatility of 82% and a dividend yield of zero. The warrants are classified as equity, and the Company expensed $2,000 and $14,000, to general and administrative expense in the three months ended March 31, 2024 and 2023, respectively.

In connection with the 2024 Private Placement, the Company issued Tranche A, Tranche B Common Warrants and Pre-Funded Warrants. Tranche A Common Warrants are exercisable upon the earlier of December 31, 2024 or 30 days following the Company’s public disclosure of topline results from the Company’s Phase 2b clinical trial in patients with acute pancreatitis. The Tranche B Common Warrants are exercisable upon the earlier of December 31, 2026 or 30 days following the Company’s public disclosure of topline results from the Company’s planned Phase 2 clinical trial in patients with acute kidney injury. The purchase price per share and accompanying Common Warrants was $3.827 (or $4.3915 for directors, employees or consultants of the Company participating in the 2024 Private Placement) (or $3.8269 per Pre-Funded Warrant and accompanying Common Warrants, which represented the price of $3.827 per share and accompanying Common Warrants minus the $0.0001 per share exercise price of each such Pre-Funded Warrant).

The Tranche A Common Warrants have a strike price of $5.36 per share, are not deemed equity and are classified as a liability in the Company’s condensed consolidated balance sheets. At the date of issuance, the fair value of the Tranche A Common Warrants was $4.1 million utilizing Black-Scholes with the following assumptions: expected term of 0.94 years, risk-free interest rate of 4.9%, volatility of 100% and a dividend yield of zero. As of the balance sheet date of March 31, 2024, the value of the Tranche A Common Warrants was $1.4 million with the change in fair value of $2.7 million being recorded in the condensed consolidated statements of operations in other income/(expense).

The Tranche B Common Warrants have a strike price of $7.15 per share, are not deemed equity and are classified as a liability in the Company’s condensed consolidated balance sheets. At the date of issuance, the fair value of the Tranche B Common Warrants was $7.1 million utilizing Black-Scholes with the following assumptions: expected term of 1.69 years, risk-free interest rate of 4.5%, volatility of 100% and a dividend yield of zero. As of the balance sheet date of March 31, 2024, the value of the Tranche A Common Warrants was $4.2 million, with the change in fair value of $2.9 million being recorded in the condensed consolidated statements of operations in other income/(expense).

The Pre-Funded Warrants have a strike price of $0.0001 per share, are deemed equity and included in the equity section of the Company’s condensed consolidated balance sheets. At date of issuance, the fair value of the Pre-Funded Warrants was $0.5 million using the relative fair value method and is included in equity at March 31, 2024.

The Placement Agent Warrants have a strike price of $0.0001 per share, are deemed equity and included in the equity section of the Company’s condensed consolidated balance sheets. At date of issuance, the fair value of the Placement Agent Warrants was $0.1 million using the relative fair value method and is included in equity at March 31, 2024.

8. Stock-based Compensation

 

2006 Equity Incentive Plan and Amendment to 2006 Plan

Private CalciMedica adopted an equity incentive plan in 2006 (“2006 Plan”) that provides for the issuance of common stock to employees, non-employee directors and consultants. Recipients of incentive stock options are eligible to purchase common stock at an exercise price equal to no less than the estimated fair market value of such stock on the date of grant. The 2006 Plan provides for the grant of incentive stock options, non-statutory stock options and stock purchase rights. The maximum contractual term of options granted under the 2006 Plan is ten years. The options generally vest 25% on the first anniversary of the grant date, with the balance vesting ratably over the following 36 months. Pursuant to the Merger Agreement, CalciMedica, Inc. assumed the 2006 Plan and all stock options issued and outstanding under the 2006 Plan.

2023 Equity Incentive Plan

The Company adopted 2023 Equity Incentive Plan (the “2023 Plan”), which became effective at the closing of the Merger. As of the effective date of the Merger, there were 1,000,000 shares of the Company’s common stock available for grant under the 2023 Plan. In addition, the share reserve is subject to annual increases each January 1 for the first ten years following approval of the 2023 Plan of up to 5% of shares of the Company’s common stock outstanding (or a lesser number determined by the Company’s board of directors). As of March 31, 2024, 218,576 options have been returned and are unavailable for future grant. Effective January 1, 2024, the shares reserved for issuance under the 2023 Plan was increased by 287,725. As of March 31, 2024, 91,516 shares were available for grant under the 2023 Plan.

2023 Employee Stock Purchase Plan

The Company adopted the 2023 Employee Stock Purchase Plan (the “2023 ESPP”) which became effective at the closing of the Merger. As of the effective time of the Merger, there were 65,000 shares of the Company’s common stock reserved for issuance under the 2023 ESPP. In addition, the share reserve is subject to annual increases each January 1 for the first ten years following approval of the 2023 ESPP of the lesser of (i) 1% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, (ii) 195,000 shares of the Company’s common stock, or (iii) such lesser number of

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shares of the Company’s common stock as determined by the Company’s board of directors. An annual increase of 57,545 shares of the Company’s common stock was automatically added to the share reserve under the 2023 ESPP on January 1, 2024.

As of March 31, 2024, no shares have been issued under the 2023 ESPP.

The following table summarizes the stock option transactions for the 2023 Plan:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Options

 

 

 

Weighted Average Exercise Price

 

 

Weighted Average Remaining Contractual Term (years)

 

 

 

Aggregate Intrinsic Value (in thousands)

 

Outstanding at December 31, 2023

 

 

1,739,270

 

 

$

 

15.71

 

 

 

6.99

 

 

$

 

76

 

Granted

 

 

595,250

 

 

 

 

4.16

 

 

 

10

 

 

 

 

 

Cancelled

 

 

(223,308

)

 

 

 

76.63

 

 

 

 

 

 

 

 

Outstanding at March 31, 2024

 

 

2,111,212

 

 

$

 

6.01

 

 

 

8.34

 

 

$

 

790

 

Vested and exercisable at March 31, 2024

 

 

883,869

 

 

$

 

7.18

 

 

 

6.90

 

 

$

 

356

 

There were no options exercised during the three months ended March 31, 2024. The weighted-average fair value of options granted during the three months ended March 31, 2024 and 2023 was $4.16 and $11.94 per share, respectively. The total fair value of shares vested was $0.3 million for the three months ended March 31, 2024. The total fair value of shares vested as of March 31, 2023 was $10.9 million (includes $10.5 million related to the acceleration of vesting of the Graybug stock awards at the date of the Merger).

As of March 31, 2024, stock-based compensation not yet recognized is $