REVELATION BIOSCIENCES, INC. quarterly report, Q3 FY2024

Business Context and Reporting Period

Company: Revelation Biosciences, Inc. (REVB)
Reporting Period: Quarter ended September 30, 2024 (Q3 2024)
Business Overview: A clinical-stage biopharmaceutical company developing therapeutics based on its proprietary formulation, Gemini, to harness trained immunity. Key programs include GEM-AKI (acute kidney injury), GEM-CKD (chronic kidney disease), and GEM-PSI (post-surgical infection). The company has no product revenue and relies on capital raises to fund operations.

Key Financial Metrics

Metric Q3 2024 (3 Months) Q3 2023 (3 Months) YTD 2024 (9 Months) YTD 2023 (9 Months)
Revenue $0 $0 $0 $0
Net Loss $(2.24) million $(2.63) million $(13.31) million $2.08 million (Income)
Operating Expenses $1.80 million $2.78 million $6.22 million $6.33 million
Cash and Equivalents (End of Period) $6.54 million $13.99 million $6.54 million $13.99 million
Stockholders' Equity $2.67 million $8.82 million $2.67 million $8.82 million
Accumulated Deficit $(38.78) million $(23.26) million $(38.78) million $(23.26) million

Liquidity: Cash burn for the nine months ended September 30, 2024, was approximately $5.45 million. The company raised approximately $9.16 million in financing activities during the period, primarily through a public offering and warrant inducement exercises.

Material Changes vs. Prior Period

  • Net Loss vs. Net Income: The company reported a net loss of $13.31 million for the nine months ended September 30, 2024, compared to net income of $2.08 million in the same period in 2023. The 2023 income was driven by an $8.26 million gain from the change in fair value of warrant liabilities, which was absent in 2024.
  • Operating Expenses: Total operating expenses decreased slightly year-over-year for the nine-month period ($6.22 million vs. $6.33 million). Research and Development (R&D) expenses decreased by $0.14 million, while General and Administrative (G&A) expenses increased by $0.03 million.
  • Capital Structure: Significant equity activity occurred in Q3 2024, including a "Warrant Inducement" that resulted in the issuance of 2.55 million shares and new Class E warrants, raising approximately $3.5 million in net proceeds. This activity helped satisfy the Nasdaq Stockholders' Equity Requirement.
  • Legal Settlements: The company incurred significant non-recurring expenses related to legal judgments, including a $7.5 million settlement with LifeSci Capital LLC and costs related to a settlement with A-IR Clinical Research Ltd., contributing to the YTD loss.

Outlook, Risks, and Management Commentary

  • Going Concern: Management has raised substantial doubt about the company's ability to continue as a going concern. With $6.54 million in cash and no revenue, the company does not anticipate having sufficient funds to sustain operations for one year from the filing date. Additional financing is required.
  • NASDAQ Compliance: The company received a delisting notice from Nasdaq regarding the Minimum Bid Price Requirement (stock price below $1.00). While the company satisfied the Stockholders' Equity Requirement through Q3 financing, it is not eligible for a standard compliance period due to a recent reverse stock split. An appeal hearing was requested on October 23, 2024.
  • Legal Proceedings: The company settled a lawsuit with LifeSci Capital LLC for $7.5 million (paid in August 2024) and settled a claim with A-IR Clinical Research Ltd. These events resulted in significant one-time charges.
  • Future Guidance: The company expects to continue incurring significant operating losses as it advances clinical trials for GEM-AKI, GEM-CKD, and GEM-PSI. No revenue is expected until regulatory approval is obtained, which is not anticipated for several years.

Investor Verification Checklist

  • Cash Runway: Verify the sufficiency of the $6.54 million cash balance against projected burn rates and the timeline for securing additional capital.
  • NASDAQ Status: Monitor the outcome of the appeal hearing regarding the Minimum Bid Price delisting notice and any potential reverse stock splits.
  • Legal Exposure: Confirm that the $7.5 million LifeSci settlement and A-IR settlement are fully resolved with no further contingent liabilities.
  • Dilution Risk: Assess the impact of the 5.1 million Class E warrants issued in the inducement and other outstanding warrants on future share count and dilution.
  • Warrant Liability: Review the accounting treatment of warrant liabilities and the volatility of fair value adjustments on the income statement.