NOTE 2 — LIQUIDITY

The Company is in the clinical stage and has not yet generated any revenues. For the six months ended December 31, 2022, the Company incurred a net loss of $23.4 million and net cash used in operating activities amounted to $15.1 million. For the fiscal year ended June 30, 2022, the Company incurred a net loss of $41.1 million and net cash used in operating activities amounted to $39.6 million. As of December 31, 2022, the Company had an accumulated deficit of $232.6 million, cash and cash equivalents of $146.7 million, and total current liabilities of $6.3 million.

As discussed in Note 4, the Company is subject to license agreements that provide for future contractual payments upon achievement of various milestone events. Pursuant to the ActiveSite License Agreement (as defined below), a $3.0 million milestone payment will be due upon dosing of the first patient in a Phase 2 clinical trial for RZ402. Additionally, pursuant to the XOMA License Agreement (as defined below), a $5.0 million milestone payment will be due upon dosing of the first patient in a Phase 3 clinical trial for RZ358.  First patient dosing milestone for the RZ402 Phase 2 clinical trial was triggered in February 2023. First patient dosing milestone RZ358 Phase 3 clinical trial is expected to occur within the next 12 months.

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Management believes the Company’s cash and cash equivalents balance of $146.7 million as of December 31, 2022, will be adequate to meet the Company’s contractual obligations and carry out ongoing clinical trials and other planned activities at least through February 2024.