NOTE 2 — LIQUIDITY

As a clinical stage business, the Company has not yet generated any revenues and had an accumulated deficit of $289.4 million as of December 31, 2023. For the six months ended December 31, 2023, the Company incurred a net loss of $28.4 million and net cash used in operating activities amounted to $23.6 million. For the fiscal year ended June 30, 2023, the Company incurred a net loss of $51.8 million and net cash used in operating activities amounted to $44.5 million. As of December 31, 2023, the Company’s capital resources consist of cash and cash equivalents of $12.5 million, short-term investments in marketable debt securities of $80.1 million and long-term investments in marketable debt securities of $3.4 million.

As discussed in Note 7, in November 2023 the Company entered into an agreement for an “at-the-market” offering for the sale of up to $50.0 million in shares of common stock. The net proceeds from the “at-the-market” offering, if any, will be used to fund a portion of the Company’s liquidity requirements. However, even if the entire $50.0 million is obtained in the “at-the-market” offering, the Company will need to obtain additional equity or debt financing in order to fund all of its long-term capital requirements.

As of December 31, 2023, the Company has total liabilities of $10.4 million, including current liabilities of $8.0 million. As discussed in Note 5, the Company is subject to license agreements that provide for future contractual payments upon achievement of various milestone events. 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, and an additional $5.0 million milestone payment will be due upon the dosing of the last patient in a Phase 3 clinical trial for RZ358. Both the first patient dosing milestone and last patient dosing milestone events in connection with the RZ358 Phase 3 clinical trial are expected to occur within the next 12 months.

Management believes the Company’s existing cash and cash equivalents and investments in marketable debt securities will be adequate to meet the Company’s contractual obligations and carry out ongoing clinical trials and other planned activities through February 2025, at a minimum.