LIQUIDITY AND CAPITAL RESOURCES

9 Months Ended

Sep. 30, 2023

LIQUIDITY AND CAPITAL RESOURCES [Abstract]

2)	LIQUIDITY AND CAPITAL RESOURCES

The Company has incurred significant operating losses and has an accumulated deficit as a result of its efforts to develop product candidates, including conducting clinical trials and providing general and administrative support for operations. As of September 30, 2023, the Company had an unrestricted cash balance of approximately $4.6 million and an accumulated deficit of approximately $180.8 million. For the three and nine months ended September 30, 2023, the Company incurred a net loss of $5.6 million and $15.5 million, respectively, and the Company used cash in operating activities of $15.7 million during the nine months ended September 30, 2023.

In October 2022, the Company entered into a facility sublease agreement (the “Sublease”) for approximately 45,500 square feet of office and laboratory space in Somerville, Massachusetts. Pursuant to the Sublease, the Company delivered to the sublessor a security deposit in the form of a letter of credit in the amount of $4.1 million, which will be reduced on an incremental basis throughout the term of the lease. The letter of credit was issued by the Company’s commercial bank, which required that the Company cash collateralize the letter of credit by depositing $4.1 million in a restricted cash account with such bank. The amount of required restricted cash collateral will decline in parallel with the reduction in the amount of the letter of credit over the term of the Sublease.

On April 5, 2023, the Company entered into a standby equity purchase agreement (the “SEPA”) and a registration rights agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park committed to purchase up to $10.0 million of the Company’s common stock in an “equity line” financing arrangement. During the nine months ended September 30, 2023, the Company issued and sold approximately 214,000 shares of common stock under the SEPA for gross proceeds of $0.3 million. The Company did not sell any shares under the SEPA for the three months ended September 30, 2023. See Note 15.

On July 14, 2023, the Company closed a financing with certain investors providing for the private placement to the investors of (i) approximately $8.7 million in aggregate principal convertible promissory notes (the “ Convertible Notes”) and (ii) warrants to purchase an aggregate of approximately 6.1 million shares of the Company’s common stock (the “Note Warrants,” and together with the Convertible Notes, the “July 2023 Financing”). The Convertible Notes bear interest at 6% per annum, payable quarterly in arrears, and the Company may pay interest in cash or in-kind by increasing the outstanding principal amount of the Convertible Notes. The Convertible Notes mature in July 2028 and can be converted into shares of the Company’s common stock at the option of the applicable investor.

In connection with preparing the accompanying condensed consolidated financial statements as of and for the three and nine months ended September 30, 2023, the Company’s management concluded that there is substantial doubt regarding the Company’s ability to continue as a going concern because it does not expect to have sufficient cash or working capital resources to fund operations for the twelve-month period subsequent to the issuance date of these condensed consolidated financial statements. The Company will need to raise additional capital in addition to the July 2023 Financing, which could be through the remaining availability under the SEPA, public or private equity offerings, debt financings, strategic partnerships or other means. Other than the SEPA, the Company currently has no arrangements for such capital, and no assurances can be given that it will be able to raise such capital when needed, on acceptable terms, or at all.

The accompanying condensed consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.