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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 10-Q
______________________
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
Or
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number: 001-16133
______________________
DELCATH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
______________________
Delaware06-1245881
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
566 Queensbury Avenue
Queensbury, NY 12804
(Address of principal executive offices)
(212) 489-2100
(Registrant’s telephone number, including area code)
______________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.01 par value per shareDCTH
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 x No o
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated fileroAccelerated filero
Non-accelerated filerxSmaller reporting companyx
Emerging growth companyo
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 Securities Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of November 5, 2024, 31,973,784 shares of the Company’s common stock, $0.01 par value, were outstanding.

DELCATH SYSTEMS, INC.
Table of Contents
Page
Item 2.
Item 3.
Item 4.
Item 5.
2


DELCATH SYSTEMS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share data)
September 30,
2024		December 31,
2023
Assets
Current assets
Cash and cash equivalents$8,315 $12,646 
Restricted cash— 50 
Short-term investments5,677 19,808 
Accounts receivable, net6,936 241 
Inventory6,642 3,322 
Prepaid expenses and other current assets1,312 1,091 
Total current assets28,882 37,158 
Property, plant and equipment, net1,729 1,352 
Right-of-use assets1,070 103 
Total assets$31,681 $38,613 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$937 $1,012 
Accrued expenses5,706 5,249 
Lease liabilities, current107 37 
Loan payable— 5,239 
Convertible notes payable2,000 4,911 
Warrant liability - current12,834 — 
Total current liabilities21,584 16,448 
Warrant liability, non-current— 5,548
Lease Liabilities, non-current963 — 
Other liabilities, non-current563 840 
Total liabilities$23,110 $22,836 
Commitments and contingencies (see Note 14)
Stockholders’ equity
Preferred stock, $0.01 par value; 10,000,000 shares authorized; 12,342 and 24,819 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively
— — 
Common stock, $0.01 par value; 80,000,000 shares authorized; 28,019,599 shares and 22,761,554 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively
280 228 
Additional paid-in capital536,430 520,576 
Accumulated deficit(528,150)(505,162)
Accumulated other comprehensive income11 135 
Total stockholders’ equity8,571 15,777 
Total liabilities and stockholders’ equity$31,681 $38,613 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
3
DELCATH SYSTEMS, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income and Loss
(Unaudited)
(in thousands, except share and per share data)
Three months ended September 30,Nine months ended September 30,
2024202320242023
Product revenue$11,200 $434 $22,105 $1,526 
Cost of goods sold(1,640)(133)(4,062)(464)
Gross profit9,560 301 18,0431,062
Operating expenses:
Research and development expenses3,866 4,662 10,96012,793
Selling, general and administrative expenses6,953 6,195 22,53215,147
Total operating expenses10,819 10,857 33,49227,940
Operating loss(1,259)(10,556)(15,449)(26,878)
Change in fair value of warrant liability2,975 (9,384)(7,392)(8,224)
Interest expense, net113 (395)(170)(1,454)
Other (expense) income35 (5)23 $14 
Net income (loss)1,864 (20,340)(22,988)(36,542)
Other comprehensive (loss) income:  
Unrealized gain (loss) on investments(14)— (147)— 
Foreign currency translation adjustments17 5 23 24 
Total comprehensive income (loss)$1,867 $(20,335)$(23,112)$(36,518)
Common share data:  
Basic income (loss) per common share$0.06 $(1.14)$(0.84)$(2.61)
Weighted average number of basic shares outstanding28,738,30717,863,07827,335,21213,985,248
Diluted income (loss) per common share$0.06 $(1.14)$(0.84)$(2.61)
Weighted average number of dilutive shares outstanding32,345,67217,863,07827,335,21213,985,248
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
4
DELCATH SYSTEMS, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(in thousands, except share data)
Preferred Stock
$0.01 Par Value
Common Stock
$0.01 Par Value
Additional
Paid
in Capital		Accumulated
Deficit 		Accumulated
Other
Comprehensive
Income (Loss) 		Total
No. of
Shares		AmountNo. of
Shares		Amount
Balance at January 1, 202424,819$— 22,761,554$228 $520,576 $(505,162)$135 $15,777 
Compensation expense for issuance of stock options—— —— 2,895 — — 2,895 
Compensation expense for Employee Stock Purchase Plan————50——50
Private placement -issuance of common shares, net of expenses—— 876,6278 6,904 — — 6,912 
Issuance of common stock with the employee stock purchase plan—— 21,140— 74 — — 74 
Conversion - F-3 Preferred to Common(8,010)—1,779,99818(17)——1
Net loss—— —— — (11,111)— (11,111)
Unrealized gain on investments——————88
Foreign currency translation adjustments—— —— — — 14 14 
Balance at March 31, 202416,809$— 25,439,319$254 $530,482 $(516,273)$157 $14,620 
Compensation expense for issuance of stock options————3,021——3,021
Compensation expense for Employee Stock Purchase Plan————48——48
Prior quarter private placement - expenses————(141)——(141)
Warrant exercise and conversion - F-4 Preferred to Common——41,666—355——355
Conversion - F-3 Preferred to Common (3,010)—668,8887(7)———
Conversion - F-2 Preferred to Common(1,457)—441,5144(4)———
Pre-funded warrant exercise——1,307,70613(3)——10
Stock option exercise——32,3001168——169
Net loss—————(13,741)—(13,741)
Unrealized loss on investments——————(141)(141)
Foreign currency translation adjustments——————(8)(8)
Balance at June 30, 202412,342$— 27,931,393$279 $533,919 $(530,014)$8 $4,192 
Compensation expense for issuance of stock options————2,092——2,092
Compensation expense for Employee Stock Purchase Plan————49——49
Issuance of common stock with the Employee Stock Purchase Plan——50,4181174——175
Stock option exercise——37,788—196——196
Net income—————1,864—1,864
Unrealized loss on investments——————(14)(14)
Foreign currency translation adjustments——————1717
Balance at September 30, 202412,342$— 28,019,599$280 $536,430 $(528,150)$11 $8,571 

5
Preferred Stock
$0.01 Par Value
Common Stock
$0.01 Par Value
Additional
Paid
in Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Income (Loss)		Total
No. of
Shares		AmountNo. of
Shares		Amount
Balance at January 1, 202311,357$— 10,046,571$100 $451,608 $(457,484)$(83)$(5,859)
Compensation expense for issuance of stock options—— —— 1,661 — — 1,661 
Private placement -issuance of common shares, net of expenses—— 19,6461 55 — — 56 
Issuance of common stock with the employee stock purchase plan—— 15,417— 47 — — 47 
Net loss—— —— — (9,000)— (9,000)
Foreign currency translation adjustments—— —— — — 19 19 
Balance at March 31, 202311,357$— 10,081,634$101 $453,371 $(466,484)$(64)$(13,076)
Compensation expense for issuance of stock options————1,661——1,661
Conversion of Preferred F-1 shares to common shares——4,629,5394711,222——11,269
Preferred F-2 Shares Issuance9,624———7,099——7,099
Pre-funded warrant exercise——538,8285———5
Issuance of common stock related to stock option exercises——468—2——2
Net loss—————(7,202)—(7,202)
Balance at June 30, 202320,981$— 15,250,469$153 $473,355 $(473,686)$(64)$(242)
Compensation expense for issuance of stock options————2,783——2,783
Conversion of Series F-2 Preferred shares to common shares(4,721)—1,430,60314(14)———
Series F-3 Preferred Shares Issuance34,859———42,388——42,388
Conversion of Series F-3 Preferred shares to common shares(13,232)—2,940,44030(29)——1
Conversion of Series E Preferred shares to common shares(100)—10,000—————
Common Stock warrant exercise——31,110—————
Issuance of common stock with the employee stock purchase plan——26,018—76— —76
Issuance of common stock related to stock option exercises——351—1——1
Compensation expense for issuance of employee stock purchase plan————47— —47
Net loss—————(20,340)—(20,340)
Total comprehensive income——————55
Balance at September 30, 202337,787$— 19,688,991$197 $518,607 $(494,026)$(59)$24,719 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
6
DELCATH SYSTEMS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Nine months ended September 30,
20242023
Cash flows from operating activities:  
Net loss$(22,988)$(36,542)
Adjustments to reconcile net loss to net cash used in operating activities:  
Stock option compensation expense8,155 6,152 
Depreciation expense96 87 
Warrant liability fair value adjustment7,392 8,224 
Amortization of Right-of-Use Asset64 262 
Amortization of debt discount460 582 
Interest expense accrued related to convertible notes120 120 
Amortization of premiums and discounts on marketable securities(450)— 
Changes in operating assets and liabilities:  
Prepaid expenses and other assets(353)(743)
Accounts receivable(6,695)161 
Inventory(3,320)(669)
Accounts payable and accrued expenses120 (437)
Other liabilities, non-current(276)(270)
Net cash used in operating activities(17,675)(23,073)
Cash flows from investing activities:  
Purchase of investment(31,767)— 
Maturities of investments46,344 — 
Purchase of property, plant and equipment(330)(39)
Net cash provided by (used in) investing activities14,247 (39)
Cash flows from financing activities:  
Net proceeds from private placement6,771 22,960 
Proceeds from the issuance of common stock relating to the employee stock purchase plan250 123 
Repayment of debt(8,610)(6,313)
Proceeds from exercise of warrants259 35,004 
Proceeds from exercise of stock options355 3 
Net cash (used in) provided by financing activities(975)51,777 
Foreign currency effects on cash22 25 
Net (decrease) increase in total cash(4,381)28,690 
Total Cash, Cash Equivalents and Restricted Cash:  
Beginning of period12,696 11,822 
End of period$8,315 $40,512 
Cash, Cash Equivalents and Restricted Cash consisted of the following:  
Cash and Cash Equivalents$8,315 $40,462 
Restricted Cash— 50 
Total$8,315 $40,512 

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Nine months ended September 30,
20242023
Supplemental Disclosure of Cash Flow Information:
Cash paid during the periods for:
Interest expense$389 $1,122 
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Right of use assets obtained in exchange for lease obligations$1,029 $84 
Conversion of mezzanine equity to common shares$— $11,269 
Conversion of mezzanine equity to preferred shares$— $7,099 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
8
DELCATH SYSTEMS, INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
(amounts in thousands, except share and per share amounts)
(1)    General
The unaudited interim condensed consolidated financial statements of Delcath Systems, Inc. (“Delcath” or the “Company”) as of and for the three and nine months ended September 30, 2024 and 2023 should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Annual Report”), which was filed with the Securities and Exchange Commission (the “SEC”) on March 26, 2024 and may also be found on the Company’s website (www.delcath.com). In these notes to the interim condensed consolidated financial statements the terms “us”, “we” or “our” refer to Delcath and its consolidated subsidiaries.
Description of Business
The Company is an interventional oncology company focused on the treatment of cancers primary or metastatic to the liver. The Company’s lead product, the HEPZATOTM KIT (melphalan for Injection/Hepatic Delivery System), a drug/device combination product, was approved by the US Food and Drug Administration (the “FDA”) on August 14, 2023, indicated as a liver-directed treatment for adult patients with uveal melanoma with unresectable hepatic metastases affecting less than 50% of the liver and no extrahepatic disease, or extrahepatic disease limited to the bone, lymph nodes, subcutaneous tissues, or lung that is amenable to resection, or radiation. The first commercial use of the HEPZATO KIT (“HEPZATO” or “HEPZATO KIT”) for the treatment of metastatic uveal melanoma (“mUM”) occurred in January 2024.
In the United States, HEPZATO is considered a combination drug and device product and is regulated as a drug by the FDA. Primary jurisdiction for regulation of HEPZATO has been assigned to the FDA’s Center for Drug Evaluation and Research. The FDA has granted Delcath six orphan drug designations (five for melphalan in the treatment of patients with ocular (uveal) melanoma, cutaneous melanoma, intrahepatic cholangiocarcinoma, hepatocellular carcinoma, and neuroendocrine tumor indications and one for doxorubicin in the treatment of patients with hepatocellular carcinoma).
The Company has sufficient raw material and component constituent parts of the HEPZATO KIT to meet anticipated demand and it intends to manage supply chain risk through stockpiled inventory and, where commercially reasonable, contracting with multiple suppliers for critical components.
In Europe, the hepatic delivery system is a stand-alone medical device having the same device components as HEPZATO, but without the melphalan hydrochloride and is approved for sale under the trade name CHEMOSAT Hepatic Delivery System for Melphalan (“CHEMOSAT”), where it has been used at major medical centers to treat a wide range of cancers in the liver. On February 28, 2022, CHEMOSAT received Medical Device Regulation (MDR) certification under the European Medical Devices Regulation (EU) 2017/745, which may be considered by jurisdictions when evaluating reimbursement.
To support the New Drug Application for HEPZATO the Company conducted the FOCUS Clinical Trial for Patients with metastatic hepatic dominant Uveal Melanoma (the “FOCUS Trial”), a global registration clinical trial that investigated objective response rate in patients with mUM. On May 6, 2024, the Company announced the publication of results from the pivotal FOCUS Trial in the journal Annals of Surgical Oncology. The current focus of the Company’s clinical development program is to generate clinical data for CHEMOSAT and HEPZATO either as monotherapy or in combination with immunotherapy. The Company expects that this will support increased clinical adoption of and reimbursement for CHEMOSAT in Europe, and to support reimbursement in various jurisdictions, including the United States. In addition to HEPZATO’s use to treat mUM, the Company believes that HEPZATO has the potential to treat other cancers in the liver, such as metastatic colorectal cancer, metastatic neuroendocrine tumors, metastatic breast cancer and intrahepatic cholangiocarcinoma, and plans to begin one or more studies of the HEPZATO KIT to treat such conditions in late 2024 or early 2025. The Company believes that those and similar disease states are areas of unmet medical needs that represent significant market opportunities.
Risks and Uncertainties
As detailed in the Company’s 2023 Annual Report filed on Form 10-K, the Company is subject to risks common to companies in the biopharmaceutical industry with FDA-approved products and planned clinical development activities, including, but not limited to, risks associated with successfully launching and commercializing the products; further developing HEPZATO to potentially treat other cancers in the liver and the Company’s ability to obtain any additional regulatory approval of such products in the United States and obtaining regulatory approval in other geographic markets;
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the uncertainty relating to the broad adoption of any approved products by physicians and consumers; and the impacts of significant competition.
In addition, high rates of inflation have previously resulted in the U.S. Federal Reserve raising interest rates and any future increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may further increase economic uncertainty and heighten these risks. Furthermore, if additional banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, the Company or its partners’ ability to access existing cash, cash equivalents and investments may be threatened and could have a material adverse effect on the Company’s business and financial condition, including the Company’s ability to access additional capital on favorable terms, or at all, which could in the future negatively affect the Company’s ability to pursue its business strategy.
Liquidity and Going Concern
On September 30, 2024, the Company had cash and cash equivalents totaling $8.3 million and short-term investments totaling $5.7 million, as compared to cash, cash equivalents and restricted cash totaling $12.7 million and short-term investments totaling $19.8 million at December 31, 2023. During the nine months ended September 30, 2024, the Company used $17.7 million of cash in its operating activities and $8.6 million for principal payments.
The Company’s future results are subject to substantial risks and uncertainties. The Company has operated at a loss for its entire history and there can be no assurance that it will ever achieve or maintain profitability. The Company has historically funded its operations primarily with proceeds from sales of common stock, warrants and pre-funded warrants for the purchase of common stock, sales of preferred stock, proceeds from the issuance of convertible debt and borrowings under loan and security agreements.
If there is a substantial delay in the activation of additional sites to administer HEPZATO and/or the revenue generated from HEPZATO and CHEMOSAT is less than anticipated, the Company expects to need to raise additional capital under structures available to the Company, including debt and/or equity offerings, which may not be on favorable terms. In a substantially delayed site activation scenario, the Company would not have sufficient funds to meet its obligations within twelve months from the issuance date of these condensed consolidated financial statements. As such, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt about the Company’s ability to continue as a going concern. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting the Company’s ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If the Company raises funds through collaborations or other similar arrangements with third parties, it may have to relinquish valuable rights to its technologies, future revenue streams, research programs for product candidates and/or grant licenses on terms that may not be favorable to the Company, any of which may reduce the value of its common stock. If the Company is unable to raise additional funds through equity or debt financings when needed, it may be required to delay, limit, reduce or terminate its product development or future commercialization efforts or grant rights to develop and market its product candidates to third parties even if the Company would otherwise prefer to develop and market such product candidates itself.
The Company expects to use cash and cash equivalents to fund activities relating to commercial support for HEPZATO, CHEMOSAT and any future clinical research trials and operating activities. The Company’s future liquidity and capital requirements will depend on numerous factors, including the initiation and progress of clinical trials and research and product development programs; obtaining regulatory approvals and complying with applicable laws and regulations; the timing and effectiveness of product commercialization activities, including marketing arrangements; the timing and costs involved in preparing, filing, prosecuting, defending and enforcing intellectual property rights; the resolution of any disputes with third parties; and the effect of competing technological and market developments.
The Company’s capital commitments over the next twelve months include (a) $6.8 million to satisfy accounts payable, accrued expenses, current lease liabilities and current medac settlement and (b) $2.0 million of convertible note principal payments, if the holders do not elect to convert the notes into equity. Additional capital commitments beyond the next twelve months include (a) $1.3 million of lease liabilities; and (b) $0.6 million for settlement of litigation with medac.
Basis of Presentation
These interim condensed consolidated financial statements are unaudited and were prepared by the Company in accordance with generally accepted accounting principles in the United States of America (GAAP) and with the SEC’s instructions to Form 10-Q and Article 10 of Regulation S-X. They include the accounts of all wholly owned subsidiaries and all significant inter-company accounts and transactions have been eliminated in consolidation.
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The preparation of interim condensed consolidated financial statements requires management to make assumptions and estimates that impact the amounts reported. These interim condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the Company’s results of operations, financial position and cash flows for the interim periods ended September 30, 2024 and 2023; however, certain information and footnote disclosures normally included in our audited consolidated financial statements which were included in our Annual Report have been condensed or omitted as permitted by GAAP. It is important to note that the Company’s results of operations and cash flows for interim periods are not necessarily indicative of the results of operations and cash flows to be expected for a full fiscal year or any interim period.
Significant Accounting Policies
There have been no material changes to our significant accounting policies as set forth in Note 3 Summary of Significant Accounting Policies to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Recent Accounting Pronouncements
No new accounting standards were adopted during the nine months ended September 30, 2024.
(2)    Revenue
The Company recognizes product revenue from sales of HEPZATO in the United States and CHEMOSAT in certain European countries in accordance with the five-step model in Accounting Standards Codification (“ASC”) 606, Revenue Recognition: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) the Company satisfies the performance obligation. Under this revenue standard, the Company recognizes revenue when its customer obtains control of the promised goods, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods.
HEPZATO
The Company ships and sells the HEPZATO KIT directly to hospitals and treating centers based on approved agreements. For certain customers, the inventory is considered on consignment in which the Company retains title to the product until the use of the HEPZATO KIT. For these sales, the Company recognizes HEPZATO revenue, based on contracted or published rates, upon completion of the procedure. There is no obligation for the hospitals or treating centers to use the consigned HEPZATO, and the Company has no contractual right to receive payment until the product is used in a procedure and transfer of control is completed. See Note 4 for further information for consignment inventory.
Hospitals and treating centers may also elect to purchase HEPZATO KITS prior to a procedure. For these sales, the purchasing hospital or treatment center obtains control of the product once it is delivered. In these instances, the Company recognizes the HEPZATO KIT revenue based on contracted rates stated in an approved contract or purchase order upon delivery to the customer. There are no contractual rights of returns, refunds or similar obligations.
CHEMOSAT
CHEMOSAT is sold directly to hospitals in the European Union and United Kingdom based on contracted rates in an approved contract or sales order. The Company recognizes product revenue from sales of CHEMOSAT upon shipment.
Revenue by product for the periods indicated were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2024202320242023
CHEMOSAT$1,163 $434 $3,490 $1,526 
HEPZATO KIT10,037 — 18,615 — 
Total revenue$11,200 $434 $22,105 $1,526 
Concentration of Credit Risk
Potential credit risk exposure for both the HEPZATO KIT and CHEMOSAT has been evaluated for the Company’s accounts receivable in accordance with ASC 326, Financial Instruments - Credit Losses. The loss percentage is calculated
11
through the use of current and historical economic and financial information. As of September 30, 2024, there were no estimated losses applied to the accounts receivables balance.
The Company’s total percentage of revenue and accounts receivable concentrations from a single customer consisted of the following:
For the nine months ended and as of
Revenue Accounts Receivable
September 30, 202428.1 %23.7 %
September 30, 202316.3 %43.3 %
(3)    Investments
Marketable debt securities held by the Company are classified as available-for-sale pursuant to ASC 320, Investments - Debt and Equity Securities, and carried at fair value in the accompanying condensed consolidated balance sheets.
The following table summarizes the gross unrealized gains on the Company’s marketable securities as of September 30, 2024:

September 30, 2024
Gross Unrealized
(In thousands)Amortized CostGainsEstimated Fair Value
U.S. government agency bonds$5,667 $10 $5,677 
Short-term investments$5,677 
As of September 30, 2024, there was less than $0.1 million of interest receivable related to the outstanding debt securities held by the Company.
The following table summarizes the gross unrealized gains on the Company’s marketable securities as of December 31, 2023:
December 31, 2023
Gross Unrealized
(in thousands)Amortized CostGainsEstimated Fair Value
U.S. government agency bonds$19,651 $157 $19,808 
Short-term investments$19,808 
As of December 31, 2023, there was $0.2 million of interest receivable related to the outstanding debt securities held by the Company.
(4)    Inventory
Inventory consists of the following:
(In thousands)September 30,
2024		December 31,
2023
Raw materials$3,619 $1,443 
Work-in-process2,252 1,753 
Finished goods771 126 
Total inventory$6,642 $3,322 
The Company has consignment agreements with approved hospitals and treatment centers. As of September 30, 2024, there was approximately $0.4 million in finished goods held at hospitals and treatment centers.
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(5)    Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following:
(In thousands)September 30,
2024		December 31,
2023
Clinical trial expenses$222 $222 
Insurance premiums112 157 
Professional services375 133 
Interest Receivable9 151 
Licenses261 105 
Software90 90 
Taxes85 91 
Other158 142 
Total prepaid expenses and other current assets$1,312 $1,091 
(6)    Property, Plant, and Equipment
Property, plant, and equipment consist of the following:
(In thousands)September 30, 2024December 31, 2023Estimated Useful Life
Buildings and land$1,318 $1,318 
30 years - Buildings
Enterprise hardware and software1,815 1,857 3 years
Leaseholds1,611 1,787 Lesser of lease term or estimated useful life
Equipment1,484 1,263 7 years
Furniture234 202 5 years
Equipment in process216 — 
Property, plant and equipment, gross6,678 6,427 
Accumulated depreciation(4,949)(5,075)
Property, plant and equipment, net$1,729 $1,352 
Depreciation expense for the three and nine months ended September 30, 2024 and 2023 was less than $0.1 million for each period.
(7)    Accrued Expenses
Accrued expenses consist of the following:
(In thousands)September 30,
2024		December 31,
2023
Clinical expenses$858 $1,129 
Compensation, excluding taxes3,058 1,859 
Professional fees175 272 
Interest on convertible note833 713 
Inventory8 585 
Other774 691 
Total accrued expenses$5,706 $5,249 
(8)    Leases
The Company recognizes right-of-use (“ROU”) assets and lease liabilities when it obtains the right to control an asset under a leasing arrangement with an initial term greater than twelve months. The Company leases its facilities under non-cancellable operating leases. The Company evaluates the nature of each lease at the inception of an arrangement to determine whether it is an operating or financing lease and recognizes the ROU asset and lease liabilities based on the
13
present value of future minimum lease payments over the expected lease term. The Company’s leases do not generally contain an implicit interest rate and therefore the Company uses the incremental borrowing rate it would expect to pay to borrow on a similar collateralized basis over a similar term in order to determine the present value of its lease payments.
For both the three months ended September 30, 2024 and 2023, the Company recognized less than $0.1 million of operating lease expense, and $0.1 million and $0.3 million for the nine months ended September 30, 2024 and 2023, respectively.
In 2021, the Company entered into a sub-lease agreement (the “2021 Sub-Lease”) with its previous sub-lessee pursuant to which, effective August 2, 2021, the previous sub-lessee would become the lessee and the Company would then sublease its portion of the premises in Galway, Ireland from the previous sub-lessee. The Company’s annual rent expense under the 2021 Sub-Lease is less than $0.1 million for a term of 5 years.
In 2020, the Company entered into an amendment to a sub-lease agreement executed in 2016 for office space at 1633 Broadway, New York, New York. The term of the sub-lease agreement began in April 2016 and, pursuant to amendments, was extended through August 2023. As of August 31, 2023, the lease was month-to-month. No ROU assets or lease liabilities were recognized on the balance sheet as of December 31, 2023 for this arrangement. The Company ended the sublease for its former corporate offices at 1633 Broadway, New York, New York in February 2024.
On January 18, 2024, the Company entered into a lease agreement (the “Queensbury Lease”) to lease approximately 18,000 square feet of manufacturing and office space in Queensbury, New York (the “Premises”). The initial term of the lease is five years with a right to extend the lease by an additional five years, exercisable under certain conditions set forth in the Queensbury Lease. The Company’s annual rent expense under the Queensbury Lease is less than $0.2 million for a term of 5 years.
The following table summarizes the Company’s operating leases as of September 30, 2024:
(In thousands)U.S.IrelandTotal
Operating cash flows for operating leases$(76)$(30)$(106)
Weighted average remaining lease term9.31.8
Weighted average discount rate - operating leases8 %8 %
Remaining maturities of the Company’s operating leases, excluding short-term leases, are as follows:
(In thousands)U.S.IrelandTotal
Year ended December 31, 2024$36 $11 $47 
Year ended December 31, 2025144 45 189 
Year ended December 31, 2026144 26 170 
Year ended December 31, 2027148 — 148 
Year ended December 31, 2028152 — 152 
Thereafter800 — 800 
Total1,424 82 1,506 
Less present value discount(431)(5)(436)
Operating lease liabilities included in the condensed consolidated balance sheets at September 30, 2024$993 $77 $1,070 
(9)    Loans and Convertible Notes Payable
September 30, 2024December 31, 2023
(In thousands)
Gross
Discount
Net
Gross
Discount
Net
Loans payable, current$— $— $— $5,610 $(371)$5,239 
Convertible notes payable - current1
2,000 — 2,000 5,000 (89)4,911 
Total - Loans and notes payable$2,000 $— $2,000 $10,610 $(460)$10,150 
1 The gross amount for December 31, 2023 includes the 4.25% final payment of $0.5 million.
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Term Loan from Avenue Venture Opportunities Fund, L.P.
On August 6, 2021, the Company entered into a Loan and Security Agreement (the “Avenue Loan Agreement”) with Avenue Venture Opportunities Fund, L.P. (the “Lender,” or “Avenue”) for a term loan in an aggregate principal amount of up to $20.0 million (the “Avenue Loan”). The Avenue Loan bore interest at an annual rate equal to the greater of (a) the sum of 7.70% plus the prime rate as reported in The Wall Street Journal and (b) 10.95%. The Avenue Loan matured on August 1, 2024 with a 16.20% rate at maturity.

The Avenue Loan Agreement required the Company to make and maintain representations and warranties and other agreements that are customary in loan agreements of this type. The Avenue Loan Agreement also contained customary events of default, including non-payment of principal or interest, violations of covenants, bankruptcy and material judgements. The Avenue Loan was secured by all of the Company’s assets globally, including intellectual property. As of August 2024, Avenue has released the Company from all obligations and returned all security interests back to the Company.

The initial tranche of the Avenue Loan was $15.0 million, including $4.0 million that was funded into a restricted account. On March 15, 2023, the Company returned to Avenue $4.0 million held as restricted cash to pay down a portion of the outstanding loan balance, principal payments of $2.1 million and an incremental 4.25% of the final payment of $0.2 million. On March 31, 2023, the Avenue Loan Agreement was amended (the “Avenue Amendment”) to defer the interest only period to September 30, 2023, with an additional extension option upon FDA Approval for the HEPZATO KIT and subsequent receipt of at least $10 million from the sale and issuance of equity securities. On August 14, 2023, the Company received FDA approval and had subsequently received over $10 million from the exercise of Tranche A Preferred Warrants. At the Company’s option, it elected to extend the interest only period to December 31, 2023 and monthly principal payments of approximately $1.0 million began in January 2024 with the final payment occurring on August 1, 2024.
Avenue did not exercise its option to convert the principal amount of the Avenue Loan into shares of the Company’s common stock.
In connection with the initial entry into the Avenue Loan Agreement, the Company issued warrants to Avenue (the “Initial Avenue Warrant”) to purchase 127,755 shares of common stock at an exercise price per share equal to $0.01. Additionally, in connection with the Avenue Amendment, the Company issued to Avenue a warrant to purchase 34,072 shares of common stock at an exercise price per share equal to $0.01. Avenue exercised all outstanding warrants connected to the Avenue Loan in full in April 2024.
The Company determined that the embedded conversion option associated with the Avenue Loan did not require bifurcation and met the criteria for equity classification. In addition, the amendment was recorded under debt modification guidance. Aggregate debt discount amortization of $0.1 million and $0.2 million was recorded during the three months ended September 30, 2024 and 2023, and $0.5 million and $0.6 million for the nine months ended September 30, 2024 and 2023, respectively. Interest expense incurred was $0.1 million and $0.3 million for the three months ended September 30, 2024 and 2023, respectively, and $0.4 million and $1.1 million for the nine months ended September 30, 2024 and 2023, respectively.
Convertible Notes Payable
The Company has $2.0 million of principal outstanding related to Senior Secured Promissory Notes (the “Rosalind Notes”) which bear interest at 8% per annum. Pursuant to the original terms, the Rosalind Notes were convertible into Series E Preferred Stock at a price of $1,500 per share and were to mature on July 16, 2021.
On August 6, 2021, the Company executed an agreement to amend the Rosalind Notes to (i) reduce the conversion price to $1,198 per share of the Company’s Series E Preferred Stock; and (ii) extend the maturity date to October 30, 2024. In addition, the holders of the Rosalind Notes agreed to subordinate all of the Company’s indebtedness and obligations to Avenue and all of the holders’ security interest to the Avenue Loan and Avenue’s security interest in the Company’s property.
The outstanding principal and accrued interest was paid on October 30, 2024. Rosalind did not exercise its option to convert the Rosalind Notes into shares of the Company’s common stock.
Interest expense accrued relating to the Rosalind Notes was $0.1 million for both the three and nine months ended September 30, 2024 and 2023.
15
(10)    Preferred Purchase Agreement
On March 27, 2023, we entered into a securities purchase agreement with certain accredited investors (the “Preferred Purchase Agreement”), pursuant to which on March 29, 2023, the Company issued and sold, in a private placement (the “Series F Preferred Offering”), (i) 24,900 shares of Series F-1 Convertible Preferred Stock, par value $0.01 per share (the “Series F-1 Preferred Stock”), (ii) tranche A warrants (the “Preferred Tranche A Warrants”) to acquire 34,859 shares of Series F-3 Convertible Preferred Stock, par value $0.01 per share (the “Series F-3 Preferred Stock”) and (iii) tranche B warrants (the “Preferred Tranche B Warrants”, together with the Preferred Tranche A Warrant, the “Preferred Warrants”) to acquire 24,900 shares of Series F-4 Convertible Preferred Stock, par value $0.01 per share (the “Series F-4 Preferred Stock”) for an aggregate offering price of $24.9 million before deducting the fees paid to the placement agent and the financial advisors and other financing expenses payable by the Company.

The gross proceeds of $24.9 million from the Series F Preferred Offering have been allocated first to the Preferred Warrant liabilities at their fair value of $4.9 million, with the residual of $20.0 million being allocated to the Series F-1 Preferred Stock.
As of September 30, 2024, all of the Preferred Tranche A Warrants were exercised for an aggregate exercise price of $34.9 million and 250 Preferred Tranche B Warrants were exercised for an aggregate exercise price of $0.3 million. The remaining Preferred Tranche B Warrants are exercisable for 24,650 shares of Series F-4 Preferred Stock, with an aggregate exercise price of $24.7 million until the earlier of (i) 21 days following the Company’s announcement of receipt of at least $10 million in quarterly U.S. revenue from the commercialization of the HEPZATO KIT and (ii) March 31, 2026.
During the quarter ending September 30, 2024, we recorded at least $10 million in quarterly U.S. revenue from the commercialization of the HEPZATO KIT, which was announced by the Company on October 17, 2024, triggering the 21 day exercise period for the Tranche B Warrants. As of November 5, 2024, 24,900 Tranche B Warrants were exercised by the November 6, 2024 expiration date which resulted in $24.9 million of cash proceeds to the Company.
Pursuant to the Certificate of Designation of Preferences, Rights and Limitations of the Series F Convertible Voting Preferred Stock (the “Certificate of Designation”), each share of Series F-1 Preferred Stock automatically converted into shares of common stock and/or, if applicable (in accordance with the beneficial ownership limitations then in effect), shares of Series F-2 Preferred Stock, par value $0.01 per share (the “Series F-2 Preferred Stock” and, together with the Series F-1 Preferred Stock, the Series F-3 Preferred Stock and the Series F-4 Preferred Stock, the “Series F Preferred Stock”) in lieu of common stock. Subject to limitations set forth in the Certificate of Designation, the shares of Series F-2, F-3 and F-4 Preferred Stock are convertible into common stock at the option of the holder at the conversion price of $3.30 per share, $4.50 per share and $6.00 per share, respectively, rounded down to the nearest whole share, and in each case subject to the terms and limitations contained in the Certificate of Designation.
As of September 30, 2024, 58,924 shares of the Company’s Series F-1, F-2, F-3 and F-4 Preferred Stock were converted into 15,005,211 shares of common stock. As of September 30, 2024, there were 1,085 shares of Series F-2 Preferred Stock, and no shares of Series F-3 Preferred Stock or Series F-4 Preferred Stock outstanding.
The Series F-2, F-3 and F-4 Preferred Stock are not mandatorily redeemable, redeemable at the holder’s election or contingently redeemable at the holder’s election (at this point, a Deemed Liquidation Event would potentially trigger pro rata liquidation payments to the preferred and common stockholders on a pro rata “as converted” basis). Accordingly, the Series F-2, F-3 and F-4 Preferred are now classified as permanent equity.
The Company determined that the outstanding Preferred Warrants should be liability-classified. See Note 15 for a discussion of the accounting treatment of the Common Warrants and Preferred Warrants.
(11)    Stockholders’ Equity
Public and Private Placements
Common Purchase Agreement
On March 27, 2023, the Company entered into a securities purchase agreement (the “Common Purchase Agreement”) with the Company’s Chief Executive Officer, Gerard Michel, pursuant to which the Company agreed to issue and sell, in a private placement (the “Common Offering”) shares of common stock, tranche A warrants (“Common Tranche A Warrants”) to acquire 31,110 shares of common stock, tranche B warrants (“Common Tranche B Warrants”, together with
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the Common Tranche A Warrants, the “Common Warrants”) to acquire 16,666 shares of common stock. On March 29, 2023, the Company closed the Common Offering.
The aggregate exercise price of the Common Tranche A Warrants issued pursuant to the Common Offering is approximately $0.1 million.
On August 14, 2023, the Company announced the receipt of the FDA Approval and all Common Tranche A Warrants were exercised and converted into 31,110 shares of common stock.
The aggregate exercise price of the Common Tranche B Warrants issued in the Common Offering is approximately $0.1 million. The Common Tranche B Warrants are exercisable for an aggregate of 16,666 shares of common stock until the earlier of 21 days following the Company’s announcement of receipt of recording at least $10 million in quarterly U.S. revenue from the commercialization of the HEPZATO KIT and March 31, 2026.
During the quarter ending September 30, 2024, we recorded at least $10 million in quarterly U.S. revenue from the commercialization of the HEPZATO KIT, which was announced by the Company on October 17, 2024, triggering the 21 day exercise period for the Common Tranche B Warrants. All 16,666 Common Tranche B Warrants were exercised prior to the November 6, 2024 expiration date which resulted in $0.1 million of cash proceeds to the Company.
Securities Purchase Agreement
On March 14, 2024, the Company and certain accredited investors (each an “Investor” and collectively, the “Investors”) entered into a securities purchase agreement (the “Securities Purchase Agreement”) pursuant to which the Company agreed to sell and issue to the Investors in a private placement (the “Private Placement”) (i) an aggregate of 876,627 shares of the Company’s common stock, par value $0.01 per share, at a purchase price of $3.72 per share, and (ii) to certain investors, in lieu of shares of common stock, 1,008,102 pre-funded warrants (the “Pre-Funded Warrants”) at a price per Pre-Funded Warrant of $3.71 (the “Warrant Shares” and together with the Shares, the “Securities”) with an exercise price of $0.01. As of September 30, 2024 the Pre-Funded Warrants have been exercised in full.
The Private Placement closed on March 19, 2024. The Company received gross proceeds of approximately $7.0 million, before deducting offering expenses payable by the Company.
Registration Rights for Preferred and Common Offerings
Pursuant to the Preferred Purchase Agreement and the Common Purchase Agreement (collectively, the “Purchase Agreements”), the Company filed a registration statement on Form S-3 (the “June 2023 Resale Registration Statement”) providing for the resale by the investors party thereto of the common stock issuable upon conversion of the Registrable Shares (as defined in the Purchase Agreements). The June 2023 Resale Registration Statement became effective on June 28, 2023.
Pursuant to the Securities Purchase Agreement, the Company filed a registration statement on Form S-3 (the “April 2024 Resale Registration Statement”) providing for the resale of the common stock and common stock issuable upon the exercise of the Pre-Funded Warrants. The April 2024 Resale Registration Statement also provided for the common stock issued upon the exercise of pre-funded warrants to purchase common stock issued by the Company pursuant to the Avenue Amendment. The registration became effective on May 9, 2024.
There is no established public trading market for the Series F Preferred Stock, the Preferred Warrants, Common Warrants or the Pre-Funded Warrants and the Company does not intend to list such securities on any national securities exchange or nationally recognized trading system.
June 2024 Shelf Registration Statement
On June 28, 2024, the Company filed a universal shelf registration statement on Form S-3 (the “June 2024 Shelf Registration Statement”) with the SEC, pursuant to which the Company may offer, issue and sell any combination of shares of the Company’s common stock, par value $0.01 per share, shares of the Company’s preferred stock, par value $0.01 per share, debt securities, warrants to purchase common stock, preferred stock and/or debt securities, in one or more series, and units consisting of any combination of the other types of securities registered under such June 2024 Shelf Registration Statement in an aggregate amount of up to $150 million, in each case, to the public in one or more registered offerings. The June 2024 Shelf Registration Statement was declared effective on August 5, 2024.
At-the-Market Offering
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The Company previously entered into a Controlled Equity OfferingSM Sales Agreement (“ATM Sales Agreement”), with Cantor Fitzgerald & Co. (the “Sales Agent”), pursuant to which the Company may offer and sell, at its sole discretion through the Sales Agent, shares of its common stock from time to time. Pursuant to a prospectus supplement (the “ATM Prospectus Supplement”), filed with the SEC on February 27, 2023, the Company could sell shares of common stock under the ATM Sales Agreement up to an aggregate of $17.0 million. To date, the Company has sold approximately $4.0 million of its common stock, prior to issuance costs, under the ATM Sales Agreement. No sales were made during the three or nine months ended September 30, 2024.
The registration statement the ATM Prospectus Supplement was part of, expired on July 1, 2024 and the Company can no longer make sales under the ATM Prospectus Supplement.
Authorized Shares
The Company is authorized to issue 80 million shares of common stock, $0.01 par value, and 10 million shares of preferred stock, $0.01 par value. As of September 30, 2024, the Company has designated the following preferred stock:

Designated Preferred SharesSeptember 30, 2024
Series A4,200 
Series B2,360 
Series C590 
Series D10,000 
Series E 40,000 
Series E-112,960 
Series F-1 24,900 
Series F-224,900 
Series F-334,860 
Series F-424,900 
Total179,670 
Preferred Stock
As of September 30, 2024, there were an aggregate of 11,257 shares of Series E and Series E-1, 1,085 Series F-2 and no shares of Series F-3 or Series F-4 Convertible Preferred Stock outstanding, respectively.
Omnibus Equity Incentive Plan
On September 30, 2020, the Company’s 2020 Omnibus Equity Incentive Plan (the “2020 Plan”) was adopted by the Company’s Board of Directors. On November 23, 2020, the Company’s stockholders approved the 2020 Plan. The 2020 Plan will continue in effect until the tenth anniversary of the date of its adoption by the Board or until earlier terminated by the Board. The 2020 Plan is administered by the Board of Directors or a committee designated by the Board of Directors. The 2020 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards, as well as other stock-based awards or cash awards that are deemed to be consistent with the purposes of the plan to Company employees, directors and consultants. As of September 30, 2024, there have been 7,125,000 shares of common stock reserved under the 2020 Plan, which includes an additional 2,000,000 shares approved by shareholders on May 23, 2024 and registered on a Form S-8 registration statement, filed with the SEC on June 28, 2024, of which 2,232,925 remained available to be issued.
In addition to options granted from the 2020 Plan, the Company also grants employment inducement awards pursuant to Listing Rule 5635(c)(4) of the corporate governance rules of the Nasdaq Stock Market. The inducement grants are intended to provide incentive to certain individuals to enter into employment with the Company. Prior to December 5, 2023, the inducement awards were granted outside of the 2020 Plan, however they are governed in all respects as if they were issued under the 2020 Plan. These grants do not reduce the number of options available for issuance under the 2020 Plan.
On December 5, 2023, the Company’s 2023 Inducement Plan (the “2023 Plan”) was adopted by the Company’s Board of Directors. The 2023 Plan is administered by a Compensation Committee of two or more Independent Directors appointed by the Board of Directors and is intended to provide for the grant of non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards, as well as other stock-based awards or cash
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awards that are deemed appropriate to incentivize employment with the Company. Awards from the 2023 Plan can only be granted to individuals who have not previously worked for the Company or have not worked for the Company for a bona fide period of time. As of September 30, 2024, there have been 650,000 shares of common stock reserved under the 2023 Plan, of which 285,000 remain available to be granted.

Stock Options
The following tables include information for all options granted including inducement grants that are granted outside of the 2020 Plan.
The Company values stock options using the Black-Scholes option pricing model and used the following assumptions, on a weighted-average basis, during the reporting periods:
 Nine Months Ended September 30,
 20242023
Expected terms (years)5.65.7
Expected volatility114.0%160.4%
Risk-free interest rate4.20%3.99%
Expected dividends0.00%0.00%
The following is a summary of stock option activity for the nine months ended September 30, 2024:
Number of Options Weighted Average
Exercise Price Per Share		Weighted Average Grant Date Fair Value Per ShareWeighted Average
Remaining
Contractual Term
(in years)		Aggregate Intrinsic
Value
(in thousands)
Outstanding at January 1, 20244,183,232$8.17 $7.60 8.3$147 
Granted2,282,0965.17 4.228.9
Exercised(70,088)5.19 3.72 221 
Expired(56,910)8.05 7.73
Cancelled/Forfeited(282,602)5.73 5.29
Outstanding at September 30, 20246,055,728$7.19 $6.47 7.6$15,453 
Exercisable at September 30, 20243,373,334$8.59 $7.78 6.5$5,692 
Unvested at September 30, 20242,682,394 $5.42 $4.83 9.1$9,761 
The following table summarizes information for stock option shares outstanding and exercisable at September 30, 2024:
Options Outstanding
Range of Exercise PricesOutstanding Number of
Options		Weighted Average
Remaining Option Term
(in years)
$2.83 - $51.50
6,055,2297.6
$51.50+
4991.2
6,055,7287.6
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The following is a summary of share-based compensation expense in the statement of operations:
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2024202320242023
Selling, general and administrative$1,530 $1,674 $5,502 $3,774 
Research and development411 1,027 1,954 2,095 
Cost of goods sold200 129 699 283 
Total$2,141 $2,830 $8,155 $6,152 
At September 30, 2024, there was $6.3 million of aggregate unrecognized compensation expense related to employee and board stock option grants. The cost is expected to be recognized over a weighted average period of one year.
Common Stock Warrants
The following is a summary of common stock warrant activity for the nine months ended September 30, 2024:
 Warrants
Weighted Average Exercise Price
Weighted Average
Remaining Life
(in years)
Outstanding at January 1, 20244,665,201$7.76 1.6
Warrants issued1
1,008,1020.01 
Warrants exercised(1,308,473)0.01 
Outstanding and exercisable at September 30, 20244,364,830$8.30 0.8
1All warrants issued in 2024 have been exercised and therefore have no remaining life.
The following table presents information related to common stock warrants outstanding at September 30, 2024:
Warrants Exercisable
Range of Exercise PricesOutstanding
Number of
Warrants		Weighted Average
Remaining Warrant Term
(in years)		Number of Warrants
$0.01737,4212.8737,421
$6.00
16,6660.216,666
$10.003,610,7430.43,610,743
4,364,8300.84,364,830
Preferred Stock Warrants
The following is a summary of preferred stock warrant activity for the nine months ended September 30, 2024:
WarrantsWeighted Average Exercise PriceWeighted Average
Remaining Life
(in years)
Outstanding at January 1, 202424,900 $1,000 2.3
Warrants issued— 
Warrants exercised(250)1,000 
Outstanding and exercisable at September 30, 202424,650$1,000 0.2
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As of November 5, 2024, all 24,900 Tranche B Warrants were exercised by the November 6, 2024 expiration date which resulted in $24.9 million of cash proceeds to the Company.
Employee Stock Purchase Plan
In August 2021, the Company’s Board of Directors, with shareholder approval in May 2022, adopted the Employee Stock Purchase Plan (the “ESPP”). The ESPP provides for a maximum of 260,295 shares of common stock to be purchased by participating employees of which 112,993 have been issued as of September 30, 2024 since the inception of the benefit in 2021. Employees who elect to participate in the ESPP will be able to purchase common stock at the lower of 85% of the fair market value of common stock on the first or last day of the applicable six-month offering period.
(12)    Net Income (Loss) per Share
Basic net income or loss per share is determined by dividing net loss by the weighted average shares of common stock outstanding during the period, without consideration of potentially dilutive securities, except for those shares that are issuable for little or no cash consideration. Diluted net income or loss per share is determined by dividing net income or loss by diluted weighted average shares outstanding. Diluted weighted average shares reflects the dilutive effect, if any, of potentially dilutive common shares, such as stock options and warrants calculated using the treasury stock method. In periods with reported net operating losses, all common stock options, convertible preferred shares, and preferred and common warrants are generally deemed anti-dilutive such that basic net loss per share and diluted net loss per share are equal.
As of September 30, 2024 and 2023, the Company had 737,421 and 1,037,792 pre-funded warrants outstanding, respectively. The following table provides a reconciliation of the weighted average shares outstanding calculation for the three and nine months ended September 30, 2024 and 2023:
Weighted average number of basic shares outstanding
Three months ended September 30,Nine months ended September 30,
2024202320242023
Weighted average shares issued28,000,88616,825,28626,347,22912,745,035
Weighted average pre-funded warrants737,4211,037,792987,9831,240,213
Weighted average shares outstanding28,738,30717,863,07827,335,21213,985,248

Weighted average number of diluted shares outstanding
Three months ended September 30,Nine months ended September 30,
2024202320242023
Weighted average shares outstanding (Basic)28,738,30717,863,07827,335,21213,985,248
Additional dilutive shares3,607,365— — — 
Weighted average shares outstanding (Diluted)32,345,67217,863,07827,335,21213,985,248

The following potentially dilutive securities were excluded from the computation of earnings per share as of September 30, 2024 and 2023 because their effects would be anti-dilutive:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Common stock warrants3,610,7433,627,409 3,627,4093,627,409
Assumed conversion of preferred stock warrants—4,149,994 4,108,3284,149,994
Assumed conversion of preferred stock—7,417,473 1,454,5097,417,473
Assumed conversion of convertible notes237,614488,031 237,614488,031
Stock options1,489,3104,136,828 6,055,7284,136,828
Total5,337,66719,819,73515,483,58819,819,735

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(13)    Income Taxes
As discussed in “Note 17—Income Taxes” to the notes to the consolidated financial statements contained in the Annual Report, the Company has a valuation allowance against the full amount of its net deferred tax assets. The Company currently provides a valuation allowance against deferred tax assets when it is more likely than not that some portion or all of its deferred tax assets will