10-Q 1 rani-20230930.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission File Number: 001-40672

 

RANI THERAPEUTICS HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

86-3114789

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

2051 Ringwood Avenue

San Jose, California

95131

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (408) 457-3700

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A common stock, par value $0.0001 per share

 

RANI

 

The Nasdaq Stock Market LLC

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 ☒ No ☐

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

 

 

 

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 Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of November 3, 2023, the registrant had 25,880,064 shares of Class A common stock, $0.0001 par value per share, outstanding, 24,116,444 shares of Class B common stock, $0.0001 par value per share, outstanding and no shares of Class C common stock, $0.0001 par value per share, outstanding. Certain holders of units of the registrant’s consolidated subsidiary, Rani Therapeutics, LLC, who do not hold shares of the registrant’s Class B common stock can exchange their units of Rani Therapeutics, LLC for 1,345,067 shares of the registrant’s Class A common stock.

 

 

 


 

Table of Contents

 

 

 

Page

Special Note Regarding Forward-Looking Statements

3

 

 

 

PART I.

FINANCIAL INFORMATION

 

 

 

 

 

RANI THERAPEUTICS HOLDINGS, INC.

 

Item 1.

Financial Statements (Unaudited)

5

 

Condensed Consolidated Balance Sheets

5

 

Condensed Consolidated Statements of Operations

6

 

Condensed Consolidated Statements of Comprehensive Loss

7

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity

8

 

Condensed Consolidated Statements of Cash Flows

9

 

Notes to Unaudited Condensed Consolidated Financial Statements

10

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

37

Item 4.

Controls and Procedures

37

 

 

 

PART II.

OTHER INFORMATION

38

 

 

 

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

38

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

45

Item 3.

Defaults Upon Senior Securities

45

Item 4.

Mine Safety Disclosures

45

Item 5.

Other Information

45

Item 6.

Exhibits

46

Signatures

47

 

2


 

Unless otherwise stated or the context otherwise requires, the terms “we,” “us,” and “our,” and similar references refer to Rani Therapeutics Holdings, Inc. (“Rani Holdings”) and its consolidated subsidiary, Rani Therapeutics, LLC (“Rani LLC”) and, prior to December 15, 2022, Rani Management Systems, Inc. (“RMS”). RMS was dissolved as of December 15, 2022.

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations," contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and consolidated financial position, business strategy, product candidates, planned preclinical studies and clinical trials, results of clinical trials, research and development costs, manufacturing costs, regulatory approvals, development and advancement of our oral delivery technology, timing and likelihood of success, potential partnering activities as well as plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that are in some cases beyond our control and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “believe,” “estimate,” “predict,” “potential,” “seek,” “aim,” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

 

the progress and focus of our current and future clinical trials in the United States and abroad, and the reporting of data from those trials;
our ability to advance product candidates into and successfully complete clinical trials;
the beneficial characteristics, safety, efficacy, and therapeutic effects of our product candidates;
our potential and ability to successfully manufacture and supply our product candidates for clinical trials and for commercial use, if approved;
our ability to complete development of the RaniPill HC or any redesign and conduct additional preclinical and clinical studies of the RaniPill HC or any future design of the RaniPill capsule to accommodate target payloads that are larger than the payload capacity of the RaniPill GO capsule currently used for our product candidates;
our ability to further develop and expand our platform technology;
our ability to utilize our technology platform to generate and advance additional product candidates;
the accuracy of our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing;
our financial performance;
our plans relating to commercializing our product candidates, if approved;
our ability to selectively enter into strategic partnership and the expected potential benefits thereof;
the implementation of our strategic plans for our business and product candidates;
our ability to continue to scale and optimize our manufacturing processes by expanding our use of automation;
our estimates of the number of patients in the United States who suffer from the indications we target and the number of patients that will enroll in our clinical trials;
the size of the market opportunity for our product candidates in each of the indications we target;
our ability to continue to innovate and expand our intellectual property by developing novel formulations and new applications of the RaniPill capsule;
our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available;
the scope of protection we are able to establish and maintain for intellectual property rights, including our technology platform and product candidates;

3


 

the sufficiency of our existing cash and cash equivalents to fund our future operating expenses and capital expenditure requirements;
our ability to realize savings from any restructuring plans or cost-containment measures we propose to implement;
developments relating to our competitors and our industry, including competing product candidates and therapies;
our realization of any benefit from our organizational structure, taking into account our obligations under the Tax Receivable Agreement (defined herein) and the impact of any payments required to be made thereunder on our liquidity and financial condition; and
our expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions described in the section titled “Risk Factors” and elsewhere in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 22, 2023. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

4


 

RANI THERAPEUTICS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

 

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

4,972

 

 

$

27,007

 

Marketable securities

 

 

55,554

 

 

 

71,475

 

Prepaid expenses and other current assets

 

 

2,696

 

 

 

2,442

 

Total current assets

 

 

63,222

 

 

 

100,924

 

Property and equipment, net

 

 

6,255

 

 

 

6,038

 

Operating lease right-of-use asset

 

 

959

 

 

 

1,065

 

Total assets

 

$

70,436

 

 

$

108,027

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,405

 

 

$

1,460

 

Accrued expenses and other current liabilities

 

 

3,930

 

 

 

2,349

 

Current portion of long-term debt

 

 

1,222

 

 

 

 

Current portion of operating lease liability

 

 

788

 

 

 

1,006

 

Total current liabilities

 

 

7,345

 

 

 

4,815

 

Long-term debt, less current portion

 

 

28,101

 

 

 

29,149

 

Operating lease liability, less current portion

 

 

171

 

 

 

59

 

Total liabilities

 

 

35,617

 

 

 

34,023

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value - 20,000 shares authorized; none issued and outstanding as of September 30, 2023 and December 31, 2022

 

 

 

 

 

 

Class A common stock, $0.0001 par value - 800,000 shares authorized; 25,876 and 25,295 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

 

3

 

 

 

3

 

Class B common stock, $0.0001 par value - 40,000 shares authorized; 24,116 issued and outstanding as of September 30, 2023 and December 31, 2022

 

 

2

 

 

 

2

 

Class C common stock, $0.0001 par value - 20,000 shares authorized; none issued and outstanding as of September 30, 2023 and December 31, 2022

 

 

 

 

 

 

Additional paid-in capital

 

 

83,380

 

 

 

75,842

 

Accumulated other comprehensive loss

 

 

(41

)

 

 

(73

)

Accumulated deficit

 

 

(65,791

)

 

 

(38,919

)

Total stockholders' equity attributable to Rani Therapeutics Holdings, Inc.

 

 

17,553

 

 

 

36,855

 

Non-controlling interest

 

 

17,266

 

 

 

37,149

 

Total stockholders' equity

 

 

34,819

 

 

 

74,004

 

Total liabilities and stockholders' equity

 

$

70,436

 

 

$

108,027

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


 

RANI THERAPEUTICS HOLDINGS, INC.

CONDENSED Consolidated Statements of Operations

(in thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

11,220

 

 

$

9,103

 

 

$

32,018

 

 

$

26,221

 

General and administrative

 

 

6,635

 

 

 

7,239

 

 

 

20,647

 

 

 

19,748

 

Total operating expenses

 

$

17,855

 

 

$

16,342

 

 

$

52,665

 

 

$

45,969

 

Loss from operations

 

 

(17,855

)

 

 

(16,342

)

 

 

(52,665

)

 

 

(45,969

)

Other income (expense), net

 

 

 

 

 

 

 

 

 

 

 

 

Interest income and other, net

 

 

839

 

 

 

379

 

 

 

2,626

 

 

 

430

 

Interest expense and other, net

 

 

(1,316

)

 

 

(352

)

 

 

(3,789

)

 

 

(352

)

Loss before income taxes

 

 

(18,332

)

 

 

(16,315

)

 

 

(53,828

)

 

 

(45,891

)

Income tax expense

 

 

 

 

 

107

 

 

 

 

 

 

(111

)

Net loss

 

$

(18,332

)

 

$

(16,208

)

 

$

(53,828

)

 

$

(46,002

)

Net loss attributable to non-controlling interest

 

 

(9,135

)

 

 

(8,253

)

 

 

(26,956

)

 

 

(24,200

)

Net loss attributable to Rani Therapeutics Holdings, Inc.

 

$

(9,197

)

 

$

(7,955

)

 

$

(26,872

)

 

$

(21,802

)

Net loss per Class A common share attributable to Rani Therapeutics Holdings, Inc., basic and diluted

 

$

(0.36

)

 

$

(0.33

)

 

$

(1.06

)

 

$

(0.93

)

Weighted-average Class A common shares outstanding—basic and diluted

 

 

25,552

 

 

 

24,468

 

 

 

25,380

 

 

 

23,449

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6


 

RANI THERAPEUTICS HOLDINGS, INC.

CONDENSED Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss

 

$

(18,332

)

 

$

(16,208

)

 

$

(53,828

)

 

$

(46,002

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gain (loss) on marketable securities

 

 

45

 

 

 

(118

)

 

 

64

 

 

 

(118

)

Comprehensive loss

 

$

(18,287

)

 

$

(16,326

)

 

$

(53,764

)

 

$

(46,120

)

Comprehensive loss attributable to non-controlling interest

 

 

(9,113

)

 

 

(8,314

)

 

 

(26,924

)

 

 

(24,261

)

Comprehensive loss attributable to Rani Therapeutics Holdings, Inc.

 

$

(9,174

)

 

$

(8,012

)

 

$

(26,840

)

 

$

(21,859

)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7


 

RANI THERAPEUTICS HOLDINGS, INC.

CONDENSED Consolidated Statements of Changes in STOCKHOLDERS’ Equity

(in thousands)

(Unaudited)

 

 

 

Class A Common Stock

 

 

Class B Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional Paid In Capital

 

 

Accumulated Other Comprehensive Loss

 

 

Accumulated Deficit

 

 

Non-Controlling Interest

 

 

Total Stockholders' Equity

 

Balance at December 31, 2022

 

 

25,295

 

 

$

3

 

 

 

24,116

 

 

$

2

 

 

$

75,842

 

 

$

(73

)

 

$

(38,919

)

 

$

37,149

 

 

$

74,004

 

Issuance of common stock under employee equity plans, net of shares withheld for tax settlement

 

 

81

 

 

 

 

 

 

 

 

 

 

 

 

(124

)

 

 

 

 

 

 

 

 

 

 

 

(124

)

Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

98

 

 

 

 

 

 

 

 

 

(98

)

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,202

 

 

 

 

 

 

 

 

 

2,213

 

 

 

4,415

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,372

)

 

 

(8,460

)

 

 

(16,832

)

Other comprehensive gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

63

 

 

 

 

 

 

63

 

 

 

126

 

Balance at March 31, 2023

 

 

25,376

 

 

$

3

 

 

 

24,116

 

 

$

2

 

 

$

78,018

 

 

$

(10

)

 

$

(47,291

)

 

$

30,867

 

 

$

61,589

 

Issuance of common stock under employee stock purchase plan

 

 

63

 

 

 

 

 

 

 

 

 

 

 

 

219

 

 

 

 

 

 

 

 

 

 

 

 

219

 

Issuance of common stock under employee equity plans, net of shares withheld for tax settlement

 

 

78

 

 

 

 

 

 

 

 

 

 

 

 

(9

)

 

 

 

 

 

 

 

 

 

 

 

(9

)

Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(54

)

 

 

 

 

 

 

 

 

54

 

 

 

 

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,572

 

 

 

 

 

 

 

 

 

2,569

 

 

 

5,141

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,303

)

 

 

(9,361

)

 

 

(18,664

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(53

)

 

 

 

 

 

(54

)

 

 

(107

)

Balance at June 30, 2023

 

 

25,517

 

 

$

3

 

 

 

24,116

 

 

$

2

 

 

$

80,746

 

 

$

(63

)

 

$

(56,594

)

 

$

24,075

 

 

$

48,169

 

Issuance of common stock under employee equity plans, net of shares withheld for tax settlement

 

 

319

 

 

 

 

 

 

 

 

 

 

 

 

(29

)

 

 

 

 

 

 

 

 

 

 

 

(29

)

Effect of exchanges of Paired Interests and non-corresponding Class A Units of Rani LLC

 

 

42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

159

 

 

 

 

 

 

 

 

 

(159

)

 

 

 

Forfeiture of restricted stock awards

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

(6

)

 

 

 

 

 

 

 

 

(6

)

 

 

(12

)

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,510

 

 

 

 

 

 

 

 

 

2,468

 

 

 

4,978

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,197

)

 

 

(9,135

)

 

 

(18,332

)

Other comprehensive gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22

 

 

 

 

 

 

23

 

 

 

45

 

Balance at September 30, 2023

 

 

25,876

 

 

$

3

 

 

 

24,116

 

 

$

2

 

 

$

83,380

 

 

$

(41

)

 

$

(65,791

)

 

$

17,266

 

 

$

34,819

 

 

 

 

Class A Common Stock

 

 

Class B Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional Paid In Capital

 

 

Accumulated Other Comprehensive Loss

 

 

Accumulated Deficit

 

 

Non-Controlling Interest

 

 

Total Stockholders' Equity

 

Balance at December 31, 2021

 

 

19,712

 

 

$

2

 

 

 

29,290

 

 

$

3

 

 

$

55,737

 

 

$

 

 

$

(8,331

)

 

$

74,156

 

 

$

121,567

 

Effect of exchanges of Paired Interests and non-corresponding Class A Units of Rani LLC

 

 

4,675

 

 

 

 

 

 

(4,517

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,928

 

 

 

 

 

 

 

 

 

(10,928

)

 

 

 

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,268

 

 

 

 

 

 

 

 

 

1,637

 

 

 

2,905

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,223

)

 

 

(7,605

)

 

 

(13,828

)

Balance at March 31, 2022

 

 

24,387

 

 

$

2

 

 

 

24,773

 

 

$

3

 

 

$

67,933

 

 

$

 

 

$

(14,554

)

 

$

57,260

 

 

$

110,644

 

Forfeiture of restricted stock awards

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

(3

)

 

 

(6

)

Effect of exchanges of Paired Interests and non-corresponding Class A Units of Rani LLC

 

 

110

 

 

 

 

 

 

(110

)