Quarterly report pursuant to Section 13 or 15(d)

Basis of Presentation

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Basis of Presentation
9 Months Ended
Mar. 31, 2024
Basis of Presentation [Abstract]  
Basis of Presentation

2.   Basis of Presentation

Interim Condensed Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared from the books and records of the Company and include all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim consolidated financial information and Rule 8-03 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required for complete annual consolidated financial statements. Interim results are not necessarily indicative of the results that may be expected for the full year. Interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the prior year ended June 30, 2023, filed with the SEC on September 27, 2023 (the “Annual Report”), from which the accompanying condensed consolidated balance sheet dated June 30, 2023 was derived.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated as part of the consolidation.

Going Concern

In accordance with ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

The history of significant losses, the negative cash flow from operations, the upcoming maturity of the term note payable, the limited cash resources on hand and the dependence by the Company on obtaining additional financing to fund its operations after the current cash resources are exhausted raise substantial doubt about the Company's ability to continue as a going concern. Management’s current financing and business plans have not mitigated such substantial doubt about the Company’s ability to continue as a going concern for at least 12 months from the date of filing this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024. In an effort to mitigate the substantial doubt about continuing as a going concern and increase cash reserves, the Company has raised funds from time to time through equity offerings or other financing alternatives, sold certain intellectual property rights, reduced its work force by approximately 60% (a reduction of approximately 69 positions) in November 2022, and ceased operations of its 130,000 square foot cGMP facility located in Bryan, Texas (the “Facility”) thereby reducing annual spend on expenses. The Facility is a life science building located on land owned by the Board of Regents of the Texas A&M University System (“Texas A&M”) and was designed and equipped for the manufacture of plant-made biopharmaceuticals.

In July 2022, the Company initiated the selling of the CDMO assets and Facility, and since then has sold a substantial portion of the CDMO assets. (See Note 3 – Discontinued Operations for more information.)

Furthermore, on September 15, 2023, iBio CDMO LLC, or iBio CDMO, the Company’s subsidiary, entered into a purchase and sale agreement, dated as of September 15, 2023 (the “Purchase and Sale Agreement”), with Majestic Realty Co., a California corporation, (“Majestic Realty”), which sale if consummated would have allowed the Company to pay all outstanding amounts under the secured term loan with Woodforest National Bank (“Woodforest”) originally issued to iBio CDMO on November 1, 2021, in the amount of $22,375,000 (the “Term Loan”), with an outstanding balance of approximately $12.7 million as of March 31, 2024. (See Note 13 – Debt for more information.)  On November 7, 2023, the Company received written notice from Majestic Realty of its election to terminate the Purchase and Sale Agreement. Although the Property (as such term is defined in Note 3 below) is listed for sale, the Company does not currently have a buyer for the Property (as such term is defined in Note 3 below) at a price that will allow us to pay the Term Loan in full. If a sale of the Facility is not consummated prior to the May 15, 2024 maturity date of the Term Loan and the maturity date is not further extended, the Company will not have sufficient funds to repay the Term Loan on its maturity date and support its operations for at least 12 months from the date of filing this Quarterly Report for the quarterly period ended March 31, 2024. There can be no

assurance that the Company will be able to sell the Property or that the Company will be able to sell the Property for an amount that will allow it to repay all outstanding amounts under the Term Loan.

During the first quarter ended on September 30, 2023, the Company completed at-the-market offerings and sold 170,989 shares of Common Stock for which it received approximately $1.7 million. The Company also sold 181,141 shares of common stock, par value $0.001 per share (the “Common Stock”) under its purchase agreement entered into on August 4, 2023 (the “Purchase Agreement”), with Lincoln Park Capital Fund, LLC (“Lincoln Park”) and received approximately $1.2 million in proceeds. During the second quarter ended December 31, 2023, the Company sold an additional 21,457 shares to Lincoln Park under the Purchase Agreement for approximately $0.1 million.

On December 7, 2023, the Company closed a public offering (the “2023 Offering”) pursuant to which it sold in the 2023 Offering, (i) 600,000 shares (the “Shares”) of the Company’s Common Stock, (ii) 1,650,000 pre-funded warrants (the “2023 Pre-Funded Warrants”) exercisable for an aggregate of 1,650,000 shares of Common Stock, (iii) 2,250,000 Series C common warrants (the “Series C Common Warrants”) exercisable for an aggregate of 2,250,000 shares of Common Stock, and (iv) 2,250,000 Series D common warrants (the “Series D Common Warrants,” and together with the Series C Common Warrants, the “Common Warrants”) exercisable for an aggregate of 2,250,000 shares of Common Stock. A.G.P./Alliance Global Partners (“A.G.P.”) acted as lead placement agent, and Brookline Capital Markets, a division of Arcadia Securities, LLC (“Brookline”), acted as co-placement agent (A.G.P. and Brookline are referred to herein, collectively, as the “Placement Agents”) for the 2023 Offering. The Company received approximately $4.5 million in gross proceeds from the 2023 Offering, including the exercise of all 2023 Pre-Funded Warrants and prior to deducting placement agent fees and other estimated offering expenses payable by the Company and excluding the net proceeds, if any, from the exercise of the Common Warrants. (See Note 16 – Stockholders’ Equity for more information.)

On February 25, 2024, the Company entered into an Asset Purchase Agreement (the “PD-1 Purchase Agreement”) with Otsuka Pharmaceutical Co., Ltd. (“Otsuka”) pursuant to which the Company sold and assigned to Otsuka, and Otsuka purchased and assumed, all intellectual property rights directly related to the Company’s early-stage programmed cell death protein 1 (“PD-1” ) (the “PD-1 Assets”) developed or held for development in consideration of $1,000,000 paid at closing.  The PD-1 Purchase Agreement also provides for a potential contingent payment of $2,500,000 upon the achievement of specified developmental milestones and a second potential contingent payment of $50,000,000 upon the achievement of specified milestones following commercialization. The acquisition of the PD-1 Assets (the “PD-1 Acquisition”) closed on February 25, 2024.

On March 26, 2024, the Company entered into a securities purchase agreement (the “PIPE Purchase Agreement”) with several institutional investors and an accredited investor (the “Purchasers”) for the issuance and sale in a private placement (the “Private Placement”) of the following securities for gross proceeds of approximately $15.1 million: (i) 2,701,315 shares of the Company’s common stock, par value $0.001 (the “Common Stock”), (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 2,585,963 shares of the Company’s Common Stock at an exercise price of $0.0001 per share, and (iii) Series E Common Stock purchase warrants (the “Series E Warrants”) to purchase up to 5,287,278 shares of the Company’s Common Stock at an exercise price of $2.64 per share. The Series E Warrants are exercisable at any time after the six-month anniversary of their issuance (the “Initial Exercise Date”) at an exercise price of $2.64 per share and have a term of exercise equal to five years from the date of issuance. The combined purchase price for one share of common stock and the accompanying Series E Warrant was $2.85 and the purchase price for one Pre-Funded Warrant and the accompanying Series E Warrant was $2.849. Chardan Capital Markets, LLC (“Chardan”) served as the exclusive placement agent in connection with the Private Placement and was paid (i) a cash fee equal to 6.0% of the aggregate gross proceeds of the Private Placement (reduced to 4.0% with respect to certain investors), and (ii) up to $50,000 for legal fees and other out-of-pocket expenses. The Private Placement closed on April 1, 2024.  The Company received net proceeds of approximately $14.1 million from the Private Placement, after deducting estimated offering expenses payable by the Company, including placement agent fees and expenses, which was reported as a subscription receivable on the March 31, 2024 condensed consolidated balance sheet.

During the third quarter of Fiscal 2024, 414,000 of pre-funded warrants issued in 2023, 1,131,500 Series C Common Warrants and 1,006,500 Series D Common Warrants were exercised for proceeds of $4,276,000.  In April 2024, 48,000 Series C Common Warrants and 48,000 Series D Common Warrants were exercised for proceeds of $192,000.

The Company’s cash, cash equivalents and restricted cash were approximately $6.4 million as of March 31, 2024, which is inclusive of restricted cash of $1.1 million, of which $0.9 million was deposited in accordance with the Fourth Amendment with Woodforest. Subsequent to March 31, 2024, the Company received net proceeds from the Private Placement of approximately $14.1 million.  As of the filing of this Quarterly Report, the Company’s cash balance of approximately $17.9 million, which is inclusive of $1.1 million of restricted cash, is not anticipated to be sufficient to support operations through the first quarter of Fiscal 2025, unless the Company either sells the Facility prior to the May 15, 2024 maturity date for amounts near or above its Term Loan, the maturity date of the Term Loan is further extended, or the Term Loan is restructured. The Company is evaluating a potential transaction based on current interest in the Facility, which could minimize cash outlay and allow the Company to have a cash runway for at least 12 months from the date of

the filing of this Quarterly Report. However, there can be no assurance the Company will be successful in implementing any of the potential options it is evaluating.

The accompanying condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that may result from the substantial doubt about the Company’s ability to continue as a going concern.

Reverse Stock Split

On September 22, 2022, the Company's Board of Directors (the “Board”) approved the implementation of a reverse stock split (the “Reverse Split”) at a ratio of one-for-twenty-five (1:25) shares of the Company's Common Stock. The Reverse Split was effective as of October 7, 2022.  All share and per share amounts of the Common Stock presented in this Quarterly Report have been retroactively adjusted to reflect the Reverse Split. See Note 16 – Stockholders’ Equity for more information.

On November 27, 2023, the Company’s Board approved the implementation of a reverse stock split (the “2023 Reverse Split”) at a ratio of one-for-twenty (1:20) shares of the Company's Common Stock. The 2023 Reverse Split was effective as of November 29, 2023. All share and per share amounts of the Common Stock presented in this Quarterly Report have been retroactively adjusted to reflect the 2023 Reverse Split. See Note 16 – Stockholders’ Equity for more information.