xcur-20230630

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________________

FORM 10-Q

______________________________________

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

For the quarterly period ended June 30, 2023

☐ 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: 001-39011

______________________________________

EXICURE, INC.

(Exact name of registrant as specified in its charter)

_____________________________________


Delaware						81-5333008
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)

2430 N. Halsted St.

Chicago, IL 60614

(Address of principal executive offices)

Registrant’s telephone number, including area code (847) 673-1700

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

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

XCUR

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, a 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 by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 9, 2023, there were 8,648,307 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

EXICURE, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION						7
Item 1. Financial Statements						7
Unaudited Condensed Consolidated Balance Sheets						7
Unaudited Condensed Consolidated Statements of Operations						8
Unaudited Condensed Consolidated Statements of Comprehensive Loss						9
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity						10
Unaudited Condensed Consolidated Statements of Cash Flows						12
Notes to Unaudited Condensed Consolidated Financial Statements						14
Item 2. Management's Discussion and Analysis and Results of Operations						29
Item 3. Quantitative and Qualitative Disclosures About Market Risk						38
Item 4. Controls and Procedures						38

PART II - OTHER INFORMATION						40
Item 1. Legal Proceedings						40
Item 1A. Risk Factors						42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						53
Item 3. Defaults Upon Senior Securities						53
Item 4. Mine Safety Disclosures						53
Item 5. Other Information						53
Item 6. Exhibits						54

Signatures						56

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains express or implied “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “will,” “would,” “should,” “expect,” “plan,”, “anticipate,” “believe,” “estimate,” “intend,” “predict,” “seek,” “contemplate,” “project,” “continue,” “potential,” “ongoing” or the negative of these terms or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to such statements.

Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, such expectations or any of the forward-looking statements may prove to be incorrect and actual results could differ materially from those projected or assumed in the forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties, including, but not limited to, the risk factors described in the “Risk Factor Summary” below and set forth in Part II, Item 1A “Risk Factors” below and for the reasons described elsewhere in this Quarterly Report on Form 10-Q. All forward-looking statements and reasons why results may differ included in this report are made as of the date hereof and we do not intend to update any forward-looking statements except as required by law. These forward-looking statements include, but are not limited to, statements concerning the following:

•substantial uncertainties regarding our exploration of strategic alternatives to maximize stockholder value, including whether we are able to identify potential partners and consummate transactions, in a timely manner or at all, whether we would be able to obtain sufficient funding to complete this process and whether any such transactions would generate value for stockholders;

•our ability to generate any meaningful value from sales, out-licensing or other transactions involving our historical assets;

•our ability to raise the substantial additional capital that is needed within the next few months to fund our operations and our pursuit of strategic alternatives, particularly given our current lack of a revenue source or committed financing and the substantial doubt about our ability to continue as a going concern;

•our ability to correct deficiencies and to remain listed on The Nasdaq Capital Market (“Nasdaq”), including the ability to maintain minimum stockholders’ equity and stock price, and comply with applicable governance requirements, for continued listing on Nasdaq;

•any strategic plan or alternative that we may identify and pursue may involve unexpected costs, liabilities and/or delays and may not deliver anticipated benefits to our stockholders;

•our estimates of expenses, use of cash, timing of future cash needs, ongoing losses and capital requirements, including our expectations relating to our needs for additional financing and the timing thereof may prove to be inaccurate;

•uncertainty about reaction from investors and potential business partners to our recent change of control and board composition and the future direction of the Company, and the ability of our controlling stockholder and new board members to earn the confidence of investors and potential partners despite limited experience with U.S. public companies, and how these factors may impact our ability to obtain funding and execute any strategic alternatives that we may identify;

•potential turnover of senior management in the near term, and any inability to attract and retain qualified management and other key personnel, could create significant continuity risk and impair our ability to raise capital and execute on our exploration of strategic alternatives;

Table of Contents

•our ability to comply with all applicable laws, which may be particularly challenging given the recent turnover in our board, potential turnover in management, significant reductions in force, limited resources and the potential to enter into new business areas with which we have no past experience;

•our ability to obtain and maintain intellectual property protection for our technologies and our ability to operate our business without infringing the intellectual property rights of others;

•the impact of worsening macroeconomic conditions, including rising global inflation, actions taken by central banks to counter inflation, capital market and bank instability, exchange rate fluctuations, supply chain disruptions and energy and fuel prices;

•the impact of government laws and regulations as well as developments relating to our competitors or our industry; and

•other factors that may impact our financial results and condition and our ongoing strategic efforts.

These statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed in Part II, Item 1A of this Quarterly Report on Form 10-Q under the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

Any forward-looking statement in this Quarterly Report on Form 10-Q reflects our current view with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our business, results of operations, industry and future growth. Given these uncertainties, you should not place undue reliance on these forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed with the SEC as exhibits thereto completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements. Except as required by law, we assume no, and specifically decline any, obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Quarterly Report on Form 10-Q also contains or may contain estimates, projections and other information concerning our industry, our business and the markets for certain therapeutics, including data regarding the estimated size of those markets, their projected growth rates and the incidence of certain medical conditions. Information that is based on estimates, forecasts, projections or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained these industry, business, market and other data from reports, research surveys, studies and similar data prepared by third parties, industry, medical and general publications, government data and similar sources. In some cases, we do not expressly refer to the sources from which these data are derived.

Except where the context otherwise requires, in this Quarterly Report on Form 10-Q, the “Company,” “Exicure,” “we,” “us” and “our” refers to Exicure, Inc., a Delaware corporation, and, where appropriate, our subsidiary.

Table of Contents

SUMMARY RISK FACTORS

Investing in common stock involves numerous risks, including the risks described in “Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q. Below are some of these risks, any one of which could materially adversely affect our business, financial condition, results of operations and prospects.

•Our exploration of strategic alternatives may not be successful.

•We need to obtain substantial funding in the near term in order to continue operations and our exploration of strategic alternatives.

•Our controlling stockholder, executive officers and members of our board, have limited experience controlling or governing a public company in the United States.

•Turnover of senior management, and any inability to attract and retain qualified management and other key personnel, could impair our ability to implement our business plan.

•Our unaudited condensed consolidated financial statements have been prepared assuming that we will continue as a going concern.

•We currently do not comply with the Nasdaq continued listing requirements. Our common stock may be delisted from Nasdaq, which could negatively impact the price of our common stock, liquidity and our ability to access the capital markets.

•We have a history of losses. We expect to continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability, which could result in a decline in the market value of our common stock.

•Our internal computer systems, or those of contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our business operations.

•Our information technology systems could face disruptions that could adversely affect our business.

•Our business and operations could suffer in the event of system failures or unauthorized or inappropriate use of or access to our information technology systems.

•Increasing scrutiny and changing expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.

•Our current operations are concentrated in one location and any events affecting this location may have material adverse consequences.

•The investment of our cash, cash equivalents and fixed income marketable securities is subject to risks which may cause losses and affect the liquidity of these investments.

•If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired.

•We currently license patent rights from Northwestern University. If Northwestern University does not properly or successfully obtain, maintain or enforce the patents underlying such licenses, or if they retain or license to others any competing rights, our competitive position and business prospects may be adversely affected.

•Our licensors, or any current or future strategic partners, may become subject to third-party claims or litigation alleging infringement of patents or other proprietary rights or seeking to invalidate patents or other proprietary rights, and we may need to resort to litigation to protect or enforce our patents or other proprietary rights, all of which could be costly, time consuming, or put our patents and other proprietary rights at risk.

•We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.

•If we fail to comply with our obligations under any license, collaboration or other agreements, we may be required to pay damages and could lose intellectual property rights that are necessary for developing and protecting our therapeutic candidates or we could lose certain rights to grant sublicenses.

•Our status as a “controlled company” could make our Common Stock less attractive to some investors or otherwise harm the trading price of our Common Stock.

•The market price of our common stock has been, and is likely to continue to be, highly volatile, and you may not be able to resell your shares at or above the price you paid for them.

Table of Contents

•Raising additional funds by issuing securities may cause dilution to existing stockholders and raising funds through lending and licensing arrangements may restrict our operations or require us to relinquish proprietary rights.

•We are an “emerging growth company” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.

•Anti-takeover provisions in our charter documents and under the General Corporation Law of the State of Delaware could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our management.

•Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.

•Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

•FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock due to our low stock price.

•If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

EXICURE, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	June 30, 2023		December 31, 2022

ASSETS
Current assets:
Cash and cash equivalents	$	2,335	$	8,577

Prepaid expenses and other assets	1,329		1,474
Total current assets	3,664		10,051
Property and equipment, net	1,796		2,530
Right-of-use asset	6,893		7,257
Other noncurrent assets	5,202		3,490
Total assets	$	17,555	$	23,328
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable	343		361
Accrued expenses and other current liabilities	1,088		1,278

Total current liabilities	1,431		1,639

Lease liability, noncurrent	6,419		6,767

Total liabilities	7,850		8,406

Contingencies (Note 11)

Stockholders’ equity:
Preferred stock, $0.0001 par value per share; 10,000,000 shares authorized, no shares issued and outstanding, June 30, 2023 and December 31, 2022	—		—
Common stock, $0.0001 par value per share; 200,000,000 shares authorized, 8,648,307 issued and outstanding, June 30, 2023; 4,965,901 issued and outstanding, December 31, 2022	1		—
Additional paid-in capital	192,524		187,571

Accumulated deficit	(182,820)		(172,649)
Total stockholders’ equity	9,705		14,922
Total liabilities and stockholders’ equity	$	17,555	$	23,328

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

EXICURE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue:
Collaboration revenue	$	—	$	2,471	$	—	$	5,036
Total revenue	—		2,471		—		5,036
Operating expenses:
Research and development expense	921		6,749		2,902		13,889
General and administrative expense	4,721		3,205		7,279		6,367
Total operating expenses	5,642		9,954		10,181		20,256
Operating loss	(5,642)		(7,483)		(10,181)		(15,220)
Other income (expense), net:
Dividend income	15		16		32		18
Interest income	13		1		24		3
Interest expense	—		—		—		(595)
Other income (expense), net	(150)		(4)		(46)		(24)
Total other income (expense), net	(122)		13		10		(598)
Net loss before provision for income taxes	(5,764)		(7,470)		(10,171)		(15,818)
Provision for income taxes	—		—		—		—
Net loss	$	(5,764)	$	(7,470)	$	(10,171)	$	(15,818)

Basic and diluted loss per common share	$	(0.68)	$	(1.66)	$	(1.38)	$	(3.71)


Weighted-average basic and diluted common shares outstanding	8,432,394		4,503,983		7,366,594		4,268,955

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

EXICURE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands, except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net loss	$	(5,764)	$	(7,470)	$	(10,171)	$	(15,818)
Other comprehensive (loss), net of taxes
Unrealized (loss) on available for sale securities, net of tax	—		—		—		(3)
Other comprehensive (loss)	—		—		—		(3)
Comprehensive loss	$	(5,764)	$	(7,470)	$	(10,171)	$	(15,821)

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

EXICURE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except shares)


	Common Stock
	Shares	$		Additional Paid-in- Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Balance at December 31, 2022	4,965,901	$	—	$	187,571	$	(172,649)	$	—	$	14,922
Equity-based compensation	—	—		308		—		—		308
Reclassification of common stock warrants to liability	—	—		(800)		—		—		(800)
Vesting of restricted stock units and related repurchases	5,561	1		(2)		—		—		(1)
Issuance of common stock, net	3,400,000	—		4,597		—		—		4,597
Net loss	—	—		—		(4,407)		—		(4,407)
Balance at March 31, 2023	8,371,462	$	1	$	191,674	$	(177,056)	$	—	$	14,619
Equity-based compensation	—	—		969		—		—		969
Vesting of restricted stock units and related repurchases	276,845	—		(119)		—		—		(119)



Net loss	—	—		—		(5,764)		—		(5,764)
Balance at June 30, 2023	8,648,307	$	1	$	192,524	$	(182,820)	$	—	$	9,705

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

EXICURE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except shares)


	Common Stock
	Shares	$		Additional Paid-in- Capital		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Stockholders' Equity
Balance at December 31, 2021	3,626,073	$	—	$	181,301	$	(170,067)	$	(2)	$	11,232
Exercise of common stock warrants	466,666	—		14		—		—		14
Equity-based compensation	—	—		342		—		—		342
Vesting of restricted stock units and related repurchases	324	—		(1)		—		—		(1)
Other comprehensive loss, net	—	—		—		—		(3)		(3)
Net loss	—	—		—		(8,348)		—		(8,348)
Balance at March 31, 2022	4,093,063	$	—	$	181,656	$	(178,415)	$	(5)	$	3,236
Exercise of options	124	—		1		—		—		1
Equity-based compensation	—	—		507		—		—		507
Vesting of restricted stock units and related repurchases	324	—		(1)		—		—		(1)
Issuance of common stock-ESPP	1,351	—		4		—		—		4
Issuance of common stock and warrants	867,369	—		4,886		—		—		4,886

Net loss	—	—		—		(7,470)		—		(7,470)
Balance at June 30, 2022	4,962,231	$	—	$	187,053	$	(185,885)	$	(5)	$	1,163

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

EXICURE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(10,171)	$	(15,818)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	479		593

SEC Form 10-Q filed by Exicure Inc.