pirs20240630

pirs20240630_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 June 30, 2024

☐	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: 001-37471

PIERIS PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Nevada	30-0784346
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

225 Franklin Street, 26th Floor
Boston, MA
United States	02110
(Address of principal executive offices)	(Zip Code)

857-246-8998

(Registrant’s telephone number, including area code)

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

Title of Each Class		Trading Symbol		Name of Each Exchange on which Registered
Common Stock, $0.001 par value per share		PIRS		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 ☒ 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 in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 8, 2024, the registrant had 1,320,240 shares of common stock outstanding.

Table of Contents

TABLE OF CONTENTS

	Page
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)	1
Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	1
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months ended June 30, 2024 and 2023	2
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months ended June 30, 2024 and 2023	3
Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2024 and 2023	5
Notes to the Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3. Quantitative and Qualitative Disclosures about Market Risk	24
Item 4. Controls and Procedures	25
PART II: OTHER INFORMATION
Item 1. Legal Proceedings	26
Item 1A. Risk Factors	26
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	28
Item 3. Defaults Upon Senior Securities	28
Item 4. Mine Safety Disclosures	28
Item 5. Other Information	28
Item 6. Exhibits	28
SIGNATURES	30

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Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that involve risks and uncertainties, principally in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding future events, the transactions contemplated by the Agreement and Plan of Merger, dated as of July 23, 2024, or the Merger Agreement, by and between the Pieris, Polo Merger Sub, a Delaware corporate and wholly owned subsidiary of ours, or Merger Sub, and Palvella Therapeutics, Inc., a Delaware corporation, or Palvella, the approval by our stockholders of the issuance of our common stock in connection with, and the change of control that would be occasioned by, the Merger and the PIPE Financing, the closing of the Merger, including the timing of the Merger, and the approval of the proposal to increase the number of authorized shares of common for issuance under our charter, our cash balance at the closing of the Merger, if any, our ability to receive future milestones and royalty payments in connection with the contingent value rights contemplated by the Merger Agreement, our workforce reduction and related restructuring activities, our future financial and operating performance, anticipated timing and amounts of milestone and other payments under collaboration agreements, business strategy and plans, objectives of management for future operations, timing and outcome of legal and other proceedings and our ability to finance our operations are forward-looking statements. We have attempted to identify forward-looking statements by using terms such as including “anticipates,” “approach,” “believes,” “can,” “contemplate,” “continue,” “look forward,” “ongoing,” “could,” “estimates,” “expects,” “intends,” “may,” “appears,” “suggests,” “future,” “likely,” “goal,” “plans,” “potential,” “possibly,” “projects,” “predicts,” “seek,” “should,” “target,” “would” or “will” and other similar words or expressions or the negative of these terms or other comparable terminology. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy.

These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Risk Factors” or elsewhere in our most recent Annual Report on Form 10-K or Quarterly Reports on Form 10-Q, which may cause our or our industry’s actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements to differ materially.

Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements. Actual results could differ materially from our forward-looking statements due to a number of factors, including, without limitation, risks related to: consummating the Merger Agreement and realizing the anticipated benefits in connection with the proposed merger; our ability to achieve anticipated cost savings and capital preservation as a result of our workforce reduction and related restructuring; the early stage of our partnered drug candidates presently under development; our partners' continued progress, if any, in the areas of co-stimulatory bispecifics and the results of their research and development activities including uncertainties relating to the ongoing or planned clinical testing of our partnered product candidates; our potential need for substantial additional funds in order to continue our operations and the uncertainty of whether we will be able to obtain the funding we need; our ability to maintain our compliance with the continued listing requirements of The Nasdaq Capital Market LLC, or Nasdaq; the possibility that Nasdaq treats us as a public shell, which may lead to delisting of our common stock on Nasdaq; our future financial performance; our ability to protect our intellectual property rights that are valuable to our business, including patent and other intellectual property rights; the success of our collaborations with third parties; our partners’ ability to meet milestones; the receipt of royalty and milestone payments provided for in our collaboration agreements; our partners' ability to successfully market and sell our drug candidates in the future as needed; the size and growth of the potential markets for any of our product candidates for which we or our partners may obtain regulatory approval, and the rate and degree of market acceptance of such product candidates; competition in our industry; regulatory developments in the United States and foreign countries, including with respect to the U.S. Food and Drug Administration, or FDA; Pfizer Inc.'s, or Pfizer’s, ability to continue to advance SGN-BB228 (also known as PRS-346) and the other drug candidates licensed to them; BP Asset XII, Inc.'s, or Boston Pharmaceuticals', ability to continue to advance BOS-342 (also known as PRS-342); the expected impact of new accounting standards; and the delays or disruptions due to geopolitical issues, including the conflicts in Ukraine and the Middle East on our company.

You should not place undue reliance on any forward-looking statement(s), each of which applies only as of the date of this Quarterly Report on Form 10-Q. Before you invest in our securities, you should be aware that the occurrence of the events described in Part II, Item 1A (Risk Factors) of this Quarterly Report on Form 10-Q or Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission, or SEC, on March 29, 2024, could negatively affect our business, operating results, financial condition and stock price. All forward-looking statements included in this Quarterly Report on Form 10-Q are based on information available to us on the date hereof, and except as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this Quarterly Report on Form 10-Q to conform our statements to actual results or changed expectations.

We have registered trademarks for Pieris®, Anticalin® and Duocalin®. All other trademarks, trade names and service marks included in this Quarterly Report on Form 10-Q are the property of their respective owners. Use or display by us of other parties’ trademarks, trade dress or products is not intended to and does not imply a relationship with, or endorsements or sponsorship of, us by the trademark, trade dress or product owner.

Currency Presentation and Currency Translation

Unless otherwise indicated, all references to “dollars,” “$,” “U.S. $” or “U.S. dollars” are to the lawful currency of the United States. All references in this Quarterly Report on Form 10-Q to “euro” or “€” are to the currency introduced at the start of the third stage of the European Economic and Monetary Union pursuant to the Treaty establishing the European Community, as amended. We prepare our financial statements in U.S. dollars.

The functional currency for our operations is primarily the euro. With respect to our financial statements, the translation from the euro to U.S. dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income/loss.

Where in this Quarterly Report on Form 10-Q we refer to amounts in euros, we have for your convenience also, in certain cases, provided a conversion of those amounts to U.S. dollars in parentheses. Where the numbers refer to a specific balance sheet account date or financial statement account period, we have used the exchange rate that was used to perform the conversions in connection with the applicable financial statement. In all other instances, unless otherwise indicated, the conversions have been made using the noon buying rate of €1.00 to U.S. $1.07142 based on information provided by Xignite as of June 30, 2024.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

PIERIS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

	*June 30,*			*December 31,*
	*2024*			*2023*
Assets
Current assets:
Cash and cash equivalents	$	19,731		$	17,396
Short term investments		—			8,970
Accounts receivable		1,485			572
Receivable from public grants		3,049			3,141
Other receivables		137			2,326
Assets held for sale, property and equipment		—			2,188
Prepaid expenses and other current assets		649			4,087
Total current assets	$	25,051		$	38,680
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	969		$	3,372
Accrued expenses and other current liabilities		5,377			8,550
Total current liabilities		6,346			11,922
Stockholders’ equity:
Preferred stock		—			—
Common stock		1			1
Additional paid-in capital		342,586			341,693
Accumulated other comprehensive loss		(436	)		28
Accumulated deficit		(323,446	)		(314,964	)
Total stockholders’ equity		18,705			26,758
Total liabilities and stockholders’ equity	$	25,051		$	38,680

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

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PIERIS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

(in thousands, except per share data)

	*Three Months Ended June 30,*						*Six Months Ended June 30,*
	*2024*			*2023*			*2024*			*2023*
Revenue
Customer revenue	$	—		$	20,086		$	6		$	22,096
Collaboration revenue		—			(31	)		47			(105	)
Total revenue		—			20,055			53			21,991
Operating expenses
Research and development		751			14,328			1,969			27,752
General and administrative		3,426			3,664			7,564			7,687
Total operating expenses		4,177			17,992			9,533			35,439
Loss from operations		(4,177	)		2,063			(9,480	)		(13,448	)
Other income (expense)
Interest income		201			490			441			847
Grant income		—			1,584			—			3,612
Other income (loss)		386			(161	)		557			(218	)
Net income (loss)	$	(3,590	)	$	3,976		$	(8,482	)	$	(9,207	)

Other comprehensive income loss:
Foreign currency translation		(90	)		287			(463	)		45
Unrealized gain (loss) on available-for-sale securities		—			2			(1	)		72
Comprehensive loss	$	(3,680	)	$	4,265		$	(8,946	)	$	(9,090	)
Net income (loss) per share
Basic	$	(2.76	)	$	3.63		$	(6.69	)	$	(9.08	)
Diluted	$	(2.76	)	$	3.62		$	(6.69	)	$	(9.08	)
Weighted average number of common shares outstanding
Basic		1,299			1,095			1,268			1,014
Diluted		1,299			1,098			1,268			1,014

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

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PIERIS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited, in thousands)

For the Three Months Ended June 30, 2023 and 2024

											Accumulated
	Preferred shares				Common shares				Additional		other						Total
	No. of		Share		No. of		Share		paid-in		comprehensive			Accumulated			Stockholders’
	shares		capital		shares		capital		capital		income (loss)			deficit			equity
Balance as of March 31, 2023		16	$	—		931	$	1	$	319,487	$	(426	)	$	(303,604	)	$	15,458
Net loss		—		—		—		—		—		—			3,976			3,976
Stock based compensation expense		—		—		—		—		1,048		—			—			1,048
Foreign currency translation adjustment		—		—		—		—		—		287			—			287
Unrealized gain on investments		—		—		—		—		—		2			—			2
Issuance of common stock resulting from purchase of employee stock purchase plan shares		—		—		1		—		52		—			—			52
Issuance of common stock pursuant to ATM offering program, net of $0.7 million in offering costs		—		—		303		—		19,675		—			—			19,675
Balance at June 30, 2023		16	$	—		1,236	$	1	$	340,262	$	(137	)	$	(299,628	)	$	40,498

Balance as of March 31, 2024		16	$	—		1,237	$	1	$	342,165	$	(346	)	$	(319,856	)	$	21,964
Net loss		—		—		—		—		—		—			(3,590	)		(3,590	)
Stock based compensation expense		—		—		—		—		421		—			—			421
Foreign currency translation adjustment		—		—		—		—		—		(90	)		—			(90	)
Round-Up shares from the 1-for-80 reverse split effective April 23, 2024		—		—		83		—		—		—			—			—
Balance at June 30, 2024		16	$	—		1,320	$	1	$	342,586	$	(436	)	$	(323,446	)	$	18,705

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PIERIS PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited, in thousands)

For the Six Months Ended June 30, 2023 and 2024

											Accumulated
	Preferred shares				Common shares				Additional		other						Total
	No. of		Share		No. of		Share		paid-in		comprehensive			Accumulated			Stockholders’
	shares		capital		shares		capital		capital		income (loss)			deficit			equity
Balance at December 31, 2022		16	$	—		931	$	1	$	318,603	$	(254	)	$	(290,421	)	$	27,929
Net loss		—		—		—		—		—		—			(9,207	)		(9,207	)
Stock based compensation expense		—		—		—		—		1,932		—			—			1,932
Foreign currency translation adjustment		—		—		—		—		—		45			—			45
Unrealized loss on investments		—		—		—		—		—		72			—			72
Issuance of common stock resulting from purchase of employee stock purchase plan shares		—		—		1		—		52		—			—			52
Issuance of common stock pursuant to ATM offering program, net of $0.3 million in offering costs		—		—		303		—		19,675		—			—			19,675
Balance at June 30, 2023		16	$	—		1,236	$	1	$	340,262	$	(137	)	$	(299,628	)	$	40,498

Balance at December 31, 2023		16	$	—		1,237	$	1	$	341,693	$	28		$	(314,964	)	$	26,758
Net loss		—		—		—		—		—		—			(8,482	)		(8,482	)
Stock based compensation expense

SEC Form 10-Q filed by Pieris Pharmaceuticals Inc.