Filed Pursuant to Rule 424(b)(3)
Registration No. 333-274931
Prospectus Supplement No. 5
(To Prospectus Dated December 28, 2023)
ESTRELLA IMMUNOPHARMA, INC.
3,829,338 Shares of Common Stock
Up to 7,036,726 Shares of Common Stock
Up to 2,215,000 Shares of Common Stock Issuable
Upon Exercise of Warrants
This prospectus supplement no.
5 and the prospectus, dated December 28, 2023 (as supplemented by prospectus supplement no. 1, dated February 12, 2024, prospectus supplement
no. 2, dated February 15, 2024, prospectus supplement no. 3, dated March 7, 2024, and prospectus supplement no. 4 dated March 8, 2024,
the “Prospectus”), which form a part of our registration statement on Form S-1 (No. 333-274931),
relate to the resale from time to time of certain shares of common stock (“Common Stock”) of Estrella Immunopharma, Inc. (“we,”
“us,” “our” the “Company” and “Estrella”). These shares include (a) 3,829,338 shares of
Common Stock held by the Selling Stockholders as more fully described in the Prospectus, (b) up to 7,036,726 shares of Common Stock that
may be issued and sold by us to White Lion Capital, LLC pursuant to a Common Stock Purchase Agreement, as more fully described in the
Prospectus and (c) up to 2,215,000 shares of Common Stock issuable to the holders of redeemable warrants (“Warrants”) upon
the exercise thereof at an exercise price of $11.50 per share, as more fully described in the Prospectus.
This prospectus
supplement is being filed to update and supplement the information contained in the Prospectus with the information contained in the quarterly
report on Form 10-Q for the quarter ending March 31, 2024 filed by the Company on May 14, 2024 (the “Quarterly Report”). Accordingly,
we have attached the Quarterly Report to this prospectus supplement.
You should
read this prospectus supplement in conjunction with the Prospectus, including any amendments or supplements thereto. This prospectus supplement
is qualified by reference to the Prospectus except to the extent that the information provided by this prospectus supplement supersedes
information contained in the Prospectus. This prospectus supplement is not complete without, and may not be delivered or used except in
conjunction with, the Prospectus, including any amendments or supplements thereto.
Our Common Stock and Warrants are
traded on the Nasdaq Capital Market (“Nasdaq”) under the symbols “ESLA” and “ESLAW,” respectively.
On May 14, 2024, the closing price of our Common Stock on Nasdaq was $1.04 per share and the closing price of our Warrants on Nasdaq was
$0.05 per Warrant.
Investing in our securities
is highly speculative and involves a high degree of risk. See “Risk Factors” beginning on page 7 of the Prospectus.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or determined if the Prospectus or this
prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is May 15,
2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 001-40608
ESTRELLA IMMUNOPHARMA, INC.
(Exact name of registrant as specified in its charter)
Delaware |
|
86-1314502 |
(State or other jurisdiction of
incorporation or organization) |
|
(IRS Employer
Identification No.) |
5858 Horton Street, Suite 370
Emeryville, California, 95608
(Address of principal executive offices and zip
code)
(510) 318-9098
(Registrant’s telephone number, including
area code)
N/A
(Former name, former address and former fiscal
year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
|
Trading Symbols |
|
Name of Each Exchange on Which Registered |
Common Stock, par value $0.0001 per share |
|
ESLA |
|
The Nasdaq Stock Market LLC |
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 |
|
ESLAW |
|
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 (Section 232.405
of this chapter) during the preceding 12 months (or 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 May 13, 2024, there were 36,376,293 shares of the issuer’s
Common Stock, par value $0.0001 per share, outstanding.
ESTRELLA IMMUNOPHARMA, INC.
TABLE
OF CONTENTS
Cautionary
Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (“Form
10-Q”) contains “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”).
Any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying
assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,”
“believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,”
“forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,”
“potential,” “predict,” “should,” “would” and other similar words and expressions, but
the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements are based on the
current expectations of our management and are inherently subject to uncertainties and changes in circumstances and their potential effects
and speak only as of the date such statements are made. These forward-looking statements involve a number of risks, uncertainties or other
assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking
statements. These risks and uncertainties include, but are not limited to, those described in “Risk Factors” in the Company’s
Registration Statement on Form S-1, filed with the SEC on October 11, 2023 and Amendment No. 1 and Amendment No. 2 thereto filed on November
13, 2023 and December 18, 2023, respectively.
These and other factors could cause actual results
to differ from those implied by the forward-looking statements. Forward-looking statements are not guarantees of performance and speak
only as of the date hereof. There can be no assurance that future developments will be those that have been anticipated or that we will
achieve or realize these plans, intentions, or expectations.
All forward-looking statements attributable to
us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation
to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except
as required by law.
In addition, statements of belief 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 they are made, and while we believe such information forms a reasonable basis for such statements, such information may be limited
or incomplete, and 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.
PART I - FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS.
ESTRELLA IMMUNOPHARMA, INC AND ITS SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| |
As of March 31, 2024 | | |
As of June 30, 2023 | |
| |
(Unaudited) | | |
| |
Current Assets | |
| | |
| |
Current assets: | |
| | |
| |
Cash and cash equivalent | |
$ | 4,727,290 | | |
$ | 2,479,146 | |
Prepaid expenses and other receivable | |
| 406,110 | | |
| - | |
Prepaid expenses, related party | |
| 3,500,000 | | |
| - | |
Extension note receivable | |
| - | | |
| 273,066 | |
Total current assets | |
| 8,633,400 | | |
| 2,752,212 | |
| |
| | | |
| | |
Other Assets | |
| | | |
| | |
Deferred transaction costs | |
| - | | |
| 276,187 | |
| |
| | | |
| | |
Total Assets | |
$ | 8,633,400 | | |
$ | 3,028,399 | |
| |
| | | |
| | |
Liabilities, Preferred Stock and Stockholders’ Equity (Deficit) | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable - related party | |
$ | - | | |
$ | 9,333,146 | |
Other payables and accrued liabilities | |
| 89,413 | | |
| 398,781 | |
Accrued liability - related party | |
| 4,000 | | |
| 22,000 | |
Franchise tax payables | |
| 4,359 | | |
| 4,297 | |
Income tax payables | |
| 40,719 | | |
| - | |
Total current liabilities | |
| 138,491 | | |
| 9,758,224 | |
| |
| | | |
| | |
Non-current liabilities: | |
| | | |
| | |
Other liability | |
| - | | |
| 12,725 | |
Total non-current liabilities | |
| - | | |
| 12,725 | |
| |
| | | |
| | |
Total Liabilities | |
| 138,491 | | |
| 9,770,949 | |
| |
| | | |
| | |
Commitments and Contingencies (Note 7) | |
| | | |
| | |
| |
| | | |
| | |
Preferred Stock* | |
| | | |
| | |
Series A Preferred Stock, $0.0001 par value, 15,000,000 shares authorized; 0 and 1,203,695 shares issued and outstanding as of March 31, 2024 and June 30, 2023, respectively | |
| - | | |
| 5,000,000 | |
Series AA Preferred Stock, $0.0001 par value, 105,000,000 shares authorized; 0 and 25,277,591 shares issued and outstanding as of March 31, 2024 and June 30, 2023, respectively | |
| - | | |
| - | |
| |
| | | |
| | |
Stockholders’ Equity (Deficit): | |
| | | |
| | |
Common stock, $0.0001 par value; 250,000,000 shares authorized; 36,610,870
and 978,243 shares issued as of March 31, 2024 and June 30, 2023, respectively; | |
| | | |
| | |
36,535,980 and 978,243 shares outstanding as of March 31, 2024 and June 30, 2023, respectively* | |
| 3,661 | | |
| 98 | |
Additional paid-in capital | |
| 24,124,543 | | |
| 445,905 | |
Accumulated deficit | |
| (15,549,204 | ) | |
| (12,188,553 | ) |
Treasury stock, at cost 74,890 and 0 shares as of March 31, 2024 and June 30, 2023, respectively | |
| (84,091 | ) | |
| - | |
Total Stockholders’ Equity (Deficit) | |
| 8,494,909 | | |
| (11,742,550 | ) |
Total Liabilities, Preferred Stock and Stockholders’ Equity (Deficit) | |
$ | 8,633,400 | | |
$ | 3,028,399 | |
| * | Giving retroactive effect to reverse recapitalization effected
on September 29, 2023 to reflect exchange ratio of approximately 0.2407 as described in Note 3 |
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
ESTRELLA IMMUNOPHARMA, INC AND ITS SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| |
For the
Three Months
Ended | | |
For the
Three Months
Ended | | |
For the
Nine Months
Ended | | |
For the
Nine Months
Ended | |
| |
March 31,
| | |
March 31,
| | |
March 31,
| | |
March 31,
| |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| |
| | |
| | |
| | |
| |
Operating expenses | |
| | |
| | |
| | |
| |
Research and development | |
$ | 25,000 | | |
$ | 2,623,399 | | |
$ | 583,925 | | |
$ | 7,875,427 | |
General and administrative | |
| 444,530 | | |
| 117,707 | | |
| 2,776,726 | | |
| 507,463 | |
Total operating expenses | |
| 469,530 | | |
| 2,741,106 | | |
| 3,360,651 | | |
| 8,382,890 | |
| |
| | | |
| | | |
| | | |
| | |
Loss from Operations | |
| (469,530 | ) | |
| (2,741,106 | ) | |
| (3,360,651 | ) | |
| (8,382,890 | ) |
| |
| | | |
| | | |
| | | |
| | |
Loss before income taxes | |
| (469,530 | ) | |
| (2,741,106 | ) | |
| (3,360,651 | ) | |
| (8,382,890 | ) |
| |
| | | |
| | | |
| | | |
| | |
Income taxes provision | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
Net loss | |
$ | (469,530 | ) | |
$ | (2,741,106 | ) | |
$ | (3,360,651 | ) | |
$ | (8,382,890 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss applicable to common stock per share, basic and diluted | |
$ | (0.01 | ) | |
$ | (8.13 | ) | |
$ | (0.14 | ) | |
$ | (39.95 | ) |
Weighted average common stock outstanding, basic and diluted* | |
| 35,519,192 | | |
| 337,275 | | |
| 23,963,515 | | |
| 209,811 | |
| * | Giving
retroactive effect to reverse recapitalization effected on September 29, 2023 to reflect exchange ratio of approximately 0.2407 as described
in Note 3 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
ESTRELLA IMMUNOPHARMA, INC AND ITS SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
| |
Series A
Preferred Stock | | |
Series AA
Preferred Stock | | |
Common Stock | | |
Treasury | | |
Additional
Paid-in | | |
Accumulated | | |
Total
Stockholders’
Equity | |
| |
Shares* | | |
Amount | | |
Shares* | | |
Amount | | |
Shares* | | |
Amount | | |
Stock | | |
Capital | | |
Deficit | | |
(Deficit) | |
Balance, July 1, 2023 | |
| 5,000,000 | | |
$ | 5,000,000 | | |
| 105,000,000 | | |
$ | - | | |
| 4,063,500 | | |
$ | 407 | | |
$ | - | | |
$ | 445,596 | | |
$ | (12,188,553 | ) | |
$ | (11,742,550 | ) |
Recapitalization | |
| (3,796,305 | ) | |
| - | | |
| (79,722,409 | ) | |
| - | | |
| (3,085,257 | ) | |
| (309 | ) | |
| - | | |
| 309 | | |
| - | | |
| - | |
Balance, July 1, 2023 | |
| 1,203,695 | | |
| 5,000,000 | | |
| 25,277,591 | | |
| - | | |
| 978,243 | | |
| 98 | | |
| - | | |
| 445,905 | | |
| (12,188,553 | ) | |
| (11,742,550 | ) |
Issuance of series A preferred stock | |
| 2,407,390 | | |
| 9,750,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Conversion of series A and series AA preferred stock into common stock | |
| (3,611,085 | ) | |
| (14,750,000 | ) | |
| (25,277,591 | ) | |
| - | | |
| 28,888,675 | | |
| 2,889 | | |
| - | | |
| 14,747,111 | | |
| - | | |
| 14,750,000 | |
Vesting of early exercised stock options | |
| - | | |
| - | | |
| - | | |
| - | | |
| 2,633,082 | | |
| 263 | | |
| - | | |
| 12,462 | | |
| - | | |
| 12,725 | |
Stock-based compensation | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,194,653 | | |
| - | | |
| 1,194,653 | |
Issuance of common stock for PIPE investment | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,000,000 | | |
| 100 | | |
| - | | |
| 9,999,900 | | |
| - | | |
| 10,000,000 | |
Issuance of common stock upon completion of business combination | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,701,232 | | |
| 170 | | |
| - | | |
| (474,147 | ) | |
| - | | |
| (473,977 | ) |
Transactions cost | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,801,200 | ) | |
| - | | |
| (1,801,200 | ) |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,870,497 | ) | |
| (1,870,497 | ) |
Balance, September 30, 2023 | |
| - | | |
$ | - | | |
| - | | |
$ | - | | |
| 35,201,232 | | |
$ | 3,520 | | |
$ | - | | |
$ | 24,124,684 | | |
$ | (14,059,050 | ) | |
$ | 10,069,154 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,020,624 | ) | |
| (1,020,624 | ) |
Balance, December 31, 2023 | |
| - | | |
$ | - | | |
| - | | |
$ | - | | |
| 35,201,232 | | |
$ | 3,520 | | |
$ | - | | |
$ | 24,124,684 | | |
$ | (15,079,674 | ) | |
$ | 9,048,530 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (469,530 | ) | |
| (469,530 | ) |
Issuance of common stock for PIPE investment | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,409,638 | | |
| 141 | | |
| - | | |
| (141 | ) | |
| - | | |
| - | |
Purchase of treasury stock | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (84,091 | ) | |
| - | | |
| - | | |
| (84,091 | ) |
Balance, March 31, 2024 | |
| - | | |
$ | - | | |
| - | | |
$ | - | | |
| 36,610,870 | | |
$ | 3,661 | | |
$ | (84,091 | ) | |
$ | 24,124,543 | | |
$ | (15,549,204 | ) | |
$ | 8,494,909 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, July 1, 2022 | |
| 1,203,695 | | |
$ | 5,000,000 | | |
| 25,277,591 | | |
$ | - | | |
| 42,370 | | |
$ | 4 | | |
$ | - | | |
$ | 34,304 | | |
$ | (1,074,151 | ) | |
$ | (1,039,843 | ) |
Vesting of early exercised stock options | |
| - | | |
| - | | |
| - | | |
| - | | |
| 126,388 | | |
| 13 | | |
| - | | |
| 512 | | |
| - | | |
| 525 | |
Stock-based compensation | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 102,399 | | |
| - | | |
| 102,399 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (2,885,444 | ) | |
| (2,885,444 | ) |
Balance, September 30, 2022 | |
| 1,203,695 | | |
$ | 5,000,000 | | |
| 25,277,591 | | |
$ | - | | |
| 168,758 | | |
$ | 17 | | |
$ | - | | |
$ | 137,215 | | |
$ | (3,959,595 | ) | |
$ | (3,822,363 | ) |
Vesting of early exercised stock options | |
| - | | |
| - | | |
| - | | |
| - | | |
| 126,388 | | |
| 13 | | |
| - | | |
| 512 | | |
| - | | |
| 525 | |
Stock-based compensation | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 102,399 | | |
| - | | |
| 102,399 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (2,756,340 | ) | |
| (2,756,340 | ) |
Balance, December 31, 2022 | |
| 1,203,695 | | |
$ | 5,000,000 | | |
| 25,277,591 | | |
$ | - | | |
| 295,146 | | |
$ | 30 | | |
$ | - | | |
$ | 240,126 | | |
$ | (6,715,935 | ) | |
$ | (6,475,779 | ) |
Vesting of early exercised stock options | |
| - | | |
| - | | |
| - | | |
| - | | |
| 126,388 | | |
| 13 | | |
| - | | |
| 512 | | |
| - | | |
| 525 | |
Stock-based compensation | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 102,399 | | |
| - | | |
| 102,399 | |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (2,741,106 | ) | |
| (2,741,106 | ) |
Balance, March 31, 2023 | |
| 1,203,695 | | |
$ | 5,000,000 | | |
| 25,277,591 | | |
$ | - | | |
| 421,534 | | |
$ | 43 | | |
$ | - | | |
$ | 343,037 | | |
$ | (9,457,041 | ) | |
$ | (9,113,961 | ) |
| * | Giving
retroactive effect to reverse recapitalization effected on September 29, 2023 to reflect exchange ratio of approximately 0.2407 as described
in Note 3 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
ESTRELLA IMMUNOPHARMA, INC AND ITS SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| |
For the
Nine Months | | |
For the
Nine Months | |
| |
Ended | | |
Ended | |
| |
March 31,
2024 | | |
March 31,
2023 | |
Cash Flows from Operating Activities: | |
| | |
| |
Net loss | |
$ | (3,360,651 | ) | |
$ | (8,382,890 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Stock-based compensation | |
| 1,194,653 | | |
| 307,197 | |
Amortization of operating right-of-use asset, related party | |
| - | | |
| 14,473 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Prepaid expenses | |
| (267,343 | ) | |
| (50,000 | ) |
Prepaid expenses - related party | |
| (3,500,000 | ) | |
| 833,333 | |
Accounts payable - related party | |
| (9,333,146 | ) | |
| 5,925,271 | |
Other payables and accrued liabilities | |
| (492,368 | ) | |
| 55,813 | |
Operating lease liability - related party | |
| - | | |
| 1,527 | |
Accrued liability - related party | |
| (18,000 | ) | |
| - | |
Franchise tax payable | |
| 62 | | |
| 2,400 | |
Net cash used in operating activities | |
| (15,776,793 | ) | |
| (1,292,876 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities: | |
| | | |
| | |
Loan to UPTD as extension note receivable prior to business combination | |
| (112,298 | ) | |
| (136,533 | ) |
Cash released from trust account | |
| 5,072,945 | | |
| - | |
Net cash provided by investing activities | |
| 4,960,647 | | |
| (136,533 | ) |
| |
| | | |
| | |
Cash Flows from Financing Activities: | |
| | | |
| | |
Payments of transactions cost | |
| (1,525,013 | ) | |
| - | |
Net proceeds from PIPE investment | |
| 10,000,000 | | |
| - | |
Net proceeds from issuance of Series A Preferred Stock | |
| 9,020,000 | | |
| - | |
Net proceeds from promissory note | |
| 300,000 | | |
| - | |
Repayment of promissory note | |
| (300,000 | ) | |
| - | |
Payment of redemption payable | |
| (5,072,945 | ) | |
| - | |
Proceeds from business combination | |
| 726,339 | | |
| - | |
Purchase of treasury stock | |
| (84,091 | ) | |
| | |
Net cash provided by financing activities | |
| 13,064,290 | | |
| - | |
| |
| | | |
| | |
Net Change in Cash | |
| 2,248,144 | | |
| (1,429,409 | ) |
| |
| | | |
| | |
Cash at beginning of period | |
| 2,479,146 | | |
| 4,088,333 | |
Cash at end of period | |
$ | 4,727,290 | | |
$ | 2,658,924 | |
| |
| | | |
| | |
Supplemental Cash Flow Information | |
| | | |
| | |
Cash paid for income tax | |
$ | - | | |
$ | - | |
Cash paid for interest | |
$ | 2,663 | | |
$ | - | |
| |
| | | |
| | |
Supplemental Disclosure of Non-cash Financing Activities | |
| | | |
| | |
Deferred transaction costs included in other payables and accrued liabilities | |
$ | - | | |
$ | 221,187 | |
Recognition of related party operating right-of-use asset and lease liability | |
$ | - | | |
$ | 48,988 | |
Conversion of Series A prefer stock into common stock | |
$ | 5,000,000 | | |
$ | - | |
Conversion of deferred underwriting commission payable into Series A preferred stock | |
$ | 730,000 | | |
$ | - | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
ESTRELLA IMMUNOPHARMA, INC AND ITS SUBSIDIARY
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1 — Organization and Business Operation
Description of business
Estrella Immunopharma, Inc., a Delaware corporation,
is a clinical-stage biopharmaceutical company developing T-cell therapies with the capacity to cure patients with blood cancers and solid
tumors.
As further discussed below and in Note 3, on September
29, 2023 (the “Closing Date”), Estrella Biopharma, Inc. (“Estrella”) and TradeUP Acquisition Corp. (“UPTD”)
consummated the business combination (the “Business Combination”) pursuant to the terms of the Agreement and Plan of Merger,
dated as of September 30, 2022 (the “Merger Agreement”), by and among UPTD, Tradeup Merger Sub Inc., a Delaware corporation
and wholly-owned subsidiary of UPTD (“Merger Sub”), and the Company. Pursuant to the terms of the Merger Agreement, Merger
Sub merged with and into Estrella, with Estrella surviving as a wholly-owned subsidiary of UPTD. Upon closing of the Business Combination
(the “Closing”), UPTD changed its corporate name to Estrella Immunopharma, Inc. (“New Estrella” or the “Company”).
Estrella was incorporated in the State of Delaware
on March 30, 2022 by Eureka Therapeutics, Inc. (“Eureka”), which was incorporated in California in February 2006 and reincorporated
in Delaware in March 2018 and is the predecessor of Estrella. Estrella’s fiscal year end is June 30, and the Company’s fiscal
year end changed from December 31 to June 30 effective as of the Closing Date.
On June 28, 2022, pursuant to a Contribution Agreement
between Estrella and Eureka (the “Contribution Agreement”), Eureka contributed certain assets (the “Assets”) related
to T-cell therapies targeting CD19 and CD22, proteins expressed on the surface of almost all B-cell leukemias and lymphomas, in exchange
for 105,000,000 shares of Estrella’s Series AA Preferred Stock (the “Separation”).
As part of the Separation, Estrella entered into
a License Agreement (the “License Agreement”) with Eureka and Eureka Therapeutics (Cayman) Ltd. (“Eureka Cayman”),
an affiliate of Eureka, and a Services Agreement (the “Services Agreement”) with Eureka, and Eureka contributed and assigned
the Collaboration Agreement between Eureka and Imugene Limited (“Imugene”) (the “Collaboration Agreement”) to
Estrella. The License Agreement grants the Company an exclusive license to develop CD19 and CD22 targeted T-cell therapies using Eureka’s
ARTEMIS® platform. Under the Services Agreement, Eureka has agreed to perform certain services for the Company in
connection with the development of the Company’s product candidates, EB103 and EB104. EB103, which is a T-cell therapy also called
“CD19-Redirected ARTEMIS® T-Cell Therapy,” utilizes Eureka’s ARTEMIS® technology
to target CD19. The Company is also developing EB104, a T-cell therapy also called “CD19/22 Dual-Targeting ARTEMIS® T-Cell
Therapy.” Like EB103, EB104 utilizes Eureka’s ARTEMIS® technology to target not only CD19, but also CD22.
The Collaboration Agreement establishes the partnership between the Company and Imugene related to development of solid tumor treatments
using Imugene’s product candidate (“CF33-CD19t”) in conjunction with EB103.
On March 2, 2023, the FDA cleared Estrella’s
IND application for EB103, allowing Estrella to proceed with the Phase I/II Starlight-1 Clinical Trial “Starlight-1”. As of
March 31, 2024, the Company has initiated activities in preparation of conducting the Starlight-1 clinical trial in the U.S. On March
4, 2024, the Company, Estrella and Eureka executed Statement of Work #001 relating to clinical trial services to be performed by Eureka
in connection with the Starlight-1 clinical trial (see Note 9). On May 13, 2024, the Company, Estrella, and Eureka entered into Amendment
No. 1 to the Statement of Work, effective as of March 4, 2024 (see Note 9).
Merger and reverse recapitalization
As described above and further discussed in Note
3, the Business Combination was consummated on September 29, 2023.
The Business Combination was accounted for as
a “reverse recapitalization.” Under this method of accounting, UPTD was treated as the “acquired” company for
financial reporting purposes. Accordingly, the Business Combination was treated as the equivalent of Estrella issuing shares for the net
assets of UPTD, accompanied by a recapitalization. The net assets of UPTD are stated at historical costs. No goodwill or other intangible
assets are recorded.
Liquidity
The accompanying unaudited condensed consolidated
financial statements have been prepared on a basis which contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. As of March 31, 2024, the Company had cash of approximately $4.7 million, and accumulated deficit of approximately
$15.5 million. For the nine months ended March 31, 2024, loss from operations was approximately $3.4 million. The Company’s ability
to fund its operations is dependent on the amount of cash on hand and its ability to raise debt or additional equity financing. The Company
has expended substantial funds on its research and development business, has experienced losses and negative cash flows from operations
since its inception and expects losses and negative cash flows from operations to continue until its technology receives regulatory approval
and the Company generates sufficient revenue and positive cash flow from operations, if ever.
On September 29, 2023, the Business Combination
and several concurrent financing transactions were consummated, with the Company receiving net proceeds of approximately $20.1 million,
after deducting $5.1 million payable to redeem 467,122 shares of UPTD Common Stock at $10.86 per share in connection with the special
meeting of UPTD stockholders related to the Business Combination held on July 31, 2023, $1.6 million for UPTD’s transaction expenses
and $0.7 million for repayment of working capital loans, consisting of: (i) $9.75 million from the issuance of shares of the Company’s
Operating Series A Preferred Stock immediately prior to the closing of the Business Combination ($0.7 million of which was comprised of
funds in the trust account delivered to the Company at the closing of the Business Combination that would have otherwise been paid to
US Tiger Securities, Inc. as a deferred underwriting fee in connection with UPTD’s IPO); (ii) $0.3 million from the issuance of
an unsecured promissory note by us to a third party investor; (iii) $3.06 million from the funds held in UPTD’s trust account; and
(iv) $10 million from the PIPE investors pursuant to the Subscription Agreements.
On April 20, 2023, UPTD entered into the Common
Stock Purchase Agreement and the White Lion RRA with White Lion. Subsequently, on April 26, 2023, UPTD and White Lion entered into an
amendment to the Common Stock Purchase Agreement. Pursuant to the Common Stock Purchase Agreement, following the Closing, New Estrella
will have the right, but not the obligation, to require White Lion to purchase, from time to time up to $50,000,000 in aggregate gross
purchase price of newly issued shares of Common Stock (the “Equity Line Shares”), subject to certain limitations and conditions
set forth in the Common Stock Purchase Agreement as further described in Note 8.
On October 10, 2023, the Company used a portion
of the net proceeds from the Business Combination to pay $8.3 million due to Eureka under the Services Agreement and approximately $0.9
million aggregate amount due to Eureka under the License Agreement, comprised of the outstanding portion of the upfront fee as well as
a milestone payment in connection with the submission of the IND application for EB103. The Company intends to devote the remaining net
proceeds from the Business Combination to the preclinical and clinical development of the Company’s product candidates and the public
company compliance costs.
On March 4, 2024, Estrella and Eureka entered
into Statement of Work No. 001 (“SOW”) relating to the clinical trial services to be performed by Eureka in connection with
Starlight-1, the Phase I/II clinical trial of Estrella Biopharma’s product candidate, EB103, a T-cell therapy targeting CD19 using
ARTEMIS® T cell technology licensed by Estrella Biopharma from Eureka. Pursuant to the SOW, Estrella agrees to pay Eureka
non-refundable net fees in connection with the achievement of certain milestones set forth in the SOW, with total fees of $33,000,000
for achievement of all milestones. As of March 31, 2024, Estrella has prepaid $3,500,000 to Eureka for covering the fees associated with
the initiation of the study, the preparation and activation of the first study site, and the First Patient First Visit (FPFV) milestones.
On May 13, 2024, the Company, Estrella, and Eureka
entered into Amendment No. 1 to the Statement of Work, effective as of March 4, 2024, to clarify that in the event that Estrella exercises
its right to terminate or suspend the engagement with Eureka by providing written notice to Eureka in accordance with the SOW, Estrella
will only be obligated to compensate Eureka for (i) services provided by Eureka pursuant to the SOW (“Services”) in connection
with milestones that were achieved prior to the date and time of such written notice, (ii) reasonable and documented pass-through costs
incurred by Eureka on behalf of Estrella prior to the date and time of such written notice in connection with providing the Services and
(iii) amounts payable to third parties pursuant to commitments reasonably entered into by Eureka on behalf of Estrella prior to the date
and time of such written notice in connection with providing the Services, provided that Eureka shall make commercially reasonable efforts
to cancel or reduce any such amounts.
The Company’s future operations are highly
dependent on a combination of factors, including but not necessarily limited to (1) the success of our research and development programs;
(2) the timely and successful completion of any additional financing; (3) the development of competitive therapies by other
biotechnology and pharmaceutical companies; (4) our ability to manage growth of the organization; (5) our ability to protect
our technology and products; and, ultimately (6) regulatory approval and successful commercialization and market acceptance of our
product candidates.
However, management believes that the
Company has sufficient funds on hand and ability to raise funds in the future through the issuance and sale of Equity Line Shares to White Lion in order to meet its working capital requirements and debt obligations, for at
least the next 12 months from the filing date of these unaudited condensed consolidated financial statements.
Note 2 — Significant accounting
policies
Basis of Presentation
The accompanying unaudited financial statements
are presented in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and
pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The accompanying unaudited financial
statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments,
including normal recurring accruals, necessary to present fairly the Company’s consolidated financial statements. The results for
the three and nine months ended March 31, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending
June 30, 2024 (fiscal year 2024) or for any other interim period or for any future year.
Principles of consolidation
The unaudited condensed consolidated financial
statements include the financial statements of the Company and its subsidiary. All transactions and balances among the Company and its
subsidiary have been eliminated upon consolidation.
A subsidiary is an entity in which the Company,
directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies,
to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.
Emerging Growth Company Status
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified
by the Jumpstart The Company’s Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from
the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved.
Further, Section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies
are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out
of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election
to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard
is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company,
can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the
Company’s unaudited condensed consolidated financial statements with another public company difficult because of the potential differences
in accounting standards used.
Use of Estimates
The preparation of unaudited condensed consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial
statements and the reported amounts of revenues and expenses during the reporting periods.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its
estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly
from those estimates. Significant items subject to such estimates and assumptions include stock-based compensation, and deferred income
tax asset valuation and allowances.
Cash and cash equivalent
The Company maintains its operating accounts in
a single financial institution. The balance is insured by the United States Federal Deposit Insurance Corporation (“FDIC”)
but only up to specified limits. The Company’s cash is maintained in a checking and a saving account and Certificates of Deposits.
Cash equivalents consist of funds held at the third-party broker’s account for stock repurchase purpose, and the fund are unrestricted
and immediately available for withdrawal and use.
Basic and Diluted Loss per Common Stock
Basic net loss per Common Stock is calculated
by dividing the net loss by the weighted–average number of Common Stock outstanding for the period. Diluted net loss per share is
computed by dividing the net loss by the weighted–average number of Common Stock and dilutive share equivalents outstanding for
the period, determined using the treasury stock and if–converted methods. Since the Company has had net losses for all periods presented,
all potentially dilutive securities are anti–dilutive.
As of March 31, 2024 and June 30, 2023, the Company
had the following potential Common Stock outstanding which were not included in the calculation of diluted net loss per Common Stock because
inclusion thereof would be anti-dilutive:
| |
As of | | |
As of | |
| |
March 31, | | |
June 30, | |
| |
2024 | | |
2023 | |
| |
(Unaudited) | | |
| |
Series A Preferred Stock* | |
| - | | |
| 1,203,695 | |
Series AA Preferred Stock* | |
| - | | |
| 25,277,591 | |
Unvested early-exercised stock option* | |
| - | | |
| 2,633,082 | |
Public warrant | |
| 2,215,000 | | |
| - | |
Total | |
| 2,215,000 | | |
| 29,114,368 | |
* |
Giving retroactive effect to reverse recapitalization effected on September 29, 2023 to reflect exchange ratio of approximately 0.2407 as described in Note 3 |
Stock-Based Compensation
The Company recognizes compensation costs resulting
from the issuance of stock-based awards to employees, non-employees and directors as an expense in the statements of operations over the
requisite service period based on a measurement of fair value for each stock-based award. The fair value of each option granted is estimated
as of the date of grant using the Black-Scholes-Merton option-pricing model, net of actual forfeitures. The fair value is amortized as
compensation cost on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. The
Black-Scholes-Merton option-pricing model includes various assumptions, including the fair market value of the Common Stock of the Company,
expected life of stock options, the expected volatility and the expected risk-free interest rate, among others. These assumptions reflect
the Company’s best estimates, but they involve inherent uncertainties based on market conditions generally outside the control of
the Company.
As a result, if other assumptions had been used,
stock-based compensation expense, as determined in accordance with authoritative guidance, could have been materially impacted. Furthermore,
if the Company uses different assumptions on future grants, stock-based compensation expense could be materially affected in future periods.
Mezzanine Equity
Mezzanine equity represents the Series A Preferred
Stock and Series AA Preferred Stock (collectively known as “Preferred Stock”) issued by the Company. The shares of Preferred
Stock were mandatorily redeemable upon the occurrence of Deemed Liquidation Events outside of the Company’s control. Therefore,
the Company classifies the Preferred Stock as mezzanine equity. Refer to Note 11.
Warrants
The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance
in Financial Accounting Standards Board (“FASB”) ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and
ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments
pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for
equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether
the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control,
among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the
time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all
of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance.
The Company determined that upon further review of the warrant agreements, the Company concluded that its warrants qualify for equity
accounting treatment.
Upon completion of the business combination, all
of UPTD’s public warrants that remained outstanding were replaced by the Company’s public warrants. The Company treated such
warrants replacement as a warrant modification and no incremental fair value was recognized.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentration of credit risk consist of two cash accounts in a financial institution located in the United States. The
Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
FDIC provides standard insurance coverage of $250,000 per insured bank, for each account ownership category. As of March 31, 2024 and
June 30, 2023, the Company had not experienced losses on these accounts. As of March 31, 2024 and June 30, 2023, $4,561,368 and $2,479,146 were
deposited with financial institutions located in the United States, and $4,300,226 and $2,229,146 of these balances are not covered
by deposit insurance, respectively. While management believes that these financial institutions are of high credit quality, it also continually
monitors their credit worthiness.
Risks and Uncertainties
Management continues to evaluate the impact of
inflation rates, the continuing military action in Ukraine, and Israel’s war against Hamas on the industry and has concluded that
these factors could have a negative effect on the Company’s financial position and/or results of its operations. The specific impact
of these factors is not readily determinable as of the date of these unaudited condensed consolidated financial statements. The unaudited
condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
The Company’s future success depends on
the Company and Eureka’s ability to retain key employees, directors, and advisors and to attract, retain and motivate qualified
personnel. The Company relies on Eureka to provide certain technical assistance to facilitate the Company’s exploitation of the
intellectual property licensed by Eureka, and Eureka will be solely responsible for the manufacture and supply of clinical quantities
of the licensed products and final filled and finished (including packaged) drug product form of the licensed products. Pursuant to the
Services Agreement, Eureka currently performs or supports the Company’s important research and development activities. The Statement
of Work (see Note 9) may be terminated by mutual agreement at any time. Following the termination of, or the expiration of the term of,
the Statement of Work, the Company may not be able to replace the research and development-related services that Eureka provides or enter
into appropriate third-party arrangements on terms and conditions, including cost, comparable to those that the Company will receive from
Eureka. Additionally, after the Statement of Work terminates, the Company may be unable to sustain the research and development-related
services at the same levels or obtain the same benefits as when the Company was receiving such services and benefits from Eureka. If the
Company is required to operate these research and development functions separately in the future, or are unable to obtain them from other
providers, the Company may not be able to operate the Company’s business effectively and could result in a material adverse effect.
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates
the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature. The Company measures the
fair value of certain of its financial assets and liabilities on a recurring basis. A fair value hierarchy is used to rank the quality
and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value which is not
equivalent to cost will be classified and disclosed in one of the following three categories:
Level 1 — Quoted prices (unadjusted) in
active markets for identical assets and liabilities.
Level 2 — Inputs other than Level 1 that
are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted
prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially
the full term of the assets or liabilities.
Level 3 — Unobservable inputs that are supported
by little or no market activity and that are significant to the fair value of the assets or liabilities.
Income Taxes
The Company recognizes deferred tax assets and
liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for
the expected future tax benefit to be derived from tax loss and tax credit carry forwards and establishes a valuation allowance when it
is more likely than not that all or a portion of deferred tax assets will not be realized.
Accounting for uncertainty in income taxes is
recognized based on a recognition threshold and measurement process for the financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be
sustained upon examination by taxing authorities. There were no unrecognized tax benefits and no amounts accrued for interest and penalties
as of March 31, 2024 and June 30, 2023. The Company is currently not aware of any issues under review that could result in significant
payments, accruals or material deviation from its position. The Company may be subject to potential examination by federal and state taxing
authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the
nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not
expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
The Company is incorporated in the State of Delaware
and is required to pay franchise taxes to the State of Delaware on an annual basis.
There is no tax sharing agreement with Eureka;
therefore, no deferred taxes were carried over from Eureka to the Company.
Research and Development Expenses
The Company charges research and development costs
to operations as incurred. The Company accrues for costs incurred by external service providers, including contract research organizations
and clinical investigators, based on its estimates of service performed and costs incurred. These estimates include the level of services
performed by third parties, patient enrollment in clinical trials when applicable, administrative costs incurred by third parties, and
other indicators of the services completed. Based on the timing of amounts invoiced by service providers, the Company may also record
payments made to those providers as prepaid expenses that will be recognized as expense in future periods as the related services are
rendered. Research and development expenses for the nine months ended March 31, 2024 and 2023 primarily consisted of personnel costs for
the design and development of clinical trials, legal and professional fees and, facilities related fees. Refer to Note 9 for the terms
of the License Agreement, the Service Agreement, and the Statement of Work.
Deferred transaction costs
Deferred transaction costs consist primarily of
expenses paid to attorneys, consultants, underwriters, and others related to the Merger, which were charged to shareholders’ equity upon the completion of the Merger. The Company completed the
Merger on September 29, 2023.
Lease
Effective July 1, 2022, the Company adopted ASU
2016-02, “Leases” (Topic 842), and elected the practical expedients that does not require us to reassess: (1) whether any
expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct
costs for any expired or existing leases. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy
election not to recognize lease assets and liabilities.
If any of the following criteria are met, the
Company classifies the lease as a finance lease:
| ● | The
lease transfers ownership of the underlying asset to the lessee by the end of the lease term; |
| ● | The
lease grants the lessee an option to purchase the underlying asset that the Company is reasonably certain to exercise; |
| ● | The
lease term is for a major part of the remaining economic life of the underlying asset; |
| ● | The
present value of the sum of the lease payments and any residual value guaranteed by the lessee, that is not otherwise included in the
lease payments substantially exceeds all of the fair value of the underlying asset; or |
| ● | The
underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease
term. |
Leases that do not meet any of the above criteria
are accounted for as operating leases.
The Company combines lease and non-lease components
in its contracts under Topic 842, when permissible.
Operating lease right-of-use (“ROU”)
asset and lease liability were recognized at the adoption date of July 1, 2022, based on the present value of lease payments over the
lease term. Since the implicit rate for the Company’s leases is not readily determinable, the Company uses its incremental borrowing
rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing
rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments,
in a similar economic environment and over a similar term.
In the event of lease modification, the Company
followed ASC 842-10-25 through 25-12, “lessee accounting for a modification that is not accounted for as a separate contract,”
to remeasure and reallocate the remaining consideration in the lease agreement, and reassess the classification of the lease at the effective
date of the modification.
The Company reviews the impairment of its ROU
asset consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets
when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment
of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax
cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liability in any tested
asset group and includes the associated operating lease payments in the undiscounted future pre-tax cash flows.
Segment reporting
The Company accounted for segment reporting in
accordance with ASC 280, “Segment Reporting”. Based on qualitative and quantitative criteria established by ASC 280,
the Company considers itself to be operating within one reportable segment.
Recent Accounting Pronouncements
The Company considers the applicability and impact
of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under
the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging
growth company and has elected the extended transition period for complying with new or revised accounting standards, which delays the
adoption of these accounting standards until they would apply to private companies.
In July 2023, the FASB issued ASU 2023-03, “Presentation
of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from
Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to
SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic
6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock” (“ASU
2023-03”). This ASU amends or supersedes various SEC paragraphs within the applicable codification to conform to past SEC staff
announcements. This ASU does not provide any new guidance. ASU 2023-03 will become effective for the Company once the addition to the
FASB Codification is made available. The Company is currently evaluating the impact of the update on the Company’s consolidated
financial statements and related disclosures.
In October 2023, the FASB issued ASU 2023-06,
Disclosure Improvements — codification amendments in response to SEC’s disclosure Update and Simplification initiative which
amend the disclosure or presentation requirements of codification subtopic 230-10 Statement of Cash Flows—Overall, 250-10 Accounting
Changes and Error Corrections— Overall, 260-10 Earnings Per Share— Overall, 270-10 Interim Reporting— Overall, 440-10
Commitments—Overall, 470-10 Debt—Overall, 505-10 Equity—Overall, 815-10 Derivatives and Hedging—Overall, 860-30
Transfers and Servicing—Secured Borrowing and Collateral, 932-235 Extractive Activities— Oil and Gas—Notes to Financial
Statements, 946-20 Financial Services— Investment Companies— Investment Company Activities, and 974-10 Real Estate—Real
Estate Investment Trusts—Overall. The amendments represent changes to clarify or improve disclosure and presentation requirements
of above subtopics. Many of the amendments allow users to more easily compare entities subject to the SEC’s existing disclosures
with those entities that were not previously subject to the SEC’s requirements. Also, the amendments align the requirements in the
Codification with the SEC’s regulations. For entities subject to existing SEC disclosure requirements or those that must provide
financial statements to the SEC for securities purposes without contractual transfer restrictions, the effective date aligns with the
date when the SEC removes the related disclosure from Regulation S-X or Regulation S-K. Early adoption is not allowed. For all other entities,
the amendments will be effective two years later from the date of the SEC’s removal. The Company is currently evaluating the impact
of the update on the Company’s consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09,
which is an update to Topic 740, Income Taxes. The amendments in this update related to the rate reconciliation and income taxes paid
disclosures improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information
in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The amendments allow investors to better assess, in
their capital allocation decisions, how an entity’s worldwide operations and related tax risks and tax planning and operational
opportunities affect its income tax rate and prospects for future cash flows. The other amendments in this Update improve the effectiveness
and comparability of disclosures by (1) adding disclosures of pretax income (or loss) and income tax expense (or benefit) to be consistent
with U.S. Securities and Exchange Commission (SEC) Regulation S-X 210.4-08(h), Rules of General Application—General Notes to Financial
Statements: Income Tax Expense, and (2) removing disclosures that no longer are considered cost beneficial or relevant. For public business
entities, the amendments in this Update are effective for annual periods beginning after December 15, 2024. For entities other than public
business entities, the amendments are effective for annual periods beginning after December 15, 2025. Early adoption is permitted for
annual financial statements that have not yet been issued or made available for issuance. The amendments in this Update should be applied
on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the impact of the update on Company’s
consolidated financial statements and related disclosures.
The Company does not believe recently issued but
not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated
financial statements.
Note 3 — Reverse recapitalization
Upon the consummation of the Business Combination,
the following transactions (collectively, the “Transactions”) were completed, based on the Company’s capitalization
as of September 29, 2023:
| ● | each
share of common stock, par value $0.0001 per share, of Merger Sub issued and outstanding immediately prior to the effective time of the
Business Combination (“Effective Time”) was no longer outstanding and thereupon were converted into and become one validly
issued fully paid and non-assessable share of Common Stock, par value $0.001 per share, of the Company and all such shares constituted
the only outstanding shares of capital stock of the Company as of immediately following the Effective Time; |
| ● | The
UPTD Units were automatically separated into underlying Common Stock and UPTD Warrants and are no longer be traded on the open market
following the Closing; |
| ● | Estrella
issued 500,000 shares of Series A Preferred Stock to White Lion for $500,000 and 250,000 shares of Series A Preferred Stock to White
Lion as commitment fee pursuant to the Common Stock Purchase Agreement immediately prior to the Effective Time; |
| ● | Estrella
issued (i) 1,520,000 shares of Series A Preferred Stock were issued to Lianhe World for $1,520,000, (ii) 1,000,000 shares of Series A
Preferred Stock were issued to CoFame for $1,000,000, (iii) 730,000 shares of Series A Preferred Stock were issued to Tiger for $730,000
for deferred commission, (iv) 2,000,000 shares of Series A Preferred Stock were issued to Smart Crest for $2,000,000; (v) 2,000,000 shares
of Series A Preferred Stock were issued to Xiao for $2,000,000 and (vi) 2,000,000 shares of Series A Preferred Stock were issued to Wang
for $2,000,000, immediately prior to the Effective Time; |
| ● | Estrella
issued an unsecured 30-day promissory note to Hongbing Zhang in the principal amount of $0.3 million with an interest rate of 12% per
annum; |
| ● | Each
share of Series A Preferred Stock and Series AA Preferred Stock that was issued and outstanding immediately prior to the Effective Time
was automatically converted into a number of shares of Estrella Common Stock (See Note 12); |
| ● | Each
share of Estrella Common Stock was converted into 0.2407 shares of Company Common Stock; and |
| ● | The
Company issued 500,000 shares of Common Stock to each of Plentiful Limited and Lianhe World, respectively. |
The following table presents the number of the
Company’s Common Stock issued and outstanding immediately following the Reverse Recapitalization:
| |
Common Stock | |
UPTD’s Common Stock outstanding prior to Reverse Recapitalization | |
| 2,329,920 | |
Less: redemption of UPTD’s Common Stock | |
| (628,688 | ) |
Common Stock issued to PIPE investment | |
| 1,000,000 | |
Conversion of Estrella’s Common Stock into UPTD’s Common Stock | |
| 32,500,000 | |
Total Common Stock outstanding | |
| 35,201,232 | |
Estrella was determined to be the accounting acquirer
given that Estrella effectively controlled the Company upon consummation of the Business Combination. The transaction is accounted for
as a reverse recapitalization, which is equivalent to the issuance of Common Stock by Estrella for the net monetary assets of UPTD, accompanied
by a recapitalization. Estrella was determined as the accounting acquirer and the historical financial statements of Estrella became the
Company’s historical financial statements, with retrospective adjustments to give effect of the reverse recapitalization. The net
assets of UPTD were recognized as of the Closing Date at historical cost, with no goodwill or other intangible assets recorded. Operations
prior to the Closing Date are those of Estrella and Estrella’s operations are the only ongoing operations of the Company.
In connection with the Reverse Recapitalization,
the Company raised approximately $726,339 of proceeds, presented as cash flows from financing activities, which included the contribution
of $8,138,230 of funds held in UPTD’s trust account, $9,782 of cash held in UPTD’s operating cash account, net of $5,072,945
payable to UPTD’s public stockholders to redeem 467,122 public shares of UPTD’s Common Stock, $1,640,128 in transaction
costs incurred by UPTD, and $708,600 prepayment of working capital loans issued to UPTD’s related parties.
The following table reconcile the elements of
the Reverse Recapitalization to the unaudited condensed consolidated statements of cash flows and the changes in shareholders’ equity
(deficit):
|
|
September 29,
2023 |
|
Funds held in UPTD’s trust account |
|
$ |
8,138,230 |
|
Funds held in UPTD’s operating cash account |
|
|
9,782 |
|
Less: amount payable to redeem public shares of UPTD’s Common Stock |
|
|
(5,072,945 |
) |
Less: payments of transaction costs incurred by UPTD |
|
|
(1,640,128 |
) |
Less: repayments of working capital loan – related parties of UPTD |
|
|
(708,600 |
) |
Proceeds from the Reverse Recapitalization |
|
|
726,339 |
|
Less: non-cash net deficit assumed from UPTD |
|
|
(1,200,316 |
) |
Net distributions from issuance of Common Stock upon the Reverse Recapitalization |
|
$ |
(473,977 |
) |
The shares and corresponding capital amounts and
all per share data related to the Company’s outstanding Common Stock prior to the Reverse Recapitalization have been retroactively
adjusted using the Exchange Ratio of 0.2407.
Note 4 — Cash Held in Trust Account
The Company had cash held in a trust account,
carried over from UPTD upon the consummation of the Business Combination. Such balance held in trust account was designated to pay UPTD’s
shareholders who redeemed public shares of UPTD’s Common Stock before the consummation of the business combination. On October 3,
2023, the remaining balance of cash held in trust account was disbursed to the UPTD’s shareholder as mentioned above.
Note 5 — Extension Note Receivable
Pursuant to Merger Agreement, Estrella agreed
to, upon request by UPTD, deposit the agreed reasonable amount to UPTD’s trust account in order to effectuate extension of UPTD’s
deadline to consummate a business combination. Pursuant to the Merger Agreement, as of June 30, 2023, a total of $273,066 of six monthly
extension payments, each in the principal amount of $45,511, would be deposited into the Trust Account of UPTD, all of which were sourced
by loans from Estrella (the “Extension Notes”). The Extension Notes bore no interest and were settled between Estrella
and UPTD upon the consummation of the Business Combination on September 29, 2023.
Note 6 — Other payables and accrued
liabilities
|
|
As of
March 31,
2024 |
|
|
As of
June 30,
2023 |
|
|
|
(Unaudited) |
|
|
|
|
Accrued professional fees (i) |
|
$ |
89,022 |
|
|
$ |
398,781 |
|
Others |
|
|
391 |
|
|
|
- |
|
Total other payables and accrued liabilities |
|
$ |
89,413 |
|
|
$ |
398,781 |
|
(i) | The
balance of accrued professional fees represented amount due to third party service providers which include, legal and consulting fee
related to research and development, and others. |
Note 7 — Stock redemption payable
Stock redemption payable represents the balance
payable to UPTD’s shareholders related to the redemption of public shares of UPTD’s Common Stock before the consummation of
the business combination. On October 3, 2023, such balance was paid in full through the Company’s investment held in trust account.
(see Note 4).
Note 8 — Commitments and contingencies
Manufacturing Commitment
On June 28, 2022, Eureka and the Company entered
into the License Agreement under which Eureka granted to the Company a license under certain intellectual property controlled by Eureka
for exploitation by the Company in the Company’s territory under the License Agreement (the “Licensed Territory”). Eureka
will be solely responsible for the manufacture and supply of clinical quantities of the licensed products and final filled and finished
(including packaged) drug product form of the licensed products for development and commercialization purposes in the field both in the
Licensed Territory and elsewhere. Refer to Note 9.
Equity Financing Commitment
On April 20, 2023, UPTD entered into a Common
Stock purchase agreement (as amended on April 26, 2023 and from time to time, the “Common Stock Purchase Agreement”) and a
related registration rights agreement (the “White Lion RRA”) with White Lion. Pursuant to the Common Stock Purchase Agreement,
following the Closing, the Company has the right, but not the obligation to require White Lion to purchase, from time to time, up to $50,000,000
in aggregate gross purchase price of newly issued shares of Common Stock of the Company, subject to certain limitations and conditions
set forth in the Common Stock Purchase Agreement, including, among others, the initial and any subsequent registration statement for the
Equity Line Shares being declared effective by the SEC and remaining effective during the term of the Common Stock Purchase Agreement.
In addition, under Nasdaq listing rules, the Company is not permitted to issue any Equity Line Shares under the Common Stock Purchase
Agreement if such issuance would equal 20% or more of the Company’s outstanding common stock without obtaining majority approval
by our stockholders, which had not been obtained as of the date hereof. On December 28, 2023, the Company’s registration statement
on Form S-1 related to the Equity Line Shares was declared effective by the SEC. As of the date hereof, no Equity Line Shares have been
issued to White Lion pursuant to the Common Stock Purchase Agreement.
Registration Rights
The holders of 312,200 shares of Common Stock
that were issued to the initial stockholders of UPTD (the “Founder Shares”) and of 1,107,500 shares of Common Stock issued
to certain investors in a private placement in connection with UPTD’s initial public offering (the “Private Shares”)
are entitled to registration rights pursuant to a Registration Rights Agreement, dated July 14, 2021, among UPTD, TradeUP Acquisition
Sponsor LLC and certain security holders named therein. The Company assumed the obligations of UPTD under such agreement upon consummation
of the Business Combination. The holders of the majority of these securities are entitled to make up to three demands, excluding short
form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration
rights with respect to registration statements filed subsequent to the completion of the initial Business Combination and rights to require
the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company is also obligated to file
a registration statement for the (i) Equity Line Shares that we may issue to White Lion pursuant to the Common Stock Purchase Agreement
and White Lion RRA, (ii) up to 2,225,000 shares of Common Stock issuable upon exercise of the Warrants and (iii) the shares issued or
that will be issued pursuant to the Subscription Agreements. The Company will bear the expenses incurred in connection with the filing
of any such registration statements.
Contingencies
From time to time, the Company is or may be party
to certain legal proceedings, as well as certain asserted and un-asserted claims. Amounts accrued, as well as the total amount of reasonably
possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the unaudited condensed
consolidated financial statements.
In some instances, the Company may be required
to indemnify its licensors for the costs associated with any such adversarial proceedings or litigation. Third parties may assert infringement
claims against the Company, its licensors or its strategic collaborators based on existing patents or patents that may be granted in the
future, regardless of their merit. There is a risk that third parties may choose to engage in litigation or other adversarial proceedings
with the Company, its licensors or its strategic collaborators to enforce or otherwise assert their patent rights.
Collaboration Agreement
On October 29, 2021, Eureka, entered into a Collaboration
Agreement with Imugene Ltd, a clinical stage immune-oncology company to evaluate Imugene’s CF33-CD19t, its oncolytic virus onCARlytics
technology in combination with Eureka’s CD19 ARTEMIS® T-cell therapy for the treatment of solid tumors.
On June 28, 2022, as part of the Separation, Eureka
contributed and assigned the Collaboration Agreement to Estrella. Pursuant to the Collaboration Agreement, Estrella and Imugene have each
granted to the other a royalty free, non-exclusive, worldwide license, with the right to grant and authorize sublicenses, to their respective
technologies to conduct the research activities each is responsible for performing under the research plan set forth in the Collaboration
Agreement. The research plan is required to be reviewed no less frequently than every six to eight months by a joint steering committee
comprised of participants from each of Estrella and Imugene.
Allocation of Costs, unless otherwise agreed by
the Parties in connection with a given Research Plan and associated Research Budget:
| (a) | Eureka
Costs: Eureka will be responsible for all FTE and other internal costs incurred in the performance of all Eureka Research Activities,
as defined in the Collaboration Agreement; |
| (b) | Imugene
Costs: Imugene will be responsible for all FTE and other internal costs incurred in the performance of all Imugene Research Activities,
as defined in the Collaboration Agreement; and |
| (c) | Joint
Costs: Eureka and Imugene will share equally (50:50) the out-of-pocket costs set forth in the applicable Research Budget plus Allowable
Overruns, as defined in the Collaboration Agreement. If either Party incurs out-of-pocket costs in excess of the amount budgeted therefor
in the applicable Research Budget plus Allowable Overruns, then the other Party will not be responsible for its 50% share to the extent
in excess of such budgeted amount plus Allowable Overruns, unless the joint steering committee (“JSC”) approves such excess
costs (either before or after such costs have been incurred). |
The research plan under the Collaboration Agreement
was completed as of August 30, 2023. The Company and Eureka recorded the costs associated with the Collaboration Agreement as research
and development expenses in the amount of $0 and $24,186, for the nine months ended March 31, 2024 and 2023, respectively, and $0 for
the three months ended March 31, 2024 and 2023.
On May 15, 2023, Estrella assigned a cost reimbursement
receivable of $27,169 from Imugene under the Collaboration Agreement to Eureka. There was no impact on Estrella’s statements of
operations.
Note 9 — Related Party Transactions
License Agreement
On June 28, 2022, in connection with the Contribution
Agreement, Eureka, Eureka Cayman and Estrella entered a License Agreement under which Eureka and Eureka Cayman granted to Estrella a license
under certain intellectual property controlled by Eureka for exploitation by Estrella in the Licensed Territory, which primarily includes
the United States and the rest of the world, excluding China and the Association of Southeast Asian Nations.
Pursuant to the License Agreement, (1) Eureka
will be solely responsible for the manufacture and supply of clinical quantities of the licensed products and final filled and finished
(including packaged) drug product form of the licensed products (“Drug Product”) for development and commercialization purposes
in the field both in the Licensed Territory and elsewhere, and (2) during the term of the License Agreement, Eureka will manufacture and
supply, either itself or through an affiliate or a third party contract manufacturer, all of Estrella’s and its related parties’
clinical quantities requirements of Drug Product for Estrella’s and its related parties’ development activities with respect
to the licensed products in the field in the Territory conducted in accordance with this agreement. Eureka and Estrella will use good
faith efforts to negotiate and enter into a clinical supply agreement on reasonable and customary terms for the supply of Drug Product
by Eureka to Estrella at a price equal to the fully burdened cost (the “Clinical Supply Agreement”), and a related quality
agreement, which agreements will govern the terms and conditions of the manufacturing and clinical supply of Drug Product to Estrella.
Furthermore, Eureka and Estrella’s collaboration will be overseen by a JSC. Eureka and Estrella will initially appoint one representative
to the JSC, with each representative having knowledge and expertise in the development and commercialization of products similar to the
licensed products and having sufficient seniority within the applicable party to provide meaningful input and make decisions arising within
the scope of the JSC’s responsibility.
The License Agreement requires Estrella to make
certain payments, including (a) an “upfront” payment of $1,000,000, payable in 12 equal monthly installments, (b) “milestone”
payments upon the occurrence of certain events related to development and sales, with potential aggregate multi-million dollar payments
upon FDA approval, and (c) royalty payments of a single digit percentage on net sales.
As of March 31, 2024 and June 30, 2023, Estrella
had remaining balance of account payable - related party amounted to $0 and $833,333, respectively, related to License Agreement’s
upfront payment. As of March 31, 2024, one development milestone payment in the amount of $50,000 related to the submission of EB103 to
the FDA was earned by Eureka under the Agreement. Such amount was accrued by Estrella and outstanding as of June 30, 2023 and payment
was made on October 10, 2023 with $0 outstanding as of March 31, 2024.
Services Agreement
On June 28, 2022, Estrella entered a Services
Agreement with Eureka. Pursuant to the Services Agreement, Eureka will perform certain services for Estrella related the transfer of certain
technology and the provision of certain technical assistance to facilitate Estrella’s exploitation of the intellectual property
licensed by Eureka to Estrella under the License Agreement, and Eureka will perform such services for Estrella (the “Services”).
Under the Services Agreement, Estrella shall pay Eureka (1) $10,000,000 in connection with the Services payable in 12 equal monthly installments
with the first payment to be made no later than five days after the Effective date and (2) reimburse Eureka on a monthly basis for reasonable
pass-through costs incurred or paid to providers by Eureka in providing the Services. In addition, Estrella will be charged for other
services performed by Eureka outside the scope of the Services per the Service Agreement, at a flat rate, by time or materials or as mutually
agreed upon the parties in writing.
Eureka’s service covered a period of 12
months and the service commenced on June 28, 2022. As of March 31, 2024 and June 30, 2023, Estrella had account payable balance - related
party of $0 and $8,333,331 related to Service Agreement with Eureka, respectively.
As of March 31, 2024 and June 30, 2023, Estrella
accrued $166,941 and $116,482 for pass-through costs related to clinical trials incurred by Eureka in account payable-related party, respectively.
For the nine months ended March 31, 2024 and 2023,
Estrella incurred $54,957 and $125,273 pass-through costs related to clinical trials, respectively.
For the three months ended March 31, 2024 and
2023, Estrella incurred $0 and $9,822 pass-through costs related to clinical trials, respectively.
After the closing of the business combination
on September 29, 2023, on October 10, 2023 Estrella remitted $9,334,475 to Eureka.
Statement of Work
On March 4, 2024, the Company, Estrella and Eureka
entered into Statement of Work No. 001 (“SOW”) relating to the clinical trial services to be performed by Eureka in connection
with Starlight-1, the Phase I/II clinical trial of Estrella Biopharma’s product candidate, EB103, a T-cell therapy targeting CD19
using ARTEMIS® T cell technology licensed by Estrella Biopharma from Eureka. The trial is designed to assess the safety,
tolerability, recommended Phase II dose, and preliminary anti-cancer activity of EB103 for the treatment of relapsed or refractory (R/R)
B-cell non-Hodgkin lymphoma (NHL) patients.
The SOW is governed by the terms of the Services
Agreement, dated June 28, 2022, between Estrella and Eureka (as amended by Amendment No. 1, effective as of October 1, 2022, and Amendment
No. 2, effective as of March 1, 2023), and incorporates all the terms of the Services Agreement by reference. Notwithstanding the foregoing,
the terms and conditions of the SOW govern in the event of any conflict with the terms and conditions of the Services Agreement.
The scope of work set forth in the SOW includes
study start-up, patient dosing and related activities, study close-out, and reporting. Additionally, the SOW sets forth the various services
Eureka will provide in connection with the clinical trial, including regulatory document development, site activation, patient enrollment
and consent management, data collection, and pharmacovigilance.
Pursuant to the SOW, Estrella agrees to pay Eureka
non-refundable net fees in connection with the achievement of certain milestones set forth in the SOW, with total fees of $33,000,000
for achievement of all milestones, excluding additional pass-through costs and expenses incurred by Eureka and payable by Estrella Biopharma
as further described below. Such amount assumes 20 patients to be dosed and one clinical site is activated. An additional $500,000 will
become payable to Eureka if a second site is activated following mutual agreement of Estrella Biopharma and Eureka. In addition to the
milestone payments, Eureka will invoice Estrella Biopharma quarterly for additional pass-through costs and expenses incurred in connection
with its services under the SOW. Estrella Biopharma is required to settle invoices within 30 days, with Eureka reserving the right to
impose monthly interest charges of 1.5% for undisputed amounts unpaid after 30 days. Estrella Biopharma will also be responsible for payment
of any taxes, fees, duties or charges imposed by any governmental authority in connection with the services provided by Eureka under the
SOW, other than any taxes on Eureka’s income.
The first invoice payable to Eureka issuable upon
execution of the SOW is for $3.5 million, covering the fees associated with the initiation of the study, the preparation and activation
of the first study site, and the First Patient First Visit (FPFV) milestones. Prior to the commencement of the patient dosing phase, a
deposit of $1.5 million is required to be delivered to Eureka to ensure the readiness for patient treatment expenses and will be applied
against the final invoice, and any unused portion will be returned to Estrella following collection of all outstanding fees and costs
payable to Eureka under the SOW. Additional invoices will be issued in connection with the patient dosing milestone, amounting to $1,375,000
per patient and a total cost $27,500,000 for 20 patients, excluding any pass-through costs and additional expenses. The SOW provides an
estimated dosing timeline of 6 patients by the end of 2024 and an additional 14 patients by the end of 2025. Lastly, a $2,000,000 milestone
fee will become due in connection with the study close-out phase, estimated to be completed by the end of 2025. Services provided in connection
with this milestone include finalizing patient data, trial data cleaning, statistical analysis, and preparing and submitting the final
study report.
As of March 31, 2024, Estrella has prepaid $3,500,000
to Eureka for covering the fees associated with the initiation of the study, the preparation and activation of the first study site, and
the First Patient First Visit (FPFV) milestones. No milestone from the SOW has been achieved as of March 31, 2024.
On May 13, 2024, the Company, Estrella, and Eureka
entered into Amendment No. 1 to the SOW, effective as of March 4, 2024, to clarify that in the event that Estrella exercises its right
to terminate or suspend the engagement with Eureka by providing written notice to Eureka in accordance with the SOW, Estrella will only
be obligated to compensate Eureka for (i) services provided by Eureka pursuant to the SOW (“Services”) in connection with
milestones that were achieved prior to the date and time of such written notice, (ii) reasonable and documented pass-through costs incurred
by Eureka on behalf of Estrella prior to the date and time of such written notice in connection with providing the Services and (iii)
amounts payable to third parties pursuant to commitments reasonably entered into by Eureka on behalf of Estrella prior to the date and
time of such written notice in connection with providing the Services, provided that Eureka shall make commercially reasonable efforts
to cancel or reduce any such amounts.
Series AA Preferred Stock
On June 28, 2022, Estrella and Eureka entered
into the Contribution Agreement pursuant to which Eureka agreed to contribute and assign to Estrella all rights, title and interest in
and to the Assets in exchange for 105,000,000 shares of Estrella’s Series AA Preferred Stock (refer to Note 11). As of March 31,
2024 and June 30, 2023, Eureka collectively owned 65.1% and 92.1% of Estrella on a fully diluted basis, respectively.
Lease
On July 6, 2022, Estrella entered into an office
lease contract with Eureka, to lease a 428 square feet office with a $2,000 payment. Under the original lease contract, the sublease agreement
commenced on August 1, 2022 and expired on September 30, 2023. In November 2022, the sublease’s expiration date was amended to July
31, 2023. Therefore, such lease contained a lease term for 12 months and less after amendment. Estrella elected not to apply the ROU and
lease liability recognition requirements to above mentioned short-term lease as the modified lease term was less than twelve months. As
a result of the lease amendment, Estrella then reduced the corresponding ROU and lease liability to $0 and continued to recognize the
lease monthly payments in profit or loss on a straight-line basis over the remaining lease term period.
On October 1, 2023 Estrella entered into an office
lease contract with Eureka, to lease 180 square feet of office space with $2,000 monthly lease payments for nine months without any renewal
option.
For the nine months ended March 31, 2024 and 2023,
the Company incurred $14,000 and $16,000 rent expense from Eureka, respectively. For the three months ended March 31, 2024 and 2023, the
Company incurred $6,000 rent expense from Eureka, respectively. Refer to Note 14.
As of March 31, 2024 and June 30, 2023, the outstanding
balance of lease payments of $4,000 and $22,000 was recorded as accrued liability - related party on the Company’s condensed consolidated
balance sheets, respectively.
Note 10 — Promissory note
On September 29, 2023, Estrella issued an unsecured
promissory note to Hongbing Zhang, in the aggregate principal amount of $300,000 (the “Unsecured Note”). Interest shall begin
accruing on September 29, 2023 at a rate of 12% per annum until the outstanding amount has been paid in full. The Unsecured Note matures
on October 30, 2023 and was paid in full on October 27, 2023.
Note 11 — Preferred Stock
Series AA Preferred Stock
On June 28, 2022, Estrella and Eureka entered
into the Contribution Agreement pursuant to which Eureka contributed and assigned to Estrella all right, title and interest in and to
the Assets in exchange for 105,000,000 shares of Estrella’s Series AA Preferred Stock. In accordance with ASC 805 “Common
control transactions.” The transfer of the Assets was accounted for by Estrella at historical carrying values.
Series A Preferred Stock
On June 28, 2022, Estrella entered into a Series
A Preferred Stock Purchase Agreement with an accredited third-party investor to raise gross proceeds of $5,000,000 by issuing 5,000,000
shares of its Series A Preferred Stock. The shares of Series A Preferred Stock were sold for $1.00 per share.
On each of July 31, 2023 and September 18, 2023,
an aggregate of six third party investors executed joinders to Estrella’s Series A Preferred Stock Purchase Agreement. Pursuant
to the joinders, such investors agreed to purchase an aggregate of 9,250,000 shares of Estrella’s Series A Preferred Stock for $9,250,000
immediately prior to the effective time of Estrella’s merger with UPTD. Subsequently and immediately prior to the effective time
of the merger with UPTD, such shares of Estrella’s Series A Preferred Stock converted into Estrella Common Stock and then into Merger
Consideration Shares based on an exchange ratio of 0.2407 determined by the total number of shares of Estrella Common Stock outstanding
immediately prior to the Effective Time in accordance with the Merger Agreement. In addition, immediately prior to the Effective Time,
500,000 shares of Estrella’s Series A Preferred Stock were issued to White Lion for $500,000 and 250,000 shares of Estrella’s
Series A Preferred Stock were issued to White Lion in consideration for its commitments under the Common Stock Purchase Agreement pursuant
to the Joinder to the Series A Preferred Stock Purchase Agreement between Estrella and White Lion, dated April 20, 2023, as further described
in Note 8 above.
The significant terms of the Series A, Series
AA Preferred Stocks issued by Estrella are as follows:
Dividend Rights
Each holder of Preferred Stock shall be entitled
to receive only when, as and if declared by the board of directors, out of any funds and assets legally available therefor, dividends
on a pari passu basis at the rate of 8% of the original issue price of $1.00 per share. The dividend shall be non-cumulative and non-compounding.
Liquidation Rights
Series A Preferred Stock – In
the event of any voluntary or involuntary liquidation, dissolution or winding up of Estrella, the holders of shares of Series A Preferred
Stock then outstanding shall be entitled to be paid out of the assets of Estrella available for distribution to its stockholders or, in
the case of a Deemed Liquidation Event (as defined below), out of the consideration payable to stockholders in such Deemed Liquidation
Event or the Available Proceeds, before any payment shall be made to the holders of Series AA Preferred Stock or Common Stock by reason
of their ownership thereof, and amount per share equal to the applicable Original Issue Price, plus any dividends declared but unpaid
thereon.
Series AA Preferred Stock – After
payment of the full liquidation preference of the Series A Preferred Stock, then in the event of any voluntary or involuntary liquidation,
dissolution or winding up of Estrella, the holders of shares of Series AA Preferred Stock then outstanding shall be entitled to be paid
out of the assets of Estrella available for distribution to its stockholders or, in the case of a Deemed Liquidation Event, out of the
consideration payable to stockholders in such Deemed Liquidation Event or the Available Proceeds. Before any payment shall be made to
the holders of Common Stock by reason of their ownership, an amount per share equal to the applicable Original Issue Price, plus any dividends
declare but unpaid thereon.
Distribution of Remaining Assets – If
there are any remaining assets of the Estrella, such assets shall be distributed among the holders of the shares of Series A Preferred
Stock and Common Stock, prorated based on the number of shares held by each such holder, treating for this purpose all such securities
as if they had been converted to Common Stock.
Voting Rights
Each holder of outstanding shares of Series A
Preferred Stock shall be entitled to cast two (2) votes for each share of Series A Preferred Stock held by such holder and each holder
of outstanding shares of Series AA Preferred Stock shall be entitled to cast one (1) vote for each share of Series AA Preferred Stock
held by such holder. Except as provided by law or by the other provisions of the amended and restated certificate of incorporation, holders
of Preferred Stock shall vote together with holders of Common Stock as a single class.
Conversion Rights
Each share of Preferred Stock shall be convertible,
at the option of the holder at any time and from time to time, and without the payment of additional consideration by the holder into
such number of fully paid and non – assessable shares of Common Stock as is determined by dividing the Original Issue Price by the
Conversion Price in effect at the time of conversion. The Series A Conversion Price applicable to the Series A Preferred Stock shall initially
be equal to $1.00. The Series AA Conversion Price applicable to the Series AA Preferred Stock shall initially be equal to $1.00. The Series
A Conversion Price and the Series AA Conversion Price are referred to as “Conversion Price.” The initial Conversion Prices
and the rate at which shares of applicable Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment
in connection with certain dilutive issuances, share split, combinations, dividends, distributions, recapitalizations, mergers, consolidations,
reclassifications, exchanges, and substitutions.
Pursuant to the Estrella’s amended and restated
certificate of incorporation, holders of the Estrella’s Preferred Stock have the following methods of conversion: Automatic conversion
upon either (a) the closing of the sale of shares of Common Stock to the public at a price of at least $1.00 per share (subject to appropriate
adjustment in the event of any stock dividend, stock splits, combination or other similar recapitalization with respect to the Common
Stock), in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of
1933, as amended, resulting in at least $50,000,000 of gross proceeds to Estrella and in connection with such offering the Common Stock
is listed for trading on the Nasdaq Stock Market’s National Market, the New York Stock Exchange or another exchange or marketplace
approved by the board of directors or (b) the date and time, or the occurrence of an event, specified by vote or written consent of (i)
the holders of at least a majority of the outstanding shares of Series A Preferred Stock and (ii) the holders of at least a majority of
the outstanding shares of Series AA Preferred Stock, voting separately, then (x) all outstanding shares of Preferred Stock shall automatically
be converted into shares of Common Stock, at the then effective conversion rate (y) such shares may not be reissued by Estrella.
Redemption Rights
Both Series A Preferred Stock and Series AA Preferred
Stock were mandatorily redeemable upon the occurrence of a “Deemed Liquidation Event” which includes the following: (1) a
merger or consolidation in which (a) Estrella is a constituent party or (b) a subsidiary of Estrella is a constituent party and Estrella
issues shares of its capital stock pursuant to such merger or consolidation, except any such merger or consolidation involving the Corporation
or a subsidiary in which the shares of capital stock of Estrella outstanding immediately prior to such merger or consolidation continue
to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation,
at least a majority, by voting power, of the capital stock of (i) the surviving or resulting corporation; or (ii) if the surviving or
resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent
corporation of such surviving or resulting corporation; or (2) (a) the sale, lease, transfer, exclusive license or other disposition,
in a single transaction or series of related transactions, by Estrella or any subsidiary of Estrella of all or substantially all the assets
of Estrella and its subsidiaries taken as a whole, or (b) the sale or disposition (whether by merger, consolidation or otherwise, and
whether in a single transaction or a series of related transactions) of one or more subsidiaries of Estrella if substantially all of the
assets of Estrella and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer,
exclusive license or other disposition is to a wholly owned subsidiary of Estrella.
Estrella shall use the consideration received
by Estrella for such Deemed Liquidation Events mentioned above (net of any retained liabilities associated with the assets sold or technology
licensed, as determined in good faith by the board of directors of Estrella), together with any other assets of Estrella available
for distribution to its stockholders, all to the extent permitted by Delaware law governing distributions to stockholders (the “Available
Proceeds”), to redeem all outstanding shares of Preferred Stock at a price per share equal to the applicable liquidation amount,
which is equal to the original issue price of the Preferred Stock plus any declared but unpaid dividends. The Series A Preferred Stock
must receive its liquidation amount prior to the Series AA Preferred Stock receives any payment.
The Series A Preferred Stock and the Series AA
Preferred Stock were accounted for under Section 480-10-S99 — Distinguishing Liabilities from Equity (FASB Accounting Standards
Codification 480) as amended by ASU 2009-04 — for Redeemable Equity Instruments (“ASU 2009-04”). Under ASU 2009-04,
a redeemable equity security is to be classified as temporary equity if it is conditionally redeemable upon the occurrence of an event
that is not solely within the control of the issuer. Therefore, the Company classified the Series A Preferred Stock and Series AA Preferred
Stock as temporary equity in the condensed consolidated balance sheet as of June 30, 2023.
Immediately prior to the consummation of the business
combination on September 29, 2023, all shares of Estrella Series A and Series AA Preferred Stock were converted into Estrella Common Stock
and each share of Estrella Common Stock was exchanged for shares of Common Stock at an exchange ratio of 0.2407.
Note 12 — Stockholders’
Equity (Deficit)
Before reverse recapitalization
Given the consideration of retroactive adjustments,
upon incorporation on March 20, 2022, the Company’s authorized shares were 145,000,000 shares of Common Stock with a par value of
$0.0001 per share.
After reverse recapitalization
Upon consummation of the business combination
on September 29, 2023, each share of Estrella’s Common Stock was converted into 0.2407 shares of the Company’s Common Stock.
The Company’s authorized shares of Common
Stock is 250,000,000 with a par value of $0.0001 per share (the “Common Stock”). Given the retroactive effect of the reverse
recapitalization, as of June 30, 2023, there were 978,243 shares of Common Stock issued and outstanding.
Issuance of Common Stock upon the reverse
recapitalization (see Note 3)
On September 29, 2023, upon the consummation of
the Business Combination, the Company issued an aggregate total of 1,701,232 Common Stock to UPTD’s shareholders.
The following table presents the number of the
Company’s ordinary shares issued upon the Reverse Recapitalization:
| |
Ordinary
Shares | |
UPTD’s Common Stock outstanding prior to Reverse Recapitalization | |
| 2,329,920 | |
Less: redemption of UPTD’s Common Stock | |
| (628,688 | ) |
Total shares issued upon the Reverse Recapitalization | |
| 1,701,232 | |
Conversion of Series A Preferred Stock and
the Series AA Preferred Stock
Immediately prior to the consummation of the business
combination on September 29, 2023, all shares of Estrella Series A and Series AA Preferred Stock were converted into Estrella Common Stock
and then into Merger Consideration Shares which is amounted to 28,888,675 shares of Common Stock based on an exchange ratio of 0.2407
determined by the total number of shares of Estrella Common Stock outstanding at the Effective Time in accordance with the Merger Agreement.
PIPE investment shares
In connection with the Merger, on September 14,
2023, UPTD entered into subscription agreements (the “Subscription Agreements”) with each of Plentiful Limited, a Samoan limited
company (“Plentiful Limited”) and Lianhe World Limited (“Lianhe World,” together with Plentiful Limited, collectively,
the “PIPE Investors”). Concurrently with the closing of the Business Combination, the Company issued 500,000 shares of Common
Stock to each of Plentiful Limited and Lianhe World, respectively, for aggregate proceeds of $10,000,000.
Within thirty days following the date of the Closing,
each PIPE Investor will also be entitled to receive 704,819 shares of Common Stock. Within five days following the date that is 24 months
following the Closing (the “24-Month Date”), if the VWAP of Common Stock for the fifteen trading days prior to the 24-Month
Date (the “24-Month Date VWAP”) is less than $8.30, then each of them will be entitled to a number of shares of Common Stock
equal to (i) (A) 8.30 minus (B) the 24-Month Date VWAP multiplied by (ii) (A) the number of Shares held by the Investor on the 24-Month
Date minus (B) the number of Shares acquired by the Investor following the Closing divided by 10.00.
On January 22, 2024, the Company completed the
issuance of an additional 704,819 shares of Common Stock to each of the two PIPE Investors. The shares were issued as part of the consideration
that each PIPE Investor was entitled to receive thirty days following the date of the closing of the Business Combination.
Warrants
In connection with the reverse recapitalization,
the Company has assumed 2,215,000 Public Warrants outstanding. Public Warrants met the criteria for equity classification.
Each whole Warrant entitles the registered holder
to purchase one whole share of the Company’s Common Stock at a price of $11.50 per share. Pursuant to the warrant agreement,
a warrant holder may exercise its Warrants only for a whole number of shares of Common Stock. This means that only a whole Warrant may
be exercised at any given time by a warrant holder. No fractional Warrants will be issued upon separation of the Units and only whole
Warrants will trade. The Warrants will expire five years after the completion of the Company’s initial Business Combination,
at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
The Company has agreed that as soon as practicable,
but in no event later than 30 business days, after the closing of the initial Business Combination, it will use its reasonable commercially
reasonable efforts to file, and within 60 business days following its initial Business Combination to have declared effective, a
registration statement for the registration, under the Securities Act, of the shares of Common Stock issuable upon exercise of the Warrants.
The Company will use its commercially reasonable efforts to maintain the effectiveness of such registration statement, and a current prospectus
relating thereto, until the expiration of the Warrants in accordance with the provisions of the warrant agreement. No Warrants will be
exercisable for cash unless the Company has an effective and current registration statement covering the Common Stock issuable upon exercise
of the Warrants and a current prospectus relating to such shares of Common Stock. Notwithstanding the above, if the Company’s Common
Stock is at the time of any exercise of a Warrant not listed on a national securities exchange such that it satisfies the definition of
a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Warrants
who exercise their Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in
the event it so elect, it will not be required to file or maintain in effect a registration statement, but it will be required to use
its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not
available.
Once the Warrants become exercisable, the Company
may call the Warrants for redemption:
| ● | in
whole and not in part; |
| ● | at
a price of $0.01 per Warrant; |
| ● | upon
not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder;
and |
| ● | if,
and only if, the reported last sale price of the Common Stock equals or exceeds $16.50 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on third
business day before the Company send the notice of redemption to the warrant holders. |
The Company accounted for the 2,215,000 public
Warrants assumed from the merger as equity instruments in accordance with ASC 480, “Distinguishing Liabilities from Equity”
and ASC 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity”.
Stock Repurchase Program
On January 30, 2024, the Company issued a press
release announcing that its board of directors has authorized share repurchases of up to $1 million of its common stock. The authorization
does not constitute a formal or binding commitment to make any share repurchases and the timing, amount and method of any share repurchases
made pursuant to the authorization will be determined at a future date depending on market conditions and other factors. As
of March 31, 2024, $915,909 remained available for repurchases.
For the nine months
ended March 31, 2024, the Company repurchased 74,890 shares of its Common stock in open market transactions for $84,091 at a weighted
average price per share of $1.12. The Company did not repurchase any shares of its Common stock during the same period in 2023. As
of March 31, 2024, $915,909 remained available for stock repurchasing.
Note 13 — Stock Based Compensation
At the special meeting of UPTD stockholders related
to the Business Combination held on July 31, 2023, UPTD’s shareholders approved the adoption of the Company’s 2023 Omnibus
Incentive Plan (the “2023 Plan”), which became effective on the Closing Date. Upon the closing of the Business Combination,
3,520,123 shares of Common Stock became authorized for issuance under the 2023 Plan. As of the date hereof, no shares of Common Stock
have been issued under the Incentive Plan.
On May 27, 2022, the Company’s board of
directors approved its 2022 Equity Incentive Plan (the “2022 Plan”). The 2022 Plan provides for the grant of (i) options,
(ii) share appreciation rights, (iii) restricted share awards, (iv) restricted share unit awards, and (v) other share awards. The aggregate
number of shares of Common Stock that may be issued pursuant to the 2022 Plan will not exceed 15,000,000 shares of Common Stock. On May
27, 2022, the Company granted options under the 2022 Plan to purchase 15,000,000 shares of its Common Stock to its employees, board of
directors, and other consultants. The total fair value of these stock options was approximately $1,638,381.
The stock-based compensation expense recorded
in the Company’s results of operations for the nine months ended March 31, 2024 and 2023 were $1,194,653 and $307,197, respectively.
The stock-based compensation expense recorded in the Company’s results of operations for the three months ended March 31, 2024 and
2023 were $0 and $102,399, respectively.
The breakdown of stock-based compensation by categories
for the three and nine months ended March 31, 2024 and 2023 are summarized below:
| |
For the three months Ended March 31,
2024 | | |
For the three months Ended March 31,
2023 | |
Research and development | |
$ | - | | |
$ | 38,912 | |
General and administrative | |
| - | | |
| 63,487 | |
Total stock based compensation | |
$ | - | | |
$ | 102,399 | |
| |
For the Nine months Ended March 31, 2024 | | |
For the Nine months Ended March 31, 2023 | |
Research and development | |
$ | 453,968 | | |
$ | 116,735 | |
General and administrative | |
| 740,685 | | |
| 190,462 | |
Total stock based compensation | |
$ | 1,194,653 | | |
$ | 307,197 | |
The intrinsic value of the granted options was
approximately $1.6 million. Upon completion of the business combination on September 29, 2023, the unvested options were vested upon consummation
of the merger, under which the Company recognized the remaining unrecognized fair value as expense.
The Company estimated the fair value of the stock
options using the Black-Scholes option pricing model. The fair value of employee stock options issued was estimated using the following
assumptions:
Grant date | |
May 27, 2022 | |
Exercise price | |
$ | 0.001 | |
Estimated stock price | |
$ | 0.11 | |
Expected volatility | |
| 120.0 | % |
Expected term (in years) | |
| 4.00 | |
Risk-free interest rate | |
| 3.00 | % |
The risk-free interest rate was obtained from
U.S. Treasury rates for the applicable periods. The Company’s expected volatility was based upon the implied volatility of a portfolio
of comparable companies. The expected life of the Company’s options was determined using the actual remaining life of the stock
option. The fair value of the Common Stock input was determined by the board of directors based on a variety of factors, including valuation
prepared by a third party, the Company’s financial position, the status of development efforts within the Company, the current climate
in the marketplace and the prospects of a liquidity event, among others.
For the nine months ended March 31, 2024, no additional
stock options were granted.
On May 27, 2022, all employees, the board of directors,
and other consultants elected to exercise the stock options granted by the Company early. The total proceeds received by the Company amounted
to $15,000 and was recorded as other liability due to the terms of the early exercised shares, which are subject to repurchase until such
shares are vested and are required to be returned to the Company if the vesting conditions are not satisfied. Such other liability account
should be cleared at the time the exercised shares are vested or repurchased. As of March 31, 2024 and June 30, 2023, the unamortized
balance of the above mentioned other liability amounted to $0 and $12,725, respectively, based on the vesting period.
A summary of early-exercised stock option’s
vesting activity for the year ended June 30, 2023, and for the nine months ended March 31, 2024 is as follows:
| |
Number of Shares | | |
Weighted- Average Grant Date Fair Value per share | |
Balance of unvested early-exercised stock option at June 30, 2022 | |
| 14,825,000 | | |
$ | 0.11 | |
Vested early-exercised stock option | |
| (3,887,500 | ) | |
$ | 0.11 | |
Balance of unvested early-exercised stock option at June 30, 2023 | |
| 10,937,500 | | |
$ | 0.11 | |
Vested early-exercised stock option | |
| (10,937,500 | ) | |
$ | 0.11 | |
Balance of unvested early-exercised stock option at March 31, 2024 | |
| - | | |
$ | - | |
Note 14 — Leases
On July 6, 2022, the Company entered into an office
lease contract with Eureka, a related party (“Lease 1”). Under the original lease contract, the sublease agreement commenced
on August 1, 2022 and expires on September 30, 2023. In November 2022, the sublease’s expiration date was amended to July 31, 2023.
On October 1, 2023 Estrella entered into an office
lease contract with Eureka, a related party (“Lease 2”) for nine months without any renewal option.
The Company’s office lease was classified
as an operating lease. The Company’s lease agreement does not contain any material residual value guarantees or material restrictive
covenants.
The Company elected not to apply the ROU and lease
liability recognition requirements to above mentioned short-term lease in accordance with ASC 842-20-25-2. As a result of the lease amendment,
the Company then reduced the corresponding ROU and lease liability to $0 from Lease 1 and continued to recognize the lease monthly payments
in profit or loss on a straight–line basis over the remaining lease term period.
Rent expense for the three months ended March
31, 2024 and 2023 was $6,000. Rent expense for the nine months ended March 31, 2024 and 2023 was $14,000 and $16,000, respectively.
Note 15 — Subsequent Events
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date through May 14, 2024, when the unaudited financial statements were issued. Except as described
below, there were no material subsequent events that required recognition or disclosure in the financial statements.
Clinical Trial Agreement
On April 9, 2024, the Company entered into an
Accelerated Clinical Trial Agreement with the Regents of the University of California for conducting Starlight-1, a multicenter clinical
trial sponsored by the Company.
Stock Repurchase
From April 1, 2024 to May 13, 2024, the Company
repurchased 159,687 shares of its Common Stock in open market transactions for $182,867.79 at a weighted average price per share of $1.15.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Unless the context otherwise requires, for
purposes of this section, the terms “Company,” “we,” “us,” “our,” refer to Immunopharma,
Inc. collectively with its subsidiary Estrella Biopharma, Inc., while the term “Estrella” refers to Estrella Biopharma, Inc.
prior to closing of the Business Combination. The following discussion and analysis of our results of operations and financial condition
should be read together with our unaudited condensed consolidated financial statements and the notes thereto, which are included elsewhere
in this Report and our audited financial statements as exhibit 99.1 on Form 8-K filed with the SEC on October 5, 2023 and the section
entitled “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” included in the Company’s
Registration Statement on Form S-1, filed with the SEC on October 11, 2023 and amended on November 13, 2023 and December 18, 2023. Certain
information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
(“U.S. GAAP”).
Overview
The Company is a clinical-stage
biopharmaceutical company developing T-cell therapies with the capacity to address treatment challenges for patients with blood cancers
and solid tumors. We believe T-cell therapy continues to represent a revolutionary step towards providing a potential solution for many
forms of cancer, including cancers poorly addressed by current approaches.
On June 28, 2022, pursuant
to the Contribution Agreement, Eureka contributed certain assets related to T-cell therapies targeting CD19 and/or CD22 to Estrella in
exchange for 105,000,000 shares of Series AA Preferred Stock of Estrella (the “Separation”). Eureka determined that the Separation
would allow for the flexibility to create a capital structure tailored to Estrella’s strategic goals, provide increased access to
capital markets, allow for greater focus on the product candidates contributed to Estrella, and result in a dedicated management team.
As part of the Separation,
Estrella entered into a License Agreement with Eureka and Eureka Therapeutics (Cayman) Ltd., an affiliate of Eureka, and a Services Agreement
with Eureka, and Eureka contributed and assigned the Collaboration Agreement between Eureka and Imugene to Estrella. The License Agreement
grants Estrella an exclusive license to develop CD19 and CD22-targeted T-cell therapies using Eureka’s ARTEMIS® platform.
Under the Services Agreement, Eureka has agreed to perform certain services for us in connection with the development of our product candidates,
EB103 and EB104, and researching the use of EB103 in conjunction with CF33-CD19t. The Collaboration Agreement establishes our collaboration
with Imugene related to the development of solid tumor treatments using CF33-CD19t in conjunction with EB103.
On March 2, 2023, the FDA
cleared the IND application for EB103, allowing Estrella to proceed with the Phase I/II Starlight-1 Clinical Trial, which Estrella expects
to commence in the first half of 2024.
To date, we have funded our
operations primarily from the June 28, 2022 issuance of $5.0 million of our Series A Preferred Stock, and net proceeds of approximately
$20.1 million raised from completion of the Business Combination on September 29, 2023. We have a limited operating history. Since our
inception, our operations have focused on preparing for the Business Combination, regulatory filings (including the INDs), planning preclinical
and clinical studies, and building our management team. We do not have any product candidates approved for sale and have not generated
any revenue from product sales.
As of March 31, 2024 we had
an accumulated deficit of approximately $15.5 million. We have remitted payment of approximately $11.2 million to Eureka, consisting of
the upfront payment incurred under the License Agreement and monthly service provided by Eureka under the Services Agreement on October
10, 2023. We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we:
| ● | continue
to advance preclinical and clinical development of our product candidates and preclinical programs; |
|
● |
seek regulatory approval for any product candidates that successfully complete clinical trials; |
|
● |
scale up our clinical and regulatory capabilities; |
|
● |
adapt our regulatory compliance efforts to incorporate requirements applicable to marketed products; |
|
● |
maintain, expand, and protect our intellectual property portfolio; |
|
● |
add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts; and |
|
● |
incur additional legal, accounting and other expenses in operating as a public company. |
Recent Developments
The Business Combination and Public Company Costs
On September 29, 2023, we
consummated the previously announced Business Combination with UPTD pursuant to the terms of the Merger Agreement by and among UPTD, Merger
Sub and Estrella. No closing conditions set forth in the Merger Agreement were waived by either UPTD or Estrella. Moreover, concurrently
with closing of the Merger, Estrella consummated the following transactions: (i) sales of 9.25 million shares of Estrella Series A Preferred
Stock for $9.25 million ($730,000 of which was comprised of funds in the trust account delivered to the Company at the closing of the
Business Combination that would have otherwise been paid to US Tiger Securities, Inc as a deferred underwriting fee in connection with
UPTD’s initial public offering), which shares were converted to shares of Estrella Common Stock and subsequently exchanged for Merger
Consideration Shares of UPTD immediately prior to the effective time of the merger at an exchange ratio of 0.2407, with such shares becoming
shares of New Estrella Common Stock from and after the effective time of the Merger; (ii) issuance of 500,000 shares of Estrella’s
Series A Preferred Stock to White Lion for $500,000 and 250,000 shares of Estrella Series A Preferred Stock to White Lion in consideration
for its commitments under the Common Stock Purchase Agreement, dated April 20, 2023, between UPTD and White Lion and in accordance with
the Joinder to the Series A Preferred Stock Purchase Agreement between Estrella and White Lion, dated April 20, 2023, which shares were
subsequently converted to shares of Estrella Common Stock and exchanged for Merger Consideration Shares of UPTD at an exchange ratio of
0.2407, with such Merger Consideration Shares becoming shares of New Estrella Common Stock from and after the effective time of the Merger
and (iii) issued an unsecured promissory note to a third party for $300,000 at 12% interest per annum, which will be payable 30 days after
the closing date of the Merger of September 29, 2023 and subsequently settled on October 26, 2023.
While the legal acquirer in
the Business Combination was UPTD, for financial accounting and reporting purposes under U.S. GAAP, Estrella was the accounting acquirer,
and the Business Combination was accounted for as a “reverse recapitalization.” A reverse recapitalization (i.e., a capital
transaction involving the issuance of stock by UPTD for the stock of Estrella) does not result in a new basis of accounting, and the consolidated
financial statements of the combined company represent the continuation of the consolidated financial statements of Estrella in many respects.
Accordingly, the consolidated assets, liabilities and results of operations of Estrella became the historical consolidated financial statements
of the combined company, and UPTD’s assets, liabilities, and results of operations were consolidated with Estrella beginning on
the Closing Date. Operations prior to the Business Combination are presented as those of Estrella. The net assets of UPTD are recognized
at historical cost (which is expected to be consistent with carrying value), with no goodwill or other intangible assets recorded upon
execution of the Business Combination.
As a consequence of the Merger,
Estrella became the successor to an SEC-registered and Nasdaq-listed company which will require Estrella to hire additional personnel
and implement procedures and processes to address public company regulatory requirements and customary practices. Estrella expects to
incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance,
director fees and additional internal and external accounting and legal and administrative resources, including increased audit and legal
fees.
Estrella’s future results
of consolidated operations and financial position may not be comparable to historical results as a result of the Business Combination.
Results of Operations
Estrella was formed on March
30, 2022, and has not commenced revenue-producing operations. To date, our operations have consisted of the development and early-stage
testing of our initial product candidates, EB103 and EB104, preparation and submission of the IND Application for and researching the
use of EB103 in conjunction with CF33-CD19t.
The results of operations
for the three and nine months ended March 31, 2024 represented Estrella’s results of operations to be comparable with the same period
in 2023.
There are two major expenses incurred for the
past and current operation:
Comparison of Three Months Ended March 31,
2024 and 2023
Research and Development Expenses
Research and development expenses
consist primarily of costs related to conducting work related to IND-enabling, IND-filing and clinical trial preparation, which were mainly
performed by Eureka. For the three months ended March 31, 2024 and 2023, we incurred approximately $25,000 and $2.6 million of research
and development expenses, respectively. All research and development expense incurred for the periods presented above were dedicated to
the development of ARTEMIS® T-cell therapies targeting CD19 and CD22. The decrease in research and development expenses
was mainly due to Estrella incurring lower service fees with Eureka due to a lower volume of service rendered under the Services Agreement
during the three months ended March 31, 2024 compared to the same period in 2023.
Our breakdown of research
and development expenses by categories for the three months ended March 31, 2024 and 2023 are summarized below:
| |
For the Three Months Ended
March 31,
2024 | | |
For the Three Months Ended
March 31,
2023 | |
Consulting and laboratory related fee | |
$ | 25,000 | | |
$ | 2,584,487 | |
Stock based compensation | |
| - | | |
| 38,912 | |
Total research and development | |
$ | 25,000 | | |
$ | 2,623,399 | |
General and administrative expense
For the three months ended
March 31, 2024 and 2023, we incurred approximately $0.4 million and $0.1 million of general and administrative expenses, respectively.
The increase in general and administrative expenses for the three months ended March 31, 2024, was mainly due to an increase in executive
salary, legal and audit fees.
Net Loss
We incurred a net loss of
approximately $0.5 million and $2.7 million for the three months ended March 31, 2024 and 2023, respectively. We expect our research and
development expenses to continue to increase as we continue to work with Eureka to advance the IND filings, preclinical and clinical development
of our product candidates and preclinical programs, seek regulatory approval for any product candidates that successfully complete clinical
trials, scale up our clinical and regulatory capabilities, adapt our regulatory compliance efforts to incorporate requirements applicable
to marketed products, maintain, expand, and protect our intellectual property portfolio, add operational, financial, and management information
systems and personnel, including personnel to support our product development and planned future commercialization efforts, and incur
additional legal, accounting, and other expenses in operating as a public company.
Comparison of Nine Months Ended March 31, 2024
and 2023
Research and Development Expenses
Research and development expenses
consist primarily of costs related to conducting work related to IND-enabling, IND-filing and clinical trial preparation, which were mainly
performed by Eureka. For the nine months ended March 31, 2024 and 2023, we incurred approximately $0.6 million and $7.9 million of research
and development expenses, respectively. All research and development expense incurred for the periods presented above were dedicated to
the development of ARTEMIS® T-cell therapies targeting CD19 and CD22. The decrease in research and development expenses
was mainly due to Estrella incurring lower service fees with Eureka due to a lower volume of service rendered under the Services Agreement
for the nine months ended March 31, 2024 compared to the same period in 2023. As of March 31, 2024, no expenses were recognized under
the SOW since no milestone has yet been reached.
Our breakdown of research
and development expenses by categories for the nine months ended March 31, 2024 and 2023 are summarized below:
| |
For
the Nine Months Ended
March 31,
2024 | | |
For
the Nine Months Ended
March 31, 2023 | |
Consulting and laboratory related fee | |
$ | 129,957 | | |
$ | 7,758,691 | |
Stock based compensation | |
| 453,968 | | |
| 116,736 | |
Total research and development | |
$ | 583,925 | | |
$ | 7,875,427 | |
General and administrative expense
For the nine months ended
March 31, 2024 and 2023, we incurred approximately $2.8 million and $0.5 million of general and administrative expenses, respectively.
The increase in general and administrative expenses for the nine months ended March 31, 2024, was mainly due to an increase in professional
fee, and recognition of the acceleration of the stock-based compensation upon consummation of the Business Combination. The increase was
also attributable to approximately $0.5 million of bonus granted to our executive officers in recognition of their service.
Net Loss
We incurred a net loss of
approximately $3.4 million and $8.4 million for the nine months ended March 31, 2024 and 2023, respectively. We expect our research and
development expenses to continue to increase as we continue to work with Eureka to advance the IND filings, preclinical and clinical development
of our product candidates and preclinical programs, seek regulatory approval for any product candidates that successfully complete clinical
trials, scale up our clinical and regulatory capabilities, adapt our regulatory compliance efforts to incorporate requirements applicable
to marketed products, maintain, expand, and protect our intellectual property portfolio, add operational, financial, and management information
systems and personnel, including personnel to support our product development and planned future commercialization efforts, and incur
additional legal, accounting, and other expenses in operating as a public company.
Liquidity and Capital Resources
As of March 31, 2024, we had
cash of approximately $4.7 million. Our ability to fund our operations is dependent on the amount of cash on hand, our ability to raise
debt or additional equity financing, and ultimately our ability to generate sufficient revenue. We have expended substantial funds on
research and development, have experienced losses and negative cash flows from operations since our inception, and expect losses and negative
cash flows from operations to continue until such time that our product candidates receive regulatory approval and we generate sufficient
revenue and positive cash flow from operations, if ever.
To date, we have not generated
any revenue from any source, and we do not expect to generate revenue for at least the next few years. If we fail to complete the
development of our product candidates in a timely manner or fail to obtain their regulatory approval, our ability to generate future revenue
will be adversely affected. We do not know when, or if, we will generate any revenue from our product candidates, and we do not expect
to generate revenue unless and until we obtain regulatory approval of, and commercialize, our product candidates.
We expect our expenses to
increase significantly in connection with our ongoing activities, particularly as we continue research and development, and seek marketing
approval for, our product candidates. In addition, if we obtain approval for any of our product candidates, we expect to incur significant
commercialization expenses related to sales, marketing, manufacturing, and distribution. Furthermore, following the completion of the
Business Combination, we expect to incur additional costs associated with operating as a public company.
On September 29, 2023, the
Business Combination and several concurrent financing transactions were consummated, with Estrella receiving net proceeds of approximately
$20.1 million, after deducting $5.07 million payable to redeem 467,122 shares of UPTD Common Stock at $10.86 per share in connection with
the special meeting of UPTD stockholders related to the Business Combination held on July 31, 2023, $1.6 million for transaction expenses
and $0.7 million for repayment of working capital loans, consisting of: (i) $9.75 million from the issuance of shares of Estrella Series
A Preferred Stock immediately prior to the closing of the Business Combination ($0.7 million of which was comprised of funds in the trust
account delivered to Estrella at the closing of the Business Combination that would have otherwise been paid to US Tiger Securities, Inc.
as a deferred underwriting fee in connection with UPTD’s IPO); (ii) $0.3 million from the issuance of an unsecured promissory note
by us to a third party investor; (iii) $3.06 million from the funds held in UPTD’s trust account; and (iv) $10 million from the
PIPE investors pursuant to the Subscription Agreements.
On October 10, 2023, we remitted
approximately $9.3 million to Eureka upon consummation of the Business Combination. We expect to devote the remaining net proceeds from
the Business Combination to the preclinical and clinical development of our product candidates and our public company compliance costs.
Based on our current operating plan, we expect that the net proceeds from the Business Combination and our ability to raise funds in the
future through the issuance and sale of Equity Line Shares to White Lion will allow us to fund our operating expenses and capital requirements
through one year from the issuance of these unaudited condensed consolidated financial statements. However, this estimate is subject to
various uncertainties and risks, some of which are beyond our control. We may use our available capital resources sooner than we currently
anticipate, and we may need to seek additional funds sooner than planned. Our estimate as to how long we expect such proceeds to be able
to fund our operating expenses and capital requirements is based on assumptions that may prove to be wrong, and we could use our available
capital resources sooner than we currently expect. Changing circumstances, some of which may be beyond our control, could result in fewer
cash and cash equivalents available to us or cause us to consume capital significantly faster than we currently anticipate, and we may
need to seek additional funds sooner than planned.
On March 4, 2024, the Company
and Eureka entered into Statement of Work No. 001 (“SOW”) relating to the clinical trial services to be performed by Eureka
in connection with Starlight-1, the Phase I/II clinical trial of Estrella Biopharma’s product candidate, EB103, a T-cell therapy
targeting CD19 using ARTEMIS® T cell technology licensed by Estrella Biopharma from Eureka. Pursuant to the SOW, Estrella
agreed to pay Eureka non-refundable net fees in connection with the achievement of certain milestones set forth in the SOW, with total
fees of $33,000,000 for achievement of all milestones. As of March 31, 2024, the Company prepaid $3,500,000 to Eureka for covering the
fees associated with the initiation of the study, the preparation and activation of the first study site, and the First Patient First
Visit (FPFV) milestones.
On May 13, 2024, the Company,
Estrella, and Eureka entered into Amendment No. 1 to the SOW, effective as of March 4, 2024, to clarify that in the event that Estrella
exercises its right to terminate or suspend the engagement with Eureka by providing written notice to Eureka in accordance with the SOW,
Estrella will only be obligated to compensate Eureka for (i) services provided by Eureka pursuant to the SOW (“Services”)
in connection with milestones that were achieved prior to the date and time of such written notice, (ii) reasonable and documented pass-through
costs incurred by Eureka on behalf of Estrella prior to the date and time of such written notice in connection with providing the Services
and (iii) amounts payable to third parties pursuant to commitments reasonably entered into by Eureka on behalf of Estrella prior to the
date and time of such written notice in connection with providing the Services, provided that Eureka shall make commercially reasonable
efforts to cancel or reduce any such amounts.
Our future operations are
highly dependent on a combination of factors, including but not necessarily limited to (1) the success of our research and development
programs; (2) the timely and successful completion of any additional financing; (3) the development of competitive therapies by other
biotechnology and pharmaceutical companies; (4) our ability to manage growth of the organization; (5) our ability to protect our technology
and products; and, ultimately (6) regulatory approval and successful commercialization and market acceptance of our product candidates.
In addition, there is no assurance
that the Warrant holders will exercise their Warrants because they are currently out of the money. As of May 13, 2024, the closing price
of our Common Stock was $1.07 per share, which is significantly lower than the exercise price of the Warrants of $11.50 per share. Therefore,
it is unlikely that the warrant holders will exercise their warrants unless the market price of our Common Stock increases substantially
above the exercise price. The cash proceeds associated with the exercise of the Warrants are dependent on the stock price and the number
of Warrants being exercised. We cannot predict when or if any Warrants will be exercised, and it is possible that none or only a small
number of Warrants will ever be exercised. Therefore, we may not be able to rely on the warrant exercise as a source of liquidity or capital
resources.
Furthermore, although the
Common Stock Purchase Agreement with White Lion provides that the Company may, in its discretion, from time to time, direct White Lion
to purchase shares of up to $50,000,000 of Common Stock (“Equity Line Shares”) from the Company in one or more purchases in
accordance with the Common Stock Purchase Agreement, the Company is not permitted to issue any Equity Line Shares under the Common Stock
Purchase Agreement without obtaining majority stockholder approval if such issuance would equal 20% or more of the Company’s outstanding
common stock, which had not been obtained as of the date hereof and may not be obtained in the future. On December 28, 2023, the Company’s
registration statement on Form S-1 related to the Equity Line Shares was declared effective. As of the date hereof, no Equity Line Shares
have been issued to White Lion under the Common Stock Purchase Agreement.
We plan to raise additional
capital in the future in order to continue our research and development programs and fund operations. However, our ability to raise additional
capital in the equity or debt markets is dependent on various factors, and there is no assurance that such financing will be available
on acceptable terms, or at all. The market demand of our equity is subject to a number of risks and uncertainties, including but not limited
to, negative economic conditions, adverse market conditions, and adverse financial results.
Cash Flows
Operating activities
Net cash used in operating
activities was approximately $15.8 million for the nine months ended March 31, 2024, and was primarily attributable to (a) a net loss
of approximately $3.4 million, approximately $9.3 million decrease in accounts payable, related party, as we remitted approximately $9.4
million payment to Eureka, consisting of the upfront payment incurred under the License Agreement and monthly service provided by Eureka
under the Services Agreement on October 10, 2023, (b) approximately $0.3 million increase in prepaid expense as we prepaid various service
providers and insurance which we expect to be amortized within the next 12 months, (c) approximately $3.5 million increase in prepaid
expense, related party as the Company made prepayment to Eureka related to the SOW for covering the fees associated with the initiation
of the study, the preparation and activation of the first study site, and FPFV milestones, and (d) approximately $0.5 million decrease
in other payables and accrued liabilities as we paid off accrued professional fee over the previous period, offset by approximately $1.2
million increase in non-cash items such as stock-based compensation as we incurred amortization for the nine months ended March 31, 2024
related to the stock options granted to our employees, board of directors, and other consultants under the Incentive Plan.
Net cash used in operating
activities was approximately $1.3 million for the nine months ended March 31, 2023, and was primarily attributable to a net loss of approximately
$8.4 million, offset by (a) approximately $5.9 million increase in account payable related party which related to service fee incurred
from the Services Agreement, (b) approximately $0.3 million increase in non-cash item such as stock-based compensation as we incurred
amortization for the nine months ended March 31, 2023 related to the stock options granted to our employees, board of directors, and other
consultants under the Incentive Plan, (c) approximately $0.8 million decrease in prepaid expenses – related party as we utilized
prior prepaid service fees from the Services Agreement in the current period, (d) a $50,000 increase in prepaid expense as the Company
prepaid an unrelated individual for research and development expense which commenced in April 2023 and (e) an approximately $56,000 increase
in other payables and accrued liabilities as we accrued various legal, consulting, and research and development expenses related to the
Business Combination.
Investing activities
Net cash provided by investing
activities was approximately $5.0 million for the nine months ended March 31, 2024, and was primarily attributable to approximately $5.1
million cash released from trust account as a result of the consummation of the Business Combination, offset by approximately $0.1 million
loan to UPTD as Monthly Extension Payment before merger.
Net cash used in investing
activities was approximately $137,000 for the nine months ended March 31, 2023, and was primarily attributable to loan to UPTD as
Monthly Extension Payment.
Financing activities
Net cash provided by
financing activities was approximately $13.1 million for the nine months ended March 31, 2024, and was primarily attributable to
approximately $20.0 million net proceed received from the consummation of the Business Combination, which included approximately
$9.0 million in gross proceeds raised through sales of Estrella Series A Preferred Stock immediately prior to the effective time of
the Merger, approximately $0.3 million raised through issuance of an unsecured promissory note by Estrella to a third party
investor, approximately $0.7 million proceeds raise from the reverse recapitalization, and $10.0 million net proceeds from the PIPE
Investment that closed concurrently with the consummation of the Business Combination, offset by approximately $1.5 million payments
of transaction cost related to the Merger, approximately $5.1 million payment to UPTD’s stockholder for stock redemption
before the Business Combination, approximately $0.3 million repayment of promissory note, and approximately $0.1 million payment in
stock repurchase.
Off-Balance Sheet Arrangements
As of March 31, 2024 and June
30, 2023, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under the rules and regulations of
the SEC.
Commitments & Contingencies
In the normal course of business,
we are subject to loss contingencies, such as legal proceedings and claims arising out of our business, that cover a wide range of matters,
including, among others, government investigations and tax matters. In accordance with ASC No. 450-20, “Loss Contingencies”,
we will record accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can
be reasonably estimated.
License Agreement
Pursuant to the License Agreement,
we were obligated to make (i) a one-time, non-refundable, non-creditable payment of $1,000,000, payable in twelve equal monthly installments,
(ii) certain one-time, non–refundable, non-creditable development “milestone” payments upon the occurrence of certain
events related to development and sales, with potential aggregate multi-million dollar payments upon FDA approval, and (iii) royalty payments
of a single digit percentage on net sales during any consecutive 12-month period.
As of March 31, 2024, we have
fully paid the license fee to Eureka.
On January 30, 2023, one development
milestone payment in the amount of $50,000 related to the submission of EB103 to the FDA was earned by Eureka under the Agreement, which
was paid on October 10, 2023. No other development milestone, sales milestone, or royalty payment has been earned as we do not have any
product candidates approved for sale and have not generated any revenue from product sales.
Collaboration Agreement
Pursuant to the Collaboration
Agreement, we and Imugene will be separately responsible for all qualified full-time person (“FTE”) and other internal costs
incurred in the performance of its research, as well as the full cost of procurement of leukopaks and purification of T-cells from two
donors, and of manufacturing and quality control of EB103 T-cells under the research plan. Any joint cost will be shared equally. If either
we or Imugene incurs out-of-pocket costs in excess of the amount budgeted for such costs in the applicable research budget plus allowable
overruns, then the other party will not be responsible for its 50% share of the excess of such budgeted amount plus allowable overruns,
unless the joint steering committee approves such excess costs (either before or after such costs have been incurred). The research
plan under the Collaboration Agreement was completed as of August 30, 2023.
Services Agreement
Pursuant to the Services Agreement,
we agreed to (i) pay Eureka $10,000,000 in connection with the services thereunder payable in 12 equal monthly installments and (ii) reimburse
Eureka on a monthly basis for reasonable pass-through costs incurred or paid to providers by Eureka in providing the services. In addition,
we will be charged for other services performed by Eureka outside the scope of the services set forth in the Services Agreement, at a
flat rate, by time or materials or as mutually agreed upon the parties in writing. As of March 31, 2024, we had remitted to Eureka twelve
installments of $10,000,000 and $117,920 of pass-through costs for services provided pursuant to the Services Agreement.
Statement of Work
Pursuant to the SOW, Estrella
agreed to pay Eureka total fees of $33,000,000 in connection with the Phase I/II clinical trial of Estrella Biopharma’s product
candidate, EB103, a T-cell therapy targeting CD19 using ARTEMIS® T cell technology licensed by Estrella Biopharma from
Eureka. As of March 31, 2024, we have prepaid $3,500,000 to Eureka for covering the fees associated with the initiation of the study,
the preparation and activation of the first study site, and the First Patient First Visit (FPFV) milestones.
Equity Financing Commitment
On April 20, 2023, UPTD entered
into a Common Stock purchase agreement (as amended on April 26, 2023 and from time to time, the “Common Stock Purchase Agreement”)
and a related registration rights agreement (the “White Lion RRA”) with White Lion. Pursuant to the Common Stock Purchase
Agreement, following the Closing, the Company has the right, but not the obligation to require White Lion to purchase, from time to time
up to $50,000,000 in aggregate gross purchase price of newly issued shares of Common Stock of the Company, subject to certain limitations
and conditions set forth in the Common Stock Purchase Agreement, including, among others, the initial and any subsequent registration
statement for the Equity Line Shares being declared effective by the SEC and remaining effective during the term of the Common Stock Purchase
Agreement. In addition, under Nasdaq listing rules, the Company is not permitted to issue any Equity Line Shares under the Common Stock
Purchase Agreement if such issuance would equal 20% or more of the Company’s outstanding common stock without obtaining majority
approval by our stockholders, which had not been obtained as of the date hereof. On December 28, 2023, the Company’s registration
statement on Form S-1 related to the Equity Line Shares was declared effective by the SEC. As of the date hereof, no Equity Line Shares
have been issued to White Lion pursuant to the Common Stock Purchase Agreement.
Registration Rights
The holders of 312,200 shares
of common stock that were issued to the initial stockholders of UPTD (the “Founder Shares”) and of 1,107,500 shares of Common
Stock issued to certain investors in a private placement in connection with UPTD’s initial public offering (the “Private Shares”)
are entitled to registration rights pursuant to a registration rights agreement, dated July 14, 2021, among UPTD, TradeUP Acquisition
Sponsor LLC and certain security holders named therein. The Company assumed the obligations of UPTD under such agreement upon consummation
of the Business Combination. The holders of the majority of these securities are entitled to make up to three demands, excluding short
form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration
rights with respect to registration statements filed subsequent to the completion of the initial Business Combination and rights to require
the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. We are also obligated to file a registration
statement for the (i) Equity Line Shares that we may issue to White Lion pursuant to the Common Stock Purchase Agreement and White Lion
RRA, (ii) up to 2,225,000 shares of Common Stock issuable upon exercise of the Warrants and (iii) the shares issued or that will be issued
pursuant to the Subscription Agreements. The Company will bear the expenses incurred in connection with the filing of any such registration
statements. The Company filed a registration statement on Form S-1 with the SEC on October 10, 2023 and subsequently filed Amendment No.
1 and Amendment No. 2 thereto on November 13, 2023 and December 18, 2023, respectively, with respect to the Founder Shares, Private Shares,
Equity Line Shares, the shares of Common Stock issuable upon exercise of the Warrants and certain shares issuable under the Subscription
Agreements. The registration statement was declared effective by the SEC on December 28, 2023.
Critical Accounting Policies
Our unaudited financial statements
accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements and accompanying
notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. We have identified certain accounting estimates that
are significant to the preparation of our financial statements. These estimates are important for an understanding of our financial condition
and results of operation. Certain accounting estimates are particularly sensitive because of their significance to financial statements
and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.
We believe no critical accounting estimate was identified other than below listed significant estimate and accounting policies.
Stock-Based Compensation
We recognize compensation
costs resulting from the issuance of stock-based awards to employees, non-employees, and directors as an expense in the statements of
operations over the requisite service period based on a measurement of fair value for each stock-based award. The fair value of each option
granted is estimated as of the date of grant using the Black-Scholes-Merton option-pricing model, net of actual forfeitures. The fair
value is amortized as compensation cost on a straight-line basis over the requisite service period of the awards, which is generally the
vesting period. The Black-Scholes-Merton option-pricing model includes various assumptions, including the fair market value of Estrella
Common Stock, expected life of stock options, the expected volatility, and the expected risk-free interest rate, among others. These assumptions
reflect our best estimates, but they involve inherent uncertainties based on market conditions generally outside of our control.
As a result, if other assumptions
had been used, stock-based compensation expense, as determined in accordance with authoritative guidance, could have been materially impacted.
Furthermore, if we use different assumptions on future grants, stock-based compensation expense could be materially affected in future
periods.
We account for the fair value
of equity instruments issued to non-employees using either the fair value of the services received or the fair value of the equity instrument,
whichever is considered more reliable. We utilize the Black-Scholes-Merton option-pricing model to measure the fair value
of options issued to non-employees.
We record compensation expense
for the awards with graded vesting using the straight-line method. We recognize compensation expense over the requisite service period
applicable to each individual award, which generally equals the vesting term. Forfeitures are recognized when realized.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
We are a smaller reporting
company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures
are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and
forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15
and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures as of March 31, 2024. Based upon their evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e)
under the Exchange Act) were not effective.
Management’s Controls Over Financial
Reporting
Our disclosure controls and
procedures are designed to ensure that the information we are required to disclose in reports that we file or submit under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods
specified in Securities and Exchange Commission (“SEC”) rules and forms, and that such information is accumulated and communicated
to our management to allow timely decisions regarding required disclosure.
Our management, with the participation
and supervision of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly
report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of such date, our disclosure
controls and procedures were not, in design and operation, effective as of March 31, 2024 at a reasonable assurance level due to the material
weaknesses in internal control over financial reporting described below:
Material Weaknesses
|
● |
We did not have qualified full-time personnel with appropriate levels of accounting knowledge and experience to address complex U.S. GAAP accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP. |
|
● |
We did not have comprehensive written control policies in place; we did not have an internal audit function or IT function to ensure the internal controls are properly designed and implemented. |
|
● |
We lacked evidence of certain review and approval procedures performed. |
A material weakness is a deficiency,
or a combination of deficiencies, within the meaning of Public Company Accounting Oversight Board Auditing Standard AS 2201, in internal
control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial
statements will not be prevented or detected on a timely basis.
Following the identification
of the material weaknesses, we plan to take remedial measures including:
|
● |
hiring qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework; |
|
● |
implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel; |
|
● |
establishing internal audit function by engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley Act of 2002 compliance requirements and improvement of overall internal control; and |
|
● |
strengthening corporate governance. |
We believe, however, that
a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls systems
are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any,
within a company have been detected.
Changes in Internal Control over Financial
Reporting
The Company is in the process
of implementing certain changes in its internal control over financial reporting to remediate the material weaknesses described above.
The implementation of the material aspects of this plan began in the second quarter of fiscal year 2024, and the Company is planning to
remediate the material weaknesses described above by the end of fiscal year 2024. As a result, there has been no change in the Company’s
internal control over financial reporting during the third quarter of fiscal year 2024, that has materially affected, or is reasonably
likely to materially affect, its internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
Factors that could cause our
actual results to differ materially from those included in this Quarterly Report are any of the risks described under “Risk Factors”
in our registration statement on Form S-1 filed with the SEC on October 10, 2023, Amendment No. 1 thereto filed on November 13, 2023 and
Amendment No. 2 thereto filed on December 18, 2023, which are incorporated herein by reference. Any of these factors could result in a
significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known
to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report,
there have been no material changes to the risk factors disclosed in our registration statement on Form S-1 filed with the SEC on October
10, 2023, Amendment No. 1 thereto filed on November 13, 2023 and Amendment No. 2 thereto filed on December 18, 2023, except we may disclose
changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides information with respect to repurchases
of our Common Stock during each month of the quarter ended March 31, 2024.
Issuer
Purchases of Common Stock(i)
Period | |
Total
Number
of Shares
Purchased | | |
Average Price
Paid Per Share | | |
Total Number
of Shares
Purchased as
Part of
Publicly Announced
Plans or
Programs | | |
Maximum
Dollar
Value of
Shares That
May Yet Be
Purchased
Under the
Plans or
Programs | |
January 1, 2024 – January 31, 2024 | |
| 0 | | |
$ | 0 | | |
| 0 | | |
$ | 1,000,000 | |
February 1, 2024 – February 29, 2024 | |
| 0 | | |
$ | 0 | | |
| 0 | | |
$ | 1,000,000 | |
March 1, 2024 – March 31, 2024 | |
| 74,890 | | |
$ | 1.12 | | |
| 74,890 | | |
$ | 915,909 | |
Total | |
| 74,890 | | |
$ | 1.12 | | |
| 74,890 | | |
$ | 915,909 | |
| (i) | All shares of Common Stock repurchased during the quarter ended
March 31, 2024 were made in open-market transactions pursuant to the authorization of the Company’s board of directors to repurchase
up to $1,000,000 of the Company’s common stock as publicly announced in the Company’s press release issued on January 30,
2024 and included as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on the same date. The authorization does not
have an expiration date. While the Company anticipates as of the date hereof that it will continue to repurchase shares of Common Stock
pursuant to the authorization, the Company is not obligated to repurchase any particular amount of Common Stock pursuant to the authorization
and the timing, method and amount of any repurchases made pursuant to the authorization in the future may depend on market conditions
and other factors. |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following exhibits are filed as part of, or
incorporated by reference into, this Quarterly Report on Form 10-Q.
Exhibit
Number |
|
Description
of Exhibit |
2.1* |
|
Agreement and Plan of Merger, dated as of September 30, 2022, by and among TradeUP Acquisition Corp., Tradeup Merger Sub Inc. and Estrella Immunopharma, Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on October 3, 2022, File No. 001-40608) |
3.1 |
|
Amended and Restated Certificate of Incorporation of Estrella Immunopharma, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 5, 2023) |
3.2 |
|
Amended and Restated Bylaws of Estrella Immunopharma, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on October 5, 2023) |
4.1 |
|
Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 9 to the Registration Statement on Form S-1/A filed with the SEC on July 9, 2021, File No. 333-253322) |
4.2 |
|
Specimen Common Stock Certificate. (incorporated by reference to Exhibit 4.2 to Amendment No. 9 to the Registration Statement on Form S-1/A filed with the SEC on July 9, 2021, File No. 333-253322) |
4.3 |
|
Specimen Warrant Certificate (included as Exhibit A to Exhibit 4.4 below) |
4.4 |
|
Warrant Agreement, dated July 14, 2021, between TradeUP Acquisition Corp. and VStock Transfer, LLC, as warrant agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on July 19, 2021, File No. 001-40608) |
10.1 |
|
Promissory Note, dated July 25, 2022, issued by TradeUP Acquisition Corp. to Running Lion Holdings Limited (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on July 27, 2022, File No. 001-40608) |
10.2 |
|
Promissory Note, dated July 25, 2022, issued by TradeUP Acquisition Corp. to Tradeup INC. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on July 27, 2022, File No. 001-40608) |
10.3 |
|
Contribution Agreement, dated June 28, 2022, by and between Eureka Therapeutics, Inc. and Estrella Immunopharma, Inc. incorporated by reference to Exhibit 10.3 to the registration statement on Form S-4/A filed with the SEC on July 7, 2023 (File No. 2333-267918) |
10.4† |
|
License Agreement, dated June 28, 2022, by and among Eureka Therapeutics, Inc., Eureka Therapeutics (Cayman) Ltd. and Estrella Immunopharma, Inc. incorporated by reference to Exhibit 10.4 to the registration statement on Form S-4/A filed with the SEC on July 7, 2023 (File No. 2333-267918) |
10.5† |
|
Services Agreement, dated June 28, 2022, by and between Eureka Therapeutics, Inc. and Estrella Immunopharma, Inc. incorporated by reference to Exhibit 10.5 to the registration statement on Form S-4/A filed with the SEC on July 7, 2023 (File No. 2333-267918) |
10.6† |
|
Collaboration Agreement, dated October 29, 2021, by and between Estrella Immunopharma, Inc. (as successor to Eureka Therapeutics, Inc.) and Imugene Limited incorporated by reference to Exhibit 10.6 to the registration statement on Form S-4/A filed with the SEC on July 7, 2023 (File No. 2333-267918) |
10.7 |
|
Amendment to Executive
Offer Letter, by and between Estrella Immunopharma, Inc. and Dr. Cheng Liu incorporated by reference to Exhibit 10.16 to the Current
Report on Form 8-K filed with the SEC on October 5, 2023 |
10.8 |
|
Amendment to Employment
Agreement, by and between Estrella Immunopharma, Inc. and Jiandong (Peter) Xu incorporated by reference to Exhibit 10.17 to the Current
Report on Form 8-K filed with the SEC on October 5, 2023 |
10.9 |
|
Amendment to Employment
Agreement, by and between Estrella Immunopharma, Inc. and Qian (Vicky) Yang incorporated by reference to Exhibit 10.18 to the Current
Report on Form 8-K filed with the SEC on October 5, 2023 |
10.10* |
|
Support Agreement, dated
September 30, 2022, by and among TradeUP Acquisition Corp., Estrella Immunopharma, Inc., TradeUP Acquisition Sponsor LLC, Tradeup
INC. and the officers and directors of TradeUP Acquisition Corp. (incorporated by reference to Exhibit 10.1 to the Current Report
on Form 8-K filed with the SEC on October 3, 2022, File No. 001-40608) |
10.11 |
|
Estrella Immunopharma,
Inc. 2023 Omnibus Incentive Plan incorporated by reference to Annex C to the registration statement on Form S-4/A filed with the
SEC on July 7, 2023 (File No. 2333-267918) |
10.12 |
|
Estrella Biopharma, Inc.
Option Grant Notice, including 2022 Equity Incentive Plan incorporated by reference to Exhibit 10.12 to the registration statement
on Form S-4/A filed with the SEC on July 7, 2023 (File No. 2333-267918) |
10.13 |
|
Business Combination Marketing
Agreement, dated July 14, 2021, among TradeUP Acquisition Corp., US Tiger Securities, Inc. EF Hutton, division of Benchmark Investments,
LLC, and R. F. Lafferty & Co., Inc. (incorporated by reference to Exhibit 1.2 to the Current Report on Form 8-K filed with the
SEC on July 19, 2021, File No. 001-40608) |
10.14 |
|
Registration Rights Agreement,
dated July 14, 2021, among TradeUP Acquisition Corp., TradeUP Acquisition Sponsor LLC and certain security holders named therein
(incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the SEC on July 19, 2021, File No. 001-40608) |
10.15 |
|
Amendment No. 1 to Services
Agreement, effective October 1, 2022, by and between Eureka Therapeutics, Inc. and Estrella Immunopharma, Inc. incorporated by reference
to Exhibit 10.15 to the registration statement on Form S-4/A filed with the SEC on July 7, 2023 (File No. 2333-267918) |
10.16 |
|
Amendment No. 1 to License
Agreement, effective October 1, 2022, by and between Eureka Therapeutics, Inc. and Estrella Immunopharma, Inc. incorporated by reference
to Exhibit 10.16 to the registration statement on Form S-4/A filed with the SEC on July 7, 2023 (File No. 2333-267918) |
Exhibit
Number |
|
Description
of Exhibit |
10.17 |
|
Promissory Note, dated January 19, 2023, issued by TradeUP Acquisition Corp. to TradeUP Acquisition Sponsor LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on January 24, 2023, File No. 001-40608) |
10.18 |
|
Extension Promissory Note, dated January 19, 2023, issued by TradeUP Acquisition Corp. to Estrella Immunopharma, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on January 24, 2023, File No. 001-40608) |
10.19 |
|
Extension Promissory Note, dated February 19, 2023, issued by TradeUP Acquisition Corp. to Estrella Immunopharma, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on February 21, 2023, File No. 001-40608) |
10.20 |
|
Extension Promissory Note, dated March 17, 2023, issued by TradeUP Acquisition Corp. to Estrella Immunopharma, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on March 17, 2023, File No. 001-40608) |
10.21 |
|
Extension Promissory Note, dated April 12, 2023, issued by TradeUP Acquisition Corp. to Estrella Immunopharma, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on April 13, 2023, File No. 001-40608) |
10.22 |
|
Common Stock Purchase Agreement, dated as of April 20, 2023, by and between TradeUP Acquisition Corp. and White Lion Capital LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on April 24, 2023, File No. 001-40608) |
10.23 |
|
Registration Rights Agreement, dated as of April 20, 2023, by and between TradeUP Acquisition Corp. and White Lion Capital LLC. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on April 24, 2023, File No. 001-40608) |
10.24 |
|
Amendment to the Common Stock Purchase Agreement, dated as of April 26, 2023, by and between TradeUP Acquisition Corp. and White Lion Capital LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on April 26, 2023, File No. 001-40608) |
10.25 |
|
Extension Promissory Note, dated May 19, 2023, issued by TradeUP Acquisition Corp. to Estrella Immunopharma, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on May 19, 2023, File No. 001-40608) |
10.26 |
|
Promissory Note, dated June 6, 2023, issued by TradeUP Acquisition Corp. to Tradeup INC. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on June 6, 2023, File No. 001-40608) |
10.27 |
|
Amendment No. 2 to Services Agreement, effective March 1, 2023, by and between Eureka Therapeutics, Inc. and Estrella Immunopharma, Inc. incorporated by reference to Exhibit 10.27 to the registration statement on Form S-4/A filed with the SEC on July 7, 2023 (File No. 2333-267918) |
10.28 |
|
Amendment No. 2 to License Agreement, effective March 1, 2023, by and between Eureka Therapeutics, Inc. and Estrella Immunopharma, Inc. incorporated by reference to Exhibit 10.28 to the registration statement on Form S-4/A filed with the SEC on July 7, 2023 (File No. 2333-267918) |
10.29 |
|
Extension Promissory Note, dated June 16, 2023, issued by TradeUP Acquisition Corp. to Estrella Immunopharma, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on June 20, 2023, File No. 001-40608) |
10.30 |
|
Subscription Agreement dated September 14, 2023 by and among TradeUP Acquisition Corp. and Plentiful Limited (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on September 20, 2023) |
10.31 |
|
Subscription Agreement dated September 14, 2023 by and among TradeUP Acquisition Corp. and Lianhe World Limited (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on September 20, 2023) |
10.32 |
|
Joinder to the Estrella Series A Purchase Agreement by and between Estrella Biopharma, Inc. and Lianhe World Limited (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed with the SEC on October 5, 2023) |
10.33 |
|
Joinder to the Estrella Series A Purchase Agreement by and between Estrella Biopharma, Inc. and CoFame Investments, LLC (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed with the SEC on October 5, 2023) |
10.34 |
|
Joinder to the Estrella Series A Purchase Agreement by and between Estrella Biopharma, Inc. and US Tiger Securities, Inc. (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K filed with the SEC on October 5, 2023) |
Exhibit
Number |
|
Description
of Exhibit |
10.35 |
|
Joinder to the Estrella Series A Purchase Agreement by and between Estrella Biopharma, Inc. and Smart Crest International Limited (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K filed with the SEC on October 5, 2023) |
10.36 |
|
Joinder to the Estrella Series A Purchase Agreement by and between Estrella Biopharma, Inc. and Yangbing Xiao (incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K filed with the SEC on October 5, 2023) |
10.37 |
|
Joinder to the Estrella Series A Purchase Agreement by and between Estrella Biopharma, Inc. and Yuandong Wang (incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K filed with the SEC on October 5, 2023) |
10.38 |
|
Stock Transfer Agreement by and among Cheng Liu, Jiandong (Peter) Xu and Qian (Vicky) Yang, Yuandong Wang and Estrella Biopharma, Inc. (incorporated by reference to Exhibit 10.10 to the Current Report on Form 8-K filed with the SEC on October 5, 2023) |
10.39 |
|
Stock Transfer Agreement by and among Cheng Liu, Jiandong (Peter) Xu and Qian (Vicky) Yang, Yangbing Xiao and Estrella Biopharma, Inc. (incorporated by reference to Exhibit 10.11 to the Current Report on Form 8-K filed with the SEC on October 5, 2023) |
10.40 |
|
Stock Transfer Agreement by and among Cheng Liu, Jiandong (Peter) Xu and Qian (Vicky) Yang, Smart Crest International Limited and Estrella Biopharma, Inc. (incorporated by reference to Exhibit 10.12 to the Current Report on Form 8-K filed with the SEC on October 5, 2023) |
10.41 |
|
Unsecured Promissory Note by and between Hongbin Zhang and Estrella Biopharma Inc. (incorporated by reference to Exhibit 10.15 to the Current Report on Form 8-K filed with the SEC on October 5, 2023) |
10.45 |
|
Employment agreement by and between Dr. Cheng Liu and Estrella Immunopharma, Inc. (incorporated by reference to Exhibit 10.19 to the Current Report on Form 8-K filed with the SEC on October 5, 2023) |
10.46 |
|
Employment Agreement by and between Peter Xu and Estrella Immunopharma, Inc. (incorporated by reference to Exhibit 10.20 to the Current Report on Form 8-K filed with the SEC on October 5, 2023) |
10.47 |
|
Registration Rights Agreement, dated as of April 20, 2023, by and between TradeUP Acquisition Corp. and White Lion Capital LLC. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on April 24, 2023, File No. 001-40608) |
10.48 |
|
Amendment to the Common Stock Purchase Agreement, dated as of April 26, 2023, by and between TradeUP Acquisition Corp. and White Lion Capital LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on April 26, 2023, File No. 001-40608) |
10.49 |
|
Private Placement Shares Purchase Agreement, dated July 14, 2021, among the Registrant, TradeUP Acquisition Sponsor LLC and Tradeup INC. (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed with the SEC on July 19, 2021) |
10.50 |
|
Securities Subscription Agreement, between the Registrant and the sponsor dated February 12, 2021 (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-1 filed with the SEC on July 9, 2021 File No. 333-253322) |
10.51 |
|
Securities Subscription Agreement, between the Registrant and Tradeup INC. dated February 12, 2021 (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-1 filed with the SEC on July 9, 2021 File No. 333-253322) |
10.52 |
|
Form of Share Purchase Agreement between the Registrant and the founders (incorporated by reference to Exhibit 10.7 to the Registration Statement on Form S-1 filed with the SEC on June 11, 2021 File No. 333-253322) |
10.53 |
|
Letter Agreement, dated July 14, 2021, among the Registrant, TradeUP Acquisition Sponsor LLC, Tradeup INC. and certain security holders named therein (incorporated by reference to Exhibit 10.1 to the Current Report on 8-K filed with the SEC on July 19, 2021 File No. 001-40608) |
10.54 |
|
Statement of Work No. 001, dated and effective as of March 4, 2024, between Estrella Biopharma, Inc., Eureka Therapeutics, Inc. and Estrella Immunopharma, Inc. (incorporated by reference to exhibit 10.1 to the Current Report on 8-K filed with the SEC on March 7, 2024 File No. 001-40608) |
10.55 |
|
Amendment
No. 1 to Statement of Work No. 001, dated May 13, 2024 and effective as of March 4, 2024, by and among Estrella Biopharma, Inc., Eureka
Therapeutics, Inc. and Estrella Immunopharma, Inc. (incorporated by reference to exhibit 10.1 to the Current Report on 8-K filed with
the SEC on May 13, 2024 File No. 001-40608)
|
31.1** |
|
Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2** |
|
Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1** |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2** |
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS |
|
Inline XBRL Instance Document |
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase
Document |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase
Document |
101.LAB |
|
Inline XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase
Document |
104 |
|
Cover Page Interactive Data File (formatted as Inline
XBRL and contained in Exhibit 101). |
* |
Annexes, schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any omitted attachment to the Securities and Exchange Commission on a confidential basis upon request. |
|
|
† |
Portions of this exhibit (indicated by asterisks) have been omitted because the registrant has determined that the information is both not material and is the type that the registrant treats as private or confidential. |
|
|
** |
These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. |
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
ESTRELLA IMMUNOPHARMA, INC. |
|
|
|
|
By: |
/s/ Cheng Liu |
|
Name: |
Cheng Liu |
|
Title: |
Chief Executive Officer |
Pursuant to the requirements of the Securities
Act of 1933, as amended, this Quarterly Report has been signed below by the following persons in the capacities and on the dates indicated.
Signature |
|
Position |
|
Date |
|
|
|
|
|
/s/ Cheng Liu |
|
Principal Executive Officer and Chairman |
|
May 14, 2024 |
Cheng Liu |
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
/s/ Peter Xu |
|
Principal Financial Officer |
|
May 14, 2024 |
Peter Xu |
|
(Principal Financial Officer and Principal Accounting Officer) |
|
|
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