nmtr-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended March 31, 2021


☐			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 001-37797

9 METERS BIOPHARMA, INC.

(Exact name of registrant as specified in its charter)


Delaware						27-3948465
(State or other jurisdiction of						(I.R.S. Employer
incorporation or organization)						Identification No.)

8480 Honeycutt Road, Suite 120

Raleigh, North Carolina 27615

(Address of principal executive offices, including zip code)

(919) 275-1933

(Registrant’s telephone number, including area code)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock $0.0001 Par Value	NMTR	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

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

As of May 10, 2021, the registrant had 251,372,296 shares of common stock, par value $0.0001 per share, issued and outstanding.

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS	3

	Unaudited Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	3

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2021 and 2020	4

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2021 and 2020	5

	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	32

ITEM 4.	CONTROLS AND PROCEDURES	32

PART II – OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	33

ITEM 1A.	RISK FACTORS	33

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	33

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	33

ITEM 4.	MINE SAFETY DISCLOSURES	33

ITEM 5.	OTHER INFORMATION	33

ITEM 6.	EXHIBITS	34

	SIGNATURES	35

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

9 METERS BIOPHARMA, INC.

Condensed Consolidated Balance Sheets


	March 31, 2021		December 31, 2020
Assets	(Unaudited)

Current assets:
Cash and cash equivalents	$	38,496,108	$	37,851,388
Restricted deposit	75,000		75,000
Prepaid expenses and other current assets	1,412,862		1,000,587

Total current assets	39,983,970		38,926,975

Property and equipment, net	15,093		11,191
Right-of-use asset	203,269		214,767
Other assets	5,580		5,580
Total assets	$	40,207,912	$	39,158,513

Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable	$	1,370,679	$	1,487,948
Accrued expenses	4,566,320		5,290,181
Convertible note payable, net	—		14,216
Derivative liability	—		7,000

Accrued interest	—		488
Lease liability, current portion	50,102		48,629
Total current liabilities	5,987,101		6,848,462
Lease liability, net of current portion	154,846		167,938
Total liabilities	6,141,947		7,016,400

Commitments and contingencies (Note 8)

Stockholders’ equity:
Preferred stock $0.0001 par value per share, 10,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2021 (unaudited) and December 31, 2020	—		—
Common stock $0.0001 par value per share, 350,000,000 shares authorized; 216,324,896 and 204,629,064 shares issued and outstanding as of March 31, 2021 (unaudited) and December 31, 2020, respectively	21,632		20,463
Additional paid-in capital	171,536,679		164,182,917
Accumulated deficit	(137,492,346)		(132,061,267)
Total stockholders’ equity	34,065,965		32,142,113
Total liabilities and stockholders’ equity	$	40,207,912	$	39,158,513

See accompanying notes to these condensed consolidated financial statements.

9 METERS BIOPHARMA, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)


	Three Months Ended March 31,
	2021		2020
Operating expenses:
Research and development	$	3,190,302	$	2,598,985

General and administrative	2,208,800		1,669,807
Warrant inducement expense	—		690,839
Total operating expenses	5,399,102		4,959,631

Loss from operations	(5,399,102)		(4,959,631)

Other income (expense):
Interest income	5,087		12,815
Interest expense	(44,064)		(572,985)

Change in fair value of derivative liabilities	7,000		338,000
Change in fair value of warrant liabilities	—		1,578,800
Total other income (expense), net	(31,977)		1,356,630

Loss before income taxes	(5,431,079)		(3,603,001)
Income tax benefit	—		—

Net loss	$	(5,431,079)	$	(3,603,001)

Net loss per common share, basic and diluted	$	(0.03)	$	(0.09)

Weighted-average common shares, basic and diluted	211,280,867		41,162,296

See accompanying notes to these condensed consolidated financial statements.

9 METERS BIOPHARMA, INC.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(Unaudited)


Three Months Ended March 31, 2021
	Series A Preferred Shares	Series A Preferred Amount		Common Stock Shares	Common Stock Amount		Additional Paid-in Capital		Accumulated Deficit		Total
Balance as of December 31, 2020	—	$	—	204,629,064	$	20,463	$	164,182,917	$	(132,061,267)	$	32,142,113

Share-based compensation	—	—		—	—		422,000		—		422,000

Exercise of warrants	—	—		11,634,151	1,163		6,855,865		—		6,857,028
Exercise of stock options	—	—		61,681	6		75,897		—		75,903
Net loss	—	—		—	—		—		(5,431,079)		(5,431,079)





















Balance as of March 31, 2021	—	$	—	216,324,896	$	21,632	$	171,536,679	$	(137,492,346)	$	34,065,965


Three Months Ended March 31, 2020
	Common Stock Shares	Common Stock Amount		Additional Paid-in Capital		Accumulated Deficit		Total
Balance as of December 31, 2019	39,477,667	$	3,948	$	60,946,816	$	(70,564,778)	$	(9,614,014)
Warrant exchange	1,847,309	185		690,654		—		690,839
Share-based compensation	—	—		276,000		—		276,000
Stock issuance costs - Warrant exchange (FN-1)	—	—		(300,000)		—		(300,000)


Net loss	—	—		—		(3,603,001)		(3,603,001)












Balance as of March 31, 2020	41,324,976	$	4,133	$	61,613,470	$	(74,167,779)	$	(12,550,176)

See accompanying notes to these condensed consolidated financial statements.

9 METERS BIOPHARMA, INC.

Unaudited Condensed Consolidated Statements of Cash Flows


	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities
Net loss	$	(5,431,079)	$	(3,603,001)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation	422,000		276,000

Accrued interest on convertible notes	—		81,972
Amortization of debt discount	43,983		481,024

Depreciation	1,110		5,284

Change in fair value of derivative liabilities	(7,000)		(338,000)
Change in fair value of warrant liabilities	—		(1,578,800)
Warrant inducement expense	—		690,839



Changes in operating assets and liabilities:
Prepaid expenses and other assets	(269,942)		66,841
Accounts payable	(117,269)		1,185,384
Accrued expenses and other liabilities	(866,315)		100,072
Accrued interest	(488)		—
Net cash used in operating activities	(6,225,000)		(2,632,385)
Cash flows from investing activities
Purchase of property and equipment	(5,012)		—

Net cash used in investing activities	(5,012)		—
Cash flows from financing activities
Borrowings from convertible notes	—		2,500,000
Payments of convertible notes	(58,199)		(1,469,804)
Payments of debt issuance costs	—		(23,000)
Proceeds from the exercise of stock options	75,903		—


Payment of offering costs	—		(300,000)
Proceeds from exercise of warrants	6,857,028		—
Net cash provided by financing activities	6,874,732		707,196
Net increase (decrease) in cash and cash equivalents	644,720		(1,925,189)
Cash and cash equivalents as of beginning of period	37,851,388		4,592,932
Cash and cash equivalents as of end of period	$	38,496,108	$	2,667,743

Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	569	$	54,578

Supplemental disclosure of non-cash financing activities




Non-cash addition of derivative liability	$	—	$	370,000
Addition of non-cash stock issuance and deferred offering costs	$	142,333	$	—

See accompanying notes to these condensed consolidated financial statements.

9 METERS BIOPHARMA, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Description

9 Meters Biopharma, Inc. (the “Company”) is a clinical-stage biopharmaceutical company focused on rare and unmet needs in gastroenterology. The Company’s pipeline includes drug candidates NM-002, a proprietary long-acting GLP-1 agonist for short bowel syndrome (SBS), an orphan designated disease, larazotide, a Phase 3 tight junction regulator being evaluated for celiac disease and three early-stage candidates for undisclosed rare and/or orphan diseases.

On April 30, 2020, the Company completed its merger with privately-held RDD Pharma, Ltd., an Israel corporation (“RDD”) (the “RDD Merger”) and changed its name from Innovate Biopharmaceuticals, Inc. to 9 Meters Biopharma, Inc.

Basis of Presentation

The unaudited condensed consolidated interim financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary for a fair statement of the balance sheets, operating results, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021 or any other future period. Certain information and footnote disclosure normally included in the annual financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the SEC’s rules and regulations for interim reporting. The Company’s financial position, results of operations and cash flows are presented in U.S. Dollars. These financial statements and related notes should be read in conjunction with the audited financial statements and related notes thereto for the year ended December 31, 2020, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 22, 2021.

Except as noted below under the section entitled “Recently Issued Accounting Standards—Accounting Pronouncements Adopted,” there have been no material changes to the Company’s significant accounting policies during the three months ended March 31, 2021, as compared to the significant accounting policies disclosed in Note 1 of the Company’s financial statements for the years ended December 31, 2020 and 2019 included in the Company’s Annual Report on Form 10-K. However, the following accounting policies are the most critical in fully understanding the Company’s financial condition and results of operations.

Basis of Consolidation

The accompanying consolidated financial statements reflect the operations of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Shelf Registration Filing

On October 2, 2020, the Company filed a shelf registration statement that was declared effective on October 9, 2020 (the “Current Registration Statement”) and the previous shelf registration statement (the “Prior Registration Statement”) was terminated effective October 16, 2020. Pursuant to the Current Registration Statement, the Company may from time to time offer, issue and sell in one or more offerings of various types of securities up to an aggregate dollar amount of $200 million.

On July 22, 2020, the Company filed a prospectus supplement and associated sales agreement related to an “at-the-market” offering (“ATM”) pursuant to which the Company may sell, from time to time, common stock with an aggregate offering price of up to $40 million through Truist Securities, Inc. (previously SunTrust Robinson Humphrey), or Truist, as sales agent, for general corporate purposes (the “Sales Agreement”). In October 2020, the Company entered into an amendment to the Sales Agreement to reflect the termination of the Prior Registration Statement and effectiveness of the Current Registration Statement. During the three months ended March 31, 2021, the Company did not sell any shares under the Sales Agreement.

9 METERS BIOPHARMA, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Warrant Exchange

Pursuant to a securities purchase agreement entered into with certain institutional and accredited investors on April 29, 2019, the Company issued warrants with an initial exercise price of $2.13 per share and a term of five-and-a-half years (the “April Warrants”). In addition, the Company issued placement agent warrants on April 29, 2019 with an initial exercise price of $2.53 per share and a term of five years (the “Placement Agent Warrants”). On December 19, 2019, the Company and each of the purchasers of the April Warrants and the Placement Agent Warrants (collectively, the “Exchange Warrants”) entered into separate exchange agreements, pursuant to which the Company agreed to issue to the purchasers an aggregate of 5,441,023 shares of the Company’s common stock (the “Exchange Shares”), at a ratio of 1.2 Exchange Shares for each purchaser warrant in exchange for the cancellation and termination of all of the outstanding Exchange Warrants. During the three months ended March 31, 2020, Exchange Warrants to purchase an aggregate of 1,539,424 shares were exchanged for 1,847,309 shares of the Company’s common stock. All of the April Warrants and Placement Agent Warrants were exchanged as of March 31, 2020.

Offer to Amend and Exercise

On February 12, 2020, the Company offered to amend certain outstanding warrants in the Offer to Amend and Exercise. The warrants amended included the short-term warrants issued in 2019 that were classified as warrant liabilities (the “Short-Term Warrants”), warrants classified as equity issued in 2018 and the outstanding long-term warrants issued in 2019 that were classified as warrant liabilities (collectively, the “Long-Term Warrants”). On April 29, 2020, Short-Term Warrants and Long-Term Warrants to purchase an aggregate of 12,230,418 shares were tendered, amended and exercised for $0.10 per share for aggregate gross proceeds of approximately $1.2 million. All of the warrants classified as warrant liabilities were fully exercised at an exercise price of $0.10 per share and as such, there were no warrant liabilities outstanding as of March 31, 2021 or December 31, 2020.

RDD Merger Financing

On April 29, 2020, the Company entered into a securities purchase agreement with various accredited investors pursuant to which the Company agreed to issue and sell to the investors units (“Units”) consisting of (i) one share of Series A Convertible Preferred Stock (the "Series A Preferred Stock") and (ii) one five-year warrant (the "Preferred Warrants") to purchase one share of Series A Preferred Stock (the "RDD Merger Financing"). On May 4, 2020, the Company closed the RDD Merger Financing and the Company sold an aggregate of (i) 382,779 shares of Series A Preferred Stock, par value $0.0001 per share, which converted into 38,277,900 shares of common stock on June 30, 2020, upon receipt of approval by the Company’s stockholders (the “Automatic Conversion”), and (ii) Preferred Warrants to purchase up to 382,779 shares of Series A Preferred Stock, which following the Automatic Conversion became exercisable for 38,277,900 shares of common stock. The exercise price of the Preferred Warrants was $58.94 per share of Series A Preferred Stock, and following the Automatic Conversion, became $0.5894 per share of common stock, subject to adjustments as provided under the terms of the Preferred Warrants. In addition, broker warrants covering 8,112 Units and broker warrants covering 10,899 shares of Series A Preferred Stock, which following the Automatic Conversion became exercisable for 2,712,300 shares of common stock, were issued in connection with the RDD Merger Financing. Gross proceeds from the RDD Merger Financing were approximately $22.6 million with net proceeds of approximately $19.2 million after deducting commissions and estimated offering costs. See Note 3—Merger & Acquisition for additional details.

December 2020 Offering

On December 11, 2020, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with William Blair & Company, L.L.C. and Truist, as representatives of the several underwriters named therein (the “Underwriters”), in connection with the public offering of 46,153,847 shares of the Company’s common stock at a price of $0.65 per share, less underwriting discounts and commissions (the “December 2020 Offering”). Pursuant to the terms of the Underwriting Agreement, the Company granted the Underwriters a 30-day option to purchase up to an additional 6,923,077 shares of common stock at the same price, which the Underwriters exercised in full on December 14, 2020. On December 15, 2020, upon closing of the December 2020 Offering, the Company received net proceeds of approximately $32.0 million after deducting underwriting discounts and commissions and offering expenses. The shares issued in the December 2020 Offering were registered and sold under the Current Registration Statement.

Of the shares issued in the December 2020 Offering, the Company’s Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors purchased an aggregate of 446,153 shares of common stock in this offering at the public offering price and on the same terms as the other purchasers in the offering. The underwriters received the same underwriting

9 METERS BIOPHARMA, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

discount on the shares purchased by the Company’s Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors.

SEC Form 10-Q filed by 9 Meters Biopharma, Inc.