10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended: September 30, 2023


☐		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-39101

Baudax Bio, Inc.

(Exact name of registrant as specified in its charter)


Pennsylvania	47-4639500
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

490 Lapp Road, Malvern, Pennsylvania	19355
(Address of principal executive offices)	(Zip Code)

(484) 395-2440

(Registrant’s telephone number, including area code)

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


Title of Each Class	Trading Symbol	Name of Exchange on Which Registered
Common Stock, par value $0.01	BXRX	Nasdaq Capital Market*

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

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

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


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(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 November 17, 2023, there were 43,593,082 shares of common stock, par value $0.01 per share, outstanding.

*As previously reported, November 16, 2023, the registrant's common stock has been suspended from trading on the Nasdaq Capital Market. The registrant expects that its shares will be delisted from the Nasdaq Capital Market after the Nasdaq Stock Market LLC

files a Form25-NSE with the SEC and the resgistrant's common stock will no longer be registered pursuant to Section 12(b) of the Act following the effectiveness of such filing. The registrant's common stock is currently being quoted on the OTC Pink Open Market under the symbol "BXRX".

TABLE OF CONTENTS

Index


			Page

Forward-Looking Statements			4

PART I. FINANCIAL INFORMATION			6

	Item 1.	Consolidated Financial Statements (Unaudited)	6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47

	Item 4.	Controls and Procedures	47

PART II. OTHER INFORMATION			48

	Item 1.	Legal Proceedings	48

	Item 1A.	Risk Factors	48

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48

	Item 3.	Defaults Upon Senior Securities	49

	Item 4.	Mine Safety Disclosures	49

	Item 5.	Other Information	49

	Item 6.	Exhibits	49

SIGNATURES			51

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this Quarterly Report regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” “would,” “could,” “should,” “potential,” “seek,” “evaluate,” “pursue,” “continue,” “design,” “impact,” “affect,” “forecast,” “target,” “outlook,” “initiative,” “objective,” “designed,” “priorities,” “goal,” or the negative of such terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated.

These forward-looking statements in this Quarterly Report include, among other things, statements about:

•

our estimates regarding expenses, revenue, capital requirements and timing and availability of and the need for additional financing;

•

our ability to continue as a going concern for the next twelve months;

•

whether our cash resources will be sufficient to fund our continuing operations;

•

our ability to operate under significant indebtedness;

•

the suspension and anticipated delisting of our common stock from the Nasdaq Capital Market;

•

our ability to obtain regulatory approval for any product candidates that we may develop, and any related restrictions, limitations, or warnings in the label of any approved product candidates;

•

our ability to successfully market, commercialize and achieve broad market acceptance for any of our product candidates once approved;

•

our ability and that of our third-party manufacturers to successfully transfer or scale-up our clinical and commercial manufacturing processes for our product candidates;

•

the results, timing and outcome of our clinical trials of our product candidates, and any future clinical trials and preclinical studies;

•

our ability to source materials needed for our product candidates, optimize formulations for stability and other characteristics;

•

our relationships with licensors, collaborators, other third parties and our employees;

•

our ability to successfully integrate the operations of our recent acquisition, TeraImmune, Inc., or TeraImmune, and realize anticipated benefits of the acquisition of TeraImmune;

•

the effects of changes in our effective tax rate due to changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, tax impacts and net operating loss utilization related to the separation from Societal CDMO’s acute care business and transfer of such assets to us, or the Separation, and changes in the tax laws;

•

our ability to comply with the regulatory schemes applicable to our business and other regulatory developments in the United States and foreign countries;

•

the performance of third-parties upon which we depend, including third-parties involved with clinical trial execution, and third-party suppliers, manufacturers, supply chain and logistics providers;

•

our ability to obtain and maintain patent protection and defend our intellectual property rights against third-parties;

•

our ability to obtain regulatory exclusivity periods for our products post approval, or our ability to obtain orphan drug status for certain of our product candidates;

•

our ability to develop relationships with potential collaborators and development partners;

•

our ability to defend any material litigation filed against us and avoid liabilities resulting from any material litigation;

•

our ability to recruit or retain key scientific, technical, and management personnel or to retain our executive officers;

•

our ability to raise future financing for continued development of our business and our product candidates and to meet any required debt payments, and any milestone payments we may owe;

•

the volatility of capital markets and other macroeconomic factors, including inflationary pressures, banking instability issues, geopolitical tensions or the outbreak of hostilities or war;

•

our ability to operate under leverage and comply with associated lending covenants; to pay existing required interest and principal amortization payments when due; and/or to obtain acceptable refinancing alternatives; and

•

our expectations regarding continuing effects of the COVID-19 pandemic, including manufacturing and supply chain interruptions, adverse effects on healthcare systems and disruption of the global economy, and the overall impact of the COVID-19 pandemic on our business, financial condition and results of operations.

Any forward-looking statements that we make in this Quarterly Report speak only as of the date of such statement, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

You should also read carefully the factors described in the “Risk Factors” included in Part II, Item 1A of this Quarterly Report and Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 23, 2023, or the 2022 Annual Report, to better understand significant risks and uncertainties inherent in our business and underlying any forward-looking statements. As a result of these factors, actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements in this Quarterly Report and you should not place undue reliance on any forward-looking statements.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BAUDAX BIO, INC.

Consolidated Balance Sheets

(Unaudited)


(amounts in thousands, except share and per share data)	September 30, 2023			December 31, 2022

Assets
Current assets:
Cash and cash equivalents	$	363		$	5,259
Prepaid expenses and other current assets		975			303
Current assets of discontinued operation		—			785
Total current assets		1,338			6,347
Property and equipment, net		3,671			9
Right-of-use asset, net		2,877			854
Intangible asset		3,900			—
Goodwill		8,797			2,127
Non-current assets of discontinued operation		—			695
Total assets	$	20,583		$	10,032
Liabilities, Non-Voting Convertible Preferred Stock and Shareholders' Deficit
Current liabilities:
Accounts payable	$	7,822		$	3,198
Accrued expenses and other current liabilities		3,652			2,133
Current portion of long-term debt, net		4,228			5,600
Current portion of operating lease liability		341			231
Contingent consideration		83			—
Convertible bond payable		1,000			—
Derivative instrument		1,659			—
Other current liabilities		266			—
Current liabilities of discontinued operation		—			10,298
Total current liabilities		19,051			21,460
Long-term debt, net		—			1,519
Long-term operating lease liability		2,528			585
Deferred tax liability		202			—
Other long-term liabilities		—			13
Non-current liabilities of discontinued operation		—			10,697
Total liabilities		21,781			34,274
Commitments and contingencies (Note 12)
Mezzanine equity:
Series X non-voting convertible preferred stock, $0.01 par value, Authorized, 27,090 shares; issued and outstanding 20,066 shares at September 30, 2023		9,040			—
Shareholders’ deficit:
Preferred stock, $0.01 par value. Authorized, 10,000,000 shares; shares issued and outstanding, 36,267 at September 30, 2023 and 0 December 31, 2022		—			—
Common stock, $0.01 par value. Authorized, 190,000,000 shares; issued and outstanding, 12,164,753 shares at September 30, 2023 and 1,623,913 shares at December 31, 2022		122			16
Additional paid-in capital		178,940			166,646
Accumulated deficit		(189,300	)		(190,904	)
Total shareholders’ deficit		(10,238	)		(24,242	)
Total liabilities, non-voting convertible preferred stock and shareholders’ deficit	$	20,583		$	10,032

See accompanying notes to unaudited consolidated financial statements.

BAUDAX BIO, INC.

Consolidated Statements of Operations

(Unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(amounts in thousands, except share and per share data)	2023			2022			2023			2022
Operating expenses:
Research and development	$	1,901		$	622		$	6,597		$	2,196
General and administrative		3,639			2,953			7,664			12,785
Change in fair value of warrants and derivatives		(3,587	)		—			(717	)		(7	)
Change in contingent consideration valuation		(177	)		—			(35	)		—
Total operating expenses		1,776			3,575			13,509			14,974
Operating loss from continuing operations		(1,776	)		(3,575	)		(13,509	)		(14,974	)
Other expense:
Other expense, net		(115	)		(512	)		(3,069	)		(1,652	)
Net loss from continuing operations	$	(1,891	)	$	(4,087	)	$	(16,578	)	$	(16,626	)
Income (loss) on discontinued operation		(43	)		(25,120	)		18,673			(32,920	)
Net income (loss)	$	(1,934	)	$	(29,207	)	$	2,095		$	(49,546	)

Per share information:
Net loss per share from continuing operations, basic and diluted	$	(0.29	)	$	(13.81	)	$	(3.36	)	$	(86.53	)
Net income (loss) per share from discontinued operations, basic and diluted	$	(0.01	)	$	(84.89	)	$	3.69		$	(171.34	)
Net income (loss) per share, basic and diluted	$	(0.30	)	$	(98.70	)	$	0.33		$	(257.87	)
Weighted average common shares outstanding, basic and diluted		7,993,522			295,903			5,065,759			192,135

See accompanying notes to unaudited consolidated financial statements.

BAUDAX BIO, INC.

Consolidated Statements of Non-voting Convertible Preferred Stock and Shareholders’ Deficit

(Unaudited)


For the Nine Months Ended September 30, 2023
	Series X Convertible Preferred Stock				Preferred Stock				Common Stock				Additional
(amounts in thousands, except share data)	Shares		Amount		Shares		Amount		Shares		Amount		paid-in capital			Accumulated Deficit			Total
Balance, December 31, 2022		—	$	—		—	$	—		1,623,913	$	16	$	166,646		$	(190,904	)	$	(24,242	)
Stock-based compensation expense		—		—		—		—		—		—		194			—			194
Issuance of common stock and warrants for public offering, net		—		—		—		—		—		—		(55	)		—			(55	)
Issuance of shares pursuant to vesting of restricted stock units, net of shares withheld for income taxes		—		—		—		—		2		—		—			—			—
Exercise of warrants		—		—		—		—		961,787		10		4,318			—			4,328
Issuance of warrants for MAM debt amendment		—		—		—		—		—		—		1,058			—			1,058
Net income		—		—		—		—		—		—		—			11,404			11,404
Balance, March 31, 2023		—	$	—		-	$	—		2,585,702	$	26	$	172,161		$	(179,500	)	$	(7,313	)
Stock-based compensation expense		—		—		—		—		—		—		208			—			208
Issuance of common stock and warrants for public offering, net		—		—		—		—		3,478,262		35		3,222			—			3,257
Issuance of Series X convertible preferred stock upon acquisition of TeraImmune		20,066		9,040		—		—		—		—		—			—			—
Issuance of common stock upon acquisition of TeraImmune		—		—		—		—		897,903		9		535			—			544
Net loss		—		—		—		—		—		—		—			(7,375	)		(7,375	)
Balance, June 30, 2023		20,066	$	9,040		-	$	—		6,961,867	$	70	$	176,126		$	(186,875	)	$	(10,679	)
Stock-based compensation expense		—		—		—		—		—		—		253			—			253
Issuance of common stock and warrants for registered direct offering, net		—		—		—		—		3,401,787		34		1,577			—			1,611
Sale of common stock under equity line of credit, net of transaction costs		—		—		—		—		1,794,170		18		493			—			511
Issuance of shares pursuant to vesting of restricted stock units, net of shares withheld for income taxes		—		—		—		—		6,929		—		—			—			—
Deemed dividend on warrant modification														455			(455	)
Stock dividend		—		—		36,267		—		—		—		36			(36	)		—
Net income		—		—		—		—		—		—		—			(1,934	)		(1,934	)
Balance, September 30, 2023		20,066	$	9,040		36,267	$	—		12,164,753	$	122	$	178,940		$	(189,300	)	$	(10,238	)

See accompanying notes to unaudited consolidated financial statements

BAUDAX BIO, INC.

Consolidated Statements of Shareholders’ (Deficit) Equity

(Unaudited)


For the Nine Months Ended September 30, 2022
	Preferred Stock					Common Stock				Additional
(amounts in thousands, except share data)	Shares			Amount		Shares		Amount		paid-in capital			Accumulated Deficit			Total
Balance, December 31, 2021		8,289		$	—		70,181	$	1	$	145,314		$	(132,089	)	$	13,226
Stock-based compensation expense		—			—		—		—		521			—			521
Issuance of common stock and warrants for registered direct offerings, net		—			—		—		—		(13	)		—			(13	)
Issuance of common stock and warrants for public offering, net		—			—		87,719		1		8,817			—			8,818
Issuance of shares pursuant to vesting of restricted stock units, net of shares withheld for income taxes		—			—		56		—		—			—			—
Conversion of preferred stock		(8,289	)		—		2,368		—		—			—			—
Net loss		—			—		—		—		—			(12,809	)		(12,809	)
Balance, March 31, 2022		—		$	—		160,324	$	2	$	154,639		$	(144,898	)	$	9,743
Stock-based compensation expense		—			—		—		—		325			—			325
Issuance of common stock and warrants for registered direct offerings, net		—			—		41,152		—		1,720			—			1,720
Issuance of common stock and warrants for public offering, net		—			—		—		—		(28	)		—			(28	)
Issuance of shares pursuant to vesting of restricted stock units, net of shares withheld for income taxes		—			—		245		—		—			—			—
Net loss		—			—		—		—		—			(7,531	)		(7,531	)
Balance, June 30, 2022		—		$	—		201,721	$	2	$	156,656		$	(152,429	)	$	4,229
Stock-based compensation expense		—			—		—		—		874			—			874
Issuance of common stock and warrants for registered direct offerings, net		—			—		—		—		(38	)		—			(38	)
Issuance of shares pursuant to vesting of restricted stock units, net of shares withheld for income taxes		—			—		4,289		—		(29	)		—			(29	)
Stock dividend		20,004									20			(20	)		—
Net income		—			—		—		—		—			(29,207	)		(29,207	)
Balance, September 30, 2022		20,004		$	—		206,010	$	2	$	157,483		$	(181,656	)	$	(24,171	)

See accompanying notes to unaudited consolidated financial statements.

BAUDAX BIO, INC.

Consolidated Statements of Cash Flows

(Unaudited)


	For the Nine Months Ended September 30,
(amounts in thousands)	2023			2022
Cash flows from operating activities:
Net income (loss)	$	2,095		$	(49,546	)
(Income) loss on discontinued operation		(18,673	)		32,920
Adjustments to reconcile net income (loss) from continuing operations to net cash used in operating activities from continuing operations:
Stock-based compensation		642			1,062
Non-cash interest expense		297			652
Depreciation expense		135			38
Non-cash loss on retirement of fixed assets		5			(86	)
Loss on extinguishment of debt		2,196			—
Change in fair value of warrants and derivatives		(717	)		(7	)
Right-of-use asset		111			—
Change in contingent consideration valuation		(35	)		—
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(404	)		923
Accounts payable, accrued expenses and other liabilities		4,750			947
Operating lease liability		(82	)		—
Net cash used in operating activities, continuing operations		(9,680	)		(13,097	)
Cash flows from investing activities:
Cash acquired in acquisition of TeraImmune		142			—
Purchase of property and equipment		(21	)		—
Net cash provided by investing activities, continuing operations		121			—
Cash flows from financing activities:
Payment of deferred financing costs		(291	)		—
Proceeds from public offering, net of transaction costs		3,494			14,270
Proceeds from registered direct offerings, net of transaction costs		1,712			1,762
Payments on long-term debt		(4,050	)		(1,112	)
Proceeds from warrant exercises		4,328			69
Proceeds from equity line of credit, net of transaction costs		313