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, 20222023
OR
☐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 001-39990
ANGION BIOMEDICA CORPElicio Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
Delaware11-3430072
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer Identification No.)
51 Charles Lindbergh Boulevard Uniondale, New York451 D Street, 5th Floor Boston, Massachusetts1155302210
(Address of Principal Executive Offices)(Zip Code)
(415) 655-4899(857) 209-0050
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01ANGNELTXThe Nasdaq Global Select 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 and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-(§S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or 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 ☒
The number of shares of the issuer’s common stock outstanding as of November 8, 20227, 2023 was 30,113,703.8,407,106.


TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Page
56
Condensed Consolidated Balance Sheets (unaudited)
56
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)
67
Condensed Consolidated Statements of Stockholders' Convertible Preferred Stock and Stockholders’ Equity (Deficit)(Deficit) (unaudited)
78
Condensed Consolidated Statements of Cash Flows (unaudited)
10
Notes to Unaudited Interim Condensed Consolidated Financial Statements
11
2927
3836
3836
PART II OTHER INFORMATION
4038
4039
6241
6241
6241
6241
6342
6443


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Forward-Looking Statements
This Quarterly Report on Form 10-Q, including the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, contains forward-looking statements. We intend such forward-looking statements to be covered bywithin the safe harbor provisions for forward-looking statements contained in Section 27Ameaning of the Private Securities Litigation Reform Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Any1995. All statements contained in this Quarterly Report on Form 10-Q that are notother than statements of historical facts may be deemed to befact, including statements concerning our business strategy and plans, future operating results and financial position, as well as our objectives and expectations for our future operations, are forward-looking statements.

In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•our intentionfinancial condition, including our ability to explore strategic options, including but not limitedobtain the funding necessary to merger, reverse merger,advance the development of ELI-002 and any other business combinations, sale of assets, licensing, or other strategic alternativesfuture product candidates, and our ability to enhance value for shareholders;continue as a going concern;
•the potential benefits, activity, effectivenessability of our clinical trials to demonstrate safety and safetyefficacy of our product candidates, and other positive results;
•our ability to utilize our platform to develop a pipeline of product candidates to address unmet needs in cancer and infectious disease;
•the timing, progress and results of clinical trials for ELI-002, and other product candidates we may develop, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the studies or trials will become available, and research and development programs;
•the timing, scope and likelihood of regulatory filings and approvals, including timing of INDs (as defined below) and U.S. Food and Drug Administration (“FDA”) approval of ELI-002 and any other future product candidates;
•the timing, scope progress, expansion,or likelihood of foreign regulatory filings and costsapprovals;
•our ability to develop and advance current product candidates and programs into, and successfully complete, clinical studies;
•our manufacturing, commercialization, and marketing capabilities and strategy;
•the need to hire additional personnel and our ability to attract and retain such personnel;
•the size of developingthe market opportunity for our product candidates, including estimates of the number of patients who suffer from the diseases we are targeting;
•expectations regarding the approval and commercializinguse of our product candidates in combination with other drugs;
•expectations regarding potential for accelerated approval or other expedited regulatory designation;
•our competitive position and the success of competing therapies that are or may become available;
•our anticipated research and development activities and projected expenditures;
•existing regulations and regulatory developments in the United States, Europe and other jurisdictions;
•the extent to which global economic and political developments, including the ongoing conflict between Ukraine and Russia, the conflicts in the Middle East, and other geopolitical events, will affect our business operations, clinical trials, or financial condition;
•our expectations regarding other macroeconomic trends;
•our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering ELI-002, other product candidates we may develop, including the extensions of existing patent terms where available, the validity of intellectual property rights held by third parties, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights;
•our continued reliance on third parties to conduct additional clinical trials of our product candidates, and for the manufacture of our product candidates for clinical trials;
•our ability to have manufactured sufficient supplies of drug product for clinical testing and commercialization;
•our ability to obtain, and negotiate favorable terms of, any collaboration, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize our product candidates;
•our dependence on existing andestimates regarding expenses, future collaborators for commercializing product candidates in the collaboration;
•our receipt and timing of any milestone payments or royalties under any existing or future research collaboration and license agreements or arrangements;
•the potential effects of the COVID-19 pandemic on our business and operations, results of operations and financial performance;
•the potential adverse effects of any regional armed conflicts on our business and operations, results of operations and financial performance;
•the size and growth of the potential markets for our product candidates and the ability to serve those markets;
•our expectations regarding our expenses, the sufficiency of our cash resources,revenue, capital requirements and needs for additional financing;
•regulatory developments in the United States and other countries;our projected financial performance;
•the rate and degree of market acceptance of any future products;
•the implementation of our business model and strategic plans for our business and product candidates, including additional indicationsperiod over which we may pursue;
•estimate our expectations regarding competition;
•existing cash and cash equivalents will be sufficient to fund our anticipated business strategies;
•the performance of third-party manufacturers;
•our ability to establishplanned operating expenses and maintain development partnerships;
•our expectations regarding federal, state, and foreign regulatorycapital expenditure requirements;
•our ability to obtain and maintain intellectual property protection for our product candidates;
•the successful development for our sales and marketing capabilities;
•the hiring, retention, or separation of key scientific or management personnel; and
•the anticipated trendsimpact of laws and challenges in our business and the market in which we operate.regulations.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
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Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in “Risk Factors”our Current Report on Form 8-K filed with the SEC on June 2, 2023 and elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into or review of all relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements.
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This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business and the markets for certain drugs, including data regarding the estimated size of those markets, their projected growth rates and the incidence of certain medical conditions. Information that is based on estimates, forecasts, projections or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by third parties, industry, medical and general publications, government data and similar sources. In some cases, we do not expressly refer to the sources from which this data is derived. In that regard, when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph is derived from the same sources, unless otherwise expressly stated or the context otherwise requires.
EXPLANATORY NOTE

On June 1, 2023, Elicio Operating Company, Inc. (“Former Elicio”), completed the previously announced merger transaction in accordance with the terms and conditions of the Agreement and Plan of Merger and Reorganization, dated as of January 17, 2023 (the “Merger Agreement”), by and among the Delaware corporation formerly known as “Angion Biomedica Corp.” (“Angion”), Arkham Merger Sub, Inc., a wholly owned subsidiary of Angion (“Merger Sub”), and Former Elicio, pursuant to which Merger Sub merged with and into Former Elicio, with Former Elicio surviving the merger as a wholly owned subsidiary of Angion (the “Merger”). Additionally, on June 1, 2023, Angion changed its name from “Angion Biomedica Corp.” to “Elicio Therapeutics, Inc.” (the “Company”).

Prior to the effective time of the Merger, on June 1, 2023, in connection with the transactions contemplated by the Merger Agreement, the Company effected a reverse stock split of the Company’s common stock, par value $0.01 per share (“Company common stock”), at a ratio of 10:1 (the “Reverse Stock Split”).At the effective time of the Merger, each outstanding share of Former Elicio capital stock (after giving effect to the automatic conversion of all shares of Former Elicio preferred stock into shares of Former Elicio common stock and excluding any shares held as treasury stock by Former Elicio or held or owned by Angion or any subsidiary of Angion or Former Elicio and any dissenting shares) was converted into the right to receive 0.0181 shares of Company common stock. The information in this Quarterly Report on Form 10-Q as of and for the periods prior to the effective date of the Merger gives effect to the Reverse Stock Split.

Since Former Elicio was determined to be the accounting acquirer in connection with the Merger, for periods prior to the Merger, the condensed consolidated financial statements were prepared on a stand-alone basis for Former Elicio and did not include the combined entities’ activity or financial position. Subsequent to the Merger, the condensed consolidated financial statements as of and for the three and nine months ended September 30, 2023 include the acquired business from June 2, 2023 through September 30, 2023, and assets and liabilities at their acquisition date fair value. Historical share and per share figures of Former Elicio have been retroactively restated based on the exchange ratio of 0.0181.

In this Quarterly Report on Form 10-Q, unless the context indicates otherwise, the terms “Company,” “we,” “us,” and “our” refer to (i) Angion for periods prior to the effectiveness of the Merger and (ii) Elicio Therapeutics, Inc.
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(as a combined company) for periods following the effectiveness of the Merger. Following the completion of the Merger, the business conducted by the Company became primarily the business conducted by Former Elicio.
Trademarks
This Quarterly Report on Form 10-Q includes trademarks, service marks and trade names owned by us or other companies. All trademarks, service marks and trade names included in this Quarterly Report on Form 10-Q are the property of their respective owners. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.





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Part I FINANCIAL INFORMATION
Item 1. Financial Statements
ANGION BIOMEDICA CORP.ELICIO THERAPEUTICS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
September 30,
2022		December 31,
2021
Assets
Current assets
Cash and cash equivalents$55,143 $88,756 
Grants receivable— 806 
Prepaid expenses and other current assets1,537 1,685 
Total current assets56,680 91,247 
Property and equipment, net304 451 
Operating lease right-of-use assets3,383 3,986 
Investments in related parties874 723 
Other assets75 106 
Total assets$61,316 $96,513 
Liabilities and stockholders’ equity
Current liabilities
Accounts payable$2,218 $4,710 
Accrued expenses4,908 3,219 
Operating lease liabilities, current968 894 
Financing obligation, current64 58 
Deferred revenue, current— 2,301 
Warrant liability24 114 
Total current liabilities8,182 11,296 
Operating lease liabilities, noncurrent2,738 3,475 
Financing obligation, noncurrent186 235 
Total liabilities11,106 15,006 
Commitments and contingencies (Note 9)
Stockholders' equity
Common stock, $0.01 par value per share; 300,000,000 shares authorized; 30,113,582 and 29,959,060 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively301 300 
Additional paid-in capital297,109 296,445 
Accumulated other comprehensive income (loss)302 (103)
Accumulated deficit(247,502)(215,135)
Total stockholders' equity50,210 81,507 
Total liabilities and stockholders' equity$61,316 $96,513 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
September 30,
2023		December 31,
2022
Assets
Current assets
Cash and cash equivalents$14,841 $6,156 
Restricted cash, current1,671 1,641 
Prepaid expenses and other current assets3,419 2,920 
Total current assets19,931 10,717 
Property and equipment, net772 1,147 
Operating lease, right-of-use assets6,768 7,350 
Restricted cash, noncurrent683 617 
Other long-term prepaid assets2,833 2,833 
Total assets$30,987 $22,664 
Liabilities, convertible preferred stock, and stockholders’ equity (deficit)
Current liabilities
Accounts payable$4,406 $2,805 
Accrued expenses4,416 1,935 
Deferred research obligation1,664 1,436 
Operating lease liability, current938 692 
Unvested option exercise liability, current36 — 
Warrant liability26 — 
Total current liabilities11,486 6,868 
Operating lease liability, noncurrent6,215 6,789 
Unvested option exercise liability, non current— 92 
Total liabilities17,701 13,749 
Commitments and contingencies - Note 10
Convertible preferred stock:
Series A convertible preferred stock, $0.06 par value:
no shares and 132,387 shares authorized, issued and outstanding at September 30, 2023 and December 31, 2022, respectively
— 7,495 
Series B convertible preferred stock, $0.06 par value:
no shares and 1,927,375 shares authorized, issued and outstanding at September 30, 2023 and December 31, 2022, respectively
— 62,944 
Series C convertible preferred stock, $0.06 par value:
no shares and 4,888,798 shares authorized at September 30, 2023 and December 31, 2022, respectively; no shares and 2,938,158 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively
— 40,621 
Total convertible preferred stock— 111,060 
Stockholders' equity (deficit):
Common stock, $0.01 par value; 300,000,000 shares authorized at September 30, 2023 and December 31, 2022; 8,384,723 shares and 320,281 shares issued at September 30, 2023 and December 31, 2022, respectively; 8,378,361 and 320,281 outstanding as of September 30, 2023 and December 31, 2022, respectively84 3 
Treasury stock, at cost, 14,455 shares and no shares outstanding as of September 30, 2023 and December 31, 2022, respectively(150)— 
Additional paid-in capital146,631 4,860 
Accumulated other comprehensive income (loss)(25)— 
Accumulated deficit(133,254)(107,008)
Total stockholders' equity (deficit)13,286 (102,145)
Total liabilities, convertible preferred stock, and stockholders' equity (deficit)$30,987 $22,664 
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ANGION BIOMEDICA CORP.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Revenue:
Contract revenue$— $1,460 $2,301 $2,371 
Total revenue— 1,460 2,301 2,371 
Operating expenses:
Research and development2,938 13,288 17,940 42,030 
General and administrative3,315 3,930 10,892 14,282 
Restructuring expenses2,797 — 6,039 — 
Total operating expenses9,050 17,218 34,871 56,312 
Loss from operations(9,050)(15,758)(32,570)(53,941)
Other income (expense)
Change in fair value of warrant liability9 128 90 (3,191)
Change in fair value of convertible notes— — — (7,469)
Change in fair value of Series C convertible preferred stock— — — (3,592)
Gain upon debt extinguishment— — — 905 
Foreign exchange transaction loss(215)(204)(441)(279)
Earnings from equity method investment9 20 151 40 
Interest income (expense), net259 110 403 (1,936)
Total other income (expense)62 54 203 (15,522)
Net loss(8,988)(15,704)(32,367)(69,463)
Other comprehensive income:
Foreign currency translation adjustment204 146 405 260 
Comprehensive loss$(8,784)$(15,558)$(31,962)$(69,203)
Net loss per common share, basic and diluted$(0.30)$(0.53)$(1.08)$(2.51)
Weighted average common shares outstanding, basic and diluted30,113,407 29,829,577 30,016,079 27,671,310 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ANGION BIOMEDICA CORP.ELICIO THERAPEUTICS, INC.
Condensed Consolidated Statements of Stockholders' Equity (Deficit)Operations and Comprehensive Loss
(in thousands, except share and per share amounts)
(unaudited)
Common StockTreasury Stock
Additional
Paid-in
Capital
Accumulated Other
Comprehensive Income (Loss)
Accumulated
Deficit
Total
Stockholders'
Equity
SharesAmountSharesAmount
Balance as of December 31, 202129,959,060$300 —$— $296,445 $(103)$(215,135)$81,507 
Issuance of common stock upon net settlement of restricted stock units and performance stock units365— —— — — — — 
Stock-based compensation—— —— 31 — 31 
Foreign currency translation adjustment—— —— — (96)— (96)
Net loss—— —— — — (14,240)(14,240)
Balance as of March 31, 202229,959,425 300 — — 296,476 (199)(229,375)67,202 
Issuance of common stock upon net settlement of restricted stock units and performance stock units93,119 1 — — — — — 1 
Stock-based compensation— — — — 1,399 — — 1,399 
Foreign currency translation adjustment— — — — — 297 — 297 
Net loss— — — — — — (9,139)(9,139)
Balance as of June 30, 202230,052,544 301 — — 297,875 98 (238,514)59,760 
Issuance of common stock upon net settlement of restricted stock units and performance stock units61,038 — — — (3)— — (3)
Stock-based compensation— — — — (763)— — (763)
Foreign currency translation adjustment— — — — — 204 — 204 
Net loss— — — — — — (8,988)(8,988)
Balance as of September 30, 202230,113,582 $301 — $— $297,109 $302 $(247,502)$50,210 
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Common StockTreasury Stock
Additional
Paid-in
Capital
Accumulated Other
Comprehensive Loss
Accumulated
Deficit
Total
Stockholders'
Equity (Deficit)
SharesAmountSharesAmount
Balance as of December 31, 202015,632,809$156 (316,088)$(1,846)$72,136 $(333)$(160,562)$(90,449)
Issuance of common stock upon initial public offering, net of issuance costs, discount, and commissions of $9.3 million5,750,00058 —— 82,657 — — 82,715 
Issuance of common stock upon Concurrent Private Placement, net of issuance costs of $0.7 million1,562,50016 —— 24,234 — — 24,250 
Conversion of convertible preferred stock into common stock upon initial public offering2,234,64022 —— 35,732 — — 35,754 
Conversion of convertible notes into common stock upon initial public offering3,636,18936 —— 58,143 — — 58,179 
Conversion of convertible notes prior to initial public offering33,978— —— 460 — — 460 
Net exercise of warrants upon initial public offering844,3359 —— 13,500 — — 13,509 
Exercise of broker warrants47,188— —— — — — — 
Exercise of warrants107,0381 —— 679 — — 680 
Exercise of stock options155— —— 1 — — 1 
Issuance of common stock upon vesting of restricted stock units and performance stock units204,7742 —— 11 — — 13 
Return of common stock to pay withholding taxes on restricted stock—— (77,060)(1,145)— — — (1,145)
Stock-based compensation—— —— 5,117 — — 5,117 
Foreign currency translation adjustment—— —— — 46 — 46 
Net loss— — — — — — (36,687)(36,687)
Balance as of March 31, 202130,053,606 300 (393,148)(2,991)292,670 (287)(197,249)92,443 
Fractional shares paid out related to the forward stock split(10)(10)
Exercise of warrants22,714 1 — — 175 — — 176 
Exercise of stock options8,495 — — — 79 — — 79 
Issuance of common stock upon net settlement of restricted stock units and performance stock units193,715 2 — 4 — — 6 
Repurchase of common stock— — (87,795)(1,219)— — — (1,219)
Stock-based compensation— — — — 2,718 — — 2,718 
Foreign currency translation adjustment— — — — — 68 — 68 
Net loss— — — — — — (17,072)(17,072)
Balance as of June 30, 202130,278,530 303 (480,943)(4,210)295,636 (219)(214,321)77,189 
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Common StockTreasury Stock
Additional
Paid-in
Capital
Accumulated Other
Comprehensive Loss
Accumulated
Deficit
Total
Stockholders'
Equity (Deficit)
SharesAmountSharesAmount
Balance as of June 30, 202130,278,530 303 (480,943)(4,210)295,636 (219)(214,321)77,189 
Exercise of warrants777 — — — 5 — — 5 
Exercise of stock options126,528 1 — — 785 — — 786 
Issuance of common stock upon vesting of restricted stock units and performance stock units8,203 — — — 2 — — 2 
Return of common stock to pay withholding taxes on restricted stock— — — — (94)— — (94)
Stock-based compensation— — — — 2,184 — — 2,184 
Foreign currency translation adjustment— — — — — 146 — 146 
Net loss— — — — — — (15,704)(15,704)
Balance as of September 30, 202130,414,038 $304 (480,943)$(4,210)$298,518 $(73)$(230,025)$64,514 
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Operating expenses:
Research and development$7,264 $4,593 $17,692 $13,813 
General and administrative3,507 1,177 8,661 3,959 
Total operating expenses10,771 5,770 26,353 17,772 
Loss from operations(10,771)(5,770)(26,353)(17,772)
Other income (expense)
Change in fair value of warrant liability6 — (17)— 
Change in fair value of embedded derivatives— (360)429 (286)
Gain on extinguishment of promissory notes payable— — 604 — 
Loss on sale of equipment(105)— (105)(4)
Foreign exchange transaction loss(33)— (45)— 
Interest income246 10 298 10 
Interest expense(1)(1,078)(1,057)(3,505)
Total other income (expense)113 (1,428)107 (3,785)
Net loss(10,658)(7,198)(26,246)(21,557)
Other comprehensive loss:
Foreign currency translation adjustment(23)— (25)— 
Comprehensive loss$(10,681)$(7,198)$(26,271)$(21,557)
Net loss per common share, basic and diluted$(1.27)$(22.67)$(3.19)$(68.52)
Weighted average common shares outstanding, basic and diluted8,376,384 317,512 8,240,326 314,619 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ELICIO THERAPEUTICS, INC.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(in thousands, except share amounts)
(unaudited)
Convertible Preferred StockCommon StockTreasury Stock
Additional
Paid-in
Capital
Accumulated Other
Comprehensive Income (Loss)
Accumulated
Deficit
Total
Stockholders'
Equity (Deficit)
SharesAmountSharesPar ValueSharesAmount
Balance as of December 31, 2022 (1)
4,997,920 $111,060 320,281 $3 — $— $4,860 $— $(107,008)$(102,145)
Exercise of stock options— — 4,699 — — — 40 — — 40 
Issuance of common stock upon net settlement of restricted stock units— — 2,601 — — — 34 — — 34 
Stock-based compensation— — — — — — 224 — — 224 
Net loss— — — — — — — — (8,029)(8,029)
Balance as of March 31, 20234,997,920 111,060 327,581 3 — — 5,158 — (115,037)(109,876)
Exercise of stock options— — 4,460 — — — — — — — 
Issuance of common stock upon net settlement of restricted stock units— — 903 — — — 11 — — 11 
Conversion of preferred stock(4,997,920)(111,060)4,997,920 50 — — 111,010 — — 111,060 
Issuance of common stock to Angion stockholders as result of Merger and reset to par of $0.01, net of transaction cost of $2.4 million— — 3,012,854 30 — — 19,709 — — 19,739 
Settlement of promissory notes in connection with Merger— — — — — — 10,028 — — 10,028 
Issuance of common stock upon accelerated vesting of restricted stock units due to Merger, net of treasury stock— — 26,550 1 — — 26 — — 27 
Return of common stock to pay withholding taxes on restricted stock— — — — (14,455)(150)— — — (150)
Stock-based compensation— — — — — — 279 — — 279 
Foreign currency translation adjustment— — — — — — — (2)— (2)
Net loss— — — — — — — — (7,559)(7,559)
Balance as of June 30, 2023— — 8,370,268 84 (14,455)(150)146,221 (2)(122,596)23,557 
Exercise of stock options— — 7,190 — 60 — — 60 
Issuance of common stock upon net settlement of restricted stock units— — 903— — — 11 — — 11 
Stock-based compensation— — — — — — 339 — — 339 
Foreign currency translation adjustment— — — — — — — (23)— (23)
Net loss— — — — — — — — (10,658)(10,658)
Balance as of September 30, 2023— $— 8,378,361 $84 (14,455)$(150)$146,631 $(25)$(133,254)$13,286 
(1) Retroactively restated for the reverse recapitalization as described in Note 3.
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Convertible Preferred StockCommon StockTreasury Stock
Additional
Paid-in
Capital
Accumulated Other
Comprehensive Loss
Accumulated
Deficit
Total
Stockholders'
Equity (Deficit)
SharesAmountSharesPar ValueSharesAmount
Balance as of December 31, 2021 (1)
1,408,100 $70,439 310,200 $3 — $— $4,261 $— $(78,801)$(74,537)
Exercise of stock options— — 71 — — — 1 — — 1 
Vesting of restricted common stock— — 2,775 — — — 3 — — 3 
Stock-based compensation— — — — — — 157 — — 157 
Net loss— — — — — — — — (7,060)(7,060)
Balance as of March 31, 20221,408,100 70,439 313,046 3 — — 4,422 — (85,861)(81,436)
Vesting of restricted common stock— — 2,775 — — — 3 — — 3 
Exercise of stock options— — 181 — — — 3 — — 3 
Issuance of Series C convertible preferred stock, net of issuance costs of approximately $0.3 million103,637 1,169 — — — — — — — — 
Stock-based compensation— — — — — — 113 — — 113 
Net loss— — — — — — — — (7,299)(7,299)
Balance as of June 30, 20221,511,737 71,608 316,002 3 — — 4,541 — (93,160)(88,616)
Issuance of Series C convertible preferred stock, net of issuance costs of approximately $0.7 million668,942 8,840 — — — — — — — — 
Exercise of stock options— — 341 — — — 4 — — 4 
Vesting of restricted common stock— — 2,775 — — — 3 — — 3 
Stock-based compensation— — — — — — 110 — — 110 
Net loss— — — — — — — — (7,198)(7,198)
Balance as of September 30, 20222,180,679 $80,448 319,118 $3 — $— $4,658 $— $(100,358)$(95,697)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
(1) Retroactively restated for the reverse recapitalization as described in Note 3.
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ANGION BIOMEDICA CORP.ELICIO THERAPEUTICS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
September 30,
20222021
Cash flows from operating activities:
Net loss$(32,367)$(69,463)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation147 59 
Amortization of right-of-use assets603 519 
Amortization of debt issuance costs— 1,884 
Stock-based compensation667 10,019 
PPP Loan forgiveness— (905)
Change in fair value of convertible notes— 7,469 
Change in fair value of Series C convertible preferred stock— 3,592 
Change in fair value of warrant liability(90)3,191 
Earnings from equity method investment(151)(76)
Distribution from equity investment— 36 
Changes in operating assets and liabilities:
Grants receivable806 — 
Prepaid expenses and other current assets194 4,050 
Other assets31 (33)
Accounts payable(2,529)2,072 
Accrued expenses1,689 2,182 
Lease liabilities(663)(506)
Deferred revenue(2,301)(2,371)
Net cash used in operating activities(33,964)(38,281)
Cash flows from investing activities:
Purchases of fixed assets— (346)
Net cash used in investing activities— (346)
Cash flows from financing activities:
Net proceeds from issuance of common stock upon initial public offering and Concurrent Private Placement, net of discount and commissions— 110,560 
Payment of deferred offering costs— (3,073)
Fractional share payments related to the forward stock split— (10)
Taxes paid related to net share settlement upon vesting of restricted stock awards(2)(2,458)
Proceeds from RSU settlement— 21 
Payment of financing obligation(43)— 
Exercise of warrants— 861 
Exercise of stock options— 866 
Net cash (used in) provided by financing activities(45)106,767 
Effect of foreign currency on cash396 (11)
Net (decrease) increase in cash and cash equivalents(33,613)68,129 
Cash and cash equivalents at the beginning of the period88,756 34,607 
Cash and cash equivalents at the end of the period$55,143 $102,736 
Supplemental disclosure of noncash investing and financing activities:
Conversion of convertible notes into common stock upon initial public offering$— $58,179 
Conversion of Series C preferred stock into common stock upon initial public offering$— $35,754 
Net exercise of warrants upon initial public offering$— $13,509 
Right-of-use assets obtained in exchange for operating lease liabilities$— $624 
Conversion of convertible notes into common stock prior to initial public offering$— $460 
Fixed assets purchased in accrued expenses or accounts payable$— $32 
Nine Months Ended
September 30,
20232022
Cash flows from operating activities:
Net loss$(26,246)$(21,557)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation302 290 
Amortization of right-of-use assets, operating leases582 473 
Non-cash interest expense1,061 3,509 
Change in fair value of embedded derivative(429)286 
Change in fair value of warrant liability17 — 
Stock-based compensation842 380 
Gain on extinguishment of promissory note payable(604)— 
Loss on disposal of property and equipment, net105 4 
Changes in operating assets and liabilities:
Prepaid expenses and other current assets(41)(1,513)
Other long-term prepaid assets— 114 
Accounts payable63 1,407 
Accrued expenses and other current liabilities1,910 (70)
Deferred research obligation228 2,152 
Operating lease liabilities(588)(378)
Net cash used in operating activities(22,798)(14,903)
Cash flows from investing activities:
Purchases of property and equipment(66)(559)
Proceeds from sale of property and equipment34 — 
Net cash used in investing activities(32)(559)
Cash flows from financing activities:
Cash acquired in connection with the reverse merger24,000 — 
Merger transaction costs(2,366)— 
Proceeds from issuance of promissory notes payable10,000 — 
Proceeds from issuance of Series C-1 convertible preferred stock, net of issuance costs— 10,009 
Payment for purchase of treasury stock(150)— 
Exercise of stock options127 17 
Net cash provided by financing activities31,611 10,026 
Effect of foreign currency on cash— — 
Net increase (decrease) in cash, cash equivalents, and restricted cash8,781 (5,436)
Cash, cash equivalents and restricted cash at beginning of period8,414 10,045 
Cash, cash equivalents and restricted cash at the end of the period$17,195 $4,609 
Components of cash, cash equivalents and restricted cash:
Cash and cash equivalents$14,841 $1,839 
Restricted cash2,354 2,770 
Total cash, cash equivalents and restricted cash$17,195 $4,609 
Supplemental disclosure of noncash investing and financing activities:
Loss on disposal of property and equipment$139 $4 
Accretion of promissory note discount from embedded derivative$130 $— 
Accretion of promissory note to face value$897 $— 
Settlement of promissory notes payable$10,028 $— 
Interest expense from convertible notes payable$34 $— 
Accretion of convertible notes discount from embedded derivative$— $1,639 
Accretion of convertible notes discount from issuance costs$— $219 
Interest expense from convertible notes payable$— $574 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ANGION BIOMEDICA CORP.ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements



Note 1—Description of the Business and Financial Condition
Elicio Therapeutics, Inc. (“Elicio” or the “Company”) was incorporated in Delaware as Vedantra Pharmaceuticals Inc., in August 2011. Elicio is a clinical-stage biotechnology company developing a pipeline of novel immunotherapies for the treatment of cancer. In December 2018, Elicio formed a wholly-owned subsidiary, Elicio Securities Corporation (“ESC”), a Massachusetts corporation. ESC is an investment company. Elicio and ESC are collectively referred to as “Elicio” throughout these unaudited consolidated financial statements.
Reverse Merger Transaction
On January 17, 2023, the Company entered into a definitive merger agreement (the “Merger Agreement”) with Angion Biomedica Corp. (“Angion” or,), a clinical development corporation. In accordance with the “Company”) isterms and conditions of the Agreement and Plan of Merger and Reorganization, by and among Angion, Arkham Merger Sub, Inc., a biopharmaceutical company that has focused onwholly owned subsidiary of Angion (“Merger Sub”), and Elicio Operating Company, Inc. (“Former Elicio”), pursuant to which Merger Sub merged with and into Former Elicio, with Former Elicio surviving the discovery, development and commercializationmerger as a wholly owned subsidiary of novel small molecule therapeutics to address acute organ injuries and fibrotic diseases. The Company was incorporated in Delaware in 1998.
Initial Public Offering and the Concurrent Private PlacementAngion (the “Merger”).
On February 9, 2021,June 1, 2023, the Company completed the Merger in accordance with the terms and conditions of the Merger Agreement and Angion changed its name from “Angion Biomedica Corp.” to “Elicio Therapeutics, Inc.” Immediately following the consummation of the Merger, there were approximately 9.7 million shares of the Company’s registration statement on Form S-1 (File No. 333-252177) relating to its initial public offering (“IPO”) of common stock became effective. The IPO closedoutstanding on February 9, 2021 at which timea fully-diluted basis, with Former Elicio equity holders collectively owning approximately 65.2% of the Company issued 5,750,000 sharesand Angion equity holders collectively owning approximately 34.8% of its common stock at a price to the public of $16.00 per share, which included the full exercise by the underwriters of their option to purchase an additional 750,000 shares of common stock. In addition to the shares being sold in the IPO, the Company, sold an additional 1,562,500 shares of its common stock at the public offering price of $16.00 per share to entities affiliated with Vifor International, Ltd., an existing stockholder (the “Concurrent Private Placement”) for gross proceeds of $25.0 million.in each case on a fully diluted basis.
The IPO and Concurrent Private Placement generated aggregate net proceedsMerger was accounted for as a reverse recapitalization, with Former Elicio being treated as the acquirer for accounting purposes. See discussions of approximately $107.0 million, after deducting the underwriting discounts and commissions, private placement fee and offering expenses payable by the Company.
Intransactions in connection with the closing of the IPO, all outstanding shares of convertible preferred stockMerger at Note 3 - Merger and outstanding convertible notes automatically converted into shares of common stock. Subsequent to the closing of the IPO, there were no shares of convertible preferred stock outstanding and there were no convertible notes outstanding. In connection with the closing of the IPO, the Company restated its Restated Certificate of Incorporation to change the authorized capital stock to 300,000,000 shares designated as common stock, and 10,000,000 shares designated as preferred stock, with a par value of $0.01 per share and $0.01 per share, respectively.
Reduction in Force
On January 4, 2022, the Company announced a reduction in force impacting somewhat less than half of its employees. The Company’s decision to engage in this reduction resulted from an assessment of its internal resources needs, given the results of the Phase 3 study of ANG-3777 in patients at risk for delayed graft function (DGF) would likely not support a regulatory approval in that population and the Phase 2 study in acute kidney injury associated with cardiac surgery involving cardiopulmonary bypass (CSA-AKI) would not support a Phase 3 trial in that indication. This reduction was a cost-cutting measure across the organization to support the Company’s 2022 primary focus on the clinical development of its investigational asset ANG-3070, a highly selective, oral tyrosine kinase receptor inhibitor in development as a treatment for fibrotic diseases, as well as advancing preclinical assets to IND-enabling studies. In connection with the reduction in force, the Company incurred termination costs, which include severance, benefits, and related costs of approximately $3.2 million, which are in restructuring expense for the nine months ended September 30, 2022. The Company paid $2.2 million during the nine months ended September 30, 2022 and expects to pay the remaining $1.0 million on or before September 2023.
On July 25, 2022, the Company announced a process to explore strategic options for enhancing and preserving shareholder value (the “2022 Strategic Realignment”). Potential strategic options to be explored or evaluated as part of the process may include, but are not limited to merger, reverse merger, other business combination, sale of assets, licensing, or other strategic transactions. In connection with the 2022 Strategic Realignment, the Company also announced the discontinuation of development of ANG-3070 for all indications and the discontinuation of most other development activities pending conclusion of the strategic process. In connection with the foregoing, the Company also announced an additional reduction in force of the majority of its 37 employees. This reduction in force, expected to be completed by the end of 2022, is a cash preservation measure and impacts employees across the organization. In connection with the reduction in force, the Company recorded a charge of $2.8 million in the third quarter of 2022. The Company paid $1.7 million during the three months ended
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

September 30, 2022 and expects to pay the remaining $1.1 million on or before December 2022. These charges are primarily one-time termination benefits payable in cash.Related Transactions.
Liquidity and Capital ResourcesGoing Concern
Since inception, the Company has devoted substantially all of its efforts and financial resources to conducting research and development activities, including drug discovery and pre-clinical studies and clinical trials, establishing and maintaining its intellectual property portfolio, organizing and staffing the Company, business planning, raising capital and providing general and administrative support for these operations. The Company has incurredexperienced net losses from operations and negative cash flows from operating activities since inception. As of September 30, 2022,2023, the Company had $55.1an accumulated deficit of $133.3 million. The Company expects that its operating losses and operating cash flows will continue for the foreseeable future as the Company continues to develop its product candidates.
As of September 30, 2023, the Company had $14.8 million in cash and cash equivalentsequivalents. The Company’s losses from operations, negative operating cash flows and an accumulated deficit, as well as the additional capital needed to fund operations for at least twelve months following the issuance of $247.5 million.
The Company has evaluated and concluded there are no conditions or events, considered in the aggregate, thatcondensed consolidated financial statements, raise substantial doubt about itsthe Company’s ability to continue as a going concern. The Company expects to incur substantial expenditures in the foreseeable future for the development of its product candidates and will require additional financing to continue this development. The Company plans to address this condition through the sale of Company common stock in public offerings and/or private placements, debt financings, or through other capital sources, including licensing arrangements, partnerships and collaborations with other companies or other strategic transactions, but there is no assurance these plans will be completed successfully or at all.If the Company is unable to obtain additional capital when and as needed to continue as a going concern, it might have to further reduce or scale back its operations and/or liquidate its assets, and the values it receives for a period of one year followingits assets in liquidation or dissolution could be significantly lower than the date thesevalues reflected in its financial statements.
The accompanying unaudited condensed consolidated financial statements are issuedhave been prepared on a basis that assumes that the Company will continue as a going concern, which contemplates the realization of assets and believes its existing cash and cash equivalents will be sufficient to meetsatisfaction of liabilities in the projected operating requirements for at least 12 months following the issuance datenormal course of itsbusiness. The unaudited condensed consolidated financial statements.statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
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ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements (Continued)

Note 2—Summary of Significant Accounting Policies
Basis of Presentation
The Company's unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting, consistent in all material respects with those applied in the Company’s audited financial statements and accompanying notes for the year ended December 31, 2022 and 2021 included in the Company’s proxy statement/prospectus/information statement on Form S-4 filed April 26, 2023, as amended (the “Form S-4”). Any reference in these notes to applicable guidance is meant to refer to the authoritative accounting principles generally accepted in the United States as found in the Accounting Standard Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). This report should be read in conjunction with the audited consolidated financial statements in the Form S-4.
The condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiary, Angion Biomedica Europe Limited, which was dissolved on March 16, 2021, and its wholly owned subsidiary, Angion Pty Ltd. (“Angion Pty”), which was established on August 22, 2019.2019, and its wholly-owned subsidiary, ESC, which was established in Massachusetts in December 2018. The Company established Angion Pty, Ltd., an Australian subsidiary, for the purpose of qualifying for research credits for studies conducted in Australia.Australia and ESC is an investment company. All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts reported in the Company’s condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period presentation.
The Company’s significant accounting policies are described in Note 2 to its consolidated financial statements for the year ended December 31, 2021,2022, included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2022 (the “Annual Report on Form 10-K”).S-4. There have been no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2022.2023.
Unaudited Interim Financial Information
TheSince Former Elicio was determined to be the accounting acquirer in connection with the Merger, for periods prior to the Merger, the condensed consolidated financial statements ofwere prepared on a stand-alone basis for Former Elicio and did not include the Company included herein have been prepared, without audit, pursuantcombined entities activity or financial position. Subsequent to the rules and regulations ofMerger, the SEC. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the yearthree and nine months ended December 31, 2021September 30, 2023 include the acquired business from June 2, 2023 through September 30, 2023, and inassets and liabilities at their acquisition date fair value. Historical share and per share figures of the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s consolidated financial position, results of operations and comprehensive loss, and cash flows. The condensed consolidated balance sheet as of December 31, 2021 was derived from the audited financial statements as of that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAPFormer Elicio have been condensed or omitted from this Quarterly Report, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction withretroactively restated based on the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K. The results for any interim period are not necessarily indicativeexchange ratio of results for any future period.0.0181.
Segments
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as one operating segment.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

The Company has determined that the chief executive officer is the CODM.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requiresCompany’s management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the datedates of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to the useful lives of long-lived assets, the measurement of stock-based compensation, accruals for research and development activities, income taxes and revenue recognition. The Company bases its estimates on historical experience and on other relevant assumptions that are reasonable under the circumstances. Actual results could materially differ from those estimates. Significant estimates reflected in these condensed consolidated financial statements include but are not limited to, the accrual of research and development expenses, the valuation of stock-based awards, the operating right of use assets and operating lease liability, and going concern.
Foreign Currency Translation and Transactions
The United States Dollar (“USD”) is the functional currency for the Company’s operations outside the United States. Accordingly, nonmonetary assets and liabilities originally acquired or assumed in other currencies are recorded in USD at the exchange rates in effect at the date they were acquired or assumed. Monetary assets and liabilities denominated in other currencies are translated into USD at the exchange rates in effect at the balance sheet date. Translation adjustments are recorded in other comprehensive income (loss) in the consolidated statements of operations and comprehensive loss. Gains and losses realized from non-USD transactions, including intercompany balances not considered as permanent investments, denominated in currencies other than an entity’s
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ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements (Continued)

functional currency are included in other income (expense) in the accompanying condensed consolidated statements of operations and comprehensive loss.
Concentrations of Credit Risk and Off-Balance Sheet Risk
Cash andFinancial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash, cash equivalents, areand restricted cash. At times, cash balances deposited at major financial instruments potentially subject to concentrations of credit risk. The Company's cash and cash equivalents are deposited in accounts at large financialbanking institutions and amounts may exceed the federally insured limits.limit. The Company regularly monitors the financial condition of the institutions in which it has depository accounts and believes the risk of loss is minimal. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash balances due to the financial position of the depository institution in which those deposits are held.
Additionally, the Company established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity.
The Company maintains its cash equivalents in securities and money market funds with original maturities less than three months.
The Company has no financial instruments with off-balance sheet risk of loss.accounts.
Cash and Cash Equivalents
The Company considers allCash and cash equivalents are comprised of deposits at major financial banking institutions and highly liquid investments with an original maturitiesmaturity of three months or less to be cash equivalents.at the date of purchase. As of September 30, 20222023 and December 31, 2021,2022, the Company’s cash equivalents were held in institutions in the United States and include deposits in a money market fund which were unrestricted as to withdrawal or use.

Restricted Cash
Restricted cash consists of cash securing a collateral letter of credit issued in connection with the Company’s facility operating lease and a research grant. See notes 6 and 10 for further discussion.
Fair Value Measurement
Certain assets and liabilities are carried at fair value under GAAP. Fair value is determined usingThe Company follows the principles ofguidance prescribed by ASC Topic 820, Fair Value MeasurementMeasurements. Fair, which establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value that focuses on an exit price which is described as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard establishes a three-level hierarchy for fair value hierarchy prioritizes and definesmeasurements based on the nature of inputs toused in the valuation techniquesof an asset or liability as follows:of the measurement date.

Level 1:    Observable inputs such as unadjusted quoted prices in active markets.markets for identical assets or liabilities at measurement.

Level 2:    Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability either directlyliability. These include quoted prices for similar assets or through corroboration with observable market data.liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3:    Unobservable inputs.
The inputs usedthat are supported by little or no market activity and that are significant to measure the fair value of an assetthe assets or a liabilityliabilities.

To the extent that valuation is based on models or inputs that are categorized within levelsless observable or unobservable in the market, the determination of the fair value hierarchy. Therequires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value measurement is greatest for instruments categorized in its entirety in the sameLevel 3. A financial instrument’s level ofwithin the fair value hierarchy asis based on the lowest level of any input that is significant to the fair value measurement.
The Company'scarrying amounts of financial instruments reflected in the condensed consolidated balance sheets for cash and cash equivalents, current and non-current restricted cash, accounts payable, and accrued expenses approximate their respective fair values because of the short-term maturity of those financial instruments.
Property and Equipment

Property and equipment are carriedrecorded at cost which approximates fair value due toand depreciated using the short-term naturestraight-line method over the estimated useful life of these instruments.the asset. Upon sale or retirement, the cost and accumulated depreciation are eliminated
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ANGION BIOMEDICA CORP.ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements (Continued)

Revenuefrom their respective accounts, and the resulting gain or loss is recorded in the consolidated statement of operations and comprehensive loss. Repair and maintenance expenditures are charged to expense as incurred.

Asset Class
Estimated
Useful Lives
Equipment5 years
Furniture and fixtures3 years
Leasehold improvementsTerm of the lease

Impairment of Long-Lived Assets
Periodically, the Company evaluates its long-lived assets, which consist primarily of property and equipment, and right of use asset for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. During the three and nine months ended September 30, 2023 and 2022, no impairments have occurred.

Derivative Financial Instruments
The convertible and promissory notes include embedded derivatives requiring bifurcation in accordance with ASC 815, Derivatives and Hedging. The valuation of the instruments are determined using widely accepted valuation techniques including the probability weighted expected return model. The fair value was determined using a model with the assumptions for equity value proceeds, probability of occurrence of various liquidation scenarios, timeline to liquidity and risk-free interest rate. The fair value of the derivative instruments are measured at each reporting period with changes in fair value reported in earnings (loss).
Convertible Preferred Stock
Former Elicio had classified convertible preferred stock, par value $0.06 per share, (the “Preferred Stock”) as temporary equity in the accompanying consolidated balance sheets due to certain changes in control events that are outside of the Former Elicio’s control, including sale or transfer of control of Former Elicio, as holders of the Preferred Stock could cause redemption of the shares in these situations. Former Elicio did not accrete the carrying values of the Preferred Stock to the redemption values since a liquidation event was not considered probable as of December 31, 2022. Subsequent adjustments of the carrying values to the ultimate redemption values would be made only if it becomes probable that such a liquidation event will occur. During the prior reporting period an immaterial error was discovered in Former Elicio's 2022 audited financial statements whereas the amount of Series A and Series B Preferred Stock did not include 41,887 and 609,755 shares, respectively, that were deemed to be issued due to the antidilutive protection triggered by the Series C shares issued in October 2022 at a price below $1.00. As a result of the Merger, all Former Elicio preferred stock were converted into Company does not have any products approved for sale and has not generated any revenue from product sales. The Company’s revenue to date has been primarily derived from government funding consisting of U.S. government grants and contracts and revenue under its license agreements.common stock on June 1, 2023. See Note 7.
Contract Revenue
Income Taxes
The Company accountsprovides for revenue earned from contractsincome taxes in accordance with customers under Accounting Standards Update (“ASU”) No. 2014-09,ASC Topic 740, Revenue from Contracts with Customers (Topic 606)Income Taxes (“ASC 606”). Under ASC 606, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps:     
(1)    Identify the contract(s) with a customer;
(2)    Identify the performance obligations in the contract;
(3)    Determine the transaction price;
(4)    Allocate the transaction price to the performance obligations in the contract;Deferred tax assets and
(5)    Recognize revenue when (or as) the Company satisfies a performance obligation.
At contract inception, the Company assesses the goods or services promised within each contract, whether each promised good or service is distinct, and determines those that liabilities are performance obligations. The Company then recognizes as revenue the amount of the transaction price allocated to the respective performance obligation when or as the performance obligation is satisfied.
The Company enters into agreements under which it may obtain upfront payments, milestone payments, royalty payments and other fees. Promises under these arrangements may include research licenses, research services, including selection campaign research services for certain replacement targets, the obligation to share information during the research and the participation of alliance managers and in joint research committees, joint patent committees and joint steering committees. The Company assesses these promises within the context of the agreements to determine the performance obligations.
Licenses of Intellectual Property: If a license to its intellectual property is determined to be distinct from the other promises or performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring proportional performance for purposes of recognizing revenue from non-refundable, upfront payments. The Company evaluates the measure of proportional performance each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.
Milestone payments: The Company evaluates the probability of whether regulatory and development milestones will be reached and estimates the amounts to be included in the transaction price using the most likely amount method. The Company evaluates factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to achieve the particular milestone in making this assessment. If it is probable a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. At the end of each reporting period, the Company re-evaluates the probability of achievement of milestones and any related constraint, and if necessary, adjust the estimate of the overall transaction price.
Sales-based milestones and royalties: For sales-based royalties, including milestone payments based on the leveldifference between the financial reporting and tax bases of sales,assets and liabilities using enacted tax rates and laws in effect in the Company determines whether the sole or predominant item toyears in which the royalties relatedifferences are expected to reverse. A valuation allowance is a license. Whenprovided if, based upon the licenseweighted available evidence, it is the sole or predominant item to which the sales-based royalty relates, the Company recognize revenue at the later of: (i) when the related sales occur, or (ii) when the performance obligation to whichmore likely than not that some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date,deferred tax assets will not be realized.
The Company provides reserves for potential payments of tax to various tax authorities related to uncertain tax positions when the Company management determines that it is probable that a loss will be incurred related to these matters and the amount of the loss is reasonably determinable. The Company has not recognizedidentified any sales-based royalty revenue resulting from any license agreement.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)September 30, 2023.

Deferred revenue, which is a contract liability, represents amounts received by the Company for which the related revenues have not been recognized because one or more of the revenue recognition criteria have not been met. The current portion of deferred revenue represents the amount expected to be recognized within one year from the consolidated balance sheet date based on the estimated performance period of the underlying performance obligation. The noncurrent portion of deferred revenue represents amounts expected to be recognized after one year from the condensed consolidated balance sheet date through the end of the performance period of the performance obligation.
Grant Revenue
The Company concluded that the Company's government grants are not within the scope of ASC 606 as they do not meet the definition of a contract with a customer. The Company has concluded the grants meet the definition of a contribution and are non-reciprocal transactions, and has also concluded Subtopic 958-605, Not-for-Profit-Entities-Revenue Recognition, does not apply, as the Company is a business entity and the grants are with governmental agencies.
In the absence of applicable guidance under GAAP, the Company developed a policy recognizing grant revenue when the allowable costs are incurred and the right to payment is realized.
The Company believes this policy is consistent with the overarching premise in ASC 606, to ensure revenue recognition reflects the transfer of promised goods or services to customers in an amount reflecting the consideration the Company expects to be entitled to in exchange for those goods or services, even though there is no exchange as defined in ASC 606. The Company believes the recognition of revenue as costs are incurred and amounts become realizable is analogous to the concept of transfer of control of a service over time under ASC 606.
Research and Development

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ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements (Continued)

Research and development costs include, but are not limitedcharged to payrollexpense as incurred and personnelconsist of expenses laboratoryincurred in performing research and development activities, including salaries and benefits, materials and supplies, preclinical studies, compound manufacturingexpenses, stock-based compensation expense, depreciation of equipment, contract services, and other outside expenses. The Company accrues for costs consulting costsincurred by external service providers, based on estimates of services performed and allocated overhead, including rent, equipment, depreciationcosts.These estimates include the level of services performed by the third parties, and utilities.other indicators of the services completed.Based on the timing of payments to service providers, the Company may also record prepaid expenses for those service providers that will be recognized as expenses in future periods as the related services are rendered. Research and development costs may be offset by research and development refundable tax rebates received by the Company’s wholly-owned Australian subsidiary.
Leases
ASU No. 2016-02, Leases (“ASC 842”) establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and corresponding lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations as well as the reduction of the ROU asset.
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on specific facts and circumstances, the existence of an identified asset(s), if any, and the Company’s control over the use of the identified asset(s), if applicable. Operating lease liabilities and their corresponding ROU assets are recorded based on the present value of future lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company will utilize the incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

The Company has agreements with various Contract Research Organizations (“CROs")elected to combine lease and third-party vendors. Research and development accruals of amounts due to the CROnon-lease components as a single component. Operating leases are estimated based on the level of services performed, progress of the studies, including the phase or completion of events, and contracted costs. The estimated costs of research and development provided, but not yet invoiced, are included in accrued expensesrecognized on the condensed consolidated balance sheet. Payments made to CROs under such arrangementssheet as ROU lease assets, current lease liabilities and non-current lease liabilities. Fixed rents are included in advancethe calculation of the performancelease balances, while variable costs paid for certain operating and pass-through costs are excluded. Lease expense is recognized over the expected term on a straight-line basis.
Research Grant
The Company recognizes the amount of grant income based on the activity in allowable expenses covered under the grant and has elected to recognize the funds earned as an offset to the related servicesresearch expenses recorded in operations. Advances from the grant that have yet to be recognized are recorded as prepaid expensesrestricted cash if the grant requires the funds to be isolated from general cash and other current assets until the services are rendered.cash equivalents. The Company makes judgmentsrecords a liability for any research activity that is required under the grant but has not yet been performed. The liability is recorded as deferred research obligation on the condensed consolidated balance sheets.
Stock-based Compensation
The Company issues stock-based awards to employees and estimatesnon-employees, generally in determining the accrued expenses balanceform of stock options. The Company accounts for stock-based awards in each reportingaccordance with ASC 718, Compensation—Stock Compensation, which requires all stock-based payments, to be recognized in the condensed consolidated statements of operations based on their fair values. The expense is recognized on a straight line basis over the requisite service period, which is generally the vesting period. As actual costs become known,The Company has elected to account for option forfeitures as they occur.
The Company uses the Black-Scholes option-pricing model (“Black-Scholes”) to determine the weighted-average fair value of options granted, which uses as inputs the fair value of the Company adjusts its accrued expenses. For the three and nine months ended September 30, 2022 and 2021,common stock, assumptions the Company has not experienced any material differences between accrued costsmakes for the volatility of its Company common stock, the expected term of its stock options, the risk-free interest rate for a period that approximates the expected term of its stock options and actual costs incurred.its expected dividend yield.
Advertising CostsCompensation cost of awards that contain a performance condition are recognized when success is considered probable during the performance period.
Advertising costs are expensedPrior to the Merger, there was no public market for Former Elicio’s common stock. The estimated fair value of the Company common stock underlying Former Elicio’s stock-based awards was determined by Former Elicio’s board of directors as incurred. Forof the threegrant date of each option grant. To determine the fair value of Former Elicio’s common
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ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements (Continued)

stock underlying option grants, Former Elicio’s board of directors considered, among other things, input from management and nine months ended September 30, 2022valuations of Former Elicio's common stock prepared by third-party valuation firms performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants' Accounting and 2021, advertising costs were not material.Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. Following the Merger, the fair value of Company common stock is based on the closing stock price on the date of grant as reported on the Nasdaq Global Select Market.
Net Loss Per Share
Basic net loss per share of Company common stock is computed by dividing net loss attributable to Company common stockholders by the weighted average number of shares of Company common stock outstanding for the period. Diluted net loss per share excludes the potential impact of Company common stock options, warrants and unvested shares of restricted stock and restricted stock units because their effect would be anti-dilutive due to the Company's net loss. Since the Company had net losses for the three and nine months ended September 30, 20222023 and 2021,2022, basic and diluted net loss per common share are the same.

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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

Recently IssuedAdopted Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments (ASU No. 2016-13), which requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial assets and certain other instruments, including but not limited to, available-for-sale debt securities. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. As an emerging growth company,The Company adopted ASU No. 2016-13 is effective for the Company for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact ofon January 1, 2023 and the adoption of ASU No. 2016-13the standard had no material impact on its condensed consolidated financial statements.
Note 3—RevenueMerger and Deferred RevenueRelated Transactions
Contract Revenue
As described in Note 1, Former Elicio merged with a wholly owned subsidiary of Angion on June 1, 2023. The Company’s contract revenue has been generated from payments received pursuant toMerger was accounted for as a license agreement (the “Vifor License”) with Vifor International, Ltd. (“Vifor Pharma”), with headquarters located in Switzerland. The Company recognized revenue from upfront payments overreverse recapitalization under U.S. GAAP. Former Elicio was considered the term of its estimated period of performance using a cost-based input method under Topic 606.
Vifor License Agreement
In November 2020, the Company entered into a license agreement with Vifor Pharma, granting Vifor Pharma global rights (excluding China, Taiwan, Hong Kong and Macau) to develop, manufacture and commercialize ANG-3777 in all therapeutic, prophylactic and diagnostic usesaccounting acquirer for renal indications, including forms of acute kidney injury (AKI), and congestive heart failure (collectively, the Renal Indications). Pursuant to the Vifor License, the Company received $60.0 million in upfront and equity payments, including $30.0 million in up-front cash received in November 2020, and a $30.0 million equity investment, $5.0 million of whichfinancial reporting purposes. This determination was a convertible note that subsequently converted into common stock with the IPO and $25.0 million of which was received in the Concurrent Private Placement with the Company’s IPO. The Company is also eligible to receive post-approval milestones of up to approximately $260.0 million and sales-related milestones of up to $1.585 billion, providing a total potential deal value of up to $1.905 billion (subject to certain specified reductions and offsets), plus tiered royalties on net sales of ANG-3777 at royalty rates of up to 40%. Under the Vifor License, the Company is responsible for executing a pre-specified clinical development plan designed to obtain regulatory approvals of ANG-3777 for delayed graft function (DGF) and AKI associated with cardiac surgery involving cardiopulmonary bypass (CSA-AKI). Basedbased on the ANG-3777 clinical trial data disclosed infacts that, immediately following the fourth quarter of 2021, the Company does not expect to receive any additional clinical, post-approval, or sales milestones, or royalties, as it does not intend to continue to pursue the clinical development plan for ANG-3777 set forth in the Vifor License.
On October 26, 2021, the Company announced that its Phase 3 trial of ANG-3777 in DGF did not achieve its primary endpoint and the data from the Phase 3 trial was not expected to provide sufficient evidence to support an indication in the studied DGF population. On December 9, 2021, the Company announced its Phase 2 trial of ANG-3777 in CSA-AKI did not achieve its primary endpoint and the data from the Phase 2 trial was not expected to provide sufficient evidence to supportMerger: (i) Former Elicio stockholders own a Phase 3 trial in the studied CSA-AKI population. Angion and Vifor continue to analyze data from the CSA-AKI trial. In 2022, the Company and Vifor Pharma continue to work to complete the planned analysessubstantial majority of the resultsvoting rights; (ii) Former Elicio designated a majority (six of nine) of the clinical trials announced in the fourth quarter of 2021 and to discuss the future of the collaboration based upon such analyses.
Vifor Pharma may terminate the Vifor License at its sole discretion upon the earlier of (i) the acceptance for filing of an NDA covering products incorporating ANG-3777 filed with the FDA (after completion of the relevant Phase 3 clinical trial for such products), or (ii) the third anniversary of the effective date of the Vifor License. Both the Company and Vifor Pharma may terminate the Vifor License in its entirety if the other is in material breach of the Vifor License and has not cured the breach (if curable) within 60 days, or 90 days for incurable breach. In certain circumstances, in the eventinitial members of the Company’s material breachboard of directors of the Vifor License, Vifor Pharma may terminatecombined company; (iii) Former Elicio’s executive management team became the Vifor Licensemanagement team of the combined company; and (iv) the Company was named Elicio Therapeutics, Inc. and is headquartered in Boston, Massachusetts. Accordingly, for accounting purposes, the Merger was treated as the equivalent of Former Elicio issuing stock to acquire the net assets of Angion. As a result of the Merger, the net assets of Angion were recorded at their acquisition-date fair value, which approximated book value due to the short-term nature of the instruments, in the financial statements of Former Elicio and the reported operating results prior to the Merger were those of Former Elicio. Historical common share amounts of Former Elicio have been retroactively restated based on the exchange ratio of 0.0181 (the “Exchange Ratio”). It was concluded that any in-process research and development assets that remained as of the Merger would be de minimis when compared to the cash and investments obtained through the Merger.
Prior to the effective time of the Merger, on June 1, 2023, in connection with respectthe transactions contemplated by the Merger Agreement, the Company effected a reverse stock split of Angion’s common stock, par value $0.01 per share (“Angion common stock”), at a ratio of 10:1 (the “Reverse Stock Split”). At the effective time of the Merger, each outstanding share of Former Elicio capital stock (after giving effect to certain major markets. In addition, both parties havethe automatic conversion of all shares of Former Elicio preferred stock into shares of Former Elicio common stock and excluding any shares held as treasury stock by Former Elicio or held or owned by Angion or any subsidiary of Angion or Former Elicio and any dissenting shares) was converted into the right to terminatereceive 0.0181 shares of Angion common stock, which resulted in the Vifor License upon insolvencyissuance by Angion of an aggregate of 5,375,751 shares of Angion common stock to the stockholders of Former Elicio (the “Exchange Shares”), and a total of 8,387,025 shares of the other party.Company common stock being issued and outstanding immediately following the effective time of the Merger. In addition, Angion assumed the Elicio 2022 Equity Incentive Plan and the Elicio 2012 Equity Incentive Plan (the “Elicio Plans”) and each outstanding and unexercised option to purchase Former Elicio common stock and each outstanding and unexercised warrant to
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ANGION BIOMEDICA CORP.ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements (Continued)

The Company identifiedpurchase Former Elicio capital stock were adjusted with such stock options and warrants henceforth representing the following performance obligations inright to purchase a number of shares of the Vifor License based upon the clinical development plan for ANG-3777: (1) the global license (excluding greater China), (2) the development services, including the clinical development services including a post-approval confirmatory study, the technical development services and regulatory services and (3) the required participation on Joint Committees for coordination and oversight. The Company determined that the license is not capable of being distinct dueCompany’s common stock equal to the specialized natureExchange Ratio multiplied by the number of shares of Former Elicio common stock previously represented by such options, and warrants at an exercise price equal to the exercise price of Former Elicio capital stock divided by the Exchange Ratio.
In connection with execution of the development servicesMerger Agreement, Angion made a bridge loan to be providedFormer Elicio pursuant to a note purchase agreement and promissory notes up to an aggregate principal amount of $12.5 million, issued with a 20% original issue discount, with an initial closing held substantially concurrently with the execution of the Merger Agreement for a principal amount of $6.25 million on account of a $5.0 million loan and an additional closing for a principal amount of $6.25 million on account of a $5.0 million loan upon delivery by Former Elicio to Angion of Former Elicio’s audited financial statements for the year ended December 31, 2022.
As part of the recapitalization, the Company obtained the assets and accordingly, this promise was combined withliabilities listed below (in thousands):

Cash and cash equivalents$24,000 
Other current assets539 
Promissory notes10,028 
Accrued liabilities(2,438)
Net assets acquired$32,129 


Per the development services and participation in the joint committees as one single performance obligation.
In order to determine the transaction price, the Company evaluated all the payments to be received during the durationterms of the contract. Certain milestones and additional fees were considered variable consideration, which were not included in the transaction price at contract inception. The Company determined the transaction price at the inceptionMerger Agreement, upon completion of the Vifor License was $15.0 million, which represents 50% of the $30.0 million upfront payment due to the potential setoff defined in the contract.
Based on the ANG-3777 clinical trial data disclosed in the fourth quarter of 2021 and the Company’s decision to discontinue the current clinical development plan for ANG-3777 DGF as described above, the Company adjusted the transaction price to include an additional $15.0 million in previously constrained variable consideration. The Company also reassessed the performance period as the Company is currently closing out the planned analyses from both trials. As of September 30, 2022, the Company has completed substantiallyMerger, all performance obligation under the Vifor License and had recognized all deferred revenue under the agreement.
Using the cost-based input method, the Company recognizes revenue based on actual costs incurred as a percentage of total estimated costs as the Company completes its performance obligation. The cumulative effect of revisions to estimated costs to complete the Company’s performance obligation will be recorded in the period in which changes are identified and amounts can be reasonably estimated. These actual costs consist primarily of internal full time equivalent (FTE) efforts and third-party contract costsobligations owed by Former Elicio related to the Vifor License.
Forpromissory notes were automatically forgiven and the three months ended September 30, 2022amount advanced by Angion, along with any accrued and 2021,unpaid interest, was credited towards the net cash balance used to calculate the assets and liabilities listed above. Upon settlement of the promissory notes, the Company recognized contract revenuea gain of $0.6 million related to extinguishment of the Vifor Licensepromissory notes.

The Company recognized the net assets acquired, excluding the promissory notes and transaction costs of zero$2.9 million, as a reduction to additional paid-in capital in the condensed consolidated statements of convertible preferred stock and $1.5 million, respectively. Forstockholders’ equity (deficit) for the three and nine months ended September 30, 2022 and 2021, the Company recognized contract revenue related to the Vifor License of $2.3 million and $2.4 million, respectively. As of September 30, 2022 and December 31, 2021, zero and $2.3 million, respectively, was recorded as deferred revenue, current, on the condensed consolidated balance sheets related to the Vifor License.2023.
Note 4—Fair Value Measurements
The following tables present the Company's financial assets and liabilities measured at fair value on a recurring basis and their assigned levels within the fair value hierarchy (in thousands):
September 30, 2022September 30, 2023
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Money market funds(1)
Money market funds(1)
$10,737 $— $— $10,737 
Money market funds(1)
$16,302 $— $— $16,302 
Total assetsTotal assets$10,737 $— $— $10,737 Total assets$16,302 $— $— $16,302 
Warrant liabilitiesWarrant liabilities$— $— $24 $24 Warrant liabilities$— $— $26 $26 
Total liabilitiesTotal liabilities$— $— $24 $24 Total liabilities$— $— $26 $26 
December 31, 2021December 31, 2022
Level 1 Level 2Level 3TotalLevel 1 Level 2Level 3Total
Money market funds(1)
Money market funds(1)
$87,252 $— $— $87,252 
Money market funds(1)
$5,340 $— $— $5,340 
Total assetsTotal assets$87,252 $— $— $87,252 Total assets$5,340 $— $— $5,340 
Warrant liabilities$— $— $114 $114 
Total liabilities$— $— $114 $114 
_________________
(1) Included in cash, and cash equivalents, and restricted cash on the condensed consolidated balance sheets. This balance includes cash requirements settled on a nightly basis.
There were no transfers made among the three levels in the fair value hierarchy during periods presented.
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ANGION BIOMEDICA CORP.ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements (Continued)

As part of the Merger transaction, Former Elicio adopted Angion’s warrant liabilities. The following table presents a summary of changes in Level 3 in the fair value of the Company’s common stock warrant liability (in thousands):
September 30,
2022		December 31,
2021
Balance, beginning of the period$114 $10,704 
Net exercise of warrants— (13,509)
Change in fair value(90)2,919 
Balance, end of the period$24 $114 
September 30,
2023		December 31,
2022
Balance, beginning of the period$— $— 
Existing Angion Warrant Liability9 — 
Change in fair value17 — 
Balance, end of the period$26 $— 
Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with assets and liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.
The fair value of the warrants issued by the Company has been estimated using a variant of the Black Scholes option pricing model.Black-Scholes. The underlying equity included in the Black Scholes option pricing modelBlack-Scholes was valued based on the equity value implied from sales of preferred and common stock at each measurement date. The fair value of the warrants was impacted by the model selected as well as assumptions surrounding unobservable inputs including the underlying equity value, expected volatility of the underlying equity, risk free interest rate, and the expected term.
The Company records the change in the fair value of common stock warrants in change in fair value of warrant liability in the condensed consolidated statements of operations.
The fair value of the common stock warrant liability was estimated using the following assumptions:
September 30,
2022		December 31,
2021
Weighted average strike price$7.60$7.60
Contractual term (years)5.96.7
Volatility (annual)117.5%124.0%
Risk-free rate4.2%1.4%
Dividend yield (per share)0.0%0.0%
Note 5—Balance Sheet Components
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
September 30,
2022		December 31,
2021
Equipment$866 $866 
Furniture and fixtures34 34 
Leasehold improvements68 68 
Total property and equipment968 968 
Less: accumulated depreciation(664)(517)
Property and equipment, net$304 $451 
Depreciation expense for each of the three and nine months ended September 30, 2022 and 2021 was immaterial.
September 30,
2023		June 1,
2023
Weighted average strike price$76.00$76.00
Contractual term (years)4.95.2
Volatility (annual)153.2%100.0%
Risk-free rate4.6%3.9%
Dividend yield (per share)0.0%0.0%
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ANGION BIOMEDICA CORP.ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements (Continued)

Note 5—Balance Sheet Components
Prepaid and Other Current Assets
Prepaid and other current assets consisted of the following (in thousands):
September 30,
2022		December 31,
2021
Angion Pty tax receivable$7 $781 
Prepaid insurance1,103 275 
Security deposit101 131 
Other326 498 
Total prepaid and other current assets$1,537 $1,685 
September 30,
2023		December 31,
2022
Prepaid research and development contract services$2,379 $2,132 
Advanced professional fees209 648 
Prepaid insurance496 104 
Miscellaneous receivables102 — 
Other prepaid expenses and other current assets233 36 
Total prepaid and other current assets$3,419 $2,920 

Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
September 30,
2023		December 31,
2022
Equipment$1,678 $1,787 
Furniture and fixtures374 359 
Leasehold improvements132 124 
Total property and equipment2,184 2,270 
Less: accumulated depreciation(1,412)(1,123)
Property and equipment, net$772 $1,147 
Depreciation expense for the three and nine months ended September 30, 2023 was immaterial and $0.3 million, respectively. Depreciation expense for the three and nine months ended September 30, 2022 was $0.1 million and $0.3 million, respectively.
Other long-term prepaid assets
Other long-term prepaid assets consisted of the advance payments for clinical trial services, totaling $2.8 million as of September 30, 2023 and December 31, 2022, respectively.
Accrued Expenses
Accrued expenses consisted of the following (in thousands):
September 30,
2022		December 31,
2021
Accrued compensation$356 $2,023 
Accrued restructuring (Note 1)2,072 — 
Accrued direct research costs1,999 764 
Accrued operating expenses481 432 
Total accrued expenses$4,908 $3,219 
September 30,
2023		December 31,
2022
Accrued professional fees$951 $180 
Accrued compensation and benefits1,577 1,491 
Accrued research and development1,875 260 
Other accrued expenses13 4 
Total accrued expenses$4,416 $1,935 

Note 6—Stockholders' Equity
Common Stock
Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are not entitled to receive dividends, unless declared by the board of directors.

Note 7—Stock-Based Compensation
2015 Plan6 — Research Grant
In June 2019,September 2022, Former Elicio entered into a grant agreement with the Company approved an AmendedGastro-Intestinal (“GI”) Research Foundation, a not-for-profit organization focused on supporting research to treat, cure and Restated 2015 Equity Incentive Plan (the “2015 Plan”) permitting the granting of incentive stock options, non-statutory stock options, restricted stock and other stock-based awards. Following the effectiveness of the 2021 Equity Incentive Plan (“2021 Plan”), the Company ceased making grants under the 2015 Plan. However, the 2015 Plan continues to govern the terms and conditions of the outstanding awards granted under it. Shares of common stock subject to awards granted under the 2015 Plan that cease to be subject to such awards by forfeiture or otherwise after the termination of the 2015 Plan will be available for issuance under the 2021 Plan.
2021 Plan
On January 25, 2021, the Company's board of directors approved the 2021 Plan which permits the granting of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to employees, directors, officers and consultants. On January 25, 2021, shares of common stock equal to 11% of the post-IPO capitalization were authorized for issuance under the 2021 Plan. The 2021 Plan provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2022, by the lesser of 5% of the Company’s common stock outstanding on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s board of directors.prevent digestive
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ANGION BIOMEDICA CORP.ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements (Continued)

Stock Options
The fair value of each employeediseases. Of the $2.8 million award, $2.3 million was received in September 2022 and non-employee stock option grantthe remaining $0.5 million was estimated onreceived in June 2023 with the date of grant using the Black-Scholes option-pricing model based on the following assumptions:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Risk-free interest rate3.1%0.9%1.7%0.7%
Expected dividend yield0.0%0.0%0.0%0.0%
Expected term in years6.056.035.905.99
Expected volatility71.9%-72.0%74.6%-74.9%70.8%-72.5%73.8%-86.8%
Each of these inputs is subjective and generally requires significant judgment.
Expected Term—The expected term represents the period the Company’s stock-based awards are expected to be outstanding and is determined using the simplified method, which is based on the mid-point between the contractual term and vesting period.
Volatility—The Company determines volatility based on the historical volatilities of comparable publicly traded life science companies over a period equal to the expected term because it does not have sufficient trading history for its common stock price. The comparable companies were chosen based on the similar size, stage in the life cycle, or area of specialty. The Company will continue to apply this process until a sufficient amount of historical information regarding volatility on its own stock becomes available.
Risk-Free Interest Rate—The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grantcompletion of the award for time periods approximately equal to the expected term of the award.
Dividend Yield—The Company has never paid and has no plans to pay any dividends on its common stock. Therefore, the Company has used an expected dividend yield of zero.
Fair Value of Common Stock—For periods prior to the IPO, the Company determined the estimated fair value of its common stock using the Subject Company Transaction Method which includes the back-solve and scenario-based methods (Probability Weighted Expected Return Method) to arrive at estimated fair values. Subsequent to the IPO, the fair value was based on the closing price of the Company’s common stock on the grant date.
The following table summarizes information and activity related to the Company’s stock options:
Number of
Stock Options		Weighted Average
Exercise Price		Weighted Average
Remaining Contractual Life
(in years)		Total
Intrinsic Value
(in thousands)
Outstanding as of December 31, 20214,230,162 $8.92 8.4$— 
Options granted2,257,100 1.93 
Options forfeited(914,621)9.37 
Outstanding as of September 30, 20225,572,641 $7.48 7.7$— 
Options vested and exercisable3,862,362 $7.34 6.1$— 
The aggregate intrinsic value in the above table is calculated as the difference between the estimated fair value of the Company's common stock price and the exercise price of the stock options. The weighted average grant date fair value per share for the stock option grants during the three months ended September 30, 2022 and 2021 was $0.74 and $10.13, and was $1.18 and $8.97 during the nine months ended September 30, 2022 and 2021 respectively. As of September 30, 2022, the total unrecognized compensation related to unvested stock option awards granted was $2.2 million, which the Company expects to recognize over a weighted-average period of approximately 2.6 years.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

Restricted Stock Units (RSUs)
The following table summarizes information and activity related to the Company’s RSUs:
Number of
Restricted Stock Units		Weighted
Average Grant
Date Fair Value
Per Share
Outstanding at December 31, 202117,504 $9.51 
Vested and released(1,094)$9.51 
Outstanding as of September 30, 202216,410 $9.51 
Performance-based Restricted Stock Units (PSUs)
The Company granted 556,530 PSUs in June 2019. Vesting of the PSUs is dependent upon the satisfaction of both a service condition and a performance condition, an initial public offering or a change of control,development efforts as defined in the 2015 Plan. Asagreement. For the IPO occurred in February 2021, the performance condition was met and 185,510 PSUs vested and were released upon the closing of the IPO. Another 185,510 PSUs vested and were released in June 2021 upon the second anniversary of the grants. The remaining 185,510 PSUs vested and were released in June and July 2022 upon the third anniversary of the grants, therefore, as of September 30, 2022, the Company had no PSUs outstanding.
Stock-based Compensation Expense
The following table summarizes total stock-based compensation expense recorded in the condensed consolidated statements of operations (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Research and development$(1,143)$1,152 $(1,055)$5,104 
General and administrative380 1,032 1,722 4,915 
Total$(763)$2,184 $667 $10,019 
The decrease in total stock-based compensation expense for three and nine months ended September 30, 2022 is primarily due to the reversal of expense upon the forfeiture of awards in connection with the reduction in force events that occurred on January 4, 2022 and July 25, 2022. See Note 1 for additional information.
Employee Stock Purchase Plan
In January 2021, the board of directors of2023, the Company approved the Employee Stock Purchase Plan (the “ESPP”). The ESPP was effective on the date immediately prior to the effectiveness of the Company's registration statement relating to the IPO. A total of 390,000 shares of common stock were initially reserved for issuance under the ESPP. The ESPP provides that the number of shares reservedincurred zero and available for issuance will automatically increase each January 1, beginning on January 1, 2022, by the lesser of 1% of the Company’s common stock outstanding on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s board of directors. The offering period$1.9 million in research and purchase period will be determined by the board of directors. As of September 30, 2022, 689,583 shares under the ESPP remain available for purchase and no offerings have been authorized.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

Note 8—Warrants
As of September 30, 2022 and December 31, 2021, outstanding warrants to purchase the Company's common stock consisted of the following:
ClassificationExercise PriceExpiration DateSeptember 30,
2022		December 31,
2021
Warrants issued with Conversion of Notes to Common StockEquity$8.03 8/31/23232,287 232,287 
Warrants issued with Units in the Equity OfferingEquity$8.03 8/31/23875,034 875,034 
Broker Warrants issued with Equity OfferingEquity$0.01 8/31/251,297 1,297 
Consultant WarrantsLiability$7.60 8/31/2839,505 39,505 
Total Warrants1,148,123 1,148,123 
In accordance with ASC 815, the warrants classified as liabilities are recorded at fair value at the issuance date, with changes in the fair value recognized in the condensed consolidated statements of operations at the end of each reporting period. Refer to Note 4 for changes in the fair value recognized during the periods reported.
In accordance with ASC 815, the warrants classified as equity do not meet the definition of a derivative and are classified in stockholders' equity in the condensed consolidated balance sheets.
There was no warrant activity during the nine months ended September 30, 2022.
Note 9—Commitments and Contingencies
Operating Leases
The Company leases office and laboratory space in Uniondale, New York from NovaPark, a related party, under an agreement classified as an operating lease expiring on June 20, 2026. The Company's lease does not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees. Variabledevelopment expenses generally represent the Company's share of the landlord's operating expenses, including management fees. The Company does not act as a lessor or have any leases classified as financing leases.
The Company leased office space in Fort Lee, New Jersey, comprising approximately 2,105 square feet for approximately $0.1 million per year, under a non-cancelable operating lease through March 31, 2022. However, this arrangement was excluded from the calculation of lease liabilities and right of use assets as its term was less than one year. The lease was subject to charges for common area maintenance and other costs. The Company did not renew the New Jersey lease and it expired on March 31, 2022.
In July 2020, the Company entered into a lease for office furniture in San Francisco, California set to expire in July 2025, with an immaterial annual lease payment.
In February 2021, the Company entered into a lease for clinical and regulatory space in Newton, Massachusetts (the “Newton lease”), comprising approximately 6,157 square feet for approximately $0.2 million per year, under a non-cancelable operating lease through June 30, 2024. Pursuant to the Newton lease, the Company had four months of free rent starting from February 15, 2021 to June 14, 2021. The Company has one option to extend the term of the lease for three years with nine months’ notice.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

The following table summarizes the components of the Company's operating lease costs (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Operating lease cost$301 $325 $1,015 $914 
Variable lease cost108 67 252 282 
Short-term lease cost6 16 18 58 
Total operating lease cost$415 $408 $1,285 $1,254 
The following table summarizes quantitative information about the Company's operating leases (dollars in thousands):
Nine Months Ended
September 30,
20222021
Operating cash flows from operating leases$966 $861 
Right-of-use assets exchanged for operating lease liabilities$— $624 
Weighted-average remaining lease term—operating leases (in years)3.33.5
Weighted-average discount rate—operating leases9.5 %10.1 %
As of September 30, 2022, maturities of lease liabilities were as follows (in thousands):
Year Ended December 31,Amounts
2022 (remaining three months)$322 
20231,305 
20241,209 
20251,104 
2026516 
Total4,456 
Less present value discount(750)
Operating lease liabilities$3,706 
Financing obligation
In 2021, the Company entered into an immaterial sale and leaseback arrangement with a third-party financing institution as a financing mechanism to fund certain of its capital expenditures primarily related to operating equipment, whereby the physical asset is sold concurrent with an agreement to lease the asset back. The initial leaseback term is 42 months starting from November 2021. The arrangement includes a renewal option as well as a repurchase option at fair value with a cap at the end of the term. The arrangement does not qualify as an asset sale as control of the equipment did not transfer to the third party and is accounted for as a failed sale-leaseback. Therefore, the Company accounts for the arrangement as a financing transaction and records the proceeds received as a financing obligation. The leased assets are included in property and equipment, net on the condensed consolidated balance sheets and are subject to depreciation.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

The following table summarizes quantitative information about the Company's financing obligation for the nine months ended September 30, 2022 (dollars in thousands):
Cash flow information:
Payments of financing obligation
Operating cash flows from financing obligation$28 
Financing cash flows from financing obligation$43 
Other information:
Weighted-average remaining lease term (in years)2.6
Weighted-average discount rate (in percent)1.1 %
Carrying value of leased asset included in Property and Equipment, net$223 
Depreciation associated with the Property and Equipment$46 
As of September 30, 2022, maturities of the financing obligation were as follows (in thousands):
Year Ended December 31,Amounts
2022 (remaining three months)$25 
202394 
202494 
202531 
Total$244 
Litigation
The Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims. From time to time, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities.
Indemnification
The Company enters into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third party with respect to its technology. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these arrangements is not determinable. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the fair value of these agreements is minimal.
Note 10—Income Taxes
The Company’s income tax provision was immaterial and the effective tax rate was 0% in each ofthis project. For both the three and nine months ended September 30, 2022, the Company incurred $0.1 million in research and 2021. The difference between the Company's effective tax rate of 0% and the U.S. federal statutory tax rate of 21% is primarily duedevelopment expenses related to net operating losses in this period which are offset by the corresponding valuation allowance. The Company has provided a full valuation allowance against its net deferred tax assets as it is more likely than not such assets would not be realized.project.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income in which those temporary differences become deductible. Based on the available objective evidence, management believes it is more likely than not the net deferred tax assets at September 30, 2022 will not be realizable. Accordingly, management has maintained a full valuation allowance against its net deferred tax assets at September 30, 2022. Each reporting period, management evaluates the need for a valuation allowance on the Company’s deferred tax assets by jurisdiction and adjust the Company’s estimates as more information becomes available.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

The Company is required to recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, the position will be sustained upon examination. Tax years starting from 2015 and forward are subject to examination by the U.S. federal and state tax authorities. These years are open due to net operating losses and tax credits remain unutilized from such years. The Company's policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. As of September 30, 2022, there were no accruals for interest and penalties related to uncertain tax positions.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

Note 11—Employee Benefit Plan
Employee Benefit Plan
The Company sponsors a retirement savings plan intended to qualify for favorable tax treatment under Section 401(a) of the Code, and contains a cash or deferred feature intended to meet the requirements of Section 401(k) of the Code. Participants may make pre-tax and certain after-tax (Roth) salary deferral contributions to the plan from their eligible earnings up to the statutorily prescribed annual limit under the Code. Participants who are 50 years of age or older may contribute additional amounts based on the statutory limits for catch-up contributions. Participant contributions are held in trust as required by law. No minimum benefit is provided under the plan. An employee’s interest in his or her salary deferral contributions is 100% vested when contributed. Contributions, subject to established limits, are matched at a dollar for dollar rate up to 3% of an individual’s earnings and fifty cents on the dollar on the next 4-5% of earnings.
Note 12—Net Loss Per Share
The following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to common stockholders, which excludes shares which are legally outstanding but subject to repurchase by the Company (in thousands, except share and per share data):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Numerator
Net loss attributable to common stockholders$(8,988)$(15,704)$(32,367)$(69,463)
Denominator:
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted30,113,40729,829,57730,016,07927,671,310
Net loss per share attributable to common stockholders, basic and diluted$(0.30)$(0.53)$(1.08)$(2.51)
The table below provides potentially dilutive securities not included in the calculation of the diluted net loss per share because to do so would be anti-dilutive:
Nine Months Ended
September 30,
20222021
Shares issuable upon exercise of stock options5,572,6414,398,898
Shares issuable upon the exercise of warrants1,148,1231,148,123
Unvested shares under restricted stock unit grants16,41038,472
Unvested shares under restricted stock grants—3,645
Total6,737,1745,589,138
Note 13—Related Party Transactions
On February 25, 2022,2023, the Company entered into a Separation Agreement with Itzhak D. Goldberg, M.D., who formerly served as Executive Chairman and Chief Scientific Officer and currently serves as a director and Chairman Emeritus on the Company’s board of directors. Pursuant to the terms of the Separation Agreement, Dr. Goldberg will receive severance benefits of approximately $1.1 million. Under the 2015 Plan and 2021 Plan, Dr. Goldberg has vested his PSUs and stock options and will have the right to exercise vested stock options, so long as he remains in continuous servicesecond grant agreement with the Company as a director on the board of directors or otherwise.
On March 1, 2022, the Company entered into a Separation AgreementGI Research Foundation for $3.1 million, with Elisha Goldberg, former employee and son of Itzhak D. Goldberg, M.D. Pursuant to the terms of the Separation Agreement, Mr. Goldberg will receive severance benefits of approximately $0.5 million. Mr. Goldberg will also have the right to exercise vested stock
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

options he may havesuch amount received under the 2015 Plan or 2021 Plan until December 31, 2022, which extended the exercise period by 11 months.
Ohr Investment
In a series of investments in November 2013 and July 2017, the Company invested a total of $150,000 to acquire a membership interest in Ohr Cosmetics, LLC (“Ohr”), an affiliated company.
The Company owns, and the family of the Company's Chairman Emeritus owns, approximately 2.4% and 81.3%, respectively, of the membership interests in Ohr. The Chairman Emeritus' son is the manager of Ohr.
In November 2013, the Company granted Ohr an exclusive worldwide license, with the right to sublicense, under the Company's patent rights covering one of the Company's CYP26 inhibitors, ANG-3522, for the use in treating conditions of the skin or hair. Sublicensees may not grant further sublicenses under the Company's patent rights other than to affiliates of such sublicensees and entities with which sublicensees are collaborating for the research, development, manufacture and commercialization of the products. Ohr will pay the Company a royalty at a rate in the low single digits on gross revenue of products incorporating ANG-3522, and milestone payments potentially totaling up to $9.0 million based on achievement of sales milestones. Royalties and milestone payments will be paid until the later of 15 years from the first commercial salenet of a licensed product or the last to expire licensed patent rights.$0.5 million credit. The royalty rate is subject to adjustments under certain circumstances. The Company believes the Ohr License was made on terms no less favorable to the Company than those the Company could obtain from unaffiliated third parties.
No revenue from this license agreement was recognized for the periods presented.
NovaPark Investment and Lease
Asgrant funds available as of September 30, 2022,2023 are $1.7 million, which are reflected in restricted cash and the Company had a 10% interestdeferred research obligation in NovaPark. Members of the Company's Chairman Emeritus’ immediate family own a majority of the membership interests of NovaPark. The Company accounts for its aggregate 10% investment in NovaPark under the equity method.
The following table provides the activity for the NovaPark investment foraccompanying consolidated balance sheets. For the three and nine months ended September 30, 2022 and 2021 (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Beginning balance$865 $693 $723 $672 
Earnings from equity method investment9 31 151 76 
Distribution from NovaPark— (12)— (36)
Ending balance$874 $712 $874 $712 
The2023 the Company rents office and laboratory space in Uniondale, New York from NovaPark under a lease expiring June 20, 2026. The Company recorded rent expense for fixed lease payments of $0.3incurred $1.4 million in each of the three months ended September 30, 2022research and 2021 and $0.9 million in each of the nine months ended September 30, 2022 and 2021. The Company recorded rent expense for variabledevelopment expenses related to this project.
The award money for both agreements was earned and recognized as a contra research and development expense as the leaseexpenses were incurred.


Note 7—Convertible Preferred Stock, Common Stock and Stockholders' Equity

Authorized Shares
The Company's current Amended and Restated Certificate of $0.1 million in each of the three months ended September 30, 2022 and 2021 and $0.3 million in each of the nine months ended September 30, 2022 and 2021. See Note 9.
Convertible Notes
In connection with the IPO in February 2021, Victor Ganzi, Gilbert Omenn and Karen Wilson, directors of the Company, and Raj Venkatesan, brother of the Chief Executive Officer and director of the Company, converted all their outstanding convertible notes into an aggregate of 149,500Incorporation, as amended, authorizes 300,000,000 shares of common stock, with a conversion pricepar value $0.01 per share, and 10,000,000 shares of $11.57. Aspreferred stock, par value $0.01 per share.
Convertible Preferred Stock
Former Elicio’s convertible preferred stock consisted of September 30, 2022, there were no convertible notes outstanding.Series A preferred stock (“Series A Preferred Shares”), Series B preferred stock (“Series B Preferred Shares”) and Series C preferred stock (“Series C Preferred Shares”).
Series C Convertible Preferred Stock
In May 2022, Former Elicio authorized the sale and issuance of up to 760,200 shares of $0.06 par value Series C Preferred Shares at an original issuance price of $66.30 per share and up to 325,800 shares of Series C Preferred for the settlement of the Convertible Notes Payable. The Series C Preferred Shares financing was structured to be issued in rolling closes in 2022.
From the period May through September 2022, Former Elicio issued 772,579 shares of Series C Preferred Shares for gross proceeds of approximately $11.0 million. Former Elicio incurred cash issuance costs of approximately $1.0 million in connection with these shares.
Conversion of Convertible Preferred Stock
On June 1, 2023, Former Elicio completed the IPOMerger with Angion in February 2021, Jay Venkatesan, M.D.,accordance with the Chief Executive Officer and directorMerger Agreement. Under the terms of the Company converted all his outstandingMerger Agreement, immediately prior to the effective time of the Merger, each share of Former Elicio’s preferred stock was converted into a share of Former Elicio’s common stock. At the closing of the Merger, the Company issued an aggregate of 165,0945,375,751 shares of its common stock to Former Elicio stockholders, based on an exchange ratio of 0.0181 shares of the Company’s common stock for each share of Former Elicio’s common stock outstanding immediately prior to the Merger, including those shares of common stock issued upon conversion of the Former Elicio preferred stock. No shares and 772,579 shares of convertible preferred stock were issued during the nine months ended September 30, 2023 and 2022, respectively.
The authorized, issued and outstanding shares of the convertible preferred stock and liquidation preferences of Former Elicio as of December 31, 2022 were as follows (in thousands, except share and per share amounts):
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ANGION BIOMEDICA CORP.ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements (Continued)

Authorized SharesShares Issued and OutstandingAggregate Liquidation AmountProceeds Net of Liquidation Costs
Series A Convertible Preferred Shares132,387 132,387 $7,495$7,495
Series B Convertible Preferred Shares1,927,375 1,927,375 $72,803$62,944
Series C Convertible Preferred Shares4,888,798 2,938,158 $41,816$40,621
Total Preferred Shares6,948,560 4,997,920 

The Series A and Series B Preferred Shares were deemed changed as of October 18, 2022 into 132,387 and 1,927,375 preferred shares (retroactively restated for the reverse recapitalization as described in Note 3) due to the antidilutive protection triggered by the Series C shares issued in October 2022 at a price below $1.00.
As a result of the Merger, the aggregate amount of 4,997,920 shares of Former Elicio preferred stock (retroactively restated for the reverse recapitalization as described in Note 3) were converted into 4,997,920 shares of Former Elicio's common stock to be exchanged for the same number of shares of the Company’s common stock.
Note 8—Stock-Based Compensation

2012 Plan and 2022 Plan
Pursuant to the Merger Agreement, the Company assumed the Former Elicio 2022 Equity Incentive Plan and the Former Elicio 2012 Equity Incentive Plan (the “Former Elicio Plans”) and all stock options issued and outstanding under the Former Elicio Plans. Each outstanding and unexercised option to purchase Former Elicio common stock was adjusted with such Company stock options henceforth representing the right to purchase a conversion pricenumber of $11.57 per share. shares of the Company’s common stock based on an exchange ratio of 0.0181. Any restriction on the exercise of any Former Elicio stock option assumed by the Company will continue in full force and effect and the term, exercisability, vesting schedule, accelerated vesting provisions, and any other provisions of such Former Elicio stock option will otherwise remain unchanged; provided, however, that the Company’s board of directors or a committee thereof will assume the responsibility and the authority of Former Elicio’s board of directors or any committee thereof with respect to each Former Elicio stock option assumed by the Company.

2015 Plan

In June 2019, Angion approved an Amended and Restated 2015 Equity Incentive Plan (the “2015 Plan”) permitting the granting of incentive stock options, non-statutory stock options, restricted stock and other stock-based awards. Following the effectiveness of the 2021 Equity Incentive Plan (“2021 Plan”), the Company ceased making grants under the 2015 Plan. However, the 2015 Plan continues to govern the terms and conditions of the outstanding awards granted under it. Shares of common stock subject to awards granted under the 2015 Plan that cease to be subject to such awards by forfeiture or otherwise after the termination of the 2015 Plan will be available for issuance under the 2021 Plan.

2021 Plan and Amendment to 2021 Plan

On January 25, 2021, Angion’s board of directors approved the 2021 Plan (“2021 Plan”) which permits the granting of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to employees, directors, officers and consultants. The 2021 Plan provides that the number of shares reserved and available for issuance will automatically increase each January 1 by the lesser of 5% of the Company’s common stock outstanding on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s board of directors. On March 17, 2023, Angion’s board of directors approved an amendment to the 2021 Plan to increase the cumulative number of shares of common stock reserved for issuance thereunder by 30,113 shares.
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ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements (Continued)


As of September 30, 2023, 570,271 shares and 91,707 shares remain available for future grants under the 2021 plan and 2022 thereplan, respectively.
Stock Options
The following table summarizes information and activity related to the Company’s stock options:
Number of
Stock Options		Weighted Average
Exercise Price		Weighted Average
Remaining Contractual Life
(in years)		Total
Intrinsic Value
(in thousands)
Outstanding as of December 31, 2022854,076 $5.24 7.72$— 
Options granted186,572 9.96 
Existing Angion Options outstanding351,656 61.99 
Options exercised(61,791)10.08 
Forfeited (unvested)(19,579)33.97 
Outstanding as of September 30, 20231,310,934 $19.99 7.68$2,841 
Options vested and exercisable597,723 $38.50 5.59$645 
The aggregate intrinsic value in the above table is calculated as the difference between the estimated fair value of the Company's common stock price and the exercise price of the stock options. 186,572 stock options were no sharesgranted in the nine months ended September 30, 2023. The weighted average grant date fair value per share for the stock option grants during the nine months ended September 30, 2023 was $9.96. As of convertible preferredSeptember 30, 2023, the total unrecognized compensation related to unvested stock outstanding.option awards granted was $2.7 million, which the Company expects to recognize over a weighted-average period of approximately 1.64 years.
Consultant FeesStock-based Compensation Expense
The following table summarizes total stock-based compensation expense recorded in the condensed consolidated statements of operations (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Research and development$13 $68 $425 $200 
General and administrative326 42 417 180 
Total$339 $110 $842 $380 
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ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements (Continued)
Angion paid consulting fees under an agreement

The fair value of each option is estimated on the date of grant using Black-Scholes with the wifeassumptions noted in the table below. The fair value of an award with only a service condition is amortized as compensation cost on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. Compensation cost of awards that contain a performance condition are recognized when success is considered probable during the performance period. The Company has elected to account for forfeitures as they occur, rather than estimating the number of awards that are expected to vest. The risk-free interest rate is estimated using the weighted average rate of return on U.S. Treasury notes with a life that approximates the expected life of the option. The expected term of options granted to employees was calculated using the simplified method, which represents the average of the contractual term of the option and the weighted-average vesting period of the option. The Company uses the simplified method because it does not have sufficient historical option exercise data to provide a reasonable basis upon which to estimate expected term. The contractual life of the option was used for the expected life of options granted to non-employees. Expected volatility is based on the weighted average of the historical volatility of a peer group of publicly traded companies. The assumed dividend yield is based upon the Company's expectation of not paying dividends in the foreseeable future.
The fair value of each employee and non-employee stock option grant was estimated on the date of grant using Black-Scholes based on the following assumptions.

OptionsThree months ended September 30,Nine months ended September 30,
2023202220232022
Risk-free interest rate4.4%2.3%3.7%2.3%
Expected dividend yield0.0%0.0%0.0%0.0%
Expected term in years (employees)6.066.546.006.54
Expected volatility71.7% - 72.1%60.3% - 62.1%71.9% - 72.5%60.3% - 62.1%
In March 2021 and June 2022, certain employees of the Company early exercised options to purchase shares of the Company’s Chairman Emerituscommon stock. The shares had not fully vested at the time of exercise and were recorded as an unvested option exercise liability. As the shares vest, the Company recognizes the shares and related expense as issuance of common stock upon settlement of restricted stock on the Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for Company management services. Consultant fees paidthe periods ended September 30, 2023 and December 31, 2022.
Employee Stock Purchase Plan
In January 2021, the board of directors of Angion approved the Employee Stock Purchase Plan (the “ESPP”). The ESPP was effective on the date immediately prior to the wifeeffectiveness of the Angion's registration statement relating to the IPO. The offering period and purchase period was determined by Angion’s board of directors. Pursuant to the Merger Agreement, the Company assumed the ESPP. No offering periods or purchasing periods were immaterialactive as of September 30, 2023. As of September 30, 2023, 68,958 shares under the ESPP remain available for purchase and no offerings have been authorized.
Restricted Stock Units
In March 2021, Former Elicio granted restricted stock units (“RSUs”) with service and performance vesting conditions to an employee. The completion of the Merger satisfied the performance vesting criteria and triggered accelerated vesting for all unvested RSUs. As a result, the employee received 41,005 shares on June 1, 2023. To pay for the tax withholdings that were due upon vesting of the RSUs, the employee sold 14,455 shares to the Company, which are held in treasury stock as of September 30, 2023.
Note 9—Warrants
In accordance with ASC 815, the warrants classified as liabilities are recorded at fair value at the issuance date, with changes in the fair value recognized in the condensed consolidated statements of operations at the end of each reporting period. Refer to Note 4 for changes in the fair value recognized during the periods reported.
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ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements (Continued)

In accordance with ASC 815, the warrants classified as equity do not meet the definition of a derivative and are classified in stockholders' equity in the condensed consolidated balance sheets.
There was no warrant activity during the nine months ended September 30, 2023, other than the assumption of the previously issued Angion warrants by the Company.

The following table summarizes information regarding common stock warrants outstanding at September 30, 2023:
WarrantsWeighted
Average
Exercise
Price		Weighted Average Life (years)
Outstanding at December 31, 2022144,814 $53.59 6.5
Angion Warrants assumed3,950 76.00 4.9
Outstanding at September 30, 2023148,764 $54.19 6.5

Note 10—Commitments and Contingencies

Operating Leases

In July 2021, the Company signed an operating lease for office and laboratory space in Boston, Massachusetts (the “Boston Lease”).The Boston lease commenced in February 2022 with the term set to expire in January 2030. The lease has rent payments escalating annually, which total $11.1 million in the aggregate. As a result, at the commencement of the lease the Company recognized a right-of-use lease asset of $8.0 million with a corresponding lease liability of $8.0 million based on the present value of the minimum rental payments. In addition, the Company will make payments for operating expenses and real estate taxes. In June 2023, the Company secured a letter of credit for the deposit on the lease and has a deposit in the amount of $0.7 million, which was reported as Restricted Cash on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022.

As part of the Merger Agreement, the Company also assumed a lease for clinical and regulatory space in Newton, Massachusetts (the “Newton lease”), comprising approximately 6,157 square feet for approximately $0.2 million per year, under a non-cancelable operating lease through June 30, 2024.

Lease expense for all leases for the three and nine months ended September 30, 2023 was $0.4 million and $1.1 million, respectively, and $0.3 millionand$0.9 million, for the three and nine months ended September 30, 2022, respectively. All expenses are included in operating expenses in the accompanying condensed consolidated statements of operations and 2021. This consultant agreement was terminated in February 2022.comprehensive loss.
OtherThe following table summarizes quantitative information about the Company's operating leases (dollars in thousands):
Dr. Michael Yamin,
Nine Months Ended
September 30,
20232022
Operating cash flows from operating leases$1,002 $798 
Right-of-use assets exchanged for operating lease liabilities$— $8,017 
Weighted-average remaining lease term—operating leases (in years)6.27.3
Weighted-average discount rate—operating leases7.7 %8.0 %
As of September 30, 2023, maturities of lease liabilities were as follows (in thousands):
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ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements (Continued)

Year Ended December 31,Amounts
2023 (remaining three months)$375 
20241,427 
20251,349 
20261,383 
20271,425 
Thereafter3,232 
Total9,191 
Less present value discount(2,038)
Operating lease liabilities7,153 
Less: operating lease liability, current portion(938)
Operating lease liability, noncurrent portion$6,215 
Legal Proceedings
From time to time, the Company may be involved in legal proceedings, as well as demands, claims and threatened litigation, which arise in the normal course of its business or otherwise.
The outcome of any future litigation is uncertain. Such litigation, if not resolved, could result in substantial costs to the Company, including any costs associated with the indemnification of directors and officers.
The Company may be exposed to litigation in connection with its products under development and operations. The Company’s policy is to assess the likelihood of any adverse judgments or outcomes related to legal matters, as well as ranges of probable losses. The Company is not aware of any material legal matters.

License Agreements

In July 2012 and January 2016, Former Elicio licensed certain intellectual property from a former memberuniversity. The license term for both licenses extends until terminated by either party under certain provisions. The Company is required to pay certain contractual maintenance and milestone payments related to clinical trials and royalties on product sales over the term of the board of directorscontract, with minimum annual royalty payments commencing in the calendar year after commercialization. In January 2019, Former Elicio licensed additional intellectual property and terminated a license obtained in July 2012 from the university. No commercialization royalties have been achieved.

Future minimum annual maintenance payments are $0.1 million for the year ended December 31, 2023 and for each year thereafter. Future minimum annual payments are due until the termination of the agreement.
Note 11—Income Taxes
The Company isdid not record a Scientific Advisorprovision or benefit for Pearl Cohen Zedek Latzer Baratz LLP (Pearl Cohen). Duringincome taxes during the eachthree and nine months ended September 30, 2023 and 2022. As of September 30, 2023 and December 31, 2022, the Company continues to maintain a full valuation allowance against all of its deferred tax assets in light of its history of cumulative net losses.
Note 12—Net Loss Per Share
The Company has reported losses since inception and has computed basic net loss per share attributable to common stockholders by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period, without consideration for potentially dilutive securities. The Company computes diluted net loss per share of common stock after giving consideration to all potentially dilutive shares of common stock, including options to purchase common stock and preferred stock, outstanding during the period determined using the treasury-stock and if-converted methods, except where the effect of including such securities would be antidilutive. Because the Company has reported net losses since inception, these potential shares of common stock and preferred stock have been anti-dilutive and basic and diluted loss per share were the same for all periods presented.

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ELICIO THERAPEUTICS, INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements (Continued)

Basic and diluted net loss per share attributable to common stockholders was calculated at September 30, as follows (in thousands, except share and per share data):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Numerator
Net loss$(10,658)$(7,198)$(26,246)$(21,557)
Denominator:
Weighted-average shares used in computing net loss per share, basic and diluted8,376,384317,5128,240,326314,619
Net loss per share, basic and diluted$(1.27)$(22.67)$(3.19)$(68.52)
The table below provides potentially dilutive securities not included in the calculation of the diluted net loss per share because to do so would be anti-dilutive:
Nine Months Ended
September 30,
20232022
Convertible preferred stock— 2,180,699 
Shares issuable upon exercise of stock options2,8367,582
Shares issuable upon the exercise of warrants148,764144,815
Options to purchase Common Stock1,310,934224,319
Total1,462,5342,557,415
Note 13—Related Party Transactions
The Company paid $0.1 million and $0.7 million for the three and nine months ended September 30, 2023, respectively, and $0.1 million and $0.2 million for the three and nine months ended September 30, 2022, and 2021, the Company paid Pearl Cohen an immaterial amount in legal fees, respectively.
In January 2018, the Company also entered into a consulting agreement with Dr. Yamin pursuant to which he agreed to providerespectively, for consulting services to the Company in the areas of biomedical research and development. Consultant fees paid to Dr. Yamin were immaterial in in each of the three and nine months ended September 30, 2022 and 2021. Dr. Yamin resigned from the Company's board of directors in March 2020. Dr. Yamin's resignation was not due to any disagreementprovided by an entity affiliated with the Company, theCompany’s former interim chief financial officer and former board or management of the Company.





member.


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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-Kaudited financial statements and accompanying notes for the year ended December 31, 2021.2022 and 2021 included in our proxy statement/prospectus/information statement on Form S-4 filed April 26, 2023, as amended (the “Form S-4”). In addition to the historical financial information, this discussion contains forward-looking statements involving risks, assumptions and uncertainties, such as statements of our plans, objectives, expectations, intentions, forecasts and projections. Our actual results and the timing of selected events could differ materially from those discussed in these forward-looking statements as a result of several factors, including those set forth under the section of this Quarterly Report on Form 10-Q titled “Risk Factors,”Factors” and the Current Report on Form 8-K filed on June 2, 2023, which you should read carefully to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section titled “Forward-Looking Statements” at the beginning of this report.
Overview
We are a biopharmaceuticalclinical-stage biotechnology company that has focused on the discovery, development, and commercializationdeveloping a pipeline of novel small molecule therapeutics to address chronic and progressive fibrotic diseases. Our goal has been to transform the treatment paradigm for patients suffering from these potentially life-threatening conditions for which there are no approved medicines or where existing approved medicines have limitations. Our product candidates and programs include ANG-3070, a highly selective oral tyrosine kinase receptor inhibitor (TKI) in development as a treatment for fibrotic diseases, a ROCK2 preclinical program targeted towards the treatment of fibrotic diseases, a CYP11B2 preclinical program targeted towards diseases related to aldosterone synthase dysregulation, and a CYP26 (retinoic acid metabolism) inhibitor program targeted towards a number of indications, including cancer.
Prior to January 2022, our lead product was ANG-3777, a hepatocyte growth factor (HGF) mimetic we were evaluating in multiple indications of acute organ injury, including delayed graft function (DGF) andimmunotherapies for the treatment of acute kidney injury (AKI) associated with cardiac surgery involving cardiopulmonary bypass (CSA-AKI). In 2021,cancer. Through our Amphiphile, or AMP, platform technology, our goal is to re-engineer the body’s immune response to defeat diseases using potent lymph node targeted vaccines and immunotherapies.

Our proprietary AMP technology precisely traffics immuno-modulatory molecules to the lymph nodes, the “schoolhouse” of the immune system, enhancing the magnitude, potency, functionality, and durability of the immune response. The lymph nodes are a primary site in the body where most immune cells are located. The lymph nodes are where the immune system naturally collects information about health and disease in order to orchestrate the mechanisms of immunity which protect us from pathogens and tumors. By efficiently targeting these sites within the body we alsoare taking advantage of the power and the unique biology of the lymph nodes to improve responses across a broad range of diseases. We are utilizing our lymph-node targeting technology to build a pipeline of therapeutic cancer vaccines, which will be the focus of the company.

Our core business is the development of therapeutic cancer vaccines. ELI-002, our lead clinical program, is designed to stimulate an immune response against the KRAS mutations driving 25% of solid tumors. ELI-002 2P, our 2-peptide formulation designed to treat cancers driven by G12D and G12R mutations in KRAS, is currently being studied ANG-3777in an ongoing phase 1 (AMPLIFY-201) trial in patients with severe COVID-19 related pneumoniamutant (m)KRAS-driven pancreatic ductal adenocarcinoma (“PDAC”) and colorectal cancer. Initial data for ELI-002 2P was presented at high risk for acute respiratory distress syndrome (ARDS). On October 26, 2021, we announced the Phase 3 trial2023 American Society of ANG-3777 in DGF did not achieve its primary endpointClinical Oncology (“ASCO”) Annual Meeting and additional preliminary data including relapse-free survival data was presented at the 2023 AACR Special Conference on Pancreatic Cancer. We presented updated preliminary immunogenicity data were not expected to be sufficient evidence to support an indication infrom the studied DGF population. On December 9, 2021, we announced the Phase 2 trial of ANG-3777 in CSA-AKI did not achieve its primary endpoint. We do not intend to continue the clinical development plan for ANG-3777 set forth in the Vifor License, which had included a Phase 3 study in CSA-AKI and a Phase 4 confirmatory study in donor kidney transplant patients who were at risk for developing DGF, given we do not believe the earlier Phase 2 and Phase 3 clinical trial results in the respective indications support a regulatory approval. We have no funds budgeted for additional clinical trials for ANG-3777. However, based upon the biologic activity demonstrated in the Phase 3 and Phase 2 trials of ANG-3777, and consistent with our discussions with our license partner Vifor Pharma, we are actively conducting pre-clinical studies to assess the effects of ANG-3777 on long-term kidney function.
On May 12, 2022, we were notified by the U.S. Food and Drug Administration (FDA) of the acceptance of an Investigational New Drug (IND) application supporting the clinical development of ANG-3070 in idiopathic pulmonary fibrosis (IPF) and clearance to begin a Phase 1bongoing phase 1 study of ANG-3070ELI-002 2P at the Society for Immunotherapy of Cancer 38th Annual Meeting (“SITC 2023”). ELI-002 7P, our 7-peptide formulation, is currently being studied in AMPLIYFY-7P, a phase 1/2 trial in patients with IPF.high relapse risk mKRAS-driven solid tumors. The AMPLIYFY-7P study’s independent data monitoring committee supported initiation of a randomized phase 2 trial studying ELI-002 7P as a monotherapy in adjuvant PDAC patients, which we plan to initiate in early 2024.
On June 29, 2022, we announced the terminationOur operations to date have been financed primarily by aggregate net proceeds of our Phase 2 “JUNIPER” dose-finding trial for ANG-3070 in patients with primary proteinuric kidney diseases, specifically focal segmental glomerulorsclerosis (FSGS) and immunoglobulin A nephropathy (IgAN) in the interests of patient safety based upon a reassessment of the risk/benefit profile of ANG-3070 in patients with established serious kidney disease. We continue work necessary to complete collection of data$99.6 million from the JUNIPER study to ascertain whether the drug had any effect, positive or negative, in patients with fibrotic kidney diseases.
On July 25, 2022, we announced a process to explore strategic options for enhancing and preserving shareholder value (the “2022 Strategic Realignment”). Potential strategic options to be explored or evaluated as partissuance of the process may include, but are not limited to merger, reverse merger, other business combination, sale of assets, licensing, or other strategic transactions. In addition, we announced the discontinuation of development of ANG-3070 for all indicationsconvertible preferred stock, convertible notes, and the discontinuationexercise of most other development activities pending conclusion of the strategic process. Finally,stock options and common stock warrants. Since inception, we also announced and completed a reduction in force across the organization as described below. To the extent we fail to realize the potential benefits of the 2022 Strategic Realignment, we may resume the clinical development of our product candidates.
We have currently suspended clinical development activities, and we do not have any products approved for sale and have not generated any revenue from product sales since our inception and do not expect to generate revenue from product sales unless we successfully develop, and we or our collaborators commercialize, our product
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candidates, which we do not expect to occur in the near future, if ever.had significant annual operating losses. Our net losses were $9.0loss was $10.7 million and $15.7$7.2 million for the three months ended September 30, 2023 and 2022, respectively, and 2021, and $32.4$26.2 million and $69.5$21.6 million for the nine months ended September 30, 20222023 and 20212022, respectively. As of September 30, 2022,2023, we had an accumulated deficit of $247.5 million.$133.3 million and $14.8 million in cash and cash equivalents.
Elicio Operating Company, Inc. (“Former Elicio”) was incorporated in Delaware as Vedantra Pharmaceuticals Inc. in August 2011. In December 2018, Former Elicio formed a wholly owned subsidiary, Elicio Securities Corporation, a Massachusetts corporation.

On January 17, 2023, Former Elicio entered into a definitive merger agreement (the “Merger Agreement”) with Angion Biomedica Corp (“Angion”), a clinical-stage biotechnology company. In accordance with the terms and conditions of the Agreement and Plan of Merger and Reorganization, by and among Angion, Arkham Merger Sub, Inc., a wholly owned subsidiary of Angion (“Merger Sub”), and Former Elicio, pursuant to which Merger Sub merged with and into Former Elicio, with Former Elicio surviving the merger as a wholly owned subsidiary of Angion (the “Merger”).
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On June 1, 2023, the Merger was completed in accordance with the terms and conditions of the Merger Agreement and Angion changed its name from “Angion Biomedica Corp.” to “Elicio Therapeutics, Inc.” Immediately following the consummation of the Merger, there were approximately 9.7 million shares of our common stock outstanding on a fully-diluted basis, with Former Elicio equity holders collectively owning approximately65.2% of the Company and Angion equity holders collectively owning approximately34.8%of the Company, in each case on a fully diluted basis.
We are currently facing substantial doubt about our ability to continue as a going concern, given our cash position and cash runway. We believe that our cash on hand will enable us to fund our operations into the first quarter of calendar year 2024 based on our current plan. This period could be shortened if there are any significant increases in planned or actual spending on development programs or more rapid progress of development programs than anticipated. There is no assurance that financing will be available when needed to allow us to continue as a going concern. Our losses from operations, negative operating cash flows and accumulated deficit, as well as the additional capital needed to fund operations for at least twelve months following the issuance of the unaudited condensed consolidated financial statements, raise substantial doubt about our ability to continue as a going concern. We expect to incur substantial expenditures in the foreseeable future for the development of our product candidates and will require additional financing to continue this development. We plan to address this condition through the sale of common stock in public offerings and/or private placements, debt financings, or through other capital sources, including licensing arrangements, partnerships and collaborations with other companies or other strategic transactions, but there is no assurance these plans will be completed successfully or at all.If we are unable to obtain additional capital when and as needed to continue as a going concern, we might have to further reduce or scale back our operations and/or liquidate our assets, and the values we receive for our assets in liquidation or dissolution could be significantly lower than the values reflected in our financial statements.

Our unaudited condensed consolidated financial statements appearing elsewhere in this 10-Q statement have been prepared on a basis that assumes that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Our unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our accounts payable and accrued expenses. We expect to continue to incur net losses for the foreseeable future.
future, and we expect our research and development expenses, general and administrative expenses, and capital expenditures will continue to increase. In particular, we expect our expenses to increase as we continue our development of, and seek regulatory approvals for, our product candidates, as well as hire additional personnel, pay fees to outside consultants, attorneys and accountants, and incur other increased costs associated with being a public company. In addition, if and when we resumeseek and obtain regulatory approval to commercialize any product candidate, we will also incur increased expenses in connection with commercialization and marketing of any such product. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities. We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we:
• advance our lead product candidate, ELI-002, to late stage clinical trials;
• advance our preclinical programs to clinical trials;
• expand our pipeline of product candidates;
• seek regulatory approval for our investigational medicines;
• maintain, expand, protect and defend our intellectual property portfolio;
• acquire or in-license technology;
• expand our clinical, scientific, management and administrative teams; and
• operate as a public company.
We believe that our cash on hand will enable us to fund our operations into the first quarter of calendar year 2024 based on our current plan. We have based this estimate on assumptions that may prove to be wrong, and we
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could exhaust our available capital resources sooner than we expect. To finance our operations beyond that point we will need to raise additional capital, which cannot be assured. The Company’s losses from operations, negative operating cash flows and accumulated deficit, as well as the additional capital needed to fund operations for at least twelve months following the issuance of the unaudited condensed consolidated financial statements, raise substantial doubt about the Company’s ability to continue as a going concern.
We have not had any products approved for sale. We do not expect to generate any product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates and ifcandidates. If we seekobtain regulatory approval for any of our product candidates, or those for which we retain the rightexpect to commercialize in the future, we would need to incur additional expenses as we develop and expand our clinical, regulatory, quality, manufacturing and commercialization capabilities, and incur significant commercialization expenses forrelated to product sales, marketing, sales, manufacturing and distributiondistribution. As a result, until such time, if ever, that we obtain marketing approval for suchcan generate substantial product candidates.
We have relied on third parties in the conduct of our preclinical studies and clinical trials and for manufacturing and supply of our product candidates. We have no internal manufacturing capabilities, and if we continue to develop product candidates,revenue, we expect to continuefinance our cash needs through equity offerings, debt financings or other capital sources, including collaborations, licenses or similar arrangements. However, we may be unable to relyraise additional funds or enter into such other arrangements when needed or on third parties, many of whom are single-source suppliers, for our preclinical studyfavorable terms, if at all. Any failure to raise capital as and clinical trial materials. In addition, we do notwhen needed could have a marketing or sales organization or commercial infrastructure. Accordingly, ifnegative impact on our financial condition and on our ability to pursue our business plans and strategies, including our research and development activities. If we are ableunable to develop and obtain approval for one or more product candidates,raise capital, we will incur significant expenses to develop a marketing and sales organization and commercial infrastructure in advance of generating any product sales of wholly-owned product candidates or those for which we retain the right to commercialize.
Furthermore, we would need to make continued investment in development studies, registrationdelay, reduce or terminate planned activities and the development of commercial support functions including quality assurance and safety pharmacovigilance before we would be in a position to sell any of our product candidates, if approved.
The Initial Public Offering and Concurrent Private Placement
The Initial Public Offering (“IPO”) and Concurrent Private Placement, which both closed on February 9, 2021, generated aggregate net proceeds of approximately $107.0 million, after deducting the underwriting discounts and commissions, private placement fee and offering expenses payable by us.
Reduction in Force
On January 4, 2022, we previously announced and completed a reduction in force impacting somewhat less than half of our employees at that time. Our decision to engage in this reduction resulted from an assessment of our internal resources needs, given the results of the Phase 3 study of ANG-3777 in patients at risk for DGF would likely not support a regulatory approval in that population and the Phase 2 study in CSA-AKI would not support a Phase 3 trial in that indication. This reduction was a cost-cutting measure across the organization to support our 2022 primary focus on the clinical development of our investigational asset ANG-3070, a highly selective, oral tyrosine kinase receptor inhibitor in development as a treatment for fibrotic diseases, as well as advancing preclinical assets to IND-enabling studies. In connection with the reduction in force, we incurred termination costs, which include severance, benefits and related costs, of approximately $3.2 million, of which $2.2 million were paid during the nine months ended September 30, 2022. We expect to pay the remaining $1.0 million on or before September 2023.
On July 25, 2022, we announced an additional reduction in force of the majority of our 37 employees. This reduction in force, expected to be completed by the end of 2022, is a cash preservation measure and impacts employees across the organization. In connection with the reduction in force, we recorded a charge of approximately $2.8 million in the third quarter of 2022. We paid $1.7 million during the nine months ended September 30, 2022 and expect to pay the remaining $1.1 million on or before December 2022. These charges are primarily one-time termination benefits payable in cash.
License, Collaboration and Grant Agreements
License Agreement with Vifor Pharma
In November 2020, we granted Vifor Pharma, an exclusive, global (excluding Greater China), royalty-bearing license, for the commercialization of ANG-3777 in all Renal Indications, beginning with DGF and CSA-AKI. The Vifor License also grants Vifor Pharma exclusive rights, with a right to sublicense subject to our consent for certain specified conditions, to develop and manufacture ANG-3777 for commercialization in Renal Indications worldwide (excluding Greater China) in cooperation with us or independently. We retain the right to develop and commercialize combination therapy products combining ANG-3777 with our other proprietary molecules, subject to Vifor Pharma's right of first negotiation with respect to global (excluding Greater China) rights to such combination therapy products in the Renal Indications.
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Pursuant to the Vifor License and specifically based upon the clinical development plan for ANG-3777 set forth in the Vifor License, we are entitled to receive $80 million in upfront and near-term clinical milestone payments, including $30 million in up-front cash received in November 2020, and a $30 million equity investment comprising a $5 million convertible note subsequently converting into common stock with the IPO and $25 million of which was received in the Concurrent Private Placement with our IPO.
We are also eligible to receive post-approval milestones of up to approximately $260 million and sales-related milestones of up to $1.585 billion, providing a total potential deal value of up to $1.925 billion (subject to certain specified reductions and offsets), plus tiered royalties on net sales of ANG-3777 at royalty rates of up to 40%. Under the Vifor License, we are responsible for executing a pre-specified clinical development plan designed to obtain regulatory approvals of ANG-3777 for DGF and CSA-AKI. For the three months ended September 30, 2022 and 2021, we recognized license revenue related to the Vifor License of zero and $1.5 million, respectively. For the nine months ended September 30, 2022 and 2021, we recognized license revenue related to the Vifor License of $2.3 million and $2.4 million, respectively. We have completed substantially all performance under the Vifor License and recognized all remaining deferred revenue under the agreement during the three months ended June 30, 2022. As of September 30, 2022 and December 31, 2021, we recorded zero and $2.3 million, respectively, as deferred revenue, current on the condensed consolidated balance sheet related to the Vifor License.
On October 26, 2021, we announced the Phase 3 trial of ANG-3777 in DGF did not achieve its primary endpoint and the data were not expected to be sufficient evidence to support an indication in the studied DGF population. On December 14, 2021, we announced the Phase 2 trial of ANG-3777 in CSA-AKI did not achieve its primary endpoint. The Vifor License includes additional milestone and royalty objectives related to the clinical development plan for ANG-3777, which had included a Phase 3 study for CSA-AKI and a Phase 4 confirmatory study in DGF. We do not expect to receive any clinical, post-approval, or sales milestones, or royalties, as we do not intend to continue to pursue the current clinical development plan for ANG-3777. In 2022, we and Vifor Pharma continue to work to complete the planned analyses of the results of the clinical trials announced in the fourth quarter of 2021. However, based upon the biologic activity demonstrated in the Phase 3 and Phase 2 trials of ANG-3777, and consistent with our discussions with our license partner Vifor Pharma, we are actively conducting pre-clinical studies to assess the effects of ANG-3777 on long-term kidney function.reduce costs.
Components of Results of Operations
The following discussion summarizes the key factors our management believes are necessary for an understanding of our financial statements.
RevenueOperating Expenses
Our operating expenses since inception have consisted primarily of research and development expenses and general and administrative costs.
Research and Development Expenses
Our research and development expenses consist primarily of costs incurred for the development of our product candidates and our drug discovery efforts, which include:
• personnel costs, which include salaries, benefits and equity-based compensation expense;
• expenses incurred under agreements with consultants and contract organizations that conduct research and
development activities on our behalf;
• costs related to sponsored research service agreements;
• costs related to production of preclinical and clinical materials, including fees paid to contract manufacturers;
• laboratory and vendor expenses related to the execution of preclinical studies and planned clinical trials; and
• laboratory supplies and equipment used for internal research and development activities.
We do not have any products approvedexpense all research and development costs in the periods in which they are incurred. Costs for salecertain research and have not generated any revenue from product sales. Our revenuedevelopment activities are recognized based on an evaluation of the progress to date primarily has been derived from government funding consistingcompletion of U.S. government grantsspecific tasks using information and contracts,data provided to us by our vendors and revenue under our license agreements, specifically the Vifor License.
Grant Revenueservice providers.
Our grantsresearch and contracts reimburse usdevelopment expenses are not currently tracked on a program-by-program basis. We use our personnel and infrastructure resources across multiple research and development programs directed toward identifying and developing product candidates. Substantially all our research and development costs are incurred on the development of ELI-002 and ELI-004, an AMP adjuvant that is a significant component of ELI-002, and our preclinical candidates.
We expect our research and development expenses to increase substantially for directthe foreseeable future as we continue to invest in research and indirect costs relatingdevelopment activities related to developing our product candidates, including investments in conducting clinical trials, manufacturing and otherwise advancing our programs. The process of conducting the grant projectsclinical research necessary to obtain regulatory approval is costly and also provide us with a pre-negotiated profit margin on total directtime-consuming, and indirectthe successful development of our product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing and costs of the grant award, excluding subcontractor costs, after giving effectefforts that will be needed to directly attributable costs and allowable overhead costs. Funds receivedcomplete the development of, or the period, if any, in which material net cash inflows may commence from grants and contracts are generally deemed to be earned and recognized as revenue as allowable costs are incurred during the grantELI-002 or contract period and the right to payment is realized.
Contract Revenue
Our license agreements comprise elements of upfront license fees, milestone payments based on development and royalties based on net product sales. The timingany of our operating cash flows may vary significantly from the recognition of the related revenue. Income from upfront paymentspreclinical candidates. This is recognized when we satisfy the performance obligations in the contract, which can result in recognition at either a point in time or over the period of continued involvement. Other revenue, such as milestone payments, are recognized when achieved.
Our revenue to date has been generated from payments received pursuantdue to the Vifor License Agreement. We recognize revenue from upfront payments overnumerous risks and uncertainties associated with developing drugs, including the term of our estimated period of performance using a cost-based input method under Topic 606, Revenue from Contracts with Customers.
In addition to receiving an upfront payment, we may also be entitled to milestones and other contingent payments upon achieving predefined objectives. If a milestone is considered probable of being reached, and if it isuncertainty of:
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probable that a significant revenue reversal would not occur,
•the associated milestone amount would also be included in the transaction price. We expect any license revenue we generate from any future collaboration partners, will fluctuate in the future as a resultscope, rate of the timingprogress and amountexpense of upfront, milestones and other collaboration agreement payments and other factors.
Operating Expenses
Cost of Grant Revenue
Our cost of grant revenue primarily relates to personnel-related costs and expenses for grant projects.
Research and Development Expenses
To date, our research and development expenses have primarily relatedactivities;
•clinical trials and early-stage results;
•the terms and timing of regulatory approvals; and
•the ability to discovery effortsmarket, commercialize and achieve market acceptance for ELI-002, or any of our preclinical candidates that we or our future collaboration partners may develop in the future.

Any of these variables with respect to the development of ELI-002, or any other of our preclinical candidates that we may develop could result in a significant change in the costs and timing associated with the development of such candidates. For example, if the FDA or other regulatory authority were to require us to conduct pre-clinical and clinical studies beyond those which we currently anticipate will be required for the completion of clinical development or if we experience significant delays in enrollment in any clinical trials, we could be required to expend significant additional financial resources and time on the completion of our product candidates. We recognize researchclinical development programs.
General and developmentAdministrative Expenses
Our general and administrative expenses as they are incurredconsist primarily of personnel costs, including equity-based compensation, and payments made prior to the receipt of goods orother expenses for outside professional services, to be usedincluding legal, recruiting, audit and accounting and facility-related costs not otherwise included in research and development are capitalized untilexpenses. Personnel costs consist of salaries, benefits and equity-based compensation expense, for our personnel in executive and other administrative functions. We expect our general and administrative expenses to increase over the goods or services are received.
Ournext several years to support our continued research and development expenses have consisted primarily of:
▪activities, manufacturing activities, increased costs of expanding our operations and operating as a public company. These increases will likely include increases related to the hiring of additional personnel and legal, regulatory and other fees and services associated with maintaining compliance with Nasdaq Stock Market LLC (“Nasdaq”), Marketplace Rules, or the Nasdaq Listing Rules and Securities and Exchange Commission (“SEC”) requirements, accounting and audit fees, director and officer insurance costs including salaries, payroll taxes, employee benefits and stock-based compensation, for personnel in research and development functions;
▪investor relations costs associated with medical affairs activities;being a public company.
▪fees paid to consultants, clinical testing sites and contract research organizations (CROs), including in connection with our preclinical studies and clinical trials, and other related clinical trial fees, such as for investigator grants, patient screening, laboratory work, clinical trial database management, clinical trial material management and statistical compilation, analysis and reporting;
▪contracted research and license agreement fees with no alternative future use;
▪costs related to acquiring, manufacturing and maintaining clinical trial materials and laboratory supplies;
▪depreciation of equipment and facilities;
▪legal expenses related to clinical trial agreements and material transfer agreements; and
▪costs related to preparation of regulatory submissions and compliance with regulatory requirements.Other Income (Expense)

Other than with respect to reimbursable expenses required to be recorded under our government grants and contracts, we do not allocate our expenses by product candidates. A significant amount of our direct research and development expenses include payroll and other personnel expenses for our departments supporting multiple product candidate research and development programs and, other than as specified above, we do not record research and development expenses by product. However, research and development expenses were primarily driven by expenses relating to the development of ANG-3777 and ANG-3070 duringFor the three and nine months ended September 30, 20212023 and 2022. For the three months ended September 30, 2022, , our total researchother income and development expense includes a reduction to stock-based compensation expense of $1.1 million due to the forfeiture of stock-based awards for employees terminated as a result of the 2022 Strategic Realignment, which more than fully offset our research and development expense from internal sources. For the three months ended September 30, 2021, 69% of research and development expenses were from external third-party sources and the remaining 31% were from internal sources.

For the nine months ended September 30, 2022 and 2021, 78% and 63%, respectively, of research and development expenses were from external third-party sources and the remaining 22% and 37%, respectively, were from internal sources.
General and Administrative Expenses
General and administrative expenses consistconsisted primarily of personnel-related expenses, such as salaries, payroll taxes, employee benefits and stock-based compensation, for personnelinterest income, foreign exchange transaction losses, loss on sale of equipment, interest expense, changes in executive, operational, finance and human resources functions. Other significant general and administrative expenses include facilities costs, insurance costs, and accounting and legal services and expenses associated with obtaining and maintaining patents. A portion of the general and administrative expenses are reimbursed through the overhead rates contained in our grants with the U.S. Government.
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Other Income (Expense)
Convertible Notes Recorded at Fair Value
We elected the fair value option for recognition of our convertible notes. Our convertible notes were subject to re-measurement each reporting period with gains and losses reported through our condensed consolidated statements of operations. All of our convertible notes were converted into shares of our common stock upon the closing of our IPO.
Liability Classified Series C Convertible Preferred Stock Recorded at Fair Value
Our Series C convertible preferred stock included settlement features resulting in classification as a liability. The initial carrying value of the Series C convertible preferred stock was accreted to the settlement value, the fair value of the securities to be issued upon the conversionembedded derivative, gain on extinguishment of the Series C Preferred Stock. The discount to the settlement value was accreted to interest expense using the effective interest method. During 2020, certain of the convertiblepromissory notes, were exchanged for Series C convertible preferred stock. As the exchange was accounted for as a modification, the Series C convertible preferred stock exchanged for the convertible notes (the Exchanged Series C Shares) was recorded at fair value. The Exchanged Series C Shares were subject to re-measurement each reporting period withand gains and losses reported through our condensed consolidated statements of operations. All sharesrelated to the re-measurement of our Series C convertible preferred stock converted into common stock upon the closing of our IPO.
Warrant Liabilitywarrant liabilities.
We have accounted for certain of our freestanding warrants to purchase shares of our common stock as liabilities measured at fair value, in accordance with ASC 815,
Derivatives and Hedging. The warrants are subject to re-measurement at each reporting period with gains and losses reported through our condensed consolidated statements of operations.
Foreign Exchange Transaction Gain
Foreign currency transaction gains, primarily related to intercompany loans, are recorded as a component of other income (expense) in our condensed consolidated statements of operations.
Earnings in Equity Method Investment
Earnings in equity method investment represents our 10% interest in NovaPark accounted for under the equity method.
Interest Income
Interest income consists of interest earned on our cash and cash equivalents.
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Results of Operations
Comparison of the Three Months Ended September 30, 20222023 and 20212022
The following table summarizes our results of operations for the periods indicated:
Three Months Ended
September 30,		Three Months Ended
September 30,
20222021$ Change% Change20232022$ Change% Change
(In thousands, except percentages)
(In thousands, except percentages)
Revenue:
Contract revenue$— $1,460 $(1,460)(100)%
Total revenue— 1,460 (1,460)(100)%
Operating expenses:Operating expenses:Operating expenses:
Research and developmentResearch and development2,938 13,288 (10,350)(78)%Research and development$7,264 $4,593 $2,671 58 %
General and administrativeGeneral and administrative3,315 3,930 (615)(16)%General and administrative3,507 1,177 2,330 198 %
Restructuring expense2,797 — 2,797 100%
Total operating expensesTotal operating expenses9,050 17,218 (8,168)(47)%Total operating expenses10,771 5,770 5,001 87 %
Loss from operationsLoss from operations(9,050)(15,758)6,708 (43)%Loss from operations(10,771)(5,770)(5,001)87 %
Other income (expense), net62 54 8 15%
Total other income (expense)Total other income (expense)113 (1,428)1,541 (108)%
Net lossNet loss$(8,988)$(15,704)$6,716 Net loss$(10,658)$(7,198)$(3,460)
Contract RevenueResearch and Development Expenses
Contract revenue decreased by $1.5
Research and development expenses were $7.3 million for the three months ended September 30, 20222023, compared to the same period in 2021. Since we do not intend to continue the clinical development plan for ANG-3777 currently set forth in Vifor License agreement, which had included a Phase 3 study in cardiac surgery associated with cardiopulmonary bypass (CSA-AKI) and a Phase 4 confirmatory study in delayed graft function (DGF), we performed a reassessment of the performance period and estimated costs for the completion of the performance obligations. This accelerated the revenue recognition related to the upfront payment we received from Vifor Pharma when the license agreement with Vifor Pharma was entered into in 2020.
As of September 30, 2022, we have completed substantially all our performance obligations under the Vifor License.
Research and Development Expenses
Research and development expenses decreased by $10.4$4.6 million or 78%, for the three months ended September 30, 2022 compared to the same period in 2021.2022. The net decrease in research and development expensesincrease of $2.7 million was primarily due to a $6.2 million reduction inGMP manufacturing and clinical trial related expenses and R&D consulting and subcontractor expenses as a result of the completion of ANG-3777 trials, and a net decrease of $4.2 million in personnel-related expenses, including a $2.3 million decrease in stock-based compensation expense, as a result of the reductions in force announced in January and July 2022.Company advanced ELI-002 clinical development.
We expect our research and development expenses to be significantly lower in the near term due to the discontinuation of development of ANG-3070 for all indications and the discontinuation of other development activities pending conclusion of the strategic process and certain pre-clinical studies of ANG-3777, consistent with ongoing discussions with our license partner Vifor Pharma.
General and Administrative Expenses

General and administrative expenses decreased by $0.6were $3.5 million or 16%, for the three months ended September 30, 20222023, compared to the same period in 2021. The decrease in general and administrative expenses was primarily due to a net decrease of $0.9$1.2 million in personnel-related expenses as a result of the reductions in force announced in January and July 2022, and related decrease of $0.1 million in operating expenses for rent, consultants and office costs. These decreases were offset in part by an increase of $0.4 million in legal and insurance charges.

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We expect our general and administrative expenses to be slightly lower in the future due to the effect of our restructuring and 2022 Strategic Alignment process. We also expect to generally maintain our current level of expenses associated with operating as a public company, including expenses related to audit, legal, regulatory, and tax-related services associated with maintaining compliance with the rules and regulations of the SEC and standards applicable to companies listed on a national securities exchange, insurance expenses, investor relations activities and other administrative and professional services.
Restructuring Expenses
Restructuring expenses increased by $2.8 million, or 100%, for the three months ended September 30, 2022 compared to the same period in 2021.2022. The increase isof $2.3 million was primarily due to one-time termination benefit chargeshigher personnel-related costs in support of organizational growth and higher professional fees incurred in connection with the reductions in force announced in January and July 2022 (see Note 1 to the condensed consolidated financial statements for additional information).operating as a public company.

Other Income (Expense)
Other income (expense) increased by a nominal amount for the three months ended September 30, 20222023 was income of $0.1 million compared to expense of $1.4 million for the same period in 2021.three months ended September 30, 2022. The $0.1decrease of $1.5 million increase inwas primarily due to reduced interest income earned on cash and cash equivalents was offset by an $0.1 million decrease fromexpense associated with the change in fair value relatedconversion of the convertible notes to our warrant liability and NovaPark investment.preferred stock as part of the Series C Preferred Stock offering.
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Comparison of the Nine Months Ended September 30, 20222023 and 20212022
The following table summarizes our results of operations for the periods indicated:
Nine Months Ended
September 30,		Nine Months Ended
September 30,
20222021$ Change% Change20232022$ Change% Change
(In thousands, except percentages)(In thousands, except percentages)
Revenue:
Contract revenue$2,301 $2,371 $(70)(3)%
Total revenue2,301 2,371 (70)(3)%
Operating expenses:Operating expenses:Operating expenses:
Research and developmentResearch and development17,940 42,030 (24,090)(57)%Research and development$17,692 $13,813 $3,879 28 %
General and administrativeGeneral and administrative10,892 14,282 (3,390)(24)%General and administrative8,661 3,959 4,702 119 %
Restructuring expenses6,039 — 6,039 100 %
Total operating expensesTotal operating expenses34,871 56,312 (21,441)(38)%Total operating expenses26,353 17,772 8,581 48 %
Loss from operationsLoss from operations(32,570)(53,941)21,371 (40)%Loss from operations(26,353)(17,772)(8,581)48 %
Other income (expense), netOther income (expense), net203 (15,522)15,725 (101)%Other income (expense), net107 (3,785)3,892 (103)%
Net lossNet loss$(32,367)$(69,463)$37,096 Net loss$(26,246)$(21,557)$(4,689)
Contract Revenue
Contract revenue decreased by $0.1 million for the nine months ended September 30, 2022 compared to the same period in 2021. Since we do not intend to continue the clinical development plan for ANG-3777 currently set forth under our Vifor License agreement, which had included a Phase 3 study in cardiac surgery associated with cardiopulmonary bypass (CSA-AKI) and a Phase 4 confirmatory study in delayed graft function (DGF), we performed a reassessment of the performance period and estimated costs for the completion of the performance
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obligations. This accelerated the revenue recognition related to the upfront payment we received from Vifor Pharma when the license agreement with Vifor Pharma was entered into in 2020.
As of September 30, 2022, we have completed all our performance obligation under the Vifor License and recognized all remaining deferred revenue under the agreement.
Research and Development Expenses
Research and development expenses decreased by $24.1 million, or 57%, for the nine months ended September 30, 2022 compared to the same period in 2021. The net decrease in research and development expenses was primarily due to a $12.7 million reduction in clinical trial related expenses and R&D consulting and subcontractor expenses as a result of the completion of ANG-3777 trials, and a $11.6 million decrease in salary, bonus and stock based compensation primarily due to the reduction in headcount following the reductions in force announced in January and July 2022. These decreases were offset in part by a net increase of $0.2 million in other operating expenses.
General and Administrative Expenses
General and administrative expenses decreased by $3.4 million, or 24%, for the nine months ended September 30, 2022 compared to the same period in 2021. The decrease in general and administrative expenses was primarily due to a net decrease of $4.1 million in personnel-related expenses primarily in salary, bonus and stock-based compensation related to the reductions in force announced in January and July 2022 and the vesting of performance-based stock units upon IPO in thenine months ended September 30, 2021. These decreases in personnel-related expenses were offset in part by a net increase of $0.7 million in professional services expense, including audit, tax, legal and insurance due to our 2022 Strategic Alignment.
Restructuring Expenses
Restructuring expenses increased by $6.0 million, or 100%, for the nine months ended September 30, 2022 compared to the same period in 2021. The increase is due to one-time termination benefit charges incurred in connection with the reductions in force announced in January and July 2022 (see Note 1 to the condensed consolidated financial statements for additional information).
Other Income (Expense)
Other income (expense) increased by $15.7$17.7 million for the nine months ended September 30, 20222023, compared to $13.8 million for the same period in 2021.nine months ended September 30, 2022. The increase isof $3.9 million was primarily due to an increase in external costs associated with ELI-002 manufacturing and clinical trials.

General and Administrative Expenses
General and administrative expenses were $8.7 million for the nine months ended September 30, 2023, compared to $4.0 million for the nine months ended September 30, 2022. The increase of $4.7 million was primarily due to higher personnel-related costs in support of organizational growth and higher professional fees incurred in connection with the Merger and operating as a public company.

Other Income (Expense)
Other expense for the nine months ended September 30, 2023 was income of $0.1 million compared to expense of $3.8 million for the nine months ended September 30, 2022. The decrease of $14.5$3.9 million of loss from the first quarter of 2021 as a result of the increase in fair value relatedwas primarily due to our warrant liability, convertible notes, and Series C convertible preferred stock for which we elected the fair value option as most of these instruments were no longer outstanding after our IPO in February 2021. There was also a reduction of $2.3 million inreduced interest expense primarily related to interest associated with the convertible notes and Series C convertible preferred stock in 2020 that were converted into equity upon our IPO in February 2021. The convertible notes and warrants both require re-measurement at each balance sheet date with gains and losses reported through our consolidated statement of operations. These increases were offset in part by a $0.9 million gain from the forgiveness of our PPP loan in the second quarter of 2021.

notes.
Liquidity and Capital Resources
Sources and Uses of Liquidity
WeOur operations through September 30, 2023 have incurred lossesbeen financed primarily by aggregate net proceeds of $99.6 million from the issuance of common stock, convertible preferred stock, convertible notes, the exercise of stock options and negative cash flows from operations since inception, and we anticipate we will incur losses for at least the next several years. To date, we have not generated any revenue from product sales. We have funded our operations primarily through the receipt of grants, the sale of debt and equity securities,common stock warrants and proceeds from license agreements.the Merger. Since inception, we have had significant operating losses. Our net loss was $26.2 million and $21.6 million for the nine months ended September 30, 2023 and nine months ended September 30, 2022, respectively. As of September 30, 2022,2023, we had $55.1 million of cash and cash equivalents and an accumulated deficit of $247.5$133.3 million compared to $88.8and $14.8 million ofin cash and cash equivalentsequivalents. Our primary use of cash is to fund operating expenses, which consist primarily of research and andevelopment expenditures, and to a lesser extent, general and administrative expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.
Our losses from operations, negative operating cash flows and accumulated deficit, as well as the additional capital needed to fund operations for at least twelve months following the issuance of $215.1 millionthe unaudited condensed consolidated financial statements, raise substantial doubt about our ability to continue as a going concern. We expect to incur substantial expenditures in the foreseeable future for the development of December 31, 2021.our product candidates and will require additional financing to continue this development. The unaudited condensed consolidated financial statements appearing elsewhere in this Form 10-Q have been prepared on a basis that assumes that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal
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course of business. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. We plan to address this condition through the sale of common stock in public offerings and/or private placements, debt financings, or through other capital sources, including licensing arrangements, partnerships and collaborations with other companies or other strategic transactions. However, there is no assurance that we will be successful in raising additional capital or that such additional funds will be available on acceptable terms, if at all. Should we be unable to raise this amount of capital our operating plans will be limited to the amount of capital that we can access. We may also consider steps to reduce our operating expenses. There can be no assurances that we will be successful in any of the foregoing.
Future Cash Needs and Funding Requirements
Based on our current operating plan, we believe our cash and cash equivalents will be sufficient to fund our planned operations for at least 12 months followinginto the issuance datefirst quarter of our condensed consolidated financial statements.calendar year 2024. However, we have based our projections of operating capital requirements on assumptions that may
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prove to be incorrect and we may use all our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with the status of our company and the initiation of our 2022 Strategic Realignment process, weWe are unable to estimate the exact amount of our operating capital requirements. The amount and timing of our future funding requirements will depend on many factors, including, but not limited to:
▪the scope, progress, results and costs of researching and developing product candidates, and conducting preclinical studies and clinical trials;
▪the amountoutcome of time it takesany future clinical trials, for any existing or future product candidates;
▪whether we are able to complete our 2022 Strategic Realignment process, including completingtake advantage of any potential merger or reverse merger transaction;FDA expedited development and approval programs for any of its product candidates;
▪the amountoutcome, costs and costtiming of legalseeking and professional services requiredobtaining and maintaining FDA and any foreign regulatory approvals;
▪the costs associated with any delays we may encounter as a result of evolving regulatory requirements or adverse results with respect to conductany of our 2022 Strategic Realignment process,product candidates;
▪the number and characteristics of product candidates we pursue, including fees relatedproduct candidates in preclinical development;
▪the ability of our product candidates to the engagement of a strategic advisor; andprogress through clinical development successfully;
▪our need to continueexpand our research and development activities, including to operate asconduct additional clinical trials;
▪market acceptance of our product candidates, including physician adoption, market access, pricing and reimbursement;
▪the costs of acquiring, licensing or investing in businesses, products, product candidates and technologies;
▪our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments potentially required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;
▪our need and ability to hire additional personnel, including management, clinical development, medical and commercial personnel;
▪the effect of competing technological, market developments and government policy;
▪the costs associated with being a public company, including our need to implement additional internal systems and infrastructure, including financial and reporting systems;
▪the costs associated with securing and establishing commercialization and manufacturing capabilities, as well as those associated with packaging, warehousing and distribution;
▪the economic and other terms, timing of and success of our existing licensing arrangements and any collaboration, licensing or other arrangements into which we may enter in the future and timing and amount of payments thereunder; and
▪the timing, receipt and amount of sales and general commercial success of any future approved products, if any.
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Until such time as we can generate significant revenue from sales of product candidates, if ever, we expect to finance our operations through the sale of common stock in public offerings and/or private placements, debt financings, or through other capital sources, including licensing arrangements, partnerships and collaborations with other companies or other strategic transactions. Adequate funding may not be available to us on acceptable terms, or at all. To the extent we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through additional collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to and/or may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates itself.

Summary Statement of Cash Flows
The following table sets forth a summary of our net cash flow activity for the nine months ended September 30, 20222023 and 20212022 (in thousands):
Nine Months Ended
September 30,		Nine Months Ended
September 30,
2022202120232022
Net cash provided by (used in)Net cash provided by (used in)Net cash provided by (used in)
Operating activitiesOperating activities$(33,964)$(38,281)Operating activities$(22,798)$(14,903)
Investing activitiesInvesting activities— (346)Investing activities(32)(559)
Financing activitiesFinancing activities(45)106,767 Financing activities31,611 10,026 
Effect of foreign currency on cashEffect of foreign currency on cash396 (11)Effect of foreign currency on cash— — 
Net increase (decrease) in cashNet increase (decrease) in cash$(33,613)$68,129 Net increase (decrease) in cash$8,781 $(5,436)
Operating Activities
For the nine months ended September 30, 2023, net cash used in operating activities was $22.8 million, which primarily consisted of a net loss of $26.2 million which was partially offset by the change in net operating assets and liabilities of $1.6 million and the net non-cash charges of $1.8 million. The cash provided by the change in net operating assets and liabilities was due to a $0.2 million increase in deferred research obligation, a $2.0 million increase in accrued expense and accounts payable, and $0.6 million decrease in operating lease. The net non-cash charges were primarily related to $1.1 million of interest expense related to the accretion of promissory notes payable, $0.8 million of stock-based compensation, $0.6 million decrease in the right of use asset, $0.3 million of depreciation offset by $0.4 million increase in the fair value of the embedded derivative associated with the promissory notes payable and $0.6 million of gain on the extinguishment of the promissory notes payable.

For the nine months ended September 30, 2022, net cash used in operating activities was $34.0$14.9 million, which primarily consisted of a net loss of $32.4$21.6 million and athe use of cash from the change in net operating assets and liabilities of $2.8$1.7 million which was partially offset by net non-cash charges of $1.2$5.0 million. The change in net operating assets and liabilities of $2.8 million was the result of a decrease in deferred revenue of $2.3 million resulting from revenue recognized in the period, a decrease of $2.5 million in accounts payable duecash provided by to the timing of vendor payments, offset in part by an increase of $1.7 million in accrued expenses due to timing of invoices, and a decrease of $0.8 million in grants receivable from cash collected for the grant contract with the U.S. Department of Defense. The remaining $0.5 million fluctuations were individually insignificant. The $1.2 million of net non-cash charges primary included stock-based compensation of $0.7 million and amortization of operating lease right-of-use assets of $0.6 million.

For the nine months ended September 30, 2021, net cash used in operating activities was $38.3 million, which primarily consisted of a net loss of $69.5 million, partially offset by net non-cash charges of $25.8 million and a change in net operating assets and liabilities of $5.4 million. The net non-cash charges were primarily related to a change in fair value of $14.3 million in convertible notes, Series C preferred stock and warrant liabilities, stock-based compensation expense of $10.0 million and amortization of debt issuance costs of $1.9 million, partially offset by a gain of $0.9 million from the forgiveness of our PPP loan. The change in net operating assets and liabilities was due to a $2.1 million increase in deferred research obligation, a $1.3 million increase in accounts payable and accrued expenses, a $1.4 million decrease of $4.1 million in prepaid expenses and other current assets, an increase of $2.1a $0.4 million in accounts payable due to our overall growth and an increase of $2.2 million in accrued expenses due to timing of invoices, partially offset by a decrease in deferred revenueoperating lease. The net non-cash charges were primarily related to $3.5 million of $2.4interest expense related to convertible notes, $0.4 million due to revenue recognizedof stock-based compensation, $0.3 million of depreciation, $0.5 million decrease in the period.right of use asset, and a $0.3 million decrease in the fair value of the embedded derivative associated with the convertible notes.

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Investing activitiesActivities
For the nine months ended September 30, 2022, no2023, cash was provided by or used in investing activities and for the nine months ended September 30, 2021, net cash used in investing activities was $0.3 million, primarily related to purchases of fixed assets for research activities.
Financing activitiesimmaterial.
For the nine months ended September 30, 2022, net cash used in financing activitiesinvesting activity was immaterial.$0.6 million, which was driven by the purchase of property and equipment.
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Financing Activities
For the nine months ended September 30, 2021,2023, net cash provided by financing activities was $106.8$31.6 million as a result of the Merger.
For the nine months ended September 30, 2022, net cash provided by financing activities was $10.0 million, consisting primarily due to netof proceeds of $110.6 million from the IPO and Concurrent Private Placement and $1.7 million from the exerciseissuance of warrants and stock options, partially offset by the payment of the deferred offering costs of $3.1 million and taxes paid related to net share settlement upon vesting of restricted stock awards of $2.5 million.preferred stock.
Critical Accounting Policies and Significant Judgements and Estimates
Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and judgments affecting the reported amounts of assets, liabilities, costs and expenses. We base our estimates on historical experience, known trends and events and various other factors we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates” in our AnnualCurrent Report on Form 10-K for the year ended December 31, 2021, which was8-K filed with the SEC on March 30, 2022.June 2, 2023. During the nine months ended September 30, 2022,2023, except as described in Note 12 to the unaudited interim condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, there were no material changes to our critical accounting policies from those previously disclosed.
Emerging Growth Company and Smaller Reporting Company Status
We are a smaller reporting company and an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay the adoption of new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act for emerging growth companies include presentation of only two years of audited financial statements in a registration statement for an initial public offering, an exemption from the requirement to provide an auditor's report on internal controls over financial reporting pursuant to Sarbanes-Oxley Act of 2002, as amended (Sarbanes-Oxley)(“Sarbanes-Oxley”) an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation, and less extensive disclosure about our executive compensation arrangements.
We have elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting standards as of public company effective dates.
We will remain an emerging growth company until the earliest of (i) December 31, 2026, (ii) the last day of our first fiscal year in which we have total annual gross revenue of $1.235 billion or more, (iii) the date on which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (Exchange Act)(the “Exchange Act”), which means the market value of equity securities held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter andor (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company” and/or “non-accelerated filer” which may allow us to take advantage of many of the same exemptions
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from disclosure requirements including not being required to comply for a period of time with the auditor attestation requirements of Section 404 of Sarbanes-Oxley, and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
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 required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
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Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer, our principal executive officer and principal accounting and financial officer, respectively, have evaluated the effectiveness of our disclosure controls and procedures (asat September 30, 2023. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2022.
Disclosure controls and procedures areAct, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in ourthe reports filedthat it files or submittedsubmits 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 by a company in ourthe reports filedthat it files or submits under the Exchange Act is accumulated and communicated to its management, including our Presidentits principal executive and Chief Executive Officer and our Chief Financial Officer,principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosureManagement recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer, after evaluating the effectiveness of our President“disclosure controls and Chief Executive Officer andprocedures” (as defined in the Exchange Act Rule 13a-15(e), or Rule 15d-15(e)), with the participation of our Chief Financial Officermanagement, have each concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective due to the material weakness in internal control over financial reporting described below.

During the 2022 audit procedures performed around convertible preferred stock, an adjustment in the amount of $843,000, related to the modification of the Series A preferred stock dividend rights, and associated issuance of warrants during 2018 was identified. It was further determined the modification of the dividend rights and the issuance of warrants should have been accounted for as an extinguishment.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be detected on a timely basis. Although the identified adjustment was immaterial to our financial statements, we determined that there was a risk that a similar event could have occurred without being prevented or detected on a timely basis that could have given rise to a potentially material misstatement in our financial statements or disclosures.

Although we have initiated efforts to remediate this material weakness, including enhanced review processes to address infrequent, complex transactions, the material weakness has not been fully remediated as of September 30, 2022.2023 and continues to be disclosed as a material weakness in the Company’s Form 10-Q for the three and nine month periods ended September 30, 2023.

Our remediation efforts are intended to address the identified material weakness. Management is committed to continuous improvement of our internal control over financial reporting and will continue to diligently review our internal control over financial reporting.
Changes in Internal Control Over Financial Reporting
There wasOther than the material weakness described above, there were no changechanges in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) under the Exchange Act) that occurred during the
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quarter ended September 30, 2022,2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except as follows:
Material Weakness Remediation
As previously reported, in connection with the preparation of our consolidated financial statements, we identified control deficiencies in the design and operation of our internal control over financial reporting that constituted material weaknesses. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
The material weaknesses identified in our internal control over financial reporting related to (i) insufficient resources with knowledge and expertise in U.S. GAAP to properly evaluate certain complex transactions, including debt instruments and equity instruments; and (ii) insufficient financial reporting and close controls to ensure that incurred expenses are accrued at period end and deliverables from third party contractors are reviewed for accuracy.
We initiated several steps to remediate these material weaknesses, including:

•engaging SEC compliance and technical accounting consultants to assist in evaluating transactions for conformity with U.S. GAAP;

•hiring additional finance and accounting personnel to augment accounting staff and to provide more resources for complex accounting matters and financial reporting; and

•strengthening our financial reporting and close relating to incurred expenses by ensuring our data capture procedures are clearly defined and that responsible personnel, including supervisory personnel, have adequate training regarding the process and expectation.
As a result of these actions, we have implemented various internal controls over financial reporting and our close process and since then, consistently followed and evaluated these controls in order to address the material weaknesses identified in our previous fiscal year. As a result, the material weaknesses were remediated and our internal control over financial reporting were effective as of September 30, 2022.reporting.
Inherent Limitation on the Effectiveness Over Financial Reporting
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable and not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but there can be no assurance such improvements will be sufficient to provide us with effective internal control over financial reporting.
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Part II OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently a party to any material legal proceedings. From time to time, we may be involved in legal proceedings, or subject toas well as demands, claims incident toand threatened litigation, which arise in the ordinarynormal course of business. Regardlessbusiness or otherwise.
The outcome of any future litigation is uncertain. Such litigation, if not resolved, could result in substantial costs to us, including any costs associated with the outcome, such proceedings or claims can have an adverse impact on us becauseindemnification of defensedirectors and settlement costs, diversionofficers.
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Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, described in our Form 8-K filed on June 2, 2023 as well as the other information in this Quarterly Report on Form 10-Q, including our consolidated financial statements and related notes, before deciding whether to invest in shares of our common stock.
As previously disclosed, we are engaged There have been no material changes in a 2022 Strategic Realignment process pursuant to which we are exploring strategic options for enhancing and preserving shareholder value, and we have discontinued the clinical development of ANG-3070 for all indications and discontinued other development activities pending conclusion of the strategic process, except certain pre-clinical studies of ANG-3777 and certain other pre-clinical development. As a result, the risks facing our company have changedrisk factors from the risksthose described in our Annual Reportcurrent report on Form 10-K for8-K filed on June 2, 2023, other than the year ended December 31, 2021, some of which are new and some of which are mitigated. Many ofupdates to the following risks and uncertainties are, and will be, exacerbated any worsening of the global business and economic environment as a result. The occurrence of any of the adverse developments described in the following risk factors could materially and adversely harm our business, financial condition, results of operations or prospects. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Relating to Our 2022 Strategic Realignmentset forth below.

We may be unableunsuccessful in raising the capital necessary to realize the potential benefits of, andaddress our going concern issues, or if we are successful, it may be subjecton terms that are highly dilutive to potential liabilities in connection with, our 2022 Strategic Realignment.

We have engaged in a strategic realignment process, which we refer to as our 2022 Strategic Realignment, pursuant to which we are exploring strategic options for enhancing and preserving shareholder value, which may include exploration and evaluation of strategic options such as a merger, reverse merger, other business combination, sale of assets, licensing, or other strategic transactions. We have discontinued the clinical development of ANG-3070 for all indications and discontinued other development activities pending conclusion of the strategic process, except certain pre-clinical studies of ANG-3777 and research and discovery work to advance our ROCK inhibitor and CYP26 inhibitor programs. We may not be able to successfully enter into and complete a strategic transaction in a timely manner, if at all. In addition, the costs of implementing the 2022 Strategic Realignment process may be greater than we expect and we may be unable to offset such costs. As a result, we may not achieve the benefits we are seeking, even if we implement our 2022 Strategic Realignment process.

If we engage in an acquisition, reorganization or business combination, we will incur a variety of risks potentially adversely affecting our business operations or ourexisting stockholders.

In connection withHistorically, we funded our 2022 Strategic Realignment processoperations by raising capital from external sources and from the Merger. However, we are considering strategic business initiatives, which may include exploration and evaluation of strategic options such as a merger, reverse merger, other business combination,currently facing significant challenges to our ability to raise capital through the sale of assets, licensing, or other strategic transactions. If we pursue such a strategic transaction, we could, among other things:common stock, including the following factors:

▪ issue equity securities dilutive•in general, it is difficult for development stage companies to ourraise capital under current stockholders' percentage ownership;
▪ incur substantial debt straining our operations;
▪ spend substantial operational, financial, and management resources to integrate new businesses, technologies, and products;
▪ assume substantial actual or contingent liabilities;
▪ reprioritize our developmentmarket conditions, especially those with early-stage programs and even cease development of our product candidates; or
▪ merge with, or otherwise enter into a business combination with, another company in which our stockholders would receive cash and/or shares of the other company on terms certain of our stockholders may not deem desirable.like ours;

There is no guarantee we will be able to complete •the 2022 Strategic Realignment process in a timely or successful manner, which could have a material adverse effect on our business.

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Our recent organizational changes and cost cutting measures may not be successful.

In July 2022, we implemented a reduction-in-force affecting a majority of our workforce. The objective of this workforce reduction was to realign our workforce to meet our needs in light of the results we received in clinical trials and the commencement of our 2022 Strategic Realignment process. However, these restructuring and cost cutting activities may yield unintended consequences and costs, such as attrition beyond our intended reduction-in-force, a reduction in morale among our remaining employees, and the risk we may not achieve the anticipated benefits of the 2022 Strategic Realignment, all of which may have an adverse effect on our results of operations or financial condition. In addition, while positions have been eliminated, certain functions necessary to our reduced operations remain, and we may be unsuccessful in distributing the duties and obligations of departed employees among our remaining employees. We may also discover the reductions in workforce and cost cutting measures will make it difficult for us to resume development activities we have suspended or pursue new initiatives, requiring us to hire qualified replacement personnel, which may require us to incur additional and unanticipated costs and expenses. As a result of the loss of services of substantially all of our personnel, including several of our executive officers,perception that we may be unable to continue as a going concern may impede our operationsability to attract further equity investment; and meet our ongoing obligations. Any of these unintended consequences may have a material adverse impact on our business, financial condition, and results of operations.

We may not be able to comply with Nasdaq’s continued listing standards.

•
Our common stock trades on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “ANGN.” There is also no guarantee we will be able to perpetually satisfy Nasdaq’s continued listing requirements to maintain our listing on Nasdaq for any periods of time. Among the conditions required for continued listing on Nasdaq, we are required to maintain a stock price over $1.00 per share pursuant to Rule 5550(a)(2) of the Nasdaq Listing Rules. On November 9, 2022, our common stock has traded as low as $0.81 per share. Accordingly, we may not be able to maintain a stock price over $1.00 per share and could facelimited trading volume, which limits the risk of our common stock being delisted if the closing bid pricedemand for our common stock falls below $1.00 per share for 30 consecutive business days and we are unable to regain compliance.stock.

In addition, evenGiven these factors, there can be no assurances we will be successful at raising sufficient capital to address our going concern issues. However, if we demonstrate compliance with the requirement above, we will have to continue to meet other objective and subjective listing requirements to continue to be listed on Nasdaq, which we may not be able continue to meet. Delisting from Nasdaq could make trading our common stock more difficult for investors, potentially leading to declines in our share price and liquidity. Without a Nasdaq listing, stockholders may have a difficult time obtaining a quote for the sale or purchase of our common stock, the sale or purchase of our common stock would likely be made more difficult, and the trading volume and liquidity of our common stock could decline. Delisting from Nasdaq could also result in negative publicity and could also makeare successful, it more difficult for us to raise additional capital.

Risks Relating to Our Financial Position and Need for Additional Capital

We have temporarily suspended our clinical programs and we have no products approved for sale, which makes it difficult to assess our future viability.

We are a biopharmaceutical company that has suspended its clinical programs, has only a small number of pre-clinical programs, and has no products approved for sale. Drug development is a highly speculative undertaking and involves a substantial degree of risk. We have not yet submitted any product candidates for approval or received approval of any product candidate by regulatory authorities in any jurisdiction, including the United States Food and Drug Administration (FDA). We do not expect to generate revenue from product sales unless we, or we or our collaborators, resume clinical development of our product candidates and obtain approval and commercialize our product candidates, which we do not expect to occur for several years, if ever. We expect to continue to incur net losses for the foreseeable future to the extent we advance our product candidates through preclinical and clinical and development, and as we continue to incur expenses to protect our intellectual property, maintain our general and administrative support functions, and incur costs associated with operating as a public company. If we are unable to enroll clinical trials for any of our product candidates, or we fail in clinical trials or do not gain regulatory approval, we may never generate revenue or become profitable.

To achieve our goals we will require substantial additional funding, for which capital may not be available to us on acceptable terms, or at all, and, if not so available, may require us to delay, limit, reduce or cease operations.

We have invested and, to the extent we resume clinical development and clinical trials of our product candidates following our 2022 Strategic Realignment process, will continue to invest a significant portion of our efforts and financial resources in research and development activities. Developing pharmaceutical products,
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including conducting preclinical studies and clinical trials, is expensive. We will require substantial additional future capital to complete clinical development, including additional clinical studies, and seek regulatory approval to bring our product candidates to market. Regulatory authorities in the United States and elsewhere could also require we perform additional preclinical studies or clinical trials to receive or maintain regulatory approval of our product candidates, and our expenses would further increase beyond what we currently expect. Because successful development of our product candidates is uncertain, we are unable to estimate the actual funds we will require to complete research and development of our product candidates as well as the costs of commercializing any of our wholly-owned product candidates and those for which we retain the right to commercialize.

We estimate our current cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements well into 2023. We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with our 2022 Strategic Realignment process and research, development and commercialization of biotechnology products, we are unable to estimate the exact amount of our operating capital requirements. The amount and timing of our future funding requirements will depend on many factors, including, but not limited to, the results and duration of our 2022 Strategic Realignment process and, to the extent we commence or resume one or more of our clinical programs:

▪ the scope, progress, results and costs of researching and developing product candidates, and conducting preclinical studies and clinical trials;
▪ the outcome of clinical trials;
▪ whether we are able to take advantage of any FDA expedited development and approval programs for any of our product candidates;
▪ the extent to which COVID-19 may impact our business, including our clinical trials and financial condition;
▪ the willingness of the FDA and foreign regulatory authorities to accept the results of our completed and planned clinical trials and preclinical studies and other work;
▪ the number and characteristics of product candidates we pursue, including our product candidates in preclinical development;
▪ the ability of our product candidates to progress through clinical development successfully;
▪ our need to expand our research and development activities, including to conduct additional clinical trials;
▪ the costs of acquiring, licensing or investing in businesses, products, product candidates and technologies;
▪ our need and ability to hire additional personnel, including management, clinical development, medical and commercial personnel;
▪ the costs associated with securing and establishing manufacturing capabilities, as well as those associated with packaging, warehousing and distribution; and
▪ the economic and other terms, timing of and success of our existing licensing arrangements and any collaboration, licensing or other arrangements into which we may enter in the future and the timing and amount of payments thereunder.
▪ In addition, whether or not we resume clinical trials of our product candidates, we will continue to incur costs:
▪ to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights, and
▪ the costs associated with being a public company, including our need to implement additional internal systems and infrastructure, including financial and reporting systems;

Until such time we can generate sufficient revenue from sales of any product candidates, if ever, we expect to finance our operations through public or private equity offerings, debt financings or other sources of capital, including collaborations, licenses, credit or loan facilities, receipt of research contributions or grants, tax credits or a combination of one or more of these funding sources. Adequate funding may not be available to us on acceptable terms, or at all. This may be particularly true if global capital markets continue to experience extreme volatility due to recent economic uncertainty or armed conflict. To the extent we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences adversely affecting the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements including covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through additional collaborations, or other similar arrangements with third
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parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorableare very highly dilutive to us and/or may reduce the value of our common stock. Ifexisting stockholders.In addition, if we are unable to raise additional funds through equity or debt financings when needed,capital, we may be requiredwill have to delay, limit, reducecurtail or terminate any ongoing product development or commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.

Risks Relating to the Development and Regulatory Approval of Our Product Candidates

COVID-19 could adversely impact our business, including any clinical trials and our financial condition.

We have been and continue to be subject to risks related to public health crises such as the global pandemic associated with COVID-19. As COVID-19 continues to persist around the globe, to the extent we resume clinical trials or commence new clinical trials, we may experience disruptions that could severely impact our business and clinical trials, including:

▪ delays or difficulties in enrolling patients in clinical trials;
▪ delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;
▪ diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;
▪ interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures, the occurrence of which could affect the integrity of clinical trial data;
▪ the risk that participants enrolled in our clinical trials will acquire COVID-19 while the clinical trial is ongoing, which could impact the results of the clinical trial, including by increasing the number of observed adverse events;
▪ limitations in employee resources that would otherwise be focused on the conduct of our clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people;
▪ delays in receiving authorizations from local regulatory authorities to initiate our planned clinical trials;
▪ delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials;
▪ interruption in global shipping that may affect the transport of clinical trial materials, such as investigational drug product used in our clinical trials;
▪ changes in local regulations as part of a response to the COVID-19 pandemic which may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;
▪ interruptions or delays in preclinical studies due to restricted or limited operations at our research and development laboratory facilities or at our third-party clinical research organizations;
▪ delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; and
▪ refusal of the FDA to accept data from clinical trials in affected geographies outside the United States.

The global pandemic of COVID-19 continues to evolve. The extent to which COVID-19 may impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the geographic spread of the disease and its variants, business closures or business disruptions, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

Product development and regulatory approval involve a lengthy and expensive process with uncertain outcomes. We cannot be certain any of our product candidates will receive or maintain regulatory approval and, without regulatory approval, we and our collaborators will not be able to market our product candidates.

We currently have suspended our clinical programs, only have a small number of pre-clinical programs, and have no products approved for sale, and even if we resume clinical trials we cannot guarantee we will ever have approved products we or our collaborators can market and sell. The development of a product candidate and issues relating to its approval and marketing are subject to extensive regulation by regulatory authorities, including the FDA in the United States and other regulatory authorities in other foreign countries, with regulations differing from country to country. We are not permitted to market our product candidates in the United States or elsewhere until we receive
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regulatory approval and/or marketing authorization, such as approval of an NDA from the FDA. We have not submitted any marketing applications for any of our product candidates.

New drug marketing applications must include extensive preclinical and clinical data and supporting information to establish the product candidate's safety and effectiveness for each desired indication. Such marketing applications must also include significant information regarding the chemistry, manufacturing, and controls for the product. Even if we resume clinical trials of our product candidates, obtaining approval of our product candidates will be a lengthy, expensive, and uncertain process, and we may not be successful. Specifically, the review processes of the FDA and foreign regulatory authorities can take years to complete, and approval is never guaranteed. Even if a product is approved, the FDA or foreign regulatory authorities may limit the indications for which the product may be marketed, require extensive warnings on the product labeling or require expensive and time-consuming additional clinical trials or reporting as conditions of approval. The FDA or foreign regulatory authorities also may not approve our product candidates with the labeling we believe is necessary or desirable for the successful commercialization of such product candidates. Obtaining regulatory approval for marketing of a product candidate in one country does not ensure we will be able to obtain regulatory approval in any other country.

The FDA or any foreign regulatory authorities can delay, limit or deny approval of our product candidates for many reasons, including:

▪ our inability to demonstrate to the satisfaction of the FDA or the applicable foreign regulatory authority any of our product candidates are safe and effective for the requested indication;
▪ the FDA's or the applicable foreign regulatory authority's disagreement with our trial protocols or the interpretation of data from preclinical studies or clinical trials;
▪ our inability to demonstrate the clinical and other benefits of any of our product candidates outweigh any safety or other perceived risks;
▪ the FDA's or the applicable foreign regulatory authority's requirement for additional preclinical studies or clinical trials;
▪ the FDA's or the applicable foreign regulatory authority's non-approval of the formulation, labeling or specifications of any of our product candidates;
▪ the FDA's or the applicable foreign regulatory authority's failure to approve our manufacturing processes and facilities or the facilities of third-party manufacturers upon which we rely; or
▪ the potential for approval policies or regulations of the FDA or the applicable foreign regulatory authorities to significantly change in a manner rendering our clinical data insufficient for approval.

If we resume clinical trials, we cannot predict whether the clinical trials of our product candidates will be successful, or whether regulators will agree with our conclusions regarding the preclinical studies and clinical trials we have conducted to date or we conduct in the future. If we are unable to obtain approval from regulatory authorities for any of our product candidates, we may not be able to generate sufficient revenue to become profitable or to continue our operations.

Delays or difficulties in the commencement, enrollment and completion of clinical trials could result in increased costs to us and delay or limit our ability to obtain regulatory approval our product candidates.

If we resume or commence clinical trials, delays in the commencement, enrollment, and completion of clinical trials would increase our product development costs beyond what we expect or could limit the regulatory approval of our product candidates. Delays in any of our clinical trials may increase the amount of additional funding we will require to complete these trials. The commencement, enrollment, and completion of clinical trials can be delayed, challenged or suspended for a variety of reasons, including but not limited to:

▪ severity of the disease under investigation;
▪ inability to obtain sufficient funds required for a clinical trial;
▪ inability to obtain Institutional Review Board (IRB) approval at participating institutions;
▪ our ability to effectively manage the clinical research organizations (CROs) we have engaged to conduct of our clinical trials;
▪ the extent to which COVID-19 may impact our clinical trials and our or our CROs' ability to monitor such trials;
▪ the extent to which the Russian invasion of Ukraine may impact our clinical trials and our or our CROs' ability to monitor such trials;
▪ availability and efficacy of approved medications or competing product candidates in development for the disease under investigation;
▪ the patient eligibility criteria defined in the protocol;
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▪ the ability to attract and retain patients and the general willingness of patients to enroll, consent and complete participation in the trial;
▪ the extent to which there is competition for patients to enroll in clinical trials;
▪ the size of the patient population required for analysis of the trial's primary endpoint or endpoints;
▪ clinical holds, other regulatory objections to commencing or continuing a clinical trial, or the inability to obtain regulatory approval to commence a clinical trial in countries requiring such approvals;
▪ discussions with the FDA or foreign regulatory authorities regarding the scope or design of our clinical trials;
▪ severe or unexpected drug-related adverse effects experienced by patients; and
▪ inability to timely manufacture sufficient quantities of the product candidate and other clinical supplies required for a clinical trial.

Changes in regulatory requirements and related guidance related to regulatory approval may also occur and we may need to amend clinical trial protocols to reflect these changes. Amendments may require us to resubmit clinical trial protocols to IRBs for re-examination, which may impact the costs, timing or successful completion of our clinical trials.

Furthermore, if we are required to conduct additional clinical trials or other preclinical studies of our product candidates beyond those we contemplate, our ability to obtain or maintain regulatory approval of these product candidates and generate revenue from their sales would be similarly harmed.

Clinical failure can occur at any stage of clinical development, and the results of earlier clinical trials are not necessarily predictive of future results.

Clinical failure can occur at any stage of our clinical development. For example, in the fourth quarter of 2021, we disclosed the results of the ANG-3777 Phase 3 clinical trial for delayed graft function (DGF) and AKI associated with cardiac surgery involving cardiopulmonary bypass (CSA-AKI), neither of which met their primary endpoints despite the existence of encouraging pre-clinical and clinical data for ANG-3777 established prior to initiating such studies. Clinical trials may produce negative or inconclusive results, and we or our collaborators may decide, or regulators may require us, to conduct additional clinical trials or preclinical studies. In addition, data obtained from trials and studies are susceptible to various interpretations, and regulators may not interpret our data as favorably as we do, which may delay, limit or prevent regulatory approval. Success in preclinical studies and early clinical trials does not ensure subsequent clinical trials will generate the same or similar results or otherwise provide adequate data to demonstrate the efficacy and safety of a product candidate. A number of companies in the pharmaceutical industry, including those with greater resources and experience than us, have suffered significant setbacks in Phase 3 registration trials, even after seeing promising results in earlier clinical trials or pre-clinical studies.
In addition, the design of a clinical trial can determine whether its results will support approval of a product, and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced. We have limited experience in designing clinical trials as we have never previously completed a Phase 3 registration trial with results sufficient to obtain regulatory approval or submitted an NDA to the FDA or a marketing application to any foreign regulatory authority, and we may be unable to design and execute a clinical trial to support regulatory approval. Further, clinical trials of potential products often reveal it is not practical or feasible to continue development efforts, as has occurred with the clinical development of AGN-3070.
If we resume or commence clinical trials, the product candidates in those clinical trials may be the subject of clinical trial failures or found to be unsafe or lack efficacy, and if that were to occur we would not be able to obtain regulatory approval for them and our business would be harmed.

Even if we resume or commence, and successfully complete, any clinical trials ofeliminate one or more of our product candidates, the product candidates may fail for other reasons.

Even if we successfully resume or commence,research and successfully complete, any clinical trials for one or more of our product candidates, such product candidates may fail for other reasons, including the possibility the product candidates will:
▪ fail to receive the regulatory approvals required to market them as drugs;
▪ be subject to proprietary rights held by others requiring the negotiation of a license agreement prior to marketing;
▪ be difficult or expensive to manufacture on a commercial scale;
▪ have adverse side effects that make their use less desirable;
▪ not achieve reimbursement or sales levels sufficient for continued marketing; or
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▪ fail to compete with product candidates or other treatments commercialized by our competitors.
If we are unable to receive and maintain the required regulatory approvals, secure our intellectual property rights, maintain an acceptable safety profile or fail to compete with our competitors' products, our business, financial condition, and results of operations could be materially and adversely affected.

Our product candidates may have undesirable side effects which may delay or halt clinical development or prevent marketing approval or, if approval is received, require them to be taken off the market, require them to include safety warnings, or otherwise limit their sales.

The results of any clinical trials of our product candidates we may resume or commence may show such product candidates led to patient safety concerns or undesirable or unacceptable side effects, creating risk to the patient which is deemed to outweigh the potential benefits of treatment to that patient. Unforeseen side effects from any of our product candidates could arise either during clinical development or, if approved, after the approved product has been marketed. Any such event could interrupt, delay or halt such clinical trials, resulting in the denial of regulatory approval by the FDA and other regulatory authorities or result in restrictive label warnings, if approved. In light of widely publicized events concerning the safety risk of certain drug products, regulatory authorities, members of Congress, the Government Accounting Office, medical professionals and the general public have raised concerns about potential drug safety issues. These events have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products and establishment of risk management programs that may, for instance, restrict distribution of drug products. The increased attention to drug safety issues may result in a more cautious approach by the FDA to clinical trials. Data from clinical trials may receive greater scrutiny with respect to safety, which may make the FDA or other regulatory authorities more likely to terminate clinical trials before completion, or require longer or additional clinical trials that may result in substantial additional expense and a delay or failure in obtaining approval or approval for a more limited indication than originally sought.
If any of our product candidates receives marketing approval and we or others later identify undesirable or unacceptable side effects caused by such products:
▪ regulatory authorities may require the addition of labeling statements or specific warnings, including "Black Box" warnings if the FDA views the possible side effects as very severe;
▪ we may be required to change instructions regarding the way the product is administered, conduct additional clinical trials, or change the labeling of the product;
▪ we may be subject to limitations on how we may promote the product;
▪ sales of the product may decrease significantly;
▪ regulatory authorities may require us to take our approved product off the market;
▪ we may be subject to litigation or product liability claims; and
▪ our reputation may suffer.
Any of these events could prevent us or any potential future collaborators from achieving or maintaining market acceptance of the affected product or could substantially increase commercialization costs and expenses, which, in turn, could delay or prevent us from generating significant revenues from the sale of our products.

Clinical trials of our product candidates may not uncover all possible adverse effects patients may experience or be indicative of the effect of our product candidates post approval in the general population.

Clinical trials are conducted in representative samples of the potential patient population, which may have significant variability. By design, clinical trials are based on a limited number of subjects and are of limited duration of exposure to the product, to determine whether the product candidate demonstrates the substantial evidence of efficacy and safety necessary to obtain regulatory approval. As with the results of any statistical sampling, we cannot be sure any evidence of efficacy from any clinical trials we may resume or commence will be repeated in the general population or all side effects of our product candidates may be uncovered. It may be the case only with a significantly larger number of patients exposed to the product candidate for a longer duration may a more complete safety and efficacy profile be identified. Further, even larger clinical trials may not identify rare serious adverse events, and the duration of such studies may not be sufficient to identify when those events may occur particularly for adverse events or safety risks could occur over time, such as the development and diagnosis of cancer. Other products have been approved by the regulatory authorities for which safety concerns have been uncovered following approval. Such safety concerns have led to labeling changes, restrictions on distribution through use of a REMS, or withdrawal of products from the market, and any of our product candidates may be subject to similar risks.

Due to the significant resources required for the development and commercialization of our product candidates, we must prioritize development of certain product candidates and/or certain disease indications. We may expend our limited resources on product candidates or indications that do not yield a
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successful product and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

If our 2022 Strategic Realignment does not result in a strategic transaction, we plan to develop a pipeline of product candidates to treat potentially life-threatening acute organ injuries and fibrotic diseases. However, due to the significant resources required for the development of our product candidates, we must focus on specific indications and decide which product candidates to pursue and the amount of resources to allocate to each. For instance, we plan to identify a lead candidate in one or more of our pre-clinical programs, but not in all such programs.
Our decisions concerning the allocation of research, development, collaboration, management and financial resources toward particular product candidates or therapeutic areas may not lead to the development of any viable commercial product and may divert resources away from better opportunities. Similarly, our potential decisions to delay, terminate or collaborate with third parties in respect of certain programs may subsequently also prove to be suboptimal and could cause us to miss valuable opportunities. If we make incorrect determinations regarding the viability or market potential of any of our programs or product candidates or misread trends in the biopharmaceutical industry, our business, financial condition and results of operations could be materially adversely affected.

Our business operations and relationships with investigators, healthcare professionals, consultants, third-party payors, patient organizations and customers will be subject to applicable healthcare regulatory laws, which could expose us to penalties.

Our business operations and current and future arrangements with investigators, healthcare professionals, consultants, third-party payors, patient organizations and customers, if any, may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations. These laws may constrain the business or financial arrangements and relationships through which we conduct our operations, including how we research, market, sell and distribute our product candidates, if approved. Such laws include: the U.S. federal Anti-Kickback Statute; U.S. federal civil and criminal false claims laws, including the civil False Claims Act; the federal fraud provision of the U.S. federal Health Insurance Portability and Accountability Act of 1996 (HIPAA); HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH; the FDCA; the U.S. Physician Payments Sunshine Act; federal consumer protection and unfair competition laws; analogous U.S. state laws and regulations, including state anti-kickback and false claims laws; and similar healthcare laws and regulations in the EU and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers.

Ensuring our current internal operations and future business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs. It is possible governmental authorities will conclude our business practices, including our relationships with physicians and other healthcare providers, some of whom are compensated in the form of stock options for consulting services provided, may not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of the laws described above or any other governmental laws and regulations that may apply to us, we may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, exclusion from government-funded healthcare programs, such as Medicare and Medicaid or similar programs in other countries or jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, disgorgement, individual imprisonment, contractual damages, reputational harm, diminished profits and the curtailment or restructuring of ourcease operations. If any of the physicians or other providers or entities with whom we expect to do business are found to not be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs and imprisonment, which could affect our ability to operate our business. Further, defending against any such actions can be costly, time-consuming and may require significant personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business and our ability to sell our products may be materially harmed.

Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval for and commercialize any of our product candidates we may determine to pursue and affect the prices we may obtain.

In the event we resume or commence clinical trials for our product candidates, we will be subject to significant legislation regarding healthcare. In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any product candidates for which we obtain marketing approval.

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In the United States, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (Affordable Care Act), was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.

Since its enactment, there have been judicial, executive branch and congressional challenges to certain aspects of the Affordable Care Act, and we expect there will be additional challenges and amendments to the Affordable Care Act in the future. For example, legislation informally titled the Tax Cuts and Jobs Acts (TCJA) was enacted, which, among other things, removed penalties for not complying with the individual mandate to carry health insurance. On June 17, 2021 the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed byCongress. Thus, the Affordable Care Act will remain in effect in its current form. It is possible the Affordable Care Act will be subject to judicial or congressional challenges in the future. It is unclear how such challenges or the health reform measures of the Biden administration will affect the Affordable Care Act or our business.

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. In August 2011, the Budget Control Act of 2011, among other things, included aggregate reductions of Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments, will remain in effect through 2031, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, unless additional congressional action is taken. Under current legislation, the actual reduction in Medicare payments will vary from 1% in 2022 to up to 3% in the final fiscal year of this sequester. In addition, on January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several providers, including hospitals, and an increase in the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain.

We expect other healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and in additional downward pressure on the price we receive for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our product candidates, if approved.

Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products. In July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,” with multiple provisions aimed at prescription drugs. In response to Biden’s executive order, on September 9, 2021, HHS released a Comprehensive Plan for Addressing High Drug Prices outlining principles for drug pricing reform and setting out a variety of potential legislative policies Congress could pursue to advance these principles. No legislation or administrative actions have been finalized to implement these principles. In addition, Congress is considering drug pricing as part of other reform initiatives.Individual states in the United States have become increasingly aggressive in implementing regulations designed to contain pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures. Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, results of operations, financial condition and prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for our product candidates, if approved, or put pressure on our product pricing, which could negatively affect our business, results of operations, financial condition and prospects.

Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny by Congress of the FDA's approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.

We have relied, and may continue to rely, on single-source third party contract manufacturing organizations to manufacture and supplyidentified a material weakness in our product candidates, and if the FDA or foreign regulatory authorities do not
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approve these manufacturing facilities or if these organizations fail to perform, our ability to conduct clinical trials and obtain regulatory approval our product candidates may be harmed.

We do not own facilities for clinical and commercial manufacturing of our product candidates, and to the extent we resume or commence clinical trials of any of our product candidates, we will rely upon third-party contract manufacturing organizations to manufacture and supply product candidates for our clinical trials and we will rely in such manufacturers to meet commercial demand.

Additionally, the facilities at which any of our product candidates are manufactured must be the subject of a satisfactory inspection before the FDA or the regulators in other jurisdictions approve the product candidate manufactured at that facility. We are completely dependent third-party vendors for compliance with the current Good Manufacturing Practice requirements (cGMPs), and the requirements of United States and non-United States regulators for the manufacture of our active ingredients, drug products, and finished products. If our manufacturers cannot successfully manufacture material conforming to our specifications and cGMPs of any applicable governmental agency, our product candidates will not be approved or, if already approved, may be subject to recalls or demands by regulatory agencies to stop selling the product until manufacturing issues are resolved.
Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured the product candidates, including:
▪ the possibility we are unable to enter into a manufacturing agreement with a third party to manufacture our product candidates;
▪ the possible breach of the manufacturing agreements by the third parties because of factors beyond our control; and
▪ the possibility of termination or nonrenewal of the agreements by the third parties before we are able to arrange for a qualified replacement third-party manufacturer.
Any of these factors could delay the development or approval of our product candidates, cause us to incur higher costs or prevent us from developing our product candidates successfully. Furthermore, if the supply chain for our clinical trial materials is interrupted or if any of our contract manufacturers fail to deliver the required clinical trial supplies on a timely basis and at commercially reasonable prices and we are unable to find one or more replacement manufacturers capable of production at a substantially equivalent cost, in substantially equivalent volumes and quality and on a timely basis, we may be unable to supply any clinical trial programs we may have with clinical trial materials which could delay our programs and increase our costs.

Changes in structure of or funding for the FDA and other government agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed in a timely manner, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel, the maintenance of regulatory review timelines, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. The lack of appropriate funding or appropriate resource for the FDA, could have material adverse effect on our ability to develop ANG-3070 and our product candidates.

If manufacturers obtain approval for generic versions of our product candidates, our business will be materially harmed.
In our industry, much of an innovative product's commercial value is realized while it has patent protections and market exclusivity. When market exclusivity expires generic versions of the product can be approved and marketed, and there can be substantial decline in the innovative product's sales.

Market exclusivity for our products candidates is based upon patent rights and certain regulatory forms of exclusivity. If we are unable to secure or maintain our exclusivities, we may face generic competition that could materially impede our ability to effectively commercialize our products, including be reducing the price we can charge and reducing our market share.

In some countries, patent protections for our product candidates may not exist because certain countries did not historically offer the right to obtain specific types of patents or we did not file patents in those markets. Also, the patent environment is unpredictable and the validity and enforceability of patents cannot be predicted with certainty.

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Specifically, with regard to the potential for generic entry in the United States, under the U.S. Food, Drug and Cosmetic Act (FDCA) the FDA can approve an Abbreviated New Drug Application (ANDA) for a generic version of an approved branded drug without the ANDA applicant undertaking the clinical testing necessary to obtain approval to market a new drug. Generally, in place of such clinical studies, an ANDA applicant needs only to submit data demonstrating its product has the same active ingredient(s), strength, dosage form, route of administration and that it is bioequivalent to the approved product.

The ANDA process can result in generic competition if the patents at issue are not upheld or if the generic competitor is found not to infringe the owner's patents. If this were to occur with respect to any of our product candidates after approval, our business could be materially harmed.

Risks Relating to Collaborations and Commercialization of Our Product Candidates

If we are able to develop and obtain regulatory approval for any of our product candidates, our business will be materially harmed if we are unable to successfully commercialize such approved products.

Even if we pursue and receive regulatory approval of any product candidate, it is uncertain whether we will be able to successfully commercialize such product. Our marketing of any approved product will be limited to the product’s approved use and potentially subject to other limitations as set forth in its approved prescribing information and package insert. Accordingly, we cannot ensure any of our future approved products will be successfully developed, approved or commercialized. If we are unable to successfully commercialize any future approved products, we may not be able to generate sufficient revenue to operate our business. In particular, the future commercial success of any approved product is subject to a number of risks, including the following:
▪ the emergence of unknown side effects causing an approved drug to be taken off the market;
▪ the receipt of market acceptance by physicians, hospitals, payers and patients;
▪ our ability to obtain meaningful pricing and reimbursement for any approved product, and
▪ our ability to obtain, maintain or enforce our patents and other intellectual property rightsinternal control over financial reporting related to our approved products.

If we fail to develop market opportunities for any future products, or market opportunities are smaller than we believe they are, our potential to generate revenue may be adversely affected, and our business may suffer.

The precise incidence and prevalence for all the conditions we currently or may intend to address with any future product candidates are unknown. Our projections of both the number of people who have the diseases we target, as well as the subset of people with these diseases who have the potential to benefit from treatment with any future product candidates, are based on our beliefs and estimates. These estimates have been derived from a variety of sources, including the scientific literature, surveys of clinics or market research, and may prove to be incorrect. Further, new trials may change the estimated incidence or prevalence of these diseases. The total addressable market across any future product candidates will ultimately depend upon, among other things, the diagnosis criteria included in the final label for each of the future product candidates approved for sale for these indications, the availability of alternative treatments and the safety, convenience, cost and efficacy of any future product candidates relative to such alternative treatments, acceptance by the medical community and patient access, drug pricing and reimbursement. The number of patients in the United States and other major markets and elsewhere may turn out to be lower than expected, patients may not be otherwise amenable to treatment with our products or new patients may become increasingly difficult to identify or gain access to, all of which would adversely affect our results of operations and our business.

Risks Relating to Our Business and Strategy

We face competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively.

The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. We will have competitors in the United States, Europe, and other jurisdictions, including major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical and generic drug companies, and universities and other research institutions, for any of our product candidates we determine to pursue. Many of these competitors have greater financial and other resources, such as larger research and development staff and more experienced marketing and manufacturing organizations. Large pharmaceutical companies, in particular, have extensive experience in clinical testing, obtaining regulatory approvals, recruiting patients, and manufacturing pharmaceutical products. These companies also have significantly greater research, sales, and marketing capabilities and collaborative arrangements in our target markets with leading companies and
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research institutions. Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds potentially making the product candidates we develop obsolete. As a result of all of these factors, any of these competitors may succeed in obtaining patent protection and/or FDA approval or discovering, developing, and commercializing drugs for kidney, heart, liver, lung and other diseases we are targeting before we do. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. In addition, many universities and private and public research institutes may become active in our target disease areas.
We believe our ability to successfully compete will depend on, among other things:
▪ our ability to recruit and enroll patients for our clinical trials;
▪ our ability to design and successfully execute appropriate clinical trials;
▪ our ability to gain and to maintain positive relationships with regulatory authorities;
▪ the efficacy, safety, and reliability of our product candidates;
▪ the speed at which we develop our product candidates;
▪ our ability to commercialize and market any of our product candidates receiving regulatory approval;
▪ the pricing of our products;
▪ adequate levels of reimbursement by government entities and by private health insurance plans;
▪ our ability to protect intellectual property rights and regulatory exclusivities related to our products;
▪ our ability to manufacture and sell commercial quantities of any approved products to the market; and
▪ acceptance of our product candidates by downstream customers, including physicians, other healthcare providers, pharmacists, and patients.
If our competitors market products more effective, safer, or less expensive than our products or product candidates, or if any, or these products reach the market sooner we may not achieve commercial success. In addition, the biopharmaceutical industry is characterized by rapid technological change. It may be difficult for us to stay abreast of the rapid changes in each area of research and development. If we fail to stay at the forefront of change, we may be unable to compete effectively. Products developed by our competitors may render our product candidates or products obsolete, less competitive or not economical.

We will depend on single third-party suppliers for the manufacture and supply of drug substance and potential future commercial product supplies for our product candidates, and any performance failure on the part of our supplier could delay the development and potential commercialization of our product candidates.

To the extent we resume or commence clinical trials of our product candidates, we cannot be certain our drug substance supplier will continue to provide us with sufficient quantities of drug substance, or our manufacturers will be able to produce sufficient quantities of drug product incorporating such drug substance, to satisfy our anticipated specifications and quality requirements, or such quantities can be obtained at pricing necessary to sustain acceptable pharmaceutical margins for any of our product candidates, if approved. Our dependence on a single supplier for our drug substance and the challenges we may face in obtaining adequate supply of drug substance involves several risks, including limited control over pricing, availability, quality and delivery schedules, and such risks may be heightened as a result of the COVID-19 pandemic. Any supply interruption in drug substance or drug product could materially harm our ability to complete our development program for such indications, until a new source of supply, if any, could be identified and qualified. We may be unable to find a sufficient alternative supply channel in a reasonable time or on commercially reasonable terms. Any performance failure on the part of our suppliers could delay the development and potential commercialization of our product candidates, including limiting supplies necessary for clinical trials and regulatory approvals, which would have a material adverse effect on our business.

We face potential product liability exposure, and if successful claims are brought against us, we may incur substantial liability for a product candidate and may have to limit its commercialization.

The use of our product candidates in clinical trials and the sale of any products for which we may obtain marketing approval expose us to the risk of product liability claims. Product liability claims may be brought against us or our collaborators by participants enrolled in our past and any future clinical trials, patients, healthcare providers, or others using, administering, or selling our products. If we cannot successfully defend ourselves against any such claims, we would incur substantial liabilities. Regardless of merit or eventual outcome, product liability claims may result in:
▪ withdrawal of clinical trial participants;
▪ termination of clinical trial sites or entire trial programs;
▪ costs of related litigation;
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▪ substantial monetary awards to patients or other claimants;
▪ decreased demand for our product candidates and loss of revenues;
▪ impairment of our business reputation;
▪ diversion of management and scientific resources from our business operations; and
▪ the inability to commercialize our product candidates.

We have obtained limited product liability insurance coverage for our clinical trials in the United States and in selected other jurisdictions where we are conducting clinical trials. Our insurance coverage may not reimburse us or may not be sufficient to reimburse us for any expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive and, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to product liability. Large judgments have been awarded in class action lawsuits based on drugs with unanticipated side effects. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash resources and adversely affect our business.

Our insurance policies are expensive and only protect us from some business risks, which will leave us exposed to significant uninsured liabilities.

We do not carry insurance for all categories of risk our business may encounter. Some of the policies we currently maintain include property, general liability, employment benefits liability, business automobile, workers' compensation, products liability, malicious invasion of our electronic systems, and clinical trials (U.S. and foreign), and directors' and officers', employment practices and fiduciary liability insurance. We do not know, however, if we will be able to maintain insurance with adequate levels of coverage. Any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our financial position and results of operations.

Under the terms of the government grant funding we have received, the government may compel us to license to a third party, or suspend, terminate or withhold grant funding.

A significant amount of our discovery and initial clinical research we have conducted has been funded principally by United States government grants and contracts. As with all other pharmaceutical research programs supported in part by federal research dollars, conducting research under federal grants required us to grant the U.S. government a nonexclusive, nontransferable, irrevocable, paid-up license for the government to practice or have the invention practiced on its behalf throughout the world. Under certain circumstances, the government can require the grantee to license a third party, or the government may take title and grant a license itself, known as march-in rights, which may occur if the invention is not brought to practical use within a reasonable time, if health or safety issues arise, if public use of the invention is in jeopardy, or if other legal requirements are not satisfied. Although, to our knowledge, the U.S. government has never forced a grantee to license a third party or taken title and granted a license itself, these march-in rights are available to the government, and we cannot assure you the government will not exercise such rights in the future.
Under the terms and conditions of the government grant funding, we are obligated to comply with various reporting requirements and to take certain administrative actions. Material noncompliance with the terms and conditions of the grant funding may result in one or more enforcement actions by the grant agency. These enforcement actions include denying funds for the cost of funded activities, suspending the grant in whole or in part, pending corrective action, and withholding further grant awards. The grant agency may also terminate the grant for cause, or take other legally available remedies.

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

We have incurred substantial losses during our history and do not expect to become profitable in the near future, and we may never achieve profitability. To the extent we continue to generate taxable losses, unused losses will carry forward to offset a portion of future taxable income, if any, until such unused losses expire, if ever. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an "ownership change," generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a rolling three-year period, the corporation's ability to use its pre-change net operating loss carryforwards (NOLs) and other pre-change tax attributes (such as research and development tax credits) to offset its post-change income or taxes may be limited. We have not performed an analysis to assess whether an ownership change has occurred. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise become unavailable to offset future income tax liabilities. Under the TCJA, as modified by the Coronavirus Aid, Relief and Economic Security Act (the CARES Act), the amount of post-2017 NOLs that are permitted to deduct from U.S. federal income taxes for tax years beginning after December 31, 2020 is limited to 80% of our taxable income in such year, where taxable income is determined without regard to the NOL deduction itself. The TCJA, as modified
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by the CARES Act, generally eliminates the ability to carry back any NOLs to prior taxable years for tax years beginning after December 31, 2020, while allowing post-2017 unused NOLs to be carried forward indefinitely without expiration. Additionally, state NOLs generated in one state cannot be used to offset income generated in another state. For these reasons, even if we attain profitability, we may be unable to use a material portion of our NOLs and other tax attributes.

Any claims relating to improper handling, storage or disposal of hazardous materials used in our business could be costly and delay our research and development efforts.

Our research and development activities involve the controlled use of potentially harmful hazardous materials, including volatile solvents and chemicals causing cancer. Our operations also produce hazardous waste products. We face the risk of contamination or injury from the use, storage, handling or disposal of these materials. We are subject to federal, state and local laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. The cost of compliance with these laws and regulations could be significant, and current or future environmental regulations may impair our research, development or production efforts. If one of our employees were accidentally injured from the use, storage, handling, or disposal of these materials, the medical costs related to their treatment would be covered by our workers' compensation insurance policy. However, we do not carry specific hazardous waste insurance coverage and our general liability insurance policy specifically excludes coverage for damages and fines arising from hazardous waste exposure or contamination. Accordingly, in the event of contamination or injury, we could be subject to criminal sanctions or fines or be held liable for damages, our operating licenses could be revoked, or we could be required to suspend or modify our operations and our research and development efforts.

Risks Relating to Our Intellectual Property

It is difficult and costly to protect our proprietary rights, and we may not be able to ensure their protection. If our patent position and potential regulatory exclusivity do not adequately protect our product candidates, others could compete against us more directly, which would harm our business, possibly materially.

Our success will depend in part on obtaining and maintaining patent protection and trade secret protection of our current and future product candidates, and their methods of manufacture and use. Our ability to stop third parties from making, using, selling, offering to sell or importing our product candidates is dependent upon the extent to which we have rights under valid and enforceable patents and/or trade secrets that cover these activities. The patent positions of biotechnology and pharmaceutical companies can be highly uncertain and involve complex legal and factual questions. No consistent policy regarding the breadth of claims allowed in pharmaceutical patents has emerged to date in the United States or in many jurisdictions outside of the United States. Changes in either the patent laws or interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be issued in relevant jurisdictions from our present or future patent filings, or those we license from third parties, and further cannot predict the extent to which we will be able to enforce such issued claims in jurisdictions important to our business. If any patents we obtain or license are deemed invalid and unenforceable, our ability to commercialize or license our technology could be adversely affected.

It is possible others have filed, and in the future may file, patent applications covering products and technologies similar, identical or competitive to ours, or are otherwise important to our business. We cannot be certain any patent filings owned by a third party will not have priority over patent applications filed or in-licensed by us, or we or our licensors will not be involved in interference, opposition or invalidity proceedings before United States or foreign patent offices. The costs of defending our patents or enforcing our proprietary rights in post-issuance administrative proceedings and litigation can be substantial and the outcome can be uncertain. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, and/or could allow third parties to commercialize our technology or products and compete directly with us, without payment to us. Furthermore, third-party filings may issue as patents infringed by our manufacture or commercialization of our products. Licenses may not be available to such third party patents, and challenges to their validity or infringement may be expensive and may not succeed. If the breadth or strength of protection provided by our patents and patent applications is threatened, or if we are perceived or found to infringe intellectual property rights of others, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates, and could impede or preclude our ability to commercialize our products.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad. We may become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights or the patent rights of others. Such challenges may result in loss of
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exclusivity or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, any of which could limit our ability to stop others from using or commercializing similar or identical technology and products, and/or limit the duration of the patent protection of our technology and products.

Without patent protection for our compounds, pharmaceutical compositions, or formulations of our product candidates, our ability to stop others from using or selling our product, or other competitive products including our compounds, may be limited.

If the patent applications we hold or have in-licensed with respect to present or future product candidates fail to issue, if their breadth and/or strength of protection is limited or challenged, or if they fail to provide meaningful exclusivity for present or future product candidates, it could dissuade companies from collaborating with us to develop future candidates and threaten our ability to commercialize future commercial products. Any such outcome could have a materially adverse effect on our business.

We may also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or feasible. However, trade secrets are difficult to protect. Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, outside scientific collaborators, and other advisors may unintentionally or willfully disclose our information to competitors. Enforcing a claim a third party illegally obtained and is using any of our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how.

environment. If we do not obtain protection underremediate the Hatch-Waxman Act and similar legislation outside of the United States by extending the patent terms and obtaining data exclusivity for our product candidates, our business may be materially harmed.

Depending upon the timing, duration and specifics of FDA marketing approval of our product candidates, if any, one or more of our United States patents may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Act. The Hatch-Waxman Act permits a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process.

However, we may not be granted an extension of patent term because, for example, of failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. If we are unable to obtain patent term extension or the term of any such extension is less than what we request, the period during which we will have the right to exclusively market our product will be shortened and our competitors may obtain approval of competing products following our patent expiration, and our revenue could be reduced, possibly materially.

Any trademarks we may obtain may be infringed or successfully challenged, resulting in harm to our business.

We expect to rely on trademarks as one means to distinguish any of our product candidates approved for marketing from the products of our competitors. We have not yet selected trademarks for our product candidates, and have not yet begun the process of applying to register trademarks for our product candidates. Once we select trademarks and apply to register them, our trademark applications may not be approved. Third parties may oppose our trademark applications or otherwise challenge our use of the trademarks. In the event our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand recognition and could require us to devote resources to advertising and marketing new brands. Our competitors may infringe our trademarks, and we may not have adequate resources to enforce our trademarks.

In addition, any proprietary name we propose to use with our product candidate in the United States must be approved by the FDA, regardless of whether we have registered it, or applied to register it, as a trademark. The FDA typically conducts a review of proposed product names, including an evaluation of the potential for confusion with other product names. If the FDA objects to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort to identify a suitable proprietary product name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA.

Changes in U.S. patent law or the patent law of other countries or jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our products.

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The United States has enacted and implemented wide-ranging patent reform legislation. The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on actions by the U.S. Congress, the Federal Courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce patents we have obtained or licensed, or we might obtain or license in the future. Similarly, changes in patent law and regulations in other countries or jurisdictions or changes in the governmental bodies enforcing them or changes in how the relevant governmental authority enforces patent laws or regulations may weaken our ability to obtain new patents or to enforce patents we have obtained or licensed or we may obtain or license in the future.

We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights.

If we choose to go to court to stop another party from using the inventions claimed in any patents we obtain, that individual or company has the right to ask the court to rule such patents are invalid or should not be enforced against that third party. These lawsuits are expensive, would consume time and resources and would divert the attention of managerial and scientific personnel even if we were successful in stopping the infringement of such patents. In addition, there is a risk the court will decide such patents are not valid and we do not have the right to stop the other party from using the inventions.
There is also a risk, even if the validity of such patents is upheld, the court will refuse to stop the other party on the grounds such other party's activities do not infringe our patents. In addition, the United States Supreme Court has recently modified some tests used by the USPTO in granting patents over the past 20 years, which may decrease the likelihood we will be able to obtain patents and increase the likelihood of challenge of any patents we obtain or license.

We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing or increase the costs of commercializing our product candidates.

Our success will depend in part on our ability to operate without infringing the proprietary rights of third parties. We cannot guarantee our products or product candidates, or their manufacture or use, will not infringe third-party patents. Furthermore, a third party may claim we or our manufacturing or commercialization collaborators are using inventions covered by the third party's patent rights. It is also possible a third party might allege our products or product candidates, or their manufacture or use, incorporate or rely on trade secrets improperly received from the third party. A third party alleging violations of their intellectual property rights may go to court to stop us from engaging in our normal operations and activities, including making or selling our product candidates. Defense of such claims, regardless of their merit, are costly and could affect our results of operations and divert the attention of managerial and scientific personnel.

There is a risk a court would decide we or our commercialization collaborators are infringing the third party's intellectual property rights and would order us or our collaborators to stop relevant activities. In that event, we or our commercialization collaborators may not have a viable way to avoid the infringement and may need to halt commercialization of the relevant product. In addition, there is a risk a court will order us or our collaborators to pay the other party damages for having infringed the other party's intellectual property rights. In the future, we may agree to indemnify our commercial collaborators against certain intellectual property infringement claims brought by third parties. The pharmaceutical and biotechnology industries have produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform.

If we are sued for patent or other intellectual property (e.g., trade secret, trademark, etc.) infringement, we could incur significant costs, and delays in our product development or commercialization.

Our competitors may have filed, and may in the future file, patent applications covering technology like ours. Any such patent application may have priority over our patent applications, which could further require us to obtain rights to issued patents covering such technologies. If another party has filed a United States patent application on inventions similar to ours, we may have to participate in an interference or derivation proceeding declared by the USPTO to determine priority of invention in the United States. The costs of these proceedings could be substantial, and it is possible such efforts would be unsuccessful if, unbeknownst to us, the other party had independently arrived at the same or similar invention prior to our own invention, resulting in a loss of our United States patent position with respect to such inventions, and granting such position to the third party, so we may need to seek a
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license from such third party to continue our use of the technologies, which license might not be available, or might impose significant costs.

Other countries have similar laws permitting secrecy of patent applications and may be entitled to priority over our applications in such jurisdictions.

In addition, we may be subject to claims we are infringing other intellectual property rights, such as trademarks or copyrights, or misappropriating the trade secrets of others, and to the extent our employees, consultants or contractors use intellectual property or proprietary information owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

We may not have sufficient resources to bring actions alleging intellectual property infringement to a successful conclusion. In addition, if we do not obtain a license, develop or obtain non-infringing technology, fail to defend an infringement action successfully or have infringed patents declared invalid, we may incur substantial monetary damages, encounter significant delays in bringing our product candidates to market and be precluded from manufacturing or selling our product candidates. Furthermore, even if we are successful in proceedings relating to alleged intellectual property infringement or misappropriation, we may incur substantial costs and divert management's time and attention in pursuing these proceedings, which could have a material adverse effect on us.

Some of our competitors may be able to sustain the costs of complex litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to the USPTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and/or applications. We have systems in place to remind us to pay these fees, and we employ an outside firm and rely on our outside counsel to pay these fees due to the USPTO and non-United States patent agencies. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the market and this circumstance could have a material adverse effect on our business.

The laws of some foreign countries do not protect proprietary rights to the same extent as do the laws of the United States, and we may encounter significant problems in securing and defending our intellectual property rights outside the United States.

Many companies have encountered significant problems in protecting and defending intellectual property rights in certain countries. The legal systems of certain countries, particularly certain developing countries, do not always favor the enforcement of patents, trade secrets, and other intellectual property rights, particularly those relating to pharmaceutical products, which could make it difficult for us to stop infringement of our patents, misappropriation of our trade secrets, or marketing of competing products in violation of our proprietary rights. Proceedings to enforce our intellectual property rights in foreign countries could result in substantial costs, divert our efforts and attention from other aspects of our business, and put our patents in these territories at risk of being invalidated or interpreted narrowly, or our patent applications at risk of not being granted, and could provoke third parties to assert claims against us. We may not prevail in all legal or other proceedings we may initiate and, if we were to prevail, the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property we develop or license.

Risks Relating to Our Common Stock

Our stock price may be volatile and you may not be able to resell shares of our common stock at or above the price you paid.
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The trading price of our common stock could be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. These factors include those discussed in this "Risk Factors" section of this report and others such as the outcome of our 2022 Strategic Realignment process and the extent to which we resume clinical trials of our product candidates.

In addition, the stock markets in general, and the markets for pharmaceutical and biotechnology stocks in particular, have experienced extreme volatility that may have been unrelated to the operating performance of the issuer. These broad market fluctuations may adversely affect the trading price or liquidity of our common stock. In the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the issuer. If we were to become involved in securities litigation, we could incur substantial costs and resources and the attention of our management could be diverted from the operation of our business.

An active, liquid and orderly market for our common stock may not be sustained.
Our common stock is currently listed on the Nasdaq Global Select Market under the symbol “ANGN”. The price for our common stock may vary and an active or liquid market in our common stock may not be sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price you consider reasonable. An inactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire other businesses, applications, or technologies using our shares as consideration.
If we sell shares of our common stock in future financings, stockholders may experience immediate dilution and, as a result, our stock price may decline.
We may, from time to time, issue additional shares of common stock at a discount from the current trading price of our common stock, including pursuant to our 2021 Incentive Award Plan and 2021 Employee Stock Purchase Plan. As a result, our stockholders would experience immediate dilution upon the purchase of any shares of our common stock sold at such discount. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preferred stock or common stock. If we issue common stock or securities convertible into common stock, our common stockholders would experience additional dilution and, as a result, our stock price may decline.

We identified material weaknesses in our internal control over financial reporting, and we may identify additional material weaknesses in the future that may cause us to fail to meet our reporting obligations or result in material misstatements of our financial statements. If we fail to remediate any material weaknesses or if we otherwise fail to establish and maintain effective internal control, we may not be able to accurately report our financial results, which may cause investors to lose confidence in our reported financial information and may lead to a decline in the market price of our stock.
As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal controls. Pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, we are required to furnish a report by our ability to accurately and timely report our financial results could be adversely affected.
As previously reported, in connection with the preparation of our consolidated financial statements, we identified control deficiencies in the design and operation ofmanagement on our internal control over financial reporting in our periodic reports filed with the SEC. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that constitutedcontrols are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify additional material weaknesses.weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. A material weakness is a deficiency, or a combination of deficiencies, 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 and corrected on a timely basis.
AlthoughWe have identified a material weakness in our internal control over financial reporting related to our control environment. More specifically, we have remediated the material weaknesses, there is no guaranteedetermined that we willhave not identify or experience additional material weaknesses. If this weremaintained adequate formal accounting policies, processes and controls related to occur, our ability to accurately and timely report our financial results could be adversely affected, and investor confidence in our financial reporting could be undermined, which could adversely affect our stock price.

We are an "emerging growth company" andcomplex transactions as a result of the reduced disclosurea lack of finance and governance requirements applicable to emerging growth companies, our common stock may be less attractive to investors.

We are an "emerging growth company," as defined in Jumpstart Our Business Act of 2012, (JOBS Act), and we intend to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to complyaccounting staff with the auditor attestation requirementsappropriate GAAP technical expertise needed to identify, evaluate and account for complex and non-routine transactions.
Over the next several months, we plan to implement a number of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reportsmeasures to address the material weakness we have identified. We plan to design additional controls around identification, documentation and proxy statements, and exemptions from the requirementsapplication of holding a nonbinding advisory vote on executive compensation and obtaining stockholder approval of any golden parachute payments not previously approved. In addition, as an "emerging growth company," the JOBS Act allows us to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We have elected to use this extended transition period under the JOBS Act. As a result, our financial statements may not be comparable to the financial statements of issuers who are
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technical accounting guidance with particular emphasis on complex and non-routine transactions. These controls are expected to include an additional review process to ensure that the correct conclusions are reached with respect to complex and non-routine transactions and avoid the potential for a material misstatement of our financial statements. We intend to complete the implementation of our remediation plan during 2023. However, we cannot assure you that we will be successful in remediating the material weakness we identified or that our internal control over financial reporting, as modified, will enable us to identify or avoid material weaknesses in the future.
Any failure to remediate the material weakness we identified or develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to remediate the material weakness we identified or implement and maintain effective internal control over financial reporting could also adversely affect the results of management reports and independent registered public accounting firm audits of our internal control over financial reporting that we will eventually be required to comply with the effective dates for new or revised accounting standards applicable to public companies, which may make comparison of our financials to those of other public companies more difficult. Even after we no longer qualify as an emerging growth company, we may still qualify as a "smaller reporting company" which would allow us to take advantage of many of the same exemptions from disclosure requirements including not being required to comply for a period of time with the auditor attestation requirements of Section 404, and reduced disclosure obligations regarding executive compensationinclude in this report and our periodic reports and proxy statements.

We cannot predict if investorsthat will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We may take advantage of these reporting exemptions until we are no longer an emerging growth company or smaller reporting company.

We have completed and may in the future complete related party transactions that were not and may not be conducted on an arm's length basis.

We have in the past and continue to be party to certain transactions with certain entities affiliated with Dr. Goldberg, director and Chairman Emeritus on our Board, as well as certain of his immediate family members. For instance, in November 2013, we granted Ohr Cosmetics, LLC (Ohr), an affiliated company, an exclusive worldwide license,filed with the rightSEC. Ineffective disclosure controls and procedures, and internal control over financial reporting could also cause investors to sublicense, under our patent rights covering one of our CYP26 inhibitors, ANG-3522, for the use in treating conditions of the skin or hair. We own, and the family of Dr. Goldberg, owns approximately 2.4% and 80.6%, respectively, of the membership interests in Ohr. Dr. Goldberg's son is the manager of Ohr.

In addition, we rent office and laboratory space in Uniondale, New York from NovaPark LLC (NovaPark), an affiliated company, under a lease that expires on June 20, 2026. The space we rent is part of an approximately 110,000-square-foot general laboratory and development facility (NovaPark Facility) for biological and chemistry research owned by NovaPark. We own, and Dr. Goldberg, and Rina Kurz, Dr. Goldberg's spouse, own 10%, 45% and 45%, respectively, of the membership interests in NovaPark.

Provisionslose confidence in our charter documents and under Delaware law could discourage a takeover stockholders may consider favorable and may lead to entrenchment of management.

Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could delay or prevent changes in control or changes in our management without the consent of our board of directors. These provisions include the following:
▪ a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors;
▪ no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
▪ the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
▪ the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the pricereported financial and other terms of those shares, including preferences and voting rights, without stockholder approval,information, which could be used to significantly dilute the ownership of a hostile acquiror;
▪ the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval;
▪ the required approval of at least 66 2/3% of the shares entitled to vote at an election of directors to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors;
▪ a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
▪ the requirement that a special meeting of stockholders may be called only by our chief executive officer or president or chairperson of the board of directors or by the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and
▪ advance notice procedures stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders' meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror's own slate of directors or otherwise attempting to obtain control of us.

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We are also subject to the anti-takeover provisions contained in Section 203 of the Delaware General Corporation Law. Under Section 203, a corporation may not, in general, engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other exceptions, the board of directors has approved the transaction.

Our amended and restated certificate of incorporation and amended and restated bylaws provide for an exclusive forum in the Court of Chancery of the State of Delaware for certain disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation and amended and restated bylaws provide that the Court of Chancery of the State of Delaware (or, in the event that the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a claim of breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine; provided that, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction; and provided further that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state or federal court sitting in the State of Delaware. Our amended and restated certificate of incorporation and amended and restated bylaws also provide the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action against us or any of our directors, officers, employees or agents and arising under the Securities Act. Nothing in our amended and restated certificate of incorporation or amended and restated bylaws precludes stockholders that assert claims under the Exchange Act from bringing such claims in state or federal court, subject to applicable law.

We believe these provisions may benefit us by providing increased consistency in the application of Delaware law and federal securities laws by chancellors and judges, as applicable, particularly experienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums and protection against the burdens of multi-forum litigation. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. Furthermore, the enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible a court could find these types of provisions to be inapplicable or unenforceable. While the Delaware courts have determined such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive-forum provisions, and there can be no assurance such provisions will be enforced by a court in those other jurisdictions. If a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation and amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

General Risk Factors

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.

The global credit and financial markets have experienced extreme volatility and disruptions in the past several years, including most recently as a result of the COVID-19 pandemic and the Russian invasion of Ukraine. Such volatility and disruptions have caused and may continue to cause severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. There can be no assurance further deterioration in credit and financial markets and confidence in economic conditions will not occur. Our general business strategy, and our ability to successfully complete our 2022 Strategic Realignment process, may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions. If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon clinical development plans. In addition, there is a risk one or more of our current service providers,
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manufacturers and other partners may not survive an economic downturn, which could directly affect our ability to attain our operating goals on schedule and on budget.

Our business could be affected by litigation, government investigations and enforcement actions.

We currently operate in a number of jurisdictions in a highly regulated industry and we could be subject to litigation, government investigation and enforcement actions on a variety of matters in the United States. or foreign jurisdictions, including, without limitation, intellectual property, regulatory, product liability, environmental, whistleblower, false claims, privacy, anti-kickback, anti-bribery, securities, commercial, employment, and other claims and legal proceedings which may arise from conducting our business. Any determination our operations or activities are not in compliance with existing laws or regulations could result in the imposition of fines, civil and criminal penalties, equitable remedies, including disgorgement, injunctive relief, and/or other sanctions against us, and remediation of any such findings could have an adverse effect on our business operations.

Legal proceedings, government investigations and enforcement actions can be expensive and time consuming. An adverse outcome resulting from any such proceeding, investigations or enforcement actions could result in significant damages awards, fines, penalties, exclusion from the federal healthcare programs, healthcare debarment, injunctive relief, product recalls, reputational damage and modifications of our business practices, which could have a material adverse effect on our business and results of operations.

Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.

We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants and commercial partners. Misconduct by these parties could include intentional failures, reckless and/or negligent conduct or unauthorized activities violating (i) the laws and regulations of the FDA and other regulatory authorities, including those laws requiring the reporting of true, complete and accurate information to such authorities, (ii) manufacturing standards, (iii) federal and state data privacy, security, fraud and abuse and other healthcare laws and regulations in the United States and abroad and (iv) laws requiring the true, complete and accurate reporting of financial information or data. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Such misconduct also could involve the improper use of individually identifiable information, including, without limitation, information obtained in the course of clinical trials, creating fraudulent data in our preclinical studies or clinical trials or illegal misappropriation of drug product, which could result in regulatory sanctions and cause serious harm to our reputation. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from government investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.

Additionally, we are subject to the risk a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could result in significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participating in government-funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of noncompliance with these laws, contractual damages, reputational harm and the curtailment or restructuring of our operations, any of which couldwould likely have a negative impacteffect on the market price of our business, financial condition, results of operations and prospects.

Security breaches, cyber-attacks or other disruptions or incidents could expose us to liability and affect our business and reputation.

We are increasingly dependent on our information technology systems and infrastructure for our business. We, our collaborators and our service providers collect, store, and transmit sensitive information including intellectual property, proprietary business information, clinical trial data and personal information in connection with our business operations. The secure maintenance of this information is critical to our operations and business strategy. Some of this information could be an attractive target of criminal attack by third parties with a wide range of motives and expertise, including organized criminal groups, "hacktivists," patient groups, disgruntled current or former employees, nation-state and nation-state supported actors and others. Cyber-attacks are of ever-increasing levels of sophistication, and despite our security measures, our information technology and infrastructure may becommon stock.
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vulnerable to such attacks or may be breached, including due to employee error or malfeasance. We have implemented information security measures to protect our systems, proprietary information and sensitive data, including the personal information of clinical trial participants against the risk of inappropriate and unauthorized external use and disclosure and other types of compromise. However, despite these measures, and due to the ever changing information cyber-threat landscape, we cannot guarantee these measures will be adequate to detect, prevent or mitigate security breaches and other incidents and we may be subject to data breaches through cyber-attacks, malicious code (such as viruses and worms), phishing attacks, social engineering schemes, and insider theft or misuse. Any such breach could compromise our networks and the information stored there could be accessed, modified, destroyed, publicly disclosed, lost or stolen. If our systems become compromised, we may not promptly discover the intrusion. Like other companies in our industry, we have experienced attacks to our data and systems, including malware and computer viruses. Any security breach or other incident, whether real or perceived, would cause us to lose product sales, if any, and suffer reputational damage and loss of customer confidence. Such incidents could result in costs to respond to, investigate and remedy such incidents, notification obligations to affected individuals, government agencies, credit reporting agencies and other third parties, legal claims or proceedings, and liability under our contracts with other parties and federal and state laws that protect the privacy and security of personal information. If a security breach, cyber-attack, or other disruption is the result of state-sponsored activities, it may be considered an "act-of-war", potentially making us ineligible for reimbursement under our insurance policies covering such attacks. Any one of these events could cause our business to be materially harmed and our results of operations would be adversely impacted.

We are subject to numerous and varying data privacy and security laws, regulations and standards, and our failure to comply could result in penalties and reputational damage.

We are subject to domestic and foreign laws and regulations concerning data privacy, information security and the protection of personal information including health information. The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues which may affect our business and is expected to increase our compliance costs and exposure to liability. In the United States, numerous federal and state laws and regulations, including state security breach notification laws, federal and state health information privacy laws (including HIPAA), and federal and state consumer protection laws, govern the collection, use, disclosure, and protection of personal information. Each of these laws is subject to varying interpretations by courts and government agencies, creating complex compliance issues for us. For example, the California Consumer Privacy Act (CCPA) went into effect January 1, 2020. The CCPA, among other things, imposes new data privacy obligations on covered companies and provides expanded privacy rights to California residents, including the right to access, delete and opt out of certain disclosures of their information. The CCPA provides for civil penalties for violations, as well as a private right of action with statutory damages for certain data breaches, which may increase the frequency and likelihood of data breach litigation. Although the law includes limited exceptions, including for "protected health information" maintained by a covered entity or business associate, such exceptions may not apply to all of our operations and processing activities. Further, the California Privacy Rights Act (CPRA), recently passed in California. The CPRA imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data. It also creates a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. The majority of the provisions will go into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required. In addition, the CCPA has prompted a number of proposals for new federal and state privacy legislation that, if passed, could increase our potential liability, increase our compliance costs and adversely affect our business. If we fail to comply with applicable laws and regulations we could be subject to penalties or sanctions, including criminal penalties if we knowingly obtain or disclose individually identifiable health information in a manner that is not authorized or permitted by HIPAA or applicable state laws.

We are also or may become subject to rapidly evolving data protection laws, rules and regulations in foreign jurisdictions, including Canada, Australia, Brazil, Georgia and Europe. Compliance with U.S. and foreign privacy and security laws, rules and regulations could require us to take on more onerous obligations in our contracts, require us to engage in costly compliance exercises, restrict our ability to collect, use and disclose data, or in some cases, impact our or our partners' or suppliers' ability to operate in certain jurisdictions. Each of these constantly evolving laws can be subject to varying interpretations. If we fail to comply with any such laws, rules or regulations, we may face government investigations and/or enforcement actions, fines, civil or criminal penalties, private litigation or adverse publicity that could adversely affect our business, financial condition and results of operations.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Use of Proceeds from the Initial Public Offering
On February 9, 2021, we closed our Initial Public Offering of 5,750,000 shares of our common stock at a public offering price of $16.00 per share, which includes the full exercise by the underwriters of their option to purchase an additional 750,000 shares of common stock. All of the shares of common stock issued and sold in our IPO were registered under the Securities Act pursuant to registration statements on Form S-1, as amended (Registration No. 333-252177), which was declared effective by the SEC on February 4, 2021. Aggregate net proceeds to Angion were $85.6 million, after deducting underwriting discounts and commissions of $6.4 million. None of the underwriting discounts and commissions or offering expenses were incurred or paid, directly or indirectly, to any of our directors or officers or their associates or to persons owning 10% or more of our common stock or to any of our affiliates.
The Initial Public Offering and Concurrent Private Placement, which both closed on February 9, 2021, generated aggregate net proceeds of approximately $107.0 million, after deducting the underwriting discounts and commissions, private placement fee and estimated offering expenses of $10.0 million. As of September 30, 2022, we have used approximately $84.0 million of the aggregate net proceeds from our IPO.
There has been no material change in the use of proceeds from our IPO as described in our final prospectus filed with the SEC on February 5, 2021 pursuant to Rule 424(b)(4), except that given the clinical trial data on ANG-3777 reported in the fourth quarter of 2021 and the termination of our Phase 2 “JUNIPER” dose-finding trial for ANG-3070, we no longer use the proceeds for the clinical development of ANG-3777 or ANG-3070, but we do expect to use the proceeds for the 2022 Strategic Realignment. There are no funds budgeted for additional clinical trials.
Recent Sales of Unregistered Securities
There were no unregistered securities sold in three months ended September 30, 2022.None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.During the fiscal quarter ended September 30, 2023, none of our directors or executive officers adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
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Item 6. Exhibits
Exhibit
Number		Exhibit
Description		Incorporated by ReferenceFiled Herewith
FormDateNumber
3.18-K2/09/20213.1
3.28-K2/09/20213.2
4.1Reference is made to exhibits 3.1 through 3.2.
4.2S-1/A2/01/20214.2
4.3S-11/15/20214.3
4.4S-11/15/20214.6
10.1S-35/16/20221.2
10.2X
31.1X
31.2X
32.1^X
32.2^X
101.INSXBRL Instance Document.X
101.SCHXBRL Taxonomy Extension Schema Document.X
101.CALXBRL Taxonomy Extension Calculation Linkbase Document.X
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.X
101.LABXBRL Taxonomy Extension Label Linkbase Document.X
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.X
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).X
Exhibit
Number		Exhibit
Description		Incorporated by ReferenceFiled Herewith
FormDateNumber
10.1+8-k10/20/202310.1+
10.2+X
31.1X
31.2X
32.1^X
32.2^X
101.INSXBRL Instance Document.X
101.SCHXBRL Taxonomy Extension Schema Document.X
101.CALXBRL Taxonomy Extension Calculation Linkbase Document.X
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.X
101.LABXBRL Taxonomy Extension Label Linkbase Document.X
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.X
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).X

†
Portions of this exhibit have been omitted in accordance with Item 601(b)(10) of Regulation S-K.
+ Management contract or compensatory plan arrangement.
^ The certification that accompanies this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is not deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.



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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.
ANGION BIOMEDICA CORP.ELICIO THERAPEUTICS, INC.
By:/s/ JAY R. VENKATESAN, M.D.ROBERT CONNELLY
Date:November 14, 202213, 2023
Jay R. Venkatesan, M.D.Robert Connelly
President and Chief Executive Officer and Director (Principal
(Principal Executive Officer)
ANGION BIOMEDICA CORP.ELICIO THERAPEUTICS, INC.
By:/s/ GREGORY S. CURHANBRIAN PIEKOS
Date:November 14, 202213, 2023
Gregory S. Curhan Brian Piekos
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)


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