GNTA Genenta Science SPA

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

Under the Securities Exchange Act of 1934

 

For the month of October 2024

 

Commission File Number: 001-41115

 

GENENTA SCIENCE S.P.A.

(Translation of Registrant’s Name into English)

 

Via Olgettina No. 58

20132 Milan, Italy

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F ☒ Form 40-F ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

 

This report on Form 6-K is incorporated by reference into the registrant’s registration statement on Form F-3 (File No. 333-271901).

 

 

 

Genenta Science S.p.A. Reports Financial Results for the Six Months Ended June 30, 2024

 

Genenta Science S.p.A. (“Genenta”) is furnishing this report on Form 6-K to provide its unaudited consolidated financial statements as of June 30, 2024, and for the six months ended June 30, 2024, and June 30, 2023, and to provide its Management’s Discussion and Analysis of Financial Condition and Results of Operations with respect to such financial statements.

 

The unaudited consolidated financial statements as of June 30, 2024, and for the six months ended June 30, 2024, and June 30, 2023, are attached to this Form 6-K as Exhibit 99.1. Management’s Discussion and Analysis of Financial Condition and Results of Operations is attached to this Form 6-K as Exhibit 99.2.

 

As described in more detail in Note 15, Subsequent events to the financial statements attached as Exhibit 99.1 hereto, on September 19, 2024, Genenta entered into an amendment to the Master Services Agreement with AGC Biologics S.p.A. (“AGC”) to extend the term of the Master Services Agreement. Additionally, on October 14, 2024, Genenta entered into an Agreement for the Conduct of Clinical Trials on Medical Products with San Raffaele Hospital (“OSR”) to conduct an open-label 1/2 clinical trial in Renal Cell Cancer. The descriptions of the amendment to the Master Services Agreement and the Agreement for the Conduct of Clinical Trials on Medical Products contained in this Form 6-K and in Exhibits 99.1and 99.2 hereto do not purport to be complete and are qualified in their entirety by reference to the complete text thereof, copies of which are filed as exhibits 10.1 and 10.2, respectively, to this Form 6-K.

 

EXHIBIT INDEX

 

Exhibit		Title
10.1		Amendment to the AGC Master Service Agreement dated September 19, 2024.
10.2		Agreement for the Conduct of Clinical Trials on Medicinal Products with OSR dated October 14, 2024.
99.1		Unaudited Consolidated Financial Statements as of June 30, 2024, and for the six months ended June 30, 2024, and June 30, 2023.
99.2		Management’s Discussion and Analysis of Financial Condition and Results of Operations.
101		The following materials from Genenta’s Report on Form 6-K for the six months ended June 30, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Loss, (iii) the Consolidated Statements of Changes in Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to the Consolidated Financial Statements.

 

 

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.

 

	GENENTA SCIENCE S.P.A.
Date: October 29, 2024	By:	/s/ Pierluigi Paracchi
		Pierluigi Paracchi, Chief Executive Officer

 

 

 

Exhibit 10.1

 

 

 

Exhibit 10.2

 

**AGREEMENT FOR THE CONDUCT OF CLINICAL TRIALS ON MEDICINAL PRODUCTS**

 

[This constitutes an unofficial English translation of the original Italian document. The Italian document shall govern in all respects, including interpretation.]

 

“Open-label phase 1/2 study to evaluate the safety, biological response, and efficacy of a single dose of Temferon (autologous hematopoietic stem and progenitor cells enriched with CD34+ and genetically modified with human Interferon-α2) in patients with metastatic renal carcinoma.”

 

**BETWEEN**

 

Ospedale San Raffaele S.r.l. (hereinafter referred to as the “Institution”), with registered office at 20132 Milan (MI), via Olgettina no. 60, registered with the Economic Administrative Registry at the Milan Chamber of Commerce under no. MI-1972938, with tax code, VAT number, and registration number with the Milan Companies Register 07636600962 (Share Capital € 60,817,200.00), a company with a single shareholder subject to the direction and coordination of Gruppo San Donato S.p.A., represented by the Director of Research, Dr. Anna Flavia d’Amelio Einaudi.

 

**AND**

 

Genenta Science S.p.A., with registered office at Via Olgettina 58, 20132 Milan, VAT 08738490963, represented by its legal representative Dr. Pierluigi Paracchi (CEO), acting as Chief Executive Officer (CEO) (hereinafter referred to as the “Sponsor”).

 

Hereinafter individually/collectively referred to as “the Party/the Parties.”

 

**Whereas**:

 

A. The Sponsor intends to conduct, in accordance with Regulation (EU) No. 536/2014 (hereinafter “Regulation”), a clinical trial titled “Open-label phase 1/2 study to evaluate the safety, biological response, and efficacy of a single dose of Temferon (autologous hematopoietic stem and progenitor cells enriched with CD34+ and genetically modified with human Interferon-α2) in patients with metastatic renal carcinoma” (hereinafter “Trial”), concerning Protocol version no. 1.0 dated May 10, 2024, and its duly approved subsequent amendments (hereinafter “Protocol”), EudraCT code no. 2024-512898-27-00, at the Institution, under the responsibility of Prof. Andrea Necchi, as the scientific supervisor of the trial covered by this Contract (hereinafter “Principal Investigator”), in the Department of Oncology, led by Prof. Michele Reni (hereinafter “Trial Center”), and Prof. Fabio Ciceri as co-investigator, in the Department of Hematology and Bone Marrow Transplant.

 

B. The Sponsor has designated Dr. Carlo Russo, Chief Medical Officer & Head of Development, as the scientific reference for its scope. The Sponsor may change the scientific reference by written notice to the Institution.

 

C. The Trial Center possesses the technical and scientific expertise to conduct the Trial and is appropriately structured to conduct the trial in compliance with current regulations.

 

D. The Principal Investigator and their direct collaborators, qualified to exercise discretion in executing the Protocol (hereinafter “Co-investigators”), along with all other persons involved in any part of the Trial under the Principal Investigator’s supervision, are competent to conduct the Trial in accordance with applicable regulations, are familiar with the Protocol and good clinical practice standards, and meet the necessary regulatory requirements, including compliance with applicable regulations regarding conflict of interest.

 

E. Except as may otherwise be agreed in writing by the Parties, the Institution shall conduct the Trial exclusively within its facilities.

 

 

F. The Institution is equipped with appropriate facilities for conducting the Trial as specified in the Protocol.

 

G. The Trial has been duly authorized in accordance with Chapter II of the Regulation, with a national authorization from AIFA uploaded on the EU portal pursuant to Article 80 of the Regulation on September 30, 2024, which includes the opinion issued by the National Ethics Committee for clinical trials on advanced therapies.

 

H. Pursuant to Article 76 of the Regulation and applicable national provisions, the Sponsor has taken out the insurance policy as specified in Article 8 of this Contract.

 

I. In negotiating this Contract, the Parties have based their agreement on the template approved by the National Coordination Center of Territorial Ethics Committees pursuant to Article 2, paragraph 6, of Law No. 3 of January 11, 2018, and, in compliance with the homogeneity of administrative, economic, and insurance aspects referred to therein, have agreed to supplement and/or modify the relevant provisions to govern the specificities and peculiarities of the Trial based on the following reasons, as specified below for each addition or modification:

 

- **Article 3 and following**: It is specified that, although Prof. Andrea Necchi (Medical Oncology) is the Principal Investigator, the study will take place at two separate operating units of the Institution: the Hematology and Bone Marrow Transplant Unit (where autologous transduced stem cell transplantation and Temferon administration and follow-up will take place) and the Medical Oncology Unit (responsible for the patient’s oncological treatment).

 

- **Article 3.8**: Timelines for the delivery of Data Collection Forms and the resolution of clarification requests are specified.

 

- **Article 4 and following**: The method of providing study drugs is specified, with Temferon (proprietary IMP) provided for free and full reimbursement for the purchase of other IMPs (Plerixafor, Lenograstim, Busulfan, Cabozantinib, and Pembrolizumab). There are no auxiliary medications or background therapy.

 

- **Article 4.2**: The possibility of making the clinical trial drug available after the study, beyond the observation period, for patients who have obtained clinical benefit from the trial drug does not apply to the gene therapy in this study.

 

- **Article 5**: No loan for use is provided.

 

- **Article 7.2 (Duration, Termination, and Resolution)**: The clause regarding CRO (insolvency) has been removed as the study’s financial management is fully managed by the Sponsor.

 

- **Article 9 (Final Report, Ownership, and Use of Results)**: The use of the Trial data and results by the Institution can occur only with the Sponsor’s prior written authorization and once the goals of such use have been shared.

 

- **Article 10 (Confidentiality of Technical and Commercial Information and Disclosure of Results)**: The same principle applies to the Investigator, who may disclose and publish the Trial results only with the Sponsor’s prior written authorization. Article 9.5 has been simplified, given it is a single-center study.

 

- **Annex A (Budget - omitted)**: The annex has been modified to adapt it to the specificities of the study.

 

 

The Parties agree and stipulate as follows:

 

Article 1 – Entirety of the Contract

 

1.1 The preamble, the Protocol, even if not physically attached, and all annexes, including the budget (Annex A - omitted) and the glossary related to personal data protection (Annex B - omitted), are integral and essential parts of this Contract.

 

Article 2 – Purpose

 

2.1 The Sponsor entrusts the Institution with the execution of the Trial under the conditions specified in this Contract, in accordance with the Protocol, any subsequent amendments, as well as with the modifications to this Contract/budget arising from these and formalized through the necessary, promptly signed amendment documents.

 

The Sponsor declares it has appointed the Contract Research Organization Alira Health S.r.l., based in Milan, Tax ID 03274820236, and VAT IT03274820236 (hereinafter referred to as “CRO”), which operates in compliance with the D.M. of November 15, 2011, and is registered with the National Observatory on Clinical Trials of Medicinal Products (OsSC), to carry out activities related to the Trial, granting it the necessary powers and related mandate with representation by agreement dated August 22, 2024. The Institution acknowledges being aware of this appointment.

 

2.2 The Trial must be conducted in strict compliance with the Protocol, in its current version, accepted by the Principal Investigator and approved by the Ethics Committee and Competent Authority, in accordance with the current regulations on clinical trials of medicinal products and the ethical and deontological principles that guide the medical professionals involved.

 

2.3 The Trial must also be conducted in accordance with the principles contained in the Convention on Human Rights and Biomedicine, the updated version of the Declaration of Helsinki, the current rules of Good Clinical Practice, and in compliance with the applicable transparency and anti-corruption laws, as well as personal data protection laws in accordance with the current regulations.

 

2.4 By signing this Contract, the Parties declare that they are aware of and accept the content mentioned above. To the extent necessary and to their knowledge, each Party declares that the activities provided for in this Contract do not violate any commitments it has made with third parties.

 

2.5 The Sponsor and the Principal Investigator, with an obligation to protect patient health, may, when circumstances arise, adopt urgent and appropriate measures to ensure patient safety, such as the temporary suspension of the study (discontinuation of treatment for patients already involved in the trial or the suspension of the inclusion of new subjects), following the procedures set forth in Article 38 of Regulation (EU) No. 536/2014, while the Sponsor is obliged to promptly inform the Ethics Committee, the Competent Authority, and the Trial Centers (who will then inform study participants) of any new events, measures taken, and a plan of actions to be taken, completing the procedures specified by current regulations in a timely manner. Upon notification from the investigator of a serious adverse event, the Sponsor promptly reports all suspected serious adverse reactions to the electronic database as per paragraph 2 of Article 42 of Regulation (EU) No. 536/2014, also by reporting under paragraph 3.

 

2.6 The Institution plans to enroll approximately 12 patients by December 31, 2025, though the inclusion period is subject to change based on enrollment progress, potential failure in identifying patients, or patients withdrawn from the study before treatment. The Parties acknowledge that any increase in the number of patients to be involved at the Institution’s trial center must be pre-approved by the Parties and submitted to the Ethics Committee and Competent Authority with an appropriate amendment. It is understood that such an increase, conducted under the stated conditions, does not require an additional agreement to this Contract if the agreed economic conditions per patient apply to all additional patients.

 

 

2.7 The Institution and Sponsor will retain documentation related to the Trial (permanent file “investigator site file” for the Institution and “trial master file” for the Sponsor) for the period and under the specifications indicated by the current legislation (or for a longer period if required by other applicable laws or an agreement between the Institution and Sponsor). Upon expiration of this period, the Parties may agree on the terms of an extended retention period.

 

2.8 The Institution and Sponsor, each within its scope of competence, also undertake to retain the aforementioned documentation using forms of digitization (or dematerialization) in compliance with applicable regulations. Regardless of whether the documentation storage related to the Trial concerns personal data (either specific or not), as defined in Regulation (EU) No. 679/2016 (hereinafter “GDPR”), the Institution and Sponsor must adopt all physical and technical measures required by Article 32 of the GDPR and perform the necessary security checks as stipulated by current regulations, to protect data, information, and documents (both paper and electronic). The storage system used must guarantee not only the integrity of data, information, and documents in both paper and electronic formats but also their future readability for the entire duration of the retention obligation. For the fulfillment of this obligation, both the Sponsor and the Institution may engage external entities responsible for managing this storage obligation.

 

2.9 The Sponsor, Institution, and Principal Investigator must adhere to the guidelines, directives, instructions, and recommendations provided by the Ethics Committee and Competent Authority.

 

Article 3 – Principal Investigator and Co-Investigators

 

3.1 The Principal Investigator will be assisted in conducting the Trial by direct collaborators, qualified according to the Protocol to intervene with discretionary powers in its execution (hereinafter “Co-Investigators”), as well as by staff, both healthcare and non-healthcare, appointed by the Institution. Co-Investigators and other staff will operate under the Principal Investigator’s responsibility for aspects related to the Trial. The aforementioned individuals must be qualified to conduct the Trial and must have received adequate prior training on the Protocol, according to current regulations, from the Sponsor; each of them must have expressed their willingness to participate in the Trial. In particular, the Principal Investigator is required to monitor the proper conduct of the activities of the Co-Investigators and other staff participating in the Trial, with special reference to cases of radiation or suspension that may arise for some of them during the Trial.

 

It is emphasized that this Trial will be conducted in two separate units within the Institution, namely, the Hematology and Bone Marrow Transplantation unit (where the autologous transplant of transduced stem cells will be performed, and Temferon will be administered along with follow-up) and the medical oncology unit (which will be responsible for the patient’s oncology treatment).

 

3.2 The Parties acknowledge that the Principal Investigator, as the Institution’s general point of contact with the Sponsor, is responsible for complying with all obligations imposed on the Institution by the current regulations on clinical trials of medicinal products.

 

3.3 This relationship exists between the Sponsor and the Institution. Each of the Parties is not involved in the other’s relationships with its representatives and/or employees (particularly the Sponsor’s relationship with the Institution, Principal Investigator, Co-Investigators, and all other personnel participating in the Trial, and the Institution’s relationship with the Sponsor, the CRO, or any other representative and/or employee). Therefore, each is released from any claims that these individuals may make in connection with the Trial.

 

 

3.4 Concerning the Trial under this Contract, the Parties acknowledge that they have complied with the provisions of Article 7 of the Regulation and Article 6, paragraph 4 of Legislative Decree May 14, 2019, No. 52, as amended by Article 11-bis of Law July 17, 2020, No. 77, converting Decree-Law May 19, 2020, No. 34 (“Relaunch Decree”).

 

3.5 If the relationship between the Principal Investigator and the Institution should end for any reason, the Institution must promptly inform the Sponsor in writing, indicating a replacement and reporting it in the European electronic database. The designation of the replacement must be approved by the Sponsor and the relevant Ethics Committee. The Institution guarantees that the new Principal Investigator meets the requirements to continue the study, accepts the terms and conditions of this Contract, and commits to following the Protocol in conducting the Trial. While waiting for the approval of the substantive amendment for changing the Principal Investigator, the Investigator appointed by the Institution ensures the necessary continuity of the trial activity.

 

If the Sponsor does not wish to accept the proposed replacement nominated by the Institution, or if the Institution does not propose a replacement, the Sponsor may withdraw from this Contract in accordance with Article 7.

 

3.6 The Principal Investigator or their delegate, before starting the Trial, must obtain the informed consent of the patient or their legal representative, as required by current regulations on clinical trials, and consent to the processing of personal data in accordance with the applicable national and EU regulations on data protection, as further outlined in Article 11.

 

3.7 The Principal Investigator is obliged to record and document in detail all adverse events and serious adverse events and to report them to the Sponsor within the deadlines specified by current legislation. Furthermore, the Principal Investigator must provide any other clinically relevant information specified in the Protocol (e.g., pregnancy) directly or indirectly related to conducting the Trial, as required by the Protocol, Good Clinical Practice standards, and applicable regulations on pharmacovigilance and clinical trials of medicinal products.

 

3.8 The Institution ensures the proper conduct of the Trial by the Principal Investigator and personnel under their responsibility according to the highest standards of diligence. In particular:

 

3.8.1 The Principal Investigator must deliver all Data Collection Forms (Case Report Forms - CRFs) correctly completed and pseudonymized, following the procedures and within fifteen (15) business days from the completion of each visit as defined by the Trial Protocol and applicable regulations, either in paper or electronic format, and in any case promptly as per GCP, within the deadlines set by the Trial Protocol.

 

3.8.2 The Principal Investigator also undertakes to resolve the clarification requests (queries) generated by the Sponsor within five (5) business days from the completion of each visit as provided in the Trial Protocol.

 

3.8.3 To verify the correspondence between the data recorded in the Data Collection Forms and those contained in the original documents (e.g., clinical records), the Institution and the Principal Investigator permit direct access to the original data during monitoring visits and any audits conducted by the Sponsor and inspections by the Competent Authorities, including remote procedures, provided that patient privacy and data protection laws are not violated.

 

 

3.8.4 The Institution and the Principal Investigator, after being given appropriate notice, must allow the proper conduct of monitoring, auditing, and inspection activities at the Trial Center, the medical oncology unit, and the Hematology and Bone Marrow Transplantation Department by the Sponsor’s personnel and the Competent Authorities, to ensure the regular execution of the Trial.

 

3.8.5 The Sponsor acknowledges that the Institution may conduct internal quality checks (internal GCP audits) related to the Trial within its facilities, in accordance with its quality system and procedures.

 

3.9 The Institution will promptly inform the Sponsor if a Competent Authority notifies the Institution of an inspection/audit related to the Trial. If not expressly denied by the Competent Authority, the Institution will authorize the Sponsor to participate, sending to the Sponsor any written communication received and/or transmitted in connection with or as a result of the inspection/audit. These activities must not, in any way, prejudice the regular institutional activities of the Institution.

 

3.10 The Institution and the Sponsor ensure that biological samples (blood, urine, saliva, etc.) from patients involved in the Trial under this Contract, or any substudy included in the Protocol and subject to the patient’s informed consent, will be used exclusively for the Trial under this Contract, according to the Protocol and current regulations. Any storage and subsequent use are subject to obtaining specific informed consent from the patient (or their parent/legal guardian), approval from the Ethics Committee, and must comply with the limits and safeguards provided by current laws and the guidelines specified in Article 1, paragraph 1, letter b, of Legislative Decree May 14, 2019, No. 52.

 

Article 4 – Investigational Medicinal Products, Materials, and Services

 

4.1 The Sponsor commits to provide the Institution, at no cost, with the investigational product (TemferonTM) in quantities deemed necessary and sufficient for the proper execution of the Trial throughout its duration (hereinafter “Investigational Medicinal Product”). Additionally, the Sponsor agrees to reimburse the Institution for other medicines outlined in the protocol, including Plerixafor, Lenograstim, Busulfan, Cabozantinib, and Pembrolizumab, in accordance with Annex 1, point 3, Table I of the Ministerial Decree of December 21, 2007 (hereinafter “Other Investigational Medicinal Products”). Quantities of the Investigational Medicinal Product and Other Investigational Medicinal Products provided by the Sponsor shall correspond to the study’s case numbers and remain solely for Trial use. The Institution shall manage receipt, tracking through batch registration, labeling, and appropriate disposal as required. The Institution will bear the costs of background therapies excluded from comparative therapeutic strategies. The Sponsor further undertakes to supply, at its own expense, all additional materials required for the Trial (hereinafter, “Materials”), as well as laboratory, diagnostic, and monitoring tests necessary for the utilization of the Investigational Medicinal Product and Other Investigational Medicinal Products or for achieving the primary and secondary objectives of the Trial (hereinafter, “Services”).

 

4.2 The Investigational Medicinal Product shall be dispatched by the Sponsor to the Institution’s Pharmacy, which will manage its registration, appropriate storage, and distribution to the Principal Investigator, as per the Protocol and applicable regulations. The Other Investigational Medicinal Products shall be purchased directly by the Institution’s Pharmacy, which will handle their registration, appropriate storage, and distribution to the Principal Investigator as stipulated by the Protocol and in line with prevailing regulatory standards.

 

4.3 The Investigational Medicinal Product must be accompanied by an appropriate delivery document addressed to the Pharmacy, specifying the drug type, quantity, batch number, storage requirements, expiration date, and Trial references (protocol code, Principal Investigator, and relevant Trial Center).

 

 

4.4 The Institution and the Principal Investigator are required to utilize the Investigational Medicinal Product, the Other Investigational Medicinal Products, and the Materials exclusively within the scope and for the purpose of the Trial. The Institution is prohibited from transferring or assigning to third parties the Investigational Medicinal Product, the Other Investigational Medicinal Products, and/or the Materials/Services provided by the Sponsor under this Agreement.

 

4.5 Any expired or otherwise unusable Other Investigational Medicinal Products, or those unused upon conclusion of the Trial, shall be disposed of by the Institution at the Sponsor’s expense. The disposal fee set by the Institution’s Pharmacy is €1,500.00 per disposal.

 

For the disposal of Temferon, the Sponsor shall issue a written disposal request to the Institution, with associated disposal costs also borne by the Sponsor. The Institution agrees to supply the Sponsor with duly certified proof of disposal in conformity with applicable regulations. For the disposal of unused Other Investigational Medicinal Products and related services, the Sponsor will compensate the Institution in accordance with the amount specified in Annex A (paragraph “Fees and Compensation” - part 1) of this Agreement. This amount will be invoiced with standard VAT by the Institution as an “ancillary consideration for the Trial, pertaining to the disposal of expired or unused Other Investigational Medicinal Products.”

 

Article 5 – Loan for Use

 

The Parties acknowledge that no assets and/or equipment will be granted to the Institution on loan for use by the Sponsor.

 

Article 6 – Compensation

 

6.1 The agreed compensation, previously assessed by the Institution, per eligible, evaluable patient who has completed the experimental treatment in accordance with the Protocol and for whom the relevant CRF/eCRF has been duly completed, inclusive of all expenses incurred by the Institution for the execution of the Trial and all related activities, is detailed in Part 1 of Annex A – Budget “Fees and Compensation.”

 

6.2 The Sponsor agrees to pay the amounts due under this article based on an adequate, justified accounting statement, agreed upon by the Parties. Payment of the above compensation will be made on a quarterly basis as indicated in the Budget (Annex A, paragraph “Payments and Invoices”), based on the number of patients involved in the respective period, treatments received according to Protocol, and completed and validated CRF/eCRFs, as approved by the Sponsor.

 

6.3 Plasma concentration monitoring of Busulfan (laboratory test) indicated in Annex A (paragraph “Fees and Compensation,” part 1) and required by the Protocol, as approved by the Ethics Committee, will not incur any costs to the Institution as it will be performed centrally.

 

6.4 The Institution shall receive no compensation for patients deemed unevaluable due to non-compliance with the Protocol, violations of Good Clinical Practice, or failure to comply with current clinical trial regulations. Additionally, no compensation will be provided for patients included after notification of Trial interruption or completion by the Sponsor, or beyond the maximum number of subjects specified in this Agreement, unless previously agreed upon with the Sponsor.

 

6.5 The Sponsor will also reimburse the Institution, based on the trial rate in effect at the Institution, for any additional costs arising from medical/diagnostic activities, including possible hospitalizations, not provided for in the Protocol or its subsequent amendments, and not already covered by the above compensations, if these activities become essential for the proper clinical management of the trial participant. Reimbursement will only be made if these activities and their related costs are promptly communicated, justified, and documented in writing to the Sponsor and approved by the Sponsor in writing, while ensuring the codified form of the patient’s personal data.

 

 

6.6 If, during the course of the Trial, it becomes necessary to increase financial support for the Institution, the Sponsor may supplement this Agreement with an addendum/amendment to provide for an adequate budget increase.

 

6.7 In compliance with regulations on mandatory electronic invoicing for the supply of goods and services, including private transactions, the Institution will issue invoices in XML format and send them through the Interchange System (SDI). For this purpose:

 

●

the Sponsor provides its details:

 

○

COMPANY NAME: Genenta Science S.p.A.

 

○

DESTINATION CODE/PEC: genentascience@legalmail.it

 

○

VAT NUMBER: 08738490963

 

●

the Institution provides its details:

 

○

OSPEDALE SAN RAFFAELE S.R.L., Via Olgettina, 60 – 20132 Milano, TAX CODE and VAT NUMBER 07636600962 at UNICREDIT S.P.A., Largo Francesco Anzani, 13, 00153 Rome, ITALY IBAN: IT34 C 02008 05364 000101972801 BIC CODE: UNCRITMMORR

 

6.8 Payments made for services provided by the Institution (i) represent the fair market value of such services, as they align with the applicable fee schedule at the Institution, (ii) have been negotiated on standard commercial terms, and (iii) are not based on the volume or value of prescriptions or any economic activities generated between the Parties. For activities performed or expenses incurred in relation to Patients participating in the Trial, for which the Sponsor is liable, neither the Institution nor the Principal Investigator shall seek other reimbursements or payments from third parties.

 

6.9 Within the limits and terms set forth in the Protocol and as approved by the Ethics Committee, the Sponsor makes available to Trial participants reimbursement for “out-of-pocket” expenses, provided these are actually incurred, documented, and associated with Trial participation at the Institution, following procedures previously approved by the Ethics Committee. Reimbursement will be physically provided to participants by an external, specialized organization (hereinafter referred to as “Service Provider”), which has been formally commissioned by the Sponsor and designated as the data processor for the patients’ personal data. The Institution will also enter into an agreement with the Service Provider as the data controller for the patients’ personal data. The Service Provider is compensated by the Sponsor but operates independently and may not in any way transfer patients’ personal data to the Sponsor, of which the Sponsor is not the data controller.

 

Costs related to items not specified in Annex A or not included in the Protocol will not be reimbursed.

 

The criteria and methods specified in paragraph 3 shall apply, where applicable, to other forms of outsourced services related to the Trial that are regulated by the Protocol and have received favorable evaluation by the Ethics Committee.

 

 

Article 7 – Duration, Withdrawal, and Termination

 

7.1 This Agreement will take effect on the date of its final signature (“Effective Date”) and will remain in force until the actual completion of the Trial at the Institution, as specified in the Protocol, unless modified by mutual agreement between the Parties. Notwithstanding the foregoing, this Agreement will take effect following the issuance of formal authorization by the Competent Authority.

 

7.2 The Institution reserves the right to withdraw from this Agreement by providing written notice with a 30-day advance notice to the Sponsor via registered mail or PEC in the event of:

 

- Insolvency of the Sponsor, settlement agreements (even extrajudicial) with the Sponsor’s creditors, or initiation of enforcement proceedings against the Sponsor.

 

- Transfer of all or part of the Sponsor’s assets to creditors or an agreement with them for a debt moratorium.

 

The notice will take effect from the time the Sponsor receives it.

 

7.3 The Sponsor, pursuant to Article 1373, paragraph 2, of the Italian Civil Code, reserves the right to withdraw from this Agreement at any time for just cause by providing written notice via registered mail or PEC with a 30-day notice period. The notice will take effect from the time it is received by the Institution. In the event of Sponsor withdrawal, the obligations undertaken and expenses incurred by the Institution as of the withdrawal notice date will remain unaffected. In particular, the Sponsor shall reimburse the Institution for all documented, irrevocable expenses incurred to ensure the proper and effective execution of the Trial (including, where applicable, expenses incurred by the Institution on behalf of the patient-participants) and compensation accrued to that point. In the case of early termination, the Sponsor retains ownership of all data and results, even partial, obtained by the Institution during the Trial, as well as any subsequent data or results derived from or related to it.

 

7.4 In the event of an interruption of the Trial, pursuant to applicable regulations, the Sponsor will compensate the Institution for documented expenses and accrued compensation up to that point.

 

7.5 It is understood that early termination of the Agreement will not entitle either Party to seek indemnification or additional payment beyond what has been agreed.

 

7.6 The effects of this Agreement will automatically terminate under Article 1454 of the Italian Civil Code if one of the Parties fails to fulfill an obligation within 30 days of receiving a written demand for compliance from the other Party. The applicability of Articles 1218 and following of the Italian Civil Code remains unaffected.

 

7.7 In the event of termination of this Agreement due to reasons other than the Institution’s breach, the Institution shall be entitled to reimbursement for expenses incurred for the Trial before receiving notice of termination and to compensation for services rendered in accordance with the Protocol and this Agreement, in proportion to the activities performed up to the termination date. The Institution agrees to return any amounts previously paid by the Sponsor for activities not yet performed.

 

7.8 In all cases of interruption or termination of this Agreement, all precautions will be taken to ensure the utmost protection of patients already involved, in accordance with the Protocol approved by the Ethics Committee, ensuring therapeutic continuity within the limits and methods provided in Article 4.2.

 

Article 8 - Insurance Coverage

 

8.1 The Sponsor is required to ensure, in accordance with current legislation, compensation for damages suffered by patients and attributable to their participation in the clinical trial as outlined in the Protocol, commensurate with the nature and scope of the resulting risks.

 

8.2 Without prejudice to the provisions of Article 76 of the Regulation for low-intervention trials, the insurance coverage provided by the Sponsor covers civil liability for the Sponsor, the Institution hosting the Trial, the Principal Investigator, and other Investigators involved at the Institution’s Trial Center.

 

 

8.3 By signing this Agreement, the Sponsor declares that it has taken out appropriate third-party liability insurance (policy no. 390-76845879, with HDI-GLOBAL SE) to cover the risk of possible damages to patients arising from their participation in the Trial, as required by the Ministerial Decree of July 14, 2009. The insurance policy has been deemed legally compliant and adequately protective by the Ethics Committee for the subjects involved in the Trial.

 

8.4 By signing this Agreement, the Sponsor agrees to bear the consequences of any inadequacies, including unforeseen ones, in the above-mentioned insurance coverage, supplementing it if necessary, in accordance with Article 7.1.

 

8.5 In particular, should the Sponsor intend to withdraw from the Agreement, it ensures that the insurance company will, in any case, provide coverage for individuals already included in the clinical trial, including the continuation of the Trial, in compliance with Article 2, paragraph 3 of the Ministerial Decree of July 14, 2009.

 

Article 9 - Final Report, Ownership, and Use of Results

 

9.1 The Sponsor undertakes to disclose, in accordance with legal requirements and upon completion of the Trial, all study results, even if negative.

 

9.2 The Sponsor is responsible for preparing the final clinical report and sending a summary of the Trial results to the Principal Investigator and the Ethics Committee within the legally specified timeframe. Regardless of the outcome of a clinical trial, the Sponsor will, within a year of its conclusion, submit a summary of the results to the EU database according to Article 37.4 of Regulation (EU) No. 536/2014.

 

9.3 All data, results, information, materials, discoveries, and inventions arising from the Trial’s execution, in pursuit of its objectives, are the exclusive property of the Sponsor, except in cases where Investigators, if eligible, have rights to be recognized as authors. If the Sponsor initiates or plans to initiate a patent application process for inventions developed during the Trial, the Institution, and specifically the Principal Investigator, commits to providing the necessary support to the Sponsor, including documentation, at the Sponsor’s expense.

 

9.4 The Institution may use the Trial’s data and results, over which it is the autonomous data controller by law, solely for its institutional scientific and research purposes, with prior written authorization from the Sponsor. Such use should not, under any circumstances, compromise the confidentiality or patent protection of the Sponsor’s intellectual property rights. The Institution must notify the Sponsor in writing of the purpose of its intended use of data and results.

 

The Parties mutually acknowledge their ownership of industrial and intellectual property rights related to their pre-existing knowledge (background knowledge).

 

9.5 The provisions of this article shall remain valid and effective even after the termination or cessation of this Agreement’s effects.

 

 

Article 10 - Confidentiality of Technical and Commercial Information and Dissemination of Results

 

10.1 By signing this Agreement, each Party undertakes to maintain the confidentiality, for the entire duration of this Agreement (extendable through negotiation until the information becomes public domain), of all technical and/or commercial information provided by the other Party and/or developed during the course of the Trial and in pursuit of its objectives (including, but not limited to, the Investigator Brochure, information, data, and materials concerning the investigational medicinal product). Such information qualifies as “Trade Secrets” under Articles 98 and 99 of the Italian Industrial Property Code (Legislative Decree No. 30/2005, as amended by Legislative Decree No. 63/2018 implementing EU Directive 2016/943), adopting all appropriate contractual, technological, or physical measures to protect such information, including from its employees, collaborators, subcontractors, grantors, or successors.

 

Each Party further declares and guarantees that:

 

(i) its Trade Secrets have been lawfully acquired, used, and disclosed, with no known legal actions, disputes, or claims for damages or indemnification – even out of court – by third parties asserting ownership of such secrets.

 

(ii) it will indemnify and hold the other Party harmless from any legal actions, disputes, claims for damages, or indemnification claims, even if pursued out of court, by third parties asserting ownership of such Trade Secrets.

 

10.2 The Parties are required to ensure the proper and accurate dissemination and publication of the Trial results, as well as their appropriate communication to participating patients and patient representatives. The Sponsor is required, under applicable law, to promptly disclose the results, even if negative, upon completion of the Trial, once data from all participating Centers is available, and in any case, within the deadlines established by applicable EU provisions.

 

10.3 The Principal Investigator has the right, with prior written authorization from the Sponsor, to disseminate and publish, without limitation, the results of the Trial obtained at the Institution, in compliance with current provisions regarding the confidentiality of sensitive data, data protection, and intellectual property rights, as well as the terms and conditions outlined in this Agreement. To ensure the accuracy of data collection and the veracity of data and results processing from the Trial obtained at the Institution, at least 60 days before any presentation or publication, the Principal Investigator must submit the draft document to the Sponsor. Should issues arise concerning the scientific integrity of the document and/or regulatory, patent, or intellectual property matters, the Parties and the Principal Investigator shall review the document within the following 60 days. The Principal Investigator will consider the Sponsor’s suggestions for presentation or publication, but only if necessary to protect the confidentiality of information, personal data, and intellectual property, provided they do not compromise data reliability or patient rights, safety, and well-being.

 

10.4 The Sponsor acknowledges it has no right to request the removal of information contained in the document, except when such requests and changes are necessary to protect data confidentiality, data protection, and intellectual property.

 

10.5 For the purpose of filing a patent application, the Sponsor may request the Principal Investigator to defer the publication or presentation of the document for an additional 90 days, if deemed necessary.

 

 

Article 11 - Personal Data Protection

 

11.1 The Parties, in carrying out the activities provided under this Agreement, agree to process any personal data they may become aware of during the clinical trial in compliance with the objectives stated in the previous articles and in accordance with Regulation (EU) 2016/679 of the European Parliament and Council of April 27, 2016 (“GDPR”), as well as related national legislative and administrative provisions in force, including any subsequent amendments and/or integrations (hereinafter collectively referred to as “Data Protection Laws”). Any institutional regulations of the Parties must be communicated to the Sponsor in advance and in detail.

 

11.2 The terms used in this article, in the Agreement, in the privacy notice and consent documentation, and in any other document used for the purposes of the clinical trial, must be understood and used in the manner defined in Annex B.

 

11.3 The Institution and the Sponsor qualify as independent data controllers under Article 4, paragraph 17 of the GDPR. Each Party shall, at its own cost, handle the appointment of Data Processors and assign functions and duties to designated persons operating under its authority in compliance with the GDPR and current legislation.

 

11.4 For the purposes of the Trial, personal data will be processed for the following categories of data subjects: participants in the trial and individuals working for the Parties. Such individuals are informed of the data processing through appropriate notification. For the purposes of the Trial, the following types of personal data will be processed: personal data as defined in Article 4, paragraph 1 of the GDPR; data falling under “special categories” of personal data, specifically health and sexual life data, and genetic data as per Article 9 of the GDPR. Such data will be processed in compliance with the principles of lawfulness, fairness, transparency, adequacy, relevance, and necessity as provided in Article 5, paragraph 1 of the GDPR.

 

11.5 The Sponsor may transfer data to affiliates of the Sponsor’s group and third parties operating on its behalf, including entities outside the European Union, only in compliance with Articles 44 and following of the GDPR. In such cases, the Sponsor shall ensure an adequate level of data protection. If the Sponsor is located in a country outside the EU, and the European Commission has determined that such country does not provide an adequate level of protection per Articles 44 and 45 of the GDPR, the Sponsor and the Institution must complete and sign the Standard Contractual Clauses approved by the European Commission, provided in the absence of other legal provisions (this document is not attached to this Agreement).

 

11.6 The Parties guarantee that authorized personnel processing personal data for the Trial shall comply with principles protecting the right to data protection and confidentiality and that individuals accessing personal data are obliged to process it in accordance with the instructions provided by the data controller, consistent with this article.

 

11.7 The Principal Investigator is identified by the Institution as the individual authorized to process data under Article 29 of the GDPR and designated under Article 2-quaterdecies of the Italian Personal Data Protection Code (Legislative Decree 196/2003, as amended by Legislative Decree 101/2018).

 

11.8 The Principal Investigator must inform each patient, in a clear and comprehensive manner, before the start of the Trial (including preparatory and screening phases), about the nature, purpose, results, consequences, risks, and methods of personal data processing. Specifically, the patient must be informed that national and international authorities and the Ethics Committee may access the Trial-related documentation as well as the original medical records as part of monitoring, verification, and research control activities. These authorities, as well as Monitors and Auditors, may view such documents within the scope of their respective competencies.

 

11.9 The Principal Investigator must obtain from the duly informed patient the consent document not only for participating in the Trial but also for data processing. The Institution is responsible for storing this document.

 

 

11.10 Should either Party become aware of a personal data breach, it shall notify the other within 48 hours of discovering the breach. Each Party retains the authority to assess the existence of conditions for and fulfill its obligations under Articles 33 and 34 of the GDPR.

 

Article 12 - Amendments

 

12.1 This Agreement and its annexes/addendums, together with the Protocol as an integral part, constitute the entire agreement between the Parties.

 

12.2 This Agreement may be amended or supplemented only with the written consent of both Parties. Any modifications will be documented in an addendum to this Agreement and will take effect from the date of signing unless otherwise agreed upon by the Parties.

 

Article 13 - Anti-Corruption and Crime Prevention Regulations

 

13.1 The Institution and the Sponsor agree to comply with anti-corruption regulations applicable in Italy.

 

13.2 The Sponsor declares that it has adopted monitoring and control measures to comply with and implement the provisions of Legislative Decree 231 of June 8, 2001, as well as, where applicable and not in conflict with Italian law, the principles of the United States Foreign Corrupt Practices Act and their subsequent amendments. The Institution and its clinical and administrative structures agree to cooperate in good faith, within the limits of Italian law, with the Sponsor’s personnel and management to facilitate the full and correct implementation of these obligations and the Sponsor’s operational procedures for these purposes.

 

13.3 The Parties also acknowledge that both the Institution and the Sponsor have adopted an organizational, management, and control model in compliance with the principles outlined in the Decree (each a “Compliance Model”), a Code of Ethics (each a “Code of Ethics”), and an Anti-Corruption Policy, available on the Institution’s website at https://www.hsr.it/strutture/ospedale-san-raffaele/trasparenza and on the Sponsor’s website at https://ir.genenta.com/corporate-governance, to prevent liability for the commission of offenses specified by the Decree and the related sanctions.

 

13.4 The Institution and the Sponsor mutually agree to inform each other immediately of any potential violation of this article of which they become aware and to make all relevant data and documentation available for verification.

 

13.5 The Parties may disclose the terms of this Agreement or any amendment for any legitimate purpose, within the limits of data protection regulations.

 

13.6 A violation of the provisions of this article constitutes a material breach of this Agreement pursuant to Article 1456 of the Italian Civil Code, thereby undermining the trust relationship between the Parties.

 

Article 14 - Transfer of Rights, Assignment of the Agreement

 

14.1 This Agreement is fiduciary in nature; therefore, the Parties may not assign or transfer it, in whole or in part, to third parties without the prior written consent of the other Party. In any case, the assignee must explicitly accept all terms and conditions of this Agreement. Any transfer of rights not meeting these conditions will be considered null and void.

 

14.2 In the event of a name change by the Institution that does not alter its legal identity, an amendment to this Agreement will not be required. The Institution is still obliged to promptly notify the Sponsor of such a name change.

 

 

Article 15 - Signature and Tax Obligations

 

15.1 This Agreement is signed digitally in accordance with applicable regulations. Taxes and fees related to the execution of this Agreement, including the stamp duty on the electronic original under Article 2 of Annex A, Part I of DPR 642/1972, and the registration fee, must be paid in compliance with applicable laws. The Parties agree that the stamp duty shall be the exclusive responsibility of the Sponsor, while registration fees are borne by the Party requesting registration.

 

Article 16 - Governing Law and Jurisdiction

 

16.1 The law governing this Agreement is that of the Italian Republic.

 

16.2 For any disputes arising from the interpretation, application, and execution of this Agreement, while the Parties agree to attempt an out-of-court resolution, the exclusive jurisdiction shall be the Court of Milan.

 

Article 17 - Omitted

 

Article 18 - Acknowledgment and Acceptance of the Entire Agreement

 

The Parties acknowledge for mutual clarity that this Agreement, prepared based on the minimum content identified under Article 2, paragraph 6 of Law 3 of January 11, 2018, is considered known and accepted in its entirety by both Parties. Therefore, the provisions of Articles 1341 and 1342 of the Italian Civil Code do not apply.

 

Milan, on 14/10/2024
For the Sponsor:
The Legal Representative or their Delegate:
Dr. Pierluigi Paracchi
/s/ Pierluigi Paracchi		10/14/2024
Milan, on 21/10/2024
For the Institution:
Research Director
Dr. Anna Flavia d’Amelio Einaudi
/s/ Anna Flavia d’Amelio Einaudi
For acknowledgment of the provisions that concern him:
Principal Investigator
Prof. Andrea Necchi
/s/ Andrea Necchi
For acknowledgment of the provisions that concern him:
Co-Investigator
Prof. Fabio Ciceri
/s/ Fabio Ciceri

 

 

 

Exhibit 99.1

 

Genenta Science S.p.A.

Consolidated Statements of Operations and Comprehensive Loss

 

		2024				2023
		Six Months Ended June 30,
		2024				2023
		(Unaudited)
Operating expenses
Research and development		€	2,040,390			€	3,921,802
General and administrative			2,477,978				2,878,373
Total operating expenses			4,518,368				6,800,175
Loss from operations			(4,518,368	)			(6,800,175	)
Other income (expense)
Other income			180,781				114,992
Finance income			145,290				77,999
Net exchange rate gain (loss)			153,791				(152,041	)
Total other income, net			479,862				40,950
Loss before income taxes			(4,038,506	)			(6,759,225	)
Income tax benefit (expense)			-				-
Net loss			(4,038,506	)			(6,759,225	)
Net loss per share - basic		€	(0.22	)		€	(0.37	)
Weighted average number of shares outstanding - basic and diluted			18,256,622				18,216,858
Other comprehensive income (loss)
Total change of marketable debt securities			(64,288	)			-
Change in foreign currency translation			(16,081	)			-
Total other comprehensive income			(80,369	)			-
Comprehensive loss		€	(4,118,875	)		€	(6,759,225	)

 

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

 

 

Genenta Science S.p.A.

Consolidated Balance Sheets

 

		At June 30,				At December 31,
		2024				2023
			(Unaudited)
Assets
Current assets
Cash and cash equivalents		€	6,187,966			€	3,691,420
Marketable securities			10,718,210				15,084,284
Prepaid expenses and other current assets			1,663,297				2,480,554
Total current assets			18,569,473				21,256,258
Non-current assets
Fixed assets, net		€	62,714			€	82,977
Other non-current assets			381,670				1,004,560
Other non-current assets - related party			3,350				3,350
Other non-current assets			3,350				3,350
Total non-current assets			447,734				1,090,887
Total assets		€	19,017,207			€	22,347,145
Liabilities and shareholders’ equity
Current liabilities
Accounts payable		€	405,846			€	294,975
Accounts payable - related party			189,762				170,888
Accounts payable			189,762				170,888
Accrued expenses			260,051				153,136
Accrued expenses - related party			698,868				861,578
Accrued expenses			698,868				861,578
Other current liabilities			441,296				255,062
Total current liabilities			1,995,823				1,735,639
Non-current liabilities
Other non current liabilities			7,981				14,594
Retirement benefit obligation			196,368				164,655
Total long-term liabilities			204,349				179,249
Commitments and contingencies			-				-
Shareholders’ equity
Ordinary shares, no par value, 59,700,000 shares authorized and 18,289,866 and 18,216,958 shares issued and outstanding, respectively			67,847,793				67,344,140
Accumulated deficit			(51,181,531	)			(47,143,025	)
Accumulated other comprehensive income			150,773				231,142
Total shareholders’ equity			16,817,035				20,432,257
Total liabilities and shareholders’ equity		€	19,017,207			€	22,347,145

 

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

 

 

Genenta Science S.p.A.

Consolidated Statements of Changes in Shareholders’ Equity

 

		Common shares outstanding				Common stock, no par value				Accumulated deficit				Accumulated other comprehensive income				Total
Balance at December 31, 2022		€	18,216,858			€	66,603,725			€	(35,465,559	)		€	-			€	31,138,166
Share-based compensation			-				415,433				-				-				415,433
Cumulative translation adjustment			-				-				9,716				-				9,716
Net loss			-				-				(6,759,225	)			-				(6,759,225	)
Balance at June 30, 2023 (Unaudited)		€	18,216,858			€	67,019,158			€	(42,215,068	)		€	-			€	24,804,090
Share-based compensation			-				324,451				-				-				324,451
Capital increase ATM program			100				531				-				-				531
Cumulative translation adjustment			-				-				(9,716	)			-				(9,716	)
Other comprehensive income			-				-				(32,011	)			231,142				199,131
Net loss			-				-				(4,886,230	)			-				(4,886,230	)
Balance at December 31, 2023		€	18,216,958			€	67,344,140			€	(47,143,025	)		€	231,142			€	20,432,257
Balance		€	18,216,958			€	67,344,140			€	(47,143,025	)		€	231,142			€	20,432,257
Share-based compensation			-				232,768				-				-				232,768
Capital increase ATM program			72,908				270,885				-				-				270,885
Other comprehensive income			-				-				-				(80,369	)			(80,369	)
Net loss			-				-				(4,038,506	)			-				(4,038,506	)
Balance at June 30, 2024 (Unaudited)		€	18,289,866			€	67,847,793			€	(51,181,531	)		€	150,773			€	16,817,035
Balance		€	18,289,866			€	67,847,793			€	(51,181,531	)		€	150,773			€	16,817,035

 

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

 

 

Genenta Science S.p.A.

Consolidated Statements of Cash Flows

 

		2024				2023
		Six Months Ended June 30,
		2024				2023
			(in Euros)
Cash flows from operating activities
Net loss		€	(4,038,506	)		€	(6,759,225	)
Adjustments to reconcile net loss to net cash used in operating activities:
Foreign exchange adjustment			-				9,716
Depreciation expense			22,132				21,143
Retirement benefit obligation			31,713				40,486
Share-based compensation			232,768				415,433
Net gain (loss) on purchase of marketable securities			-				(9,517	)
Changes in operating assets and liabilities
Prepaid expenses and other current assets			817,258				(377,721	)
Other non-current assets			622,890				(502,229	)
Accounts payable			110,871				(692,780	)
Accounts payable - related party			18,874				(21,768	)
Accrued expenses			106,915				245,976
Accrued expenses - related party			(162,710	)			143,174
Other current liabilities			186,234				(86,603	)
Other non-current liabilities			(6,613	)			(6,214	)
Net cash used in operating activities			(2,058,174	)			(7,580,129	)
Cash flows from investing activities
Purchases of marketable securities			(8,998,556	)			(9,989,030	)
Proceeds from maturities of marketable securities			13,300,341				-
Purchases of fixed assets			(1,869	)			(12,437	)
Net cash (used in) provided by investing activities			4,299,916				(10,001,467	)
Cash flows from financing activities
Proceeds from ATM program			270,885				-
Net cash provided by financing activities			270,885				-
Effect of exchange rate changes			(16,081	)			-
Net increase (decrease) in cash and cash equivalents			2,496,546				(17,581,596	)
Cash and cash equivalents at beginning of period			3,691,420				29,794,856
Cash and cash equivalents at end of period		€	6,187,966			€	12,213,260

 

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

 

 

Genenta Science S.p.A.

Notes to the Consolidated Financial Statements

 

1. Nature of business and history

 

Genenta Science S.p.A. (the “Company” or “Genenta”) – formerly Genenta Science S.r.l., a “società a responsabilità limitata” (“S.r.l.”), which is similar to a limited liability company in the United States (“U.S.”) converted to a “società per azioni” (“S.p.A.”), an Italian corporation in June 2021, which is similar to a C corporation in the U.S. The Company was founded in Milan, Italy by San Raffaele Hospital (“OSR”), Pierluigi Paracchi, Luigi Naldini and Bernhard Gentner, and was incorporated in July 2014. On May 20, 2021, the quotaholders (owners of the Company) resolved that the Company convert from an S.r.l. to an S.p.A. and determined that the outstanding quota be converted to 15 million ordinary shares at no par value. (See Note 10. Shareholders’ equity.) The registered office (or headquarters) is located in Milan, Italy. The Company’s reporting currency is Euros (“EUR” or “€”). In May 2021, the Company formed a wholly owned, Delaware incorporated subsidiary, Genenta Science, Inc. (“U.S. Subsidiary”), intended to support U.S. employees and future operations in the U.S.. The U.S. Subsidiary operates in U.S. Dollars (“USD” or “$”).

 

On December 17, 2021, the Company completed an initial public offering (“IPO”) of its shares. The shares began trading on the Nasdaq Stock Capital Market (“Nasdaq”) on December 15, 2021. Through the IPO, 3,120,114 new ordinary shares with no par value were issued. 720,114 ordinary shares were subscribed by the Company’s existing shareholders through a reserved offering, while 2,400,000 American Depository Shares (“ADSs”), each representing one of the Company’s ordinary shares, were offered to the public and listed on Nasdaq. Subsequently, on December 27, 2021, the Company’s underwriter exercised a portion of its “green shoe” allotment for an additional 96,744 ADSs. The total number of shares outstanding resulting at December 31, 2021 was 18,216,858. Through the IPO, approximately €29 million was raised, net of listing costs (approximately €3.9 million).

 

On May 12, 2023, the Company filed with the Securities and Exchange Commission (the “SEC”) a shelf registration statement that was subsequently declared effective on May 24, 2023. It permits the Company to sell from time-to-time ordinary shares, including ordinary shares represented by ADSs, or rights to subscribe for ordinary shares or ordinary shares represented by ADSs in one or more offerings in amounts, at prices, and on the terms that the Company will determine at the time of offering for aggregate gross sale proceeds of up to $100 million, subject currently to the limits set forth in Instruction I.B.6(a) of Form S-3 (referred to as “baby shelf” rules).

 

In June 2023, the Company’s shareholders reduced the number of directors from seven (7) to five (5).

 

In July 2023, the Company issued 100 ADSs for net proceeds of approximately €531 (or $582), increasing the total number of shares outstanding to 18,216,958, pursuant to a Controlled Equity Offering^SM Sales Agreement, dated May 12, 2023 (the “Prior Sales Agreement”), between the Company and Cantor Fitzgerald & Co. (“Cantor”), as agent, subject to the terms and conditions described in the Prior Sales Agreement and SEC rules and regulations (the “Prior ATM Offering”).

 

In March 2024, the Company issued 72,908 ADSs for net proceeds of approximately €270,885 (or $293,328), bringing the total number of ordinary shares outstanding to 18,289,866, pursuant to the Prior Sales Agreement. On March 28, 2024, the Company and Cantor mutually agreed to terminate the Prior Sales Agreement.

 

On April 26, 2024, the Company entered into an ATM Sales Agreement (the “Current Sales Agreement”) with Capital One Securities, Inc. and Virtu Americas LLC (the “Sales Agents”), pursuant to which the Company may offer and sell ADSs, for an aggregate offering price of up to $16,362,816 from time to time through or to the Sales Agents, acting as sales agents or principals, subject to the terms and conditions described in the Current Sales Agreement and SEC rules and regulations (the “Current ATM Offering”).

 

In May 2024, the Company’s shareholders approved an amendment of article 9 of the Company’s Bylaws, introducing increased voting rights by introducing a mechanism whereby each ordinary share owned by the same subject (either an entity or an individual) for a continuous period of not less than twenty-four months entitles the holder to a double vote and therefore to an increase from one to two votes per share. In addition, a further vote is attributed at the end of each twelve-month period, following the first vesting period of twenty-four months, in which the ordinary share has belonged to the same entity or individual, up to a total maximum of 10 votes per ordinary share. The amendment applies to only ordinary shares, not ADSs.

 

Genenta is an early-stage company developing first-in-class cell and gene therapies to address unmet medical needs in cancerous solid tumors. The Company is initially developing its clinical leading product, Temferon™, to treat glioblastoma multiforme (“GBM”), a solid tumor affecting the brain. The Company intends to continue its clinical trials in Italy, and eventually start a clinical trial in Europe and the U.S. to study Temferon™ in other cancers. In June 2023, the Company’s Board of Directors (the “Board”) selected Renal Cell Cancer (“RCC”) as the second solid tumor indication for Temferon. The Company is currently finalizing a clinical plan for RCC.

 

The Company is subject to risks and uncertainties common to early-stage clinical companies in the life-science and biotechnology industries, including but not limited to, risks associated with completing preclinical studies and clinical trials, receiving regulatory approvals for product candidates, development by competitors of new competing products, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. The clinical product candidates currently under development will require significant additional research and development efforts, including regulatory approval and clinical testing prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure, and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales and profit from operations.

 

 

Liquidity and risks

 

The Company has incurred losses since its inception, including a net loss of €4.0 million and €6.8 million for the six months ended June 30, 2024, and June 30, 2023, respectively. In addition, at June 30, 2024, the Company had an accumulated deficit of €51.2 million. The Company has primarily funded these losses through the proceeds from sales of convertible debt and equity quotas, before the Company’s conversion into an S.p.A., and then through the proceeds from its IPO. The Company has incurred recurring losses and expects to continue to incur losses for the foreseeable future. In addition, the Company expects that its existing cash and cash equivalents on hand of €6.2 million, together with the other short-term marketable securities of €10.7 million as of June 30, 2024 will be sufficient to fund current planned operations and capital expenditure requirements for at least the next twelve months. However, the future viability of the Company is dependent on its ability to raise additional capital to finance its operations. The Company’s inability to raise capital as and when needed could have a negative impact on its financial condition and ability to continue as a going concern, as well the ability to pursue its business strategies. There can be no assurance that the current operating plan will be achieved or that additional funding will be available on terms acceptable to the Company, or at all.

 

The Company’s business model, typical of biotechnology companies developing new therapeutic products that have not reached a balanced income and financial position, features negative cash flows. This is because, at this stage, costs must be borne in relation to services and personnel, directly connected to research and development activities, and return for these activities is not certain and, in any case, it is expected in future years. Based on the accounting policies adopted, requiring full recognition of research and development costs in the statement of operations and comprehensive loss in the year they are incurred, the Company has reported a loss since its inception and expects to continue to incur significant costs for research and development in the foreseeable future. There is no certainty that the Company will become profitable in the future.

 

The Company will require additional capital to meet its long-term operating requirements. It expects to raise additional capital through, among other things, the sale of equity, debt or convertible securities through public offerings or private placements, including sales of ADSs pursuant to the Current ATM Offering. If adequate funds are not available in the future, the Company may be forced to delay, reorganize, or cancel research and development programs, or to enter into financing, licensing or collaboration agreements with unfavorable conditions or waive rights to certain products which otherwise it would not have waived, resulting in negative effects on the activity and on the economic and /or financial situation of the Company.

 

The Company’s ability to raise additional capital may be adversely impacted by the potential worsening of global economic and political conditions and volatility in the credit and financial markets in the U.S. and worldwide. This could be exacerbated by, among other factors, the war between Russia and Ukraine, the ongoing conflict in the Middle East or other macroeconomic conditions. The Company’s failure to raise capital as and when needed, or on acceptable terms could have a negative impact on the Company’s financial condition, its ability to continue as a going concern, and its ability to pursue its business strategy, and the Company may have to delay, reduce the scope of, suspend or eliminate one or more of its research-stage programs, clinical trials, or future commercialization efforts.

 

Quantitative and qualitative disclosure about market risk

 

The Company is exposed to market risks in the ordinary course of its business. Market risk represents the risk of loss that may impact the Company’s financial position due to adverse changes in financial market prices and rates. The Company’s current investment policy is conservative due to the need to support operations. The Company invests available cash in Italian and U.S. government treasury bills and notes with short-term maturities. A minority of the Company’s cash and cash equivalents and marketable securities are held in deposits that bear a small amount of interest. The Company’s market risk exposure is primarily a result of foreign currency exchange rates, which is discussed in detail in the following section.

 

The Company is an early-stage cell and gene therapy company commercializing technology licensed from OSR. The Company intends to continue to conduct its operations so that neither it nor its subsidiary is required to register as an investment company under the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder (the “‘40 Act”). To ensure that the Company does not become subject to regulation under the ‘40 Act, the Company may be limited in the type of assets that it may own or acquire. If the Company were to become inadvertently subject to the ‘40 Act, any violation of the ‘40 Act could subject the Company to material adverse consequences.

 

 

Foreign currency exchange risk

 

The Company’s results of operations and cash flow may be subject to fluctuations due to changes in foreign currency exchange rates. The Company’s liquid assets and expenses are denominated in EUR and USD. At June 30, 2024, the Company maintained €6.2 million in cash and cash equivalents and €10.7 million in marketable securities. Changes in the USD/EUR exchange rate could increase/decrease the Company’s operating expenses, especially as more costs are incurred in the U.S. or, as USD are exchanged for EUR to cover European operating costs. As the Company continues to grow its business, the Company’s results of operations and cash flows might be subject to significant fluctuations due to changes in foreign currency exchange rates, which could adversely impact the Company’s results of operations.

 

Currently, the Company has recorded an unrealized net gain from exchange rate of approximately €0.2 million. The Company does not currently hedge its foreign currency exchange risk. In the future, the Company may enter into formal currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates of its principal operating currencies. These measures, however, may not adequately protect the Company from the material adverse effects of such fluctuations.

 

2. Summary of significant accounting policies

 

Basis of presentation

 

The consolidated financial statements of the Company are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial reporting and in accordance with Regulation S-X, Rule 10-01 promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, the financial statements may not include all the information and footnotes required by U.S. GAAP for complete financial statements. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification, or ASC, and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

 

The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 20-F filed with the SEC on March 29, 2024, as amended by Amendment No. 1 of Form 20-F/A filed with the SEC on April 1, 2024. The balance sheet as of December 31, 2023 was derived from audited consolidated financial statements included in the Company’s Annual Report but does not include all disclosures required by U.S. GAAP.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from these interim financial statements. However, these interim financial statements include all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of the Company’s management, necessary to fairly state the results of the interim period. The interim results are not necessarily indicative of results to be expected for the full year.

 

A summary of the significant accounting policies applied in the preparation of these consolidated financial statements is presented below, only for the categories and headings now applicable and that might be applicable in the future based on the Company’s business. These policies have been consistently applied, unless otherwise stated.

 

Principles of consolidation

 

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

 

Use of estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts reported in the financial statements and the disclosures made in the accompanying notes. Estimates and assumptions reflected in these consolidated financial statements include but are not limited to, the accrual for research and development and clinical expenses and related milestone payments, share-based compensation expense, valuation of research and development tax credits, the valuation of equity and the recoverability of the Company’s net deferred tax assets and related valuation allowance. Estimates are periodically reviewed considering changes in circumstances, facts, and experience. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are recorded in the period in which they become known. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed below.

 

Cash and cash equivalents

 

The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents like short-term marketable securities, which amounts may at times exceed federally insured limits. The Company has not experienced any losses on such accounts and does not believe it is exposed to any significant credit risk. In the Consolidated Statements of Cash Flows, cash and cash equivalents include cash on hand, deposits held with banks, and other short-term highly liquid investments. In the consolidated balance sheets, bank overdrafts, if any, are shown in current liabilities. Cash and cash equivalents are reported at fair value and are detailed as follows:

 Schedule of cash and cash equivalents

		At June 30,				At December 31,
		2024				2023
			(Unaudited)
Cash in bank		€	3,945,143			€	3,687,402
Cash in short-term marketable securities			2,238,823				-
Cash in hand & prepaid cards			4,000				4,018
Total cash and cash equivalents		€	6,187,966			€	3,691,420

 

Marketable securities

 

The Company’s marketable securities are maintained by management and investment managers and consist of highly rated domestic and foreign government debt securities. Debt securities are carried at fair value with the unrealized gains and losses included in other comprehensive income (loss) as a component of shareholders’ equity until realized. Any premium arising at purchase is amortized to the earliest call date and any discount arising at purchase is accreted to maturity. Amortization and accretion of premiums and discounts are recorded in interest income, net. Realized gains and losses on debt securities are determined using the specific identification method and are included in other income(expense), net.

 

The Company classifies marketable securities with a remaining maturities when purchased of greater than three months as available-for-sale. Marketable securities with a remaining maturity date greater than one year are classified as non-current assets.

 

Effective January 1, 2023, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements (“ASU 2016-13” or “ASC 326”), using the effective date method. As the Company had never recorded any other-than-temporary-impairment adjustments to its available-for-sale debt securities prior to the effective date, no transition provisions are applicable to the Company.

 

The Company assesses its available-for-sale debt securities under the available-for-sale debt security impairment model in ASC 326 as of each reporting date to determine if a portion of any decline in fair value below carrying value recognized on its available-for-sale debt securities is the result of a credit loss. The Company records credit losses in the Consolidated Statements of Operations and Comprehensive Loss as credit loss expense within other income (expense), net, which is limited to the difference between the fair value and the amortized cost of the security. To date, the Company has not recorded any credit loss on its available-for-sale debt securities.

 

Accrued interest receivable related to the Company’s available-for-sale debt securities is presented within receivables and other current assets on the Company’s Consolidated Balance Sheets. The Company has elected to exclude accrued interest receivable from both the fair value and the amortized cost basis of available-for-sale debt securities for the purposes of identifying and measuring any impairment. The Company writes off accrued interest receivable once it has determined that the asset is not realizable. Any write-offs of accrued interest receivable are recorded by reversing interest income, recognizing credit loss expense, or a combination of both. To date, the Company has not written off any accrued interest receivables associated with its marketable securities.

 

Net loss and comprehensive loss

 

Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. ASC 220 Comprehensive Income requires that an entity records all components of comprehensive (loss) income, net of their related tax effects, in its financial statements in the period in which they are recognized. For the six months ended June 30, 2024, the net loss was equal to €4.0 million and the comprehensive loss was equal to €4.1 million. At June 30, 2023, the comprehensive loss was equal to the net loss.

 

 

Net loss per share

 

Net loss per share (“EPS”) is computed in accordance with U.S. GAAP. Basic EPS is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period. Diluted EPS reflects potential dilution and is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period increased by the number of additional ordinary shares that would have been outstanding if all potential ordinary shares had been issued and were dilutive.

 

The EPS calculation was applied at the Company conversion to an S.p.A. in June 2021. Prior to the conversion to an S.p.A., the Company’s equity ownership interests were represented by quotas, as opposed to shares, and accordingly, an EPS calculation was not possible. The Company’s shareholders have authorized 59.7 million ordinary shares. In July 2023, in the Prior ATM Offering, 100 new ADSs were issued. In March 2024, 72,908 additional ADSs were issued in the Current ATM Offering. At June 30, 2024, the Company had 18,289,866 ordinary shares issued and outstanding, with approximately 1.8 million ordinary shares reserved for the Company’s Equity Incentive Plan 2021–2035.

 

At June 30, 2024 and June 30, 2023, the Company had options on 280,033 and 318,459 ordinary shares outstanding, respectively, and 23,502 ordinary share equivalents in the form of underwriters’ ordinary share warrants. Dr. Squinto, the Company’s former Chairman of the Board, held options on 147,783 shares that expired unexercised as of April 2024.

 

Diluted EPS was not relevant at June 30, 2024 and June 30, 2023, as the effect of ordinary share equivalents, in the form of 23,502 underwriters’ ordinary share warrants, and options on 280,033 and 318,459 ordinary shares, respectively, would have been anti-dilutive. (See Note 10. Shareholders’ equity and Note 11. Share-based compensation.)

 

 

Foreign currency translation

 

The reporting and functional currency of the Company is Euros. All amounts are presented in Euros unless otherwise stated. All amounts disclosed in the consolidated financial statements and notes have been rounded to the nearest Euro unless otherwise stated. Foreign currency transactions, if any, are translated into Euros using the exchange rates prevailing at the date(s) of the transaction(s) or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the Consolidated Statements of Operations and Comprehensive Loss. For financial reporting purposes, the assets and liabilities of the U.S. Subsidiary are translated into EUR using exchange rates in effect at the balance sheet date. The net income/(loss) of the U.S. Subsidiary is translated into EUR using average exchange rates in effect during the reporting period. The resulting currency translation impact is recorded in the Consolidated Statements of Changes in Shareholders’ Equity as a cumulative translation adjustment. At June 30, 2024 and June 30, 2023, the currency translation impact was not material.

 

During the six months ended June 30, 2024, the unrealized foreign exchange net gain was €0.2 million. During the six months ended June 30, 2023, the unrealized foreign exchange net loss was €0.2 million. The minimal change in the net foreign exchange rate effect was due to the fluctuation in the USD exchange rate with the Euro.

 

Emerging growth company status

 

The Company is an “emerging growth company,” as defined in the U.S. Jumpstart Our Business Startups Act (the “JOBS Act”) and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. The Company may take advantage of these exemptions until the Company is no longer an “emerging growth company.” Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. The Company has elected to use the extended transition period for complying with new or revised accounting standards and, because of this election, its consolidated financial statements may not be comparable to companies that comply with public company effective dates. The Company may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of its IPO or such earlier time that it is no longer an “emerging growth company.”

 

Fair value measurements

 

Certain assets and liabilities of the Company are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

 

	●	Level 1 — Quoted prices in active markets for identical assets or liabilities.
	●	Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.
	●	Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

 

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

 

The carrying values of the Company’s research and development (“R&D”) tax credits, VAT credits, accounts payable, accrued expenses and other current liabilities were evaluated and determined to approximate their fair values due to the short-term nature of these assets and liabilities.

 

 Schedule of fair values due to short-term nature of assets and liabilities

		Total				Level 1				Level 2				Level 3
		June 30, 2024
		Total				Level 1				Level 2				Level 3
Cash and cash equivalents		€	6,187,966				6,187,966			€	-			€	-
Marketable securities			10,718,210				10,718,210				-				-
Total cash and cash equivalents and marketable securities		€	16,906,176			€	16,906,176			€	-			€	-

 

		Total				Level 1				Level 2				Level 3
		December 31, 2023
		Total				Level 1				Level 2				Level 3
Cash and cash equivalents			3,691,420				3,691,420
Marketable Securities		€	15,084,284				15,084,284			€	-			€	-
Total cash and cash equivalents and marketable securities		€	18,775,704			€	18,775,704			€	-			€	-

 

Segment information

 

Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company and its chief operating decision-maker view the Company’s operations, and manages its business, in one operating segment, which is the research and development in the pharmaceutical sector with a focus on developing novel therapeutics to treat cancer.

 

Tax credit on investments in R&D

 

In line with the legislation in force at December 31, 2023, and for the fiscal year 2024, companies in Italy that invest in eligible R&D activities, regardless of the legal form and economic sector in which they operate, can benefit from a tax credit which can be used in order to reduce most taxes payable, including income tax or regional tax on productive activities, as well as social security contributions and payroll withholding taxes.

 

Starting with the fiscal year 2023 (“FY 2023”), for eligible R&D activities, the tax credit is equal to 10% of the eligible costs incurred, with a maximum annual amount of €5.0 million. In addition, the law extended the measure up to the tax period ended December 31, 2031.

 

The eligible activities consist of fundamental research, industrial research, and experimental development as defined respectively of the letters m), q) and j) of point 15, par. 1.3 of the Communication no. 198/2014 of the European Commission. To determine the cost basis of the benefit, the following expenses are eligible:

 

	●	Personnel costs;
	●	Depreciation charges, costs of the financial or simple lease and other expenses related to movable tangible assets and software used in R&D projects;
	●	Expenses for extra-euro research contracts concerning the direct execution of eligible R&D activities by the provider;
	●	Expenses for consulting services and equivalent services related to eligible R&D activities; and,
	●	Expenses for materials, supplies, and other similar products used in R&D projects.

 

The Company accounts for this receivable in accordance with International Accounting Standards (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance. The receivable is recognized when there is reasonable assurance that: (1) the recipient will comply with the relevant conditions; and (2) the grant will be received. The Company has elected to present net of the related expenditure on the Consolidated Statements of Operations and Comprehensive Loss.

 

While these tax credits can be carried forward indefinitely, the Company recognized an amount that reflects management’s best estimate of the amount that is reasonably assured to be realized or utilized in the foreseeable future based on historical benefits realized, adjusted for expected changes, as applicable. The tax credits are recorded as an offset to research and development expenses in the Company’s Consolidated Statements of Operations and Comprehensive Loss.

 

Share-based compensation

 

To reward the efforts of employees, officers, directors, and certain consultants, and to promote the Company’s growth and development, the Board may approve, upon occasion, various share-based awards. The Company’s stock option plan (the “Equity Incentive Plan 2021–2025” or the “Plan”), pursuant to which stock options are granted, was originally approved on May 20, 2021.

 

 

In June 2023, the Company’s shareholders modified the Plan to extend the final deadline for the issuance of the ordinary shares until December 31, 2035, to allow all stock options granted during the term of the Plan could provide for an exercise period of 10 years starting from the date of grant. (See Note 11. Share-based compensation.)

 

Currently, the Company has authorized options on 1,828,986 ordinary shares (i.e., 10% of the number of shares outstanding, which was 18,289,866 ordinary shares outstanding at June 30, 2024); however, as provided by the Plan, the Company may increase the authorized shares under the Plan up to a maximum of 2,700,000 ordinary shares without further shareholder approval. Therefore, as the Company raises additional capital, the Board has the authority to issue options on 1,828,986 to 2,700,000 ordinary shares, as the number of issued and outstanding ordinary shares grows, i.e., the Company does not have to obtain further authorization from shareholders to increase the number of ordinary shares available for equity grants until the outstanding ordinary shares exceed 27,000,000.

 

The Company measures its stock option awards granted to employees, officers, directors, and consultants under the Plan based on their fair value on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is normally the vesting period of the respective award. Forfeitures are accounted for as they occur. The measurement date for option awards is the date of the grant. The Company classifies stock-based compensation expense in its Consolidated Statement of Operations and Comprehensive Loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

 

The Company chose the Black-Scholes-Merton model because it is considered easier to apply and it is a defined equation and incorporates only one set of inputs. As a result, it is the model most commonly in use.

 

Representative warrants

 

Upon the closing of the Company’s IPO, the Company issued 23,502 warrants to the underwriters of the offering (“Warrants”). The Warrants are exercisable at a per share exercise price equal to 125% of the public offering price (i.e., $14.375) per ADS sold in the IPO. The Warrants are exercisable at any time and from time to time, in whole or in part, during the four and one-half-year period commencing June 13, 2022. The Warrants will provide for adjustment in the number and price of the Warrants and the ADSs underlying such Warrants in the event of recapitalization, merger, stock split, or other structural transaction, or a future financing undertaken by the Company. The Warrants were evaluated under applicable guidance and accordingly classified as equity in the consolidated financial statements.

 

Non-current assets right-of-use (“ROU”)

 

Upon commencement of a contract containing a lease, the Company classifies leases other than short-term leases as either an operating lease or a finance lease according to the criteria prescribed by ASC 842. The Company recognizes both lease liabilities and ROU assets on the balance sheet for all leases, except for short-term leases (those with a lease term of 12 months or less). Lease liabilities are initially measured at the present value of the future lease payments over the lease term, discounted at the rate implicit in the lease or, if that rate is not readily determinable, the Company’s incremental borrowing rate. The ROU assets represent the lessee’s right to use the underlying asset for the lease term and are initially measured at the same amount as the corresponding lease liability. For finance leases, the Company recognizes interest expense on the lease liability and amortization expense on the ROU asset. For operating leases, lease expense is recognized on a straight-line basis over the lease term.

 

In February 2022, the Company entered into a four-year (i.e., 48-month) lease of an automobile, with an ending date of January 2026. The “base” annual lease payment is €13,967 payable monthly in the amount of €1,164. The lease payment will remain fixed for the four (4) years. The automobile lease was identified and accounted for as a finance-type lease.

 

For the initial measurement, the calculation of the net present value of the ROU asset and liability was made by using the discounted rate of 6.25% and was determined to be approximately €49,320. Lessee initial direct costs were deemed not material. Other non-lease component costs for lease insurance were accounted for separately from the lease. At June 30, 2024, the net present value of the ROU asset and liability amounted to approximately €21,004. The liability was determined to be €13,023 as a current liability and €7,981 as a long-term liability.

 

Fixed Assets

 

Property and equipment are stated at cost, including any accessory and direct costs that are necessary to make the assets fit for use, and adjusted by the corresponding accumulated depreciation. Depreciation is systematically recorded in the consolidated financial statements by taking into consideration the use, purpose, and financial-technical duration of the assets, based on their estimated useful economic lives. Leasehold improvement depreciation is recorded based on the shorter of: (i) the life of the leasehold improvement; or, (ii) the remaining term of the lease.

 

 

Ordinary maintenance costs are expensed to the Consolidated Statements of Operations and Comprehensive Loss in the year in which they are incurred. Extraordinary maintenance costs, the purpose of which is to extend the useful economic life of the asset, to technologically upgrade it, and/or to increase its productivity or safety for the purpose of economic productivity of the Company, are attributed to the asset to which they refer and depreciated based on its estimated useful economic life. Amortization of leasehold improvements is computed using the straight-line method based on the terms of the applicable lease or estimated useful life of the improvements, whichever is less.

 

Impairment of long-lived assets

 

In accordance with ASC Topic 360-10-20, ‘‘Property, Plant and Equipment,” the Company performs an impairment test whenever events or circumstances indicate that the carrying value of long-lived assets with finite lives may be impaired. Impairment is measured by comparing the carrying value of the long-lived assets to the estimated undiscounted pre-tax cash flows expected to result from the use of such assets and their ultimate disposition. In circumstances where impairment is determined to exist, the Company will write down the asset to its fair value based on the present value of estimated cash flows. To date, no impairments have been identified for the six months ended June 30, 2024, and June 30, 2023.

 

Deferred offering costs

 

Deferred offering costs, which primarily consist of direct, incremental legal and accounting fees relating to fundraising activities (e.g., an IPO or other fundraising activities), are capitalized within prepaid expenses and other current assets before the offering and netted or offset with the offering proceeds upon closing of the offering.

 

For the six months ended June 30, 2024, the Company incurred approximately €0.2 million of ATM offering costs that were fully expensed as general and administrative costs in the Consolidated Statement of Operations and Comprehensive Loss.

 

For the six months ended June 30, 2023, the Company incurred approximately €0.3 million of ATM offering costs that were fully expensed as general and administrative costs in the Consolidated Statement of Operations and Comprehensive Loss.

 

Recently issued accounting pronouncements

 

In November 2023, the FASB issued ASU 2023-07 which amends ASC 280 to improve the information that a public entity discloses about its reportable segments and to address investor requests for more information about reportable segment expenses by requiring incremental disclosures for segment reporting. The effective date for ASU 2023-07 is for fiscal years beginning after December 15, 2023 and interim periods with fiscal years beginning after December 15, 2024. The amendment requires companies to disclose more information about their reportable segments, including: (1) significant segment expenses, (2) ‘other’ segment items, (3) the title and position of the chief operating decision maker (“CODM”), (4) how the CODM uses the reported measure(s) of segment profit or loss and (5) annual disclosures about a reportable segment’s profit or loss and assets. The Company will be providing the enhanced reportable segment financial disclosures effective with its Annual Report on Form 20-F for the year ending December 31, 2024.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which modifies the rules on income tax disclosures to require disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

 

In March 2024, the FASB issued ASU 2024-01, Scope Application of Profits Interest and Similar Awards, which clarifies how an entity determines whether a profits interest or similar award (hereafter a “profits interest award”) is (1) within the scope of Accounting Standards Codification (ASC) 718, Compensation — Stock Compensation, or (2) not a share-based payment arrangement and therefore within the scope of other guidance. For public business entities, ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. For all other entities, the amendments are effective for annual periods beginning after December 15, 2025, and interim periods within those annual periods. The Company currently expects that this ASU will not have a material impact on its consolidated financial statements.

 

 

3. Research and development

 

Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred in performing research and development activities, including salaries, share-based compensation and benefits, facilities costs, third-party license fees, and external costs of outside vendors and consultants engaged to conduct clinical development activities and clinical trials, (e.g., contract research organizations or “CROs”), as well as costs to develop manufacturing processes, perform analytical testing and manufacture clinical trial materials, (e.g., contract manufacturing organizations or “CMOs”). Non-refundable prepayments for goods or services that will be used or rendered for future research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered. In addition, funding from research grants, if any, is recognized as an offset to research and development expense based on costs incurred on the research program.

 

The Company annually sustains a significant amount of research costs to meet its business objectives. The Company has various research and development contracts, and the related costs are recorded as research and development expenses as incurred. When billing terms under these contracts do not coincide with the timing of when the work is performed, the Company is required to make estimates of outstanding obligations at period end to those third parties. Any accrual estimates are based on several factors, including the Company’s knowledge of the progress towards completion of the research and development activities, invoicing to date under the contracts, communication from the research institution or other companies of any actual costs incurred during the period that have not yet been invoiced, and the costs included in the contracts. Significant judgments and estimates may be made in determining the accrued balances at the end of any reporting period. Actual results could differ from the estimates made by the Company. The historical accrual estimates made by the Company have not been materially different from the actual costs. For further details, please refer to the Related Parties disclosures in Note 12. Accumulated Other Comprehensive Income below.

 

4. General and administrative

 

General and administrative costs consist primarily of salaries, share-based compensation, benefits, and other related costs for personnel and consultants in the Company’s executive and finance functions, professional fees for legal, finance, accounting, auditing, tax and consulting services, travel expenses and facility-related expenses, which include rent and maintenance of facilities and other operating costs not otherwise included in research and development expense.

 

5. Income taxes

 

The Company is subject to taxation in Italy, and the U.S., through the U.S. Subsidiary. Taxation in Italy includes the standard corporate income tax (“IRES”) and a regional business tax (“IRAP”). Taxation in the U.S. includes federal corporate income tax (“IRS”), as well as state and local taxes. Taxes are recorded on an accrual basis. They therefore represent the allowances for taxes paid or to be paid for the year, calculated according to the current enacted rates and applicable laws. In the future, the Company may be taxed in various other countries where it may have permanent establishments, as applicable. Due to the tax loss position reported, no income taxes were accrued for the six months ending June 30, 2024, and June 30, 2023, in Italy or the U.S. At June 30, 2024, the U.S, subsidiary had an immaterial amount of other state taxes.

 

The Company uses the asset and liability method of accounting for deferred income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities, measured at tax rates expected to be enacted at the time of their reversals. These temporary differences primarily relate to net operating losses carried forward available to offset future taxable income.

 

At each reporting date, the Company considers existing evidence, both positive and negative, that could impact its view with regard to future realization of deferred tax assets. In consideration of the start-up status of the Company, a valuation allowance has been established to offset the deferred tax assets, as the related realization is currently uncertain. In the future, should the Company conclude that it is more likely than not that the deferred tax assets are partially or fully realizable, the valuation allowance will be reduced to the extent of such expected realization, and the corresponding amount will be recognized as income tax benefit in the Company’s Consolidated Statements of Operations and Comprehensive Loss.

 

The Company recognizes tax liabilities from an uncertain tax position if it is more likely than not that the tax position will not be sustained upon examination by the taxing authorities, based on the technical merits of the tax position. There are no uncertain tax positions that have been recognized in the accompanying consolidated financial statements. For the Company, the prior five years of tax returns (2019-2023) are potentially subject to audit. For the U.S. Subsidiary, the open years for tax examination are 2021, 2022, and 2023.

 

At June 30, 2024, and June 30, 2023, the Company believes there were no significant differences with regard to its deferred tax assets and its relevant components, compared to the computations of the preceding periods.

 

In 2011, the Italian tax authorities issued a set of rules that modified the previous treatment of tax loss carryforwards. According to DL 98/2011, at the end of 2011, all existing tax loss carryforwards will never expire but they can offset only 80% of the taxable income of the year.

 

 

The Company has analyzed its tax position by determining the amount of tax losses that can be carried forward indefinitely and has decided to accrue an allowance for related deferred tax assets as the Company is in a situation of pre-revenues that is destined to remain in the long run and there is no certainty of the future recoverability of such tax losses through tax relevant incomes. Future taxable profits for the Company depend on the manufacture of marketable drugs following the successful completion of the applicable clinical trial. Since the GBM clinical trial is still in Phase 1/2a status, the time frame and uncertainties regarding the outcome of the completion justify the full allowance of deferred tax assets.

 

6. Prepaid expenses and other current assets

 

Prepaid expenses and other current assets consist of the following:

 Schedule of prepaid expenses and other current assets

		At June 30,				At December 31,
		2024				2023
(in Euros)			(Unaudited)
Value added tax (VAT)		€	420,366			€	1,170,634
Research and development tax credit			766,680				833,000
Advances payments to suppliers			34,439				34,108
Other current assets			247,946				64,664
Other prepaids			193,866				378,148
Total		€	1,663,297			€	2,480,554

 

Value added tax (“VAT”) receivables are linked to purchases. Italian VAT (Imposta sul Valore Aggiunto) applies to the supply of goods and services carried out in Italy by entrepreneurs, professionals, or artists and on imports carried out by anyone. Intra-Community acquisitions are also subject to VAT under certain situations. The Italian standard VAT rate for 2024 and 2023 is 22%. Reduced rates are provided for specifically listed supplies of goods and services. It is carried forward indefinitely and does not expire. The Company reclassified to other non-current assets a portion of the receivable which is expected to be realized beyond 12 months. During the six months ended June 30, 2024, the Company received a VAT refund of approximately €1.7 million, of which approximately €1.3 million related to short-term VAT and approximately €0.4 million related to VAT that was classified as long-term at December 31, 2023. The amount of VAT as of June 30, 2024 is related to the VAT accrued in the same period.

 

Tax credits on research and development represent a special tax relief offered to Italian companies operating in the research and development sector and can be used to offset most taxes payable. The Company has a total research and development tax credit available to be used of approximately €4.0 million at June 30, 2024, which can be carried forward indefinitely and does not expire. However, given the start-up status of the Company, and the fact that it will not be profitable in the foreseeable future (which limits the utilization of the credit), the Company recognized a receivable balance that represents the Company’s best estimate of the amount of tax credit that can be used in offsetting taxes payable by the fourth quarter of 2025. This estimate is consistent with the Company’s most updated cash budget utilization projections approved by the Board in March 2024 and the revised cash forecast as of October 2024. According to the revised cash forecast dated October 2024, the Company’s available cash as of June 30, 2024, together with our investment in short-term marketable securities, is deemed more than sufficient to cover the operating activities through at least November 2025, without additional financing or other management plans.

 

During the six months ended June 30, 2024 and 2023, the Company utilized approximately €0.4 million to offset certain social contributions and taxes payable. In addition, the recorded benefit for the six months ended June 30, 2024, and June 30, 2023, was approximately €0.4 million, respectively, to offset research and development expenses.

 

The advance payments to suppliers mainly refer to an advance payment to a supplier whose activities are still ongoing based on a service agreement that provides for a discount on this advance payment on the last invoice that will be issued at the end of the works.

 

As of June 30, 2024, other current assets were primarily composed of tax credits amounting to approximately €0.2 million and financial claims for accrued interest on ongoing investments, amounting to approximately €53,000. The change compared to the previous period balance was due to the reclassification from long-term to short-term of a €180,000 of tax credit related to Italian Additional Corporate Tax (the “ACE tax”) which, based on the latest updates received from the Italian Revenue Agency, will be recovered in the short term.

 

The prepaids refer to accrual adjustments for services that have already been fully invoiced and paid, but whose economic usefulness is distributed over multiple periods beyond the current closing period. These costs mainly concern IT services, licenses, insurance, and manufacturing activities. The change in the prepaid balance is primarily influenced by the trend in manufacturing activities performed by the Company’s manufacturing vendor, AGC Biologics, and the amount of the premium for the directors’ and officers’ insurance policy. The most recent renewal of this policy specifically resulted in a significant cost saving, which consequently led to a reduction in the balance of the related prepaid from approximately €0.2 million at June 30, 2023 to approximately €0.1 million at June 30, 2024.

 

 

7. Fixed assets, net

 

Fixed assets consist of the following:

 Schedule of fixed assets,net

		At June 30,				At December 31,
		2024				2023
			(Unaudited)
Software (ERP Implementation)		€	87,800			€	87,800
Computers			37,840				35,971
Furniture and fixtures			13,005				13,005
Total fixed assets			138,645				136,776
Less: accumulated depreciation			(75,931	)			(53,799	)
Fixed assets, net		€	62,714			€	82,977

 

For the period ended June 30, 2024 and June 30, 2023, software was €87,800 and includes software customization and development costs related to information technology security infrastructure and the new ERP system.

 

Equipment consists of computers, and furniture and fixtures of our office space in Milan, Italy. There were no significant purchases, disposals or impairments during the periods. Depreciation has been calculated by taking into consideration the use, purpose, and financial-technical duration of the assets, based on their estimated economic lives. No significant purchases occurred during the six months ended June 30, 2024.

 

8. Other non-current assets

 

Other non-current assets consist of the following:

 Schedule of other non-current assets

		At June 30,				At December 31,
		2024				2023
			(Unaudited)
Value added tax (VAT)		€	110,774			€	630,342
Research and development tax credit			249,892				167,000
Other non-current assets			21,004				207,218
Total		€	381,670			€	1,004,560

 

The balance of long-term VAT credit is what remains outstanding after the refund of €0.4 million already received during the six months ended June 30, 2024.

 

The R&D tax credit long-term portion at June 30, 2024 was approximately €250,000 as compared to €167,000 at December 31, 2023 due to the expected utilization period for the R&D tax credit being adjusted to a timeframe ending November 30, 2025 as per the contingent financial cash projections.

 

Other non-current assets include the ROU asset for the car lease in the amount of €21,004. The main change in the Other non-current assets balance, compared to the previous period, was due to the reclassification of the €180,000 of ACE tax credit from long-term to short-term following a recent update from the Italian Revenue Agency regarding the expected timing of the related refund.

 

9. Retirement benefit obligation

 

Employees in Italy are entitled to Trattamento di Fine Rapporto (“TFR”), commonly referred to as an employee leaving indemnity, which represents deferred compensation for employees in the private sector. Under Italian law, an entity is obligated to accrue for TFR on an individual employee basis payable to each individual upon termination of employment (including both voluntary and involuntary dismissal). The annual accrual is approximately 7% of total pay, with no ceiling, and is revalued each year by applying a pre-established rate of return of 1.50%, plus 75% of the Consumer Price Index, and is recorded by a book reserve. TFR is an unfunded plan. The costs of the retirement benefit obligation are accounted for under the provisions of ASC 715, Compensation – Retirement Benefits.

 

The amount of the obligation at June 30, 2024 and December 31, 2023 was €196,368 and €164,655, respectively. The increase was due to the increase in personnel costs and as a result of new hires.

 

 

10. Shareholders’ equity

 

The number of the Company’s outstanding ordinary shares at December 31, 2022, was 18,216,858, no par value. All ordinary shares outstanding are held in ledger form with some of the ordinary shares represented by ADSs.

 

For the six-month period ended June 30, 2023, the Company accrued €415,433 as the fair value of stock options granted as per the Plan. (See Note 11. Share-based compensation for more details.)

 

In July 2023, 100 new ADSs were issued in the Prior ATM Offering, and the Company recorded an increase in the ordinary shares, no par value of €531.

 

For the six-month period from July 1, 2023 to December 31, 2023, the Company accrued €324,451 to update the fair value of the granted stock options.

 

At December 31, 2023, the Company had 18,216,958 ordinary shares issued and outstanding with approximately 1.8 million ordinary shares reserved for the Plan.

 

In March 2024, 72,908 new ADSs were issued in the Prior ATM Offering and the Company recorded an increase in the ordinary shares, no par value of €270,885.

 

For the six-months ended June 30, 2024, the Company accrued €232,768 as the fair value of stock options granted as per the Plan. (See Note 11. Share-based compensation for more details)

 

At June 30, 2024, the Company had 18,289,866 ordinary shares issued and outstanding with approximately 1.8 million ordinary shares reserved for the Plan.

 

11. Share-based compensation

 

As mentioned in Note 2. Summary of significant accounting policies, to reward the efforts of employees, officers, directors, and certain consultants, and to promote the Company’s growth and development, the Board may approve, upon occasion, various share-based awards.

 

The Plan was originally approved on May 20, 2021 and was subsequently modified, in June 2023, to extend the final deadline for the issuance of the ordinary shares until December 31, 2035, to allow that all stock options granted during the term of the Plan could provide for an exercise period of 10 years starting from the date of grant.

 

At January 1, 2023, there were 540,523 granted stock options and 1,281,162 stock options remaining available for grant.

 

In March 2023, the Board, as administrator of the Plan, awarded non-qualified stock options (“NSOs”) on 46,400 shares to the Company’s directors. The NSOs vested monthly over a one (1) year period with a 10-year term. All NSOs were priced based on a 30-day volume weighted average formula, adjusted with the Black-Scholes method, which was determined to be $5.62 per share.

 

At December 31, 2023, there were 586,923 granted stock options and 1,234,772 stock options remaining available for grant.

 

In April 2024, NSOs on 147,783 shares expired. These options had a two (2) year term and were awarded to the Company’s former Chairman in April 2022, according to the terms of a sub-plan called the “2021-2025 Chairman Sub-Plan” (or the “Sub-Plan”) attached to the original Equity Incentive Plan 2021–2025.

 

At June 30, 2024, there were 439,140 stock options granted and 1,389,846 options available for grant.

 

The Company calculates the fair value of stock option awards granted to employees and non-employees using the Black-Scholes option-pricing method. If the Company determines that other methods are more reasonable, or other methods for calculating these assumptions are prescribed by regulators, the fair value calculated for the Company’s stock options could change significantly. Higher volatility and longer expected lives would result in an increase to share-based compensation expense to non-employees determined at the date of grant. Share-based compensation expense to non-employees affects the Company’s general and administrative expenses and research and development expenses.

 

The Company calculated the share compensation expense for the options granted by utilizing the Black-Scholes method with the following inputs for each of the stock grants:

 

	●	The option’s exercise price.
	●	The option’s expected term.

 

 

	●	The underlying share’s current price.
	●	The underlying share’s expected price volatility during the option’s expected (or in certain cases, contractual) term, or in cases where calculated value is used, the historical volatility of an appropriate industry sector index.
	●	The underlying share’s expected dividends during the option’s expected (or in certain cases, contractual) term except cases, such as when dividend protection is provided; and,
	●	The risk-free interest rate during the option’s expected (or in certain cases, contractual) term.

 Schedule of Outstanding Stock Options

		Number of Options				Weighted Average Exercise Price				Weighted Average Remaining Contractual Term (Years)				Aggregate Intrinsic Value
Outstanding as of January 1, 2023			540,523			€	4.99				7.3			€	272,480
Granted			46,400				5.30				9.17				-
Vested and exercised			-				-				-				-
Cancelled or forfeited			-				-				-				-
Outstanding as of December 31, 2023			586,923			€	4.84				6.53			€	67,596
Exercisable as of December 31, 2023			382,785			€	5.11				5.44			€	33,796
Outstanding, expected to vest as of December 31, 2023			204,138			€	4.34				8.58			€	33,800
Outstanding as of January 1, 2024			586,923			€	4.84				6.53			€	67,596
Granted			-				-				-				-
Vested and exercised			-				-				-				-
Cancelled or forfeited			(147,783	)			-				-				-
Outstanding as of June 30, 2024			439,140			€	4.53				8.12			€	-
Exercisable as of June 30, 2024			280,033			€	4.58				8.16			€	-
Outstanding, expected to vest as of June 30, 2024			159,107			€	4.44				8.05			€	-

 

The Company’s share-based compensation expense for the period ended June 30, 2024 and June 30, 2023 is represented by the following table:

 Schedule of share based compensation expenses

		2024				2023
		Six Months Ended June 30,
		2024				2023
Research & development expense		€	37,173			€	36,718
Research & development expense - related party			-				-
General & administrative expense			114,219				298,333
General & administrative expense- related party			81,376				80,381
Total		€	232,768			€	415,433
Unrecognized expense		€	747,043			€	1,471,743

 

 

For the six months ended June 30, 2024, and June 30, 2023, the Company recorded €232,768 and €415,433, respectively, as the fair value of the stock options granted. The amount of unrecognized expense at June 30, 2024 and June 30, 2023 was €747,043 and €1,471,743, respectively.

 

There were no options granted during the six months ended June 30, 2024. The weighted average grant date fair value of the options granted during the six months ended June 30, 2023 was €5.30 per share.

 

Weighted average shares

 

The calculation was performed by taking the number of shares outstanding during a given period and weighting them for the number of days that number of shares were outstanding. For the six months ended June 30, 2024, and June 30, 2023, there was a weighted average of 18,256,622 and 18,216,858 shares, respectively, of the Company’s ordinary shares, no par value.

 

12. Accumulated Other Comprehensive Income

 Schedule of Accumulated Other Comprehensive Income

		Unrealized gains and losses on available-for-sale debt securities				Foreign Currency Translation Adjustments				Total
		Changes in Accumulated Other Comprehensive Income
		For the Period Ending June 30, 2024
		Unrealized gains and losses on available-for-sale debt securities				Foreign Currency Translation Adjustments				Total
Beginning Balance		€	214,984			€	16,158			€	231,142
Adjustment for net gain on marketable securities			(190,228	)							(190,228	)
Change in fair value of marketable securities			125,940								125,940
Cumulative translation adjustment			-				(16,081	)			(16,081	)
Total		€	150,696			€	77			€	150,773

 

Accumulated Other Comprehensive Income relates to marketable securities fair value measurement reserve and cumulative translation adjustment reserve as reported in the above table.

 

The net realized gain in the six months ended June 30, 2024 from the Company’s investing activity was approximately €0.2 million. The unrealized net gain on marketable securities not matured at June 30, 2024, was approximately €0.1 million. Translation adjustments on investment transactions expressed in U.S. dollars were not material.

 

The cumulative translation adjustments reserve was not material, and it mainly included the effect of the translation of U.S. dollars held by the U.S. Subsidiary into Euros as the consolidated financial statements currency.

 

 

13. Related parties

 

The Company’s R&D expenses are a combination of third-party expenses, and related party expenses, as detailed below:

 Schedule of third party and related party expenses

		Six Months Ended June 30, 2024
		Third Parties				Related Parties				Total
Consultants & other third parties		€	113,498			€	303,298			€	416,796
Materials & supplies			911,246				-				911,246
Compensation (including share-based)			349,839				329,227				679,066
Travel & entertainment			17,589				-				17,589
Other			15,693				-				15,693
Total		€	1,407,865			€	632,525			€	2,040,390

 

		Six Months Ended June 30, 2023
		Third Parties				Related Parties				Total
		(Unaudited)
Consultants & other third parties		€	150,402			€	72,500			€	222,902
Materials & supplies			2,464,107				660,863				3,124,970
Compensation (including share-based)			212,003				330,796				542,799
Travel & entertainment			27,892				-				27,892
Other			3,239				-				3,239
Total		€	2,857,643			€	1,064,159			€	3,921,802

 

Related party R&D expenses for consultants & other third parties refer mainly to the costs of preclinical and clinical activities charged by OSR. R&D costs for materials & supplies relate mainly to manufacturing costs charged by the Company’s main manufacturing vendor, AGC Biologics. Compensation costs relate to R&D personnel wages, salaries, and share-based compensation including social contribution and other related personnel costs. Travel & entertainment expenses relate mainly to business trips and scientific conferences. Other R&D expenses relate to minor general operating costs.

 

The Company’s general and administrative expenses are also a combination of third-party and related-party expenses, as detailed below:

Schedule of third party and general and administrative expenses 

		Six Months Ended June 30, 2024
		Third Parties				Related Parties				Total
Compensation (including share-based)		€	451,903			€	698,620			€	1,150,523
Accounting, legal & other professional			557,049				-				557,049
Communication & IT related facility			85,277								85,277
Facility & insurance related			984				8,120				9,104
Consultants & other third parties			324,306				-				324,306
Other			350,752				967				351,719
Total		€	1,770,271			€	707,707			€	2,477,978

 

 

		Six Months Ended June 30, 2023
		Third Parties				Related Parties				Total
		(Unaudited)
Compensation (including share-based)		€	697,228			€	673,795			€	1,371,023
Accounting, legal & other professional			720,989				-				720,989
Communication & IT related facility			-				-				-
Facility & insurance related			2,868				8,171				11,039
Consultants & other third parties			314,059				-				314,059
Other			460,320				943				461,263
Total		€	2,195,464			€	682,909			€	2,878,373

 

The Company’s accounts payable to related parties are comprised as follows:

Schedule of accounts payable to related parties 

		At June 30,				At December 31,
		2024				2023
			(Unaudited)
San Raffaele Hospital		€	189,762			€	170,888

 

The Company’s accrued expenses to related parties are comprised as follows:

Schedule of accrued expenses to related parties 

At June 30,

At December 31,