10-Q: Liminatus Pharma Q2: Nasdaq Listing, Debt Conversion, Going Concern

Liminatus Pharma, Inc. reported its Q2 2025 results, highlighting its recent Nasdaq listing, significant debt-to-equity conversions, and ongoing going concern doubts despite a net income for the quarter.

Summary

• Completed a business combination with Iris Acquisition Corp. on April 30, 2025, leading to a Nasdaq listing under the symbols LIMN and LIMNW.
• Issued 1,500,000 shares in a Private Investment in Public Equity (PIPE) Financing for $15,000,000, comprising $10,556,500 in cash and $4,443,500 from the non-cash conversion of related party debt.
• Converted a total of $14,797,901 of related party debt and accrued interest into common stock as part of the Business Combination.
• Terminated CAR-T and Vaccine Products license agreements with Targeted Diagnostics & Therapeutics, Inc. (TDT) on August 11, 2024, and subsequently settled related payables, recognizing a gain of $2,142,297.
• Reported a net income of $113,287 for the three months ended June 30, 2025, a significant improvement from a net loss of $(961,207) for the same period in 2024.
• Incurred a net loss of $(214,239) for the six months ended June 30, 2025, an improvement from $(2,715,185) in the prior year period.
• Cash balance increased to $1,338,222 as of June 30, 2025, from $56,319 at December 31, 2024.
• Management concluded there is substantial doubt about the company's ability to continue as a going concern within one year.
• Received a Nasdaq non-compliance notice on August 22, 2025, for the delayed filing of its Quarterly Report on Form 10-Q.

Sentiment

Score: 3

Explanation: While the company completed a business combination and secured some financing, the persistent going concern doubt, significant cash burn from operations, material weaknesses in internal controls, and Nasdaq non-compliance for a delayed filing indicate substantial operational and financial challenges. The net income for the quarter was primarily due to a non-recurring debt forgiveness, not sustainable operational profitability.

Positives

• Successfully completed the Business Combination with Iris Acquisition Corp. and achieved a Nasdaq listing for its common stock and public warrants.
• Secured a significant capital infusion of $15,000,000 through a PIPE Financing, providing much-needed funds.
• Reduced short-term related party debt substantially from $19,973,000 at December 31, 2024, to $1,442,500 at June 30, 2025, primarily through conversion into common stock.
• Reported a net income of $113,287 for the three months ended June 30, 2025, a notable improvement from a net loss of $(961,207) in the prior year period, largely due to the forgiveness of vendor payables.
• The termination and settlement of CAR-T and Vaccine Products license agreements with TDT resulted in a non-recurring gain of $2,142,297.
• Cash balance significantly increased to $1,338,222 as of June 30, 2025, from $56,319 at December 31, 2024.

Negatives

• Accumulated deficit increased to $(28,879,455) as of June 30, 2025, indicating continued historical losses.
• Incurred a net loss of $(214,239) for the six months ended June 30, 2025.
• Operating expenses, particularly general and administrative costs, increased significantly by 473% for the three months and 374% for the six months ended June 30, 2025, primarily due to Business Combination-related expenses.
• Net cash used in operating activities increased substantially to $(8,975,859) for the six months ended June 30, 2025, compared to $(1,104,287) in the prior year period.
• All remaining outstanding related party debt, totaling $1,442,500, is past due, although repayment has been mutually deferred.
• Recognized an unrealized loss of $756,000 on the change in fair value of deferred underwriting fee common stock payable and an unrealized loss of $116,894 on warrant liabilities for the three and six months ended June 30, 2025.

Risks

• Substantial doubt exists about the ability to continue as a going concern within one year due to historical operating losses and expected future losses.
• Uncertainty surrounds whether intellectual property will develop into successful commercial products, as the company is in a pre-clinical stage.
• Inability to raise adequate additional capital through equity or debt financings on acceptable terms could necessitate a reevaluation of future operations.
• Future sales of additional equity may dilute existing shareholders, and newly issued equity securities could contain senior rights and preferences.
• Issued debt securities may contain covenants that limit the company's ability to pay dividends or make other distributions to stockholders.
• Identified material weaknesses in internal control over financial reporting, including a lack of formalized control environment and inadequate segregation of duties, pose risks to financial reporting accuracy.
• Received a Nasdaq non-compliance notice for delayed filing of the Quarterly Report on Form 10-Q, which could lead to delisting if not resolved.

Future Outlook

Management plans to raise additional cash through equity and debt financings or other arrangements to fund operations, acknowledging that there is no assurance of securing adequate capital on acceptable terms. The company's ability to generate future revenue depends entirely on successfully developing commercial products from its intellectual property.

Management Comments

• Management has concluded that there is substantial doubt about its ability to continue as a going concern within one year after the date that the accompanying unaudited condensed consolidated financial statements are issued.
• Management's plans relating to the above include raising additional cash through equity and debt financings or other arrangements to fund operations.
• There can be no assurance that the Company will be able to raise adequate capital under acceptable terms, if at all.
• The sale of additional equity may dilute existing members and newly issued equity securities may contain senior rights and preferences compared to currently outstanding common stock.
• Issued debt securities may contain covenants and limit the Company's ability to pay dividends or make other distributions to stockholders.
• If the Company is unable to obtain such additional financing, future operations would need to be reevaluated.

Industry Context

Liminatus Pharma operates in the highly competitive and capital-intensive biopharmaceutical industry, specifically in the pre-clinical stage of developing immune-modulating cancer therapies. The termination of two key license agreements (CAR-T and Vaccine Products) with TDT indicates a shift or setback in its pipeline, while the focus on the CD47 immune checkpoint inhibitor (IBA101) positions it in a promising but crowded area of oncology research. The company's pre-clinical stage means it faces significant hurdles in clinical trials, regulatory approvals, and commercialization, typical for early-stage biotech firms, requiring substantial and continuous funding.

Comparison to Industry Standards

• As a pre-clinical stage biopharmaceutical company, the absence of revenue and significant research and development expenses are typical for this industry phase.
• The disclosure of 'substantial doubt about its ability to continue as a going concern' is a critical indicator of financial distress, which, while not uncommon for early-stage biotech companies reliant on external funding, signals a higher risk profile compared to more financially stable industry peers.
• The reliance on related party debt and its subsequent conversion to equity, while providing short-term financial relief, suggests challenges in securing traditional, non-dilutive financing, which can be a red flag when compared to companies attracting broader institutional investment.
• The termination of two license agreements (CAR-T and Vaccine Products) with TDT, despite resulting in a financial gain from debt forgiveness, could indicate a narrowing of the pipeline or a strategic refocusing, which needs to be assessed against industry peers who are actively expanding their therapeutic areas.
• The identified material weaknesses in internal controls are below industry best practices for public companies, even smaller reporting companies, and require urgent remediation to meet regulatory standards and investor expectations, contrasting with more mature companies that typically have robust control environments.

Management Changes

Corporate Governance

Legal Proceedings

• Not a party to any material legal proceedings and not aware of any pending or threatened claims.

Related Party Transactions

• **Feelux Bonds**: $10,000,000 bonds issued to Feelux Co., Ltd. (parent of Car-Tcellkor), bearing 1% interest, due Oct 30, 2021. Converted to 4,000,000 common shares on April 30, 2025, along with $10,681,146 outstanding principal and accrued interest.
• **Car-Tcellkor Loan**: $800,000 borrowed from Car-Tcellkor, non-interest bearing, due March 18, 2020 (extended to May 18, 2023). Forgiven on April 30, 2025.
• **Valetudo Loans**: Multiple loans from Valetudo Therapeutics LLC (common executives). $700,000 paid on May 1, 2025. $400,000 principal and accrued interest from August 2023 loans and $200,000 principal and accrued interest from November 2023 loan, and $750,000 principal and accrued interest from January 2024 loans converted to common stock on April 30, 2025. Total Valetudo loans outstanding as of June 30, 2025: $450,000.
• **Ewon Loans**: Multiple loans from Ewon Comfortech Co., Ltd. (a member and related party). $2,000,000 principal and accrued interest from the Ewon Loan, $200,000 principal and accrued interest from the Ewon September 2023 Loan, and $1,000,000 principal and accrued interest from the Ewon December 2023 Loan converted to common stock on April 30, 2025. Total Ewon loans outstanding as of June 30, 2025: $0.
• **Prophase Loans**: Multiple loans from Prophase Sciences LLC (a related party). $168,500 principal and accrued interest from the February 2024 loan, $250,000 principal and accrued interest from the April 2024 loan, $550,000 principal and accrued interest from the May 2024 loans, $125,000 principal and accrued interest from the February 2025 loan, $200,000 principal and accrued interest from the March 2025 loan, and $3,627,000 principal and accrued interest from the April 2025 loans converted to common stock on April 30, 2025. Total Prophase loans outstanding as of June 30, 2025: $742,500.
• **Hana Loans**: Multiple loans from Hana Immunotherapeutics, LLC (common executives). $800,000 principal and accrued interest converted to common stock on April 30, 2025. Total Hana loans outstanding as of June 30, 2025: $50,000.
• **Amantes Loans**: Multiple loans from Amantes LLC (common executives). $550,000 principal and accrued interest from the November 2024 loans and $250,000 principal and accrued interest from the January 2025 loans converted to common stock on April 30, 2025. Total Amantes loans outstanding as of June 30, 2025: $200,000.
• **Due to CEO**: $172,753 due to the CEO for compensation under his employment agreement.
• **Due from Viral Gene**: $126,275 due from Viral Gene (CEO is also CEO of Viral Gene) for a non-interest bearing loan and expenses paid.

Stakeholder Impact

• **Shareholders**: Experienced dilution from the Business Combination and PIPE financing. Future equity raises could lead to further dilution. The Nasdaq listing provides increased liquidity and visibility. The going concern doubt and internal control weaknesses pose significant risks to shareholder value.
• **Employees**: The company's financial instability and going concern doubt could create job insecurity.
• **Creditors (Related Parties)**: Many related party debts were converted to equity, reducing immediate repayment obligations but shifting their stake to equity. Remaining related party debt is past due, but repayment is deferred by mutual agreement.
• **Customers/Partners**: As a pre-clinical stage company, direct customer impact is minimal. Termination of TDT licenses could affect future product pipeline breadth, but the focus on CD47 remains.

Next Steps

• Submit a plan to Nasdaq by October 21, 2025, to regain compliance for the delayed 10-Q filing.
• Implement remediation efforts for identified material weaknesses in internal control over financial reporting, including designing formal written policies and procedures, increasing communication with personnel and third-party professionals, and evaluating the need for additional qualified personnel.
• Raise additional cash through equity and debt financings or other arrangements to fund operations.
• Continue development of IBA101, the humanized anti CD47 monoclonal antibody for advanced solid cancers.

Key Dates

Recommendation

The company faces severe financial distress, evidenced by the 'substantial doubt about its ability to continue as a going concern' within the next year. Despite a recent business combination and PIPE financing, operating cash burn is significant, and the company has an accumulated deficit of over $28 million. The termination of two key license agreements, coupled with identified material weaknesses in internal controls and a Nasdaq non-compliance notice for a delayed filing, highlight significant operational and governance issues. While the Q2 net income was positive, it was driven by a non-recurring debt forgiveness, not sustainable operations. The company's pre-clinical stage means no near-term revenue, and future funding is uncertain. These factors collectively present an extremely high-risk investment profile with a strong likelihood of further value erosion.

Keywords

Biopharmaceutical, Cancer Therapies, CD47 Monoclonal Antibody, IBA101, Pre-clinical Stage, Nasdaq Listing, Business Combination, PIPE Financing, Going Concern, SEC Filing, 10-Q, Biotech, Oncology, Warrants, Related Party Debt