Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

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

You should read the following management's discussion and analysis of our financial condition and results of operations in conjunction with our unaudited financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and notes thereto for the year ended December 31, 2024, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed on March 13, 2025 (the "Annual Report") with the U.S. Securities and Exchange Commission (the "SEC"). This discussion, particularly information with respect to our future results of operations or financial condition, business strategy, plans and objectives for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading "Special note regarding forward-looking statements" in this Quarterly Report on Form 10-Q. You should review the disclosure under Part 1, Item 1A of the Annual Report for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. References in this Quarterly Report on Form 10-Q to "we," "us," "our" and similar first-person expressions refer to Cadrenal Therapeutics, Inc. ("Cadrenal").

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. The statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements are often identified by the use of words such as, but not limited to, "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "plan," "project," "seek," "should," "strategy," "target," "will," "would" and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified under Part 1, Item 1A of the Annual Report. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Company Overview

We are developing tecarfarin, our lead drug candidate, for unmet needs in anticoagulation therapy. Tecarfarin is a late-stage novel oral and reversible anticoagulant (blood thinner) designed to prevent heart attacks, strokes, and deaths due to blood clots in patients requiring chronic anticoagulation.

There is a lack of approved anticoagulation therapies for certain conditions requiring chronic anticoagulation, such as patients with end-stage kidney disease (ESKD) and atrial fibrillation (AFib), patients with mechanical heart valves withconditions predisposing them to poor warfarin metabolism, and patients with left ventricular assist devices (LVADs). For patients with these conditions, treatment guidelines, and not FDA-approved labeling, recommend using a vitamin K antagonist (VKA) such as warfarin, despite warfarin's acknowledged challenges in achieving sufficiently stable and reliable anticoagulation in these patients. Additionally, direct-acting oral anticoagulants (DOACs) like Eliquis and Xarelto have either not shown clinical benefits in these and certain other patient populations, or their efficacy and safety remain uncertain.

At the time the initial investigational new drug (IND) application for tecarfarin was filed by its initial sponsor, warfarin was the only marketed oral anticoagulant, and the strategy was to develop tecarfarin as an alternative VKA with superior efficacy and safety over warfarin for a broad range of indications including AFib, deep vein thrombosis (DVT), pulmonary embolism (PE), prevention of pulmonary embolism in patients with venous thrombosis, DVT prevention in patients undergoing certain surgical procedures, thrombosis prevention in patients with mechanical heart valves, and prevention of thrombotic complications in patients after a myocardial infarction (heart attack), among others.

While tecarfarin clinical trials were being conducted by the initial IND sponsor, the DOACs were advancing through clinical trials and ultimately approved after demonstrating that they were non-inferior to warfarin in certain indications, including AFib in the general population, prevention of pulmonary embolism in patients with venous thrombus, and prevention of deep vein thrombosis in patients undergoing certain surgical procedures, among others. These DOAC clinical studies resulted in a change in the standard of care for a large percentage of the population that had been previously treated with warfarin, and some of the same population that was initially targeted by the prior tecarfarin IND sponsor. Thus, the original broad-label development plan for tecarfarin became much more challenging.

Accordingly, we are focusing on the development of tecarfarin for rare cardiovascular conditions where patients are unable to achieve sufficiently reliable chronic anticoagulation with warfarin, and where DOACs have either failed or their efficacy and safety remain unproven. These include patients with mechanical heart valves with conditions predisposing them to poor warfarin metabolism, patients with left ventricular assist devices (LVADs), and patients with end-stage kidney disease (ESKD) and atrial fibrillation (AFib), where the need for VKA-dependent chronic anticoagulation has been underscored by recent clinical studies. While warfarin-treated patients have fared better than DOAC-treated patients in comparative studies in certain of these cardiovascular conditions, the event rates in these studies remain unacceptably high and the quality of anticoagulation in warfarin-treated patients has repeatedly been shown to be sub-optimal - hence, there continues to be unmet medical needs surrounding the use of warfarin in these patients that are not addressed - or not addressable - by DOACs.

Cadrenal is pursuing a pipeline-in-a-product approach with tecarfarin. Tecarfarin has an orphan drug designation from the FDA for the prevention of thrombosis and thromboembolism (blood clots) in patients with an implanted mechanical circulatory support device, which includes left ventricular assist device (LVAD), a heart pump. Tecarfarin also has orphan drug and fast-track designations from the FDA for the prevention of systemic thromboembolism of cardiac origin in patients with end-stage kidney disease (ESKD) and atrial fibrillation (AFib).

Tecarfarin has been evaluated in eleven (11) human clinical trials in over 1,000 individuals; (269 patients were treated for at least six months and 129 patients were treated for one year or more). In Phase 1, Phase 2 and Phase 2/3 clinical trials, tecarfarin has generally been well-tolerated in both healthy adult subjects and patients with chronic kidney disease (CKD). In the Phase 2/3 trial, EMBRACE-AC, the largest tecarfarin trial with 607 patients having completed it, including those with mechanical heart valves, only 1.6% of the blinded tecarfarin subjects suffered from major bleeding and there were no thrombotic events.

Recent Events

On August 5. 2025, we announced our clinical trial initiation plans for our lead late-stage drug candidate, tecarfarin, in patients with ESKD who are transitioning to dialysis. Enrollment is expected to begin later this year and will include patients with and without atrial fibrillation (AFib).

ATM Facility

During the six months ended June 30, 2025, we sold 186,294 shares of our common stock through our at-the-market (ATM) facility with H.C. Wainwright & Co., LLC ("H.C.W"). These sales were made at a weighted average price of $17.97 per share, resulting in total gross proceeds of approximately $3,348,000 and net proceeds of approximately $3,199,000.

From July 1, 2025 through July 14, 2025, we sold 39,741 shares of our common stock through our at-the-market (ATM) facility with H.C.W. These sales were made at a weighted average price of $12.97 per share, resulting in total gross proceeds of approximately $516,000 and net proceeds of approximately $499,000.

Results of Operations

Results of Operations for the Three Months Ended June 30, 2025 and 2024

The following table summarizes our results of operations for the three months ended June 30, 2025 and 2024.

		Three Months Ended June 30,
		2025				2024				Change
Operating expenses:
General and administrative expenses		$	2,656,392			$	1,212,437			$	1,443,955
Research and development expenses			1,077,498				1,253,711				(176,213	)
Depreciation expense			401				470				(69	)
Total operating expenses			3,734,291				2,466,618				1,267,673
Loss from operations			(3,734,291	)			(2,466,618	)			(1,267,673	)
Other income
Interest and dividend income			67,004				73,636				(6,632	)
Total other income			67,004				73,636				(6,632	)
Net loss and comprehensive loss		$	(3,667,287	)		$	(2,392,982	)		$	(1,274,305	)

General and administrative expenses

General and administrative expenses for the three months ended June 30, 2025 and 2024 were $2.7 million and $1.2 million, respectively, representing an increase of approximately $1.4 million, or 119%. The increase is primarily attributed to a $0.6 million increase in expenses related to being a public company, a $0.4 million increase in stock-based compensation, a $0.2 million increase in annual Delaware franchise taxes, a $0.1 million increase in consulting expenses, and a $0.1 million increase in personnel-related expenses related to annual pay raises for management in January 2025.

Research and development expenses

Research and development expenses for the three months ended June 30, 2025, and 2024 were $1.1 million and $1.3 million, respectively, representing a decrease of $0.2 million, or 14%. The decrease is primarily attributed to a $0.3 million decrease in consulting expenses partially offset by a $0.1 million increase in expenses associated with chemistry, manufacturing, and controls ("CMC").

Interest and dividend income

Interest and dividend income for the three months ended June 30, 2025, and 2024 were $0.1 million and $0.1 million, respectively. This represents the interest and dividend income earned from our investments in money market funds.

Results of Operations for the Six Months Ended June 30, 2025 and 2024

The following table summarizes our results of operations for the six months ended June 30, 2025 and 2024.

		Six Months Ended June 30,
		2025				2024				Change
Operating expenses:
General and administrative expenses		$	4,910,970			$	2,338,430			$	2,572,540
Research and development expenses			2,745,379				1,882,736				862,643
Depreciation expense			5,918				1,067				4,851
Total operating expenses			7,662,267				4,222,233				3,440,034
Loss from operations			(7,662,267	)			(4,222,233	)			(3,440,034	)
Other income
Interest and dividend income			149,600				165,963				(16,363	)
Total other income			149,600				165,963				(16,363	)
Net loss and comprehensive loss		$	(7,512,667	)		$	(4,056,270	)		$	(3,456,397	)

General and administrative expenses

General and administrative expenses for the six months ended June 30, 2025 and 2024 were $4.9 million and $2.3 million, respectively, representing an increase of approximately $2.6 million, or 110%. The increase is primarily attributed to a $1.3 million increase in expenses related to being a public company, a $0.6 million increase in stock-based compensation, and a $0.2 million increase in personnel-related expenses as we hired a Chief Operating Officer in February 2024 and implemented annual pay raises for management in January 2025, a $0.2 million in increase in annual Delaware franchise taxes, and a $0.2 million increase in consulting expenses.

Research and development expenses

Research and development expenses for the six months ended June 30, 2025, and 2024 were $2.7 million and $1.9 million, respectively, representing an increase of $0.9 million, or 46%. The increase is primarily attributed to a $0.5 million increase in expenses associated with CMC, a $0.3 million increase in personnel-related expenses related to our prior Chief Medical Officer's severance agreement entered into in February 2025, a $0.2 million increase in stock-based compensation, and a $0.1 million increase in clinical trial preparation costs. These increases were offset by a $0.3 million decrease in consulting expenses.

Interest and dividend income

Interest and dividend income for the six months ended June 30, 2025, and 2024 were $0.1 million and $0.2 million, respectively. This represents the interest and dividend income earned from our investments in money market funds.

Liquidity and Capital Resources

Since inception, we have incurred losses and utilized cash in operations. To date, we have funded our operations from the proceeds of the sale of convertible and promissory notes, our initial public offering completed in January 2023, our Private Placement completed in July 2023, our Warrant Inducement completed in November 2024, and the sale of common stock through our ATM facility. We recognized a net loss of $7.5 million for the six months ended June 30, 2025 which included $1.1 million of non-cash expenses. Cash used in operating activities for the six months ended June 30, 2025 totaled $7.7 million. As of August 11, 2025, we had cash and cash equivalents of approximately $5.0 million, which is expected to be sufficient to fund our operations for at least the next twelve months from the date of the filing of this Quarterly Report on Form 10-Q, however, we will require additional funding to conduct any further clinical trials, including a Phase 3 clinical trial for tecarfarin.

Cash Flows

The following table summarizes our cash flow for the period presented:

		Six Months Ended June 30,
		2025				2024
Cash used in operating activities		$	(7,674,557	)		$	(3,365,624	)
Cash used in investing activities			(3,251	)			-
Cash provided by financing activities			3,230,596				298
Net change in cash			(4,447,212	)			(3,365,326	)
Cash and cash equivalents, beginning of period			10,017,942				8,402,500
Cash and cash equivalents, end of period		$	5,570,730			$	5,037,174

Operating activities

During the six months ended June 30, 2025, cash used in operating activities was $7.7 million. Net loss adjusted for the non-cash items as detailed on the statement of cash flows, used $6.4 million in cash, and the changes in operating assets and liabilities, as detailed on the statement of cash flows, used $1.3 million in cash primarily from a $0.6 million decrease in accounts payable, a $0.4 million decrease in accrued liabilities, and a $0.3 million increase in prepaid expenses.

During the six months ended June 30, 2024, cash used in operating activities was $3.4 million. Net loss adjusted for the non-cash items as detailed on the statement of cash flows, used $3.7 million in cash, and the changes in operating assets and liabilities, as detailed on the statement of cash flows, provided $0.3 million in cash primarily from a $0.6 million increase in accounts payable partially offset by a $0.2 million increase in deferred offering costs, and a $0.2 million increase in prepaid expenses.

Financing activities

During the six months ended June 30, 2025, net cash provided by financing activities totaled $3.2 million from the use of our ATM facility and proceeds from the exercise of stock options.

During the six months ended June 30, 2024, net cash provided by financing activities totaled $298 from the exercise of Pre-Funded Warrants.

Critical Accounting Estimates

This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Significant estimates and assumptions made in the accompanying financial statements include but are not limited to the fair value of financial instruments, the fair value of stock-based awards, deferred tax assets and valuation allowance, income tax uncertainties, and certain accruals. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimated under different assumption or conditions.

Stock-Based Compensation

We measure our stock-based awards granted to employees, consultants and directors based on the estimated grant-date fair values of the awards and recognize the compensation over the requisite service period. We use the Black-Scholes option-pricing model to estimate the fair value of our stock option awards. Stock-based compensation is recognized using the straight-line method. As the stock compensation expense is based on awards ultimately expected to vest, it is reduced by forfeitures. We account for forfeitures as they occur.

OFF-BALANCE SHEET ARRANGEMENTS

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.