What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-14 compared with 2025-08-13 · 434 added, 330 removed, 165 unchanged (82% of the section changed)

26 unchanged sentences

expectation that we will incur significant operating losses for the foreseeable future and will need significant additional capital;

expectation that any planned OTC formulation, dosage, combination, or indications fall inside the scope of an applicable OTC monograph,

will not require a new drug application, and are otherwise not challenged by FDA, state boards, or other regulators, any of which

could delay or prevent launch or require reformulation, relabeling, additional testing, or other corrective actions;

possibility that positive clinical data generated in the Rx setting are not predictive of consumer experience or commercial performance

in the OTC context, and the limits such data may impose on the scope of permissible OTC claims;

ability to timely secure and scale manufacturing, packaging, and quality systems suitable for OTC commercialization, including meeting

lot release, stability, shelf life, and container-closure requirements, and to manage product returns, recalls, or withdrawals if

quality issues arise;

ability to successfully execute our strategic pivot from Rx to OTC, including our capacity to design, formulate, manufacture, package

and distribute products that comply with applicable federal, state and international OTC requirements and standards, including FDA

OTC monographs, current good manufacturing practices applicable to OTC products, labeling and Drug Facts requirements, and other

enforcement policies;

ability to establish and maintain distribution and sales channels, including direct-to-consumer e-commerce, professional/clinic channels,

and any retail partners, and to manage channel economics, chargebacks, returns, and working capital needs;

current and future capital requirements to support our development and commercialization efforts for our product candidates and our

ability to satisfy our capital needs;

dependence on our product candidates, which are still in various stages of clinical development;

ability to acquire sufficient quantities of raw material needed to manufacture our drug product;

or that of our third-party manufacturers, ability to manufacture cGMP quantities of our product candidates as required for pre-clinical

and clinical trials and, subsequently, our ability to manufacture commercial quantities of our product candidates;

ability to complete required clinical trials for our product candidates and obtain approval from the FDA or other regulatory agencies

in different jurisdictions;

lack of a sales and marketing organization and our ability to commercialize our product candidates if we obtain regulatory approval;

dependence on our product candidates, which are not yet available for commercial sale;

ability to acquire sufficient quantities of raw material needed to manufacture our product candidates;

or that of our third-party manufacturers, ability to manufacture cGMP quantities of our product candidates as required for clinical

trials and, subsequently, our ability to manufacture commercial quantities of our product candidates for commercial sale;

lack of a sales and marketing organization and our ability to effectively commercialize our product candidates, including in connection

with our recent pivot to the OTC market;

dependence on third parties to manufacture our product candidates;

reliance on third-party CROs to conduct our clinical trials;

ability to maintain or protect the validity of our intellectual property;

7 unchanged sentences

accuracy of our estimates regarding expenses and capital requirements;

accuracy of our estimate forecast for future commercial sales of our product candidates;

ability to adequately support organizational and business growth;

1 unchanged sentence

foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or

risk factors that we are faced with that may cause our actual results to differ from those anticipate in our forward-looking statements.

risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements.

Please see “Risk Factors” for additional risks which could adversely impact our business and financial performance.

9 unchanged sentences

or projections will result or be achieved or accomplished.

are a late-stage medical dermatology company focused on identifying, developing, and commercializing innovative pharmaceutical product

candidates for the treatment of medical skin diseases and aesthetic applications we believe represent significant market opportunities.

Dermatological

diseases such as acne vulgaris (or acne), psoriasis vulgaris (or psoriasis), hyperhidrosis, and various aesthetic indications, affect

millions of people worldwide each year which may negatively impact their quality of life and emotional well-being.

While there are multiple

current treatment options for these indications on the market, we believe that most have significant drawbacks, including underwhelming

efficacy, cumbersome application regimens and varying negative side effects, all of which we believe lead to decreased patient compliance.

A majority of these indications are first treated with topical therapies, however, many patients frequently switch treatments or discontinue

treatment altogether due to patient dissatisfaction.

This is primarily due to slow and modest response rates, early tolerability issues,

once or twice daily application schedules and long duration of therapy.

Given the limitations with current topical therapies, we believe

there is a significant opportunity to address the needs of frustrated patients searching for topical products that satisfy their dermatological

and lifestyle needs.

two product candidates, XYNGARI™ (formerly DMT310) and DMT410, both incorporate our proprietary, multifaceted, Spongilla technology

to topically treat a variety of dermatological conditions.

Our Spongilla technology is derived from a naturally grown freshwater

sponge, Spongilla lacustris or Spongilla , which is processed into a powder that is mixed with a fluidizing agent immediately

prior to application to form an easily applicable paste.

Spongilla is a unique freshwater sponge that only grows in commercial

quantities in select regions of the world and under specific environmental conditions, all of which give it its distinctive anti-microbial,

anti-inflammatory, and mechanical properties.

The combination of these environmental conditions, the proprietary harvesting protocols

developed with our exclusive supplier, and our post-harvest processing procedures produce a pharmaceutical product candidate that optimizes

the mechanical components as well as the chemical components of the sponge to create a product candidate with multiple mechanisms of

action for the treatment of inflammatory skin diseases and aesthetic applications.

believe our Spongilla technology platform will enable us to develop XYNGARI TM as either a single, stand-alone agent,

or used together with other dermatology products to target the topical delivery of chemical compounds into the dermis for a variety of

dermatology indications.

We believe the combination of Spongilla’s mechanical and chemical components (which we believe

have demonstrated, in-vitro , anti-microbial and anti-inflammatory properties), add to the versatility of our Spongilla

technology platform’s effectiveness as a singular product, in the treatment of a wide variety of medical skin diseases like acne

and psoriasis.

We also believe the mechanical properties of our Spongilla technology allows for the intradermal delivery of a

variety of large molecules, like botulinum toxins, monoclonal antibodies, or dermal fillers, to targeted treatment sites, through topical

application without the need for needles.

lead product candidate, XYNGARI™, is intended to utilize our Spongilla technology for the once weekly treatment of a variety

of skin diseases, with our initial focus being the treatment of acne, which has a U.S.

market size of approximately 30 million patients

seeking treatment.

are a scientific leader in dermatology dedicated to the development and commercialization of products that address common and

underserved skin conditions.

In March 2025, we announced that we achieved statistically significant results from our Phase 3 STAR-1

clinical trial of XYNGARI™, formerly our lead prescription (“Rx”) candidate incorporating our Spongilla technology for

moderate-to-severe acne.

XYNGARI™ demonstrated statistically significant results across all three co-primary endpoints at

weeks 4, 8, and 12 when compared with placebo.

Following the successful completion of the STAR-1 trial, we conducted a full

assessment of the Rx landscape and the continued Rx development pathway for XYNGARI™.

In September 2025, after an extensive

review of current trends in dermatology, changing patient preferences, and go-to market costs, management, with support from the our

board of directors, determined that a strategic shift to developing and distributing OTC pharmaceutical dermatology products that

are backed by science would be a better path to commercialization with potentially greater financial upside.

We believe we can

leverage the data generated with our Spongilla technology to create OTC pharmaceutical products that are effective and that

patients want to use.

This repositioning should accelerate our path to commercialization, reduce our regulatory burden, and decrease

company expenses, all while being able to address broader consumer segments in the dermatology space.

believe the dermatology market, from both an OTC and Rx perspective, has seen a substantial shift over the last few years, with an

increasing trend of consumers first relying on OTC treatments for common dermatological diseases and conditions such as acne

vulgaris (or “acne”), psoriasis vulgaris (or “psoriasis”), and acne rosacea (or “rosacea”), among others.

Common dermatology issues, like

acne with over 50 million patients in the U.S., are well known by patients with extensive publicly available information and thus

patients are more willing to treat these diseases with OTC offerings prior to seeing a dermatologist.

Over 70% of patients with acne

first choose to try OTC products and wait at least one year before scheduling a visit with a dermatologist.

Additionally, due to the

lower price point for OTC products, a desire for self-administration, difficulty getting appointments with dermatologists, and

enhanced convenience, many consumers are first relying on OTC products to fill their treatment needs.

believe that we can apply the clinical knowledge we’ve gained over the last ten years to design products that incorporate OTC

pharmaceutical ingredients with our Spongilla technology to offer patients easy access to affordable and effective OTC

treatments for acne, psoriasis, seborrheic dermatitis and other skin diseases and conditions.

While this is a major shift in

strategy for our company, we believe it is the best path forward to meet our mission of providing patients with efficacious and safe

treatment options.

are currently working with a branding agency to build a new brand identity for our OTC treatments, that represents our core values of

providing patients skin care products that are natural but scientifically proven to work.

We believe this new brand identity will bridge

the gap between Rx therapies and OTC pharmaceutical products, allowing patients to take control of their skin care needs and feel confident

about the treatment outcomes of the products we plan to offer.

As part of this new brand identity, we will be developing visual and verbal

identities that bring to life the core essence of the new brand, which incorporates scientifically backed technology that targets the

underlying causes of skin diseases with a consumer-friendly approach.

We want customers to experience the efficacy and safety we saw

in our previous clinical studies and to feel proud of their skin after using our products.

We plan to develop and distribute a variety

of OTC products that are backed by science but are easily accessible by patients who are more comfortable treating their skin problems

independently with readily available OTC therapies.

Our core values will remain unchanged during this strategic shift as we strive to

provide patients with affordable, safe, and effective treatment options, but now they can directly order our products rather than having

to see a physician to be prescribed treatment.

We believe patients are seeking greater flexibility and freedom in treating their

skin as a majority of patients first turn to OTC products before seeing a dermatologist.

With the continued regulatory oversight of the

OTC marketplace, patients should maintain confidence in the OTC therapies they can purchase without a prescription.

view this shift in consumer preferences as a significant benefit for the research we have completed to date.

Over the past several years

we have gained substantial knowledge of various dermatology diseases and what seems to work in treating these diseases.

We plan to leverage

this knowledge in creating a whole product line of skin care treatments that patients can access directly.

We plan to launch our first

product in the middle of 2026 which will consist of a once-weekly, topical acne kit that can be used by patients with mild, moderate,

or severe acne.

We have gained tremendous understanding of our Spongilla technology over the past 8 years and deeply understand

the benefits of it being combined with OTC monograph active ingredients to topically treat a variety of dermatological conditions.

Spongilla technology is derived from a naturally grown freshwater sponge, Spongilla lacustris or Spongilla , which

is processed into a fine, purified powder and mixed with a fluidizing agent immediately prior to application by the patient.

is a unique freshwater sponge that only grows in commercial quantities in select regions of the world and under specific environmental

conditions, all of which give our Spongilla technology its distinctive anti-microbial, anti-inflammatory, and mechanical properties.

The combination of these environmental conditions, the proprietary harvesting protocols developed with our exclusive supplier, and our

post-harvest processing procedures produce an ingredient that optimizes the mechanical components as well as the organic components,

while eliminating any harmful bacteria that could be found in a freshwater sponge.

We believe these unique components used in tandem

with an OTC monograph active ingredient could produce a superior OTC product candidate unlike anything currently on the market.

for our product candidates to have multiple mechanisms of action for the treatment of skin diseases and conditions.

to our strategic switch to develop and distribute OTC pharmaceutical products, our U.S.

Food and Drug Administration (“FDA”)

investigational new drug applicant, XYNGARI™, was intended to utilize our Spongilla technology as a stand-alone product

for the once weekly treatment of a variety of skin diseases, with our initial focus being the treatment of moderate to severe acne.

In March 2025, we announced that our XYNGARI™ Phase 3 S pongilla T reatment of A cne R esearch

(“STAR-1”) trial topline data met all co-primary endpoints at week 12.

XYNGARI™ demonstrated highly statistically significant difference

compared with placebo for all primary endpoints after 12 weeks of once weekly treatments.

XYNGARI™ patients saw a rapid and sustained

therapeutics treatment effect in absolute reduction in inflammatory lesion counts with a -11.4 lesion reduction at week four, -14.7 lesions

XYNGARI™ demonstrated highly statistically significant

difference compared with placebo for all primary endpoints after 12 weeks of once weekly treatments.

XYNGARI™ patients saw a

rapid and sustained therapeutics treatment effect in absolute reduction in inflammatory lesion counts with a -11.4 lesion reduction

at week four, -14.7 lesion reduction at week 8, and -16.8 lesion reduction at week 12 compared to -8.6, -10.9, and -13.1 lesion

reduction for placebo at weeks 4, 8, and 12, respectively.

XYNGARI™ patients also saw a rapid and sustained therapeutics

treatment effect in absolute reduction in noninflammatory lesion counts with a -12.4 lesion reduction at week four, -15 lesions

reduction at week 8, and -17.3 lesion reduction at week 12 compared to -8.8, -10.4, and -12.4 lesion reduction for placebo at weeks

4, 8, and 12, respectively.

XYNGARI™ patients also saw a rapid and sustained therapeutics treatment effect in absolute reduction in

noninflammatory lesion counts with a -12.4 lesion reduction at week four, -15 lesions reduction at week 8, and -17.3 lesion reduction

at week 12 compared to -8.8, -10.4, and -12.4 lesion reduction for placebo at weeks 4, 8, and 12, respectively.

Lastly, we observed a

sustained therapeutics treatment effect in the investigator’s global assessment of acne with a 11.9% of XYNGARI™ patients

being considered a responder at week four, 21.6% of XYNGARI™ patients being considered a responder at week 8, and 29.4% of XYNGARI™

patients being considered a responder at week 12 compared to 6.2%, 8.0%, and 15.2% of placebo patients being considered a responder at

weeks 4, 8, and 12, respectively.

The Phase 3 STAR-1 trial was double-blind, randomized, placebo controlled, and enrolled 520 patients

with moderate-to-severe acne, age 9 years or older across sites in the United States and Latin America.

The co-primary endpoints included

absolute reduction in inflammatory and noninflammatory lesion counts and the improvement in investigators global assessment (IGA) of

Patients were treated once a week for 12 weeks with either XYNGARI™ or placebo and were evaluated monthly.

We are currently

evaluating the full data set from the STAR-1 trial.

As requested by the FDA, we would have to complete a second Phase 3 trial, STAR-2,

which would be followed by an extension study to follow patients for a 12-month total treatment period.

The STAR-2 trial would include

a near identical trial design to the STAR-1 trial and we are currently evaluating next steps as it relates to the XYNGARI™ Phase 3 STAR-2 clinical trial.

Previously XYNGARI™ has shown its

ability to treat the multiple causes of acne in a Phase 2b study where we initially saw a 45% reduction in inflammatory lesions after

four treatments, with XYNGARI™ achieving statistically significant improvements at all time points for all three primary endpoints

throughout the study (reduction in inflammatory lesions, reduction in non-inflammatory lesions, and improvement in IGA).

based on the multiple mechanisms of action and anti-inflammatory effect seen with the XYNGARI™ acne trial, we completed a Phase

1b proof of concept, or POC, trial in psoriasis where we saw encouraging results warranting further investigation upon our receipt of

adequate funding.

consists of two grams of powder processed from the naturally grown freshwater sponge, Spongilla lacustris.

The patient mixes the

powder with a fluidizing agent (3% hydrogen peroxide) immediately prior to application to form an easy-to-apply paste.

The paste is applied

like a mud mask and is left on the skin for approximately ten to fifteen minutes, after which time it is washed off with water.

the unique combination of XYNGARI™’s mechanical components and chemical components, and based on our Phase 2 acne data, we

believe patients will only need to apply XYNGARI™ once weekly to produce the desired treatment effect.

The mechanical components

of the Spongilla powder consist of many microscopic siliceous, needle-like spicules that, when massaged into the skin, penetrate

the stratum corneum (the skin’s outermost protective layer) and create microchannels into the dermis where pro-inflammatory cytokines

and bacteria reside.

We believe that the penetration of the spicules also leads to the opening of microchannels, which allow oxygen to

enter pilosebaceous glands, helping to kill C.

Lastly, we observed a sustained therapeutics treatment effect as measured in the investigator’s

global assessment (IGA) of acne scale.

IGA is measured on a 5-point scale (0-4), with 4 being severe, 3 being moderate, 2 being

mild, 1 being almost clear and 0 being clear.

To be considered a responder, patients had to achieve a score of 0 (clear) or 1

(almost clear).

There were 11.9% of XYNGARI™ patients that were considered a responder at week four, 21.6% of XYNGARI™

patients being considered a responder at week 8, and 29.4% of XYNGARI™ patients being considered a responder at week 12

compared to 6.2%, 8.0%, and 15.2% of placebo patients being considered a responder at weeks 4, 8, and 12, respectively.

approximately 80% of the XYNGARI™ patients had at least a 1-grade change in their acne at the end of the study.

STAR-1 trial was double-blind, randomized, placebo controlled, and enrolled 520 patients with moderate-to-severe acne, age 9 years

or older across sites in the United States and Latin America.

The co-primary endpoints included absolute reduction in inflammatory

and noninflammatory lesion counts and the improvement in investigators global assessment (“IGA”) of acne.

Patients were treated once a

week for 12 weeks with either XYNGARI™ or placebo and were evaluated monthly.

While we saw positive results from the STAR-1

study, after evaluating the prescription dermatology market and regulatory hurdles for approval, we made the strategic decision to

withdraw our investigational new drug application (“IND”) for XYNGARI™ for the treatment of acne.

We believe this strategic

decision will provide us greater flexibility to leverage the many novel features and benefits of our Spongilla technology in

a variety of skin care products for the OTC marketplace.

are currently finalizing the components and container closure for our initial acne kit, as well as completing the brand identity, with

an expected launch in the middle of 2026.

The acne kit will be a topical product applied once weekly by patients at home or in a dermatology

or esthetician’s office.

The product will utilize one active ingredient from FDA’s OTC acne monograph, which consist of OTC

drugs that are generally recognized by FDA as safe and effective, in predefined doses, for specific therapeutic categories.

active ingredients can be used alone or in combination with other ingredients and marketed as a treatment for various skin diseases or

conditions, like acne.

For our initial acne kit we plan on incorporating salicylic acid as the active ingredient in combination with

our unique Spongilla technology to distribute a novel acne treatment kit we believe is unlike anything currently on the market.

Based on years of testing we have learned that our Spongilla technology has a unique combination of mechanical components and chemical

components, that provide unique benefits against various skin conditions.

The mechanical components of the Spongilla powder consist

of many microscopic siliceous, needle-like spicules that, when massaged into the skin, penetrate the stratum corneum (the skin’s

outermost protective layer) and create microchannels into the dermis where pro-inflammatory cytokines and bacteria reside.

that the penetration of the spicules also leads to the opening of microchannels, which allow oxygen to enter pilosebaceous glands, helping

acnes , which grow in an anaerobic (without oxygen) environment ( C.

the bacteria that cause inflammatory lesions in acne patients).

The spicules also cause turnover of the top layer of dead skin, thereby

increasing collagen production resulting in skin rejuvenation.

Additionally, we believe the newly created microchannels provide a conduit

for XYNGARI™’s naturally occurring chemical compounds to be delivered to the dermis and pilosebaceous glands, helping to

acnes and reduce inflammation .

In addition to anti-microbial compounds, XYNGARI™ also appears to have anti-inflammatory

chemical compounds, as demonstrated during in vitro experiments, that inhibit inflammation through the reduction of C.acnes

stimulated IL-8 production and by inhibiting IL-17A and IL-17F expression in human cell lines.

Also, during in vitro studies

of XYNGARI™’s organic compounds, we observed the inhibition of the lipogenesis of sebocytes, which may translate to a reduction

in sebum (an oily and waxy substance produced by the human body’s sebaceous glands) production and the oiliness of the skin in

patients, which was observed by a number of clinical investigators in our Phase 2 acne studies.

We believe the combination of these biological

and mechanical effects could be important factors in treating multiple inflammatory skin diseases, as seen in our clinical trials.

second product candidate utilizing our Spongilla technology is DMT410.

DMT410 is intended to consist of one treatment of our proprietary

sponge powder followed by one topical application of botulinum toxin for delivery into the dermis.

Currently, botulinum toxin is only

approved to be delivered to the dermis by intradermal injections, which can be painful for the patient and time-consuming for the physician.

However, we believe DMT410’s ability to topically deliver botulinum toxin into the dermis could have similar levels of efficacy

to existing delivery techniques, with fewer tolerability issues, and a quicker application time, possibly replacing the need for intradermal

We first tested DMT410 in a Phase 1 POC trial in primary axillary hyperhidrosis patients where we observed 80% of patients

achieving a reduction in gravimetric sweat production greater than 50% four weeks after a single treatment.

With almost 40% of the hyperhidrosis

market currently being treated with intradermal injections of botulinum toxin, we believe there could be significant opportunity for

DMT410 to break into this market and replace intradermal injections of botulinum toxin.

Based on DMT410’s ability to effectively

deliver botulinum toxin to the dermis as observed in the Phase 1 axillary hyperhidrosis trial, we also conducted a Phase 1 POC trial

of DMT410 for the treatment of multiple aesthetic skin conditions, including reduction of pore size, sebum production, and fine lines,

among others.

In November 2021, we announced top-line results from this trial, where we saw promising data that we believed warranted

further investigation of DMT410.

acnes are the bacteria that cause inflammatory

lesions in acne patients).

The spicules also cause turnover of the top layer of dead skin, thereby increasing collagen production resulting

in skin rejuvenation.

Additionally, we believe the newly created microchannels provide a conduit for Spongilla powder’s

naturally occurring chemical compounds to be delivered to the dermis and pilosebaceous glands, helping to kill the C.

reduce inflammation.

In addition to anti-microbial compounds, the Spongilla powder also appears to have anti-inflammatory chemical

compounds, as demonstrated during in vitro experiments, that inhibit inflammation through the reduction of C.acnes stimulated

IL-8 production and by inhibiting IL-17A and IL-17F expression in human cell lines.

Also, during in vitro studies of Spongilla

powder’s organic compounds, we observed the inhibition of the lipogenesis of sebocytes, which may translate to a reduction in sebum

(an oily and waxy substance produced by the human body’s sebaceous glands) production and the oiliness of the skin in patients.

We believe the combination of an FDA approved OTC active ingredient with the multiple biological and mechanical effects of our Spongilla

technology could be important factors in treating multiple inflammatory skin diseases.

January 17, 2025, we entered into a Clinical Trial Collaboration Agreement (the “Collaboration Agreement”) with Revance Therapeutics,

(“Revance”) where we intend to initiate a Phase 2a clinical trial to evaluate the topical application of XYNGARI™

(“Revance”) where we intended to conduct a Phase 2a clinical trial to evaluate the topical application of XYNGARI™

followed by the topical application of DAXXIFY® for the treatment of primary axillary hyperhidrosis.

The Phase 2a clinical trial

is anticipated to evaluate the efficacy, safety, and tolerability of XYNGARI™ and DAXXIFY® versus XYNGARI™ and placebo

in patients with moderate-to-severe axillary hyperhidrosis for 16 weeks.

The trial is anticipated to be randomized (1:1:1:1), double-blind,

placebo-controlled, enrolling approximately 48 patients across sites in the United States.

The endpoints are intended to be the percent

of patients with greater than 50% reduction in gravimetrically measured sweat production from baseline, the percent of patients with

gravimetric sweat production less than 50mg, and the mean absolute change from baseline in gravimetrically measured.

In light of our recent strategic

shift to develop and distribute OTC pharmaceutical products, we plan to continue to discuss future opportunities for this collaboration

with Revance.

At this time, the initiation of the Phase 2a clinical trial has been placed on hold.

We still believe there is a potential

to utilize our Spongilla technology for the topical delivery of botulinum toxin, but with our strategic decision to withdraw the

XYNGARI™ IND, we are currently evaluating the regulatory and commercial opportunities for this program.

the initiation of the Phase 2a clinical study is on hold, we continue to evaluate alternative ways to leverage our Spongilla

technology as a novel platform to enhance the topical delivery of large-molecules, like botulinum toxin, as a needle-free

alternative to conventional intradermal injection of large molecules for medical and aesthetic skin conditions.

Typically, for

facial aesthetics, botulinum toxins are injected into facial muscles to reduce forehead, lateral canthal, and glabella deep lines.

While currently only approved for the treatment of axillary hyperhidrosis, intradermal injections of botulinum toxin primarily

affect neuromodulatory at the level of cutaneous nerves, sweat glands, and superficial muscle fibers, not via deep muscular

paralysis as with intramuscular injections.

However, there have been many studies conducted with intradermal injections of botulinum

toxin for various aesthetic and medical skin conditions, showing its broad potential application.

This is because the mechanism of

action of botulinum toxin in the dermis acts to block acetylcholine release from the presynaptic nerve terminals.

effects are 1) reduced cholinergic activity (eccrine glands reduce sweating, sebaceous glands reduce sebum production, arrector pili

and superficial muscle fibers reduce fine wrinkling resulting in smoother skin), 2) modulation of sensory nerves leading to a

reduction in neurogenic inflammation, itching, and erythema (redness), and 3) indirect skin-tightening due to mild reduction of

superficial muscle tone and possible microvascular effects.

Intradermal injections of botulinum toxin have also shown cosmetic

effects, including skin smoothing through reducing pore size, reducing fine lines, and a mild lifting effect from dermal tightening

and reducing oil and sweat reduction.

However, due to the difficulty, pain, and time-consuming nature of intradermal injections,

there still remains few approved or widely practiced treatment options.

believe our Spongilla technology can increase the number of intradermal uses for botulinum toxin by leveraging the unique microstructure

of our Spongilla technology, to create microchannels into the dermis, enabling improved dermal penetration of botulinum toxins

Using our microstructures to create microchannels into the dermis avoids the need to give multiple intradermal

injections, which can be painful for patients and very time consuming for the dermatologist or esthetician.

Additionally, our technology

can allow for broad coverage of larger surface areas of the skin, which we believe will provide a better field effect of the botulinum

plan to leverage this platform for broad applicability across dermatologic and aesthetic skin conditions, potentially allowing dermatologists

and estheticians to increase uses for the intradermal delivery of botulinum toxin.

We believe this non-invasive approach could meaningfully

expand the therapeutic and aesthetic utility of botulinum toxin for conditions such as axillary, palmar and plantar hyperhidrosis, acne,

acne scars, rosacea, and improved skin aesthetics (including improvements in skin luminosity and brightness, reducing pore size and number

of pores, reducing fine lines, and reducing skin oiliness by decreasing sebum production).

Our initial clinical proof-of-concept studies

using our Spongilla technology have demonstrated the ability to deliver botulinum toxin into the dermis for improvement in facial

aesthetics and reduction in sweat production in patients with primary axillary hyperhidrosis.

We plan to continue to explore additional

uses for this platform and look forward to getting our technology in the hands of estheticians and dermatologists so they may better

serve their patients.

have a limited operating history.

Since our inception, our operations have focused on developing XYNGARI™ and DMT410, organizing

Since our inception, our operations have focused on developing XYNGARI™ and DMT410, our topical botulinum toxin program, organizing

and staffing our company, raising capital, establishing our supply chain and manufacturing processes, further characterizing the multiple

7 unchanged sentences

Our net losses were $5.7 million and $9.1 million

for the six months ended June 30, 2025, and 2024, respectively.

As of June 30, 2025, we had an accumulated deficit of $69.7 million.

for the nine months ended September 30, 2025, and 2024, respectively.

As of September 30, 2025, we had an accumulated deficit of $71.4

We expect to continue to incur significant expenses and operating losses for the foreseeable future.

We anticipate that our expenses

will increase significantly in connection with our future activities, as we:

development of XYNGARI™ for the treatment of acne, including non-clinical studies and the second Phase 3 clinical trial;

for regulatory approval of XYNGARI™ for the treatment of moderate-to-severe acne;

a botulinum toxin partner for DMT410 for the treatment of medical and aesthetic skin conditions and diseases;

development of DMT410 for the treatment of treatment of aesthetic and medical skin conditions, including Phase 1 and Phase 2 clinical

for commercialization of XYNGARI™, if approved, including the hiring of sales and marketing personnel;

our product candidates for additional Phase 2 and Phase 3 trials and commercial sale;

We anticipate that our

expenses will increase significantly in connection with our future activities, as we:

develop OTC pharmaceutical kits for the treatment of acne;

for commercial launch of OTC pharmaceutical kits for the treatment of acne, including hiring additional marketing personnel;

development of DMT410 for the treatment of aesthetic and medical skin conditions, including proof of concept clinical

our product candidates for commercial sale;

additional research and development and selling, general and administrative personnel;

9 unchanged sentences

We will need to generate significant revenues to achieve profitability, and we may never do so.

January 21, 2025, we closed a private placement (the “January 2025 PIPE”) priced at the market under Nasdaq rules, in which

we sold 193,539 shares of Common Stock, pre-funded warrants to purchase an aggregate of 7,246 shares of Common Stock with an exercise

price of $0.01 per share (“January 2025 Pre-Funded Warrants”), and 200,785 warrants (the “January 2025 PIPE Warrants”)

to purchase up to an aggregate of 200,785 shares of Common Stock.

The January 2025 PIPE Warrants have an exercise price of $12.70.

our insiders, including our Chief Executive Officer, Chief Financial Officer and certain members of the our board of directors, participated

in the January 2025 PIPE.

These insiders purchased an aggregate of 122,047 shares of Common Stock and January 2025 PIPE Warrants to purchase

up to an aggregate of 122,047 shares of Common Stock, for an aggregate purchase price of approximately $1,550,000.

The purchase price

per share of Common Stock and accompanying January 2025 PIPE Warrant for these insiders was the same as paid by other investors in the

January 2025 PIPE.

In connection with the January 2025 PIPE, we entered into a registration rights agreement with the investor, pursuant

to which we agreed to prepare and file a registration statement with the SEC registering the resale of the shares of Common Stock underlying

the securities sold in the January 2025 PIPE financing.

We filed a Form S-3 on January 30, 2025, which was declared effective by the

SEC on February 5, 2025.

We received net cash proceeds of approximately $2.3 million from the January 2025 PIPE after deducting underwriters’

discounts and offering expenses of approximately $0.3 million.

During the first quarter of 2025, all of the January 2025 Pre-Funded Warrants

were exercised.

As of June 30, 2025, no January 2025 Pre-Funded Warrants remained outstanding.

March 27, 2025, we announced that our XYNGARI™ Phase 3 STAR-1 trial met all co-primary endpoints by achieving highly

statistically significant difference when compared with placebo after 12 weeks of once weekly treatments.

At week 12, XYNGAR™

achieved IGA success (2-point change and 0 or 1) in 29.4% of patients vs.

15.2% of patients on placebo (p<0.001), XYNGARI™

saw a -16.8 inflammatory lesion reduction compared with a -13.1 inflammatory lesion reduction for placebo (p<0.001), and

XYNGARI™ saw a -17.3 noninflammatory lesion reduction compared with a -12.4 noninflammatory lesion reduction for placebo

Based on this positive data, we are evaluating next steps with respect to the XYNGARI™ Phase 3 STAR-2 clinical

March 27, 2025, we entered into an inducement offer letter agreement (the “March 2025 Inducement Letter”) with a holder (the

“Holder”) of certain of our existing warrants to purchase an aggregate of 483,447 shares of our common stock.

Such existing

warrants were made up of (i) certain of the May 17, 2024 (the “May 2024 Warrants”), which were issued in two separate series,

having an exercise price of $49.10 per share, and (ii) the September 16, 2024, which were issued in two separate series, having an exercise

price of $15.80 per share (the “September 2024 Warrants” and together with the May 2024 Warrants, the “Existing Warrants”).

Pursuant to the March 2025 Inducement Letter, the Holder agreed to exercise for cash its Existing Warrants at a reduced exercise price

of $12.84 per share in consideration for our agreement to issue in a private placement (i) new Series A common stock purchase warrants

(the “New Series A Warrants”) to purchase up to 498,080 shares of Common Stock (the “New Series A Warrant Shares”)

and (ii) new Series B common stock purchase warrants (the “New Series B Warrants” and together with the New Series A Warrants,

the “New Warrants”) to purchase up to 468,813 shares of Common Stock (the “New Series B Warrant Shares” and together

with the New Series A Warrant Shares, the “New Warrant Shares”).

We received net proceeds of approximately $5.7 million from

the exercise of the Existing Warrants by the Holder, after deducting financial advisor fees and other offering expenses payable by us.

As of June 30, 2025, 388,700 shares were held in abeyance.

June 2024, we entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C.

Wainwright & Co., LLC

(“HCW”), as sales agent, pursuant to which we may offer and sell, from time to time through HCW, shares of our common stock

Pharmaceutical Requirements

We plan to develop and distribute

OTC pharmaceutical products, such as topical acne products, that are subject to FDA and foreign regulation.

Under the U.S.

OTC monograph

system, OTC pharmaceutical products that meet established conditions are generally recognized as safe and effective and do not require

the submission and approval of a new drug application.

The FDA OTC monographs include well-known ingredients and specify requirements

for permitted indications, required warnings and precautions, allowable combinations of ingredients and dosage levels.

Pharmaceutical

products marketed under the OTC monograph system must conform to specific quality, formula, and labeling requirements.

Following the passage

of the CARES Act, FDA is updating and working to finalize current monographs.

All facilities where OTC pharmaceutical

products are manufactured, tested, packaged, stored or distributed must comply with current Good Manufacturing Practices (“cGMP”)

regulations and/or regulations promulgated by competent authorities in the countries where the facilities are located.

All of our pharmaceutical

products are manufactured, tested, packaged, stored and distributed according to cGMP regulations.

The FDA performs periodic audits to

ensure that our facilities remain in compliance with all appropriate regulations.

The failure of a facility to be in compliance may lead

to a breach of representations made to customers or to regulatory action against us related to the products made in that facility, such

as seizure, injunction or recall.

Serious product quality concerns could also result in governmental actions against us that, among other

things, could result in the suspension of production or distribution of our products, product seizures, loss of certain licenses or other

governmental penalties, and could have a material adverse effect on our financial condition or operating results.

We are required to report

serious adverse events associated with the use of our OTC pharmaceutical products marketed in the U.S.

and other countries where such

products are sold.

We cannot predict whether new

legislation regulating our activities will be enacted or what effect any legislation would have on our business.

OTC Pharmaceutical Pre- and Post-market Regulation

Before and after an OTC pharmaceutical

product is commercialized, numerous regulatory requirements apply, including:

international quality system regulations, including those of the FDA and other regulatory authorities, impose cGMP requirements governing the methods used in, and the facilities and controls used for, the design, manufacture, packaging, servicing, labeling, storage, installation, and distribution of all finished OTC pharmaceuticals intended for human use;

global standards and regulations affecting product design and development, including requirements to keep existing products current to the “state of the art,” and doing an ongoing assessment of the risk acceptability, adopting risk control measures where appropriate, and re-assessing the clinical benefit;

labeling regulations, including a prohibition on product promotion for unapproved or “off label” uses;

the drug reporting regulation requiring a manufacturer to report to the regulatory authorities if its drug may have caused or contributed to a death or serious injury in a way that would likely cause or contribute to a death or serious injury if it were to recur and ongoing post-market surveillance of the product and like-products to continuously evaluate the benefit/risk over the life of the product;

regulations on corrections and removals which require a manufacturer to report recalls and field actions to the regulatory authorities if initiated to reduce a risk to health posed by the device or to remedy a violation of the applicable laws.

July 15, 2025, we held our annual meeting of stockholders at which time our stockholders approved the adoption of an amendment to our

Amended and Restated Certificate of Incorporation, as amended, to effect a reverse stock split of its issued and outstanding shares of

Common Stock, at a specific ratio, ranging from one-for-two to one-for-thirty, with the exact ratio determined by our board of directors

without further approval or authorization of its stockholders.

On August 1, 2025, we effected the reverse split of our shares of Common

Stock at a ratio of 1-for-10, as approved by our board of directors, with no adjustment to par value.

All issued and outstanding shares

of Common Stock and per share amounts contained in our financial statements have been retroactively adjusted to reflect this reverse

stock split for all periods presented.

September 10, 2025, we announced a strategic pivot to shift our focus to developing and distributing OTC pharmaceutical products for

the dermatology market.

We plan to focus on developing and launching multiple products that can be sold directly to consumers to treat

their various skin diseases and conditions.

We believe this strategic shift, through leveraging the FDA’s OTC monograph pathway,

could accelerate our ability to launch a commercial dermatology product, reduce our regulatory burden, and give us access to a broader

consumer market.

We are currently working with a branding agency to develop the commercial launch strategy while also beginning the manufacturing

process for our initial product launch, which we expect to occur in the middle of 2026.

In June 2024, we entered into the ATM Agreement with H.C.

Co., LLC , as Sales Agent, pursuant to which we may offer and sell, from time to time through Sales Agent, shares of our Common Stock

for aggregate proceeds of up to $1,662,761 (upon the terms and subject to the conditions and limitations set forth in the ATM Agreement).

During the six months ended June 30, 2025, we sold no shares of common stock under the ATM Agreement and have no capacity to sell shares

pursuant to the ATM Agreement remaining.

In 2024, we sold 55,001 shares of Common Stock under the ATM Agreement, for net proceeds of $1.4 million after deducting $0.2 million

of compensation to Sales Agent and other administration fees.

During the nine months ended September 30, 2025, we sold no shares of Common

Stock under the ATM Agreement.

On November 7, 2025, we filed a prospectus supplement, pursuant to which

we may offer and sell, from time to time through Sales Agent, shares of our Common Stock for aggregate proceeds of an additional $1,792,315

(upon the terms and subject to the conditions and limitations set forth in the ATM Agreement).

As of the date of this filing, we have

not sold any additional shares under the ATM Agreement.

Accounting Policies and Use of Estimates

have based our management’s discussion and analysis of financial condition and results of operations on our financial statements,

which have been prepared in accordance with accounting principles generally accepted in the United States.

The preparation of these financial

statements requires us to make estimates 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 expenses during the reporting periods.

On an ongoing basis,

we evaluate our estimates and judgments, including those related to clinical development expenses.

We base our estimates on historical

experience and on various other factors that we believe to be appropriate under the circumstances.

Actual results may differ from these

estimates under different assumptions or conditions.

which have been prepared in accordance with GAAP.

The preparation of these financial statements requires us to make estimates 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 expenses during the reporting periods.

On an ongoing basis, we evaluate our estimates and judgments, including those related

to clinical development expenses.

We base our estimates on historical experience and on various other factors that we believe to be appropriate

under the circumstances.

Actual results may differ from these estimates under different assumptions or conditions.

our significant accounting policies are more fully discussed in Note 2 - Summary of Significant Accounting Policies to our unaudited

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and Development Expenses

rely on third parties to conduct our clinical studies and to provide services, including data management, statistical analysis, and electronic

Once our clinical trials begin, at the end of each reporting period, we will compare the payments made to each service provider

to the estimated progress towards completion of the related project.

Factors that we will consider in preparing these estimates include

the number of patients enrolled in studies, milestones achieved, and other criteria related to the efforts of our vendors.

These estimates

will be subject to change as additional information becomes available.

Depending on the timing of payments to vendors and estimated services

provided, we will record net prepaid or accrued expenses related to these costs.

date, our research and development expenses have been related to the clinical development and manufacturing costs of our product candidates.

Research and development expenses include salaries and related expenses for personnel, including stock-based compensation, as well as

external party costs for clinical, nonclinical, and manufacturing of our product candidates.

Research and development expenses are recognized

as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until

the goods or services are received.

Research and development estimates will be subject to change as additional information becomes available.

March 2025, we announced topline results from our Phase 3 STAR-1 clinical trial and we completed the trial in the second quarter of

We expect that research and development costs will decrease in fiscal year 2026 as we will no longer conduct FDA-regulated clinical trials under IND for NDA,

and the cost of manufacturing OTC products is significantly less than manufacturing FDA-regulated

General and Administrative Costs

general and administrative expenses consist primarily of salaries, benefits, stock-based compensation for personnel in executive, finance,

business development, marketing and other corporate administrative functions.

Selling, general and administrative expenses also include

pre-commercial launch activities prior to product launch, including marketing expenses, legal fees incurred relating to corporate and

patent matters, professional fees incurred for accounting, auditing, tax and administrative consulting services, and insurance costs.

expect our selling, general and administrative expenses to increase in 2026.

The increase in expenses is due to our planned launch of

our first product candidate in mid-2026, including the development and commencement of our marketing campaigns and initiatives, the hiring

of marketing personnel and engagement of consultants to support full commercialization activities, and the addition of programs to support

commercialization activities.

expect to continue to incur audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing

and SEC requirements, director and officer insurance premiums, board of director fees, investor relations costs associated with operating

as a public company, patent costs and defense, and general and administrative personnel.

perform an assessment of warrants upon issuance to determine their proper classification in the financial statements based upon the warrant’s

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in Operating Results

results of operations have fluctuated significantly from period to period in the past and are likely to continue to do so in the future.

We anticipate that our quarterly and annual results of operations will be impacted for the foreseeable future by several factors, including

the progress and timing of expenditures related to the development of our product candidates.

Due to these fluctuations, we believe that

the period-to-period comparisons of our operating results are not a good indication of our future performance.

results of operations have fluctuated significantly from period to period in the past and are likely to continue to do so in the

We anticipate that our quarterly and annual results of operations will be impacted for the foreseeable future by several

factors, including the progress and timing of expenditures related to the development and commercialization of our product

Due to these fluctuations, we believe that the period-to-period comparisons of our operating results are not a good

indication of our future performance.

of Operations

Months Ended June 30, 2025, and 2024

Months Ended September 30, 2025, and 2024

following table summarizes our results of operations for the periods presented:

Three Months Ended June 30,

Three Months Ended September 30,

Operating expenses:

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$ (1,896,972 )

General and administrative

Selling, general and administrative

Total operating expenses

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and Development Expenses

and development expenses decreased by $1.4 million from $2.0 million for the three months ended June 30, 2024, to $0.6 million for the

three months ended June 30, 2025.

The decrease in research and development expenses resulted from $1.6 million of decreased clinical

expenses from the XYNGARI™ STAR-1 acne study, which completed enrollment during the fourth quarter of 2024.

The decrease in clinical

expense was partially offset by $0.1 million of increased chemistry, manufacturing, and controls, or CMC, expenses and $0.1 million of

increased personnel costs.

and Administrative Expenses

and administrative expenses increased by $0.3 million from $0.9 million for the three months ended June 30, 2024, to $1.2 million for

the three months ended June 30, 2025.

The increase in general and administrative expense was result of $0.2 million of increased public

company compliance costs as well as $0.1 million of increased personnel costs.

Income and Expenses

income increased by $17,002 from $54,636 for the three months ended June 30, 2024, to $71,638 for the three months ended June 30, 2025.

The increase in interest income resulted from increased cash balances.

Months Ended June 30, 2025, and 2024

and development expenses decreased by $1.9 million from $2.4 million for the three months ended September 30, 2024, to $0.5 million for

the three months ended September 30, 2025.

The decrease in research and development expenses resulted from $1.9 million of decreased

clinical expenses from the XYNGARI™ STAR-1 acne study, which completed enrollment during the fourth quarter of 2024 and completed

expenses during the second quarter of 2025.

General and Administrative Expenses

general and administrative expenses increased by $0.4 million from $0.8 million for the three months ended September 30, 2024, to

$1.3 million for the three months ended September 30, 2025.

The increase in selling, general and administrative expense was the

result of $0.5 million of increased marketing expenses, as we are preparing for our first product launch in mid-2026, partially

offset by $0.1 million of decreased audit fees.

Months Ended September 30, 2025, and 2024

following table summarizes our results of operations for the periods presented:

Six Months Ended June 30,

Nine Months Ended September 30,

Operating expenses:

1 unchanged sentence

$ (3,607,838 )

General and administrative

Selling, general and administrative

Total operating expenses

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and Development Expenses

and development expenses decreased by $1.7 million from $3.6 million for the six months ended June 30, 2024, to $1.9 million for the

six months ended June 30, 2025.

The decrease in research and development expenses resulted from $1.7 million of decreased clinical expenses

from the XYNGARI™ STAR-1 acne study, which completed enrollment during the fourth quarter of 2024.

and Administrative Expenses

and administrative expenses decreased by $0.3 million from $2.5 million for the six months ended June 30, 2024, to $2.2 million for

the six months ended June 30, 2025.

The decrease in general and administrative expense was the net result of $0.3 million of

decreased stock-based compensation resulting from the cancellation of out-of-the-money stock options during the first quarter of

Income and Expenses

income and expenses decreased by $16,079 from $123,934 for the six months ended June 30, 2024, to $107,855 for the six months ended June

The decrease in interest income resulted from changes in cash and cash equivalents.

and development expenses decreased by $3.6 million from $6.0 million for the nine months ended September 30, 2024, to $2.4 million for

the nine months ended September 30, 2025.

The decrease in research and development expenses resulted from approximately $3.6 million

of decreased clinical expenses from the XYNGARI™ STAR-1 acne study, which completed enrollment during the fourth quarter of 2024.

General and Administrative Expenses

general and administrative expenses increased by approximately $0.2 million from $3.3 million for the nine months ended September

30, 2024, to approximately $3.5 million for the nine months ended September 30, 2025.

The increase in selling, general and

administrative expense was the result of $0.5 million of increased marketing expenses partially offset by $0.3 million of decreased

We expect marketing expenses to increase as we are preparing for our first product launch in mid-2026.

following table summarizes our cash flows from operating and financing activities:

Six Months Ended June 30,

Nine Months Ended September 30,

Statements of cash flows data:

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$ (1,294,383 )

used in operations of $4.6 million for the six months ended June 30, 2025, was the result of the net loss of $4.0 million and decreases

in accounts payable and accrued expenses and other current liabilities of $0.9 million, partially offset by the decrease in prepaid expenses

and other current assets of $0.2 million and non-cash stock-based compensation of $0.1 million.

used in operations of $4.8 million for the six months ended June 30, 2024, was the result of the net loss of $6.0 million and a decrease

in accrued and other current liabilities of $0.2 million, offset by increases in non-cash stock-based compensation of $0.6 million, an

increase in accounts payable of $0.4 million, and a decrease in prepaid expenses and other current assets of $0.4 million.

provided by financing activities of $7.9 million for the six months ended June 30, 2025, was primarily the result of the January 2025

PIPE financing which raised net proceeds of approximately $2.2 million, and the March 2025 Inducement financing which raised net proceeds

used in operations of $6.4 million for the nine months ended September 30, 2025, was the result of the net loss of $5.7 million and decreases

in accounts payable and accrued expenses and other current liabilities of $0.8 million, partially offset by non-cash stock-based compensation

of $0.1 million.

provided by financing activities of $2.3 million for the six months ended June 30, 2024, was the result of the May 2024 Warrant Inducement

financing which raised gross process of $2.7 million offset by approximately $0.4 million of financing-related expenses.

used in operations of $8.2 million for the nine months ended September 30, 2024, was the result of the net loss of $9.1 million, offset

by increases in non-cash stock-based compensation of $0.6 million and increases in accrued expenses of $0.3 million.

provided by financing activities of $7.9 million for the nine months ended September 30, 2025, was primarily the result of the January

2025 PIPE financing which raised net proceeds of approximately $2.2 million, and the March 2025 Inducement financing which raised net

proceeds of $5.7 million.

provided by financing activities of approximately $7.0 million for the nine months ended September 30, 2024, was the result of the September

2024 PIPE financing which raised net proceeds of $3.1 million, sales of the Company’s shares through the ATM Agreement which raised

net proceeds of $1.4 million during the third quarter of 2024, and the May 2024 warrant inducement financing which raised net proceeds

of $2.3 million.

and Capital Resources

our inception, we have not generated any revenue or commercialized any products.

As of June 30, 2025, our cash and cash equivalents totaled

$6.5 million, and we had an accumulated deficit of $69.7 million.

For the six months ended June 30, 2025, and the year ended December

31, 2024, we used cash of $4.6 million and approximately $11.1 million, respectively, in operations.

We expect our cash resources to

fund operations into the second quarter of 2026.

We anticipate that we will continue to incur net losses for the foreseeable future.

our inception, we have incurred net losses and have not generated any revenue.

As of September 30, 2025, our cash and cash

equivalents totaled $4.7 million, and we had an accumulated deficit of $71.4 million.

For the nine months ended September 30, 2025,

and the year ended December 31, 2024, we used cash of $6.4 million and approximately $11.1 million, respectively, in operations.

expect our cash resources to fund operations into the second quarter of 2026.

We anticipate that we will continue to incur net

losses for the foreseeable future, or until product candidate revenues exceed operating expenses, which timing is uncertain at this

Historically,

our principal sources of cash have included proceeds from the issuance of common and preferred equity and proceeds from the issuance

Our principal uses of cash have included cash used in operations (including clinical development of our product candidates and

general and administrative expenses) and payments for license rights.

We expect that the principal uses of cash in the future will be

for continuing operations, funding of research and development, and general working capital requirements.

We expect that as research

and development expenses continue to grow, we will need to raise additional capital to sustain operations and research and development

plan to focus in the near term on the development, regulatory approval, and potential commercialization of XYNGARI™ for the treatment

We anticipate we will incur net losses for the next several years as we complete clinical development of XYNGARI™ for

the treatment of acne and psoriasis and continue research and development of DMT410 for the treatment of aesthetic and medical skin conditions.

In addition, we plan to seek opportunities to identify, acquire or in license and develop additional drug candidates, potentially build

commercial capabilities, and expand our corporate infrastructure.

We may not be able to complete the development and initiate commercialization

of these programs if, among other things, our clinical trials are not successful or if the FDA does not approve our drug candidate arising

out of our current clinical trials when we expect, or at all.

primary uses of capital are, and we expect will continue to be, compensation and related expenses, clinical costs, external research

and development services, legal and other regulatory expenses, and administrative and overhead costs.

Our future funding requirements

will be heavily determined by the resources needed to support the development of our drug candidates.

believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements

into the second quarter of 2026.

We have based this estimate of cash runway on assumptions that may prove to be wrong, and we could utilize

our available capital resources sooner than we expect.

our principal sources of cash have included proceeds from the issuance of equity and proceeds from the issuance of debt.

Our principal

use of cash has been cash used in operations.

Our projected principal uses of cash for the next 12 months are the following expected

activities related to our OTC product launch, which is expected in mid-2026:

formulation optimization, bench testing, and small-scale manufacturing runs;

development, consumer product testing, brand development, and marketing activities in preparation for commercial launch;

research and development related to additional OTC product launches;

working capital requirements.

expect that selling, general and administrative expenses, including marketing, will continue to grow, and therefore, we will need to

raise additional capital to sustain operations until we can generate operating income.

are focused on preparing for the launch of our first commercial OTC product, a monthly kit containing four weekly acne treatments, which

is planned for mid-2026, based on our current operating plan and anticipated expenditures associated with formulation and pre-commercial

We anticipate we will incur net losses for the next several years until we can generate sufficient

operating income from our OTC products.

Our primary uses of capital are, and we expect will continue to be, compensation and related

expenses, marketing, external manufacturing, legal and other regulatory expenses, and administrative and overhead costs.

Our future funding

requirements will be heavily determined by the potential income generated from revenues related to our OTC product candidates.

we may seek opportunities to identify, acquire or in license and develop additional drug candidates, potentially build commercial capabilities,

and expand our corporate infrastructure.

believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses into the second quarter of 2026.

We have based this estimate of cash runway on assumptions that may prove to be wrong, and we could deplete our available capital resources

sooner than we expect.

We anticipate that we will continue to incur net losses for the foreseeable future.

These factors raise substantial doubt about our ability to continue as a going concern for the one-year period following the date that

these financial statements were issued.

We will require additional capital to complete the Phase 3 studies for XYNGARI™ for the

treatment of acne, continue development of XYNGARI™, and to pursue in-licenses or acquisitions of other drug candidates.

based on our recurring losses from operations incurred since inception, expectation of continuing operating losses for the foreseeable

future, and the need to raise additional capital to finance future operations, we are developing plans to mitigate this risk, which may

consist of raising additional capital through some combination of equity or debt financings, and/or potentially new collaborations, business

These factors raise substantial

doubt about our ability to continue as a going concern for the one-year period following the date that these financial statements were

on our recurring losses from operations incurred since inception, expectation of continuing operating losses for the foreseeable future,

and the need to raise additional capital to finance future operations, we are developing plans to mitigate this risk, which may consist

of raising additional capital through some combination of equity or debt financings, and/or potentially new collaborations, business

transactions, and reducing cash expenditures.

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may include liquidation or other preferences that adversely affect the rights of the holders of our Common Stock.

of the numerous risks and uncertainties associated with research, development, and commercialization of pharmaceutical drugs, we are

unable to estimate the exact amount of our working capital requirements.

Our future funding requirements will depend on many factors,

number and characteristics of the drug candidates we pursue;

scope, progress, results, and costs of researching and developing our drug candidates, and conducting preclinical studies and clinical

timing of, and the costs involved in, obtaining regulatory approvals for our drug candidates;

cost of manufacturing our drug candidates and any drugs we successfully commercialize;

future funding requirements will depend on many factors, including:

number and characteristics of the product candidates we pursue;

scope, progress, results, and costs of researching and developing our product candidates, and conducting any clinical trials;

timing of, and the costs involved in, obtaining regulatory approvals for our product candidates;

cost of manufacturing our product candidates and any candidates we successfully commercialize;

ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements;

costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing patent claims, including litigation costs

and the outcome of such litigation; and

timing, receipt and amount of sales of, or milestone payments related to or royalties on, our current or future drug candidates,

continue to grow our business over the longer term, we plan to commit substantial resources to research and development, clinical trials

of our product candidates, and other operations and potential product acquisitions and in licensing.

We have evaluated and expect to

continue to evaluate a wide array of strategic transactions as part of our plan to acquire or in license and develop additional products

and product candidates to augment our internal development pipeline.

Strategic transaction opportunities that we may pursue could materially

affect our liquidity and capital resources and may require us to incur additional indebtedness, seek equity capital or both.

we may pursue development, acquisition or in licensing of approved or development products in new or existing therapeutic areas or continue

the expansion of our existing operations.

Accordingly, we expect to continue to opportunistically seek access to additional capital to

license or acquire additional products, product candidates or companies to expand our operations, or for general corporate purposes.

Strategic transactions may require us to raise additional capital through one or more public or private debt or equity financings or

could be structured as a collaboration or partnering arrangement.

We have no arrangements, agreements, or understandings in place at

the present time to enter into any acquisition, in licensing or similar strategic business transaction.

and the outcome of such litigation;

timing, receipt and amount of sales of, or milestone payments related to or royalties on, our current or future drug candidates, if any;

derived from the sale of our OTC products, if any;

and cost of product formulation and validation of our OTC acne product;

and scale of commercial launch activities, including digital and retail distribution partnerships;

of manufacturing scale-up and establishing compliant supply chains;

of marketing and consumer acquisition spending required to gain initial market traction.

continue to grow our business over the longer term, we plan to commit substantial resources to marketing our first OTC product.

Additionally,

we have evaluated and expect to continue to evaluate a wide array of strategic transactions as part of our plan to acquire or in license

and develop additional products and product candidates to augment our internal development pipeline.

Strategic transaction opportunities

that we may pursue could materially affect our liquidity and capital resources and may require us to incur additional indebtedness, seek

equity capital or both.

In addition, we may pursue development, acquisition or in licensing of approved or development products in new

or existing therapeutic areas or continue the expansion of our existing operations.

Accordingly, we expect to continue to opportunistically

seek access to additional capital to license or acquire additional products, product candidates or companies to expand our operations,

or for general corporate purposes.

Strategic transactions may require us to raise additional capital through one or more public or private

debt or equity financings or could be structured as a collaboration or partnering arrangement.

We have no arrangements, agreements, or

understandings in place at the present time to enter into any acquisition, in licensing or similar strategic business transaction.

Obligations and Commitments

do not currently own or lease any office space.

enter into contracts in the normal course of business with contract research organizations for clinical trials, preclinical research

studies and testing, manufacturing and other services and products for operating purposes.

These contracts generally provide for termination

upon notice, and therefore we believe that our non-cancelable obligations under these agreements are not material.

enter into contracts in the normal course of business with contract research organizations for research studies and stability testing,

contract manufacturing organizations for manufacturing and other services, agencies for branding, marketing, and product design for our

first product launch, expected in mid-2026, and others for operating purposes.

These contracts generally provide for termination upon

notice, and therefore we believe that our non-cancelable obligations under these agreements are not material.

Act Accounting Election

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis