What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-13 compared with 2025-05-14 · 105 added, 73 removed, 390 unchanged (31% of the section changed)

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

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

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

The STAR-2 trial will include

a near identical trial design to the STAR-1 trial and is planned to begin by the end of 2025.

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

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Our net losses were $4.0 million and $6.0 million

for the three months ended March 31, 2025, and 2024, respectively.

As of March 31, 2025, we had an accumulated deficit of $68.0 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.

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 ongoing activities, as we:

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;

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

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;

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in the January 2025 PIPE.

These insiders purchased an aggregate of 1,220,476 shares of Common Stock and January 2025 PIPE Warrants to

purchase up to an aggregate of 1,220,476 shares of Common Stock, for an aggregate purchase price of approximately $1,550,000.

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 March 31, 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 (p<0.001).

Based on this positive data, we plan

initiate the second XYNGARI™ Phase 3 STAR-2 trial by the end of 2025.

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

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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 4,688,134 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 $5.8

million from the exercise of the Existing Warrants by the Holder, after deducting financial advisor fees and other offering expenses

payable by us.

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 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 three months

ended March 31, 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.

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

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.

Accounting Policies and Use of Estimates

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of Operations

Months Ended March 31, 2025, and 2024

Months Ended June 30, 2025, and 2024

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

Three Months Ended

Three Months Ended June 30,

Operating expenses:

and administrative

Research and development

$ (1,391,267 )

General and administrative

Total operating expenses

Losses from operations

Other income and expenses:

Interest income, net

$ (1,701,093 )

$ (2,829,106 )

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

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

Six Months Ended June 30,

Operating expenses:

Research and development

$ (1,710,867 )

General and administrative

Total operating expenses

Loss from operations

Other income and expenses:

Interest income

Interest expense, net

$ (4,004,680 )

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and Development Expenses

and development expenses decreased by $0.3 million from $1.6 million for the three months ended March 31, 2024, to $1.3 million for the

three months ended March 31, 2025.

The decrease in research and development expenses resulted from $0.1 million of decreased clinical

expenses from the XYNGARI™ STAR-1 acne study, which completed enrollment during the fourth quarter of 2024, and $0.2 million of

decreased stock-based compensation resulting from the cancellation of out-of-the-money stock options during the first quarter of 2024.

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 $0.5 million from $1.6 million for the three months ended March 31, 2024, to $1.1 million for

the three months ended March 31, 2025.

This decrease resulted from $0.3 million of decreased stock-based compensation resulting from

the cancellation of out-of-the-money stock options during the first quarter of 2024 and $0.2 million of decreased audit fees.

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 decreased by $33,082 from $69,298 for the three months ended March 31, 2024, to $36,216 for the three months ended March 31, 2025.

The decrease in interest income resulted from decreased cash balances.

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.

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

Six Months Ended June 30,

Statements of cash flows data:

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$ (2,491,035 )

$ (2,704,454 )

used in operations of $1.9 million for the three months ended March 31, 2025, was the result of the net loss of $2.3 million, offset

by increases in accounts payable and accrued expenses of approximately $0.3 million, as well as the decrease of prepaid expenses and

other current assets of approximately $0.1 million.

and cash equivalents used in operations of $2.7 million for the three months ended March 31, 2024, was the result of the net loss of

$3.1 million, offset by $0.6 million in non-cash stock-based compensation expense, a decrease in prepaid expenses and other current assets

of $0.1 million, and decreases in accounts payable and accrued and other current liabilities of $0.3 million.

provided by financing activities of $8.5 million for the three months ended March 31, 2025, was the result of the January 2025 PIPE financing

which raised net proceeds of $2.3 million, and the March 2025 Inducement financing which raised net proceeds of $6.2 million.

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

of $5.7 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.

and Capital Resources

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

As of March 31, 2025, our cash and cash equivalents

totaled $9.7 million, and we had an accumulated deficit of $68.0 million.

For the three months ended March 31, 2025, and the year ended

December 31, 2024, we used cash of $1.9 million and approximately $11.1 million, respectively, in operations.

We expect our cash resources

to fund operations into the first quarter of 2026.

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.

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

into the first quarter of 2026.

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

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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