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Item 2. Management’s Discussion and Analysis

2024-11-14 compared with 2024-08-14 · 92 added, 75 removed, 152 unchanged (52% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Company’s financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q, the audited financial statements and notes thereto, as well as management’s discussion and analysis of financial condition and results of operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (the SEC) on March 28, 2024 (the Annual Report).

Some of the information contained in this discussion and analysis, including information with respect to the Company’s plans and strategy for its business and related financing, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 12E of the Securities Exchange Act of 1934, as amended (the Exchange Act), that involve risks and uncertainties.

As a result of many factors, including those factors set out under the section entitled “Risk Factors” included in the Annual Report, the Company’s actual results could differ materially from the results described in or implied by these forward-looking statements.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q, the audited financial statements and notes thereto, as well as management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (the SEC) on March 28, 2024 (the Annual Report).

Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 12E of the Securities Exchange Act of 1934, as amended (the Exchange Act), that involve risks and uncertainties.

As a result of many factors, including those factors set out under the section entitled “Risk Factors” included in the Annual Report, our actual results could differ materially from the results described in or implied by these forward-looking statements.

Except as otherwise indicated, references herein to “GRI Bio,” or the “Company,” refer to GRI Bio, Inc.

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GRI-0621 is also an oral formulation of tazarotene, a synthetic retinoid acid receptor (RAR)-beta and gamma selective agonist, that is approved in the United States for topical treatment of psoriasis and acne.

As of June 30, 2024, it has been evaluated in over 1,700 patients as an oral product for up to 52-weeks.

As of September 30, 2024, it has been evaluated in over 1,700 patients as an oral product for up to 52-weeks.

We are developing GRI-0621 for the treatment of severe fibrotic lung diseases such as idiopathic pulmonary fibrosis (IPF), a life-threatening progressive fibrotic disease of the lung that affects approximately 140,000 people in the United States, with up to 40,000 new cases per year in the United States.

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Food and Drug Administration has cleared our Investigative New Drug (IND) application for GRI-0621 for the treatment of IPF and we plan to evaluate GRI-0621 in a randomized, double-blind, multi-center Phase 2a biomarker study, for which we commenced enrollment in December 2023.

Based on our current enrollment projections, we now expect interim data from this trial to be available in the fourth quarter of 2024 and topline results to be available in the first quarter of 2025.

Additionally, on March 1, 2024, we received authorization of our clinical trial application from the United Kingdom Medicines and Healthcare Products Regulatory Agency to initiate the Phase 2a biomarker study evaluating GRI-0621 for the treatment of IPF in the United Kingdom.

Based on our current enrollment projections, we now expect interim data from this trial to be available in the first quarter of 2025 and topline results to be available in the second quarter of 2025.

Additionally, we have received authorization of our clinical trial application from both the United Kingdom Medicines and Healthcare Products Regulatory Agency and the Australian Therapeutic Goods Administration to initiate the Phase 2a biomarker study evaluating GRI-0621 for the treatment of IPF in the United Kingdom and Australia, respectively.

Our product candidate portfolio also includes GRI-0803 and a proprietary library of 500+ compounds.

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On June 7, 2024, our stockholders approved a reverse stock split of our Common Stock and our Board subsequently approved a reverse stock split of our Common Stock at a ratio of one-for-thirteen (the June 2024 Reverse Stock Split).

October 2024 Repricing Letter Agreements

On October 21, 2024, we entered into letter agreements (the Repricing Letter Agreements) with holders (the Holders) of our issued and outstanding Series B-1 Common Warrants (as defined below) and Series B-2 Common Warrants (as defined below) (the Prior Warrants) to purchase an aggregate of 762,236 shares of our Common Stock, offering the Holders the opportunity to exercise all of their Prior Warrants for cash at a reduced exercise price equal to $1.00 per share (the Reduced Exercise Price).

In addition, the Holders received new unregistered Series D-1 common warrants (the Series D-1 Warrants) exercisable for up to an aggregate of 762,236 shares of Common Stock and new unregistered Series D-2 common warrants (the Series D-2 Warrants and, together with the Series D-1 Warrants, the Series D Warrants) exercisable for up to an aggregate of 762,236 shares of Common Stock.

The Series D Warrants are immediately exercisable and have an exercise price of $1.00 per share.

The Series D-1 Warrants have a term of five years from October 22, 2024, the initial issuance date, and the Series D-2 Warrants have a term of 18 months from October 22, 2024, the initial issuance date.

Wainwright & Co., LLC (Wainwright) acted as the exclusive placement agent for the offering pursuant to an engagement agreement between us and Wainwright dated as of October 21, 2024.

In addition to a cash fee, management fee, and reimbursement of certain accountable and non-accountable expenses, we also issued to Wainwright or its designees warrants to purchase up to an aggregate of 53,357 shares of Common Stock (the PA Warrants) as compensation for its placement agent services.

The PA Warrants are immediately exercisable, have a term of five years from the date of issuance, and have an exercise price of $1.25 per share.

June 2024 Securities Purchase Agreement

On June 26, 2024, we entered into a securities purchase agreement (the June 2024 Purchase Agreement), pursuant to which we agreed to issue and sell, in a public offering (the June 2024 Offering), (i) 60,000 shares (the June 2024 Shares) of Common Stock, (ii) 2,125,793 pre-funded warrants (the June 2024 Pre-Funded Warrants) exercisable for an aggregate of 2,125,793 shares of Common Stock, (iii) 2,185,793 Series C-1 common warrants (the Series C-1 Common Warrants) exercisable for an aggregate of 2,185,793 shares of Common Stock, and (iv) 2,185,793 Series C-2 common warrants (the Series C-2 Common Warrants, and together with the Series C-1 Common Warrants, the Series C Common Warrants) exercisable for an aggregate of 2,185,793 shares of Common Stock for net proceeds of $3,172, after deducting offering expenses of $1,057.

On June 26, 2024, we entered into a securities purchase agreement (the June 2024 Purchase Agreement), pursuant to which we issued and sold, in a public offering (the June 2024 Offering), (i) 60,000 shares (the June 2024 Shares) of Common Stock, (ii) 2,125,793 pre-funded warrants (the June 2024 Pre-Funded Warrants) exercisable for an aggregate of 2,125,793 shares of Common Stock, (iii) 2,185,793 Series C-1 common warrants (the Series C-1 Common Warrants) exercisable for an aggregate of 2,185,793 shares of Common Stock, and (iv) 2,185,793 Series C-2 common warrants (the Series C-2 Common Warrants, and together with the Series C-1 Common Warrants, the Series C Common Warrants) exercisable for an aggregate of 2,185,793 shares of Common Stock for net proceeds of $3,172, after deducting offering expenses of $1,057.

The securities were offered in combinations of (a) one June 2024 Share or one June 2024 Pre-Funded Warrant, together with (b) one Series C-1 Common Warrant and one Series C-2 Common Warrant, for a combined purchase price of $1.83 (less $0.0001 for each June 2024 Pre-Funded Warrant).

The June 2024 Pre-Funded Warrants were exercisable for one share of Common Stock at a price per share of $0.0001, were exercisable immediately and expired when exercised in full.

Each Series C Common Warrant is exercisable into one share of Common Stock at a price per share of $1.83 and are exercisable beginning on the effective date of stockholder approval of the issuance of the shares upon exercise of the Series C Common Warrants (Warrant Stockholder Approval).

The Series C-1 Common Warrants will expire on the five-year anniversary of the Warrant Stockholder Approval.

The Series C-2 Common Warrants will expire on the 18-month anniversary of the Warrant Stockholder Approval.

As of July 31, 2024, all of the June 2024 Pre-Funded Warrants have been exercised.

The June 2024 Pre-Funded Warrants were exercisable for one share of Common Stock at a price per share of $0.0001, were exercisable immediately and have been exercised in full as of September 30, 2024.

Each Series C-1 Common Warrant is exercisable into one share of Common Stock at a price per share of $1.83 for a five-year period beginning after September 6, 2024.

Each Series C-2 Common Warrant is exercisable into one share of Common Stock at a price per share of $1.83 for an 18-month period beginning after September 6, 2024.

May 2024 At The Market Offering

On May 20, 2024, we entered into an At The Market Offering Agreement (the Sales Agreement) with H.C.

Wainwright & Co., LLC (Wainwright), pursuant to which we may sell and issue, subject to the limitations in the Sales Agreement, shares up to $10.0 million of our Common Stock from time to time through Wainwright as our sales agent (the ATM Offering).

On May 20, 2024, we entered into an At The Market Offering Agreement (the Sales Agreement) with Wainwright, pursuant to which we may sell and issue, subject to the limitations in the Sales Agreement, shares up to $10.0 million of our Common Stock from time to

time through Wainwright as our sales agent (the ATM Offering).

Under the Sales Agreement, Wainwright is entitled to compensation of 3.0% of the gross offering proceeds of all shares of Common Stock sold through it pursuant to the Sales Agreement.

As of June 30, 2024, we have sold 293,892 shares of our Common Stock in the ATM Offering at a weighted-average price of $3.27 per share, raising $1.0 million of gross proceeds and net proceeds of $0.9 million, after deducting commissions to the sales agent and other ATM Offering related expenses.

On July 26, 2024, we filed a prospectus supplement to the Company’s registration statement on Form S-1 (File No.

333-279348) to increase the amount of shares of Common Stock that we may offer and sell under the Sales Agreement and applicable registration statement to an aggregate offering price of up to $2.6 million, which amount does not include the shares of Common Stock having an aggregate gross sales price of approximately $1.0 million that have been sold under the ATM Offering.

As of September 30, 2024, we have sold 2,387,296 shares of our Common Stock in the ATM Offering at a weighted-average price of 0.83 per share, raising $2.0 million of gross proceeds and net proceeds of $1.9 million, after deducting commissions to the sales agent and other ATM Offering related expenses.

On July 26, 2024, we filed a prospectus supplement to our registration statement on Form S-1 (File No.

February 2024 Securities Purchase Agreement

On February 1, 2024, we entered into a securities purchase agreement (the February 2024 Purchase Agreement), pursuant to which we agreed to issue and sell, in a public offering, (i) 25,419 shares (the February 2024 Shares) of Common Stock, (ii) 359,196 pre-funded warrants (the February 2024 Pre-Funded Warrants) exercisable for an aggregate of 359,196 shares of Common Stock, (iii) 384,615 Series B-1 common warrants (the Series B-1 Common Warrants) exercisable for an aggregate of 384,615 shares of Common Stock, and (iv) 384,615 Series B-2 common warrants (the Series B-2 Common Warrants, and together with the Series B-1 Common Warrants, the Series B Common Warrants) exercisable for an aggregate of 384,615 shares of Common Stock for net proceeds of $4,389, after deducting offering expenses of $1,110.

On February 1, 2024, we entered into a securities purchase agreement (the February 2024 Purchase Agreement), pursuant to which we issued and sold, in a public offering, (i) 25,419 shares (the February 2024 Shares) of Common Stock, (ii) 359,196 pre-funded warrants (the February 2024 Pre-Funded Warrants) exercisable for an aggregate of 359,196 shares of Common Stock, (iii) 384,615 Series B-1 common warrants (the Series B-1 Common Warrants) exercisable for an aggregate of 384,615 shares of Common Stock, and (iv) 384,615 Series B-2 common warrants (the Series B-2 Common Warrants, and together with the Series B-1 Common Warrants, the Series B Common Warrants) exercisable for an aggregate of 384,615 shares of Common Stock for net proceeds of $4,389, after deducting offering expenses of $1,110.

The Series B Common Warrants together with the February 2024 Pre-Funded Warrants are referred to in this Quarterly Report on Form 10-Q as the “February 2024 Warrants.” The securities were offered in combinations of (a) one February 2024 Share or one February 2024 Pre-Funded Warrant, together with (b) one Series B-1 Common Warrant and one Series B-2 Common Warrant, for a combined purchase price of $14.30 (less $0.0013 for each February 2024 Pre-Funded Warrant).

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Each Series B-2 Common Warrant is exercisable into one share of Common Stock at a price per share of $14.30 for an 18-month period after February 6, 2024 the date of issuance.

In connection with the issuance of the February 2024 Shares and February 2024 Warrants pursuant to the February 2024 Purchase Agreement, the exercise price of the Series A-1 Warrants was reduced to par, or $0.0001, per share pursuant to the terms of the Series A-1 Warrants.

As of June 30, 2024, all of the February 2024 Pre-Funded warrants and the Series A-1 Warrants have been exercised in full.

In connection with the issuance of the February 2024 Shares and the February 2024 Warrants pursuant to the February 2024 Purchase Agreement, the exercise price of the Series A-1 Warrants was reduced to par, or $0.0001 per share, pursuant to the terms of the Series A-1 Warrants.

As of September 30, 2024, all of the February 2024 Pre-Funded Warrants and the Series A-1 Warrants have been exercised in full.

Nasdaq Compliance - Stockholders’ Equity Deficiency

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The rules of The Nasdaq Capital Market also require that we maintain a closing price for shares of our Common Stock of at least $1.00 per share (the Minimum Bid Price Rule).

On January 5, 2024, we received a letter (the Letter) from the Staff of Nasdaq indicating that we no longer met the Minimum Bid Price Rule set forth in Nasdaq Listing Rule 5550(a)(2) because the closing bid price for our Common Stock was less than $1.00 for the previous 30 consecutive business days.

The Letter was in addition to the Notice described above.

The Letter had no immediate effect on our continued listing on The Nasdaq Capital Market.

Under Nasdaq Listing Rule 5810(c)(3)(A), we had a 180-calendar day period, or until July 3, 2024 (the Compliance Date), to regain compliance with the Minimum Bid Price Rule.

On January 5, 2024, we received a letter (the January Letter) from the Staff of Nasdaq indicating that we no longer met the Minimum Bid Price Rule set forth in Nasdaq Listing Rule 5550(a)(2) because the closing bid price for our Common Stock was less than $1.00 for the previous 30 consecutive business days.

The January Letter was in addition to the Notice described above.

The January Letter had no immediate effect on our continued listing on The Nasdaq Capital Market.

Under Nasdaq Listing Rule 5810(c)(3)(A), we had a 180-calendar day period, or until July 3, 2024, to regain compliance with the Minimum Bid Price Rule.

The Minimum Bid Price Rule requires that a listed company maintain a closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days during the 180-calendar day period, unless Nasdaq exercises its discretion to extend such 10‑day period.

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On July 2, 2024 and July 19, 2024, we received letters from the Staff of Nasdaq notifying us that we were again in compliance with the Minimum Bid Price Rule.

If our closing price again remains below $1.00 for 30 trading days, we may again fail to comply with the Minimum Bid Price Rule, and we would receive an additional notification of our failure to comply with the Minimum Bid Price Rule and may be subject to delisting from Nasdaq.

On September 10, 2024, we received a letter (the September Letter) from the Staff of Nasdaq, indicating that we no longer met the Minimum Bid Price Requirement because the closing bid price for our Common Stock was less than $1.00 for the previous 30 consecutive business days.

The September Letter had no immediate effect on our continued listing on The Nasdaq Capital Market.

Under Nasdaq Listing Rule 5810(c)(3)(A), we have a 180-calendar day period, or until March 10, 2025 (the Compliance Date), to regain compliance with the Minimum Bid Price Rule.

If we do not regain compliance by the Compliance Date, we may be eligible for an additional 180-calendar day period, subject to satisfying the conditions in the applicable Nasdaq Listing Rules.

If, before the Compliance Date, our Common Stock has a closing bid price of $0.10 per share or less for ten consecutive trading days, the Staff will issue a Staff Delisting Determination under Nasdaq Listing Rule 5810 with respect to our Common Stock.

There can be no assurance that we will be able to regain compliance with the Minimum Bid Price Requirement.

We are monitoring the closing bid price of our Common Stock and will consider options to regain compliance with the Minimum Bid Price Requirement.

Merger with Vallon Pharmaceuticals, Inc.

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(Vallon)) consummated a merger with GRI Bio Operations, Inc.

(formerly GRI Bio, Inc.) (GRI Operations) pursuant to an Agreement and Plan of Merger, as amended (the Merger Agreement), by and among the Company, GRI Operations and Vallon Merger Sub, Inc.

(formerly GRI Bio, Inc.

(GRI Operations)) pursuant to an Agreement and Plan of Merger, as amended (the Merger Agreement), by and among the Company, GRI Operations, and Vallon Merger Sub, Inc.

(Merger Sub), a Delaware corporation and wholly-owned subsidiary of the Company.

The Merger Agreement provided for the merger of Merger Sub with and into GRI Operations, with GRI Operations continuing as a wholly-owned subsidiary of the Company and the surviving corporation of the merger (the Merger).

In connection with the closing of the Merger, the Company amended its certificate of incorporation and bylaws to change its name from “Vallon Pharmaceuticals, Inc.” to “GRI Bio, Inc.”

Pursuant to the Merger Agreement, Merger Sub merged with and into GRI Operations, with GRI Operations continuing as our wholly-owned subsidiary (the Merger).

In connection with the closing of the Merger, we amended our Certificate of Incorporation and Bylaws to change our name from “Vallon Pharmaceuticals, Inc.” to “GRI Bio, Inc.”

Financial Operations Overview

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• employee-related expenses, such as salaries, bonuses and benefits, consultant-related expenses such as consultant fees and bonuses, stock-based compensation, overhead-related expenses and travel-related expenses for our research and development personnel;

• expenses incurred under agreements with contract research organizations (CROs), contract manufacturing organizations (CMOs) and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities as well as consultants that support the implementation of our clinical and non-clinical studies.

• expenses incurred under agreements with contract research organizations, contract manufacturing organizations and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities as well as consultants that support the implementation of our clinical and non-clinical studies.

Although our direct research and development expenses are tracked by product candidate, we do not allocate employee costs and costs associated with our discovery efforts, laboratory supplies and facilities, including other indirect costs, to specific product candidates as these costs are deployed across multiple programs.

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Results of Operations

Comparison of the Three Months Ended June 30, 2024 and 2023

Comparison of the Three Months Ended September 30, 2024 and 2023

The following table summarizes the results of our operations for the periods indicated (in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

Operating expenses:

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Change in fair value of warrant liability — 46

Interest income (expense), net 6 (934)

Other income — 250

Interest income (expense) 7 6

Net loss $ (2,123) $ (2,137)

Research and Development Expenses

Research and development expenses were $0.9 million in each of the three-month periods ended June 30, 2024 and 2023.

Research and development expenses in each of the three month periods ended June 30, 2024 and 2023, were primarily comprised of expenses related to the development program of GRI-0621, consulting fees and personnel expenses.

Research and development expenses were $1.1 million and $1.2 million for the three months ended September 30, 2024 and 2023, respectively.

The $0.1 million decrease in research and development expenses was primarily due to a decrease of $0.1 million in personnel expenses.

General and Administrative Expenses

General and administrative expenses were $1.4 million and $5.1 million for the three months ended June 30, 2024 and 2023, respectively.

The $3.7 million decrease was primarily related to decreased costs for professional fees, including legal, accounting and

investment banking fees as a result of the completion of the Merger of $3.1 million and a decrease in personnel expenses of $0.5 million as a result of a decrease in bonus expense.

General and administrative expenses were $1.0 million and $1.3 million for the three months ended September 30, 2024 and 2023, respectively.

The $0.3 million decrease was primarily related to a $0.3 million decrease in stock based compensation expense.

Change in Fair Value of Warrant Liability

The change in fair value of $0.1 million represents a decrease in the fair value of the May 2022 Warrants during the three months ended June 30, 2024.

Interest Income (Expense), net

Interest income, net, was $6,000 for the three months ended June 30, 2024.

Interest expense, net, was $0.9 million for the three months ended June 30, 2023 and related to senior secured promissory notes issued by GRI Operations prior to the Merger (the Bridge Notes).

Comparison of the Six Months Ended June 30, 2024 and 2023

The change in fair value of $0.1 million represents a decrease in the fair value of the warrants outstanding during the three months ended September 30, 2024.

Other income was $0.3 million for the three months ended September 30, 2023 as a result of payments received under the terms of the Aardvark Agreement entered into in August 2023.

Interest Income (Expense)

Interest income was $7,000 and $6,000 for the three months ended September 30, 2024 and 2023, respectively.

Comparison of the Nine Months Ended September 30, 2024 and 2023

The following table summarizes the results of our operations for the periods indicated (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Operating expenses:

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Change in fair value of warrant liability 3 167

Interest income (expense), net 13 (2,095)

Other income — 250

Interest expense, net 19 (2,089)

Net loss $ (6,259) $ (11,033)

Research and Development Expenses

Research and development expenses were $1.8 million and $1.0 million for the six months ended June 30, 2024 and 2023, respectively.

The $0.8 million increase was primarily due to increases in expenses related to the development program of GRI-0621.

Research and development expenses were $2.9 million and $2.2 million for the nine months ended September 30, 2024 and 2023, respectively.

The $0.7 million increase in research and development expenses was primarily due to i ncreases of $0.7 million in expenses related to the development program of GRI-0621, offset by a $0.1 million decrease in personnel expenses.

General and Administrative Expenses

General and administrative expenses were $2.3 million and $5.9 million for the six months ended June 30, 2024 and 2023, respectively.

The $3.6 million decrease was primarily related to decreases in costs for professional fees, including legal, accounting and investment banking fees as a result of the completion of the Merger of $3.4 million, personnel expenses of $0.2 million and a $0.1 million decrease in consulting.This decrease were offset by an increase in administrative and insurance expenses of $0.1 million as a result of operating as a public company.

General and administrative expenses were $3.3 million and $7.2 million for the nine months ended September 30, 2024 and 2023, respectively.

The $3.9 million decrease was primarily related to decreased costs for professional fees, including legal, accounting and investment banking fees as a result of the completion of the Merger of $3.3 million and a decrease in personnel expenses of $0.5 million as a result of a decrease in bonus expense.

Change in Fair Value of Warrant Liability

The change in fair value of $0.1 million represents a decrease in the fair value of the May 2022 Warrants during the six months ended June 30, 2024.

The change in fair value of $0.2 million represents a decrease in the fair value of the warrants outstanding during the nine months ended September 30, 2024.

Other income was $0.3 million for the nine months ended September 30, 2023 as a result of payments received under the terms of the Aardvark Agreement entered into in August 2023.

Interest Income (Expense), net

Interest income (net) was $13,000 for the six months ended June 30, 2024.

Interest expense, net, was $2.1 million for the six months ended June 30, 2023 and related to the Bridge Notes.

Interest income was $19,000 for the nine months ended September 30, 2024.

Interest expense, net, was $2.1 million for the nine months ended September 30, 2023, and related to the Bridge Notes.

Liquidity and Capital Resources

Since inception, we have incurred losses and expect to continue to incur losses for the foreseeable future.

We incurred net losses of $4.1 million and $8.9 million for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, we had an accumulated deficit of $35.7 million.

We incurred net losses of $6.3 million and $11.0 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, we had an accumulated deficit of $37.8 million.

We have financed our working capital requirements to date through the issuance of common stock, warrants, convertible notes and promissory notes.

As of June 30, 2024, we had $6.4 million in cash.

As of September 30, 2024, we had $4.7 million in cash.

The following table summarizes our cash flows for the periods indicated (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash provided by (used in):

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Financing activities 9,550 6,917

Net increase (decrease) in cash and cash equivalents $ 4,545 $ 4,790

Net increase in cash and cash equivalents $ 2,938 $ 3,479

Cash Flows from Operating Activities

For the six months ended June 30, 2024 and 2023, $4.3 million and $2.1 million was used in operating activities, respectively.

The $2.2 million increase was primarily due to a decrease in non-cash adjustments of $2.3 million related to the amortization of debt discounts and debt issuance costs, the revaluation of the warrant liability and the carrying amount of right-of-use assets, as well as a $6.0 million increase in cash used for accounts payable and accrued expenses, offset by a $4.8 million decrease in net loss and a $1.3 million decrease in cash used for prepaid and other assets and operating lease liabilities.

For the nine months ended September 30, 2024 and 2023, $6.6 million and $3.4 million were used in operating activities, respectively.

The $3.2 million increase was primarily due to a decrease in non-cash adjustments of $2.1 million related to the amortization of debt discounts and debt issuance costs, $0.2 million related to stock-based compensation expenses and $0.2 million related to the change in the carrying amount of right-of-use assets, as well as a $5.0 million increase in accounts payable and a $1.7 million increase in accrued expenses, offset by a $4.8 million decrease in net loss and a $1.2 million increase in prepaid and other assets.

Cash Flows from Investing Activities

Net cash used in investing activities was $8,000 for the six months ended June 30, 2023, which was related to the purchase of computer equipment.

Net cash used in investing activities was $8,000 for the nine months ended September 30, 2023, which was related to the purchase of computer equipment.

Cash Flows from Financing Activities

Net cash provided by financing activities was $8.9 million for the six months ended June 30, 2024 and was primarily related to $10.5 million of proceeds from the February 2024 Purchase Agreement, the ATM Offering and the June 2024 Purchase Agreement.

Net cash provided by financing activities was $9.6 million for the nine months ended September 30, 2024 and was primarily related to $11.5 million of proceeds from the February 2024 Purchase Agreement, the ATM Offering and the June 2024 Purchase Agreement.

The increase was offset by $1.9 million of stock issuance costs.

Net cash provided by financing activities was $6.9 million for the six months ended June 30, 2023 and was primarily due to $12.3 million of proceeds from the Equity SPA and $1.3 million of proceeds from the funding of the second tranche of the Bridge Notes.

The increase was offset by $2.9 million of net liabilities assumed in the connection with the Merger, $3.0 million in costs associated with the Merger, the payment of $0.5 million of debt issuance costs related to the Bridge Notes and $0.1 million of stock issuance costs related the Equity SPA.

Net cash provided by financing activities was $6.9 million for the nine months ended September 30, 2023 and was primarily due to $12.3 million of proceeds from the Equity SPA and $1.3 million of proceeds from the funding of the second tranche of the Bridge

These proceeds were offset by $2.9 million of net liabilities assumed in the connection with the Merger, $3.0 million in costs associated with the Merger, the payment of $0.5 million of debt issuance costs related to the Bridge Notes and $0.2 million of stock issuance costs related the Equity SPA.

October 2024 Repricing Letter Agreements

On October 21, 2024, we entered into the Repricing Letter Agreements with the Holders of the Prior Warrants to purchase an aggregate of 762,236 shares of Common Stock, offering the Holders the opportunity to exercise all of their Prior Warrants for cash at the Reduced Exercise Price.

The Holders also received Series D-1 Warrants exercisable for up to an aggregate of 762,236 shares of Common Stock and Series D-2 Warrants exercisable for up to an aggregate of 762,236 shares of Common Stock.

The gross proceeds to the Company from the exercise of the Prior Warrants were $0.8 million prior to deducting placement agent fees and offering expenses.

June 2024 Securities Purchase Agreement

On June 26, 2024, we entered into the June 2024 Purchase Agreement, pursuant to which we agreed to issue and sell, in the June 2024 Offering), (i) 60,000 June 2024 Shares, (ii) 2,125,793 June 2024 Pre-Funded Warrants exercisable for an aggregate of 2,125,793 shares of Common Stock, (iii) 2,185,793 Series C-1 Common Warrants exercisable for an aggregate of 2,185,793 shares of Common Stock, and (iv) 2,185,793 Series C-2 Common Warrants exercisable for an aggregate of 2,185,793 shares of Common Stock for net proceeds of $3.2 million, after deducting offering expenses of $1.1 million.

On June 26, 2024, we entered into the June 2024 Purchase Agreement, pursuant to which we issued and sold, in the June 2024 Offering), (i) 60,000 June 2024 Shares, (ii) 2,125,793 June 2024 Pre-Funded Warrants exercisable for an aggregate of 2,125,793 shares of Common Stock, (iii) 2,185,793 Series C-1 Common Warrants exercisable for an aggregate of 2,185,793 shares of Common Stock, and (iv) 2,185,793 Series C-2 Common Warrants exercisable for an aggregate of 2,185,793 shares of Common Stock for net proceeds of $3.2 million, after deducting offering expenses of $1.1 million.

May 2024 At The Market Offering

n July 26, 2024, we filed a prospectus supplement to the Company’s registration statement on Form S-1 (File No.

As of September 30, 2024, we have sold 2,387,296 shares of our Common Stock in the ATM Offering at a weighted-average price of $0.83 per share, raising $2.0 million of gross proceeds and net proceeds of $1.9 million, after deducting commissions to the sales agent and other ATM Offering related expenses.

On July 26, 2024, we filed a prospectus supplement to our registration statement on Form S-3 (File No.

February 2024 Securities Purchase Agreement

On February 1, 2024, we entered into the February 2024 Purchase Agreement, pursuant to which we agreed to issue and sell, in a public offering, (i) 25,419 February 2024 Shares, (ii) 359,196 February 2024 Pre-Funded Warrants exercisable for an aggregate of 359,196 shares of Common Stock, (iii) 384,615 Series B-1 Common Warrants exercisable for an aggregate of 384,615 shares of Common Stock, and (iv) 384,615 Series B-2 Common Warrants exercisable for an aggregate of 384,615 shares of Common Stock for net proceeds of $4.4 million, after deducting offering expenses of $1.1 million.

On February 1, 2024, we entered into the February 2024 Purchase Agreement, pursuant to which we issued and sold, in a public offering, (i) 25,419 February 2024 Shares, (ii) 359,196 February 2024 Pre-Funded Warrants exercisable for an aggregate of 359,196 shares of Common Stock, (iii) 384,615 Series B-1 Common Warrants exercisable for an aggregate of 384,615 shares of Common Stock, and (iv) 384,615 Series B-2 Common Warrants exercisable for an aggregate of 384,615 shares of Common Stock for net proceeds of $4.4 million, after deducting offering expenses of $1.1 million.

Equity Securities Purchase Agreement

In connection with signing the Merger Agreement, the Company, GRI Operations and Altium entered the Equity SPA pursuant to which Altium agreed to invest $12.3 million in cash and cancel any outstanding principal and accrued interest on the Bridge Notes in return for the issuance of shares of GRI Operations’ Common Stock immediately prior to the consummation of the Merger.

Pursuant to the Equity SPA, immediately prior to the Closing, GRI Operations issued the Initial Shares to Altium and placed the Additional Shares into escrow with an escrow agent for net proceeds of $11.7 million, after deducting offering expenses of $0.5 million.

In connection with signing the Merger Agreement, we entered into the Equity SPA with GRI Operations and Altium pursuant to which Altium agreed to invest $12.3 million in cash and cancel any outstanding principal and accrued interest on the Bridge Notes in return for the issuance of shares of GRI Operations common stock immediately prior to the consummation of the Merger for net proceeds of $11.7 million, after deducting offering expenses of $0.5 million.

Future Funding Requirements

Our net losses were $4.1 million and $8.9 million for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, we had $6.4 million in cash and an accumulated deficit of $35.7 million.

Our net losses were $6.3 million and $11.0 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, we had $4.7 million in cash and an accumulated deficit of $37.8 million.

We expect to devote substantial financial resources to our planned activities, particularly as we prepare for, initiate, and conduct our planned clinical trials of GRI-0621 and GRI-0803, advance our discovery programs and continue our product development efforts.

In addition, we expect to incur additional costs associated with operating as a public company.

Based on our current operating plan, we 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 2025.

Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.

The Series T Warrants issued in connection with the Merger are not presently subject to forced exercise by the Company as the equity conditions for their forced exercise, which include, among other things, a requirement that shares of our Common Stock have a value weighted average price of at least $838.11 per share for the periods specified in the Series T Warrants, are not met.

We intend to raise capital through additional issuances of equity securities and/or short-term or long-term debt arrangements, but there can be no assurances any such financing will be available when needed, even if our research and development efforts are successful.

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Our management’s discussion and analysis of its financial condition and results of operations is based on its unaudited interim consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (GAAP).

The preparation of these unaudited interim condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the unaudited interim consolidated financial statements and accompanying notes.

The preparation of these unaudited interim consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the unaudited interim consolidated financial statements and accompanying notes.

Management evaluates these estimates and judgments on an ongoing basis.

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Actual results could differ from those estimates.

Our significant accounting policies are described in more detail in Note 3, “Summary of Significant Accounting Policies”, in the Company’s Annual Report.

Our significant accounting policies are described in more detail in Note 3, “Summary of Significant Accounting Policies”, in our Annual Report.

Emerging Growth Company Status

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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