What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-15 compared with 2024-11-14 · 66 added, 149 removed, 95 unchanged (69% 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 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).

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 Quarterly Report), 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, 2024 filed with the Securities and Exchange Commission (the SEC) on March 14, 2025 (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.

after the completion of the Merger (as defined below), and references to “GRI Operations” refer to the business of GRI Bio, Inc.

prior to the completion of the Merger.

References to “Vallon” refer to Vallon Pharmaceuticals, Inc.

prior to the completion of the Merger.

We are a clinical-stage biopharmaceutical company focused on discovering, developing, and commercializing innovative therapies that target serious diseases associated with dysregulated immune responses leading to inflammatory, fibrotic and autoimmune disorders.

Our goal is to be an industry leader in developing therapies to treat these diseases and to improve the lives of patients suffering from such diseases.

Our lead product candidate, GRI-0621, is an oral inhibitor of type 1 Natural Killer T (iNKT) cells.

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

Our lead product candidate, GRI-0621, is an oral inhibitor of type 1 invariant Natural Killer T (iNKT) cells.

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

As of March 31, 2025, 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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In preliminary data from our trials to date with GRI-0621, and earlier trials with oral tazarotene, we have observed GRI-0621 to be well-tolerated and to inhibit iNKT cell activity in subjects.

We and others have shown that activated iNKT are upregulated in IPF, primary sclerosing cholangitis (PSC), metabolic dysfunction-associated steatohepatitis (MASH), alcoholic liver disease (ALD), systemic lupus erythematosus (SLE), multiple sclerosis (MS), ulcerative colitis (UC) patients as well as other indications.

We and others have shown that activated iNKT are upregulated in IPF, primary sclerosing cholangitis, metabolic dysfunction-associated steatohepatitis, alcoholic liver disease, systemic lupus erythematosus (SLE), multiple sclerosis (MS), ulcerative colitis patients as well as other indications.

In these patients activated iNKT cells are correlated with more severe disease.

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 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.

Food and Drug Administration has cleared our Investigative New Drug (IND) application, and 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, U.S., United Kingdom and Australia, respectively.

We are evaluating 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 expect interim data from this trial to be available in the second quarter of 2025 and topline results to be available in the third quarter of 2025.

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

GRI-0803, the lead molecule selected from the library, is a novel oral agonist of type 2 Natural Killer T cells and would be developed for the treatment of autoimmune disorders, with much of our preclinical work in SLE or lupus and MS.

GRI-0803, the lead molecule selected from the library, is a novel oral agonist of type 2 diverse Natural Killer T (dNKT) cells and would be developed for the treatment of autoimmune disorders, with much of our preclinical work in SLE or lupus and MS.

In lupus, the immune system mistakenly attacks its own healthy tissues, especially joints and skin, but can affect almost every organ and tissue of the body.

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Only two drugs have been approved for lupus in the past 50 years, and new treatment options are sorely needed.

In order to focus our resources on our GRI-0621 program, we have limited our development of GRI-0803

pending additional funding.

In order to focus our resources on our GRI-0621 program, we have limited our development of GRI-0803 pending additional funding.

Subject to obtaining the requisite additional funding and IND clearance, we intend to evaluate GRI-0803 in a Phase 1a and 1b trial initially targeting SLE.

We expect to file an IND with respect to this Phase 1a and 1b trial in 2025.

We expect to file an IND application with respect to this Phase 1a and 1b trial in 2025.

We expect to continue to evaluate indications to select the best fit for further development of the program, but our initial focus would be on lupus.

Recent Developments

January 2024 and June 2024 Reverse Stock Split

On January 19, 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-seven (the January 2024 Reverse Stock Split).

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 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 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.

Reverse Stock Splits

On February 11, 2025, our stockholders approved a reverse stock split of our common stock, par value $0.0001 per share (Common Stock), within the range of not less than one-for-2 and not more than one-for-23, and our board of directors subsequently approved the February 2025 Reverse Stock Split at the ratio of one-for-17.

Following these approvals, we filed an amendment to our amended and restated certificate of incorporation, as amended with the Secretary of State of the State of Delaware to effect the February 2025 Reverse Stock Split as of 4:01 p.m.

Eastern Time on February 21, 2025.

Shares of our Common Stock began trading on a post-split basis on February 24, 2025.

The February 2025 Reverse Stock Split had the effect of reducing the aggregate number of outstanding shares of Common Stock from 8,933,366 shares on a pre-reverse split basis to a total of 525,358 shares outstanding on a post-reverse split basis.

On February 21, 2025, our stockholders approved the February 2025 Reverse Stock Split.

April 2025 Securities Purchase Agreement

On April 1, 2025, we entered into a securities purchase agreement (the April 2025 Purchase Agreement), pursuant to which we issued and sold, in a public offering (the April 2025 Offering), (i) 202,000 shares (the April 2025 Shares) of Common Stock, (ii) 1,186,888 pre-funded warrants (the April 2025 Pre-Funded Warrants) exercisable for an aggregate of 1,186,888 shares of Common Stock, (iii) 1,388,888 Series E-1 common stock warrants (the Series E-1 Common Warrants) to purchase up to 1,388,888 shares of Common Stock, (iv) 1,388,888 Series E-2 common stock warrants (the Series E-2 Common Warrants) to purchase up to 1,388,888 shares of Common Stock, and (v) 1,388,888 Series E-3 common stock warrants (the Series E-3 Common Warrants, and collectively with the Series E-1 Warrants and the Series E-2 Warrants, the Series E Common Warrants) to purchase up to 1,388,888 shares of Common Stock, for gross proceeds of $5,000, before deducting offering expenses.

The securities were offered in combinations of (a) one April 2025 Share or one April 2025 Pre-Funded Warrant, together with (b) one Series E-1 Common Warrant, one Series E-2 Common Warrant and one Series E-3 Common Warrant, for a combined purchase price of $3.60 (less $0.0001 for each April 2025 Pre-Funded Warrant).

The April 2025 Pre-Funded Warrants are exercisable for one share of Common Stock at a price of $0.0001 per share, are exercisable immediately and will expire when exercised in full.

Each Series E Common Warrant is exercisable into one share of Common Stock at a price per share of $3.20 and is immediately exercisable.

The Series E-1 Common Warrants will expire on the five-year anniversary of the date of issuance.

The Series E-2 Common Warrants will expire on the 18-month anniversary of the date of issuance.

The Series E-3 Common Warrants will expire on the nine-month anniversary of the date of issuance.

May 2024 At The Market 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).

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).

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 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.

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 were sold under the ATM Offering through June 30, 2024.

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 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).

Subject to certain ownership limitations, the February 2024 Warrants became exercisable upon issuance.

Each February 2024 Pre-Funded Warrant was exercisable for one share of Common Stock at a price per share of $0.0013 and expired when exercised in full.

Each Series B-1 Common Warrant is exercisable into one share of Common Stock at a price per share of $14.30 for a five-year period after February 6, 2024, the date of issuance.

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 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

On November 22, 2023, we received a letter (the Notice) from the Listing Qualifications Department (the Staff) of The Nasdaq Stock Market LLC (Nasdaq) notifying us that we were not in compliance with the minimum stockholders’ equity requirement for continued listing on The Nasdaq Capital Market based on the information provided in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.

Nasdaq Listing Rule 5550(b)(1) requires that companies listed on The Nasdaq Capital Market with a market value of listed securities of less than $35.0 million and annual net income of less than $0.5 million maintain stockholders’ equity of at least $2.5 million (the Stockholders’ Equity Requirement).

In accordance with Nasdaq rules, we were provided until January 8, 2024, to submit a plan to regain compliance with the Stockholders’ Equity Requirement (the Compliance Plan).

On January 22, 2024, the Staff granted us an extension until May 20, 2024 to regain compliance with the Stockholders’ Equity Requirement.

Per the Staff’s January 22, 2024 letter, we must complete an equity offering to raise gross proceeds of at least $6.0 million and furnish to the Staff and Nasdaq evidence of compliance with the Stockholders’ Equity Requirement by filing a publicly available report prior to May 24, 2024.

We completed multiple equity offerings with gross proceeds of $10.5 million and have met the minimum Stockholders’ Equity Requirement for each of the quarters ended March 31, 2024 and June 30, 2024.

As such, on July 2, 2024, we received a letter from the Staff of Nasdaq notifying us that the stockholders’ equity deficiency under Listing Rule 5550(b) had been cured and that we were then in compliance with all applicable continued listing standards.

As of March 31, 2025, we have sold 325,618 shares of our Common Stock in the ATM Offering at a weighted-average price of $11.07 per share, raising $3.6 million of gross proceeds and net proceeds of $3.5 million, after deducting commissions to the sales agent and other ATM Offering related expenses.

On May 5, 2025, we filed a prospectus supplement to our 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 $1.7 million, which amount does not include the shares of Common Stock having an aggregate gross sales price of approximately $3.6 million that were sold under the ATM Offering through March 31, 2025, in accordance with the limitations set forth in Instruction I.B.6 of Form S-3.

Nasdaq Compliance - Bid Price Deficiency

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 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.

On January 29, 2024, we filed an amendment to our Charter to implement the January 2024 Reverse Stock Split to attempt to regain compliance with the Minimum Bid Price Rule, but were not able to regain compliance following the January 2024 Reverse Stock Split.

On June 7, 2024, we filed an amendment to our Amended and Restated Certificate of Incorporation to effect the June 2024 Reverse Stock Split to attempt to regain compliance with the Minimum Bid Price Rule.

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.

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.

In April 2023, the Company (formerly Vallon Pharmaceuticals, Inc.

(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.

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

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.”

On September 10, 2024, we received a letter from the Listings Qualification Department (the Staff) of The Nasdaq Stock Market LLC, indicating that we no longer met the Minimum Bid Price Rule because the closing bid price for our Common Stock was less than $1.00 for the previous 30 consecutive business days prior thereto.

We subsequently effected the February 2025 Reverse Stock Split.

On March 10, 2025, we received a letter from the Staff indicating that we were once again in compliance with the Minimum Bid Price Rule.

Financial Operations Overview

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Warrant Liability

In May 2022, Vallon issued warrants (the May 2022 Warrants) in connection with a securities purchase agreement.

Vallon evaluated the May 2022 Warrants in accordance with ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity (ASC 815-40), and concluded that a provision in the May 2022 Warrants related to the reduction of the exercise price in certain circumstances precludes the May 2022 Warrants from being accounted for as components of equity.

In May 2022, Vallon Pharmaceuticals, Inc.

(Vallon) issued warrants (the May 2022 Warrants) in connection with a securities purchase agreement.

Vallon evaluated the May 2022 Warrants in accordance with Accounting Standards Codification (ASC) 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity (ASC 815-40), and concluded that a provision in the May 2022 Warrants related to the reduction of the exercise price in certain circumstances precludes the May 2022 Warrants from being accounted for as components of equity.

As a result, the May 2022 Warrants were measured at fair value upon issuance using a Black-Scholes valuation model and are recorded as a liability on the consolidated balance sheet.

The fair value of the May 2022 Warrants is measured at each reporting date and changes in fair value are recognized in the consolidated statements of operations in the period of change.

Interest Income (Expense)

Interest expense consists of amortization of debt discounts, debt issuance costs and interest expense related to the Bridge Notes.

Interest Income

Interest income consists of interest earned on our cash and cash equivalents held with institutional banks.

Results of Operations

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 September 30,

Operating expenses:

Research and development 1,130 $ 1,189

General and administrative 1,000 1,250

Total operating expenses 2,130 2,439

Loss from operations (2,130) (2,439)

Change in fair value of warrant liability — 46

Other income — 250

Interest income (expense) 7 6

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

Research and Development 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 $1.0 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 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

Comparison of the Three Months Ended March 31, 2025 and 2024

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

Nine Months Ended September 30,

Three Months Ended March 31,

Operating expenses:

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Change in fair value of warrant liability — 2

Other income — 250

Interest expense, net 19 (2,089)

Interest income 5 6

Net loss $ (3,046) $ (1,887)

Research and Development Expenses

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.

Research and development expenses were $1.6 million and $0.9 million for the three months ended March 31, 2025 and 2024, respectively.

The $0.7 million increase in research and development expenses was primarily due to an increase of $0.7 million in expenses related to the registration development program of GRI-0621.

General and Administrative Expenses

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 $0.2 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 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.

General and administrative expenses were $1.4 million and $1.0 million for the three months ended March 31, 2025 and 2024, respectively.

The $0.4 million increase was primarily related to a $0.3 million increase in personnel expense including stock based compensation expense and a $0.2 million increase in professional fees.

Interest Income

Interest income was $5,000 and $6,000 for the three months ended March 31, 2025 and 2024, respectively.

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 $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 incurred net losses of $3.0 million and $1.9 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, we had an accumulated deficit of $42.8 million.

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

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

As of March 31, 2025, we had $3.3 million in cash.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash provided by (used in):

Operating activities $ (1,736) $ (2,203)

Investing activities — (8)

Financing activities (11) 4,486

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

Net increase (decrease) in cash and cash equivalents $ (1,747) $ 2,283

Cash Flows from Operating Activities

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 nine months ended September 30, 2023, which was related to the purchase of computer equipment.

For the three months ended March 31, 2025 and 2024, $1.7 million and $2.2 million were used in operating activities, respectively.

The $0.5 million decrease was primarily due to an increase in non-cash adjustments of $0.2 million related to stock-based compensation expenses, as well as a $1.1 million increase in accounts payable and a $0.7 million increase in accrued expenses, offset by a $1.2 million increase in net loss and a $0.4 million decrease in prepaid and other assets.

Cash Flows from Financing Activities

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.

Net cash used in financing activities was $11,000 for the three months ended March 31, 2025 and was primarily related to stock issuance costs related to the April 2025 Purchase Agreement.

Net cash provided by financing activities was $4.5 million for the three months ended March 31, 2024 and was primarily related to $5.5 million of proceeds from the February 2024 Offering (defined below).

The increase was offset by $1.0 million of stock issuance costs.

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 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.

April 2025 Securities Purchase Agreement

On April 1, 2025, we entered the April 2025 Purchase Agreement, pursuant to which we issued and sold, in the April 2025 Offering, (i) 202,000 April 2025 Shares, (ii) 1,186,888 April 2025 Pre-Funded Warrants exercisable for an aggregate of 1,186,888 shares of Common Stock, (iii) 1,388,888 Series E-1 Common Warrants to purchase up to 1,388,888 shares of Common Stock, (iv) 1,388,888 Series E-2 Common Warrants to purchase up to 1,388,888 shares of Common Stock, and (v) 1,388,888 Series E-3 Common Warrants, to purchase up to 1,388,888 shares of Common Stock, for gross proceeds of $5,000, before deducting offering expenses.

May 2024 At The Market 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-3 (File No.

On May 5, 2025, we filed a prospectus supplement to our registration statement on Form S-3 (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 $1.7 million, which amount does not include the shares of Common Stock having an aggregate gross sales price of approximately $3.6 million that were sold under the ATM Offering through March 31, 2025, in accordance with the limitations set forth in Instruction I.B.6 of Form S-3.

February 2024 Securities Purchase Agreement

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, 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.

On February 1, 2024, we entered into securities purchase agreement , pursuant to which we issued and sold, in a public offering (the February 2024 Offering), (i) 1,495 shares of Common Stock, (ii) 21,131 pre-funded warrants exercisable for an aggregate of 21,131 shares of Common Stock, (iii) 22,631 Series B-1 common warrants exercisable for an aggregate of 22,631 shares of Common Stock, and (iv) 22,631 Series B-2 common warrants exercisable for an aggregate of 22,631 shares of Common Stock for net proceeds of $4.4 million, after deducting offering expenses of $1.1 million.

Future Funding Requirements

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.

Our net losses were $3.0 million and $1.9 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, we had $3.3 million in cash and an accumulated deficit of $42.8 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 middle of the first quarter of 2025.

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

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.

If we are unable to secure adequate additional funding, we will need to reevaluate our operating plans and may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, delay, scale back or eliminate some or all of our development programs, or relinquish rights to our technology on less favorable terms than we would otherwise choose or cease operations entirely.

unable to secure adequate additional funding, we will need to reevaluate our operating plans and may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, delay, scale back or eliminate some or all of our development programs, or relinquish rights to our technology on less favorable terms than we would otherwise choose or cease operations entirely.

These actions could materially impact our business, results of operations and future prospects and the value of shares of our Common Stock.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis