What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-05-14 · 130 added, 90 removed, 355 unchanged (38% of the section changed)

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This Quarterly Report on Form 10-Q for the three-month

period ended March 31, 2025 contains “forward-looking statements” within the meaning of the Securities Act of 1933, as amended

period ended June 30, 2025 contains “forward-looking statements” within the meaning of the Securities Act of 1933, as amended

(the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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We have incurred significant operating losses to date.

Our net loss was $20.9

million for the three months ended March 31, 2024 and we had net income of 0.6 million for the three months ended March 31, 2025.

March 31, 2025, we had an accumulated deficit of $100.7 million.

We expect that our operating expenses will increase significantly as

we advance our product candidates through pre-clinical and clinical development, seek regulatory approval, and prepare for and, if approved,

proceed to commercialization;

Our net losses were

$11.1 million and $5.9 million for the six months ended June 30, 2024 and June 30, 2025, respectively.

As of June 30, 2025, we had

an accumulated deficit of $107.1 million.

We expect that our operating expenses will increase significantly as we advance our product

candidates through pre-clinical and clinical development, seek regulatory approval, and prepare for and, if approved, proceed to commercialization;

acquire, discover, validate and develop additional product candidates;

obtain, maintain, protect and enforce

our intellectual property portfolio;

obtain, maintain, protect and enforce our intellectual property

and hire additional personnel.

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Recent Developments

Extension of Nasdaq Compliance Period

On July 9, 2024, we received written notice (the

“ Notice ”) from the Nasdaq Stock Market, LLC (“ Nasdaq ”) indicating that the bid price of our common

stock, for the last 30 consecutive business days, had closed below the minimum $1.00 per share and, as a result we were not in compliance

with the $1.00 minimum bid price requirement for the continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Listing Rule

In accordance with the Nasdaq Listing Rule 5810(c)(3)(A),

we had a period of 180 calendar days, or until January 6, 2025, to regain compliance with the minimum bid price requirement.

As of January 6, 2025we had not regained compliance

with the minimum bid price requirement.

On January 7, 2025, Nasdaq notified us that we would have an additional 180 calendar days, or

until July 7, 2025, to regain compliance.

Issuance of Common Stock Upon Conversion of

Series A-2 Prime Preferred Stock

On February 18, 2025, we issued 1,400,000 shares

(the “Shares”) of common stock, upon conversion of 686.00 shares of our Series A-2 Prime Preferred Stock.

On June 11, 2025, we issued 300,000 shares of

common stock, upon conversion of 3,000 shares of our Series B-2 Preferred Stock.

In June 2025, we issued 277,000 shares of common

stock, upon conversion of shares of our Series A-3 Preferred Stock related to exercise of Tranche A warrants.

During the six months ended June 30, 2025, the Company sold 2,009,616

shares of common stock pursuant to a sales agreement, with Guggenheim Securities, LLC, at an average price of $6.07 per share and paid

$379,000 in commissions, resulting in net proceeds to the Company of approximately $12.2 million.

Reverse Stock Split

On June 18, 2025, the Company filed the Charter

Amendment with the Secretary of State of the State of Delaware to effectuate a reverse stock split.

The Company’s common stock began

trading on a split-adjusted basis at the opening of trading on the Nasdaq Capital Market on June 20, 2025.

When the reverse stock split

became effective, every 10 shares of common stock were automatically reclassified and combined into one share of common stock.

No fractional

shares were issued as a result of the split.

Stockholders who would otherwise be entitled to receive a fractional share will instead automatically

have their fractional interests rounded up to the next whole share, after aggregating all the fractional interests of a holder resulting

from the split.

The split affects all stockholders uniformly and will not change any stockholder’s percentage ownership interest

or any stockholder’s proportionate voting power, except for immaterial changes that may result from the treatment of fractional

The split did not change the number of authorized shares of common stock or the par value per share of the common stock.

As a result of the reverse stock split, proportionate

adjustments were made to the per share exercise prices of, and the number of shares underlying, the Company’s outstanding stock

options, as well as to the number of shares available for future awards granted under the Company’s stock incentive plans.

proportionate adjustments were made to the per share exercise prices of, and the number of shares underlying, outstanding warrants to

purchase shares of the Company’s common stock.

Further, a proportionate adjustment was made to the per share conversion price of

the Company’s series A-2 prime preferred stock, pursuant to its terms.

Following the reverse stock split we had 12,768,239 shares

of our common stock outstanding, which excludes approximately 49,000 shares of our common stock that were issued for rounding up fractional

shares resulting from the reverse stock split.

The reverse stock Split is retroactively reflected in the Company’s condensed consolidated

balance sheets, condensed consolidated statements of operations, condensed consolidated statements of changes in shareholders’ equity

and loss per share data.

Components of Results of Operations

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Results of Operations

Comparison of the Three Months Ended March 31,

Comparison of the Three Months Ended June

30, 2024 and 2025

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Total other income (expenses)

Net (loss) income

Net income (loss)

Research and Development Expenses

Research and development expenses decreased by

approximately $4.6 million, or 68%, from approximately $6.8 million for the three months ended March 31, 2024, to approximately $2.2 million

for the three months ended March 31, 2025.

The decrease in research and development expenses was primarily due to a $5.0 million reduction

in drug development costs which was partially offset by an increase in labor costs of $151,000 over the prior period.

Consulting and other

costs increased $189,000 and stock compensation of $36,000.

approximately $3.1 million, or 64%, from approximately $4.9 million for the three months ended June 30, 2024, to approximately $1.8 million

for the three months ended June 30, 2025.

The decrease in research and development expenses

was primarily due to a $3.1 million decrease in drug development costs, consulting and other costs of $93,000, and stock-based compensation

of $23,000, partially offset by an increase in labor costs of $86,000

General and Administrative Expenses

General and administrative expenses increased

by $3.4 million, or 143%, from approximately $2.4 million for the three months ended March 31, 2024, to approximately $5.8 million for

the three months ended March 31, 2025 primarily due to an increase of $1.4 million in consulting and professional services expenses related to preparation of our

commercial launch.

Other professional services increased $1.3 million from the prior period.

Labor costs increased $467,000 from

the prior period.

Travel, rent, and other costs increased $230,000.

Non-cash stock compensation costs increased $6,000.

by $2.7 million , or 106%, from approximately $2.5 million for the three months ended June 30, 2024, to approximately $5.2 million for

the three months ended June 30, 2025 primarily due to an increase of $2.2 million in marketing, consulting and other expenses related

to our commercial launch, increase of $417,000 in labor costs, increase of $201,000 of insurance, travel and other costs, partially offset

by a decrease of $47,000 in stock-based compensation.

Other Income (Expenses)

Other income (expenses) increased $20.3 million,

or 173%, from $11.8 million expense in the three months ended March 31, 2024 to $8.6 million income for the three months ended March 31,

2025 primarily due to a change in fair value of our warrant liability.

Interest income increased approximately $157,000 for the three

months ended March 31, 2025 versus the comparable prior period.

Other income (expenses) decreased $16.7 million,

or 165%, from $17.3 million in the three months ended June 30, 2024 to $0.5 million for the three months ended June 30, 2025 due primarily

to the change in fair value of our warrant liability of $16.4 million and a decrease in interest income of $307,000.

Comparison of the Six Months Ended June

30, 2024 and 2025

Six Months Ended

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expenses):

Interest income

Interest expense

Change in fair value of warrant liability

Total other income (expenses)

Research and Development Expenses

Research and development expenses decreased by

approximately $7.7 million, or 66%, from approximately $11.7 million for the six months ended June 30, 2024 to approximately $3.9 million

for the six months ended June 30, 2025.

The decrease in research and development expenses was primarily due to an $8.1 million decrease

in drug development costs, partially offset by an increase in labor costs of $239,000, consulting and other costs of $110,000, and stock-based

compensation of $13,000.

General and Administrative Expenses

General and administrative expenses increased

by $6.1 million, or 124%, from approximately $4.9 million for the six months ended June 30, 2024 to approximately $11.0 million for the

six months ended June 30, 2025 primarily due to an increase of $5.0 million in marketing, consulting and other expenses related to our

commercial launch, increase of $884,000 in labor costs, increase of $284,000 of insurance, travel and other costs, partially offset by

a decrease of $42,000 in stock-based compensation.

Other Income (Expenses)

Other income (expenses) increased by $3.6 million

(income), or 65%, from $5.5 million expense in the six months ended June 30, 2024 to $9.0 million income for the six months ended June

30, 2025 due primarily to the change in fair value of our warrant liability of $3.7 million, partially offset by a decrease in interest

income of $151,000.

Liquidity and Capital Resources

Sources of Liquidity

Since our formation through June 31, 2020,

we funded our operations with the sale of common and preferred stock, convertible notes and from a loan from our Chief Executive Officer

and principal stockholder.

Since our formation through December 31,

2020, we have funded our operations with the sale of common and preferred stock, convertible notes and from a loan from our Chief Executive

Officer and principal stockholder.

As a result of our initial public offering (“IPO”),

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or licensing revenue as well as product sales.

We have generated approximately $1.6 million in licensing revenue to date.

On March 3, 2023, we entered into a securities

purchase agreement with certain healthcare-focused institutional investors that may provide up to $130.0 million in gross proceeds through

a private placement and that included initial upfront funding of $28.0 million in net proceeds.

a private placement and that included initial upfront funding of $30.0 million.

On March 13, 2024, we entered into a securities

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price of up to $50.0 million, subject to certain limitations and in accordance with the terms of the sales agreement, from time to time

through or to Guggenheim Securities, acting as sales agent or principal.

During the three months ended March 31, 2025, the Company sold

through or to Guggenheim Securities, LLC acting as sales agent or principal.

During the six months ended June 30, 2025, the Company sold

2,009,616 shares of common stock at an average price of $6.07 per share and paid $379,000 in commissions, resulting in net proceeds to

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Future Funding Requirements

have incurred net losses since our inception.

For the three months ended March 31, 2025, we had net income of $0.6 million.

the net income was a result of the change in the fair value of the warrant liability.

We expect to incur substantial losses in future

As of March 31, 2025, we had an accumulated deficit of $100.7 million.

We have incurred net losses since our inception.

For the six months ended June 30, 2025, we had a net loss of $5.9 million, and we expect to incur substantial additional losses in future

As of June 30, 2025, we had an accumulated deficit of $107.1 million.

We expect to continue incurring losses in the

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our cash in amounts sufficient to sustain operations and meet our obligations.

Based on our currently anticipated level of expenditures,

we believe that current available cash will not be sufficient to fund planned expenditures and meet obligations through the end of the

first quarter of 2026, and there is substantial doubt about our ability to continue as a going concern for one year after the date that

these financial statements are available to be issued.

Based on our current level of expenditures, we believe

that we have sufficient resources such that there is not substantial doubt about our ability to continue operations for at least one year

after the date that these financial statements are available to be issued.

We anticipate that we will need to raise substantial

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and uses of cash for each of the periods presented below (in thousands):

Three Months Ended

Six Months Ended

Net cash (used in) provided by:

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Net cash used in operating activities was $17.3

million for the three months ended March 31, 2025.

million for the six months ended June 30, 2025.

Cash used in operating activities was primarily due to the use of funds for development

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Net cash used in operating activities was $12.8

million for the three months ended March 31, 2024.

million for the six months ended June 30, 2024.

Cash used in operating activities was primarily due to the use of funds for development

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Net cash used in investing activities was $22,000

for the three months ended March 31, 2025 and was due to the purchase of furniture and fixtures for our corporate office.

for the six months ended June 30, 2025 and was due to the purchase of lab equipment.

Net cash used in investing activities was $26,000

for the three months ended March 31, 2024 and was due to the purchase of furniture and fixtures for our corporate office.

for the six months ended June 30, 2024 and was due to the purchase of furniture and fixtures for our corporate office.

Cash Flows from Financing Activities

Net cash provided by financing activities was

$2.5 million during the three months ended March 31, 2025 due primarily to the at the market public offering agreement we signed on November

$13.5 million during the six months ended June 30, 2025 due primarily to the at the market public offering agreement we signed on November

Net cash provided by financing activities was

$45.7 million during the three months ended March 31, 2024 due primarily to the private placement financing agreement we signed on March

$44.9 million during the six months ended June 30, 2024 due primarily to the private placement financing agreement we signed on March

Critical Accounting Policies, Significant Judgments and Use of Estimates

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warrant liabilities.

There have been no other material changes to our critical accounting policies and estimates during the three months

ended March 31, 2025, from those used for the year ended December 31, 2024.

The policies below represent our critical accounting policies.

There have been no other material changes to our critical accounting policies and estimates during the six months

ended June 30, 2025 from those used for the year ended December 31, 2024.

The below policies represent our critical accounting policies.

Revenue Recognition

We apply ASC 606, Revenue from Contracts with

Customers, for our revenue recognition guidance.

This includes the development of new policies based on the five-step model provided in

the revenue standard, ongoing contract review requirements, and gathering of information provided for disclosures.

We recognize revenue

from product sales or services rendered when control of the promised goods is transferred to a counterparty in an amount that reflects

the consideration to which we expect to be entitled in exchange for those goods and services.

To achieve this core principle, we apply

the following five steps:

identify the contract with the client, identify the performance obligations in the contract, determine the transaction

price, allocate the transaction price to performance obligations in the contract and recognize revenues when or as we satisfy a performance

We implemented ASC 606, Revenue from Contracts

with Customers .

This includes the development of new policies based on the five-step model provided in the new revenue standard, ongoing

contract review requirements, and gathering of information provided for disclosures.

We recognize revenue from product sales or services

rendered when control of the promised goods is transferred to a counterparty in an amount that reflects the consideration to which we

expect to be entitled in exchange for those goods and services.

To achieve this core principle, we apply the following five steps:

the contract with the client, identify the performance obligations in the contract, determine the transaction price, allocate the transaction

price to performance obligations in the contract and recognize revenues when or as we satisfy a performance obligation.

Debt and Equity Classification

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We account for these warrants as liabilities

(in accordance with ASC 480) on the balance sheets as a result of certain redemption clauses that are not within the control

of the Company.

The warrant liabilities are initially measured at fair value, resulting in an implied discount on the related preferred

stock financing arrangement (recognized as a partial offset to the carrying value of the Series A-1 Preferred Stock), and are remeasured

at fair value each reporting period.

Changes in the fair value of the warrant liabilities are recognized in earnings during each period.

(in accordance with ASC 480, Distinguishing Liabilities from Equity ) on the balance sheets as a result of certain redemption clauses

that are not within the control of the Company.

The warrant liabilities are initially measured at fair value, resulting in an implied

discount on the related preferred stock financing arrangement (recognized as a partial offset to the carrying value of the Series A-1

Preferred Stock), and are remeasured at fair value each reporting period.

Changes in the fair value of the warrant liabilities are recognized

in earnings during each period.

The warrant liabilities are measured using Level 3 fair value inputs.

See Note 10 for a description of warrant liabilities and the related

See Note 10 for a description of

warrant liabilities and the related valuations.

Research and Development

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We expense both internal and external research and

development expenses as incurred.

development expenses as they are incurred.

Stock-Based Compensation

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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