60 DEGREES PHARMACEUTICALS, INC.
For the period ended Mar 31, 2025. Filed May 15, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 15, 2025
SXTP$0.59-35.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001213900-24-098195
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001213900-25-043779
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 128 previous paragraphs and 110 current paragraphs.
40 unchanged; 27 reworded; 43 added; 55 removed; 6 previous and 0 current paragraphs rearranged.
Tables are not compared: 17 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (43)
Current report
1:5 Reverse Stock Split
Current report
On November 6, 2024, our Board of Directors (“Board”) approved a reverse stock split of our common stock at a split ratio ranging between 1:3 and 1:5, as determined by the Board in its sole discretion. On November 6, 2024, a majority of our stockholders approved the proposed reverse stock split. On February 10, 2025, the Board approved a 1-for-5 reverse split ratio. On February 18, 2025, we filed a Certificate of Amendment to the Certificate of Incorporation, as corrected, with the Secretary of State of the State of Delaware that provides for a 1-for-12 split. On February 24, 2025, we effectuated a 1-for-5 reverse stock split of our common stock (the “1:5 Reverse Stock Split”). Beginning February 24, 2025, our common stock traded on The Nasdaq Capital Market on a split adjusted basis.
Current report
January 2025 Offering
Current report
On January 28, 2025, we entered into a securities purchase agreement (the “January 2025 Securities Purchase Agreement”) with certain institutional investors (the “January 2025 Purchasers”) pursuant to which we sold an aggregate of 204,312 shares of common stock at a purchase price of $5.105 per share in a registered direct offering priced at-the-market under the rules of The Nasdaq Stock Market LLC (“Nasdaq”). In a concurrent private placement, we also issued to the January 2025 Purchasers unregistered warrants (the “January 2025 Warrants”) to purchase up to an aggregate of 408,621 shares of common stock at an exercise price of $3.855 per share. The January 2025 Warrants are exercisable upon issuance and expire twenty-four months from the date of issuance.
Current report
The shares were offered pursuant to a “shelf” registration statement on Form S-3 (Registration No. 333-280796), which was declared effective by the Securities and Exchange Commission (the “SEC”) on July 18, 2024 as supplemented by a prospectus supplement dated January 28, 2025, filed with the SEC on January 30, 2025, and accompanying base prospectus, pursuant to Rule 424(b)(5) promulgated under the Securities Act of 1933, as amended (the “Securities Act”).
Current report
H.C. Wainwright & Co., LLC (the “Placement Agent”) acted as our exclusive placement agent in connection with the offering. Pursuant to the terms of the placement agent agreement, we paid the Placement Agent a cash transaction fee equal to 7.5% of the aggregate gross cash proceeds in the offering and a management fee equal to 1.0% of the aggregate gross cash proceeds in the offering. In addition, we paid for certain non-accountable expenses in the amount of $15,000 and a clearing fee in the amount of $10,000. We also issued to the Placement Agent (or its designees) warrants to purchase up to 15,325 shares of common stock (the “January 2025 Placement Agent Warrants”). The January 2025 Placement Agent Warrants have an exercise price equal to $6.382 per share and are exercisable upon issuance and expire twenty-four months from the date of issuance.
Current report
The registered direct offering and the concurrent private placement (collectively, the “January 2025 Offering”) closed on January 30, 2025, resulting in net proceeds of approximately $804,346, after deducting estimated offering expenses paid by us, including the Placement Agent fees.
Current report
Pursuant to the January 2025 Securities Purchase Agreement, within 45 days from the date of the January 2025 Securities Purchase Agreement, we were required to file a registration statement with the SEC providing for the resale by the January 2025 Purchasers of the shares of common stock issuable upon exercise of the January 2025 Warrants. The registration statement was declared effective by the SEC on April 2, 2025. The Company shall use commercially reasonable efforts to keep such registration statement effective at all times until no January 2025 Purchaser owns any January 2025 Warrants or shares underlying the January 2025 Warrants issuable upon exercise thereof.
Current report
February 2025 Offering
Current report
On February 5, 2025, we entered into a securities purchase agreement (the “February 2025 Securities Purchase Agreement”) with certain institutional investors (the “February 2025 Purchasers”) pursuant to which we sold an aggregate of 300,700 shares of common stock at a purchase price of $3.575 per share in a registered direct offering priced at-the-market under the rules of Nasdaq. In a concurrent private placement, we also issued to the February 2025 Purchasers unregistered warrants (the “February 2025 Warrants”) to purchase up to an aggregate of 300,700 shares of common stock at an exercise price of $2.95 per share. The February 2025 Warrants are exercisable upon issuance and expire twenty-four months from the date of issuance.
Current report
The shares were offered pursuant to a “shelf” registration statement on Form S-3 (Registration No. 333-280796), which was declared effective by the Securities and Exchange Commission (the “SEC”) on July 18, 2024 as supplemented by a prospectus supplement dated February 5, 2025, filed with the SEC on February 6, 2025 and accompanying base prospectus, pursuant to Rule 424(b)(5) promulgated under the Securities Act.
Current report
The Placement Agent acted as our exclusive placement agent in connection with the offering. Pursuant to the terms of the placement agent agreement, we paid the Placement Agent a cash transaction fee equal to 7.5% of the aggregate gross cash proceeds in the offering and a management fee equal to 1.0% of the aggregate gross cash proceeds in the offering. In addition, we paid for certain non-accountable expenses in the amount of $15,000 and a clearing fee in the amount of $10,000. We also issued to the Placement Agent (or its designees) warrants to purchase up to 22,554 shares of Common Stock (the “February 2025 Placement Agent Warrants”). The February 2025 Placement Agent Warrants have an exercise price equal to $4.469 per share and are exercisable upon issuance and expire twenty-four months from the date of issuance.
Current report
The registered direct offering and the concurrent private placement (collectively, the “February 2025 Offering”) closed on February 6, 2025, resulting in net proceeds of approximately $908,627, after deducting estimated offering expenses paid by us, including the Placement Agent fees.
Current report
Pursuant to the February 2025 Securities Purchase Agreement, within 45 days from the date of the February 2025 Securities Purchase Agreement, we were required to file a registration statement with the SEC providing for the resale by the February 2025 Purchasers of the shares of common stock issuable upon exercise of the February 2025 Warrants. The registration statement was declared effective by the SEC on April 2, 2025. The Company shall use commercially reasonable efforts to keep such registration statement effective at all times until no February 2025 Purchaser owns any February 2025 Warrants or shares underlying the February 2025 Warrants issuable upon exercise thereof.
Current report
Our future results are subject to substantial risks and uncertainties. Since our inception, we have not demonstrated the ability to generate enough revenues to date to cover operating expenses and we have accumulated losses to date. To date, we have funded our operations primarily with proceeds from sales of common stock and warrants for the purchase of common stock, sales of preferred stock, proceeds from the issuance of convertible debt and borrowings under loan and security agreements.
Current report
Continuation as a going concern is dependent upon our ability to meet our financial requirements, raise additional capital, and achieve gross profitability from our single marketed product. To achieve profitability, we expect we will need to raise additional capital to fund our activities relating to commercial support for our existing product and any future clinical research trials and operating activities. However, there can be no assurance that we will ever achieve or maintain profitability. These conditions, among others, raise substantial doubt about our ability to continue as a going concern for one year from the date these financial statements are issued.
Current report
As such, we have concluded that such plans do not alleviate the substantial doubt about our ability to continue as a going concern for one year from the date the accompanying financial statements are issued.
Current report
Cost of Revenues, Gross Profit, and Gross Margin
Current report
Operating Expenses
Current report
Research and Development
Current report
General and Administrative Expenses
Current report
Interest and Other Income (Expense), Net
Current report
Cost of Revenues, Gross Profit, and Gross Margin
Current report
Operating Expenses
Current report
Research and Development
Current report
Research and development costs increased by $70,440 for the three months ended March 31, 2025 when compared to the three months ended March 31, 2024. Research and development costs incurred for the three months ended March 31, 2025 and 2024 primarily consisted of costs related to our babesiosis trial for tafenoquine. Direct trial-related costs represent 68% of the total research and development costs at $275,633 for the three months ended March 31, 2025, compared to 55% of the costs at $186,091 for the three months ended March 31, 2024. We also recorded $63,015 in research and development expenses related to commercial validation and packaging of Arakoda, for which a majority qualifies for reimbursement under the USAMMDA grant discussed above.
Current report
General and Administrative Expenses
Current report
For the three months ended March 31, 2025, our general and administrative expenses increased by approximately 57% or $611,130 from the three months ended March 31, 2024. For the three months ended March 31, 2025, we incurred significantly higher sales, advertising and promotion expenses and investor outreach expenses at $285,287 and $393,687 for the three months ended March 31, 2025, up from $104,064 and $182,164 for the three months ended March 31, 2024, respectively. Additionally, for the three months ended March 31, 2025, we recognized $142,645 in stock-based compensation expense ($0 for the three months ended March 31, 2024). This increase was in part due to new partially vested option grants awarded to two executives in January 2025, as well as the quarterly expense recognized for additional stock options granted in the third quarter of 2024.
Current report
Interest and Other Income, net
Current report
For the three months ended March 31, 2025, we recognized $1,790 of interest expense ($1,402 for the three months ended March 31, 2024). Our interest expense for the periods presented relates entirely to our single outstanding loan from the SBA. Cash paid for interest expense was $2,193 and $2,193 for the three months ended March 31, 2025 and March 31, 2024, respectively.
Current report
Other Income, net
Current report
For the three months ended March 31, 2025, we recognized $30,322 in other income compared to $31,051 for the three months ended March 31, 2024. For the three months ended March 31, 2025, we recognized interest income from cash invested in interest-bearing accounts and investments in certificates of deposit of $31,897 ($21,888 for the three months ended March 31, 2024). Other income for the three months ended March 31, 2024 also includes $10,789 of storage revenue recognized in association with final payment under the legacy contract with the USAMMDA for storing Arakoda purchases. We did not recognize storage revenue for the three months ended March 31, 2025.
Current report
Net cash provided by investing activities was $1,702,518 for the three months ended March 31, 2025, as compared to net cash used in investing activities of $9,814 for the three months ended March 31, 2024. For the three months ended March 31, 2025, we received proceeds of $1,708,000 from maturities of certain short-term investments in certificates of deposit ($0 for the three months ended March 31, 2024). The cash proceeds are partially offset by higher capitalized patent costs of $2,804 and fixed asset purchases of $2,678 for the three months ended March 31, 2025 ($726 and $0 for the three months ended March 31, 2024, respectively). However, we did not capitalize website development costs for the three months ended March 31, 2025 ($9,088 capitalized for the three months ended March 31, 2024 associated with enhancements to the functionality of our corporate website).
Current report
Net cash provided by financing activities was $1,696,899 for the three months ended March 31, 2025, as compared to $1,903,291 for the three months ended March 31, 2024. The decrease in net cash provided by financing activities is mainly attributable to net proceeds of $1,898,296 received in connection with our common stock and warrant offering in January 2024, which exceeded the aggregate net proceeds of $1,712,973 received in connection with our common stock and warrant offerings completed in January 2025 and February 2025. We also received lower proceeds from the exercise of warrants at $1,926 for the three months ended March 31, 2025, compared to $4,995 for the three months ended March 31, 2024. Additionally, for the three months ended March 31, 2025, we withheld shares valued at $18,000 to cover tax withholdings for net share settlement of certain 2024 performance bonuses awarded to our executives ($0 for the three months ended March 31, 2024).
Current report
Effect of Foreign Currency Translation on Cash
Current report
We recognize revenue in accordance with FASB ASC Topic No. 606,Revenue from Contracts with Customers (“ASC 606”). Revenues are recognized when control is transferred to customers in amounts that reflect the consideration we expect to be entitled to receive in exchange for those goods. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied. As part of the accounting for these arrangements, we may be required to make significant judgments, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each performance obligation.
Current report
Revenues from product sales are recorded at the net sales price, or “transaction price,” which may include estimates of variable consideration that result from product returns. We determine the amount of variable consideration by using either the expected value method or the most-likely-amount method. We include the unconstrained amount of estimated variable consideration in the transaction price, which reflects the amount for which it is probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each subsequent reporting period, we re-evaluate the estimated variable consideration included in the transaction price and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment. Reserves are established for the estimates of variable consideration based on the amounts we expect to be earned or to be claimed on the related sales.
Current report
We record U.S. commercial revenues as a receivable when our American distributor transfers shipped product to their title model for 60P. Foreign sales to both Australia and Europe are recognized as a receivable at the point product is shipped to distributor. The shipments to Australia and Europe are further subject to profit sharing agreements for boxes sold to customers.
Current report
Recent Accounting Pronouncements
Current report
From time to time, the FASB issues Accounting Standards Updates (“ASU”) to amend the authoritative literature in the ASC. The Company regularly evaluates new ASUs to determine the impact that these pronouncements may have on the consolidated condensed financial statements. Other than the pronouncements listed below, management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, or (iii) are not applicable to the Company’s consolidated condensed financial statements or related disclosures.
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Removed paragraphs (55)
Previous report
At-the-Market Sales Agreement
Previous report
On July 12, 2024, we filed a shelf registration statement on Form S-3 (File No. 333-280796) containing a (i) base prospectus covering the offering, issuance and sale by us of up to $15,000,000 of our common stock, preferred stock, warrants, debt securities and units and (ii) sales agreement prospectus (“Prospectus Supplement”) covering the offering, issuance and sale by us of up to a maximum aggregate offering price of $1,253,603 (which amount was included in the $15,000,000 aggregate offering price set forth in the base prospectus) of our common stock that may be issued and sold under the At-The-Market Issuance Sales Agreement dated as of July 12, 2024 (the “ATM Agreement”), that we entered into with WallachBeth Capital LLC, as sales agent. The Prospectus Supplement was subsequently amended on July 22, 2024, July 24, 2024, July 26, 2024, and August 2, 2024, to increase the maximum aggregate offering price under the ATM Agreement to $1,774,640, $1,890,705, $2,190,416, and $2,295,192, respectively. Between July 19, 2024 and August 1, 2024, we sold a total of 677,819 shares pursuant to the ATM Agreement and Prospectus Supplement, as amended, for gross proceeds of $1,994,583.
Previous report
2024 Annual Meeting of Stockholders
Previous report
On July 16, 2024, we conducted our 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”). The stockholders of record at the close of business on May 12, 2024, the record date for the determination of stockholders entitled to vote at the 2024 Annual Meeting, approved the proposals to (1) elect five directors to serve until the 2025 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified; (2) approve an amendment to the 2022 Equity Incentive Plan to increase the number of shares of common stock available for issuance by 416,667 shares; (3) approve an amendment to our Certificate of Incorporation, to effect a reverse stock split of our common stock at a reverse stock split ratio ranging from 1:5 to 1:12 inclusive, as may be determined at the appropriate time by the Board of Directors, in its sole discretion; (4) approve the issuance of options granted to a consultant to comply with Nasdaq Listing Rule 5635(c); and (5) ratify the selection of RBSM LLP by the Board of Directors as our independent auditor for the fiscal year ending December 31, 2024.
Previous report
Reverse Stock Split and Nasdaq Delisting Notice
Previous report
In February 2024, we received a letter from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”) notifying us that, for the last 30 consecutive business days, our common stock had not maintained a minimum closing bid price of $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we were provided an initial period of 180 calendar days, or until August 26, 2024 (the “Compliance Period”), to regain compliance with the Bid Price Rule. To regain compliance, the closing bid price of our common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive trading days, unless extended by Nasdaq under Nasdaq Rule 5810(c)(3)(H), prior to August 26, 2024. At the 2024 Annual Meeting in July 2024, our stockholders approved an amendment to our Certificate of Incorporation to effect reverse stock split of our common stock at a range of ratios between 1:5 to 1:12 inclusive, and on July 19, 2024, our Board of Directors approved the implementation of the reverse stock split at a ratio of 1:12 (the “Reverse Stock Split”). The Reverse Stock Split was effective as of August 12, 2024.
Previous report
On August 26, 2024, we received written notice from the Listing Qualifications Staff of Nasdaq stating that for the 10 consecutive business day period between August 12, 2024 through August 23, 2024, the closing bid price of our common stock was at $1.00 per share or greater. Accordingly, we regained compliance with the Bid Price Rule for continued listing on The Nasdaq Capital Market and the matter was closed.
Previous report
Private Placement
Previous report
On September 4, 2024, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor, agreeing to issue and sell in a private placement offering (the “Private Placement”) (i) pre-funded warrants to purchase 2,898,551 shares of common stock (the “September 2024 Pre-Funded Warrants”), (ii) series A warrants to purchase 2,898,551 shares of common stock (the “Series A Warrants”), and (iii) series B warrants to purchase 2,898,551 shares of common stock (the “Series B Warrants”) at a price of $1.379 per Pre-Funded Warrant and accompanying Series A and Series B Warrants. The Private Placement closed on September 5, 2024, generating net proceeds to us of $3,414,502, after deducting placement agent fees and offering expenses.
Previous report
The September Pre-Funded Warrants have an exercise price of $0.001 per share and are immediately exercisable, subject to certain ownership restrictions, and will remain exercisable until exercised in full. The Series A and Series B Warrants have an exercise price of $1.38 per share and will be exercisable beginning on the effective date of stockholder approval to approve the exercise of the Series A and Series B Warrants and the September 2024 Agent Warrants, defined below, to comply with applicable listing rules and regulations of the Nasdaq Stock Market (“Stockholder Approval”, and such date that approval is obtained, the “Stockholder Approval Date”). The Series A Warrants expire five years after the Stockholder Approval Date and the Series B Warrants will expire 18 months after the Stockholder Approval Date.
Previous report
As compensation for acting as the placement agent for the Private Placement, we issued to H.C. Wainwright & Co., LLC warrants to purchase up to 217,391 shares of stock (the “September 2024 Agent Warrants”). The September 2024 Agent Warrants have substantially the same terms as the Series A Warrants, except that the September 2024 Agent Warrants have an exercise price equal to $1.725 per share.
Previous report
The Purchase Agreement requires that we must hold an annual or special meeting of stockholders within 90 days from the Closing for the purposes of obtaining the Stockholder Approval. If Stockholder Approval is not obtained, we must call an additional stockholder meeting every six months thereafter until the earlier of the date such Stockholder Approval is obtained, or the Series A Warrants, the Series B Warrants, and the September 2024 Agent Warrants are no longer outstanding.
Previous report
The September 2024 Pre-Funded Warrants, the Series A Warrants, the Series B Warrants, and the September 2024 Agent Warrants and the shares of our Common Stock issuable upon the exercise of the warrants have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), were not offered pursuant to the Registration Statement and were offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and Rule 506(b) promulgated thereunder. In connection with the Private Placement, we entered into a registration rights agreement (the “Registration Rights Agreement”) with the Purchaser, pursuant to which, among other things, we are required to prepare and file with the Securities and Exchange Commission (the “SEC”) one or more registration statements to register for resale the shares of Common Stock issuable upon exercise of the Series A Warrants, the Series B Warrants, and the September 2024 Pre-Funded Warrants (the “Warrant Shares”). We are required to use our best efforts to have such registration statement(s) declared effective as promptly as possible thereafter, and in any event no later than 45 days following September 4, 2024, or, in the event of a “full review” by the SEC, 75 days following the date such additional registration statement is required to be filed thereunder.
Previous report
The audited consolidated financial statements for the years ended December 31, 2023, and December 31, 2022, respectively, included an explanatory note referring to our recurring operating losses and expressing substantial doubt in our ability to continue as a going concern. The accompanying consolidated condensed financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of obligations in the normal course of business. However, we have not demonstrated the ability to generate enough revenues to date to cover operating expenses and have accumulated losses to date. This condition, among others, raises substantial doubt about our ability to continue as a going concern for one year from the date these consolidated condensed financial statements are issued.
Previous report
Cost of Revenues, Gross Profit (Loss), and Gross Margin
Previous report
Cost of Revenues, Gross Profit (Loss), and Gross Margin
Previous report
Research and development costs increased during the three months ended September 30, 2024 when compared to the three months ended September 30, 2023. Research and development costs incurred during the three months ended September 30, 2023 consisted of initiation costs related to our Phase IIB COVID-19 clinical trial, which was later suspended in the fourth quarter of 2023. Direct COVID-19-related trial costs represented 82% of the costs for the three months ended September 30, 2023 at $216,567 (less than 1% for the three months ended September 30, 2024 at $5,445). During the three months ended September 30, 2024, we recorded research and development expense of $600,000, representing 64% of the total costs, upon the delivery from Trevally of 8.8 kilograms of castanospermine. In January 2023, we issued Trevally 10,000 fully vested shares of our common stock as advance consideration for the services, which payment was deferred and capitalized until delivery of the completed research materials. We also incurred $270,497 in costs related to our babesiosis trial for tafenoquine during the three months ended September 30, 2024 ($0 during the three months ended September 30, 2023).
Previous report
For the three months ended September 30, 2024, our general and administrative expenses decreased by 7.5% or $98,564 from the three months ended September 30, 2023. During the three months ended September 30, 2024, we recorded higher compensation expenses due to accruals for performance bonuses payable to our executives, as well as higher salaries and benefits expense due to hiring a new Chief Commercial Officer in February 2024 at $171,948 and $171,353, respectively (compared to $0 and $123,672 for the three months ended September 30, 2023, respectively). However, the main driver of the decrease relates to stock-based compensation, which decreased from $458,266 for the three months ended September 30, 2023 to $15,246 for the three months ended September 30, 2024, as a result of certain options and restricted stock units granted to our directors and executives on the closing date of our IPO in July 2023, some of which were fully vested and thus immediately expensed on the IPO date.
Previous report
For the three months ended September 30, 2024, we recognized $1,467 of interest expense ($40,106 for the three months ended September 30, 2023). The decrease in interest expense is the result of the settlement or conversion of a majority of our outstanding debt obligations upon the closing of our IPO in July 2023. Cash paid for interest was $2,193 and $171,807 for the three months ended September 30, 2024 and September 30, 2023, respectively.
Previous report
Loss on Debt Extinguishment
Previous report
For the three months ended September 30, 2023, we recognized a $391,593 net loss on debt extinguishment (none for the three months ended September 30, 2024). The decrease is related, in part, to a total $614,670 loss recognized upon extinguishment of our interim bridge financing notes, all of which were settled or converted upon our IPO in July 2023. The net amount for the three months ended September 30, 2023 was partially offset by a debt extinguishment gain of $223,077 recognized on conversion of the Xu Yu promissory note on the date of our IPO. There were no debt extinguishments recognized during the three months ended September 30, 2024.
Previous report
Change in Fair Value of Promissory Note
Previous report
For the three months ended September 30, 2023, we recognized a $6,105,066 gain related to the change in the fair value of the promissory note with Knight, which was held at fair value. The gain relates to the mark to market adjustment recognized immediately prior to the automatic conversion of the outstanding debt obligation into our equity shares upon the closing of our IPO. We no longer have any debt obligations measured at fair value on a recurring basis, hence we recorded a $0 change in fair value for the three months ended September 30, 2024.
Previous report
Other Income (Expense), net
Previous report
For the three months ended September 30, 2024, we recognized $16,623 in other income compared to $70,490 in other expense for the three months ended September 30, 2023. As a result of the IPO and recent equity offerings completed in 2024, we now earn interest income as we have invested certain cash proceeds in interest-bearing accounts and short-term certificates of deposit. We recognized interest income of $16,635 during the three months ended September 30, 2024 ($0 during the three months ended September 30, 2023).
Previous report
Comparison of the Nine Months Ended September 30, 2024, and 2023
Previous report
Product Revenues - net of Discounts and Rebates, Service Revenues, Cost of Revenues, Gross Profit (Loss), and Gross Margin
Previous report
Kodatef sales to our distributor Biocelect in Australia for the nine months ended September 30, 2024 were $20,697 ($0 for the nine months ended September 30, 2023). Sales to Biocelect are currently subject to a profit share distribution once the original transfer price has been recouped. The most recent sale of boxes to Biocelect reached profit share at the end of Q1 2024. Biocelect reported 279% year-over-year growth, the equivalent of 1,489 boxes sold for the nine months ended September 30, 2024, compared to 393 boxes for the nine months ended September 30, 2023. As of September 30, 2024, Biocelect’s unsold inventory that remains subject to profit share was the equivalent of 726 boxes. While growth in Australia is similarly positive to that in the US, Biocelect has achieved that growth by competing directly with Malarone in terms of price in their market for the approved antimalarial prophylaxis indication. As of September 30, 2024, $11,037 of profit share was due to us ($0 as of December 31, 2023).
Previous report
Service Revenues
Previous report
During the nine months ended September 30, 2024, we recognized $10,789 in service revenue in association with the final payment from the USAMMDA for storing Arakoda purchases ($0 for the nine months ended September 30, 2023). The revenue for the nine months ended September 30, 2024 is related to the final resolution of storage fees payable from the USAMMDA under the original development contract entered into in 2014. As the development contract ended on August 31, 2022, additional storage revenue is not expected in the near future.
Previous report
Cost of Revenues, Gross Profit (Loss), and Gross Margin
Previous report
Cost of revenues was $266,688 for the nine months ended September 30, 2024, as compared to $328,293 for the nine months ended September 30, 2023. While net product sales increased over the same periods, the decrease in cost of goods sold is primarily attributable to the fixed part of cost of goods. As the sales volume has increased, the gross margin has improved as the variable cost of goods of each unit sold is substantially less than the sales price. Additionally, write-downs for expired inventory were significantly higher during the nine months ended September 30, 2023 at $94,977, as compared to $18,490 during the nine months ended September 30, 2024. Due to these factors, the Gross Margin % increased significantly from (156.70%) for the nine months ended September 30, 2023 to 29.21% for the nine months ended September 30, 2024.
Previous report
Other Operating Revenues
Previous report
The research revenues earned by us were $43,177 for the nine months ended September 30, 2024, as compared to $82,974 for the nine months ended September 30, 2023. Our research revenues for the nine months ended September 30, 2023 consist entirely of projected research revenues from the Australian Tax Authority for research activities conducted in Australia at $82,974, compared to $29,821 for the nine months ended September 30, 2024. For the nine months ended September 30, 2024, we began to recognize research revenues related to initial funding earned from the new USAMMDA contract we were awarded in July 2024 to facilitate commercial validation of a new bottle and replacement blister packaging of Arakoda.
Previous report
Research and development costs increased during the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023. Research and development costs incurred during the nine months ended September 30, 2023 consisted of initiation costs related to our Phase IIB COVID-19 clinical trial, which was later suspended in the fourth quarter of 2023. Direct COVID-19-related trial costs represent less than 1% of the total costs for the nine months ended September 30, 2024 at $25,817 and 85% of the costs for the nine months ended September 30, 2023 at $504,711. During the nine months ended September 30, 2024, we recorded research and development expense of $3,225,000, representing 74% of the total costs, related to share-based payments issued to vendors in January 2023 as advance consideration, which payments were initially deferred and capitalized. Kentucky Technology, Inc. delivered us a report on the potential development of SJ733 + tafenoquine in the second quarter of 2024 and Trevally completed the synthesis of 8.8 kilograms of castanospermine in the third quarter of 2024, resulting in $2,625,000 and $600,000, respectively, of research and development expense recognized for the nine months ended September 30, 2024. We also incurred $846,323 in costs related to our babesiosis trial for tafenoquine during the nine months ended September 30, 2024 ($0 during the nine months ended September 30, 2023).
Previous report
For the nine months ended September 30, 2024, our general and administrative expenses increased by 34.03% or $868,321 from the nine months ended September 30, 2023. During the nine months ended September 30, 2024, we recorded higher compensation expenses due to accruals for performance bonuses payable to our executives, as well as higher salaries and benefits expense due to hiring a new Chief Commercial Officer in February 2024 at $171,948 and $498,832, respectively (compared to $0 and $200,068 for the nine months ended September 30, 2023, respectively). Additionally, during the nine months ended September 30, 2024, we incurred $316,311 in legal and professional fees, $422,702 of insurance expenses, $684,808 of investor outreach expenses, and $226,024 of advertising and promotion expenses (up from $172,690, $164,361, $417,620 and $64,280 for the nine months ended September 30, 2023, respectively). These increases were partially offset by a significant decrease in stock-based compensation, which decreased from $458,266 for the nine months ended September 30, 2023 to $15,246 for the nine months ended September 30, 2024, as a result of certain options and restricted stock units granted to our directors and executives on the closing date of our IPO in July 2023, some of which were fully vested and thus immediately expensed on the IPO date.
Previous report
Interest Expense
Previous report
For the nine months ended September 30, 2024, we recognized $6,490 of interest expense ($2,281,191 for the nine months ended September 30, 2023). The decrease in interest expense is the result of the settlement or conversion of a majority of our outstanding debt obligations upon the closing of our IPO in July 2023. Cash paid for interest expense was $6,579 and $176,924 for the nine months ended September 30, 2024 and September 30, 2023, respectively.
Previous report
Derivative Expense
Previous report
For the nine months ended September 30, 2023, we recognized $399,725 of derivative expense in connection with the raising of $555,000 in net proceeds from our bridge funding in May 2023. We record derivative expense when the initial fair value of the related derivative liabilities exceeds the cash proceeds received. We did not record derivative expense for the nine months ended September 30, 2024 as we did not complete any debt financing transactions during the period.
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Reworded paragraphs (27)
Previous wording
We are a specialty pharmaceutical company with a goal of using cutting-edge biological science and applied research to further develop and commercialize new therapies for the prevention and treatment of infectious diseases. We have successfully achieved regulatory approval of Arakoda® (“Arakoda”), a malaria preventative treatment that has been on the market since late 2019. Currently, 60P’s pipeline under development covers development programs for vector-borne, fungal, and viral diseases utilizing three of the Company’s future products: (i) new products that contain the Arakoda regimen of Tafenoquine; (ii) new products that contain Tafenoquine; and (iii) Celgosivir.
Current wording
We are a specialty pharmaceutical company with a goal of using cutting-edge biological science and applied research to further develop and commercialize new therapies for the prevention and treatment of infectious diseases. We have successfully achieved regulatory approval of Arakoda® (“Arakoda”), a malaria preventative treatment that has been on the market since late 2019. Currently, 60P’s pipeline under development covers development programs for vector-borne, fungal, and viral diseases utilizing three of the Company’s future products: (i) new products that contain the Arakoda regimen of Tafenoquine; (ii) new products that contain Tafenoquine; and (iii) Celgosivir and/or botanical extracts from Australian Chestnut Trees.
Previous wording
As of the effective time of the Reverse Stock Split, every twelve (12) issued and outstanding shares of our common stock was automatically combined and converted into one (1) issued and outstanding share of common stock, with no change to the par value, reducing the number of shares of common stock outstanding from 21,219,937 shares to 1,768,337 shares. No fractional shares of common stock were issued in connection with the Reverse Stock Split and all fractional shares were rounded up to the nearest whole share with respect to outstanding shares of common stock. We issued an additional 93,563 shares of common stock on August 19, 2024 for rounding due to fractional shares. The Reverse Stock Split did not change the authorized number of shares of common stock or preferred stock. Proportional adjustments were made to the number of shares of common stock issuable upon exercise or conversion of our equity awards, warrants, and other equity instruments convertible into common stock, as well as the respective exercise prices, if applicable in accordance with the terms of the instruments. Unless otherwise noted, all references to numbers of shares of our common stock and per share information presented in this Quarterly Report on Form 10-Q have been retroactively adjusted, as appropriate, to reflect the Reverse Stock Split.
Current wording
As a result of the 1:5 Reverse Stock Split, proportional adjustments were made to the number of shares of common stock issuable upon exercise or conversion of our equity awards, warrants, and other equity instruments convertible into common stock, as well as the respective exercise prices, if applicable in accordance with the terms of the instruments. No fractional shares of common stock were issued in connection with the 1:5 Reverse Stock Split and all fractional shares were rounded up to the nearest whole share with respect to outstanding shares of common stock. Unless otherwise noted, all references to numbers of shares of our common stock and per share information presented in this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect the effects of the 1:5 Reverse Stock Split.
Previous wording
For the nine months ended September 30, 2024 and 2023, our net cash used in operating activities was $4,009,871 and $4,479,242, respectively and the cash balance was $3,300,688 as of September 30, 2024 ($2,142,485 as of December 31, 2023). To date, we have funded our operations through debt and equity financings. Based on current internal projections, taking into consideration the net proceeds of approximately $1.8 million received under the ATM Agreement, an additional $3.4 million received from the Private Placement, and recent growth in Arakoda sales, we estimate that we will have sufficient funds to remain viable through June 30, 2025, excluding the additional costs of conducting the expanded access study for chronic babesiosis patients (currently being planned). We cannot give assurance that we can increase our cash balances or limit our cash consumption and thus maintain sufficient cash balances for our planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than recently experienced. We may need to raise additional capital in the future. However, we cannot assure you that we will be able to raise additional capital on acceptable terms, or at all.
Current wording
As of March 31, 2025, we had cash and cash equivalents of $3,451,500 ($1,659,353 as of December 31, 2024). For the three months ended March 31, 2025 and 2024, our net cash used in operating activities was $1,597,366 and $1,140,438, respectively. To date, we have financed our operations primarily through the issuance of common stock, warrants to purchase common stock, and proceeds from the issuance of convertible debt and promissory notes. Based on current internal projections, taking into consideration the net proceeds of approximately $1.9 million received under the ATM Agreement, an additional $5.127 million in cumulative net proceeds received from the September 2024 Private Placement and the January and February 2025 Offerings, and recent growth in Arakoda sales, we estimate that we will have sufficient funds to remain viable through August 31, 2025, excluding the additional costs of conducting the Phase II study for chronic babesiosis patients (currently being planned), and assuming no additional capital raises. We cannot give assurance that we can increase our cash balances or limit our cash consumption and thus maintain sufficient cash balances for our planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than recently experienced. We may need to raise additional capital in the future. However, we cannot assure you that we will be able to raise additional capital on acceptable terms, or at all.
Previous wording
As of September 30, 2024, we had an accumulated deficit of $38,482,920. In their audit report for the fiscal year ended December 31, 2023, our auditors have expressed their concern as to our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate cash flows from operations and obtain financing.
Current wording
In their audit report for the fiscal year ended December 31, 2024, our auditors have expressed their concern as to our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate cash flows from operations and obtain financing. The audited consolidated financial statements for the year ended December 31, 2024 included an explanatory note referring to our recurring operating losses and expressing substantial doubt in our ability to continue as a going concern.
Previous wording
In view of these matters, continuation as a going concern is dependent upon our ability to meet financial requirements, raise additional capital, and achieve gross profitability from our single marketed product. We plan to fund our operations through third party and related party debt/advances, private placement of restricted securities and the issuance of stock in a subsequent offering until such a time as we are able to generate profitable operations, or a business combination may be achieved.
Current wording
We plan to fund our operations through third party and related party debt/advances, private placement of restricted securities and the issuance of stock in a subsequent offering until such a time as the business achieves profitability or a business combination may be achieved. However, there can be no assurance that we will be successful in raising additional capital or that such capital, if available, will be on terms that are favorable to us. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.
Previous wording
Our consolidated condensed financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.
Current wording
The accompanying consolidated condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of obligations in the normal course of business, and do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.
Previous wording
To date, we have received the majority of our product revenues from sales of our Arakoda product to the US Department of Defense (the “DoD”) and resellers in the U.S. and abroad. Foreign sales to both Australia and Europe are further subject to profit sharing agreements for boxes sold to customers. Currently, the procurement contract with the DoD has expired and DoD sales last occurred in 2021. Sales to resellers in the US are subject to considerable discounts and rebates for services provided by our third-party logistics (“3PL”) partner and wholesalers and pharmacy benefit managers (“PBMs”).
Current wording
We receive the majority of our product revenues from sales of our Arakoda product to resellers in the U.S. and abroad. Foreign sales to both Australia and Europe are further subject to profit sharing agreements for boxes sold to customers. Sales to resellers in the US are subject to considerable discounts and rebates for services provided by our third-party logistics (“3PL”) partner and wholesalers and pharmacy benefit managers (“PBMs”).
Previous wording
Cost of revenues associated with our products is primarily comprised of direct materials, manufacturing related costs incurred in the production process and inventory write-downs due to expiration.
Current wording
Cost of revenues associated with our products is primarily comprised of direct materials, shipping, manufacturing-related costs incurred in the production process, serialization costs, and inventory write-downs due to expiration.
Previous wording
Other operating revenues for the periods presented primarily consist of research revenue earned from the Australian Tax Authority for research activities conducted in Australia. Beginning in the third quarter of 2024, we began to recognize research revenues associated with the new contract with the United States Army Medical Materiel Development Activity (USAMMDA) for Arakoda supply chain upgrade support. Research revenue under this contract is recognized when we incur the direct costs eligible for reimbursement, up to the maximum allowable amount.
Current wording
Other operating revenues for the periods presented include research revenue earned from the Australian Tax Authority for research activities conducted in Australia. Beginning in the third quarter of 2024, we began to recognize research revenues associated with our new contract with the United States Army Medical Materiel Development Activity (USAMMDA) for Arakoda supply chain upgrade support. Research revenue under this contract is recognized when we incur the direct costs eligible for reimbursement, up to the maximum allowable amount.
Previous wording
Research and development costs for the periods presented primarily consist of contracted R&D services and costs associated with preparation for our Babesiosis trial in 2024 and, in 2023 related to our now halted COVID-19 clinical trial. We expense all research and development costs in the period in which they are incurred. Payments made prior to the receipt of goods or services to be used in research and development are recognized as prepaid assets and expensed over the service period as the services are provided. We have also issued shares of our common stock in exchange for research and development services.
Current wording
Research and development costs for the periods presented primarily consist of contracted R&D services and costs associated with preparation for and conducting our Babesiosis trial. We expense all research and development costs in the period in which they are incurred. Payments made prior to the receipt of goods or services to be used in research and development are recognized as prepaid assets and expensed over the service period as the services are provided. We have also issued shares of our common stock to vendors in exchange for research and development services.
Previous wording
Interest expense consists of interest accrued on our debt obligations and related amortization of debt discounts and deferred issuance costs. Other components of other income (expense), net include changes in the fair value of financial instruments, gains and losses on extinguishments of debt, and other miscellaneous income (expense). We also earn interest income from cash invested in interest-bearing accounts as well as cash equivalents and short-term investments consisting of certificates of deposits with original maturities ranging from three to six months.
Current wording
We earn interest income from cash invested in interest-bearing accounts, as well as cash equivalents and short-term investments consisting of certificates of deposits with original maturities ranging from three to six months. Interest expense for the periods presented is limited to a single $150,000 SBA loan that bears interest at 3.75%. Other components of other income (expense) include changes in the fair value of derivative liabilities and other miscellaneous income or expenses.
Previous wording
Product Revenues - net of Discounts and Rebates, Cost of Revenues, Gross Profit (Loss), and Gross Margin
Current wording
Product Revenues - net of Discounts and Rebates, Cost of Revenues, Gross Profit, and Gross Margin
Previous wording
Our product revenues - net of discounts and rebates were $135,293 for the three months ended September 30, 2024, as compared to $51,188 for the three months ended September 30, 2023. For the three months ended September 30, 2024, our U.S. pharmaceutical distributor accounted for 92% of our total net product sales and Kodatef sales to our Australian distributor accounted for 8% of total net product sales (100% and 0% for the three months ended September 30, 2023, respectively). Domestic, commercial product sales are primarily driving increased sales volume during the period.
Current wording
Our product revenues - net of discounts and rebates were $163,552 for the three months ended March 31, 2025, as compared to $105,674 for the three months ended March 31, 2024. For the three months ended March 31, 2025, our U.S. pharmaceutical distributor and Infuserve America accounted for 85% and 6% of our total net product sales of Arakoda, respectively, and Kodatef sales to our Australian distributor accounted for 9% of total net product sales (99%, 0%, and 1% for the three months ended March 31, 2024, respectively). Domestic, commercial product sales are primarily driving increased sales volume during the period.
Previous wording
We offer discounts and rebates to the civilian U.S. supply chain distribution channel. We record sales when our 3PL partner transfers boxes into their title model. Discounts and rebates offered to our 3PL partner amount to 12% along with a $5,500 fixed monthly fee that started in 2023. The product is then transferred usually to one of the three large U.S. pharmaceutical distributors where rebates are 10%. Lastly, we have relationships with several large PBMs that allow patients to purchase Arakoda at a discount. The rebate associated with PBMs ranges from 30% to 41.25% depending on the amount of coverage provided. For the three months ended September 30, 2024, discounts and rebates were $122,862 compared to $76,441 for the three months ended September 30, 2023.
Current wording
We offer discounts and rebates to the civilian U.S. supply chain distribution channel. We record sales when our 3PL partner transfers boxes into their title model. Discounts and rebates offered to our 3PL partner amount to 12% (lower rates available upon reaching larger revenue tiers) along with a $5,500 fixed monthly fee. The product is then transferred usually to one of the three large U.S. pharmaceutical distributors where rebates are 10%. Lastly, we have relationships with several large pharmacy benefit managers (“PBMs”) that allow patients to purchase Arakoda at a discount. The rebate associated with PBMs ranges from 30% to 41.25% depending on the amount of coverage provided. For the three months ended March 31, 2025, discounts and rebates were $91,401 compared to $94,869 for the three months ended March 31, 2024.
Previous wording
Arakoda entered the U.S. civilian supply chain in the third quarter of 2019. For the three months ended September 30, 2023, 550 boxes were sold to pharmacies and dispensaries. Sales volume increased by 140% to 1,319 boxes sold to pharmacies and dispensaries for the three months ended September 30, 2024. Based on IQVIA data, this growth in sales volume appears to be driven primarily by organic growth in the Lyme disease community, whose prescribers utilize Arakoda for treatment of babesiosis. The sales volume growth to pharmacies and dispensaries ties more closely to the growth in discounts and rebates previously discussed than our reported sales to our 3PL.
Current wording
Arakoda entered the U.S. civilian supply chain in the third quarter of 2019. For the three months ended March 31, 2024, 1,022 boxes were sold to pharmacies and dispensaries. Sales volume increased by 55% to 1,579 boxes sold to pharmacies and dispensaries for the three months ended March 31, 2025. Based on IQVIA data, this growth in sales volume appears to be driven primarily by organic growth in the Lyme disease community, whose prescribers utilize Arakoda for treatment of babesiosis. The sales volume growth to pharmacies and dispensaries ties more closely to the growth in discounts and rebates previously discussed than our reported sales to our 3PL.
Previous wording
Kodatef sales to our distributor Biocelect in Australia for the three months ended September 30, 2024 were $10,691 ($0 for the three months ended September 30, 2023). Sales to Biocelect are currently subject to a profit share distribution once the original transfer price has been recouped. The most recent sale of boxes to Biocelect reached profit share at the end of Q1 2024. Biocelect reported approximately 130% year-over-year growth for the quarter, the equivalent of 414 boxes sold for the three months ended September 30, 2024, compared to 184 boxes for the three months ended September 30, 2023. As of September 30, 2024, Biocelect’s unsold inventory that remains subject to profit share was the equivalent of 726 boxes. While growth in Australia is similarly positive to that in the US, Biocelect has achieved that growth by competing directly with Malarone in terms of price in their market for the approved antimalarial prophylaxis indication. As of September 30, 2024, $11,037 of profit share was due to us ($0 as of December 31, 2023).
Current wording
Kodatef sales to our distributor Biocelect in Australia for the three months ended March 31, 2025 were $12,066 ($1,004 for the three months ended March 31, 2024). A historical portion of sales to Biocelect remain subject to a profit share distribution once the original transfer price has been recouped. Biocelect, which acts as a distributor in the Australian and New Zealand market, reported (42%) year-over-year decline, the equivalent of 386 boxes sold for the three months ended March 31, 2025, compared to 665 boxes for the three months ended March 31, 2024. As of March 31, 2025, Biocelect’s unsold inventory that remains subject to profit share was the equivalent of 109.5 boxes. Additionally, under a new agreement executed during the quarter, Biocelect began to purchase from the latest manufactured lot of Kodatef at $45 AUD per box which are not subject to historical profit share. For the quarter ended March 31, 2025, 200 boxes of Kodatef were sold to Biocelect. As of March 31, 2025, $5,826 of profit share was due to us ($1,004 as of March 31, 2024).
Previous wording
Arakoda sales volume is also showing signs of sales growth in Europe. We first shipped Arakoda to our distributor Scandinavian Biopharma (“SB”) in September 2022. For the three months ended September 30, 2024, SB reported 54 boxes sold (none the three months ended September 30, 2023). According to our distributor this is due to greater interest in treating babesiosis.
Current wording
Arakoda sales volume in Europe continues to grow. We first shipped Arakoda to our distributor Scandinavian Biopharma (“SB”) in September 2022. For the three months ended March 31, 2025, SB reported 73 boxes sold (27 boxes sold for the three months ended March 31, 2024). According to our distributor, this is due to greater interest in treating babesiosis.
Previous wording
Cost of revenues was $111,687 for the three months ended September 30, 2024, as compared to $71,196 for the three months ended September 30, 2023. The increase in cost of goods sold is primarily driven by the increase in net product sales over the same periods. Despite the increase, the Gross Margin % increased significantly from (39.09%) for the three months ended September 30, 2023 to 17.45% for the three months ended September 30, 2024. This is primarily attributable to the fixed part of cost of goods. As the sales volume has increased, the gross margin has improved as the variable cost of goods of each unit sold is substantially less than the sales price.
Current wording
Cost of revenues was $73,272 for the three months ended March 31, 2025, as compared to $65,437 for the three months ended March 31, 2024. The increase in cost of goods sold is primarily driven by the inflationary increase in fixed COGS charges for serialization and inventory material charges. Despite the increase, the Gross Margin % increased from 38.08% for the three months ended March 31, 2024 to 55.20% for the three months ended March 31, 2025. This is primarily attributable to the growth in revenues. As the sales volume has increased, the gross margin has improved as the variable cost of goods of each unit sold is substantially less than the sales price.
Previous wording
The research revenues earned by us were $12,818 for the three months ended September 30, 2024, as compared to $75,566 for the three months ended September 30, 2023. Our research revenues for the three months ended September 30, 2023 consist entirely of projected research revenues from the Australian Tax Authority for research activities conducted in Australia. For the three months ended September 30, 2024, our research revenues relate primarily to initial funding earned from the new USAMMDA contract we were awarded in July 2024 to facilitate commercial validation of a new bottle and replacement blister packaging of Arakoda.
Current wording
The research revenues earned by us were $92,731 for the three months ended March 31, 2025, as compared to $29,631 for the three months ended March 31, 2024. The increase in research revenues is due to the new USAMMDA contract we were awarded in July 2024 to facilitate commercial validation of a new bottle and replacement blister packaging of Arakoda. We recognized research revenues of $77,966 related to this grant for the three months ended March 31, 2025 ($0 for the three months ended March 31, 2024). We also recognized research revenues from the Australian Tax Authority for research activities conducted in Australia of $5,138 for the three months ended March 31, 2025 ($29,631 for the three months ended March 31, 2024).
Previous wording
For the three months ended September 30, 2024, we recognized a loss on the change in fair value of derivative liabilities of $56,712 compared to a gain of $92,490 for the three months ended September 30, 2023. For the three months ended September 30, 2024, derivative liabilities include the contingent milestone payment due to Knight upon a future sale of Arakoda or a Change of Control. For the three months ended September 30, 2023, derivative liabilities consisted of bridge shares, certain warrants, and embedded conversion features in our convertible notes. We use a probability-weighted discounted cash flow model or a Monte Carlo simulation model to estimate the fair value of these instruments.
Current wording
For the three months ended March 31, 2025, we recognized a gain on the change in fair value of derivative liabilities of $5,105 compared to $1,740,847 for the three months ended March 31, 2024. During the periods presented, derivative liabilities include the contingent milestone payment due to Knight upon a future sale of Arakoda or a Change of Control. We use a probability-weighted expected return method to estimate the fair value of this derivative liability.
Previous wording
Net cash used in operating activities was $4,009,871 for the nine months ended September 30, 2024, as compared to $4,479,242 for the nine months ended September 30, 2023. Our net cash used in operating activities increased, primarily due to higher general and administrative expenses at $3,419,747 for the nine months ended September 30, 2024 ($2,551,426 for the nine months ended September 30, 2023), primarily due to higher compensation and related expenses, legal and professional fees, insurance expenses, investor outreach expenses, and advertising and promotion expenses, as discussed above. In addition, we incurred $846,323 in costs related to our planned babesiosis trial for tafenoquine during the nine months ended September 30, 2024 ($0 during the nine months ended September 30, 2023).
Current wording
Net cash used in operating activities was $1,597,366 for the three months ended March 31, 2025, as compared to $1,140,438 for the three months ended March 31, 2024. Our net cash used in operating activities increased, primarily due to higher general and administrative expenses at $1,686,264 for the three months ended March 31, 2025 ($1,075,134 for the three months ended March 31, 2024), as a result of higher sales, advertising and promotion costs and investor outreach expenses, as discussed above. In addition, we incurred higher research and development costs at $407,622 for the three months ended March 31, 2025 ($337,182 for the three months ended March 31, 2024), primarily related to conducting our tafenoquine-babesiosis trial.
Previous wording
Cash Used in Investing Activities
Current wording
Cash Provided by (Used in) Investing Activities
Previous wording
Our foreign operations were small relative to U.S. operations for the nine months ended September 30, 2024, and 2023, thus effects of foreign exchange rate changes on cash have been minor.
Current wording
Our foreign operations were small relative to U.S. operations for the three months ended March 31, 2025 and March 31, 2024, thus effects of foreign currency translation have been minor.
Previous wording
The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Current wording
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Previous wording
We measure compensation for all share-based payment awards granted to employees, directors, and nonemployees, based on the estimated fair value of the awards on the date of grant. For awards that vest based on continued service, the service-based compensation cost is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the awards. For service vesting awards with compensation expense recognized on a straight-line basis, at no point in time does the cumulative grant date value of vested awards exceed the cumulative amount of compensation expense recognized. The grant date is determined based on the date when a mutual understanding of the key terms of the share-based awards is established. We account for forfeitures as they occur.
Current wording
We account for share-based payments in accordance with ASC Subtopic 718,Compensation - Stock Compensation (“ASC 718”). We measure compensation for all share-based payment awards granted to employees, directors, and nonemployees, based on the estimated fair value of the awards on the date of grant. For awards that vest based on continued service, the service-based compensation cost is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the awards. For service vesting awards with compensation expense recognized on a straight-line basis, at no point in time does the cumulative grant date value of vested awards exceed the cumulative amount of compensation expense recognized. The grant date is determined based on the date when a mutual understanding of the key terms of the share-based awards is established. We account for forfeitures as they occur.
Previous wording
We estimate the fair value of all stock option awards as of the grant date by applying the Black-Scholes option pricing model. The application of this valuation model involves assumptions, including the fair value of the common stock, expected volatility, risk-free interest rate, expected dividends and the expected term of the option. Due to the lack of a public market for our common stock prior to the IPO and lack of company-specific historical implied volatility data, we base our computations of expected volatility on the historical volatility of a representative group of public companies with similar characteristics of the Company, including stage of development and industry focus. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. We use the simplified method as prescribed by the SEC Staff Accounting Bulletin Topic 14,Share-Based Payment, to calculate the expected term for stock options, whereby, the expected term equals the midpoint of the weighted average remaining time to vest, vesting period and the contractual term of the options due to our lack of historical exercise data. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as we have never paid dividends and have no current plans to pay any dividends on our common stock. The assumptions used in calculating the fair value of share-based awards represent our best estimates and involve inherent uncertainties and the application of significant judgment.
Current wording
We estimate the fair value of all stock option awards as of the grant date by applying the Black-Scholes option pricing model. The application of this valuation model involves assumptions, including the fair value of the common stock, expected volatility, risk-free interest rate, expected dividends and the expected term of the option. Due to the lack of a public market for our common stock prior to the IPO and lack of company-specific historical implied volatility data, we base our computations of expected volatility on the historical volatility of a representative group of public companies with similar characteristics of the Company, including stage of development and industry focus. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. We generally use the simplified method as prescribed by the SEC Staff Accounting Bulletin Topic 14,Share-Based Payment, to estimate the expected term for stock options, whereby, the expected term equals the midpoint of the weighted average remaining time to vest, vesting period and the contractual term of the options due to our lack of historical exercise data. For certain options granted out-of-the-money, our best estimate of the expected term is the contractual term of the award. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as we have never paid dividends and have no current plans to pay any dividends on our common stock. The assumptions used in calculating the fair value of share-based awards represent our best estimates and involve inherent uncertainties and the application of significant judgment.
Previous wording
We analyze all financial instruments with features of both liabilities and equity under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 480, (“ASC 480”),Distinguishing Liabilities from Equity and FASB ASC Topic No. 815,Derivatives and Hedging (“ASC 815”). Derivative liabilities are adjusted to reflect fair value at each reporting period, with any increase or decrease in the fair value recorded in the results of operations (other income/expense) as change in fair value of derivative liabilities. We use a probability-weighted discounted cash flow model to estimate the fair value of these instruments.
Current wording
We analyze all financial instruments with features of both liabilities and equity under ASC Topic 480,Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 815,Derivatives and Hedging (“ASC 815”). The classification of derivative financial instruments is reassessed each reporting period. Derivative liabilities are adjusted to reflect fair value at each reporting period, with any increase or decrease in the fair value recorded in the results of operations (other income/expense) as change in fair value of derivative liabilities. As of March 31, 2025, derivative liabilities consist of contingent payment arrangements. We use a probability-weighted expected return method to determine the fair value of these instruments.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
Product Revenues - net of Discounts and Rebates
Previous report — wording carried elsewhere
Our product revenues - net of discounts and rebates were $365,939 for the nine months ended September 30, 2024, as compared to $127,892 for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, our U.S. pharmaceutical distributor accounted for 94% of our total net product sales and Kodatef sales to our Australian distributor accounted for 6% of total net product sales (100% and 0% for the nine months ended September 30, 2023, respectively). Domestic, commercial product sales are primarily driving increased sales volume during the period.
Previous report — wording carried elsewhere
We offer discounts and rebates to the civilian U.S. supply chain distribution channel. We record sales when our 3PL partner transfers boxes into their title model. Discounts and rebates offered to our 3PL partner amount to 12% along with a $5,500 fixed monthly fee that started in 2023. The product is then transferred usually to one of the three large U.S. pharmaceutical distributors where rebates are 10%. Lastly, we have relationships with several large PBMs that allow patients to purchase Arakoda at a discount. The rebate associated with PBMs ranges from 30% to 41.25% depending on the amount of coverage provided. For the nine months ended September 30, 2024, discounts and rebates were $324,486 compared to $124,090 for the nine months ended September 30, 2023.
Previous report — wording carried elsewhere
Arakoda entered the U.S. civilian supply chain in the third quarter of 2019. For the nine months ended September 30, 2023, 1,059 boxes were sold to pharmacies and dispensaries. Sales volume increased by 244% to 3,642 boxes sold to pharmacies and dispensaries for the nine months ended September 30, 2024. Based on IQVIA data, this growth in sales volume appears to be driven primarily by organic growth in the Lyme disease community, whose prescribers utilize Arakoda for treatment of babesiosis. The sales volume growth to pharmacies and dispensaries ties more closely to the growth in discounts and rebates previously discussed than our reported sales to our 3PL.
Previous report — wording carried elsewhere
Arakoda sales volume is also showing signs of increase in Europe. We first shipped Arakoda to our distributor Scandinavian Biopharma in September 2022. For the nine months ended September 30, 2024, they reported 109 boxes sold (none the nine months ended September 30, 2023). According to our distributor this is due to greater interest in treating babesiosis.
Previous report — wording carried elsewhere
Change in Fair Value of Derivative Liabilities