Dermata Therapeutics, Inc.

Previous wording

The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipate in our forward-looking statements. Please see “Risk Factors” for additional risks which could adversely impact our business and financial performance.

Current wording

The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements. Please see “Risk Factors” for additional risks which could adversely impact our business and financial performance.

Previous wording

Our two product candidates, XYNGARI™ (formerly DMT310) and DMT410, both incorporate our proprietary, multifaceted,Spongillatechnology to topically treat a variety of dermatological conditions. OurSpongilla technology is derived from a naturally grown freshwater sponge,Spongilla lacustrisorSpongilla, which is processed into a powder that is mixed with a fluidizing agent immediately prior to application to form an easily applicable paste.Spongillais a unique freshwater sponge that only grows in commercial quantities in select regions of the world and under specific environmental conditions, all of which give it its distinctive anti-microbial, anti-inflammatory, and mechanical properties. The combination of these environmental conditions, the proprietary harvesting protocols developed with our exclusive supplier, and our post-harvest processing procedures produce a pharmaceutical product candidate that optimizes the mechanical components as well as the chemical components of the sponge to create a product candidate with multiple mechanisms of action for the treatment of inflammatory skin diseases and aesthetic applications.

Current wording

We view this shift in consumer preferences as a significant benefit for the research we have completed to date. Over the past several years we have gained substantial knowledge of various dermatology diseases and what seems to work in treating these diseases. We plan to leverage this knowledge in creating a whole product line of skin care treatments that patients can access directly. We plan to launch our first product in the middle of 2026 which will consist of a once-weekly, topical acne kit that can be used by patients with mild, moderate, or severe acne. We have gained tremendous understanding of ourSpongillatechnology over the past 8 years and deeply understand the benefits of it being combined with OTC monograph active ingredients to topically treat a variety of dermatological conditions. OurSpongilla technology is derived from a naturally grown freshwater sponge,Spongilla lacustrisorSpongilla, which is processed into a fine, purified powder and mixed with a fluidizing agent immediately prior to application by the patient.Spongillais a unique freshwater sponge that only grows in commercial quantities in select regions of the world and under specific environmental conditions, all of which give ourSpongilla technology its distinctive anti-microbial, anti-inflammatory, and mechanical properties. The combination of these environmental conditions, the proprietary harvesting protocols developed with our exclusive supplier, and our post-harvest processing procedures produce an ingredient that optimizes the mechanical components as well as the organic components, while eliminating any harmful bacteria that could be found in a freshwater sponge. We believe these unique components used in tandem with an OTC monograph active ingredient could produce a superior OTC product candidate unlike anything currently on the market. We plan for our product candidates to have multiple mechanisms of action for the treatment of skin diseases and conditions.

Previous wording

Our lead product candidate, XYNGARI™, is intended to utilize ourSpongilla technology for the once weekly treatment of a variety of skin diseases, with our initial focus being the treatment of acne, which has a U.S. market size of approximately 30 million patients seeking treatment. In March 2025, we announced that our XYNGARI™ Phase 3SpongillaTreatment ofAcneResearch (STAR-1) trial topline data met all co-primary endpoints at week 12. XYNGARI™ demonstrated highly statistically significant difference compared with placebo for all primary endpoints after 12 weeks of once weekly treatments. XYNGARI™ patients saw a rapid and sustained therapeutics treatment effect in absolute reduction in inflammatory lesion counts with a -11.4 lesion reduction at week four, -14.7 lesions reduction at week 8, and -16.8 lesion reduction at week 12 compared to -8.6, -10.9, and -13.1 lesion reduction for placebo at weeks 4, 8, and 12, respectively. XYNGARI™ patients also saw a rapid and sustained therapeutics treatment effect in absolute reduction in noninflammatory lesion counts with a -12.4 lesion reduction at week four, -15 lesions reduction at week 8, and -17.3 lesion reduction at week 12 compared to -8.8, -10.4, and -12.4 lesion reduction for placebo at weeks 4, 8, and 12, respectively. Lastly, we observed a sustained therapeutics treatment effect in the investigator’s global assessment of acne with a 11.9% of XYNGARI™ patients being considered a responder at week four, 21.6% of XYNGARI™ patients being considered a responder at week 8, and 29.4% of XYNGARI™ patients being considered a responder at week 12 compared to 6.2%, 8.0%, and 15.2% of placebo patients being considered a responder at weeks 4, 8, and 12, respectively. The Phase 3 STAR-1 trial was double-blind, randomized, placebo controlled, and enrolled 520 patients with moderate-to-severe acne, age 9 years or older across sites in the United States and Latin America. The co-primary endpoints included absolute reduction in inflammatory and noninflammatory lesion counts and the improvement in investigators global assessment (IGA) of acne. Patients were treated once a week for 12 weeks with either XYNGARI™ or placebo and were evaluated monthly. We are currently evaluating the full data set from the STAR-1 trial. As requested by the FDA, we would have to complete a second Phase 3 trial, STAR-2, which would be followed by an extension study to follow patients for a 12-month total treatment period. The STAR-2 trial would include a near identical trial design to the STAR-1 trial and we are currently evaluating next steps as it relates to the XYNGARI™ Phase 3 STAR-2 clinical trial. Previously XYNGARI™ has shown its ability to treat the multiple causes of acne in a Phase 2b study where we initially saw a 45% reduction in inflammatory lesions after four treatments, with XYNGARI™ achieving statistically significant improvements at all time points for all three primary endpoints throughout the study (reduction in inflam…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Prior to our strategic switch to develop and distribute OTC pharmaceutical products, our U.S. Food and Drug Administration (“FDA”) investigational new drug applicant, XYNGARI™, was intended to utilize ourSpongilla technology as a stand-alone product for the once weekly treatment of a variety of skin diseases, with our initial focus being the treatment of moderate to severe acne. In March 2025, we announced that our XYNGARI™ Phase 3SpongillaTreatment ofAcneResearch (“STAR-1”) trial topline data met all co-primary endpoints at week 12. XYNGARI™ demonstrated highly statistically significant difference compared with placebo for all primary endpoints after 12 weeks of once weekly treatments. XYNGARI™ patients saw a rapid and sustained therapeutics treatment effect in absolute reduction in inflammatory lesion counts with a -11.4 lesion reduction at week four, -14.7 lesion reduction at week 8, and -16.8 lesion reduction at week 12 compared to -8.6, -10.9, and -13.1 lesion reduction for placebo at weeks 4, 8, and 12, respectively. XYNGARI™ patients also saw a rapid and sustained therapeutics treatment effect in absolute reduction in noninflammatory lesion counts with a -12.4 lesion reduction at week four, -15 lesions reduction at week 8, and -17.3 lesion reduction at week 12 compared to -8.8, -10.4, and -12.4 lesion reduction for placebo at weeks 4, 8, and 12, respectively. Lastly, we observed a sustained therapeutics treatment effect as measured in the investigator’s global assessment (IGA) of acne scale. IGA is measured on a 5-point scale (0-4), with 4 being severe, 3 being moderate, 2 being mild, 1 being almost clear and 0 being clear. To be considered a responder, patients had to achieve a score of 0 (clear) or 1 (almost clear). There were 11.9% of XYNGARI™ patients that were considered a responder at week four, 21.6% of XYNGARI™ patients being considered a responder at week 8, and 29.4% of XYNGARI™ patients being considered a responder at week 12 compared to 6.2%, 8.0%, and 15.2% of placebo patients being considered a responder at weeks 4, 8, and 12, respectively. In fact, approximately 80% of the XYNGARI™ patients had at least a 1-grade change in their acne at the end of the study. The Phase 3 STAR-1 trial was double-blind, randomized, placebo controlled, and enrolled 520 patients with moderate-to-severe acne, age 9 years or older across sites in the United States and Latin America. The co-primary endpoints included absolute reduction in inflammatory and noninflammatory lesion counts and the improvement in investigators global assessment (“IGA”) of acne. Patients were treated once a week for 12 weeks with either XYNGARI™ or placebo and were evaluated monthly. While we saw positive results from the STAR-1 study, after evaluating the prescription dermatology market and regulatory hurdles for approval, we made the strategic decision to withdraw our investigational new drug application (“IND”) for XYNGARI™ for the treatment of acne. We believe this str…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

XYNGARI™ consists of two grams of powder processed from the naturally grown freshwater sponge,Spongilla lacustris. The patient mixes the powder with a fluidizing agent (3% hydrogen peroxide) immediately prior to application to form an easy-to-apply paste. The paste is applied like a mud mask and is left on the skin for approximately ten to fifteen minutes, after which time it is washed off with water. Due to the unique combination of XYNGARI™’s mechanical components and chemical components, and based on our Phase 2 acne data, we believe patients will only need to apply XYNGARI™ once weekly to produce the desired treatment effect. The mechanical components of theSpongillapowder consist of many microscopic siliceous, needle-like spicules that, when massaged into the skin, penetrate the stratum corneum (the skin’s outermost protective layer) and create microchannels into the dermis where pro-inflammatory cytokines and bacteria reside. We believe that the penetration of the spicules also leads to the opening of microchannels, which allow oxygen to enter pilosebaceous glands, helping to kill C.acnes, which grow in an anaerobic (without oxygen) environment (C. acnesare the bacteria that cause inflammatory lesions in acne patients). The spicules also cause turnover of the top layer of dead skin, thereby increasing collagen production resulting in skin rejuvenation. Additionally, we believe the newly created microchannels provide a conduit for XYNGARI™’s naturally occurring chemical compounds to be delivered to the dermis and pilosebaceous glands, helping to kill theC. acnes and reduce inflammation. In addition to anti-microbial compounds, XYNGARI™ also appears to have anti-inflammatory chemical compounds, as demonstrated duringin vitro experiments, that inhibit inflammation through the reduction ofC.acnesstimulated IL-8 production and by inhibiting IL-17A and IL-17F expression in human cell lines. Also, duringin vitro studies of XYNGARI™’s organic compounds, we observed the inhibition of the lipogenesis of sebocytes, which may translate to a reduction in sebum (an oily and waxy substance produced by the human body’s sebaceous glands) production and the oiliness of the skin in patients, which was observed by a number of clinical investigators in our Phase 2 acne studies. We believe the combination of these biological and mechanical effects could be important factors in treating multiple inflammatory skin diseases, as seen in our clinical trials.

Current wording

We are currently finalizing the components and container closure for our initial acne kit, as well as completing the brand identity, with an expected launch in the middle of 2026. The acne kit will be a topical product applied once weekly by patients at home or in a dermatology or esthetician’s office. The product will utilize one active ingredient from FDA’s OTC acne monograph, which consist of OTC drugs that are generally recognized by FDA as safe and effective, in predefined doses, for specific therapeutic categories. These OTC active ingredients can be used alone or in combination with other ingredients and marketed as a treatment for various skin diseases or conditions, like acne. For our initial acne kit we plan on incorporating salicylic acid as the active ingredient in combination with our uniqueSpongilla technology to distribute a novel acne treatment kit we believe is unlike anything currently on the market. Based on years of testing we have learned that our Spongilla technology has a unique combination of mechanical components and chemical components, that provide unique benefits against various skin conditions. The mechanical components of theSpongillapowder consist of many microscopic siliceous, needle-like spicules that, when massaged into the skin, penetrate the stratum corneum (the skin’s outermost protective layer) and create microchannels into the dermis where pro-inflammatory cytokines and bacteria reside. We believe that the penetration of the spicules also leads to the opening of microchannels, which allow oxygen to enter pilosebaceous glands, helping to kill C.acnes, which grow in an anaerobic (without oxygen) environment (C. acnesare the bacteria that cause inflammatory lesions in acne patients). The spicules also cause turnover of the top layer of dead skin, thereby increasing collagen production resulting in skin rejuvenation. Additionally, we believe the newly created microchannels provide a conduit forSpongilla powder’s naturally occurring chemical compounds to be delivered to the dermis and pilosebaceous glands, helping to kill theC. acnesand reduce inflammation. In addition to anti-microbial compounds, theSpongilla powder also appears to have anti-inflammatory chemical compounds, as demonstrated duringin vitro experiments, that inhibit inflammation through the reduction ofC.acnesstimulated IL-8 production and by inhibiting IL-17A and IL-17F expression in human cell lines. Also, duringin vitro studies ofSpongilla powder’s organic compounds, we observed the inhibition of the lipogenesis of sebocytes, which may translate to a reduction in sebum (an oily and waxy substance produced by the human body’s sebaceous glands) production and the oiliness of the skin in patients. We believe the combination of an FDA approved OTC active ingredient with the multiple biological and mechanical effects of ourSpongilla technology could be important factors in treating multiple inflammatory skin diseases.

Previous wording

We have a limited operating history. Since our inception, our operations have focused on developing XYNGARI™ and DMT410, organizing and staffing our company, raising capital, establishing our supply chain and manufacturing processes, further characterizing the multiple mechanisms of action of ourSpongilla technology, building an intellectual property portfolio, and conducting non-clinical and clinical trials. We do not have any product candidates approved for marketing and have not generated any revenue from product sales. We have funded our operations primarily through the sale of our equity securities and debt securities. Since inception, we have raised an aggregate of approximately $77.5 million of gross proceeds from the sale of our debt and equity securities.

Current wording

We have a limited operating history. Since our inception, our operations have focused on developing XYNGARI™ and DMT410, our topical botulinum toxin program, organizing and staffing our company, raising capital, establishing our supply chain and manufacturing processes, further characterizing the multiple mechanisms of action of ourSpongilla technology, building an intellectual property portfolio, and conducting non-clinical and clinical trials. We do not have any product candidates approved for marketing and have not generated any revenue from product sales. We have funded our operations primarily through the sale of our equity securities and debt securities. Since inception, we have raised an aggregate of approximately $77.5 million of gross proceeds from the sale of our debt and equity securities.

Previous wording

We have not generated any revenue to date and have incurred significant operating losses. Our net losses were $4.0 million and $6.0 million for the six months ended June 30, 2025, and 2024, respectively. As of June 30, 2025, we had an accumulated deficit of $69.7 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate that our expenses will increase significantly in connection with our future activities, as we:

Current wording

We have not generated any revenue to date and have incurred significant operating losses. Our net losses were $5.7 million and $9.1 million for the nine months ended September 30, 2025, and 2024, respectively. As of September 30, 2025, we had an accumulated deficit of $71.4 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate that our expenses will increase significantly in connection with our future activities, as we:

Previous wording

In June 2024, we entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“HCW”), as sales agent, pursuant to which we may offer and sell, from time to time through HCW, shares of our common stock for aggregate proceeds of up to $1,662,761 (upon the terms and subject to the conditions and limitations set forth in the ATM Agreement). During the six months ended June 30, 2025, we sold no shares of common stock under the ATM Agreement and have no capacity to sell shares pursuant to the ATM Agreement remaining.

Current wording

In June 2024, we entered into the ATM Agreement with H.C. Wainwright & Co., LLC , as Sales Agent, pursuant to which we may offer and sell, from time to time through Sales Agent, shares of our Common Stock for aggregate proceeds of up to $1,662,761 (upon the terms and subject to the conditions and limitations set forth in the ATM Agreement). In 2024, we sold 55,001 shares of Common Stock under the ATM Agreement, for net proceeds of $1.4 million after deducting $0.2 million of compensation to Sales Agent and other administration fees. During the nine months ended September 30, 2025, we sold no shares of Common Stock under the ATM Agreement.

Previous wording

We have based our management’s discussion and analysis of financial condition and results of operations on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those related to clinical development expenses. We base our estimates on historical experience and on various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Current wording

We have based our management’s discussion and analysis of financial condition and results of operations on our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those related to clinical development expenses. We base our estimates on historical experience and on various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Previous wording

We perform an assessment of warrants upon issuance to determine their proper classification in the financial statements based upon the warrant’s specific terms, in accordance with the authoritative guidance provided in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480,Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815-40,Derivatives and Hedging – Contracts in Entity’s Own Equity (“ASC 815-40”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480 and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed in our own Common Stock and whether the warrant holders could potentially require cash settlement of the warrants.

Current wording

We perform an assessment of warrants upon issuance to determine their proper classification in the financial statements based upon the warrant’s specific terms, in accordance with the authoritative guidance provided in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480,Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815-40,Derivatives and Hedging – Contracts in Entity’s Own Equity (“ASC 815-40”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480 and whether the warrants meet all of the requirements for equity classification under ASC 815-40, including whether the warrants are indexed in our own Common Stock and whether the warrant holders could potentially require cash settlement of the warrants.

Previous wording

Our results of operations have fluctuated significantly from period to period in the past and are likely to continue to do so in the future. We anticipate that our quarterly and annual results of operations will be impacted for the foreseeable future by several factors, including the progress and timing of expenditures related to the development of our product candidates. Due to these fluctuations, we believe that the period-to-period comparisons of our operating results are not a good indication of our future performance.

Current wording

Our results of operations have fluctuated significantly from period to period in the past and are likely to continue to do so in the future. We anticipate that our quarterly and annual results of operations will be impacted for the foreseeable future by several factors, including the progress and timing of expenditures related to the development and commercialization of our product candidates. Due to these fluctuations, we believe that the period-to-period comparisons of our operating results are not a good indication of our future performance.

Previous wording

Research and development expenses decreased by $1.4 million from $2.0 million for the three months ended June 30, 2024, to $0.6 million for the three months ended June 30, 2025. The decrease in research and development expenses resulted from $1.6 million of decreased clinical expenses from the XYNGARI™ STAR-1 acne study, which completed enrollment during the fourth quarter of 2024. The decrease in clinical expense was partially offset by $0.1 million of increased chemistry, manufacturing, and controls, or CMC, expenses and $0.1 million of increased personnel costs.

Current wording

Research and development expenses decreased by $1.9 million from $2.4 million for the three months ended September 30, 2024, to $0.5 million for the three months ended September 30, 2025. The decrease in research and development expenses resulted from $1.9 million of decreased clinical expenses from the XYNGARI™ STAR-1 acne study, which completed enrollment during the fourth quarter of 2024 and completed expenses during the second quarter of 2025.

Previous wording

General and administrative expenses increased by $0.3 million from $0.9 million for the three months ended June 30, 2024, to $1.2 million for the three months ended June 30, 2025. The increase in general and administrative expense was result of $0.2 million of increased public company compliance costs as well as $0.1 million of increased personnel costs.

Current wording

Selling, general and administrative expenses increased by $0.4 million from $0.8 million for the three months ended September 30, 2024, to $1.3 million for the three months ended September 30, 2025. The increase in selling, general and administrative expense was the result of $0.5 million of increased marketing expenses, as we are preparing for our first product launch in mid-2026, partially offset by $0.1 million of decreased audit fees.

Previous wording

Research and development expenses decreased by $1.7 million from $3.6 million for the six months ended June 30, 2024, to $1.9 million for the six months ended June 30, 2025. The decrease in research and development expenses resulted from $1.7 million of decreased clinical expenses from the XYNGARI™ STAR-1 acne study, which completed enrollment during the fourth quarter of 2024.

Current wording

Research and development expenses decreased by $3.6 million from $6.0 million for the nine months ended September 30, 2024, to $2.4 million for the nine months ended September 30, 2025. The decrease in research and development expenses resulted from approximately $3.6 million of decreased clinical expenses from the XYNGARI™ STAR-1 acne study, which completed enrollment during the fourth quarter of 2024.

Previous wording

Cash used in operations of $4.6 million for the six months ended June 30, 2025, was the result of the net loss of $4.0 million and decreases in accounts payable and accrued expenses and other current liabilities of $0.9 million, partially offset by the decrease in prepaid expenses and other current assets of $0.2 million and non-cash stock-based compensation of $0.1 million.

Current wording

Cash used in operations of $6.4 million for the nine months ended September 30, 2025, was the result of the net loss of $5.7 million and decreases in accounts payable and accrued expenses and other current liabilities of $0.8 million, partially offset by non-cash stock-based compensation of $0.1 million.

Previous wording

Cash used in operations of $4.8 million for the six months ended June 30, 2024, was the result of the net loss of $6.0 million and a decrease in accrued and other current liabilities of $0.2 million, offset by increases in non-cash stock-based compensation of $0.6 million, an increase in accounts payable of $0.4 million, and a decrease in prepaid expenses and other current assets of $0.4 million.

Current wording

Cash used in operations of $8.2 million for the nine months ended September 30, 2024, was the result of the net loss of $9.1 million, offset by increases in non-cash stock-based compensation of $0.6 million and increases in accrued expenses of $0.3 million.

Previous wording

Cash provided by financing activities of $7.9 million for the six months ended June 30, 2025, was primarily the result of the January 2025 PIPE financing which raised net proceeds of approximately $2.2 million, and the March 2025 Inducement financing which raised net proceeds of $5.7 million.

Current wording

Cash provided by financing activities of $7.9 million for the nine months ended September 30, 2025, was primarily the result of the January 2025 PIPE financing which raised net proceeds of approximately $2.2 million, and the March 2025 Inducement financing which raised net proceeds of $5.7 million.

Previous wording

Since our inception, we have not generated any revenue or commercialized any products. As of June 30, 2025, our cash and cash equivalents totaled $6.5 million, and we had an accumulated deficit of $69.7 million. For the six months ended June 30, 2025, and the year ended December 31, 2024, we used cash of $4.6 million and approximately $11.1 million, respectively, in operations. We expect our cash resources to fund operations into the second quarter of 2026. We anticipate that we will continue to incur net losses for the foreseeable future.

Current wording

Since our inception, we have incurred net losses and have not generated any revenue. As of September 30, 2025, our cash and cash equivalents totaled $4.7 million, and we had an accumulated deficit of $71.4 million. For the nine months ended September 30, 2025, and the year ended December 31, 2024, we used cash of $6.4 million and approximately $11.1 million, respectively, in operations. We expect our cash resources to fund operations into the second quarter of 2026. We anticipate that we will continue to incur net losses for the foreseeable future, or until product candidate revenues exceed operating expenses, which timing is uncertain at this time.

Previous wording

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, clinical costs, external research and development services, legal and other regulatory expenses, and administrative and overhead costs. Our future funding requirements will be heavily determined by the resources needed to support the development of our drug candidates.

Current wording

We are focused on preparing for the launch of our first commercial OTC product, a monthly kit containing four weekly acne treatments, which is planned for mid-2026, based on our current operating plan and anticipated expenditures associated with formulation and pre-commercial activities. We anticipate we will incur net losses for the next several years until we can generate sufficient operating income from our OTC products. Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, marketing, external manufacturing, legal and other regulatory expenses, and administrative and overhead costs. Our future funding requirements will be heavily determined by the potential income generated from revenues related to our OTC product candidates. In addition, we may seek opportunities to identify, acquire or in license and develop additional drug candidates, potentially build commercial capabilities, and expand our corporate infrastructure.

Previous wording

We believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into the second quarter of 2026. We have based this estimate of cash runway on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We anticipate that we will continue to incur net losses for the foreseeable future. These factors raise substantial doubt about our ability to continue as a going concern for the one-year period following the date that these financial statements were issued. We will require additional capital to complete the Phase 3 studies for XYNGARI™ for the treatment of acne, continue development of XYNGARI™, and to pursue in-licenses or acquisitions of other drug candidates. Therefore, based on our recurring losses from operations incurred since inception, expectation of continuing operating losses for the foreseeable future, and the need to raise additional capital to finance future operations, we are developing plans to mitigate this risk, which may consist of raising additional capital through some combination of equity or debt financings, and/or potentially new collaborations, business transactions, and reducing cash expenditures. If we are not able to secure adequate additional funding, we may be forced to make significant reductions in our operations and the pursuit of our growth strategy. In that event, we may have to delay, scale back, or eliminate some or all of our research and development programs and activities which could adversely affect our business prospects, or we may be unable to continue operations.

Current wording

Based on our recurring losses from operations incurred since inception, expectation of continuing operating losses for the foreseeable future, and the need to raise additional capital to finance future operations, we are developing plans to mitigate this risk, which may consist of raising additional capital through some combination of equity or debt financings, and/or potentially new collaborations, business transactions, and reducing cash expenditures. If we are not able to secure adequate additional funding, we may be forced to make significant reductions in our operations and the pursuit of our growth strategy. In that event, we may have to delay, scale back, or eliminate some or all of our research and development programs and activities which could adversely affect our business prospects, or we may be unable to continue operations.

Previous wording

Because of the numerous risks and uncertainties associated with research, development, and commercialization of pharmaceutical drugs, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on many factors, including:

Current wording

Our future funding requirements will depend on many factors, including:

Previous wording

To continue to grow our business over the longer term, we plan to commit substantial resources to research and development, clinical trials of our product candidates, and other operations and potential product acquisitions and in licensing. We have evaluated and expect to continue to evaluate a wide array of strategic transactions as part of our plan to acquire or in license and develop additional products and product candidates to augment our internal development pipeline. Strategic transaction opportunities that we may pursue could materially affect our liquidity and capital resources and may require us to incur additional indebtedness, seek equity capital or both. In addition, we may pursue development, acquisition or in licensing of approved or development products in new or existing therapeutic areas or continue the expansion of our existing operations. Accordingly, we expect to continue to opportunistically seek access to additional capital to license or acquire additional products, product candidates or companies to expand our operations, or for general corporate purposes. Strategic transactions may require us to raise additional capital through one or more public or private debt or equity financings or could be structured as a collaboration or partnering arrangement. We have no arrangements, agreements, or understandings in place at the present time to enter into any acquisition, in licensing or similar strategic business transaction.

Current wording

To continue to grow our business over the longer term, we plan to commit substantial resources to marketing our first OTC product. Additionally, we have evaluated and expect to continue to evaluate a wide array of strategic transactions as part of our plan to acquire or in license and develop additional products and product candidates to augment our internal development pipeline. Strategic transaction opportunities that we may pursue could materially affect our liquidity and capital resources and may require us to incur additional indebtedness, seek equity capital or both. In addition, we may pursue development, acquisition or in licensing of approved or development products in new or existing therapeutic areas or continue the expansion of our existing operations. Accordingly, we expect to continue to opportunistically seek access to additional capital to license or acquire additional products, product candidates or companies to expand our operations, or for general corporate purposes. Strategic transactions may require us to raise additional capital through one or more public or private debt or equity financings or could be structured as a collaboration or partnering arrangement. We have no arrangements, agreements, or understandings in place at the present time to enter into any acquisition, in licensing or similar strategic business transaction.

Previous wording

We enter into contracts in the normal course of business with contract research organizations for clinical trials, preclinical research studies and testing, manufacturing and other services and products for operating purposes. These contracts generally provide for termination upon notice, and therefore we believe that our non-cancelable obligations under these agreements are not material.

Current wording

We enter into contracts in the normal course of business with contract research organizations for research studies and stability testing, contract manufacturing organizations for manufacturing and other services, agencies for branding, marketing, and product design for our first product launch, expected in mid-2026, and others for operating purposes. These contracts generally provide for termination upon notice, and therefore we believe that our non-cancelable obligations under these agreements are not material.