Hepion Pharmaceuticals, Inc.
For the period ended Dec 31, 2025. Filed Mar 12, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 12, 2026
HEPA$0.07-17.7%Stored close · as of Jul 8, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-04-08.
0001641172-25-003250
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-12.
0001493152-26-009755
Item 7. 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 69 previous paragraphs and 51 current paragraphs.
32 unchanged; 13 reworded; 6 added; 24 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 3 previous and 3 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 (6)
Current report
On May 9, 2025, we entered into a license agreement (the “License Agreement”) with New Day Diagnostics LLC (“New Day”) pursuant to which we in-licensed certain diagnostic tests for celiac disease, respiratory multiplex (Covid/Influenza A/B and RSV), helicobacter pylori (“H. pylori”) and hepatocellular carcinoma (“HCC”). The celiac, respiratory multiplex and H. pylori tests have CE marks and are eligible to be sold in the European Union (“EU”) and certain eligible markets that accept the CE mark, with the notable exception of the United States at the present time.
Current report
Pursuant to the License Agreement, we paid $525,000 in cash to New Day along with $200,000 in shares of our common stock. In addition, we have agreed to pay New Day up to $17.15 million upon achievement of certain regulatory, sales and reimbursement milestones. In addition, we will pay New Day royalty rates in the upper single to low double digits based on net sales.
Current report
Asset impairment loss for the years ended December 31, 2025 and 2024 were $0.4 million and $0 million, respectively. The increase of $0.4 million was primarily impairment expense related to the asset acquired in the license agreement. We tested the asset for impairment during the reporting period, noting there were triggering events related to delayed timing to market resulting in an adverse effect on estimated cashflow over the next two years. Given that the license agreement requires both parties to agree to renewal after the initial two years, we projected the estimated cashflows for the first two years for the assets available for sales in eligible markets, noting the projected cashflow will not be enough to recover the allocated cost in the first two years of the license agreement, resulting in an impairment loss.
Current report
Net cash provided by financing activities was $4.8 million for the year ended December 31, 2025, due primarily to $8.3 million proceeds received from common stock and warrant, net of issuance costs offset by $3.4 million payment on notes payable.
Current report
CRITICAL ACCOUNTING ESTIMATE
Current report
Fair Value of Derivative Financial Instruments- Warrants
Removed paragraphs (24)
Previous report
We have completed a number of Phase 1 and Phase 2 clinical trials. In May 2023, we announced that our Phase 2a study (“ALTITUDE-NASH”) met its primary endpoint by demonstrating improved liver function and was well tolerated after four months of treatment with once daily oral rencofilstat administered to NASH subjects with stage 3 or greater fibrosis. All additional secondary efficacy and safety endpoints were also met. These observations provide further evidence that builds on previous findings from a shorter 28-day Phase 2a (“AMBITION”) trial. Taken together, the AMBITION and ALTITUDE-NASH trials reinforced rencofilstat’s direct antifibrotic mode of action and increase our confidence level that we anticipated observing fibrosis reductions in our 12-month Phase 2b (“ASCEND-NASH”) clinical trial.
Previous report
In June 2023, we announced that the Data and Safety Monitoring Board (“DSMB”) met to review the current data for the ASCEND-NASH 2b study and issued a “study may proceed without modification” clearance. This, the first planned DSMB meeting, occurred on schedule, and all labs, electrocardiogram’s, adverse events, and protocol deviations were reviewed, focusing on any potential safety signals from the placebo-controlled trial.
Previous report
In December 2023, the board of directors approved a strategic restructuring plan to preserve capital by reducing operating costs. We incurred a one-time restructuring charge of approximately $0.7 million in the fourth quarter of 2023. Additionally, we initiated a process to explore a range of strategic and financing alternatives focused on maximizing stockholder value within the current financial environment and NASH drug development landscape.
Previous report
For the year ended December 31, 2023, we incurred an impairment to our in-process research and development asset of $3.2 million. Our in-process research and development asset was impaired in 2023 due to the slowdown of our Phase2b study, the delayed timeline of our clinical trials and our removal of Hepatitis B as a second indication to focus solely on Rencofilstat.
Previous report
CRITICAL ACCOUNTING ESTIMATES
Previous report
Fair Value of Financial Instruments
Previous report
Financial instruments consist of cash, accounts payable, contingent consideration and derivative financial instruments. These financial instruments are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature, except for contingent consideration and derivatives. We record contingent consideration and our derivative financial instruments at fair value at the end of each reporting period.
Previous report
Contingent consideration was related to the acquisition of Ciclofilin and recorded on June 10, 2016. The contingent consideration represented the acquisition date fair value of potential future payments, to be paid in cash, upon the achievement of certain milestones and in 2016 was estimated based on a probability-weighted discounted cash flow model. For the year ended December 31, 2023, significant assumptions used to calculate the fair value of the contingent consideration included the discount rate, projected milestone achievement dates, and the probability of success. For the year ended December 31, 2024, the fair value of the contingent consideration is zero as management concluded the milestones will not be achieved.
Previous report
Income Taxes
Previous report
We account for income taxes under the asset and liability method. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as for operating loss and tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect to recover or settle those temporary differences. We recognize the effect of a change in tax rates on deferred tax assets and liabilities in the results of operations in the period that includes the enactment date. We reduce the measurement of a deferred tax asset, if necessary, by a valuation allowance if it is more likely than not that we will not realize some or all of the deferred tax asset. We account for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon technical merits, it is “more-likely-than-not” that the position will be sustained upon examination. Potential interest and penalties associated with unrecognized tax positions are recognized in income tax expense.
Previous report
We continue to maintain a full valuation allowance for our U.S and foreign net deferred tax assets. Income tax expense for the years ended December 31, 2024 and 2023 are related to our foreign operations. For the year ended December 31, 2024, we received $3.0 million in proceeds from sales of our state NOLs related to prior years under the State of New Jersey’s Technology Business Tax Certificate Transfer Program.
Previous report
Contingencies
Previous report
In the normal course of business, we are subject to loss contingencies, such as legal proceedings and claims arising out of our business that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, product and environmental liability, and tax matters. In accordance with ASC Topic 450, Accounting for Contingencies, (“ASC 450”), we record accruals for such loss contingencies when it is probable that a liability will be incurred, and the amount of loss can be reasonably estimated. In accordance with this guidance, we do not recognize gain contingencies until realized.
Previous report
Research and Development
Previous report
Research and development costs, which include expenditures in connection with an in-house research and development laboratory, salaries and staff costs, application and filing for regulatory approval of proposed products, purchased in-process research and development, license costs, regulatory and scientific consulting fees, as well as contract research, insurance and FDA consultants, are accounted for in accordance with ASC Topic 730, Research and Development (“ASC 730”). Also, as prescribed by this guidance, patent filing and maintenance expenses are considered legal in nature and therefore classified as general and administrative expense, if any.
Previous report
We do not currently have any commercial biopharmaceutical products and do not expect to have such for several years, if at all. Accordingly, our research and development costs are expensed as incurred. While certain of our research and development costs may have future benefits, our policy of expensing all research and development expenditures is predicated on the fact that we have no history of successful commercialization of product candidates to base any estimate of the number of future periods that would be benefited.
Previous report
Also as prescribed by ASC 730, non-refundable advance payments for goods or services that will be used or rendered for future research and development activities should be deferred and capitalized. As the related goods are delivered or the services are performed, or when the goods or services are no longer expected to be provided, the deferred amounts would be recognized as an expense. At December 31, 2024 and 2023, we had prepaid research and development costs of $0 million and $2.5 million, respectively.
Previous report
In-Process Research and Development
Previous report
In-Process Research and Development (“IPR&D”) acquired in a business combination is capitalized as indefinite-lived assets on our consolidated balance sheets at the acquisition-date fair value. Once the project is completed, the carrying value of the IPR&D is reclassified to other intangible assets, net and is amortized over the estimated useful life of the asset. Post-acquisition research and development expenses related to the IPR&D projects are expensed as incurred. The projected discounted cash flow models used to estimate the fair values of our IPR&D assets, acquired in connection with the Ciclofilin acquisition, reflect significant assumptions regarding the estimates a market participant would make in order to evaluate a drug development asset, including: (i) probability of successfully completing clinical trials and obtaining regulatory approval; (ii) market size, market growth projections, and market share; (iii) estimates regarding the timing of and the expected costs to advance clinical programs to commercialization; (iv) estimates of future cash flows from potential product sales; and (v) a discount rate. These assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy. The use of different inputs and assumptions could increase or decrease our estimated discounted future cash flows, the resulting estimated fair values and the amounts of related impairments, if any.
Previous report
The annual, or interim if (events or changes in circumstances indicate that it is more likely than not that the asset is impaired), IPR&D impairment test is performed by comparing the fair value of the asset to the asset’s carrying amount. When testing indefinite-lived intangibles for impairment, we may assess qualitative factors for its indefinite-lived intangibles to determine whether it is more likely than not that the asset is impaired. Alternatively, we may bypass this qualitative assessment for our indefinite-lived intangible asset and perform the quantitative impairment test that compares the fair value of the indefinite-lived intangible asset with the asset’s carrying amount. If IPR&D becomes impaired or is abandoned, the carrying value of the IPR&D is written down to the revised fair value with the related impairment charge recognized in the period in which the impairment occurs. If the carrying value of the asset becomes impaired as the result of unfavorable data from any ongoing or future clinical trial, changes in assumptions that negatively impact projected cash flows, or because of any other information regarding the prospects of successfully developing or commercializing our programs, we could incur significant charges in the period in which the impairment occurs.
Previous report
We concluded that during the three months ended December 31, 2023, our IPR&D asset was impaired due to the slowdown of our Phase 2b clinical trial delaying the potential approval of Rencofilstat, which also resulted in lower revenue and profit projections. We also discarded Hepatitis B as a second indication due to costs and to focus solely on NASH. The full $3.2 million IPR&D asset was impaired at December 31, 2023.
Previous report
Share-based payments
Previous report
ASC Topic 718,Compensation—Stock Compensation (“ASC 718”), requires companies to measure the cost of employee and non-employee services received in exchange for the award of equity instruments based on the estimated fair value of the award at the date of grant. The expense is to be recognized over the period during which an employee is required to provide services in exchange for the award. Generally, we issue stock options with only service-based vesting conditions and record the expense for awards using the straight-line method (see Note 9 to the consolidated financial statements). We account for awards granted to employees that are in excess of what is available to grant as a liability and is recorded at fair value each reporting period in the consolidated financial statements.
Previous report
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The estimated expected stock volatility is based on the historical volatility of our common stock. The expected term of stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that we have never paid cash dividends and do not expect to pay any cash dividends in the foreseeable future.
Reworded paragraphs (13)
Previous wording
We are a biopharmaceutical company headquartered in Morristown, New Jersey, that was previously focused on the development of drug therapy for treatment of chronic liver diseases. Our cyclophilin inhibitor, rencofilstat (formerly CRV431), was being developed to offer benefits to address multiple complex pathologies related to the progression of liver disease.
Current wording
We are a medical diagnostic company headquartered in Morristown, New Jersey, that was previously focused on the development of drug therapy for treatment of chronic liver diseases. Our cyclophilin inhibitor, rencofilstat (formerly CRV431), was being developed to offer benefits to address multiple complex pathologies related to the progression of liver disease.
Previous wording
From inception through December 31, 2024, we have an accumulated deficit of $237.8 million and we have not generated any revenue from operations. We expect to incur additional losses to perform further research and development activities and for ongoing administrative expenses, and do not currently have any commercial biopharmaceutical products. We do not expect to have such for several years, if at all.
Current wording
From inception through December 31, 2025, we have an accumulated deficit of $246.1 million, and we have not generated any revenue from operations. We expect to incur additional losses to perform further research and development activities and for ongoing administrative expenses, and do not currently have any commercial biopharmaceutical products. We do not expect to have such for several years, if at all.
Previous wording
Research and development expenses for the years ended December 31, 2024 and 2023 were $11.8 million and $35.6 million, respectively. The decrease of $23.8 million was primarily due to a $18.5 million decrease in clinical trial costs and drug development primarily for our phase 2b study, a $2.9 million decrease in employee compensation costs due to reduced headcounts and a $1.0 million decrease in stock-based compensation costs. Also, there is a decrease of $0.7 million due to the absence of the one-time restructuring charge related to the strategic restructuring plan implemented in Q4 2023.
Current wording
Research and development expenses for the years ended December 31, 2025 and 2024 were $0.4 million and $11.8 million, respectively. The decrease of $11.4 million was primarily due to a $10.6 million decrease in clinical trial costs and drug development primarily for our phase 2b study (which includes apartial offset of $0.4 million in expense related to purchased in-process research and development from the New Day asset acquisition), a $0.5 million decrease in employee compensation costs due to reduced headcounts and a $0.4 million decrease in consulting and outside services.
Previous wording
General and administrative expenses for the years ended December 31, 2024 and 2023 amounted to $7.5 million and $9.6 million, respectively. The decrease of $2.1 million is primarily due to a $1.4 million decrease in employee compensation costs, and a $0.7 million decrease in stock-based compensation costs.
Current wording
General and administrative expenses for the years ended December 31, 2025 and 2024 amounted to $3.3 million and $7.5 million, respectively. The decrease of $4.2 million is primarily due to a $0.7 million decrease in employee compensation costs, $0.8 million decrease in stock-based compensation costs, $0.4 million decrease in consulting and outside services, $1.7 million decrease in professional fees, $0.2 million in rent, $0.1 million decrease in software and support, and $0.1 million decrease in insurance expense.
Previous wording
We have no products approved for commercial sale. To date, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, undertaking preclinical studies and clinical trials of our product candidate. As a result, we are not profitable and have incurred losses in each period since our inception in 2013. As of December 31, 2024, we had an accumulated deficit of $237.8 million. We expect to continue to incur significant losses for the foreseeable future.
Current wording
We have no products approved for commercial sale in the United States. However, with the assets related to the New Day licensing agreement, there are three products that have CE marks and are eligible to be sold in the European Union (“EU”) and certain eligible markets that accept the CE mark, with the notable exception of the United States at the present time but we cannot guarantee when and how much revenue will be generated from those products. To date, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, undertaking preclinical studies and clinical trials of our product candidate. As a result, we are not profitable and have incurred losses in each period since our inception in 2013. As of December 31, 2025, we had an accumulated deficit of $246.1 million. We expect to continue to incur significant losses for the foreseeable future.
Previous wording
Since our inception, we have invested a significant portion of our efforts and financial resources in research and development activities for our non-replicating and replicating technologies and our product candidates derived from these technologies. We believe that we will continue to expend substantial resources for the foreseeable future in connection with our anticipated acquisition of an asset in connection with our strategic alternatives strategy. In addition, other unanticipated costs may arise.
Current wording
Since our inception, we have invested a significant portion of our efforts and financial resources in research and development activities for our non-replicating and replicating technologies and our product candidates derived from these technologies. We believe that we will continue to expend substantial resources for the foreseeable future in connection with the development of acquired assets in connection with our strategic alternatives strategy. In addition, other unanticipated costs may arise.
Previous wording
As of December 31, 2024, we had a working capital deficit of $1.5 million compared to working capital of $12.2 million as of December 31, 2023. The decrease of $13.7 million in working capital is primarily related to cash spend related to our wind-down activities and operating costs, offset by $3.0 million in proceeds received from sales of our state NOLs.
Current wording
As of December 31, 2025, we had a working capital of $2.8 million compared to working capital deficit of $1.5 million as of December 31, 2024. The increase of $4.3 million in working capital is primarily due to $8.2 million in net proceeds received from equity issuance offset by the $3.4 million related to settlement of a note payable, and the Company’s other operating costs for the 12 months ended December 31, 2025.
Previous wording
As of December 31, 2023, we had $14.8 million in cash. Net cash used in operating activities was $40.9 million for the year ended December 31, 2023 consisting primarily of our net loss of $48.9 million, adjusted for an increase in non-cash charges of $4.9 million primarily for stock-based compensation, impairment of our in-process research and development asset, and the change in fair value of derivative warrants. Changes in working capital accounts had a positive impact of $3.0 million on cash primarily due to a decrease in prepaid expenses.
Current wording
As of December 31, 2025, we had $1.8 million in cash. Net cash used in operating activities was $3.3 million for the year ended December 31, 2025 consisting primarily of our net loss of $8.3 million, adjusted non-cash charges of $4.5 million, including $0.4 million for asset impairment, and $4.1 million in change in fair value of derivative warrants. Changes in working capital accounts had a negative impact of $0.4 million on cash primarily due to an increase in accounts payable, accrued expenses and prepaid expenses.
Previous wording
As of December 31, 2024, we had $0.4 million in cash. Net cash used in operating activities was $18.2 million for the year ended December 31, 2024 consisting primarily of our net loss of $13.2 million, adjusted for an increase in non-cash charges of $5.3 million, primarily for stock-based compensation, amortization of debt discount, write-off of the loan to Pharma Two B and warrant related inducement expense, partially offset by $7.6 million in change in fair value of contingent consideration and the change in fair value of derivative warrants. Changes in working capital accounts had a negative impact of $2.7 million on cash primarily due to an increase in accounts payable, accrued expenses and prepaid expenses.
Current wording
As of December 31, 2024, we had $0.4 million in cash. Net cash used in operating activities was $18.3 million for the year ended December 31, 2024 consisting primarily of our net loss of $13.2 million, adjusted for an increase in non-cash charges of $5.3 million, primarily for stock-based compensation, amortization of debt discount, write-off of the loan to Pharma Two B and warrant related inducement expense, partially offset by $7.6 million in change in fair value of contingent consideration and the change in fair value of derivative warrants. Changes in working capital accounts had a negative impact of $2.7 million on cash primarily due to an increase in accounts payable, accrued expenses and prepaid expenses.
Previous wording
Net cash used in investing activities during the year ended December 31, 2024 and 2023 was $600,000 and de minimis, respectively. The $600,000 used in investing activity during the year ended December 31, 2024 related to the loan to Pharma Two B.
Current wording
Net cash used in investing activities was $0.1 million for the year ended December 31, 2025 related to the acquisition of licenses from New Day Diagnostics. Net cash used in investing activities was $0.6 million for the year ended December 31, 2024 related to the to the loan Pharma Two B.
Previous wording
Net cash provided by financing activities was $4.4 million and $4.5 million for the year ended December 31, 2024 and 2023, respectively, primarily due to the exercise of warrants (induced), and the equity and debt issuance under a Securities Purchase Agreement, in 2024 .and the issuance of common stock and warrants in 2023.
Current wording
Net cash provided by financing activities was $4.4 million for the year ended December 31, 2024 primarily due to the exercise of warrants (induced), and the equity and debt issuance under a Securities Purchase Agreement.
Previous wording
We believe that the assumptions and estimates associated with fair value of financial instruments, income taxes, contingencies, research and development, in-process research and development, and share-based payments have the greatest potential impact on our consolidated financial statements. We evaluate these estimates on an ongoing basis. Actual results could differ from those estimates under different assumptions or conditions, and any differences could be material. For further information on all of our significant accounting policies, see Note 3 of the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K.
Current wording
We believe that the assumptions and estimates associated with fair value of derivative financial instruments-warrants, has the greatest potential impact on our consolidated financial statements. We evaluate this estimate on an ongoing basis. Actual results could differ from those estimates under different assumptions or conditions, and any differences could be material. For further information on all of our significant accounting policies, see Note 3 of the Notes to the Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K.
Previous wording
Derivative financial instruments are related to the issuance of warrants accounted for as a liability. The Black-Scholes model, which uses significant assumptions including risk-free interest rate, volatility, stock price and expected term to calculate fair value.
Current wording
Derivative financial instruments are related to the issuance of warrants accounted for as a liability. The Black-Scholes model, which uses significant assumptions including risk-free interest rate, volatility, stock price and expected term to calculate fair value. To calculate the fair value of the 2025 warrants, we performed a back solve at inception that contemplated a Discount for Lack of Marketability (DLOM) and dilution adjustments. Refer to Note 4.