NeuroBo Pharmaceuticals Inc

Previous wording

Certain amounts in the following discussion and analysis may not add due to rounding, and all percentages have been calculated using unrounded amounts.

Current wording

Certain amounts in the following discussion and analysis may not add up due to rounding, and all percentages have been calculated using unrounded amounts.

Previous wording

We are a clinical-stage biotechnology company focused primarily ondeveloping and commercializing novel pharmaceuticals to treat cardiometabolic diseases. We have two programs currently focused on treatment of metabolic dysfunction-associated steatohepatitis (“MASH”) and obesity. MASH was formerly known as non-alcoholic steatohepatitis. The American Association for the Study of Liver Diseases and its European and Latin American counterparts changed the name to metabolic dysfunction-associated steatohepatitis to reflect the complexity of the disease.

Current wording

We are a clinical-stage biotechnology company focused primarily ondeveloping and commercializing novel pharmaceuticals to treat cardiometabolic diseases. We have two programs currently focused on treatment of metabolic dysfunction-associated steatohepatitis (“MASH”) and obesity. MASH was formerly known as non-alcoholic steatohepatitis (“NASH”). The American Association for the Study of Liver Diseases and its European and Latin American counterparts changed the name to metabolic dysfunction-associated steatohepatitis to reflect the complexity of the disease.

Previous wording

While we primarily focus our financial resources and management’s attention on the development of DA-1241 and DA-1726, we also have four legacy therapeutic programs designed to impact a range of indications in viral, neurodegenerative and cardiometabolic diseases, which we continue to consider for out-licensing and divestiture opportunities. In July 2024, we entered into an exclusive out-license agreement with MThera Pharma Co., LTD. (“MThera”) to provide MThera with the rights to NB-01 for the treatment of painful diabetic neuropathy.

Current wording

While we primarily focus our financial resources and management’s attention on the development of DA-1241 and DA-1726, we also have four legacy therapeutic programs designed to impact a range of indications in viral, neurodegenerative and cardiometabolic diseases, which we have, or continue to consider for, out-licensing and divestiture opportunities. In July 2024, we entered into an exclusive out-license agreement with MThera Pharma Co., LTD. (“MThera”) to provide MThera with the rights to NB-01 for the treatment of painful diabetic neuropathy.

Previous wording

We are currently conducting a Phase 2a trial of DA-1241 for the treatment of MASH in the United States. The Phase 2a trial has two parts and each of the parts is designed to be a 16-week, multicenter, randomized, double-blind, placebo-controlled, parallel clinical study to evaluate the efficacy and safety of DA-1241 in subjects with presumed MASH while we follow the trend for type 2 diabetes mellitus. Part 2 of the Phase 2a trial will also explore the efficacy of DA-1241 in combination with sitagliptin versus placebo. Phase 2a trial enrollment began in August 2023 and we have completed enrollment of Part 1 of the Phase 2a trial in which patients with presumed MASH were randomized with a 1:2:1 ratio into 3 treatment groups: DA-1241 50 mg, DA-1241 100 mg, or placebo. Additionally, we also completed enrollment of Part 2

Current wording

We are currently conducting a Phase 2a trial of DA-1241 for the treatment of MASH in the United States. The Phase 2a trial has two parts and each of the parts is designed to be a 16-week, multicenter, randomized, double-blind, placebo-controlled, parallel clinical study to evaluate the efficacy and safety of DA-1241 in subjects with presumed MASH while we follow the trend for type 2 diabetes mellitus. Part 1 of the Phase 2a trial is exploring the efficacy of DA-1241 versus placebo and subjects are randomized in a 1:2:1 ratio into 3 treatment groups: DA-1241 50 mg, DA-1241 100 mg, or placebo. Part 2 of the Phase 2a trial is exploring the efficacy of DA-1241 in combination with sitagliptin versus placebo

Previous wording

of the Phase 2a trial in which patients with presumed MASH were randomized with a 2:1 ratio into 2 treatment groups: DA-1241 100 mg/sitagliptin 100 mg or placebo. Currently, we are expecting to have top line result in the fourth quarter of 2024.

Current wording

and subjects are randomized in a 2:1 ratio into 2 treatment groups: DA-1241 100 mg/sitagliptin 100 mg or placebo. Phase 2a trial enrollment began in August 2023 and a total of 109 patients were randomized, while 95 patients completed the dosing with the completion of the last patient last visit in October 2024. Currently, we are expecting to have top line results in December 2024.

Previous wording

We are currently conducting a Phase 1 trial of DA-1726 for the treatment of obesity in the United States. The Phase 1 trial is a randomized, placebo-controlled, double-blind, two-part study to investigate the safety, tolerability, pharmacokinetics (“PK”), and pharmacodynamics (“PD”) of single and multiple ascending doses of DA-1726 in obese, otherwise healthy subjects. Part 1 of the Phase 1 trial is a single ascending dose (“SAD”) study and enrollment began in March 2024. In August 2024, we completed enrollment with a total of 45 participants, randomized into one of five cohorts, with each cohort having been randomized in a 6:3 ratio of DA-1726 to placebo. Part 2 of Phase 1 is a multiple ascending dose (“MAD”) study, enrollment began in June 2024, and is expected to enroll approximately 36 participants, who will be randomized at the same 6:3 ratio into four planned cohorts, each to receive four weekly administrations of DA-1726 or placebo. Currently, we are expecting to report top-line data from the SAD Part 1 study in the third quarter of 2024 and the MAD Part 2 study in the first quarter of 2025.

Current wording

We are currently conducting a Phase 1 trial of DA-1726 for the treatment of obesity in the United States. The Phase 1 trial is a randomized, placebo-controlled, double-blind, two-part study to investigate the safety, tolerability, pharmacokinetics (“PK”), and pharmacodynamics (“PD”) of single and multiple ascending doses of DA-1726 in obese, otherwise healthy subjects.

Previous wording

Our total operating expenses and loss from operations for the three months ended June 30, 2024 were $10.0 million, an increase of $6.3 million, or 165.0%, compared to the three months ended June 30, 2023. This increase was attributable to $5.7 million in higher R&D expenses and $0.6 million in higher general and administrative expenses.

Current wording

Our total operating expenses and loss from operations for the three months ended September 30, 2024 were $6.3 million, an increase of $2.4 million, or 60.8%, compared to the three months ended September 30, 2023. This increase was attributable to $2.2 million in higher R&D expenses and $0.1 million in higher general and administrative expenses.

Previous wording

Our R&D expenses were $13.0 million for the six months ended June 30, 2024, an increase of $10.0 million, or 332.5%, compared to the six months ended June 30, 2023. This increase was primarily related to increased R&D activities for DA-1241 and DA-1726 for the six months ended June 30, 2024 following commencement of the Phase 2a clinical trial for DA-1241 and Phase 1 trial for DA-1726 compared to the six months ended June 30, 2023 when R&D activities were starting to ramp up following the acquisition of DA-1241 and DA-1726 in the fourth quarter of 2022. Specifically, the $10.0 million increase in R&D expenses was primarily attributable to (i) $9.3 million in higher expenditures for investigational drug manufacturing costs, non-clinical and preclinical services, clinical trials and consulting and (ii) $0.7 million in higher employee compensation and benefits. Included in R&D expenses for the six months ended June 30, 2024 was $3.6 million of investigational drug manufacturing costs and non-clinical and preclinical expenses incurred under the Shared Services Agreement with Dong-A as compared to $1.8 million for the six months ended June 30, 2023.

Current wording

Our R&D expenses were $4.5 million for the three months ended September 30, 2024, an increase of $2.2 million, or 97.1%, compared to the three months ended September 30, 2023. This increase was primarily related to increased R&D activities for DA-1241 and DA-1726 for the three months ended September 30, 2024 related to the Phase 2a clinical trial for DA-1241 and Phase 1 trial for DA-1726 compared to the three months ended September 30, 2023. Specifically, the $2.2 million increase in R&D expenses was attributable to (i) $1.9 million in higher expenditures for clinical trials, non-clinical and preclinical services, and consulting and (ii) $0.3 million in higher employee compensation and benefits. Included in R&D expenses for the three months ended September 30, 2024 was $0.7 million of non-clinical and preclinical expenses incurred under the Shared Services Agreement with Dong-A as compared to $0.4 million for the three months ended September 30, 2023.

Previous wording

Our other income for thethree months ended June 30, 2024 was $31 thousand, a decrease of $3.0 million, or 99.0%, compared to thethree months ended June 30, 2023. This decrease was attributable to the recording of a loss of $0.1 million related to thechange in fair value of warrant liabilities for the three months ended June 30, 2024 compared to a gain of$3.1 million for three months ended June 30, 2023, partially offset by$0.2 million of interest income earned on our cash balance for thethree months ended June 30, 2024, of which there was none for thethree months ended June 30, 2023.

Current wording

Our total other income for thethree months ended September 30, 2024 was $0.6 million, an increase of $0.5 million, or 709.3%, compared to thethree months ended September 30, 2023. This increase was attributable to the recording of a gain of $0.3 million related to thechange in fair value of warrant liabilities for the three months ended September 30, 2024 compared to a loss of$0.1 million for the three months ended September 30, 2023, and$0.1 million in higher interest income earned on our cash balance.

Previous wording

For the three months ended June 30, 2024, we had a netloss of $10.1 million, or$1.85 per share of basic and diluted common stock, compared to a net loss of $0.7 million, or $0.15 per share of basic and diluted common stock for the three months ended June 30, 2023.

Current wording

For the three months ended September 30, 2024, we had a net loss of $5.7 million, or $0.55 per share of basic and diluted common stock, compared to a net loss of $3.8 million, or $0.75 per share of basic and diluted common stock for the three months ended September 30, 2023, primarily due to the factors described above.

Previous wording

Our total operating expenses and loss from operations for the six months ended June 30, 2024 were $17.0 million, an increase of $10.6 million, or 168.2%, compared to the six months ended June 30, 2023. This increase was attributable to (i) $10.0 million in higher R&D expenses and (ii) $0.7 million in higher general and administrative expenses.

Current wording

Our total operating expenses and loss from operations for the nine months ended September 30, 2024 were $23.2 million, an increase of $13.0 million, or 127.3%, compared to the nine months ended September 30, 2023. This increase was attributable to (i) $12.2 million in higher R&D expenses and (ii) $0.8 million in higher general and administrative expenses.

Previous wording

for DA-1241 and Phase 1 trial for DA-1726 compared to the three months ended June 30, 2023 when R&D activities were starting to ramp up following the acquisition of DA-1241 and DA-1726 in the fourth quarter of 2022. Specifically, the $5.7 million increase in R&D expenses was primarily attributable to (i) $5.4 million in higher expenditures for investigational drug manufacturing costs, non-clinical and preclinical services, clinical trials and consulting and (ii) $0.3 million in higher employee compensation and benefits. Included in R&D expenses for the three months ended June 30, 2024 was $3.4 million of investigational drug manufacturing costs and non-clinical and preclinical expenses incurred under the Shared Services Agreement with Dong-A as compared to $1.5 million for the three months ended June 30, 2023.

Current wording

Our R&D expenses were $17.5 million for the nine months ended September 30, 2024, an increase of $12.2 million, or 230.5%, compared to the nine months ended September 30, 2023. This increase was primarily related to increased R&D activities related to Phase 2a clinical trial for DA-1241 and Phase 1 trial for DA-1726 for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 when R&D activities began to ramp up following the acquisition of DA-1241 and DA-1726 in the fourth quarter of 2022. Specifically, the $12.2 million increase in R&D expenses was attributable to (i) $11.2 million in higher expenditures for clinical trials, investigational drug manufacturing costs, non-clinical and preclinical services, and consulting and (ii) $1.0 million in higher employee compensation and benefits. Included in R&D expenses for the nine months ended September 30, 2024 was $4.3 million of investigational

Previous wording

Our other income for thesix months ended June 30, 2024 was $0.2 million, a decrease of $2.8 million, or 93.4%, compared to the six months ended June 30, 2023. This decrease was attributable to the recording of a loss of $0.2 million related to thechange in fair value of warrant liabilities for the six months ended June 30, 2024 compared to a gain of$3.0 million for six months ended June 30, 2023, partially offset by$0.4 million of interest income earned on our cash balance for thesix months ended June 30, 2024, of which there was none for thesix months ended June 30, 2023.

Current wording

Our total other income for thenine months ended September 30, 2024 was $0.8 million, a decrease of $2.3 million, or 73.7%, compared to the nine months ended September 30, 2023. This decrease was primarily attributable to $2.8 million in lower gain related to thechange in fair value of warrant liabilities, partially offset by$0.5 million of higher interest income earned on our cash balance.

Previous wording

Our effective tax rate for thesix months ended June 30, 2024 and 2023 was zero percent as we have recorded a full valuation allowance for the income tax benefits attributable to our pre-tax losses.

Current wording

Our effective tax rate for thenine months ended September 30, 2024 and 2023 was zero percent as we have recorded a full valuation allowance for the income tax benefits attributable to our pre-tax losses.

Previous wording

For the six months ended June 30, 2024, we had a netloss of $16.8 million, or$3.19 per share of basic and diluted common stock, compared to a net loss of $3.3 million, or $0.66 per share of basic and diluted common stock for the six months ended June 30, 2023.

Current wording

For the nine months ended September 30, 2024, we had a netloss of $22.4 million, or$3.24 per share of basic and diluted common stock, compared to a net loss of $7.2 million, or $1.41 per share of basic and diluted common stock for the nine months ended September 30, 2023, primarily due to the factors described above.

Previous wording

As reflected in the condensed consolidated financial statements, we had $27.9 million in cash as of June 30, 2024. We have experienced net losses and negative cash flows from operating activities since our inception and had an accumulated deficit of $125.0 million as of June 30, 2024. We have incurred a net loss of $16.8 million and net cash used of $13.7 million for operating activities for the six months ended June 30, 2024. Due in large part to the ongoing Phase 2a clinical trial for DA-1241 and Phase 1 clinical trial for DA-1726, we expect to continue to incur net losses and negative cash flows from operating activities for the foreseeable future. These conditions raise substantial doubt about our ability to continue as a going concern.

Current wording

As reflected in the condensed consolidated financial statements, we had $21.7 million in cash as of September 30, 2024. We have experienced net losses and negative cash flows from operating activities since our inception and had an accumulated deficit of $130.7 million as of September 30, 2024. We have incurred a net loss of $22.4 million and net cash used in operating activities of $19.3 million for the nine months ended September 30, 2024. Due in large part to the ongoing Phase 2a clinical trial for DA-1241 and Phase 1 clinical trial for DA-1726, we expect to continue to incur net losses and negative cash flows from operating activities for the foreseeable future. These conditions raise substantial doubt about our ability to continue as a going concern within one year from the issuance of these condensed consolidated financial statements.

Previous wording

We believe that our existing cash will be sufficient to fund our operations into the second quarter of 2025. Our existing cash includes gross proceeds of $20.0 million, of which $10.0 million was received from Dong-A, in connection with the closing of the Offering (as defined below) in June 2024. We plan to continue to fund our operations through a combination of proceeds of (i) up to $20.0 million from the potential future exercise of Series A Warrants issued in the Offering (as defined below) before deducting for certain issuance costs, such as placement agent fees and expenses and (ii) from equity offerings, debt financings, or other sources, potentially including collaborations, out-licensing and other similar arrangements. If the Series A Warrants issued in the June 2024 Offering are exercised, we believe that the additional gross proceeds to us from such exercises would be sufficient to fund our operations into 2026. There can be no assurance that we will be able to obtain any sources of financing on acceptable terms, or at all, or that the Series A Warrants will be exercised. To the extent that we can raise additional funds by issuing equity securities or in the event our existing warrants are exercised, our stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact our ability to conduct our business. If we are unable to raise additional capital, we may slow down or stop our ongoing and planned clinical trials until such time as additional capital is raised and this may have a material adverse effect on us.

Current wording

We believe that our existing cash will be sufficient to fund our operations into the third quarter of 2025. We plan to continue to fund our operations from equity offerings, debt financings, or other sources, potentially including collaborations, out-licensing and other similar arrangements. There can be no assurance that we will be able to obtain any sources of financing on acceptable terms, or at all, or that the Series A Warrants will be exercised. To the extent that we can raise additional funds by issuing equity securities or in the event our existing warrants are exercised, our stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact our ability to conduct our business. If we are unable to raise additional capital, we may slow down or stop our ongoing and planned clinical trials until such time as additional capital is raised and this may have a material adverse effect on us.

Previous wording

Our primary use of cash is to fund our R&D activities. We have funded our operations primarily through public offerings of our common stock and private placements of equity. As of June 30, 2024, we had cash totaling $27.9 million. We maintain cash at financial institutions that at times may exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limits of $250 thousand per bank. Our cash balance includes liquid insured deposits, which are obligations of the program banks in which the deposits are held and qualify for FDIC insurance protection per depositor in each recognized legal category of account ownership in accordance with the rules of the FDIC. To date, we have not experienced any losses related to these funds.

Current wording

of our common stock and private placements of equity and convertible securities. As of September 30, 2024, we had cash totaling $21.7 million. We maintain cash at financial institutions that at times may exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limits of $250 thousand per bank. Our cash balance includes liquid insured deposits, which are obligations of the program banks in which the deposits are held and qualify for FDIC insurance protection per depositor in each recognized legal category of account ownership in accordance with the rules of the FDIC. To date, we have not experienced any losses related to these funds.

Previous wording

In June 2024, we closed on a private placement offering (the “Private Placement,” and together with the Registered Direct Offering, the “Offering”) with an institutional accredited investor and Dong-A, and received aggregate gross proceeds of $17.0 million, of which $10.0 million was received from Dong-A. The Private Placement was comprised of (i) 2,544,530 shares of common stock, (ii) pre-funded warrants to purchase up to 1,781,171 shares of common (the “Pre-Funded Warrants”), (iii) Series A warrants to purchase 5,089,060 shares of common stock (the “Series A Warrants”), and (iv) Series B warrants to purchase up to 7,633,591 shares of common stock (the “Series B Warrants”). For additional information, see “Note 8. Stockholders’ equity” to the condensed consolidated financial statements included elsewhere in this Report.

Current wording

In June 2024, we closed on a private placement offering (the “Private Placement,” and together with the Registered Direct Offering, the “Offering”) with an institutional investor and Dong-A, and received aggregate gross proceeds of $17.0 million, of which $10.0 million was received from Dong-A. The Private Placement was comprised of (i) 2,544,530 shares of common stock, (ii) pre-funded warrants to purchase up to 1,781,171 shares of common (the “Pre-Funded Warrants”), (iii) Series A warrants to purchase 5,089,060 shares of common stock (the “Series A Warrants”), and (iv) Series B warrants to purchase up to 7,633,591 shares of common stock (the “Series B Warrants”). For additional information, see “Note 7. Stockholders’ equity” to the condensed consolidated financial statements included elsewhere in this Report.

Previous wording

The principal use of cash in operating activities is to fund our current expenditures in support of our R&D activities. Financing activities currently represent the principal source of our cash flow.

Current wording

The principal use of cash in operating activities is to fund our current expenditures in support of our R&D activities. Financing activities currently represent the principal source of our cash flow. The following table reflects the major categories of cash flows (in thousands).

Previous wording

Net cash used in operating activities was $13.7 million for the six months ended June 30, 2024 and consisted of net loss of $16.8 million, partially offset by net cash provided by change in operating assets and liabilities of $2.6 million and non-cash charges totaling $0.5 million, which was primarily related to stock-based compensation and change in fair value of warrant liabilities. Net cash used in operating activities was $4.6 million for the six months ended June 30, 2023 and consisted of net loss of $3.3 million and non-cash credits totaling $3.0 million, which was primarily related to change in fair value of warrant liabilities, partially offset by net cash provided by changes in operating assets and liabilities of $1.8 million.

Current wording

Net cash used in operating activities was $19.3 million for the nine months ended September 30, 2024 and consisted of net loss of $21.6 million, partially offset by net cash provided by change in operating assets and liabilities of $2.0 million and non-cash charges totaling $0.3 million, which was primarily related to stock-based compensation and change in fair value of warrant liabilities. Net cash used in operating activities was $7.4 million for the nine months ended September 30, 2023 and consisted of net loss of $7.2 million and non-cash credits totaling $2.8 million, which was primarily related to change in fair value of warrant liabilities, partially offset by net cash provided by changes in operating assets and liabilities of $2.5 million.

Previous wording

Net cash used in investing activities, related to the purchases of property equipment, was less than $0.1 million for the six months ended June 30, 2024 and 2023.

Current wording

Net cash used in investing activities, related to the purchases of property equipment, was less than $50 thousand for the nine months ended September 30, 2024 and 2023.

Previous wording

Net cash provided by financing activities was $19.2 million for the six months ended June 30, 2024 compared to net cash used in financing activities of $0.1 million for the six months ended June 30, 2023. Net cash provided by financing activities for the six months ended June 30, 2024 consisted of gross proceeds from the Offering of $20.0 million, net of payment of issuance cost of $0.8 million. Net cash used in financing activities of $0.1 million for the six months ended June 30, 2023 was attributable to payment of financing costs related to a prior financing transaction.

Current wording

Net cash provided by financing activities was $18.5 million for the nine months ended September 30, 2024 compared to net cash used in financing activities of $0.1 million for the nine months ended September 30, 2023. Net cash provided by financing activities for the nine months ended September 30, 2024 consisted of gross proceeds from the Offering of $20.0 million, net of payment of issuance cost of $1.5 million. Net cash used in financing activities of $0.1 million for the nine months ended September 30, 2023 was attributable to payment of financing costs related to a prior financing transaction.

Previous wording

For additional details, see the condensed consolidated statements of cash flows in the condensed consolidated financial statements included elsewhere in this Report.

Current wording

For additional details, see the condensed consolidated statements of cash flows in the condensed consolidated financial

Previous wording

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses, and related disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in our consolidated financial statements relate to accrued expenses and the fair value of stock-based compensation and warrants. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates. Changes in estimates are reflected in reported results in the period in which they become known.

Current wording

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses, and related disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in our condensed consolidated financial statements relate to accrued expenses and the fair value of stock-based compensation and warrants. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates. Changes in estimates are reflected in reported results in the period in which they become known.