Inhibitor Therapeutics, Inc.

1. Corporate Overview

Overview

The accompanying audited financial statements of Inhibitor Therapeutics, Inc., a Delaware corporation (the “Company”, “INTI”, “we”, “us” or similar terminology) have been prepared by the Company as a going concern, and in accordance with accounting principles generally accepted in the United States of America (“GAAP”). As used herein, the term “common stock” means the Company’s common stock, $0.0001 par value per share.

Nature of the Business

The Company is a pharmaceutical development company focused on developing and ultimately commercializing innovative therapeutics based on already approved active pharmaceuticals that have patent-protected methods of use and/or methods of delivery for patients with certain cancers and certain non-cancerous proliferation disorders. The Company has also explored and expect to continue to explore acquiring or licensing other innovative pre-clinical and clinical stage therapeutics addressing unmet needs for the treatment of cancer and other diseases based on repurposing active ingredients of already approved drugs.

The Company’s primary focus is on the development of therapies initially for basal cell carcinoma (“BCC”), prostate and lung cancers in the United States utilizing itraconazole, a drug currently approved by the FDA to treat fungal infections, and which has an extensive history of safe and effective use in humans. The Company has developed intellectual property and know-how related to the treatment of cancer patients using itraconazole. In particular, on December 12, 2023, the Company entered into an Exclusive License Agreement (the “Agreement”) with Johns Hopkins University (“JHU”). Pursuant to the Agreement, JHU granted to the Company the exclusive worldwide patent rights to a Granted US Patent, No. 8,980,930 entitled “New Angiogenesis Inhibitors” (the “Patent”). The Patent relates to the treatment of prostate cancer, BCC including basal cell carcinoma nevus syndrome (“BCCNS”), and lung cancer.

2. Liquidity and Management’s Plans

The Company is presently focused on its business plan for developing and ultimately commercializing innovative therapeutics based on already approved active pharmaceuticals that have patent-protected methods of use and/or methods of delivery. The Company expects to progress with the FDA in 2025 with a new formulation of itraconazole (the API: Active Pharmaceutical Ingredient) developed with Avior Bio, Inc. (“Avior”), coupled with a crossover PK trial to show that our formulation of itraconazole delivers comparable levels of itraconazole as the SUBA Cap formulation used in prior clinical trials. As such, we expect to justify the conclusion that we can submit a NDA without any required additional clinical trials. The current cash on hand, approximately $5.6 million on December 31, 2024, is sufficient to continue to execute the Company’s business plan as currently anticipated, without another required clinical trial. Based on the current operational plan and budget, the Company expects to have sufficient cash to manage its business and continue to pursue the FDA process for the BCCNS product (without further clinical trials) and explore other drug development opportunities. Once the requirements for the BCCNS NDA are determined, the Company will assess capital requirements for additional opportunities, at which time raising additional capital in the public market will be considered.

3. Summary of Significant Accounting Policies

Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Revenue Recognition

The Company currently has no ongoing source of revenue. Miscellaneous income, including interest, is recognized when earned by the Company. Deferred revenue represents cash received for royalties in advance of being earned. Such payments are reflected as deferred revenue until recognized under the Company’s revenue recognition policy. Deferred revenue would be classified as current if management believes the Company will be able to recognize the deferred amount as revenue within twelve months of the balance sheet date. Deferred revenue will be recognized when the product is sold and the royalty is earned. Since all deferred revenue is related to the BCCNS product, which is yet to be approved by FDA, the Company has determined that 100% of the advances of the royalty received from Mayne Pharma should be classified as non-current. As of December 31, 2024 and 2023, deferred revenue consisted of $3 million of royalties advanced by Mayne Pharma under the Third Amended Supply and License Agreement (“SLA”).

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances in bank accounts in excess of Federal Deposit Insurance Corporation insured amounts. The Company continues to monitor the third-party depository institutions that hold the Company’s cash and limits its cash deposits to financial institutions with high credit standing.

Research and Development Expenses

Research and development (“R&D”) costs are expensed in the period in which they are incurred and include salaries, benefits and other related costs to support the Company’s R&D operations, amounts paid to third parties who conduct research and development activities on behalf of the Company, as well as the costs of discovery research, preclinical and clinical development, drug formulation and licensing payments. Upfront and advanced licensing payments for future use in R&D activities are recorded as prepaid expenses and are expensed as the related services are performed.

General and Administrative Expenses

General and administrative (“G&A”) expenses are expensed in the period in which they are incurred and include operating expenses not classified as R&D expenses, such as salaries, benefits, insurance, board of directors’ fees, travel costs, as well as fees for professional services related to accounting, tax and legal matters. Penalties and interest assessed as a result of unresolved tax liabilities are also classified as G&A expenses.

3. Summary of Significant Accounting Policies (continued)

Stock-Based Compensation

The Company accounts for stock-based awards to employees and non-employees using a fair value-based method to determine compensation for all arrangements where shares of stock or equity instruments are issued for compensation. Fair values of restricted stock units issued are determined by the Company based predominantly on the trading price of the common stock on the date of grant. The fair value of each common stock option is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatility is based on historical volatility of a peer group’s common stock and other factors estimated over the expected term of the options. The expected term of the options granted is derived using the “simplified method” which computes the expected term as the average of the weighted-average vesting term and the contract term. The risk-free rate is based on the U.S. Treasury yield.

Income Taxes

Deferred tax assets and liabilities are recognized for future tax consequences, attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that are expected to apply to the differences in the periods that they are expected to reverse. Management has evaluated the guidance relating to accounting for uncertainty in income taxes and has determined that the Company had no uncertain income tax positions that could have a significant effect on the financial statements for the years ended December 31, 2024 or 2023.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07,“Improvements to Reportable Segment Disclosures (Topic 280)” which is intended to improve reportable segment disclosure requirements, primarily through incremental disclosures of segment information on an annual and interim basis for all public entities. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. The ASU is to be applied retrospectively to all prior periods presented in the financial statements and is effective for our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and interim periods thereafter. The Company adopted this guidance with no material impact on its financial statements. Refer to Note 8 for further details.

Management has considered all other recent accounting pronouncements that are issued, but not effective, and it does not believe that they will have a significant impact on the Company’s results of operations or financial position.

4. Income Taxes

The difference between expected income tax benefit and income tax benefit recorded in the financial statements is explained below:

The significant components of deferred income tax assets consist of the following:

In accordance with GAAP, it is required that a deferred tax asset be reduced by a valuation allowance if, based on the weight of available evidence it is more likely than not (a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized. At December 31, 2024 and 2023, the Company recorded a 100% valuation allowance against its deferred tax assets as it has determined such amounts will not be currently realizable.

The Company has historically generated federal and state net operating losses (“NOLs”). Under Section 382 and 383 of the Internal Revenue Code, if an ownership change occurs with respect to a “loss corporation”, as defined, there are annual limitations on the amount of the NOLs and other deductions which are available to the Company. NOLs incurred prior to December 13, 2022 are subject to this limitation. As such, the use of these NOLs to offset taxable income is limited to approximately $0.7 million per year in 2023 and future periods. As of December 31, 2024 and 2023, the Company’s federal and state NOLs are approximately $16 million and $14 million, respectively.

The Company follows the provisions of ASC 740-10*“Uncertainty in Income Taxes”* wherein certain recognition thresholds must be met before a tax position is recognized in the financial statements. An entity may only recognize or continue to recognize tax positions that meet a “more-likely-than-not” threshold. As of December 31, 2024 and 2023, the Company does not believe it has any uncertain tax positions that would require either recognition or disclosure in the accompanying financial statements.

5. Stockholders’ Equity

Employee Stock Plans

During 2014, the Equity Incentive Plan (“EIP”) was adopted by the Company’s Board of Directors and approved by a majority of stockholders. The total number of shares available for issuance under the EIP is 11,000,000. Incentive awards may be in the form of stock options, restricted stock, restricted stock units and performance and other awards. In the case of incentive stock options, the exercise price will not be less than 100% of the fair market value of shares covered at the time of the grant, or 110% for incentive stock options granted to persons who own more than 10% of the Company’s voting stock. Options granted will generally be exercisable forten years, except that the term may not exceed five years for incentive stock options granted to persons who own more than 10% of the Company’s outstanding common stock.

Stock option activity for the years ended December 31, 2024 and 2023 is as follows:

Options outstanding (all are exercisable) at December 31, 2024 are as follows:

5. Stockholders’ Equity (continued)

During the year ended December 31, 2024, the Company issued 290,000 common stock options with an exercise price of $0.08 per share and a weighted-average grant date fair value of $0.07 per share. The aggregate fair value of the options issued was approximately $0.02 million, as determined by using the Black-Scholes valuation model. The weighted-average assumptions used to estimate the fair value of the options issued during the period were as follows: risk-free interest rate:4.33%; expected term:5 years; expected volatility:129.18%; andno dividend yield. The options are fully vested upon issuance and the contractual terms expire in 2034. There wereno stock options issued during the year ended December 31, 2023.

During the year ended December 31, 2024, the Company granted 300,000 restricted shares of common stock with an aggregate grant date fair value of approximately $0.02 million to the members of the Board of Directors under the equity incentive plan. During the year ended December 31, 2023, the Company granted 230,411 restricted shares of common stock with an aggregate grant date fair value of approximately $0.01 million to the members of the Board of Directors under the equity incentive plan. The shares of common stock were fully vested upon issuance but are restricted from trading for a period of one year from the date of grant.

6. Related Party Transactions

The Company has engaged Avior, which is currently creating a novel formulation of itraconazole from which results are expected in the second quarter of 2025. Avior is a privately held drug development company whose President and Chairman of the Board, Niraj Vasisht, is a member of the Company’s Board of Directors. Upon finalization of the formulation, Avior will conduct a pharmacokinetic (PK) crossover study to the generic formulation and the formulation that was used within the HP2001 study in preparation for a new IND and NDA. Given all formulations consist of the same active pharmaceutical ingredients (API), it is expected that the Company’s new, novel formulation will have extremely similar properties to the formulation used in the HP2001 clinical study. During the year ended December 31, 2024, the Company incurred $0.3 million of costs associated with its engagement of Avior, which are included in Research and development expenses in the Statements of Operations.

7. Commitments and Contingencies

Exclusive License Agreement with Johns Hopkins University

On December 12, 2023, the Company entered into an Exclusive License Agreement (the “Agreement”) with Johns Hopkins University (“JHU”). Pursuant to the Agreement, JHU granted to the Company the exclusive worldwide patent rights to a Granted US Patent, No 8,980,930 entitled “New Angiogenesis Inhibitors” (the “Patent”). The Patent relates to the treatment of prostate cancer, basal cell carcinoma including basal cell carcinoma nevus syndrome, and lung cancer.

Pursuant to the Agreement: (i) the Company has received an exclusive worldwide license to the Patent; (ii) the Company paid JHU an upfront license fee in December 2023, (iii) the Company shall be required to make certain Minimum Annual Royalty (“MAR”) payments to JHU no later than January 1st of each calendar year in accordance with an agreed upon schedule, (iv) the Company shall be required to pay to JHU a royalty on cumulative net sales, with an additional supplement due where a licensed product is given exclusivity in the U.S. by patent rights, (v) if the Company enters into any sublicense they will pay to JHU a certain percentage of all consideration received from sublicensee but excluding (i) any consideration received by Licensee for Royalties on Sublicensee Sales (Royalties on Sales by Sublicensees will be treated as if Licensee made the Sale), and (ii) any payment of Past Patent Costs or Patent Costs made by Sublicensee to License), (vi) should the Company receive compensation in the form of a voucher, the Company will pay a certain percentage of the sale to JHU and (vii) the Company shall be required to pay to JHU certain development-related milestone payments upon the Company meeting each of a series of agreed upon milestones. The Agreement contains other customary terms and conditions.

7. Commitments and Contingencies (continued)

JHU has the right to terminate the Agreement upon the occurrence of certain events, including delinquency in payments, failure to timely reach milestones, noncompliance with audit or insurance obligations, or the Company entering into voluntary bankruptcy or insolvency. The Company may terminate the Agreement without cause upon 90 days advance written notice.

In compliance with the agreement, the Company paid in December 2023 the upfront license fee of $40,000, which has been recorded as a prepaid expense and will be expensed over the term of the Agreement. Additionally, the first two MAR payments of $10,000 each have also been paid in accordance with the agreed upon schedule. The remaining MAR payments required to be paid by the Company no later than January 1 st of each calendar year are as follows:

The Company may from time to time become a party to various legal proceedings arising in the ordinary course of business. The Company is not currently the subject of any pending legal proceedings.

8. Segment Information

The Company operates inone reportable segment related to the development and commercialization of therapeutics. The chief operating decision maker for the Company is the Chief Executive Officer (the “CEO”). The Company’s CEO reviews operating results on an aggregate basis and manages the Company’s operations as a whole for the purpose of evaluating financial performance and allocating resources. Accordingly, the Company has determined that it has a single reportable and operating segment structure. The CEO uses aggregate net loss to allocate resources in the annual budgeting and forecasting process and also uses that measure as a basis for evaluating financial performance regularly by comparing actual results with established budgets and forecasts.

The accounting policies of the Company’s single segment are the same as those described in the summary of significant accounting policies within Note 3. The CEO assesses performance for the Company and decides how to allocate resources based on the aggregate net loss that is also reported on the income statement as net loss. The measure of segment assets is reported on the balance sheets as total assets.

The table below provides information about the Company’s revenue, significant segment expenses and other segment expenses.

9. Subsequent Events

In January 2025, the Company executed a lease agreement for office space. The lease term isthree years with a commencement date of March 1, 2025 with no renewal options available. Base rent and other pass-through charges will initially be approximately $22,000 on an annual basis, subject to customary base rent annual escalations of 3%. The Company expects the lease agreement to be classified as an operating lease and currently assessing the measurement of the associated lease obligation and corresponding right-of-use asset.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.