Dermata Therapeutics Inc

Previous wording

Our two product candidates, 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 lacustrisor* Spongilla*, 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 medical and aesthetic skin diseases and conditions.

Current wording

Our two product candidates, 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 medical and aesthetic skin diseases and conditions.

Previous wording

Our lead product candidate, DMT310, 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 vulgaris, which has a U.S. market size of approximately 33 million diagnosed patients. We recently initiated a Phase 3 program of DMT310 in moderate-to-severe acne and began enrolling patients in the first of two identical Phase 3 studies in December of 2023. Both studies will be double blinded, randomized, placebo controlled, and enroll about 550 patients, age 9 years or older across sites in the United States and Latin America. The primary endpoints include absolute reduction in inflammatory and noninflammatory lesions and the improvement in investigators global assessment (IGA) of acne, which are the same endpoints used in our Phase 2b study of DMT310 for moderate-to-severe acne. Patients will be treated once a week for 12 weeks with either DMT310 or placebo and will be evaluated monthly. The second Phase 3 study will be followed by a long-term extension study. We expect to have top-line results from the first Phase 3 study in the first quarter of 2025. Previously DMT310 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 DMT310 achieving statistically significant improvements at all time points for all three primary endpoints throughout the study (reduction in inflammatory lesions, reduction in non-inflammatory lesions, and improvement in IGA). In addition, based on the multiple mechanisms of action and anti-inflammatory effect seen with the DMT310 acne trial, we completed a Phase 1b proof of concept, or POC, trial in psoriasis where we saw encouraging results warranting further investigation.

Current wording

Our lead product candidate, DMT310, 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 vulgaris, which has a U.S. market size of approximately 30 million diagnosed patients. We recently initiated a Phase 3 program of DMT310 in moderate-to-severe acne. Both studies will be double-blinded, randomized, placebo-controlled, and enroll about 550 patients, age 9 years or older across sites in the United States and Latin America. The primary endpoints include absolute reduction in inflammatory and noninflammatory lesions and the improvement in investigators global assessment (“IGA”) of acne, which are the same endpoints used in our Phase 2b study of DMT310 for moderate-to-severe acne. Patients will be treated once a week for 12 weeks with either DMT310 or placebo and will be evaluated monthly. The second Phase 3 study will be followed by a long-term extension study. We recently announced enrollment of 50% of the total expected patients in the STAR-1 study and we expect to have top-line results from the first Phase 3 study in the first quarter of 2025. Previously, DMT310 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 DMT310 achieving statistically significant improvements at all time points for all three primary endpoints throughout the study (reduction in inflammatory lesions, reduction in non-inflammatory lesions, and improvement in IGA). In addition, based on the multiple mechanisms of action and anti-inflammatory effect seen with the DMT310 acne trial, we completed a Phase 1b proof of concept, or POC, trial in psoriasis where we saw encouraging results warranting further investigation.

Previous wording

We have a limited operating history. Since our inception, our operations have focused on developing DMT310 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 $61.0 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 DMT310 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 $63.7 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 $3.1 million and $2.2 million for the three months ended March 31, 2024, and 2023, respectively, and as of March 31, 2024, we had an accumulated deficit of $56.5 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 ongoing activities, as we:

Current wording

We have not generated any revenue to date and have incurred significant operating losses. Our net losses were $2.8 million and $1.7 million for the three months ended June 30, 2024, and 2023, respectively, and our net losses were $6.0 million and $3.9 million for the six months ended June 30, 2024, and 2023, respectively. As of June 30, 2024, we had an accumulated deficit of $59.4 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 ongoing activities, as we:

Previous wording

In December 2023, we began enrolling patients in the first of two Phase 3 clinical trials of DMT310 in moderate-to-severe acne. We are currently on track to complete enrollment of the first Phase 3, referred to as STAR-1, by the end of 2024 with top-line results from the first Phase 3 trial in Q1 2025. Both Phase 3 studies will be double blinded, randomized, placebo controlled, and enroll about 550 patients, age 9 years or older across sites in the United States and Latin America. The primary endpoints include absolute reduction in inflammatory and noninflammatory lesions and the improvement in investigators global assessment (IGA) of acne. Patients will be treated once a week for 12 weeks with either DMT310 or placebo and will be evaluated monthly.

Current wording

In July 2024, we reached the 50% patient enrollment milestone in the first of two Phase 3 clinical trials of DMT310 in moderate-to-severe acne. We expect to receive top-line results from the first Phase 3 trial, referred to as STAR-1, in the first quarter of 2025. Both Phase 3 studies will be double-blinded, randomized, placebo-controlled, and enroll about 550 patients, age 9 years or older across sites in the United States and Latin America. The primary endpoints include absolute reduction in inflammatory and noninflammatory lesions and the improvement in investigators global assessment (IGA) of acne. Patients will be treated once a week for 12 weeks with either DMT310 or placebo and will be evaluated monthly.

Previous wording

Other income and expenses increased by $31,758 from $37,540 for the three months ended March 31, 2023, to $69,298 for the three months ended March 31, 2024. The increase in interest income resulted from interest rate increases.

Current wording

Other income and expenses increased by $23,586 from $31,050 for the three months ended June 30, 2023, to $54,634 for the three months ended June 30, 2024. The increase in interest income resulted from interest rate increases.

Previous wording

Research and development expenses increased by $0.4 million from $1.2 million for the three months ended March 31, 2023, to $1.6 million for the three months ended March 31, 2024. The increase in research and development expenses from the first quarter of 2024 as compared the same period in 2023 resulted from $0.7 million of increased clinical expenses from the DMT310 STAR-1 acne study initiated in late 2023, and $0.2 million of increased stock-based compensation expense, offset by $0.3 million of decreased non-clinical expenses and $0.2 million of decreased chemistry, manufacturing, and controls, or CMC, expenses.

Current wording

Research and development expenses increased by $1.6 million from $2.0 million for the six months ended June 30, 2023, to $3.6 million for the six months ended June 30, 2024. The increase in research and development expenses from the second quarter of 2024 as compared the same period in 2023 resulted from $2.2 million of increased clinical expenses from the DMT310 STAR-1 acne study initiated in late 2023 as well as $0.2 million of increased employee costs, including stock-based compensation, primarily offset by $0.5 million of decreased chemistry, manufacturing, and controls, or CMC, expenses and $0.3 million of decreased non-clinical expenses.

Previous wording

General and administrative expenses increased by $0.5 million from $1.1 million for the three months ended March 31, 2023, to $1.6 million for the three months ended March 31, 2024. The increase in general and administrative costs resulted from $0.3 million of increased stock-based compensation expense and $0.2 million of increased public company costs, related primarily to audit fees.

Current wording

General and administrative expenses increased by $0.5 million from $2.0 million for the six months ended June 30, 2023, to $2.5 million for the six months ended June 30, 2024. This increase resulted from $0.4 million of increased audit fees as well as $0.2 million of increased stock-based compensation, offset by $0.1 million of decreased insurance costs.

Previous wording

Cash and cash equivalents used in operations of $2.7 million for the three months ended March 31, 2024, was the result of the net loss of $3.1 million, offset by $0.6 million in non-cash stock-based compensation expense, a decrease in prepaid expenses and other current assets of $0.1 million, and decreases in accounts payable and accrued and other current liabilities of $0.3 million.

Current 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, increases in accounts payable of $0.4 million, and a decrease in prepaid expenses and other current assets of $0.4 million.

Previous wording

Cash and cash equivalents used in operations of $1.6 million for the three months ended March 31, 2023, was the result of the net loss of $2.2 million, offset by non-cash stock-based compensation of $0.1 million, a decrease in prepaid expenses and other current assets of $0.2 million, and an increase in accrued and other current liabilities of $0.3 million.

Current wording

Cash used in operations of $3.5 million for the six months ended June 30, 2023, was the result of the net loss of $3.9 million and a decrease in accounts payable and other accrued liabilities of $0.2 million, offset by non-cash stock-based compensation of $0.3 million, as well as a decrease in prepaid expenses and other current assets of $0.4 million.

Previous wording

Since our inception, we have not generated any revenue or commercialized any products. As of March 31, 2024, our cash and cash equivalents totaled $4.7 million, and we had an accumulated deficit of $56.5 million. For the three months ended March 31, 2024, and the year ended December 31, 2023, we used cash of $2.7 million and $6.4 million, respectively, in operations. We expect our cash resources to fund operations into the third quarter of 2024. We anticipate that we will continue to incur net losses for the foreseeable future.

Current wording

Since our inception, we have not generated any revenue or commercialized any products. As of June 30, 2024, our cash and cash equivalents totaled $4.9 million, and we had an accumulated deficit of $59.4 million. For the six months ended June 30, 2024, and the year ended December 31, 2023, we used cash of $4.8 million and $6.4 million, respectively, in operations. We expect our cash resources to fund operations into the fourth quarter of 2024. We anticipate that we will continue to incur net losses for the foreseeable future.

Previous wording

As a publicly traded company, we will incur significant legal, accounting, and other expenses that we were not required to incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, as well as rules adopted by the Securities and Exchange Commission, or SEC, and Nasdaq, requires public companies to implement specified corporate governance practices that were not applicable to us as a private company. We expect these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

Current wording

As a publicly traded company, we will incur significant legal, accounting, and other expenses that we were not required to incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, as well as rules adopted by the Securities and Exchange Commission (the “SEC”), and Nasdaq, requires public companies to implement specified corporate governance practices that were not applicable to us as a private company. We expect these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

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 third quarter of 2024. 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 DMT310 for the treatment of acne, continue development of DMT310, 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

We believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2024. 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 DMT310 for the treatment of acne, continue development of DMT310, 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.