GRI BIOPAR The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our financial statements and
related notes appearing elsewhere in this Quarterly Report, and the audited
financial statements (and notes thereto), and management's discussion and
analysis of financial condition and results of operations for the year ended
Overview
We are a clinical-stage biopharmaceutical company focused on the development and
commercialization of novel abuse-deterrent medications for CNS disorders. Our
lead investigational product candidate, ADAIR, is a proprietary, abuse-deterrent
oral formulation of immediate-release dextroamphetamine (the main active
ingredient in Adderall®), which we were developing for the treatment of
attention-deficit/hyperactivity disorder (ADHD) and narcolepsy. In
Recent Developments
The SEAL study (Study to Evaluate the Abuse Liability, Pharmacokinetics, Safety and Tolerability of an Abuse-Deterrent d-Amphetamine Sulfate Immediate Release Formulation), was our pivotal intranasal human abuse liability study assessing the pharmacodynamics (PD), pharmacokinetics (PK), safety and tolerability of snorting professional laboratory-manipulated ADAIR 30 mg when compared to crushed d-amphetamine sulfate and placebo in recreational drug users. ADAIR was prepared for snorting by a pharmacist using a multi-step technique that had been developed by a professional laboratory and agreed upon by the FDA. The SEAL study enrolled 55 subjects, of whom 53 completed the study and 52 were included in the final analysis. The study involved a four-way crossover design to evaluate professionally manipulated, intranasal ADAIR 30 mg, crushed intranasal dextroamphetamine, ADAIR 30 mg taken orally, and placebo. All subjects were non-dependent recreational stimulant users with an additional history of recreational intranasal drug use.
The SEAL study did not meet its primary endpoint, which was Emax Drug Liking. ADAIR scored similarly to what was observed in an earlier proof-of-concept study, however, reference dextroamphetamine did not score as high as expected and as seen in the previous study, thus driving the lack of statistical significance. The SEAL study did meet all pharmacodynamic secondary endpoints including Overall Drug Liking and willingness to Take Drug Again at 12 and 24 hours post-dosing, demonstrating statistical significance.
We are continuing to assess the best path forward for the ADAIR and ADMIR
development programs. In addition, we have engaged
License Agreement
In
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COVID-19
The global COVID-19 pandemic continues to present uncertainty and unforeseeable new risks to our operations and business plan. We have closely monitored recent COVID-19 developments, including the lifting of COVID-19 safety measures, the drop in vaccination rates, the implementation of, and reaction to, vaccine mandates, the spread of new strains or variants of the coronavirus (such as the Delta and Omicron variants), and supply chain and labor shortages. In light of these developments, the full impact of the COVID-19 pandemic on our business, operations and clinical development plans remains uncertain and will vary depending on the pandemic's future impact on our clinical trial enrollment (including our ability to recruit and retain patients), clinical trial sites, CROs, third-party manufacturers, and other third parties with whom we do business, as well as any legal or regulatory consequences resulting therefrom. To the extent possible, we are conducting business as usual, with necessary or advisable modifications to employee travel and with most of our employees and consultants working remotely. We will continue to actively monitor the COVID-19 pandemic and may take further actions that alter our operations, including those that may be required by federal, state or local authorities, or that we determine are in the best interests of our employees and other third parties with whom we do business.
Financial Operations Overview
Research and Development Expenses
Research and development expenses include personnel costs associated with research and development activities, including third party contractors to perform research, conduct clinical trials and manufacture drug supplies and materials. The Company accrues for costs incurred by external service providers, including contract research organizations and clinical investigators, based on its estimates of service performed and costs incurred.
Our research and development expenses have consisted primarily of in-process research and development expenses, costs related to the development program for ADAIR, commercial manufacturing of ADAIR and formulation development for ADMIR. Research and development costs are expensed as incurred. These expenses include:
•employee -related expenses, such as salaries, bonuses and benefits, consultant-related expenses such as consultant fees and bonuses, stock-based compensation, overhead related expenses and travel related expenses for our research and development personnel;
•expenses incurred under agreements with contract research organizations (CROs), as well as consultants that support the implementation of our clinical and non-clinical studies;
•manufacturing and packaging costs in connection with conducting clinical trials and for stability and other studies required to support an NDA filing as well as manufacturing drug product for commercial launch;
•formulation, research and development expenses related to ADMIR; and other products we may choose to develop; and
•costs for sponsored research.
We typically use our employee, consultant and infrastructure resources across our research and development programs. Although we track certain outsourced development costs by product candidate, we do not allocate personnel costs or other internal costs to specific product candidates.
We plan to significantly decrease our research and development expenses as we consider our future plans regarding ADAIR and ADMIR programs as well as strategic alternatives.
General and Administrative Expenses
General and administrative expenses consist primarily of compensation and consulting related expenses for executives and other administrative personnel, professional fees and other corporate expenses, including legal and accounting fees, travel expenses, facilities-related expenses, and consulting services relating to our formation and corporate matters.
We incur costs associated with being a public company, including expenses
related to services associated with maintaining compliance with The Nasdaq
Capital Market and
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Other Income
Other income consists of income recognized as a result of the extinguishment of the promissory note issued to us under the Paycheck Protection Program (PPP) as a result of the forgiveness of the note.
Revaluation of Derivative Instruments
In
Warrant Liability, Change in Fair Value and Warrant Conversion
We evaluated the warrants issued in connection with the
Interest Income (Expense), net
Interest income (expense), net, consists of interest earned on our cash, cash equivalents and marketable securities held with institutional banks, the amortization of discounts and accretion of premiums on marketable securities and interest expense on our finance lease of equipment utilized in the commercial scale manufacturing of ADAIR.
Results of Operations
Comparison of the Three Months Ended
The following table summarizes the results of our operations for the periods
indicated (in thousands):
Three Months Ended
September 30,
2022 2021
Operating expenses:
Research and development (18) 215
General and administrative 1,422 1,038
Total operating expenses 1,404 1,253
Loss from operations (1,404) (1,253)
Change in fair value of warrant liability 757 -
Loss on warrant conversion (388) -
Interest income (expense), net 2 (4)
Net loss $ (1,033) $ (1,257)
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Research and Development Expenses
Research and development expenses were
General and Administrative Expenses
General and administrative expenses were
Change in Fair Value of Warrant Liability and Loss on Warrant Conversion
In
On
The change in fair value of
Interest Income (Expense), net
Interest income, net, was
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Comparison of the Nine Months Ended
The following table summarizes the results of our operations for the periods
indicated (in thousands):
Nine Months Ended
September 30,
2022 2021
License revenue-from related party $ - $ -
Operating expenses:
Research and development 1,529 3,189
General and administrative 4,014 2,976
Total operating expenses 5,543 6,165
Loss from operations (5,543) (6,165)
Other income - 61
Revaluation of derivative liability - (89)
Change in fair value of warrant liability 490 -
Loss on warrant conversion (388) -
Interest expense, net - (14)
Net loss $ (5,441) $ (6,207) Research and Development Expenses
Research and development expenses were
General and Administrative Expenses
General and administrative expenses were
Other Income
In
Revaluation of Derivative Liability
During the nine months ended
Change in Fair Value of Warrant Liability and Loss on Warrant Conversion
In
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On
The change in fair value of
Interest Expense, net
Interest expense was
Liquidity and Capital Resources
Since inception, we have incurred losses and expect to continue to incur losses
for the foreseeable future. We incurred net losses of
We have financed our working capital requirements to date through the issuance
of common stock, warrants, convertible notes, short-term promissory notes, and a
PPP promissory note. As of
The following table summarizes our cash flows for the periods indicated (in thousands):
Nine Months Ended September 30, 2022
2022 2021
Net cash provided by (used in):
Operating activities $ (5,764) $ (6,729)
Investing activities 3,362 (3,266)
Financing activities 3,432 15,770
Net increase in cash and cash equivalents $ 1,030 $ 5,775 Cash Flows from Operating Activities
For the nine months ended
Cash Flows from Investing Activities
Net cash used in investing activities was
Cash Flows from Financing Activities
Net cash provided by financing activities was
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2021 Convertible Note Financing
In
Future Funding Requirements
To date, we have not generated any revenue from the sale of any products.
Substantially all of our revenue to date has been generated by the Medice
license agreement from which we received a
If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Any future debt financing may impose upon us covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. Any equity or debt financing may contain terms that are not favorable to us or our stockholders. If we are unable to raise additional funds when needed, we may be required to delay, reduce or terminate some or all of our development programs and clinical trials. We may also be required to sell or license to other parties' rights to develop or commercialize our drug candidates that we would prefer to retain. Therefore, there is substantial doubt about our ability to continue as a going concern. We expect to continue to incur expenses and operating losses at least for the foreseeable future as we evaluate future plans for the ADAIR and ADMIR programs as well as our strategic alternatives.
See the "Risk Factors" section on this Form 10-Q for additional risks associated with our substantial capital requirements.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined in the rules and regulations of the
Critical Accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our unaudited interim financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results could differ from those estimates.
The Company's critical accounting policies are described in Note 3, "Summary of
Significant Accounting Policies," in the Company's Annual Report on Form 10-K
filed with the
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Emerging Growth Company Status
We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may remain an emerging growth company for up to five years. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:
•reduced disclosure about our executive compensation arrangements;
•no non-binding stockholder advisory votes on executive compensation or golden parachute arrangements; and
•exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.
We have taken advantage of reduced reporting requirements in this report and may
continue to do so until such time that we are no longer an emerging growth
company. We will remain an "emerging growth company" until the earliest of (a)
the last day of the fiscal year in which we have total annual gross revenues of
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