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May 13, 2022, 4:39 p.m. EDT

10-Q: NEUROBO PHARMACEUTICALS, INC.

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(EDGAR Online via COMTEX) -- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this report and the audited financial statements and related notes for the fiscal year ended December 31, 2021 included in our Annual Report on Form 10-K ("2021 Form 10-K") filed by the Company with the SEC on March 31, 2022.

Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q are forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), that are based on management's beliefs, assumptions and expectations and information currently available to management. All statements that address future operating performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements, including without limitation, our expectations regarding the potential impacts of the COVID-19 pandemic on our business operations, cash flow, business development, and employees, our ability to execute on our strategic realignments, our clinical activities, benefits of our proposed products to patients, our expectations with respect to product development and commercialization efforts, potentially competitive product offerings, the possibility that we may be unable to raise sufficient funds necessary for our anticipated operations, intellectual property protection, our ability to integrate acquired businesses, our expectations regarding anticipated synergies with and benefits from acquired businesses and other risks and uncertainties described in our filings with the SEC.

In some cases, you can identify forward-looking statements by the following words: "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "ongoing," "plan," "potential," "predict," "project," "should," "will," "would" or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Management believes that these forward-looking statements are reasonable as and when made. However, you should not place undue reliance on forward-looking statements because they speak only as of the date when made. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that might subsequently arise.

Forward-looking statements are subject to a number of risks and uncertainties that could cause actual events to adversely differ from the expectations indicated in these forward-looking statements, including without limitation, the risks and uncertainties described in our 2021 Form 10-K, and in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022. We operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties. We may not actually achieve the plans, projections or expectations disclosed in forward-looking statements, and actual results, developments or events could differ materially from those disclosed in the forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, including without limitation, the possibility that regulatory authorities do not accept our application or approve the marketing of our products, the possibility we may be unable to raise the funds necessary for the development and commercialization of our products, and those described in our filings with the SEC.

Overview

NeuroBo Pharmaceuticals, Inc. (the "Company," "we," "us" or "our") is a clinical-stage biotechnology company focused on developing and commercializing novel pharmaceuticals to treat neurodegenerative disorders affecting millions of patients worldwide. For more information on our business and our four product candidates, ANA001, NB-01, NB-02 and Gemcabene, see "Business-Overview" in Part I, Item 1 of our Annual Report on From 10-K filed on March 31, 2022.

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NeuroBo Pharmaceuticals, Inc.

Form 10-Q

Recent Developments

COVID-19

We are subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on our business is highly uncertain and difficult to predict, as the responses that we, other businesses and governments are taking continue to evolve. Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that it could cause a lasting national or global economic recession. Policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and economy as a whole. The magnitude and overall effectiveness of these actions remain uncertain.

To date, except for the adjustments to scientific activity described under "Current Scientific Activity" below, we have not experienced any significant external changes in our business that would have a significant negative impact on our consolidated statements of operations and comprehensive loss or cash flows.

Exclusive of the development of certain of our proposed therapies, the severity of the impact of the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on our service providers, suppliers, contract research organizations and our clinical trials, all of which are uncertain and cannot be predicted. As of the date of issuance of our financial statements, the extent to which the COVID-19 pandemic may in the future materially impact our financial condition, liquidity or results of operations is uncertain.

Current Scientific Activity

In light of the present business environment, including the impact of the COVID-19 pandemic, we are currently conducting the scientific activities described below with a view toward conserving financial resources.

ANA001, our lead drug candidate, is a proprietary oral niclosamide formulation and is being developed as a treatment for patients with moderate COVID-19. Niclosamide is a potential oral antiviral and anti-inflammatory agent with a long history of use and well-understood safety in humans. ANA001 is currently being studied in a 60-subject Phase 2 clinical trial conducted in the United States with a Phase 3 component dependent on the outcome of the Phase 2 data. We expect to complete the Phase 2 clinical trial in the second half of 2022, however the Centers for Disease Control is reporting that current hospitalizations are at the lowest level since the outbreak of the COVID-19 pandemic, potentially delaying the completion of this trial.

NB-01. We have determined to cease development of NB-01 on the prior regulatory pathway and not to advance to Phase 3 clinical trials.

The Company is currently evaluating various alternatives regarding the NB-01 asset. These alternatives include two potential development pathways.

? Orphan drug. Development of NB-01 as an orphan drug is among the alternatives the Company is considering.

Nutraceutical. The Company has considered marketing NB-01 as a nutraceutical ? (non-pharmaceutical) product, and the Company may re-explore this pathway if the identified rare disease indication for NB-01 does not proceed.

NB-02. In order to preserve operating capital, we have postponed continued work on the Investigation New Drug application to the FDA for NB-02 and the first human clinical trials for NB-02 until global health and macroeconomic conditions improve. We are also considering engaging with a strategic partner with respect to further development of NB-02.

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NeuroBo Pharmaceuticals, Inc.

Form 10-Q

Gemcabene. We are currently exploring additional therapeutic indications for Gemcabene that may strengthen our pipeline of assets, this includes COVID-19 in combination with ANA001.

Going Concern

We have incurred significant operating losses since inception. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more of our current or future product candidates. To date, we have not generated any revenue from product sales, collaborations with other companies, government grants or any other source, and do not expect to generate any revenue in the foreseeable future, and have been dependent on funding operations through the sale of equity securities.

As of March 31, 2022, we had an accumulated deficit of $84.7 million. Our net losses were $2.9 million and $3.3 million for the three months ended March 31, 2022 and 2021, respectively. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

? pursue clinical development for any of our current product candidates;

initiate preclinical studies and clinical trials with respect to any additional ? indications for our current product candidates and any future product candidates that we may pursue;

? acquire or in-license other product candidates and/or technologies;

? develop, maintain, expand and protect our intellectual property portfolio;

? hire additional clinical, scientific and commercial personnel;

establish a commercial manufacturing source and secure supply chain capacity ? sufficient to provide commercial quantities of any product candidates for which we may obtain regulatory approval;

? seek regulatory approvals for any product candidates that successfully complete clinical trials;

establish a sales, marketing and distribution infrastructure and/or enter into ? partnership arrangements to commercialize any products for which we may obtain regulatory approval; or

add administrative, operational, financial and management information systems ? and personnel, including personnel to support our product development and planned future commercialization efforts, and to support our being a public reporting company

As of March 31, 2022, we had cash of $11.6 million. Operating at such level of scientific activity, we expect that our cash will be adequate to fund operations into the fourth quarter of 2022. Although we are exploring financing opportunities and carefully monitoring the capital markets, we do not yet have any commitments for additional financing and may not be successful in our efforts to raise additional funds. Any amounts raised will be used for further development of our product candidates and for other working capital purposes.

The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplate our continuation as a going concern. We have not established a source of revenues and, as such, have been dependent on funding operations through the sale of equity securities. Since inception, we have experienced significant losses and incurred negative cash flows from operations. We expect to incur further losses over the next several years as we develop our business. We have spent, and expect to continue to spend, a substantial amount of funds in connection with implementing our business strategy.

These factors individually and collectively raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments or classifications that may result from our possible inability to continue as a going concern. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2021 includes an explanatory paragraph regarding the existence of substantial doubt about our ability to continue as a going concern.

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                                 NeuroBo Pharmaceuticals, Inc.
                                           Form 10-Q
        Results of Operations
        The following table summarizes our operating results for the periods indicated:
                                         For the Three Months Ended
                                                 March 31,
                                        2022         2021       Change
        Operating expenses:
        Research and development      $     920    $   1,143    $ (223)
        General and administrative        1,955        2,187      (232)
        Total operating expenses          2,875        3,330      (455)
        Loss from operations            (2,875)      (3,330)        455
        Interest income                       -            6        (6)
        Loss before income taxes        (2,875)      (3,324)        449
        Provision for income taxes            -            -          -
        Net loss                      $ (2,875)    $ (3,324)    $   449
        


Comparison of Three Months Ended March 31, 2022 and 2021

Research and Development Expenses

Research and development expenses consist primarily of costs incurred in connection with the development of our product candidates. We expense research and development costs to operations as incurred.

Research and development expenses were $0.9 million for the three months ended March 31, 2022 as compared to $1.1 million for the three months ended March 31, 2021. The $0.2 million decrease was primarily related to payroll and consulting costs for the three months ended March 31, 2022.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting, and audit services.

General and administrative expenses were $2.0 million for the three months ended March 31, 2022, compared to $2.2 million for the three months ended March 31, 2021. The decrease of $0.2 million in the current period was primarily due to a decrease in insurance costs of $0.1 million, and decreases in payroll, professional fee and overhead costs in the aggregate of $0.1 million.

Interest Income

Interest income for the three months ended March 31, 2022 was nominal. Interest Income for the three months ended March 31, 2021 was $6,000.

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                                 NeuroBo Pharmaceuticals, Inc.
                                           Form 10-Q
        Liquidity and Capital Resources
        Cash Flows
        The following table summarizes our cash flows for the periods indicated:
                                                          For the Three Months Ended
                                                                  March 31,
                                                          2022                 2021
                                                                (in thousands)
        Net cash used in operating activities        $      (4,829)          $ (6,141)
        Net cash used in investing activities                     -                  -
        Net cash provided by financing activities                 -              9,092
        Net (decrease) increase in cash              $      (4,829)          $   2,951
        


Operating Activities

During the three months ended March 31, 2022, cash used from operating activities was $4.8 million, consisting of our net loss of $2.9 million, changes in working capital cash usage in the amount of approximately $2.2 million. offset by non-cash expenses related primarily to stock-based compensation of $0.2 million, The change in working capital consisted primarily of increases in our prepaid expenses due to the annual renewal of our insurance policies in January 2022, as well as due to decreases in our accrued liabilities associated with fluctuations of our operating expenses under the normal course of business.

During the three months ended March 31, 2021, cash used in operating activities was $6.1 million, which consisted of our net loss of $3.3 million, offset by non-cash expenses related to stock-based compensation and depreciation in the aggregate of $0.2 million and a net decrease in changes in our operating assets and liabilities of $3.0 million..

Investing Activities

There was no cash used in investing activities during the three months ended March 31, 2022 or 2021.

Financing Activities

There was no cash provided by financing activities during the three months ended March 31, 2022. During the three months ended March 31, 2021, net cash provided by financing activities was $9.1 million, consisting of net proceeds from a private placement financing of $9.1 million.

Critical Accounting Policies and Estimates

Our financial statements are prepared in accordance with GAAP. These accounting principles require us to make estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expense during the periods presented. We believe that the estimates and judgments upon which we rely are reasonably based upon information available to us at the time that we make these estimates and judgments. To the extent that there are material differences between these estimates and actual results, our financial results will be affected. The accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described in "Management's Discussion and Analysis of Financial Condition and Results of Operations", included in our 2021 Form 10-K filed on March 31, 2022..

Table of Contents

NeuroBo Pharmaceuticals, Inc.

Form 10-Q

During the three months ended March 31, 2022, there were no material changes to our critical accounting policies or estimates disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our 2021 Form 10-K filed on March 31, 2022.

Recent Accounting Pronouncements

Refer to Note 2- Summary of Significant Accounting Policies to our condensed consolidated financial statements included elsewhere in this report for a discussion of recently issued accounting pronouncements.

May 13, 2022

COMTEX_407157987/2041/2022-05-13T16:38:38

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