0001558370-23-009606 | 10-Q | XBRL Viewer | Neurobo Pharmaceuticals INC

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Balance Sheet Detail - Accrued Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Balance Sheet Detail
External research and development expenses	$ 326	$ 109
Payroll related	49	100
Professional services	23	23
Other	19	48
Total	$ 417	$ 280

Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Comprehensive Income	Accumulated Deficit	Total
Balance at beginning of period at Dec. 31, 2021	$ 1	$ 96,420	$ 4	$ (81,828)	$ 14,597
Balance at beginning of period (shares) at Dec. 31, 2021	888,693
Increase (Decrease) in Stockholders' Equity
Stock-based compensation		207			207
Foreign currency translation adjustment			(1)		(1)
Net loss				(2,875)	(2,875)
Balance at end of period at Mar. 31, 2022	$ 1	96,627	$ 3	(84,703)	11,928
Balance at end of period (shares) at Mar. 31, 2022	888,693
Balance at beginning of period at Dec. 31, 2022	$ 25	117,520		(95,795)	21,750
Balance at beginning of period (shares) at Dec. 31, 2022	25,436,019
Increase (Decrease) in Stockholders' Equity
Issuance of stock from exercise of warrants	$ 2	1,434			1,436
Issuance of stock from exercise of warrants (in shares)	1,740,666
Stock-based compensation		(74)			(74)
Net loss				(2,604)	(2,604)
Balance at end of period at Mar. 31, 2023	$ 27	$ 118,880		$ (98,399)	$ 20,508
Balance at end of period (shares) at Mar. 31, 2023	27,176,685

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

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+ Details

Fair Value Measurements - Roll-Forward of Premium conversion Derivative Liabilities (Details) - Warrants $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Warrant Liability [Roll Forward]
Balance at beginning of period	$ 10,796
Change in fair value of warrant liabilities	$ 84
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Fair Value Adjustment of Warrants
Reclass of warrant liabilities upon exercise of warrants	$ (1,436)
Balance at end of period	$ 9,444

Stockholders Equity (Tables)

3 Months Ended

Mar. 31, 2023

Stockholders' Equity

Schedule of warrants outstanding



Warrant Issuance	March 31, 2023	December 31, 2022	Exercise Price
July 2018	48	48	$	5,602.50
April 2020	1,252	1,252	$	375.00
January 2021	83,338	83,338	$	180.90
October 2021	143,597	143,597	$	112.50
November 2022 Series A	6,423,504	6,768,837	$	0.00
November 2022 Series B	6,871,837	8,267,170	$	0.00
Total	13,523,576	15,264,242

Stock-based Compensation (Tables)

3 Months Ended

Mar. 31, 2023

Stock-Based Compensation

Schedule of share-based compensation expense

Stock-based compensation expense was included in general and administrative and research and development costs as follows in the accompanying statements of comprehensive loss:


	Three Months Ended
	March 31,
		2023		2022
General and administrative	$	(85)	$	207
Research and development		11		-
Total stock-based compensation	$	(74)	$	207

Schedule of stock option plan activity

The following table summarizes the Company’s activity related to its stock options for the three months ended March 31, 2023:


				Weighted‑
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
	Number of	Exercise		Contractual	Value
	Options	Price		Term (years)	(in thousands)
Outstanding at December 31, 2022	36,493	$	99.62	8.5	$	—
Granted	25,000	$	0.67	—	$	—
Exercised	-	$	—	—	$	—
Forfeited/Cancelled	(12,333)	$	75.38	—	$	—
Outstanding at March 31, 2023	49,160	$	59.57	9.1	$	1
Vested and expected to vest at March 31, 2023	49,160	$	59.57	9.1	$	1
Options exercisable at March 31, 2023	43,349	$	62.55	9.1	$	1

Schedule of assumptions used in the Black Scholes option-pricing model


	Three Months Ended
	March 31,
	2023			2022

Expected stock price volatility		82.9	%		80.7	%
Expected life of options (years)		5.0			5.8
Expected dividend yield		—	%		—	%
Risk free interest rate		3.54	%		1.72	%

Commitments and Contingencies - License Agreement with Dong-A ST (Details) $ in Thousands	Sep. 14, 2022 USD ($) item	Mar. 31, 2023 USD ($)
Commitments and Contingencies
Amount of milestones accrued		$ 0
Dong A ST License Agreement \| Dong-A
Commitments and Contingencies
Number of proprietary compounds in a license \| item	2
DA-1726 \| Dong-A
Commitments and Contingencies
Developmental and regulatory milestone payment eligible to be received	$ 178,000
DA-1241 \| Dong-A
Commitments and Contingencies
Developmental and regulatory milestone payment eligible to be received	$ 138,000

License and Collaboration Agreement - Beijing (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
License Agreement with Beijing SL
License Agreements
Revenue recognized from the agreement	$ 0

Commitments and Contingencies - Gemphire Contingent Value Rights Agreement (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 23, 2021	Dec. 30, 2019
Mergers
Amount of milestones accrued	$ 0
Original CVR Agreement
Mergers
Percentage of proceeds from the grant, sale, or transfer of rights		10.00%	80.00%
Amount of milestones accrued	$ 0

Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2023

Related Party Transactions

Schedule of statements of work


SOW	Description		SOW amount (1)		R&D expense for the three months ended March 31, 2023		Accrued research and development as of March 31, 2023
SOW 3	Manufacture of DA-1241 and DA-1726	$	-	$	-	$	-
SOW 4	Preclinical and Research Overhead for DA-1241 and DA-1726		1,105		326		326

Total		$	1,105	$	326	$	326

(1)

SOW 3 does not reflect the cost to manufacture DA-1241 and DA-1726, which is to be provided by Dong-A closer to completion. The Company has determined that the SOW amount and R&D expense for the three months ended March 31, 2023 are not currently estimable due to uncertainty within the terms of the SOW.

Related Party Transactions (Details) $ in Thousands				3 Months Ended
Related Party Transactions (Details) $ in Thousands	Sep. 14, 2022 item	Jun. 07, 2020	Sep. 28, 2018	Mar. 31, 2023 USD ($)	Mar. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)
Related Party Transactions
Amount of milestones accrued				$ 0
Dong-A \| Manufacturing and Supply Agreement
Related Party Transactions
Term of agreement		5 years	5 years
Related party costs				0	$ 0
Notice period for purchase order prior to requested delivery date		270 days
Costs incurred under the Manufacturing Agreement remained unpaid				0		$ 0
Dong-A \| Dong A ST License Agreement
Related Party Transactions
Number of proprietary compounds in a license \| item	2
Dong-A \| Shared Services Agreement
Related Party Transactions
Total consideration				$ 1,105
Period for termination notice when material breach not cured	30 days
Period for failing to cure the beach, the agreement may get terminated	30 days

Commitments and Contingencies - Operating Leases - (Details) - Head Quarters in Boston Lease - USD ($) $ in Thousands		3 Months Ended
	May 14, 2021	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Commitments and Contingencies
Term of contract	6 months
Monthly rental cost	$ 3	$ 2
Rent concessions granted by the landlord	$ 2
Lease expense		5	$ 4
Right-of-use assets and other		0		$ 0
Lease asset liability		$ 0		$ 0

Net Loss Per Common Share - Antidilutive Securities (Details) - shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Stock options.
Potential common shares
Potential common shares	49,160	32,719
Warrants
Potential common shares
Potential common shares	228,235	228,235

Stock-based Compensation - Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Number of Options
Stock-based compensation	$ (74)	$ 207
General and administrative
Number of Options
Stock-based compensation	(85)	$ 207
Research and development
Number of Options
Stock-based compensation	$ 11

Summary of Significant Accounting Policies (Policies)	3 Months Ended
Summary of Significant Accounting Policies (Policies)	Mar. 31, 2023
Summary of Significant Accounting Policies
Use of Estimates	Use of estimates 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 the Company's condensed consolidated financial statements relate to accrued expenses and the fair value of stock-based compensation and warrant issuances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgements 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.
General and Administrative Expenses	General and Administrative Expenses General and administrative expenses consist primarily of personnel-related costs, including salaries, fees and stock-based compensation costs, for personnel in functions not directly associated with research and development activities. Other significant costs include legal fees related to intellectual property and corporate matters and professional fees for accounting and other services.
Research and Development Costs	Research and Development Costs Research and development (“R&D”) costs are charged to expense as incurred. Research and development expenses are comprised of costs incurred in performing research and development activities, including clinical trial costs, manufacturing costs for both clinical and pre-clinical materials as well as other contracted services, license fees, and other external costs. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity is performed or when the goods have been received, rather than when payment is made, in accordance with Accounting Standards Codification (“ASC”) 730, Research and Development.
Fair Value of Financial Instruments	Fair Value of Financial Instruments The Company’s financial instruments principally include cash, prepaid expenses, right of use assets, accounts payable, accrued liabilities, lease liabilities and warrant liabilities. The carrying amounts of cash, prepaid expenses and other current assets, accounts payable, and accrued liabilities are reasonable estimates of their fair value because of the short maturity of these items. See Note 9 - Fair Value Measurements.
Warrant Liabilities	Warrant Liabilities The Company accounts for its warrants as liabilities at fair value if equity accounting treatment is precluded due to provisions existing within the warrants. The change in fair value of the warrant liabilities are recognized as a fair value change in warrant liabilities in the consolidated statements of operations and comprehensive loss and as an operating item in the statement of cash flows.
Stock-Based Compensation	Stock-Based Compensation The Company accounts for stock-based compensation in accordance with the provisions of ASC 718, Compensation — Stock Compensation (“ASC 718”). Accordingly, compensation costs related to equity instruments granted are recognized at the grant-date fair value. The Company records forfeitures when they occur. Stock-based compensation arrangements to non-employees are accounted for in accordance with the applicable provisions of ASC 718 using a fair value approach.
Recent Accounting Pronouncements Adopted	Recent Accounting Pronouncements Adopted From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses”. The ASU sets forth a “current expected credit loss” (CECL) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU is effective for calendar year 2023 for smaller reporting companies. The Company adopted this new guidance on January 1, 2023, and the adoption did not have a material impact on the Company's consolidated financial statements.

- Definition

Disclosure of accounting policy for award under share-based payment arrangement. Includes, but is not limited to, methodology and assumption used in measuring cost.

+ References + Details

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash	$ 30,813	$ 33,364
Prepaid expenses	670	168
Total current assets	31,483	33,532
Property and equipment, net	5	2
Total assets	31,488	33,534
Current liabilities:
Accounts payable	1,119	708
Accrued liabilities	417	280
Warrant liabilities	9,444	10,796
Total current liabilities	10,980	11,784
Total liabilities	10,980	11,784
Commitments and contingencies (Note 4)
Stockholders' equity
Preferred stock, $0.001 par value per share; 10,000,000 shares authorized as of March 31, 2023 and December 31, 2022; no shares issued or outstanding as of March 31, 2023 and December 31, 2022.
Common stock, $0.001 par value per share, 100,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 27,176,685 and 25,436,019 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively.	27	25
Additional paid-in capital	118,880	117,520
Accumulated deficit	(98,399)	(95,795)
Total stockholders' equity	20,508	21,750
Total liabilities and stockholders' equity	$ 31,488	$ 33,534

Balance Sheet Detail - Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Balance Sheet Detail
Less accumulated depreciation	$ (29)	$ (28)
Property and equipment, net	5	2
Office equipment
Balance Sheet Detail
Office equipment	$ 34	$ 30

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Operating activities
Net loss	$ (2,604)	$ (2,875)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	(74)	207
Non-cash lease expense		6
Depreciation	1	12
Change in fair value of warrant liabilities	84
Change in operating assets and liabilities:
Prepaid expenses and other assets	(502)	(1,510)
Accounts payable	411	(54)
Accrued and other liabilities	137	(615)
Net cash used in operating activities	(2,547)	(4,829)
Investing activities
Purchases of property and equipment	(4)
Net cash used in investing activities	(4)
Net decrease in cash	(2,551)	(4,829)
Net foreign exchange difference		(1)
Cash at beginning of period	33,364	16,387
Cash at end of period	30,813	$ 11,557
Supplemental non-cash investing and financing transactions:
Unpaid issuance costs	80
Reclassification of warrant liabilities upon exercise of warrants	$ 1,436

Commitments and Contingencies

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies

Commitments and Contingencies

4. Commitments and Contingencies

Operating Lease

On May 14, 2021, the Company entered into a non-cancelable operating lease for its corporate headquarters located in Boston Massachusetts. The agreement, effective August 1, 2021, had a six month term, and rental costs of approximately $3 per month prior to the application of certain rent concessions granted by the landlord in the amount of approximately $2 over the term of the lease. The Company has since entered into amendments to the lease which reduced the size of the office space and extended the lease term, which expired in March 2023, for rental costs of approximately $2 per month. Subsequent to March 2023, the Company is on a month-to-month term for the lease.

No assets and liabilities were recognized for the corporate headquarters leases at March 31, 2023 and December 31, 2022. Due to the short-term nature of the leases, the Company recognized lease payments as an expense on a straight-line basis over the remaining lease term. For the three months ended March 31, 2023 and 2022, expense under the corporate headquarters lease was in the aggregate $5 and $4, respectively.

License Agreement with Dong-A ST

On September 14, 2022, the Company and Dong-A ST Co., Ltd. (“Dong-A”), a related party and greater than 5% shareholder, entered into a license Agreement, pursuant to which the Company received an exclusive global license (other than in the Republic of Korea) to two proprietary compounds for specified indications (the “2022 License Agreement”). The 2022 License Agreement covers the rights to DA-1241 for treatment of NASH and T2D and DA-1726 for treatment of obesity and NASH. Under the 2022 License Agreement, Dong-A will be eligible to receive (i) regulatory milestone payments of up to $178 million for DA-1726 and $138 million for DA-1241, dependent upon the achievement of specific

regulatory developments; (ii) commercial-based milestone payments, dependent upon the achievement of specific commercial developments; and (iii) single digit royalties on net sales received by the Company from the commercial sale of products covering DA-1241 or DA-1726.

As of March 31, 2023, no milestone or royalty payments had been accrued as there were no potential milestones yet considered probable.

ANA Merger Milestone Payments

On December 31, 2020, the Company acquired 100% of ANA Therapeutics, Inc., a Delaware corporation (“ANA”), pursuant to an Agreement and Plan of Merger, dated December 31, 2020 (the “2020 Merger Agreement” or “2020 Merger”). Pursuant to the 2020 Merger Agreement, following the closing of the 2020 Merger, the Company is obligated to pay milestone payments (each, a “Milestone Payment”) to certain persons identified in the 2020 Merger Agreement (each a “Stakeholder” and collectively, the “Stakeholders”) in the form, time and manner as set forth in the 2020 Merger Agreement, upon the achievement of the following milestone events set forth below by the Company or any of its affiliates (each, a “Milestone Event”):


Milestone Event				Milestone Payment
First receipt of Marketing Approval (as defined in the 2020 Merger Agreement) from the FDA for any Niclosamide Product (as defined in the 2020 Merger Agreement)		$		45.0 million
Sales Milestones:
Milestone Event – Worldwide Cumulative Net Sales of a Niclosamide Product
equal to or greater than:				Milestone Payment
$500 million			$	$9.0 million
$1 billion	$			13.5 million
$3 billion	$			36.0 million
$5 billion	$			72.0 million

Additionally, pursuant to the 2020 Merger Agreement, the Company is obligated to pay a royalty of two and a half percent (2.5%) of annual worldwide net sales of each Niclosamide Product (as defined in the 2020 Merger Agreement) (each such payment, a “Royalty Payment”) to the Stakeholders in the form, time and manner as set forth in the 2020 Merger Agreement, following the first commercial sale of each Niclosamide Product (as defined in the 2020 Merger Agreement) on a country by-country and Niclosamide Product-by-Niclosamide Product basis.

As of March 31 2023, no Royalty Payments had been accrued as there were no potential milestones yet considered probable.

YourChoice License Agreement

In connection with the 2020 Merger, the Company assumed the license agreement between ANA and Your Choice Therapeutics, Inc. (the “YourChoice Agreement”). Prior to the 2020 Merger, YourChoice Therapeutics, Inc. granted to ANA, during the term of the YourChoice Agreement, an exclusive, worldwide, fee-bearing license derived from the licensed intellectual property throughout the world. The fees due under the YourChoice Agreement include royalty payments of 0.5% of annual worldwide net sales of each Niclosamide Product (as defined in the 2020 Merger Agreement) and milestone payments in the aggregate of $19.5 million. The first milestone payment due is $5 million upon first receipt of Marketing Approval (as defined in the 2020 Merger Agreement) from the U.S. Food and Drug Administration (“FDA”) for any Niclosamide Product (as defined by the 2020 Merger Agreement), followed by sales milestones of $1 million, $1.5 million, $4 million, and $8 million if worldwide cumulative net sales of a Niclosamide Product are equal to or greater than $500 million, $1, billion, $3, billion, and $5 billion, respectively. The term of the YourChoice Agreement will expire on the expiration or invalidation of the last of the licensed patents under the YourChoice Agreement. As of March 31, 2023, there was sufficient uncertainty with regard to both the outcome of the clinical trials and the ability to obtain sufficient funding to support any of the cash milestone payments under the YourChoice Agreement, and as such, no liabilities were recorded.

Gemphire Contingent Value Rights Agreement.

On December 30, 2019, the Company was party to a definitive merger agreement (the “2019 Merger”) with Gemphire Therapeutics, Inc. (“Gemphire”). In connection with the 2019 Merger, Gemphire entered into the Contingent Value Rights Agreement (the “CVR Agreement”) with Grand Rapids Holders’ Representative, LLC, as representative of Gemphire’s stockholders prior to the 2019 Merger (the “Holders’ Representative”), and Computershare Inc. and Computershare Trust Company, N.A. as the rights agents (collectively, the “Rights Agent”). Under the CVR Agreement, which NeuroBo assumed in connection with the 2019 Merger, the holders of Gemphire shares at the time of the 2019 Merger (collectively, the “CVR Holders”) were entitled to receive 80% of the proceeds from the grant, sale, or transfer of rights to Gemcabene.

On March 23, 2021, NeuroBo, the Holders’ Representative, and the Rights Agent entered into the First Amendment to Contingent Value Rights Agreement (the “CVR Amendment”) to amend the CVR Agreement. Pursuant to the CVR Amendment, (i) the CVR Holders will continue to have the right to receive 80% of the proceeds from the grant, sale, or transfer of rights to Gemcabene as a treatment for cardiovascular conditions and (ii) the CVR Holders will now also receive 10% of the proceeds from the grant, sale, or transfer of rights to Gemcabene as a treatment for any indication outside of treating cardiometabolic diseases, including COVID-19.

As of March 31, 2023, no obligations had been accrued as there were no potential payments under the CVR Agreement or the CVR Amendment that were yet considered probable.

Pfizer License Agreement

Upon the close of the 2019 Merger, an exclusive license agreement with Pfizer, Inc. (“Pfizer”) for the clinical product candidate Gemcabene (the “Pfizer Agreement”) was assumed by the Company. Under the Pfizer Agreement, in exchange for this worldwide exclusive right and license to certain patent rights to make, use, sell, offer for sale and import the clinical product Gemcabene, the Company has agreed to certain milestone and royalty payments on future sales.

The Company agreed to make milestone payments totaling up to $37 million upon the achievement of certain milestones, including the first new drug application (or its foreign equivalent) in any country, regulatory approval in each of the United States, Europe and Japan, the first anniversary of the first regulatory approval in any country, and upon achieving

certain aggregate sales levels of Gemcabene. Future milestone payments under the Pfizer Agreement, if any, are not expected to begin for at least several years and extend over a number of subsequent years.

The Company also agreed to pay Pfizer tiered royalties on a country-by-country basis based upon the annual amount of net sales, as specified in the Pfizer Agreement, until the later of: (a) five (5) years after the first commercial sale in such country; (b) the expiration of all regulatory or data exclusivity for Gemcabene in such country; and (c) the expiration or abandonment of the last valid claim of the licensed patents, including any patent term extensions or supplemental protection certificates in such country (collectively, the “Royalty Term”). Under the Pfizer Agreement, the Company is obligated to use commercially reasonable efforts to develop and commercialize Gemcabene.

As of March 31, 2023, there was sufficient uncertainty with regard to both the outcome of the clinical trials and the ability to obtain sufficient funding to support any of the cash milestone payments, and as such, no liabilities were recorded related to the Pfizer Agreement.

Contingencies

From time to time, the Company may be subject to various claims and suits arising in the ordinary course of business. The Company does not expect that the resolution of these matters will have a material adverse effect on its financial position or results of operations.

Stock-based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Stock Options, Additional Disclosures
Options, Outstanding, Aggregate Intrinsic Value	$ 1
Vested and expected to vest, Aggregate Intrinsic Value	1
Options Exercisable	$ 1
Stock options
Stock Options, Additional Disclosures
Stock options outstanding	49,160		36,493
Outstanding, Number, Beginning Balance (in shares)	36,493
Granted (in shares)	25,000
Forfeited/Cancelled (in shares)	(12,333)
Outstanding, Number, Ending Balance (in shares)	49,160		36,493
Vested and expected to vest (in shares)	49,160
Options Exercisable (in share)	43,349
Outstanding, Weighted Average Exercise Price, Beginning Balance (in dollars per share)	$ 99.62
Granted (in dollars per share)	0.67
Forfeited/Cancelled (in dollars per share)	75.38
Outstanding, Weighted Average Exercise Price, Ending Balance (in dollars per share)	59.57		$ 99.62
Vested and expected to vest (in dollars per share)	59.57
Options Exercisable (in dollars per share)	$ 62.55
Options, Outstanding, Weighted Average Remaining Contractual Term (years)	9 years 1 month 6 days		8 years 6 months
Vested and expected to vest (years)	9 years 1 month 6 days
Options Exercisable (years)	9 years 1 month 6 days
Stock options \| Non Employee Director
Stock Options, Additional Disclosures
Vesting period		3 years
Granted (in shares)	25,000	1,333
Weighted average fair value per share of options granted	$ 0.45	$ 20.93
Maximum \| Stock options \| 2019 Plan
Stock Options, Additional Disclosures
Expiration period	10 years

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2023	May 11, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	001-37809
Entity Registrant Name	NeuroBo Pharmaceuticals, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-2389984
Entity Address, Address Line One	200 Berkeley Street, Office 19th Floor
Entity Address, City or Town	Boston
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02116
City Area Code	857
Local Phone Number	702-9600
Title of 12(b) Security	Common stock, $0.001 par value
Trading Symbol	NRBO
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		27,241,685
Entity Central Index Key	0001638287
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false

Subsequent Events (Details) - Series B Warrant - shares	3 Months Ended
Subsequent Events (Details) - Series B Warrant - shares	Jun. 30, 2023	Mar. 31, 2023
Subsequent Event [Line Items]
Number of warrants exchanged for common stock		1,395,333
Subsequent Event
Subsequent Event [Line Items]
Number of warrants exchanged for common stock	65,000

Income Taxes

3 Months Ended

Mar. 31, 2023

Income Taxes

Income Taxes

10. Income Taxes

The effective tax rate for the three months ended March 31, 2023 and 2022 was zero percent. As a result of the analysis of all available evidence as of March 31, 2023 and December 31, 2022, the Company recorded a full valuation allowance on its net deferred tax assets. Consequently, the Company reported no income tax benefit for the three months ended March 31, 2023 and 2022. If the Company’s assumptions change and the Company believes that it will be able to realize these deferred tax assets, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets will be recognized as a reduction of future income tax expense. If the assumptions do not change, each period the Company could record an additional valuation allowance on any increases in the deferred tax assets.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

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+ Details

Related Party Transactions

3 Months Ended

Mar. 31, 2023

Related Party Transactions

Related Party Transactions

11. Related Party Transactions

Manufacturing Agreement with Dong-A ST

On September 28, 2018, the Company entered into a five year manufacturing and supply agreement with Dong-A for manufacturing and supply of NB-01 drug substance and placebos for the purpose of research and development to be used in Phase 3 clinical trials (the “Manufacturing Agreement”). There were no manufacturing related costs under the Manufacturing Agreement for the three months ended March 31, 2023 and 2022. The product manufacturing related costs, when incurred, are reflected as research and development expenses.

On June 7, 2020, the Company entered into a manufacturing and supply agreement (the “Manufacturing and Supply Agreement”) with Dong-A for the manufacturing and supply of NB-02 drug product and placebo for the purpose of research and development of NB-02, including but not limited to, the use in the first NB-02 human clinical trial to be conducted by the Company. Under the terms of the Manufacturing and Supply Agreement, upon receipt of a purchase order from the Company no later than 270 days prior to the requested delivery date, Dong-A has agreed to produce for the Company tablets of the NB-02 drug substance and placebos at a specified supply price. The Company is obligated to manufacture, or have manufactured, and supply to Dong-A the active pharmaceutical ingredients which are necessary to manufacture the NB-02 drug product. The Manufacturing and Supply Agreement has a five year term, subject to earlier termination under certain circumstances. The Company recognized no product manufacturing related costs under the Manufacturing and Supply Agreement for during the three months ended March 31, 2023 and 2022. None of the costs incurred under the Manufacturing Agreement remained unpaid as of March 31, 2023 or December 31, 2022.

Shared Services Agreement

On September 14, 2022, in conjunction with the Dong-A License Agreement, the Company entered into a shared services agreement with Dong-A (the “Shared Services Agreement”). The Shared Services Agreement provides that Dong-A may

provide technical support, pre-clinical development, and clinical trial support services on terms and conditions acceptable to both parties. In addition, the Shared Services Agreement provides that Dong-A will manufacture all of the Company’s clinical requirements of DA-1241 and DA-1726.

Either party may terminate the Shared Services Agreement for the other party’s material breach that is not cured within 30 days of notice. Dong-A may also terminate the Shared Services Agreement in part on a service-by-service or product-by-product basis upon a breach by the Company which is not cured within 30 days.

As of March 31, 2023, the table below summarizes the statements of work (the “SOW”s) executed between the Company and Dong-A pursuant to the Shared Services Agreement:


SOW	Description		SOW amount (1)		R&D expense for the three months ended March 31, 2023		Accrued research and development as of March 31, 2023
SOW 3	Manufacture of DA-1241 and DA-1726	$	-	$	-	$	-
SOW 4	Preclinical and Research Overhead for DA-1241 and DA-1726		1,105		326		326

Total		$	1,105	$	326	$	326

(1)

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
Condensed Consolidated Balance Sheets
Preferred stock, par value (in dollar per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollar per share)	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	27,176,685	25,436,019
Common stock, shares outstanding	27,176,685	25,436,019

Stockholders' Equity

3 Months Ended

Mar. 31, 2023

Stockholders' Equity

Stockholders' Equity

6. Stockholders’ Equity

Warrants

The following warrants were outstanding as of March 31, 2023 and December 31, 2022:



Warrant Issuance	March 31, 2023	December 31, 2022	Exercise Price
July 2018	48	48	$	5,602.50
April 2020	1,252	1,252	$	375.00
January 2021	83,338	83,338	$	180.90
October 2021	143,597	143,597	$	112.50
November 2022 Series A	6,423,504	6,768,837	$	0.00
November 2022 Series B	6,871,837	8,267,170	$	0.00
Total	13,523,576	15,264,242

The November 2022 Series A Warrants and November 2022 Series B Warrants have a cashless exercise provision whereby one warrant can be exchanged for one share of common stock for no additional consideration, which renders the $3.00 per share stated exercise price to be $0.00. During the three months ended March 31, 2023, 345,333 Series A Warrants and 1,395,333 Series B Warrants were exchanged for shares of the Company’s common stock.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 16
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496180-112644

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 50
-Paragraph 6
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126731327&loc=SL126733271-114008

+ Details

Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Fair Value Measurements

Fair Value Measurements

9. Fair Value Measurements

The Company follows accounting guidance that emphasizes that fair value is a market-based measurement, not an entity specific measurement. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value measurements are defined on a three level hierarchy:

Level 1 inputs: Unadjusted quoted prices for identical assets or liabilities in active markets;

Level 2 inputs: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, whether directly or indirectly, for substantially the full term of the asset or liability;

Level 3 inputs: Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

The fair value of financial instruments measured on a recurring basis as of March 31, 2023 and December 31, 2022 are as follows:


	As of March 31, 2023
Description	Total		Level 1		Level 2		Level 3
Liabilities:
Warrant liabilities	$	9,444	$	—	$	9,444	$	—
Total liabilities at Fair Value	$	9,444	$	—	$	9,444	$	—


	As of December 31, 2022
Description	Total		Level 1		Level 2		Level 3
Liabilities:
Warrant liabilities	$	10,796	$	—	$	—	$	10,796
Total liabilities at Fair Value	$	10,796	$	—	$	—	$	10,796

The fair value of the 2022 Series A Warrants and 2022 Series B Warrants (collectively, the “2022 Warrants”) was determined using a Monte Carlo simulation at December 31, 2022. This valuation technique involved a significant amount of estimation and judgment. In general, the assumptions used in calculating the fair value of the common stock warrant liability represent management’s best estimate, but the estimate involves inherent uncertainties and the application of significant management judgment. At December 31, 2022, these warrant liabilities fell within Level 3 of the fair value hierarchy.

However, due to the cashless exercise provision of the 2022 Warrants rendering the exercise price effectively at zero, the calculated price per share of the 2022 Warrants was equal to that of a share of common stock. Based on this result, the Company changed its valuation methodology during the three months ended March 31, 2023 and determined that the fair value of the warrants are equal to the underlying stock price at March 31, 2023. Therefore, as of March 31, 2023, these

warrant liabilities fell within Level 2 of the fair value hierarchy.

The following table provides a roll-forward of the warrant liabilities measured at fair value for the three months ended March 31, 2023:


		Three Months Ended
		March 31,
		2023
Balance at beginning of period	$	10,796
Change in fair value of warrant liabilities		84
Reclass of warrant liabilities upon exercise of warrants		(1,436)
Balance at end of period	$	9,444

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Operating loss carryforwards
Effective tax rate (as a percent)	0.00%	0.00%
Income tax benefit	$ 0	$ 0

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Stockholders Equity - Warrants - Narrative (Details) - USD ($)	1 Months Ended	3 Months Ended
	Nov. 30, 2022	Mar. 31, 2023	Oct. 31, 2022
November 2022 Series A and B
Number of warrants exchanged	1
Consideration received	$ 0
Warrants exercise price	$ 0.00		$ 3.00
Series A Warrant
Number of warrants exchanged for common stock		345,333
Series B Warrant
Number of warrants exchanged for common stock		1,395,333

The Company and Basis of Presentation

3 Months Ended

Mar. 31, 2023

The Company and Basis of Presentation

The Company and Basis of Presentation

1. The Company and Basis of Presentation

NeuroBo Pharmaceuticals, Inc. (together with its subsidiaries, the “Company” or “NeuroBo”), is a clinical-stage biotechnology company with two primary programs focused on treatment of nonalcoholic steatohepatitis (“NASH”) obesity, and type 2 diabetes mellitus (“T2D”):

●

DA-1241 is a novel G-Protein-Coupled Receptor 119 (GPR119) agonist that in preclinical studies demonstrated therapeutic potential for both NASH and T2D. Furthermore, in Phase 1a and 1b trials, DA-1241 was well tolerated in both healthy volunteers as well as in T2D patients. We submitted to the U.S Food and Drug Administration (“FDA”), and FDA cleared, an Investigational New Drug (“IND”) application to support a Phase 2a clinical trial of DA-1241 in NASH patients. In the third quarter of 2023, the Company intends to initiate the Phase 2a study with the goal of establishing efficacy of DA-1241 in NASH patients with confirmed pre-diabetes or T2D.

●

DA-1726 is a novel oxyntomodulin (“OXM”) analogue that acts as a glucagon-like peptide-1 receptor (GLP1R) and glucagon receptor (GCGR) dual agonist, currently in development for the treatment of obesity, with the potential to address NASH. In the second half of 2023, the Company intends to file an IND application for DA-1726 and initiate Phase 1 clinical trials, with the goal of establishing the safety of DA-1726 in human subjects.

The Company had previously focused its efforts on four therapeutic programs: ANA001, NB-01, NB-02 and gemcabene.

The Company’s operations have consisted principally of performing research and development activities, clinical development and raising capital. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding before sustainable revenues and profit from operations are achieved.

Basis of presentation and consolidation principles

The accompanying condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated financial statements may not include all disclosures required by GAAP; however, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2023. The condensed consolidated balance sheet as of December 31, 2022 was derived from the audited financial statements.

In the opinion of management, all adjustments, consisting of only normal recurring adjustments that are necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, have been made. The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future periods.

The condensed consolidated financial statements of the Company include a South Korean subsidiary, NeuroBo Co., LTD., which is fully owned by the Company. All significant intercompany accounts and transactions have been eliminated in the preparation of the financial statements.

Reverse Stock Split

The Company’s Board of Directors approved a one-for-thirty reverse stock split of the Company’s issued and outstanding

shares of common stock (the “Reverse Stock Split”). The Reverse Stock Split became effective as of 5:00 p.m. Eastern Time on September 12, 2022.

All issued and outstanding common stock and per share amounts contained in the condensed consolidated financial statements have been retroactively adjusted to reflect this Reverse Stock Split for all periods presented. In addition, a proportionate adjustment was made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options and warrants to purchase shares of common stock. A proportionate adjustment was also made to the number of shares reserved for issuance pursuant to the Company’s equity incentive compensation plans to reflect the Reverse Stock Split. Any fraction of a share of common stock that was created as a result of the Reverse Stock Split was rounded down to the next whole share and the stockholder received cash equal to the market value of the fractional share, determined by multiplying such fraction by the closing sales price of the Company’s common stock as reported on Nasdaq on the last trading day before the Reverse Stock Split becomes effective (on a split-adjusted basis). The authorized shares and par value of the common stock and preferred stock were not adjusted as a result of the Reverse Stock Split.

Liquidity

The accompanying consolidated financial statements have been prepared on the basis that the Company will continue as a going concern. From its inception, the Company has devoted substantially all of its efforts to drug discovery and development and conducting clinical trials.

As of March 31, 2023, the Company had $30.8 million in cash. The Company believes that its existing cash will be sufficient to fund its operations for at least the next 12 months from the date these financial statements are issued. The Company will need to continue to raise additional funds until it is able to generate sufficient revenues to fund its development activities. The Company’s future operating activities, coupled with its plans to raise capital or issue debt financing, may provide additional liquidity in the future, however these actions are not solely within the control of the Company and the Company is unable to predict the ultimate outcome of these actions to generate the liquidity ultimately required.

Stock-based Compensation - Evergreen provision (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Unrecognized share-based compensation
Unrecognized share-based compensation cost	$ 0.1
Unrecognized share-based compensation - Weighted average period	7 months 6 days
2022 Plan \| Stock options
Number of Options
Vested	25,446	797
Forfeited, nonvested	12,333	1,111
2021 Inducement Plan and the 2022 Plan \| Stock options
Number of Options
Available for grant	5,078,833

Net Loss Per Common Share

3 Months Ended

Mar. 31, 2023

Net Loss Per Common Share

Net Loss Per Common Share

8. Net Loss Per Common Share

Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for potentially dilutive securities if their effect is antidilutive. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding for the period determined using the treasury stock method. Dilutive common stock equivalents are comprised of options outstanding under the Company's stock incentive plans and warrants. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the potentially dilutive securities would be antidilutive.

The basic net loss per share calculation includes the 2022 Series A Warrants and 2022 Series B Warrants given that these instruments are exchangeable into common stock for which no additional consideration is required from the holder. The following potential shares of common stock were not considered in the computation of diluted net loss per share as

their effect would have been anti-dilutive.


	Three Months Ended
	March 31
	2023	2022
Stock options	49,160	32,719
Warrants (excluding 2022 Series A Warrants and 2022 Series B Warrants)	228,235	228,235

The Company and Basis of Presentation (Details) $ in Thousands	Sep. 12, 2022	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
The Company and Basis of Presentation
Reverse stock split, ratio	0.33
Cash		$ 30,813	$ 33,364

Stock-based Compensation - Assumptions (Details)	3 Months Ended
Stock-based Compensation - Assumptions (Details)	Mar. 31, 2023	Mar. 31, 2022
Stock-Based Compensation
Expected stock price volatility	82.90%	80.70%
Expected life of options (years)	5 years	5 years 9 months 18 days
Risk free interest rate	3.54%	1.72%

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Operating expenses:
Research and development	$ 637	$ 920
General and administrative	1,883	1,955
Total operating expenses	2,520	2,875
Loss from operations	(2,520)	(2,875)
Other expense
Change in fair value of warrant liabilities	(84)
Loss before income taxes	(2,604)	(2,875)
Provision for income taxes	0	0
Net loss	(2,604)	(2,875)
Other comprehensive loss, net of tax		(1)
Comprehensive loss	$ (2,604)	$ (2,876)
Loss per share:
Net loss per share, basic	$ (0.06)	$ (3.24)
Net loss per share, diluted	$ (0.06)	$ (3.24)
Weighted average shares of common stock outstanding:
Basic (in shares)	40,472,026	888,693
Diluted (in shares)	40,472,026	888,693

Net Loss Per Common Share (Tables)

3 Months Ended

Mar. 31, 2023

Net Loss Per Common Share

Schedule of potential common shares not considered in computation of diluted net loss per share


	Three Months Ended
	March 31
	2023	2022
Stock options	49,160	32,719
Warrants (excluding 2022 Series A Warrants and 2022 Series B Warrants)	228,235	228,235

License and Collaboration Agreement

3 Months Ended

Mar. 31, 2023

License and Collaboration Agreement

License and Collaboration Agreement

5. License and Collaboration Agreement

Beijing SL License and Collaboration Agreement

Upon the close of the 2019 Merger, the License and Collaboration Agreement (the “Beijing SL Agreement”) with Beijing SL Pharmaceutical Co., Ltd. (“Beijing SL”) was assumed by the Company, pursuant to which the Company granted Beijing SL an exclusive royalty-bearing license to research, develop, manufacture and commercialize pharmaceutical products comprising, as an active ingredient, Gemcabene in mainland China, Hong Kong, Macau and Taiwan. The terms of the Beijing SL Agreement include payments based upon achievement of milestones and royalties on net product sales. Under the Beijing SL Agreement, the Company has variable consideration in the form of milestone payments. As of March 31, 2023, no revenue under the Beijing SL Agreement has been recognized.

Balance Sheet Detail (Tables)

3 Months Ended

Mar. 31, 2023

Balance Sheet Detail

Schedule of property and equipment



		March 31, 2023		December 31, 2022
Office equipment	$	34	$	30
Less accumulated depreciation		(29)		(28)
Property and equipment, net	$	5	$	2

Schedule of accrued liabilities


		March 31, 2023		December 31, 2022
External research and development expenses	$	326	$	109
Payroll related		49		100
Professional services		23		23
Other		19		48
Total	$	417	$	280

Stock-based Compensation

3 Months Ended

Mar. 31, 2023

Stock-Based Compensation

Stock-Based Compensation

7. Stock-based Compensation

Stock-based compensation expense was included in general and administrative and research and development costs as follows in the accompanying statements of comprehensive loss:


	Three Months Ended
	March 31,
		2023		2022
General and administrative	$	(85)	$	207
Research and development		11		-
Total stock-based compensation	$	(74)	$	207

Stock Options

In December 2019, the Company adopted the 2019 Equity Incentive Plan (the “2019 Plan”), and in November 2021 and December 2022, the Company adopted the 2021 Inducement Plan and 2022 Equity Incentive Plan (“the 2022 Plan”), respectively. The stock option plans provide for the grant of stock options, restricted stock and other equity awards of the Company's common stock to employees, officers, consultants, and directors. Options expire within a period of not more than ten years from the date of grant.

The following table summarizes the Company’s activity related to its stock options for the three months ended March 31, 2023:


				Weighted‑
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
	Number of	Exercise		Contractual	Value
	Options	Price		Term (years)	(in thousands)
Outstanding at December 31, 2022	36,493	$	99.62	8.5	$	—
Granted	25,000	$	0.67	—	$	—
Exercised	-	$	—	—	$	—
Forfeited/Cancelled	(12,333)	$	75.38	—	$	—
Outstanding at March 31, 2023	49,160	$	59.57	9.1	$	1
Vested and expected to vest at March 31, 2023	49,160	$	59.57	9.1	$	1
Options exercisable at March 31, 2023	43,349	$	62.55	9.1	$	1

During the three months ended March 31, 2023, 25,000 stock options were granted to non-employee consultant that vested in March 2023 upon the Company’s filing of an IND with the FDA for DA-1241. During the three months ended March 31, 2022, there were 1,333 stock options granted to a non-employee director that vest over a three year period. The weighted average fair value per share of options granted during the three months ended March 31, 2023 and March 31, 2022 was $0.45 and $20.93, respectively.

The Company measures the fair value of stock options on the date of grant using the Black-Scholes option pricing model. The Company does not have history to support a calculation of volatility and expected term. As such, the Company has used a weighted-average volatility considering the volatilities of several guideline companies.

For purposes of identifying similar entities, the Company considered characteristics such as industry, length of trading history, and stage of life cycle. The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The average expected life of the options was determined based on the mid-point between the vesting date and the end of the contractual term according to the “simplified method” as described in Staff Accounting Bulletin 110. The risk-free interest rate is determined by reference to implied yields available from U.S. Treasury securities with a remaining term equal to the expected life assumed at the date of grant. The Company records forfeitures when they occur.

The assumptions used in the Black-Scholes option-pricing model are as follows:


	Three Months Ended
	March 31,
	2023			2022

Expected stock price volatility		82.9	%		80.7	%
Expected life of options (years)		5.0			5.8
Expected dividend yield		—	%		—	%
Risk free interest rate		3.54	%		1.72	%

During the three months ended March 31, 2023 and 2022, 25,446 and 797 stock options vested, respectively. During the three months ended March 31, 2023 and 2022, 12,333 and 1,111 stock options were forfeited, respectively.

As of March 31, 2023, 5,078,833 shares in the aggregate were available for future issuance under the 2021 Inducement Plan, and the 2022 Plan. Unrecognized stock-based compensation cost for the stock options issued under all stock incentive plans was $0.1 million as of March 31, 2023. The unrecognized stock-based expense is expected to be recognized over a weighted average period of 0.6 years.

Commitments and Contingencies - YourChoice and Pfizer License Agreement (Details)	3 Months Ended
	Mar. 31, 2023 USD ($)
Commitments and Contingencies
Percentage of royalty payments	2.50%
Tier One Net Sales Milestone [Member]
Commitments and Contingencies
Sales based milestone payment	$ 1,000,000
Payments for specified global net sales milestones	500,000,000
Tier Two Net Sales Milestone [Member]
Commitments and Contingencies
Sales based milestone payment	1,500,000
Payments for specified global net sales milestones	1,000,000,000
Tier Three Net Sales Milestone [Member]
Commitments and Contingencies
Sales based milestone payment	4,000,000
Payments for specified global net sales milestones	3,000,000,000
Tier Four Net Sales Milestone [Member]
Commitments and Contingencies
Sales based milestone payment	8,000,000
Payments for specified global net sales milestones	5,000,000,000
YourChoice \| License Agreements
Commitments and Contingencies
Milestones or royalty payments triggered	0
Royalty and milestone payment due	$ 19,500,000
Percentage of royalty payments	0.50%
YourChoice \| License Agreements \| Milestone Payments
Commitments and Contingencies
Royalty and milestone payment due	$ 5,000,000
Pfizer, Inc. \| License Agreements
Commitments and Contingencies
Number of years after the first commercial sale	five
Milestones or royalty payments triggered	$ 0
Pfizer, Inc. \| License Agreements \| Milestone Payments \| Maximum
Commitments and Contingencies
Potential payments upon achievement of certain milestones	37,000,000

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2023

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Use of estimates

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 the Company's condensed consolidated financial statements relate to accrued expenses and the fair value of stock-based compensation and warrant issuances. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgements 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.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel-related costs, including salaries, fees and stock-based compensation costs, for personnel in functions not directly associated with research and development activities. Other significant costs include legal fees related to intellectual property and corporate matters and professional fees for accounting and other services.

Research and Development Costs

Research and development (“R&D”) costs are charged to expense as incurred. Research and development expenses are comprised of costs incurred in performing research and development activities, including clinical trial costs, manufacturing costs for both clinical and pre-clinical materials as well as other contracted services, license fees, and other external costs. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity is performed or when the goods have been received, rather than when payment is made, in accordance with Accounting Standards Codification (“ASC”) 730, Research and Development.

Fair Value of Financial Instruments

The Company’s financial instruments principally include cash, prepaid expenses, right of use assets, accounts payable, accrued liabilities, lease liabilities and warrant liabilities. The carrying amounts of cash, prepaid expenses and other current assets, accounts payable, and accrued liabilities are reasonable estimates of their fair value because of the short maturity of these items. See Note 9 - Fair Value Measurements.

Warrant Liabilities

The Company accounts for its warrants as liabilities at fair value if equity accounting treatment is precluded due to provisions existing within the warrants. The change in fair value of the warrant liabilities are recognized as a fair value change in warrant liabilities in the consolidated statements of operations and comprehensive loss and as an operating item in the statement of cash flows.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with the provisions of ASC 718, Compensation — Stock Compensation (“ASC 718”). Accordingly, compensation costs related to equity instruments granted are recognized at the grant-date fair value. The Company records forfeitures when they occur. Stock-based compensation arrangements to non-employees are accounted for in accordance with the applicable provisions of ASC 718 using a fair value approach.

Recent Accounting Pronouncements Adopted

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses”. The ASU sets forth a “current expected credit loss” (CECL) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU is effective for calendar year 2023 for smaller reporting companies. The Company adopted this new guidance on January 1, 2023, and the adoption did not have a material impact on the Company's consolidated financial statements.

Commitments and Contingencies - ANA Merger Milestone Payment (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2020
Asset Acquisition [Line Items]
Percentage of royalty payments	2.50%
Amount of royalty payments accrued	$ 0
ANA Merger
Asset Acquisition [Line Items]
Ownership acquired		100.00%
500 million
Asset Acquisition [Line Items]
Milestone Payment	9,000
Sales based milestone payment	500,000
1 billion
Asset Acquisition [Line Items]
Milestone Payment	13,500
Sales based milestone payment	1,000,000
3 billion
Asset Acquisition [Line Items]
Milestone Payment	36,000
Sales based milestone payment	3,000,000
5 billion
Asset Acquisition [Line Items]
Milestone Payment	72,000
Sales based milestone payment	5,000,000
First Amendment to Original CVR Agreement \| ANA Merger
Asset Acquisition [Line Items]
Milestone Payment	$ 45,000

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2023

ANA Merger

Schedule of milestone events


Milestone Event				Milestone Payment
First receipt of Marketing Approval (as defined in the 2020 Merger Agreement) from the FDA for any Niclosamide Product (as defined in the 2020 Merger Agreement)		$		45.0 million
Sales Milestones:
Milestone Event – Worldwide Cumulative Net Sales of a Niclosamide Product
equal to or greater than:				Milestone Payment
$500 million			$	$9.0 million
$1 billion	$			13.5 million
$3 billion	$			36.0 million
$5 billion	$			72.0 million

Balance Sheet Detail

3 Months Ended

Mar. 31, 2023

Balance Sheet Detail

Balance Sheet Detail

3. Balance Sheet Detail

Property and Equipment

Property and equipment consist of the following as of:



		March 31, 2023		December 31, 2022
Office equipment	$	34	$	30
Less accumulated depreciation		(29)		(28)
Property and equipment, net	$	5	$	2

Accrued liabilities

Accrued liabilities consist of the following as of:


		March 31, 2023		December 31, 2022
External research and development expenses	$	326	$	109
Payroll related		49		100
Professional services		23		23
Other		19		48
Total	$	417	$	280

Related Party Transactions - Statements of work (Details) - Dong-A $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Preclinical and Research Overhead for DA-1241 and DA-1726
Related Party Transactions
SOW amount	$ 1,105
R&D expense	326
Accrued research and development	326
Shared Services Agreement
Related Party Transactions
SOW amount	1,105
R&D expense	326
Accrued research and development	$ 326

Subsequent Events

3 Months Ended

Mar. 31, 2023

Subsequent Events

Subsequent Events

12. Subsequent Events

Since March 31, 2023, 65,000 2022 Series B Warrants were exchanged for shares of the Company’s common stock.

Stockholders Equity - Warrants (Details) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
Warrants
Number of Warrants	13,523,576	15,264,242
$5,602.50
Warrants
Number of Warrants	48	48
Exercise Price	$ 5,602.50
$375.00
Warrants
Number of Warrants	1,252	1,252
Exercise Price	$ 375.00
$180.90
Warrants
Number of Warrants	83,338	83,338
Exercise Price	$ 180.90
$112.50
Warrants
Number of Warrants	143,597	143,597
Exercise Price	$ 112.50
$3.00
Warrants
Number of Warrants	6,423,504	6,768,837
Exercise Price	$ 0.00
$3.00
Warrants
Number of Warrants	6,871,837	8,267,170
Exercise Price	$ 0.00

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2023

Fair Value Measurements

Schedule of fair value of financial instruments measured on recurring basis


	As of March 31, 2023
Description	Total		Level 1		Level 2		Level 3
Liabilities:
Warrant liabilities	$	9,444	$	—	$	9,444	$	—
Total liabilities at Fair Value	$	9,444	$	—	$	9,444	$	—


	As of December 31, 2022
Description	Total		Level 1		Level 2		Level 3
Liabilities:
Warrant liabilities	$	10,796	$	—	$	—	$	10,796
Total liabilities at Fair Value	$	10,796	$	—	$	—	$	10,796

Schedule of a roll-forward of the warrant liabilities measured at fair value


		Three Months Ended
		March 31,
		2023
Balance at beginning of period	$	10,796
Change in fair value of warrant liabilities		84
Reclass of warrant liabilities upon exercise of warrants		(1,436)
Balance at end of period	$	9,444

Fair Value Measurements - Recurring basis (Details) - Recurring - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Fair value measurements
Warrant liabilities	$ 9,444	$ 10,796
Total liabilities at Fair Value	9,444	10,796
Level 2
Fair value measurements
Warrant liabilities	9,444
Total liabilities at Fair Value	$ 9,444
Level 3
Fair value measurements
Warrant liabilities		10,796
Total liabilities at Fair Value		$ 10,796