FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
2024 from_________to_________☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period endedMarch 31, 2021☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period fromtoCommission File Number: 001-40034
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(State or other jurisdiction of
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2223 Avenida de la Playa, #208 La Jolla, CA 92037 | ||||||||||
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(Address of principal executive |
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Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||||||
Common Stock, par value $0.0001 | GRI | The Nasdaq Capital Market | |||||||||||||
Large accelerated filer |
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Non-accelerated filer |
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Emerging growth company |
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Consolidated |
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| 2023 | ||||||||||
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| 2023 | ||||||||||
Notes to Unaudited Interim Consolidated Financial Statements | ||||||||||
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that are based on management’s beliefs and assumptions and on information currently available to management. Some of the statements in the sections captioned “Part I—Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Quarterly Report contain forward-looking statements. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:
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Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. You should refer to the “Risk Factors” section of this Quarterly Report for a discussion of other important factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements.
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. If the forward-looking statements prove to be inaccurate; the inaccuracy may be material. In light of the significant uncertainties in these forward- looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. The forward-looking statements in this Quarterly Report represents our views as of the date of this Quarterly Report. We anticipate that subsequent events and developments will cause our views to change, however, except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein until after we distribute this Quarterly Report, whether as a result of any new information, future events or otherwise. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report.
This Quarterly Report includes trademarks and registered trademarks of Vallon Pharmaceuticals, Inc. Products or service names of other companies mentioned in this Quarterly Report may be trademarks or registered trademarks of their respective owners.
As used in this Quarterly Report, unless the context requires otherwise, the “Company,” “we,” “us” and “our” refer to Vallon Pharmaceuticals, Inc.
iii
Vallon Pharmaceuticals,
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| March 31, 2021 |
| December 31, 2020 | ||
Assets | | (unaudited) | | | | |
Current assets: | | | | | | |
Cash and cash equivalents | | $ | 12,980 | | $ | 109 |
Prepaid expenses and other current assets | |
| 1,358 | |
| 565 |
Total current assets | | | 14,338 | | | 674 |
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Finance lease right-of-use asset, net | | | 261 | | | 279 |
Property and equipment, net | | | 1 | | | 2 |
Total assets | | $ | 14,600 | | $ | 955 |
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Liabilities and Stockholders' Equity (Deficit) | |
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Current liabilities: | | | | | | |
Accounts payable | | $ | 1,347 | | $ | 1,226 |
Accrued expenses | | | 985 | | | 847 |
Note payable, current | | | — | | | 47 |
Finance lease liability, current | |
| 95 | |
| 105 |
Total current liabilities | |
| 2,427 | |
| 2,225 |
Note payable, non-current | | | — | | | 14 |
Finance lease liabilities, non-current | | | 146 | | | 170 |
Total liabilities | |
| 2,573 | |
| 2,409 |
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Commitments and contingencies (Note 10) | |
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Stockholders' equity (deficit): | |
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Common stock, $0.0001 par value; 250,000,000 shares authorized as of March 31, 2021 and December 31, 2020; 6,812,836 and 4,506,216 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively, which gives retroactive effect to the one-for-40 reverse stock split. See Note 1 to these financial statements. | |
| — | |
| — |
Additional paid-in-capital | |
| 27,264 | |
| 11,145 |
Accumulated deficit | |
| (15,237) | |
| (12,599) |
Total stockholders’ equity (deficit) | |
| 12,027 | |
| (1,454) |
Total liabilities and stockholders' equity (deficit) | | $ | 14,600 | | $ | 955 |
| March 31, 2024 | December 31, 2023 | ||||||||||
| Assets | (unaudited) | ||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 4,091 | $ | 1,808 | |||||||
| Prepaid expenses and other current assets | 337 | 1,126 | |||||||||
| Total current assets | 4,428 | 2,934 | |||||||||
| Property and equipment, net | 7 | 8 | |||||||||
| Operating lease right-of-use assets | 152 | 14 | |||||||||
| Total assets | $ | 4,587 | $ | 2,956 | |||||||
| Liabilities and stockholders' equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 637 | $ | 1,410 | |||||||
| Accrued expenses | 999 | 1,270 | |||||||||
| Warrant liability | 1 | 3 | |||||||||
| Operating lease liabilities, current | 43 | 14 | |||||||||
| Total current liabilities | 1,680 | 2,697 | |||||||||
| Operating lease liabilities, non-current | 109 | — | |||||||||
| Total liabilities | 1,789 | 2,697 | |||||||||
| Commitments and contingencies (Note 11) | |||||||||||
| Stockholders' equity: | |||||||||||
| Common stock, $0.0001 par value; 250,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 3,196,488 and 645,738 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | — | — | |||||||||
| Additional paid-in-capital | 36,218 | 31,792 | |||||||||
| Accumulated deficit | (33,420) | (31,533) | |||||||||
| Total stockholders’ equity | 2,798 | 259 | |||||||||
| Total liabilities and stockholders' equity | $ | 4,587 | $ | 2,956 | |||||||
(unaudited)
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| | For the Three | | For the Three | ||
| | Months Ended | | Months Ended | ||
| | March 31, | | March 31, | ||
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| 2021 |
| 2020 | ||
License revenue-related party | | $ | — | | $ | 100 |
Operating expenses: | | | | | | |
Research and development | | | 1,772 | | | 883 |
General and administrative | | | 830 | | | 375 |
Total operating expenses | | | 2,602 | | | 1,258 |
Loss from operations | | | (2,602) | | | (1,158) |
Other income | | | 61 | | | — |
Revaluation of derivative liability | | | (89) | | | — |
Interest expense, net | | | (8) | | | (2) |
Net loss attributable to common stockholders | | $ | (2,638) | | $ | (1,160) |
Net loss per share attributable to common stockholders, basic and diluted | | $ | (0.46) | | $ | (0.26) |
Weighted-average common shares outstanding basic and diluted | | | 5,710,270 | | | 4,506,216 |
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Operating expenses: | |||||||||||
| Research and development | 933 | 116 | |||||||||
| General and administrative | 962 | 872 | |||||||||
| Total operating expenses | 1,895 | 988 | |||||||||
| Loss from operations | (1,895) | (988) | |||||||||
| Change in fair value of warrant liability | 2 | — | |||||||||
| Interest income (expense), net | 6 | (1,162) | |||||||||
| Net loss | $ | (1,887) | $ | (2,150) | |||||||
| Net loss per share of common stock, basic and diluted | $ | (0.46) | $ | (15.04) | |||||||
| Weighted-average common shares outstanding, basic and diluted | 4,127,448 | 142,988 | |||||||||
(unaudited)
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| | Common Stock | | Additional Paid-In | | Accumulated | | Stockholders’ | ||||||
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| Shares (1) |
| Amount |
| Capital |
| Deficit |
| Equity (Deficit) | ||||
Balance, December 31, 2019 | | 4,506,216 | | $ | — | | $ | 10,991 | | $ | (7,777) | | $ | (3,214) |
Stock-based compensation expense | | — | | | — | | | 35 | | | 0 | | | 35 |
Net loss | | — | | | — | | | 0 | | | (1,160) | | | (1,160) |
Balance, March 31, 2020 |
| 4,506,216 | | $ | — | | $ | 11,026 | | $ | (8,937) | | $ | (2,089) |
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| | Common Stock | | Additional Paid-In | | Accumulated | | Stockholders’ | ||||||
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| Shares (1) |
| Amount |
| Capital |
| Deficit |
| Equity (Deficit) | ||||
Balance, December 31, 2020 | | 4,506,216 | | $ | — | | $ | 11,145 | | $ | (12,599) | | $ | (1,454) |
Issuance of common stock for convertible notes | | 54,906 | | | — | | | 439 | | | — | | | 439 |
Issuance of common stock for IPO, net of issuance expenses | | 2,250,000 | | | — | | | 15,104 | | | — | | | 15,104 |
Issuance of common stock for services | | 1,714 | | | — | | | 9 | | | — | | | 9 |
Issuance of Underwriters Warrants | | — | | | — | | | 399 | | | — | | | 399 |
Stock-based compensation | | — | | | — | | | 168 | | | — | | | 168 |
Net loss | | — | | | — | | | — | | | (2,638) | | | (2,638) |
Balance, March 31, 2021 |
| 6,812,836 | | $ | — | | $ | 27,264 | | $ | (15,237) | | $ | 12,027 |
(1) The number of shares above give retroactive effect to the one-for-40 reverse stock split. See Note 1 to these financial statements.
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Stockholders’ Deficit | |||||||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | 142,820 | $ | — | $ | 16,871 | $ | (18,496) | $ | (1,625) | |||||||||||||||||||||||
| Stock-based compensation | — | — | 13 | — | 13 | |||||||||||||||||||||||||||
| Restricted stock vesting | 67 | — | — | — | — | |||||||||||||||||||||||||||
| Warrant issuance | — | — | 532 | — | 532 | |||||||||||||||||||||||||||
| Net loss | — | — | — | (2,150) | (2,150) | |||||||||||||||||||||||||||
| Balance, March 31, 2023 | 142,887 | $ | — | $ | 17,416 | $ | (20,646) | $ | (3,230) | |||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Stockholders’ Equity | |||||||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | 645,738 | $ | — | $ | 31,792 | $ | (31,533) | $ | 259 | |||||||||||||||||||||||
| Stock-based compensation | — | — | 37 | — | 37 | |||||||||||||||||||||||||||
| Fractional share adjustment | (250) | — | — | — | — | |||||||||||||||||||||||||||
| Issuance of common stock and prefunded warrants in financing | 330,450 | — | 4,389 | — | 4,389 | |||||||||||||||||||||||||||
| Prefunded warrant exercise | 2,220,550 | — | — | — | — | |||||||||||||||||||||||||||
| Net loss | — | — | — | (1,887) | (1,887) | |||||||||||||||||||||||||||
| Balance, March 31, 2024 | 3,196,488 | $ | — | $ | 36,218 | $ | (33,420) | $ | 2,798 | |||||||||||||||||||||||
(unaudited)
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| | Three Months Ended | | Three Months Ended | ||
| | March 31, | | March 31, | ||
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| 2021 |
| 2020 | ||
Cash flows from operating activities: | | | | |
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Net loss | | $ | (2,638) | | $ | (1,160) |
Adjustments to reconcile net loss to cash used in operating activities: | |
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Amortization of finance lease right-of-use asset | | | 18 | | | 18 |
Stock-based compensation expense | | | 168 | | | 35 |
Revaluation of derivative liability | | | 89 | | | — |
Forgiveness of PPP note | | | (61) | | | — |
Non-cash interest, depreciation and other expense | |
| 10 | |
| — |
Change in operating assets and liabilities: | | | | | | |
Prepaid expenses and other current assets | |
| (793) | |
| (87) |
Accounts payable | | | 121 | | | 200 |
Accrued expenses | | | 138 | | | 226 |
Net cash used in operating activities | |
| (2,948) | |
| (766) |
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Cash flows from investing activities: | | | | | | |
Purchase of property and equipment | | | — | | | (2) |
Net cash used in investing activities | | | — | | | (2) |
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Cash flows from financing activities: | |
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Proceeds from common stock, net of offering expenses | |
| 15,503 | |
| — |
Proceeds from convertible notes | | | 350 | | | — |
Payment of finance lease liability | | | (34) | | | (29) |
Net cash provided by (used in) financing activities | |
| 15,819 | |
| (29) |
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Net increase (decrease) increase in cash and cash equivalents | |
| 12,871 | |
| (797) |
Cash and cash equivalents, at beginning of period | | | 109 | | | 3,821 |
Cash and cash equivalents, at end of period | | $ | 12,980 | | $ | 3,024 |
Supplemental disclosure of cash flows information: | | | | | | |
Interest paid | | $ | — | | $ | — |
Noncash financing activities: | | | | | | |
Conversion of convertible notes to common stock | | $ | 350 | | $ | — |
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Operating activities: | |||||||||||
| Net loss | $ | (1,887) | $ | (2,150) | |||||||
| Adjustments to reconcile net loss to cash used in operating activities: | |||||||||||
| Depreciation expense | 1 | 1 | |||||||||
| Amortization of debt discounts and issuance costs | — | 1,161 | |||||||||
| Stock-based compensation expense | 37 | 13 | |||||||||
| Change in fair value of warrant liability | (2) | — | |||||||||
| Reduction in operating lease right of use assets | 14 | 12 | |||||||||
| Change in operating assets and liabilities: | |||||||||||
| Prepaid expenses and other current assets | 564 | 28 | |||||||||
| Accounts payable | (744) | 408 | |||||||||
| Accrued expenses | (172) | (36) | |||||||||
| Operating lease liabilities | (14) | (16) | |||||||||
| Cash used in operating activities | (2,203) | (579) | |||||||||
| Financing activities: | |||||||||||
| Advances from employees | — | 190 | |||||||||
| Repayment of advances from employees | — | (195) | |||||||||
| Proceeds from issuance of bridge promissory note | — | 1,250 | |||||||||
| Proceeds from issuance of common stock and prefunded warrants | 5,500 | — | |||||||||
| Payment of stock issuance costs | (1,014) | (110) | |||||||||
| Payment of debt issuance costs | — | (105) | |||||||||
| Cash provided by financing activities | 4,486 | 1,030 | |||||||||
| Net increase in cash and cash equivalents | 2,283 | 451 | |||||||||
| Cash and cash equivalents at beginning of period | 1,808 | 9 | |||||||||
| Cash and cash equivalents at end of period | $ | 4,091 | $ | 460 | |||||||
| Supplemental disclosure of non-cash financing activities: | |||||||||||
| Recognition of debt discount and additional paid-in-capital for issuance of warrants in connection with the issuance of promissory notes | $ | — | $ | 532 | |||||||
| Recognition of right of use assets and lease liabilities | $ | 152 | $ | — | |||||||
| Debt and stock issuance costs included in accounts payable | $ | 97 | $ | 45 | |||||||
| Property and equipment purchases included in accounts payable | $ | — | $ | 8 | |||||||
GRI Bio, Inc.
(unaudited)
NOTE 1 – NATURE OF OPERATIONS, BUSINESS, GOING CONCERN AND LIQUIDITY
the Agreement and Plan of Merger, dated as of December 13, 2022, as amended on February 17, 2023 (the Merger Agreement), by and among the Company, GRI Bio Operations, Inc., formerly known as GRI Bio, Inc. (GRI Operations), and Vallon Pharmaceuticals,Merger Sub, Inc. (“Vallon” or the “Company”), a Delaware corporation is a biopharmaceutical company based in Philadelphia, PA, which is focused on the development and commercializationwholly owned subsidiary of proprietary biopharmaceutical products. The Company’s only clinical-stage product currently under development is ADAIR, a proprietary, abuse-deterrent oral formulation of immediate-release (short-acting) dextroamphetamine for the treatment of Attention-deficit/hyperactivity disorder, or ADHD, and Narcolepsy. The Company plans to develop other abuse-deterrent products which have potential for abuse in their current forms, beginning with the development of ADMIR, an abuse deterrent formulation of Ritalin, for which the Company is conducting formulation development work.
Vallon Pharmaceuticals, Inc.(Merger Sub), Merger Sub was incorporated in Delaware on January 11, 2018, which ismerged with and into GRI Operations (the Merger), with GRI Operations surviving the dateMerger as a wholly owned subsidiary of inception. The Company’s fiscal-year ends on December 31.
Immediately prior tothe Company (Note 4). In connection with the closing of the initial public offeringMerger (the Closing), the Company amended its certificate of incorporation and amended its bylaws to change its name from “Vallon Pharmaceuticals, Inc.” to “GRI Bio, Inc.”
Business Formation:
On November 15, 2017, beforeMerger has been retroactively adjusted to reflect the Company’s formation, Amiservice Development Ltd., a BVI corporation (“Amiservice”) entered into an agreementExchange Ratio (as defined below) and the Reverse Stock Splits for the purchase of the ADAIR product rights for a payment of $250,000. The Asset Purchase Agreement (“the APA”), by and between Amiservice and Arcturus Therapeutics Ltd. (”Arcturus”), was subject to several closing conditions. One of the key terms and conditions of the APA was that the purchasers provide funding of at least $2.75 million towards the development of ADAIR.
On February 11, 2018, Ofir Levi, Chairman of the newly formed Vallon, purchased 196,875 common shares from the Company at par value for $788. On June 7, 2018, Vallon entered into a stock purchase agreement with several investors pursuant to which Vallon issued 1,771,881 common shares for $3.0 million (“Private Placement”). Subsequently, on June 22, 2018, the Company executed the amended APA, by and between Arcturus Therapeutics Ltd. Such APA was amended and restated from the initial agreement discussed above, dated as of November 15, 2017. In exchange for the ADAIR product rights, Vallon issued 843,750 common shares to Arcturus, valued at approximately $1.4 million based upon the price at which the common shares were issued and sold in the Private Placement, which comprised approximately 30% of the then-outstanding common stock of the Company, on a fully diluted basis. In addition, Amiservice signed a consent and release agreement to all rightsperiods presented, to the APA in exchange for approximately $562,000 which represented a reimbursement for expenses Amiservice incurred on Vallon’s behalf in the amount of approximately $310,000, the repayment of 2 promissory notes totaling approximately $192,000 including interest, and approximately $60,000 of other operating expenses incurred. The assets acquired in the ADAIR acquisition are classified as in-process research and development (“IPR&D”). Accounting for IPR&D assets in an asset acquisition follows the guidance in Accounting Standards Codifications (“ASC”) 730, Research and Development, which requires that both tangible and intangible identifiable research and development assets with no alternative future use be allocated a portion of the consideration transferred and charged to expense at the acquisition date. The Company recorded $1.7 million to research and development expense on June 22, 2018, the date of acquisition, which included $1.4 million of common shares issued for the acquisition, as well as, the original $250,000 exclusivity payment and approximately $60,000 in transaction fees.
7
Going Concern and Liquidity:
These unaudited interim consolidated financial statements have been prepared on the basis that the Company is a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated any significant revenues from operations since inception and does not expect to do so in the foreseeable future. The Company has incurred operating losses since its inception in 2009 and, as a result, has incurred $15.2 million$33,420 in accumulated deficit through March 31, 2021.2024. The Company has financed its working capital requirements to date through the issuance of common stock, convertible notes, short-term promissory notes,equity and a Paycheck Protection Program (“PPP”) promissory note, as described in Note 4.
On January 11, 2021, the Company completed a $350,000 convertible note financing and on February 12, 2021, the Company completed the IPO, raising net proceedsdebt securities. As of $15.5 million, as described in Note 5. On March 31, 2021,2024, the Company had cash of approximately $4,091.
2024.
NOTE 2 –
The Company’s significant accounting policies are described in Note B, “Summary of Significant Accounting Policies,” in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 29, 2021. There have been no material changes to the significant accounting policies during the period ended March 31, 2021, except for items mentioned below.
[A] Unaudited Interim Financial Statements
2024. The balance sheet as of December 31, 2020 has been derived from the auditedunaudited interim consolidated financial statements, at that date but doespresented herein, do not include all ofcontain the information and notes required bydisclosures under GAAP for completeannual consolidated financial statements.
References The accompanying unaudited interim consolidated financial statements should be read in this Quarterly Report on Form 10-Q to “authoritative guidance” is toconjunction with the Accounting Standards Codification issued by the Financial Accounting Standards Board (“FASB”).
For further information, refer to theannual audited consolidated financial statements and related notes theretoas of and for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K forfiled with the year ended December 31, 2020.
8
[B] Use of Estimates
[C] Stock-based Compensation
[D] the period because the effects of potentially dilutive securities are antidilutive.
| March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Stock options | 32,642 | 12,781 | |||||||||
| Warrants | 10,298,553 | 14,822 | |||||||||
| Restricted stock with repurchase rights | — | 23,433 | |||||||||
| 10,331,195 | 51,036 | ||||||||||
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions
9
NOTE 3 – ACCRUED EXPENSES
Accrued expenses consistwholly owned subsidiary of the following (in thousands):
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| | March 31, | | December 31, | ||
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| 2021 |
| 2020 | ||
Payroll and related | | $ | 176 | | $ | 342 |
Clinical and preclinical trial and regulatory related | |
| 490 | |
| 137 |
Chemistry and manufacturing | | | 154 | | | 117 |
Financing related | | | — | | | 97 |
Licensing related | |
| 76 | |
| 81 |
Other | | | 89 | | | 73 |
Total accrued expenses | | $ | 985 | | $ | 847 |
NOTE 4 – PPP NOTE AND CONVERTIBLE NOTES
Company. In May 2020,connection with the Closing, the Company amended its certificate of incorporation and bylaws to change its name from “Vallon Pharmaceuticals, Inc.” to “GRI Bio, Inc.”
On January 11, 2021, the Company entered into a Convertible Promissory Note Purchase Agreement with certain existing stockholders, including SALMON Pharma GmbH (“Salmon Pharma”), an affiliate of Medice, and David Baker, the Company’s Chief Executive Officer, pursuant to which the Company issued convertible promissory notes (the “2021 Convertible Notes”), for cash proceeds of $350,000. The 2021 Convertible Notes bore an interest rate of 7.0% per annum, non-compounding, and had a maturity date of September 30, 2021. The 2021 Convertible Notes converted into 54,906outstanding shares of the Company’s common stock upon completionCommon Stock and the Company’s stockholders immediately prior to the Merger owned approximately 15% of the IPO. The Company identified the mandatory conversion intooutstanding shares of the Company’s common stock as a redemption feature, which requires bifurcation fromCommon Stock (ii) GRI Operations holds the 2021 Convertible Notesmajority (4 out of 5) of board seats of the combined company, and treated it as a derivative liability under ASC 815 as(iii) GRI Operations’ management holds the redemption feature was not clearly and closelymajority of key positions in the management of the combined company. Immediately after the Merger, there were 422,333 shares of the Company’s Common Stock outstanding.
| April 21, 2023 | ||||||||
| Cash and cash equivalents | $ | 941 | ||||||
| Prepaid and other assets | 310 | |||||||
| Accounts payable and accrued expenses | (4,190) | |||||||
| Total net liabilities assumed | (2,939) | |||||||
| Plus: Transaction costs | (2,984) | |||||||
| Total net liabilities assumed plus transaction costs | $ | (5,923) | ||||||
| Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | ||||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Warrant liability | $ | — | $ | — | $ | 1 | ||||||||||||||
| Total liabilities | $ | — | $ | — | $ | 1 | ||||||||||||||
NOTE 5 – EQUITY FINANCING
On February 12, 2021, the Company completed the IPO of 2,250,000 shares of common stock at a public offering price of $8.00 per share. The gross proceeds from the IPO, before deducting underwriting discounts, commissions and other offering expenses payable by the Company, were $18.0 million. Underwriting discounts and expenses totaled $1.6 million and the Company incurred approximately $905,000 of additional expenses related to completing the IPO, of which $494,000 were incurred as of December 31, 2020 and included prepaids and other current assets on the Company’s balance sheet; thus aggregate net proceeds were approximately $15.5 million. Immediately prior to the closing of the IPO, the Company effected a one-for-40 reverse stock split of its common stock.
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| Warrant Liability | |||||
| Fair value as of December 31, 2023 | $ | 3 | |||
| Change in valuation | (2) | ||||
| Fair value as of March 31, 2024 | $ | 1 | |||
In connection with the IPO, the Company granted the underwriters warrants (the “Underwriters' Warrants”) to purchase an aggregate of 112,500 shares of common stock at an exercise price of $10.00 per share, which is 125% of the initial public offering price. The Underwriters’ Warrants have a five-year term and are not exercisable prior to August 12, 2021. All of the Underwriters’ Warrants were outstanding at March 31, 2021. According to ASC 480-10-25-8 and ASC 480-10-25-14, a warrant is classified as a liability if the warrant obligates the issuer to repurchase its shares by transferring an asset. A warrant can also be classified as a liability if it (conditionally or unconditionally) obligates the issuer to settle the warrant by issuing a variable number of shares if the monetary value of the obligation is based on a predetermined fixed amount, variation in something other than the issuers stock price, or variations inversely related to the issuers stock price. Any other warrant would be classified as equity. Given that these warrants do not meet the criteria of debt classification, these warrants were classified as equity and the fair value of $399,000 is reflected as additional paid-in capital. The Black-Scholes option-pricingvaluation model was used to estimate the fair value of the warrants with the following weighted-average assumptions:
| March 31, 2024 | December 31, 2023 | ||||||||||
| Volatility | 211.9 % | 171.0 % | |||||||||
| Expected term in years | 2.5 | 2.5 | |||||||||
| Dividend rate | 0.0 % | 0.0 % | |||||||||
| Risk-free interest rate | 4.50 % | 4.12 % | |||||||||
| March 31, 2024 | December 31, 2023 | ||||||||||
| Computer equipment | $ | 21 | $ | 21 | |||||||
| Furniture and fixtures | 13 | 13 | |||||||||
| 34 | 34 | ||||||||||
| Accumulated depreciation | (27) | (26) | |||||||||
| $ | 7 | $ | 8 | ||||||||
| March 31, 2024 | December 31, 2023 | ||||||||||
| Research and development | $ | 191 | $ | 93 | |||||||
| General and administrative | 52 | 441 | |||||||||
| Payroll and related | 756 | 736 | |||||||||
| Total accrued expenses | $ | 999 | $ | 1,270 | |||||||
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| Number of Shares | Exercise Price per Share | Expiration Date | ||||||||||||
| 2,449,000 | $0.0001 | Do not expire | ||||||||||||
| 5,000,000 | $1.10 | August 2025 | ||||||||||||
| 116,353 | $85.96 | December 2025 | ||||||||||||
| 542 | $2,100.00 | February 2026 | ||||||||||||
| 3,524 | $197.05 | May 2027 | ||||||||||||
| 167 | $0.01 | July 2027 | ||||||||||||
| 343 | $429.73 | April 2028 | ||||||||||||
| 181,316 | $0.0001 | December 2028 | ||||||||||||
| 5,000,000 | $1.10 | February 2029 | ||||||||||||
The Company has granted
its accompanying consolidated statements of operations for the three months ended March 31, 2024 and 2023:
| For the Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Research and development | $ | — | $ | — | |||||||
| General and administrative | 37 | 13 | |||||||||
| Total | $ | 37 | $ | 13 | |||||||
The Company’s stock-based compensation expense was recognized in operating expense as follows (in thousands):
| | | | | | |
| | For the Three Months Ended March 31, | ||||
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| 2021 |
| 2020 | ||
Research and development | | $ | 20 | | $ | 35 |
General and administrative | |
| 148 | |
| — |
Total | | $ | 168 | | $ | 35 |
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The fair value of the options granted during the three months ended March 31, 2021 and 2020 was estimated by utilizing the following assumptions:
| | | | | | | |
| | For the Three Months Ended March 31, |
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| 2021 |
| 2020 | | ||
Volatility | | | 80.0 | % | | 85.0 | % |
Expected term in years | | | 5.5-5.8 | |
| 5.8 | |
Dividend rate | | | 0.0 | % |
| 0.0 | % |
Risk-free interest rate | | | 0.63-0.81 | % | | 2.20 | % |
Fair value of option on grant date | | $ | 4.08-5.31 | | $ | 3.24 | |
The table below represents the activity of stock options granted to employees and consultants:
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| | Period from December 31, 2020 through March 31, 2021 | ||||||||||
| | | | | | | | Weighted | | | | |
| | | | | | | | average | | Aggregate | ||
| | | | | Weighted | | remaining | | intrinsic | |||
| | Number of | | average | | contractual | | value | ||||
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| options |
| exercise price |
| terms (years) |
| ($ 000) (1) | ||||
Outstanding at December 31, 2020 |
| | 266,250 | | $ | 2.94 | | | 4.109 | | $ | 474 |
Granted during the period | | | 22,750 | | | 7.39 | | | — | | | — |
Outstanding at March 31, 2021 | | | 289,000 | | $ | 3.29 | | | 4.060 | | $ | 460 |
Exercisable at March 31, 2021 |
| | 135,794 | | $ | 2.28 | | | 3.770 | | $ | 320 |
| Number of options | Weighted average exercise price | Weighted average remaining contractual term (years) | |||||||||||||||
| Outstanding at December 31, 2023 | 32,642 | $ | 37.41 | 9.55 | |||||||||||||
| Granted | — | ||||||||||||||||
| Exercised | — | ||||||||||||||||
| Forfeited/cancelled | — | ||||||||||||||||
| Outstanding at March 31, 2024 | 32,642 | $ | 37.41 | 9.30 | |||||||||||||
| Exercisable at March 31, 2024 | 5,958 | $ | 133.34 | 8.78 | |||||||||||||
| Vested and expected to vest at March 31, 2024 | 32,642 | $ | 37.41 | 9.30 | |||||||||||||
NOTE 7 – INCOME TAXES
For the three months ended March 31, 2021 and 2020, respectively, 0 income tax expense or benefit was recognized. The Company’s deferred tax assets are comprised primarily of net operating loss carryforwards. The Company maintains a full valuation allowance on its deferred tax assets since it has not yet achieved sustained profitable operations. As a result, the Company has not recorded any income tax benefit since its inception.
NOTE 8 - RELATED PARTY TRANSACTIONS
On January 6, 2020, the Company entered into a license agreement with Medice which grants Medice an exclusive license, with the right to grant sublicenses, to develop, use, manufacture, market and sell ADAIR throughout Europe. Medice is responsible for obtaining regulatory approval of ADAIR in the licensed territory. Under the license agreement, Medice paid Vallon a $100,000 upfront payment and is required to pay milestone payments upon first obtaining regulatory approval to market and sell ADAIR in any country, territory or region in the licensed territory and upon achieving certain annual net sales thresholds. Medice will also pay tiered royalties on annual net sales of ADAIR at rates in the low double-digits. The initial term of the license agreement will expire five years after the date on which Medice first obtains regulatory approval in any country, territory or region in the licensed territory.
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On January 11, 2021, the Company entered into a Convertible Promissory Note Purchase Agreement with certain existing stockholders, including Salmon Pharma, an affiliate of Medice, and David Baker, the Company’s Chief Executive Officer, pursuant to which the Company issued the 2021 Convertible Notes for cash proceeds of $350,000. The 2021 Convertible Notes bore an interest rate of 7.0% per annum, non-compounding, and had a maturity date of September 30, 2021. The 2021 Convertible Notes converted into 54,906 shares of the Company’s common stock upon completion of the IPO.
NOTE 9 - FINANCE LEASE
The Company entered into a finance lease in October 2019 in relation to equipment utilized in the commercial scale manufacturing of ADAIR ($ in thousands).
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| March 31, 2021 |
| December 31, 2020 |
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Initial lease right-of-use asset | | $ | 368 | | $ | 368 |
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Accumulated amortization | | $ | 107 | | $ | 89 | |
Weighted-average remaining lease term - finance lease (in years) | |
| 2.50 | |
| 2.75 | |
Weighted-average discount rate - finance lease | |
| 13.50 | % |
| 13.50 | % |
| | | | | | |
| | Three Months Ended March 31, | ||||
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| 2021 |
| 2020 | ||
Operating cash flows from finance lease amortization | | $ | 18 | | $ | 18 |
Financing cash flows from finance lease payments | | $ | 34 | | $ | 29 |
The maturities of the finance lease liability as of March 31, 2021 (in thousands):
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2021 |
| $ | 95 |
2022 |
| | 114 |
2023 |
| | 76 |
Total lease payments |
| | 285 |
Less: Imputed interest |
| | 44 |
Present value of lease liability | | $ | 241 |
NOTE 10 – COMMITMENTS AND CONTINGENCIES
(A) Employment Agreements
On January 15, 2019, the Company entered into an employment agreement with David Baker, to serve as its President and Chief Executive Officer, which was subsequently superseded by a new employment agreement, effective as of April 20, 2021 (the “Baker Agreement”). The Baker Agreement provides for a base salary of $400,000 per year, effective as of April 20, 2021.
Under the Baker Agreement, in the event of an involuntary termination by the Company or termination by Mr. Baker for good reason, Mr. Baker will receive:
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In the event of a termination within 12 months after the occurrence of a change in control transaction, the President and Chief Executive Officer will receive:
In exchange for the severance benefits described above, Mr. Baker must comply with certain confidentiality, non-competition and non-solicitation provisions, return all company property, and sign a release of claims in favor of the Company. The description of the terms above are qualified in their entirety by reference to the Baker Agreement, a copy of which is filed by the Company as Exhibit 10.1 to this Quarterly Report on Form 10-Q.
(B) Clinical Trial Agreements
In January 2020, the Company entered into a service agreement, amended August 2020 and further amended January 2021, with a clinical research organization to provide clinical trial management services to the Company to assist the Company in its pivotal human abuse liability clinical trial of ADAIR, Study VAL-104. The agreement may be terminated by either party upon thirty days prior written notice. The total clinical trial cost is expected to be $3.1 million of which approximately $1.1 million and $49,000 was expensed during the three months ended March 31, 20212024 and 2020, respectively. 2023.
(C) Consulting Agreements
Effective April 2, 2018, the Company entered into a consulting agreementemployment contracts with a consultant to serve as the Chief Medical Officerits officers that provide for the Company. Pursuant to the consulting agreement, the consultant is paid $10,000 per month for his services. In October 2018severance and May 2020, the Company granted the consultant 15,625 and 6,250 options, respectively. For the three months ended March 31, 2021 and 2020, the Company has incurred consulting feescontinuation of benefits in the amountevent of approximately $30,000 and $30,000, respectively, under the agreement. The agreement may be terminated by either party with 30 days’ notice.
(D) Manufacturing Agreements
In August 2019, the Company entered into an agreement with a contract manufacturer for the commercial scale up and registration batches for ADAIR. The total contract is estimated at $1.6 milliontermination of which approximately $79,000 and $79,000 was expensed under the agreement during the three months ended March 31, 2021 and 2020, respectively.
In October 2019, the Company entered into an agreement with a formulation development company for the formulation and development for an abuse-deterrent formulation of methylphenidate (Ritalin®). The total contract is estimated at $232,000, of which $6,000 and $83,000 was expensed during the three months ended March 31, 2021 and 2020, respectively.
(E) Pre-Clinical Agreement (included in research and development expense)
In November 2019, the Company entered into an agreement with a clinical research organization for pre-clinical services. The total contract currently authorized is estimated at $1.5 million of which $245,000 and $175,000 was expensed during the three months ended March 31, 2021 and 2020, respectively.
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(F) COVID-19 Impact
The global COVID-19 pandemic continues to rapidly evolve, and the Company continues to monitor the COVID-19 situation closely, including the worldwide vaccine rollout and the recent outbreaks of various strains of the virus. the full impact of the COVID-19 pandemic on the Company’s business, operations and clinical development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spread of the outbreak and its future impact on the Company’s clinical trial enrollment, clinical trial sites, CROs, third-party manufacturers, and other third parties with whom it does business, as well as its impact on regulatory authorities and the Company’s key scientific and management personnel. To the extent possible, the Company is conducting business as usual, with necessary or advisable modifications to employee travel and with many of its employees and consultants working remotely. The Company will continue to actively monitor the rapidly evolving situation related to COVID-19 and may take further actions that alter its operations, including those that may be required by federal, state or local authorities, or that it determines are in the best interests of its employees and other third parties with whom the Company does business.
NOTE 11: FAIR VALUE MEASUREMENTS
The fair value of the embedded derivative liability identified in the 2021 Convertible Notes was a Level 3 fair value measurement. As of February 12, 2021, the embedded derivative was remeasured based upon the conversion price of $8 per share upon closing of the IPO. As such, an expense of $89,000 was recorded in the first quarter of 2021.
The following table presents the activity for the liability measured at estimated fair value using unobservable inputs for the three months ended March 31, 2021 (in thousands):
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NOTE 12: SUBSEQUENT EVENTS
On May 10, 2021, the Company appointed Leanne M. Kelly to serve as its Chief Financial Officer, and principal financial and accounting officer. In connection with Ms. Kelly’s appointment, the Company entered into an employment agreement with Ms. Kelly (the “Kelly Agreement”), which provides for an initial base annual salary of $275,000 and a target bonus opportunity equal to 35% of her base salary.
The Kelly Agreement also provides that the Company will recommend that the Board approve a stock option grant covering 100,000 common shares of the Company (the “Stock Option”). The Stock Option shall have an exercise price per share equal to the fair market value of a share of the Company’s common stock on the date of grant and shall vest in installments and become exercisable as follows: (i) 70% of the shares underlying the Stock Option shall vest as follows: (x) 17,500 option shares on the first anniversary of her start date, and (y) the remaining 52,500 option shares in equal installments on a quarterly basis for the next three years, in each case subject to continued employment, and (ii) 30% of the shares underlying the Stock Option shall vest as follows: (x) 15,000 option shares on the date the Company submits a New Drug Application (“NDA”) filing for ADAIR with the U.S. Food & Drug Administration, and (y) 15,000 option shares on the date when the U.S. Food & Drug Administration approves the NDA, provided that she is employed by the Company at the time the applicable performance objective is achieved.
The Kelly Agreement provides that if she is terminatedwithout cause or by the Company other than for cause, or she resignsemployee for good reason,reason. In addition, in either case not in connection withthe event of termination of employment following a change in control, she will receive:
If she is terminated bythe vesting of certain equity awards may be accelerated.
In exchange for the severance benefits described above, Ms. Kelly must comply with certain confidentiality, non-competition and non-solicitation provisions, return all company property, and sign a release of claims in favorterms of the Company. The descriptionSeparation Agreement and his employment agreement, Mr. Baker will receive continuation of his current salary and certain COBRA benefits for 18 months payable in accordance with the terms above are qualified in their entirety by referenceCompany’s payroll practices. Mr. Baker also received a lump sum payment equal to the Kelly Agreement, a copy150% of which is filed by the Company as Exhibit 10.2his target bonus and agreed to this Quarterly Report on Form 10-Q.
See description of the Baker Agreement under Note 10 – Employment Agreements.
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of the program, but our initial focus is on lupus. Series A-1 Warrants.Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe following discussion and analysis of our financial condition and results of operations should be read in conjunction with ourthe Company’s financial statements and the related notes appearing elsewhere in this Quarterly Report andon Form 10-Q, the audited financial statements (andand notes thereto), andthereto, as well as management’s discussion and analysis of financial condition and results of operations, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, included in our Annual Report on Form 10-K that was2023 filed with the SECSecurities and Exchange Commission (the SEC) on March 29, 2021.28, 2024 (the Annual Report). Some of the information contained in this discussion and analysis, or set forth elsewhere in this Quarterly Report, including information with respect to ourthe Company’s plans and strategy for ourits business and related financing, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 12E of the Securities Exchange Act of 1934, as amended (the Exchange Act), that involve risks and uncertainties. As a result of many factors, including those factors set forthout under the section entitled “Risk Factors” included in the “Risk Factors” section of this QuarterlyAnnual Report, ourthe Company’s actual results could differ materially from the results described in or implied by these forward-looking statements.Except as otherwise indicated, references herein to “GRI Bio,” or the “Company,” refer to GRI Bio, Inc. after the completion of the Merger (as defined below), and references to “GRI Operations” refer to the business of GRI Bio, Inc. prior to the completion of the Merger. References to “Vallon” refer to Vallon Pharmaceuticals, Inc. prior to the completion of the Merger.OverviewWe are a clinical-stage biopharmaceutical company primarily focused on discovering, developing, and commercializing innovative therapies that target serious diseases associated with dysregulated immune responses leading to inflammatory, fibrotic, and autoimmune disorders. Our goal is to be an industry leader in developing therapies to treat these diseases and to improve the development and commercializationlives of proprietary biopharmaceutical products. patients suffering from such diseases.Our only clinical-stagelead product currently under developmentcandidate, GRI-0621, is ADAIR, a proprietary, abuse-deterrentan oral inhibitor of type 1 Natural Killer T (iNKT) cells. GRI-0621 is also an oral formulation of immediate-release (short-acting) dextroamphetaminetazarotene, a synthetic retinoid acid receptor (RAR)-beta and gamma selective agonist, that is approved in the United States for topical treatment of psoriasis and acne. As of March 31, 2024, it has been evaluated in over 1,700 patients as an oral product for up to 52-weeks. We are developing GRI-0621 for the treatment of Attention-deficit/hyperactivity disorder (“ADHD”)severe fibrotic lung diseases such as idiopathic pulmonary fibrosis (IPF), a life-threatening progressive fibrotic disease of the lung that affects approximately 140,000 people in the United States, with up to 40,000 new cases per year in the United States. Some estimate that IPF affects 3 million globally. While there are currently two approved therapies for the treatment of lung fibrosis, neither has been associated with improvements in overall survival, and Narcolepsy.both therapies have been associated with significant side effects leading to poor therapeutic adherence. In preliminary data from our trials to date with GRI-0621, and earlier trials with oral tazarotene, we have observed GRI-0621 to be well-tolerated and to inhibit iNKT cell activity in subjects. We and others have shown that activated iNKT are upregulated in IPF, primary sclerosing cholangitis (PSC), non-alcoholic steatohepatitis (NASH), alcoholic liver disease (ALD), Systemic Lupus Erythematosus Disease (SLE), multiple sclerosis (MS), ulcerative colitis (UC) patients as well as other indications. In these patients activated iNKT cells are correlated with more severe disease. The U.S. Food and Drug Administration (FDA) has cleared our Investigative New Drug (IND) application for GRI-0621 for the future,treatment of IPF and we plan to develop other abuse-deterrent products that have potential for abuseevaluate GRI-0621 in their current forms, beginning with the development of ADMIR, an abuse deterrent formulation of Ritalin,a randomized, double-blind, multi-center Phase 2a biomarker study, for which we commenced enrollment in December 2023. We expect interim data from this trial to be available in the third quarter of 2024 and topline results to be available in the fourth quarter of 2024.Our product candidate portfolio also includes GRI-0803 and a proprietary library of 500+ compounds. GRI-0803, the lead molecule selected from the library, is a novel oral agonist of type 2 Natural Killer T cells. We are conducting formulationdeveloping GRI-0803 for the treatment of autoimmune disorders, with much of our preclinical work in SLE or lupus and MS. In lupus, the immune system mistakenly attacks its own healthy tissues, especially joints and skin, but can affect almost every organ and tissue of the body. The condition can be fatal, and often causes debilitating bouts of fatigue and pain that prevent nearly half of adult patients from working. Lupus affects between 160,000 - 200,000 patients in the United States, with around 80,000 – 100,000 patients in the United States suffering from kidney nephritis, one of the most serious manifestations of SLE, typically within five years of diagnosis. There is no cure for lupus, but medical interventions and lifestyle changes can help control it. SLE treatment consists primarily of immunosuppressive drugs that inhibit the activity of the immune system. Only two drugs have been approved for lupus in the past 50 years, and new treatment options are sorely needed. Subject to IND clearance, we intend to evaluate GRI-0803 in a Phase 1a and 1b trial initially targeting SLE. We expect to file an IND with respect to this Phase 1a and 1b trial in the second half of 2024. We will continue to evaluate indications to select the best fit for further development work.18Recent DevelopmentsSecurities Purchase AgreementOn February 1, 2024, we entered into a securities purchase agreement (the Purchase Agreement), pursuant to which we agreed to issue and sell, in a public offering, (i) 330,450 shares (the Shares) of the Company’s common stock, par value $0.0001 per share (Common Stock), (ii) 4,669,550 pre-funded warrants (the Pre-Funded Warrants) exercisable for an aggregate of 4,669,550 shares of Common Stock, (iii) 5,000,000 Series B-1 common warrants (the Series B-1 Common Warrants) exercisable for an aggregate of 5,000,000 shares of Common Stock, and (iv) 5,000,000 Series B-2 common warrants (the Series B-2 Common Warrants, together with the Series B-1 Common Warrants, the Common Warrants) exercisable for an aggregate of 5,000,000 shares of Common Stock for net proceeds of $4.4 million, after deducting offering costs of $1.1 million. The ADAIR assetsCommon Warrants together with the Pre-Funded Warrants are referred to in this Quarterly Report on Form 10-Q as the “Warrants.”The securities were acquired by us on June 22, 2018offered in combinations of (a) one Share or one Pre-Funded Warrant, together with (b) one Series B-1 Common Warrant and one Series B-2 Common Warrant, for a combined purchase price of $1.10 (less $0.0001 for each Pre-Funded Warrant).Subject to certain ownership limitations, the Warrants are exercisable upon issuance. Each Pre-Funded Warrant is exercisable for one share of Common Stock at a price per share of $0.0001 and does not expire. Each Series B-1 Common Warrant is exercisable into one share of Common Stock at a price per share of $1.10 for a five-year period after February 6, 2024, the date of issuance. Each Series B-2 Common Warrant is exercisable into one share of Common Stock at a price per share of $1.10 for an 18-month period after February 6, 2024, the date of issuance. In connection with the issuance of the securities pursuant to the Purchase Agreement, the exercise price of the Series A-1 Warrants was reduced to par, or $0.0001, per share pursuant to the terms and conditions of the Amended and Restated Asset Purchase Agreement with Arcturus Therapeutics, Inc. (the successor to Arcturus Therapeutics Ltd.), referred to herein collectively as Arcturus, and Amiservice Development Ltd., dated as of June 22, 2018 (the “Asset Purchase Agreement”). In exchange for the ADAIR assets, we issued 843,750 shares of our common stock to Arcturus (valued at approximately $1.4 million based upon the price at which the common stock was issued and sold in the June 2018 private placement of our common stock) which comprised 30% of our then-outstanding common stock on a fully diluted basis.We intend to develop ADAIR for registration through the Section 505(b)(2) approval pathway. We filed our Investigational New Drug (“IND”), application for ADAIR in June 2018 and the IND was cleared in July 2018. Subsequently, we have successfully completed a Phase 1 pivotal bioequivalence study of ADAIR and a Phase 1 food effect study. In 2019, we conducted a Phase 1 proof-of-concept intranasal human abuse potential study designed to compare ADAIR when insufflated (snorted) to the reference comparator, crushed immediate release dextroamphetamine sulfate tablets. We began enrollment of subjects in a pivotal intranasal abuse study during the fourth quarter of 2020 and expect to have topline results for the study by the end of 2021. We are also currently conducting a 13-week preclinical toxicology study on the final formulation of ADAIR and have begun planning additional non-clinical safety studies during 2021. We also plan to conduct additional preclinical studies of unintended routes of administration such as IV and intranasal administration.We plan to develop other abuse-deterrent products that have potential for abuse in their current forms, beginning with the development of an abuse deterrent formulation of Ritalin (“ADMIR”), for which we are conducting formulation development work.January 2024 Reverse Stock SplitOn January 6, 2020, we entered into19, 2024, our stockholders approved a license agreement with Medice, who is affiliated with one of our principal stockholders, Salmon Pharma, and represented by one member of our board of directors, which grants Medice an exclusive license, with the right to grant sublicenses, to develop, use, manufacture, market and sell ADAIR throughout Europe. Medice currently markets several ADHD products in Europe and is the ADHD market leader in Europe based on branded prescription market share. Medice is responsible for obtaining regulatory approval of ADAIR in the licensed territory. Under the license agreement, Medice paid us a minimal upfront payment and will pay milestone payments of up to $6.3 million in the aggregate upon first obtaining regulatory approval to market and sell ADAIR in any country, territory or region in the licensed territory and upon achieving certain annual net sales thresholds. Medice will also pay tiered royalties on annual net sales of ADAIR at rates in the low double-digits. The initial term of the license agreement will expire five years after the date on which Medice first obtains regulatory approval in any country, territory or region in the licensed territory.17
Our objective is to develop and commercialize proprietary biopharmaceutical products. To this effect, we intend to develop and seek marketing approvals from the FDA and other worldwide regulatory bodies for ADAIR, and any other products we opt to pursue in the future, such as ADMIR. To achieve these objectives, we plan to:
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Emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. Therefore, we may not be subject to the same new or revised accounting standards as other public companies that are not “emerging growth companies.” For as long as we continue to be an emerging growth company, we also intend to take advantage of certain other exemptions from various reporting requirements that are applicable to other public companies including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a nonbinding advisory stockholder vote on executive compensation, and any golden parachute payments not previously approved, exemption from the requirement of auditor attestation in the assessment of our internal control over financial reporting and exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis). We will remain an emerging growth company until the earliest of (i) the end of the fiscal year in which the market value of our commonreverse stock that is held by non-affiliates exceeds $700 million as of the end of the second fiscal quarter, (ii) the end of the fiscal year in which we have total annual gross revenues of $1.07 billion or more during such fiscal year, (iii) the date on which we issue more than $1 billion in non-convertible debt in a three-year period, or (iv) the end of the fiscal year following the fifth anniversary of the date of the first salesplit of our Common Stock. Our Board approved the reverse stock split at a ratio of one-for-seven (the January 2024 Reverse Stock pursuant toSplit). Following the Board’s approval, we filed an effective registration statement filed under the Securities Act.
The global COVID-19 pandemic continues to rapidly evolve, and we will continue to monitor the COVID-19 situation closely, including the worldwide vaccine rollout and the recent outbreaks of various strains of the virus. The full impact of the COVID-19 pandemic on our business, operations and clinical development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spread of the outbreak and its future impact on our clinical trial enrollment, clinical trial sites, CROs, third-party manufacturers, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel. 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 rapidly evolving situation related to COVID-19 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.
Reverse Split
On February 10, 2021, the Company filed a certificate of amendment to itsour amended and restated certificate of incorporation (Charter) with the Secretary of State of the State of Delaware which effected a one-for-40 reverse stock split (the “reverse split”)to effect the January 2024 Reverse Stock Split as of its issued and outstanding shares of common stock at 11:59 PM4:01 p.m. Eastern Time on that date.January 29, 2024. Shares of our Common Stock began trading on a post-split basis on January 30, 2024. As a result of the reverse split,January 2024 Reverse Stock Split, every 40seven shares of common stockour Common Stock, either issued or outstanding, immediately prior to the filing and outstanding were reclassifiedeffectiveness of our amendment to our Charter filed with the Secretary of State of the State of Delaware, was automatically combined and converted (without any further act) into one share of common stock.fully paid and nonassessable share of Common Stock. No fractional shares were issued in connection with the reverse split and anyJanuary 2024 Reverse Stock Split. Stockholders who otherwise would have received fractional shares were rounded upof Common Stock received cash in lieu thereof at a price equal to the nearest whole share.
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The reverse split did not changereducing the par value of the common stock or the authorizedaggregate number of outstanding shares of common stock. The reverseCommon Stock from 4,520,233 shares on a pre-reverse split affectedbasis to a total of 645,738 shares outstanding on a post-reverse split basis.
All share and per share amounts, excluding the number of authorized shares and par value, containedexercise prices appearing in this Quarterly Report on Form 10-Q have been adjusted to give retroactive effect to the reverse split.
Initial Public Offering (“IPO”); Underwriting Agreement
As previously disclosed,January 2024 Reverse Stock Split.
As partMinimum Bid Price Rule. The Minimum Bid Price Rule will be met if our Common Stock has a minimum closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days during the 180-calendar day period, unless Nasdaq exercises its discretion to extend such 10‑day period. If we do not regain compliance by the Compliance Date, we may be eligible for an additional 180-calendar day period, subject to satisfying the conditions in the applicable Nasdaq Listing Rules. If, before the Compliance Date, our Common Stock has a closing bid price of $0.10 per share or less for ten consecutive trading days, the Staff will issue a Staff Delisting Determination under Nasdaq Listing Rule 5810 with respect to our Common Stock. On January 29, 2024, we filed an amendment to our Charter to implement the January 2024 Reverse Stock Split to attempt to regain compliance with the Minimum Bid Price Rule, but were not able to regain compliance following the January 2024 Reverse Stock Split. There can be no assurance that the stock price of our Common Stock will remain above the minimum $1.00 bid price required for any post-split Nasdaq monitoring period or otherwise.
2021 Convertible Note Financing
On January 11, 2021, weCompany, GRI Operations and Altium entered into a Convertible Promissory NoteSecurities Purchase Agreement with certain existing stockholders, including SALMON Pharma GmbH (“Salmon Pharma”), an affiliate of Medice, and David Baker, our Chief Executive Officer,on December 13, 2022 (the Equity SPA) pursuant to which we issued convertible promissory notes (the “2021 Convertible Notes”)the Investor agreed to invest $12.25 million in cash and cancel any outstanding principal and accrued interest on the Bridge Notes in return for cash proceedsthe issuance of $350,000. The 2021 Convertible Notes bear an interest rate of 7.0% per annum, non-compounding, and had a maturity date of September 30, 2021. The 2021 Convertible Notes were convertible into shares of our capitalGRI Operations’ common stock offered to investors in any subsequent equity financing after the date of their issuance in which we issued any of our equity securities (a “Qualified Financing”), and were convertible at a twenty percent (20%) discount(GRI Operations Common Stock) immediately prior to the price per share offered in such Qualified Financing. Such Qualified Financing includedconsummation of the initial public offeringMerger. Pursuant to the Equity SPA, immediately prior to the Closing, GRI Operations issued 969,602 shares of our common stock, consummated on February 12, 2021; therefore,GRI Operations Common Stock (the Initial Shares) to Altium and 3,878,411 shares of GRI Operations Common Stock (the Additional Shares) into escrow with an escrow agent. At the 2021 Convertible Notesclosing, pursuant to the Merger, the Initial Shares converted into an aggregate of 54,90636,263 shares of our common stock immediately priorthe Company’s Common Stock and the Additional Shares converted into an aggregate of 145,052 shares of the Company’s Common Stock. On May 8, 2023, in accordance with the terms of the Equity SPA, the Company and Altium authorized the escrow agent to, subject to beneficial ownership limitations, disburse to Altium all of the shares of the Company’s Common Stock issued in exchange for the Additional Shares.
Series T Warrants, an additional amount of Series A-1 Warrants and Series A-2 Warrants, each to purchase 116,353 shares of the Company’s Common Stock (collectively, the Equity Warrants).
Revenue
We have not generated any significant revenue, and we do not expect to generate any revenue from the sale of any products unless or until we obtain regulatory approval of and commercialize ADAIR. The only revenue we have generated was the $100,000 license fee from the Medice license agreement recognized in the three months ended March 31, 2020.
Since our incorporation, our operations have primarily been limited to building our management and corporate team, acquiring the ADAIR assets from Arcturus and conducting our clinical program for ADAIR. Research and development costs are expensed as incurred.
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Our research and development expenses have consisted primarily of in-processcosts related to our development program for our lead product candidate GRI-0621. These expenses include:
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Research and development activities will continue to be central to our business model. Products in later stages of clinical development generally have higher developmentspecific product candidates as these costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.are deployed across multiple programs. We expect our research and development expenses to be significantincrease over the next several years as we increase personnelconduct our planned clinical and compensation costs and conduct the studies described above, and prepare to seek regulatory approvalpreclinical activities for ADAIR and any other futureour product such as ADMIR.
The duration, costs and timing of clinical trials of ADAIR and any other future product, such as ADMIR, will depend on a variety of factors that include, but are not limited to:
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In addition, the probability of success for ADAIR and any other future products, such as ADMIR, will depend on numerous factors, including competition, manufacturing capability and commercial viability.
General and Administrative Expenses
Interest Expense and Revaluation of Derivative Instruments
In January 2021, we entered into a Convertible Promissory Note Purchase Agreement pursuant to which we issued $350,000 in 2021 Convertible Notes The 2021 Convertible Notes automatically converted into 54,906 shares of our common stock concurrently with the closing of the IPO. We identified the mandatory conversion into shares our common stock as a redemption feature, which requires bifurcation from the 2021 Convertible Notes and treated it as a derivative liability under ASC 815 as the redemption feature was not clearly and closelyMay 2022 Warrants related to the debt. We evaluatedreduction of the exercise price in certain circumstances precludes the May 2022 Warrants from being accounted for as components of equity. As a result, the May 2022 Warrants were measured the fair value upon issuance using a Black-Scholes valuation model and are recorded as a liability on the balance sheet. The fair value of the derivative liabilityMay 2022 Warrants is measured at issuance. Upon the conversion of the 2021 Convertible Notes to common stock at the closing of the IPO, the embedded derivative liability was remeasuredeach reporting date and removed from the balance sheet.
Critical Accounting Policies
The Company’s critical accounting policieschanges in fair value are described in Note B, “Summary of Significant Accounting Policies,”recognized in the Company’s Annual Report on Form 10-K filed withconsolidated statements of operations in the U.S. Securitiesperiod of change.
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Results of Operations
2023
| | | | | | | | | |
| | Three Months Ended | | Three Months Ended | | | | ||
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| March 31, 2021 |
| March 31, 2020 |
| Change $ | |||
| | | | | (in thousands) | | | | |
License revenue-from related party | | $ | — | | $ | 100 | | $ | (100) |
Operating expenses: |
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Research and development |
| | 1,772 |
| | 883 |
| | 889 |
General and administrative |
| | 830 |
| | 375 |
| | 455 |
Total operating expenses |
| | 2,602 |
| | 1,258 |
| | 1,344 |
Loss from operations |
| | (2,602) |
| | (1,158) |
| | 1,444 |
Other income |
| | 61 |
| | — |
| | 61 |
Revaluation of derivative liability |
| | (89) |
| | — |
| | (89) |
Interest expense, net |
| | (8) |
| | (2) |
| | (6) |
Net loss | | $ | (2,638) | | $ | (1,160) | | $ | 1,478 |
License Revenue – From Related Party
We determined there is a single performance obligation with respect to our involvement in the joint development committee in regards to the Medice license agreement and thus the entire $100,000 allocable consideration was assigned to that accounting unit and recognized in the first quarter of 2020.
indicated (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Operating expenses: | |||||||||||
| Research and development | $ | 933 | $ | 116 | |||||||
| General and administrative | 962 | 872 | |||||||||
| Total operating expenses | 1,895 | 988 | |||||||||
| Loss from operations | (1,895) | (988) | |||||||||
| Change in fair value of warrant liability | 2 | — | |||||||||
| Interest income (expense) | 6 | (1,162) | |||||||||
| Net loss | $ | (1,887) | $ | (2,150) | |||||||
General2024 and Administrative Expenses2023, respectively. The $0.1 million increase was primarily related to increased personnel expenses of $0.3 million as a result of increased
General
Other Income
In May 2020, the Company issued a promissory note under the PPP totaling $61,000.2023, respectively. As of DecemberMarch 31, 2020,2024, we had an accumulated deficit of $33.4 million.
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Net cash provided by (used in): | |||||||||||
| Operating activities | $ | (2,202) | $ | (579) | |||||||
| Financing activities | 4,485 | 1,030 | |||||||||
| Net increase in cash and cash equivalents | $ | 2,283 | $ | 451 | |||||||
Revaluation of Derivative Liability
Operating Activities
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Income Taxes
For the three months ended March 31, 2021debt discounts and 2020, respectively, no income tax expense or benefit was recognized. Our deferred tax assets are comprised primarily of net operating loss carryforwards. We maintaindebt issuance costs, offset by a full valuation allowance on our deferred tax assets since we have not yet achieved sustained profitable operations. As a result, we have not recorded any income tax benefit since our inception.
Net Loss
We recorded $2.6$0.3 million decrease in net loss and a $0.5 million increase in prepaid and other assets.
Liquidity and Capital Resources
Overview
For$2.2 million for the period from January 11, 2018 (inception) throughthree months ended March 31, 2021,2024 and 2023, respectively. As of March 31, 2024, we havehad $4.1 million in cash and an accumulated deficit of $15.2 million and we do not$33.4 million. We expect to have positive cash flow from operationsdevote substantial financial resources to our planned activities, particularly as we prepare for, the foreseeable future. Asinitiate, and conduct our planned clinical trials of March 31, 2021,GRI-0621 and GRI-0803, advance our discovery programs and continue our product development efforts. In addition, we hadexpect to incur additional costs associated with operating as a public company.
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Cash Flows
The following table summarizes our cash flows for the periods indicated:
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| | Three Months Ended | | Three Months Ended | ||
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| March 31, 2021 |
| March 31, 2020 | ||
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Net cash provided by (used in): | | | | | | |
Operating activities | | $ | (2,948) | | $ | (766) |
Investing activities | | | — | | | (2) |
Financing activities | | | 15,819 | | | (29) |
Net decrease in cash and cash equivalents | | $ | 12,871 | | $ | (797) |
Cash Flows from Operating Activities
For the three months ended March 31, 2021 and 2020, $2.9 million and $766,000 were used in operating activities, respectively. The $2.2 million increase was primarily due to the $1.5 million increase in our net loss offset by a $793,000 increase in prepaid expenses and increased accounts payable and accrued expenses of $259,000. The net loss for the three months ended March 31, 2021 included non-cash expenses of $168,000 in non-cash stock compensation, $89,000 in revaluation of derivative liability and $18,000 amortization of finance lease right-of-use asset offset by $61,000 of other income from the forgiveness of the PPP note.
Cash Flows from Investing Activities
Net cash used in investing activities was $0 for the three months ended March 31, 2021 and $2,000 for the three months ended March 31, 2020.
Cash Flows from Financing Activities
Net cash provided by financing activities was $15.8 million during the three months ended March 31, 2021 related to the net proceeds from our IPO and 2021 Convertible Notes financings compared to $29,000 used in financing activities during the three months ended March 31, 2020 related to our finance lease.
Contractual Obligations and Other Commitments
As of March 31, 2021, there have been no changes to our contractual obligations and commitments since December 31, 2020. For a discussion of our contractual obligations, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2020 Annual Report on Form 10K.
Off-Balance Sheet Arrangements
Company’s Annual Report.
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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 $1.07$1.235 billion or more, (b) December 31, 2026, the last day of the fiscal year following the fifth anniversary of the completion of the our IPO,Vallon’s initial public offering, (c) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years or (d) the date on which we are deemed to be a large accelerated filer under the rules of the SEC. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period for complying with new or revised accounting standards. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.Management’s Evaluation of our Disclosure Controls and ProceduresOur Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of ourits disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e)) of the Exchange Act as of March 31, 2021.2024. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in ourits periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only25reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.Based on the evaluation of our disclosure controls and procedures as of March 31, 2021,2024, our Chief Executive Officer hasand Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures, as defined above, are effective.Changes in Internal Control over Financial ReportingWe are taking actions to remediate the material weaknesses relating to our internal controls over financial reporting as described in our Annual Report on Form 10-K. Except as otherwise disclosed herein, there have beenThere were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the fiscal quarter ended March 31, 2021covered by this report that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.26
Item 1. Legal Proceedings.We are not currently a party to any material legal proceedings. From time to time, we may be subject to various legal proceedings, and claimswe are not aware of any pending or threatened legal proceeding against us that arise in the ordinary course of our business activities. Regardless of the outcome, litigation canwe believe could have a materialan adverse effect on us because of defense and settlement costs, diversion of management resources, and other factors.our business, operating results or financial condition.25
Factors.Item 1A. Risk FactorsThere have been no material changes from the risk factors previously disclosed in ourthe Annual Report on Form 10-K for the fiscal year ended December 31, 2020, except as set forth below.Public health crises such as pandemics or similar outbreaks could materially and adversely affect our preclinical and clinical trials, business, financial condition and results of operations.In March 2020, the World Health Organization declared COVID-19 a global pandemic and the United States declared a national emergency with respect to COVID-19. The COVID-19 pandemic continues affect the U.S. and global economies and may affect our operations and certain other third parties on which we rely, including by causing disruptions in the supply of our product candidates and the conduct of future clinical trials. Moreover, the COVID-19 pandemic may adversely affect the operations of the FDA and other health authorities, resulting in delays of reviews and approvals with respect to our product candidates. While the potential economic impact brought by, and the duration of the COVID-19 pandemic is difficult to assess or predict, the impact of the COVID-19 pandemic on the global financial markets may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity. In addition, the loss of any of our employees as a result of COVID-19, or another pandemic, may adversely affect our operations. The ultimate impact of the COVID-19 pandemic is highly uncertain, and we do not yet know the full extent of potential delays or impacts that COVID-19 may have on our business, financing or clinical trial activities.Some examples of potential disruptions that may result from the COVID-19 pandemic, include, but are not limited to:·delays or difficulties in enrolling patients in our clinical trials;·delays or difficulties in initiating or expanding clinical trials, including delays or difficulties with clinical site initiation and recruiting clinical site investigators and clinical site staff;·increased rates of patients withdrawing from our clinical trials following enrollment as a result of contracting COVID-19 or other health conditions or being forced to quarantine;·interruption of key clinical trial activities, such as clinical trial site data monitoring and efficacy, safety and translational data collection, processing and analyses, due to limitations on travel imposed or recommended by federal, state or local governments, employers and others or interruption of clinical trial subject visits, which may impact the collection and integrity of subject data and clinical study endpoints;·delays or disruptions in preclinical experiments and IND-enabling studies due to restrictions of on-site staff and unforeseen circumstances at CROs and vendors, including any delays caused by the COVID-19 outbreak;·interruption or delays in the operations of the FDA and comparable foreign regulatory agencies;·interruption of, or delays in receiving, supplies of our product candidates from our contract manufacturing organizations due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems;·delays in receiving approval from local regulatory authorities to initiate our planned clinical trials;·limitations on employee or other resources that would otherwise be focused on the conduct of our clinical trials and pre-clinical work, including because of sickness of employees or their families, the desire of employees to avoid travel or contact with large groups of people, an increased reliance on working from home, school closures or mass transit disruptions;·changes in regulations as part of a response to the COVID-19 pandemic which may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;·delays in necessary interactions with regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government or contractor personnel; andReport.26
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The COVID-19 global pandemic continues to rapidly evolve. The extent to which the outbreak may affect our clinical trials, business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted at this time, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, actions to contain the outbreak or treat its impact, such as social distancing and quarantines or lock-downs in the United States, and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease, and the ongoing worldwide vaccine rollout. Future developments in these and other areas present material uncertainty and risk with respect to our clinical trials, business, financial condition and results of operations.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.
Proceeds
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Rule 10b5-1 trading arrangements 31.2 32.1* 32.2* 101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) During the three months ended March 31, 2024, none of our directors or officers adopted or terminated “Rule 10b5-1 trading arrangement” or “non Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.27Exhibit
NumberDescription Filed Herewith Form Incorporated by Reference File No. Date Filed Exhibit
Number3.1 Description10-K 001-40034 3/28/2024 3.28-K/A001-40034 5/26/2023 10.1#4.1 8-K 001-40034 2/2/2024 4.2 Employment8-K001-40034 2/2/2024 4.3 8-K 001-40034 2/2/2024 10.1△ 8-K 001-40034 2/2/2024 10.2 8-K 001-40034 2/2/2024 10.38-K001-40034 2/2/2024 10.2#Employment Agreement, dated as of May 10, 2021, by and between the Company and Leanne M. Kelly31.131.1X X X X XBRLiXBRL Instance DocumentXBRLiXBRL Taxonomy Extension Schema DocumentXBRLiXBRL Taxonomy Extension Calculation Linkbase DocumentXBRLiXBRL Taxonomy Extension Definition Linkbase DocumentXBRLiXBRL Taxonomy Extension Label Linkbase DocumentXBRLiXBRL Taxonomy Extension Presentation Linkbase Document28Unless otherwise indicated, exhibits are filed herewith.# Indicates a management contract or any compensatory plan, contract or arrangement. * This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing.△ Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company undertakes to furnish supplemental copies of any of the omitted schedules upon request by the U.S. Securities and Exchange Commission. 2829Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.GRI BIO, INC. Date: May 10, 2024VALLON PHARMACEUTICALS, INC./s/ Leanne M. Kelly Name: Leanne M. KellyTitle: Chief Financial OfficerDate: May 13, 2021By:/s/ David BakerName: David BakerTitle: President(Principal Financial and Chief Executive Officer2930